UBS is particularly positive about the outlook for the Greek banking sector, maintaining a “Buy” rating for all four systemic banks. The Swiss firm believes that the recovery of the Greek economy, strong credit expansion to businesses, and the growing ability to utilize excess capital are creating the conditions for further value creation for shareholders.
UBS estimates that Greek banks are entering a new phase of growth, as—following the consolidation of their balance sheets—the key drivers are shifting toward increased lending, acquisitions, and higher capital distributions to shareholders. At the same time, it emphasizes that their valuations remain attractive compared to other European banks.
Upside potential of up to 26%
The firm sets the following price targets:
- Alpha Bank: 4.90 euros from 3.90 euros (+26%)
- Piraeus Bank: €11.20 from €8.88 (+26%)
- National Bank of Greece: €18.20 from €15 (+21%)
- Eurobank: €4.70 from €4.09 (+15%)
Reasons for Optimism
UBS believes that Greek banks are among the main beneficiaries of the Greek economy’s recovery. It forecasts GDP growth of close to 2% annually in the coming years, driven primarily by Recovery Fund allocations, investments, tourism, and shipping.
At the same time, it highlights the ongoing fiscal improvement, with public debt on a downward trajectory and unemployment continuing to decline.
The bank forecasts that credit expansion to businesses will remain strong, estimating an average annual increase in performing loans of approximately 8% for the period 2025–2028. At the same time, it believes that net interest income has now bottomed out, while further growth in lending and fees will bolster banks’ total revenue in the coming years.
Equally important, according to UBS, is the normalization of non-performing exposures (NPEs), with credit risk remaining limited, allowing management to channel more capital toward dividends and acquisitions.
What Sets Each Bank Apart
UBS identifies different strengths for each of the four systemic banks.
Regarding Alpha Bank, it notes that, despite its currently lower profitability, it shows the strongest earnings-per-share growth potential over the next three years, with this improvement also supported by recent acquisitions.
Eurobank is characterized as having the strongest regional growth story, as its presence in Southeast Europe boosts both growth rates and profitability. UBS believes that the acquisition of Hellenic Bank in Cyprus and the integration of Eurolife create additional value and leave room for even higher dividends to shareholders.
Regarding National Bank of Greece, the firm notes that it has the highest profitability in the sector, the strongest capital base, and very high-quality assets. At the same time, the bancassurance agreement with Allianz is expected to further boost earnings and return on equity in the coming years.
As for Piraeus Bank, UBS believes that the new business plan and the acquisition of Ethniki Insurance create a comprehensive financial services model with significant potential for increased profitability and a further upgrade in the stock’s valuation.
Valuations remain attractive
Although Greek bank stocks have rebounded following the correction triggered by geopolitical tensions in the Middle East, UBS believes they continue to trade at a discount relative to most European banks, despite the fact that they exhibit returns on equity and growth prospects that are fully comparable to those of Europe’s strongest banking systems.