Jefferies expects Greek banks to enter the remainder of 2026 from a position of strength, despite the more uncertain international environment and market volatility.
Following a two-day series of meetings in Athens with bank executives, investors, the Hellenic Debt Management Agency (HDMA), and the management ofEuronextAthens,Alexander Demetriou concludesthat the sector remains well-positioned, with strong credit expansion, stable asset quality, and new avenues for revenue growth.
The key point of the report is that the recent performance of bank stocks does not fully reflect the improvement in fundamentals. Jefferies maintains a positive stance on the sector and a buy recommendation forAlpha Bank, Eurobank, National Bank of Greece, and Piraeus Bank, noting that banks are no longer operating solely on the logic of post-crisis recovery but are actively restructuring their capital to enhance profitability visibility.
The focus is on credit expansion. Loan disbursements rose by 30% year-over-year in the first quarter, while management appears comfortable with the new business pipeline for 2026. Jefferies notes that the net interest margin appears to have bottomed out in the first quarter and that from here on out, banks expect growth in both net interest income and the margin.
The firm’s analysis identifies three key sources of “upside risk” for net interest income: growth in loan volumes, securities portfolios, and interest rates. At the same time, banks do not see a significant deterioration in competition for deposits, despite the shift of some funds toward mutual funds. Excess liquidity remains strong and limits pressure on funding costs.
The second major theme is insurance. The Greek market remains underpenetrated compared to European markets, a factor that creates room for growth for banks. Eurobank and Piraeus Bank cited the potential capital benefit from theDanish Compromisein their recent insurance agreements, with a likely timeline of 2028. Management teams, however, appear disciplined regarding acquisitions, setting a high bar to ensure that every move is strategically useful and profit-boosting.
A separate area of interest is restructured loans. National Bank of Greece and Piraeus Bank see opportunities for inorganic growth of their loan portfolios from a pool of approximately €80 billion currently held by servicers. Piraeus estimates the addressable market at €3 billion to €4 billion, while National Bank puts it closer to €20 billion. A common denominator remains the focus on asset quality.
For the smaller banks,Optima Bank andCrediaBank, Jefferies notes a strong growth trajectory. Their loans increased by 40% year-over-year in the first quarter. Optima reports a ROTE of 25% for 2025 and a cost-to-income ratio of 22%, while CrediaBank is entering a new phase following its intention to acquire 70% ofHSBC Malta, a move that doubles its assets.
Finally, regarding artificial intelligence, banks’ approach remains cautious. Management teams have not yet incorporated significant benefits into cost plans, but are testing applications in areas such as customer identification and consumer credit assessment. For Jefferies, the main cost pressure still comes from personnel expenses and talent retention.