Optima bank expects another strong quarter from the four systemic banks. They remain on track to meet their revised full-year targets, although profits are down from a particularly strong second quarter.

Analyst Konstantinos Komnos maintains his buy rating on all four banks, with price targets unchanged.

Net interest income at the four banks is estimated at €2.25bn. This represents an increase of 2.8% quarter on quarter and 11% year on year. Higher interest rates, continued credit expansion and contained deposit costs are contributing to the rise. Credit expansion is more moderate this quarter due to seasonal factors, but remains on target. Deposit inflows are strong, supported by tourism.

Fee income remains a key revenue driver, at €701m. It is up 18% year on year but down about 10% quarter on quarter as non-recurring income from the second quarter normalises. Trading income is being weighed down by volatility in the bond markets. Provisions for loan losses are rising to €253m, from €220m. Overall, profits before exceptional items are estimated at €1.26bn.

Eurobank: Eurolife and Bulgaria in focus

Eurobank kicks off the earnings season on Thursday, 29 October, after the market close. Optima estimates reported profits of €379m, up 11% year on year. Profits before exceptional items are €392m.

Net interest income is expected to come in at €702m, up 11% year on year. Fee income is close to second-quarter levels. The cost of risk is rising to 56 basis points, close to the full-year target of 55 basis points. Return on tangible equity is estimated at 16.2%. Net interest income is in line with market consensus, while profits are 5% below it. The focus is on the timing of the Eurolife deal and the extraordinary tax in Bulgaria.

Alpha Bank: School donation and fee income

Alpha Bank reports results on Friday, 30 October, before the market opens. Optima estimates reported profits of €220m, up 19% year on year. Profits before exceptional items are €245m.

Net interest income is up 3.2% quarter on quarter and 12% year on year, to €450m, supported by higher Euribor rates and loan growth. Fee income is seasonally boosted by payment transactions, while investment banking fees are down. The cost of risk is estimated at 44 basis points, against a full-year target of 45 basis points. Results will include a €25m charge for school renovations (the “Giannakou” programme).

Return on tangible equity is estimated at 11.2%. Net interest income is slightly above market consensus, while reported profits are 6% lower.

Piraeus: Higher cost of risk

Piraeus also reports results that day, before the market opens. Optima estimates reported profits of €300m, up 15% year on year. Profits before exceptional items are €309m.

Net interest income is up 2.2% quarter on quarter, to €520m. Fee income is down 11% from the second quarter because of non-recurring items, but up 37% year on year. The contribution from Ethniki Insurance is estimated to be close to second-quarter levels. The bank is expected to record a €10m trading loss.

The cost of risk is rising to 73 basis points, from 59 basis points, due to prudent management. The non-performing exposures ratio is down to 2.1%. Return on tangible equity is estimated at 14.7% and the CET1 ratio at 12.9%. Profits are 3% below market consensus.

National Bank: High sensitivity to interest rates

National Bank wraps up the earnings season on 4 November. Optima expects a “strong” quarter, with reported profits of €297m, up 8% year on year. Profits before exceptional items are €312m.

Net interest income is up 3.4% quarter on quarter, to €574m, reflecting the bank’s high sensitivity to rising interest rates. Fee income is down 7% as fees from Recovery Fund loans and capital markets activity normalise. The cost of risk is estimated at 39 basis points, in line with the target of below 40 basis points and the lowest in the sector. Return on tangible equity is estimated at 13.9% and the CET1 ratio at 17.4%.

Valuations below European peers

Greek banks hit new highs in September, buoyed by inflows linked to the market’s upgrade to developed-market status. They subsequently fell 16% to 17% from their highs. The correction reflects weaker sentiment towards European banks, widening bond spreads and inflation concerns.

The systemic banks trade at an average of 9.2 times forecast 2027 earnings, compared with 9.6 times for Southern European banks. Despite the more challenging environment and potential volatility, Optima reiterates its buy ratings across the sector.

*Based on the close on 26 October. Profits are reported figures. Source: Optima bank