We are rebalancing our portfolio of top investment picks, adding Alpha Bank in place of Piraeus Bank as a relative-value trade, as we now see a more asymmetric risk-return profile in Alpha’s favor following its relative underperformance since the beginning of the year, writes Eurobank Equities.
Based on our estimates, Alpha is trading at just 1.17x its estimated Price-to-Tangible Book Value (P/TBV) for 2026, compared to approximately 1.5x for the other systemic banks, while it has underperformed the Greek banking sector by about 7% since the start of the year.
This is despite the fact that the expected difference in Return on Tangible Equity (RoTE) is projected to narrow to about 3 percentage points in 2026 from about 6 percentage points in 2024 and to fall below 3 percentage points by 2028, supported by the recently announced acquisitions.
As Eurobank, National Bank of Greece, and Piraeus Bank are now trading at broadly similar valuation multiples (approximately 1.5x P/TBV for 2026), Alpha remains the clear outlier in terms of valuation.
Although part of this discount is justified by its lower profitability, weaker asset quality metrics, and greater reliance on wholesale funding— which implies lower sensitivity to interest rates, we believe these factors are increasingly reflected in the current valuation, the analysts continue.
At current levels, we estimate that there is limited room for a further relative decline in the valuation, while the likelihood of the valuation converging with that of peer banks is increasing, as business plan execution improves, acquired businesses are integrated, and the profitability gap gradually narrows.
Furthermore, UniCredit’s strategic stake continues to offer optionality regarding potential mergers and acquisitions (M&A), which is not reflected in the current share price.
The Investor Day in the second half of 2026 could also serve as a catalyst, with room for upward revisions relative to current market consensus estimates.
We reiterate our Buy recommendation for both Alpha Bank and Piraeus Bank, as well as our positive stance on the banking sector as a whole, where we foresee scope for a compression of risk premiums following the reopening of the Strait of Hormuz.