Net interest income again drove Greek banks’ profitability in the third quarter, with lending growth and higher-for-longer interest rates providing a powerful boost.
The picture was not uniform, however: Eurobank and Alpha Bank beat market expectations, while Piraeus fell short, weighed down by provisions, fees and negative trading results.
Citi maintains a “buy” rating on all four systemic banks, with target prices implying upside of 13% to almost 24%. National Bank of Greece —which reports its nine-month results on Wednesday—stands out.
In its reports on the third-quarter results, Citi analyst Simon Nellis says the common thread among Greek banks remains the strength of net interest income (NII), which exceeded expectations in every case. The banks differed in other income, the cost of risk and one-off charges.
Eurobank
Eurobank delivered the clearest picture, in Citi’s view. Third-quarter net profit came to €423 million, up 4% quarter on quarter and 24% year on year, beating the market consensus by 6% and Citi’s own forecast by 10%. Excluding one-off items, profit reached €433 million, while return on tangible equity (RoTE) remained at 18%.
Net interest income came to €719 million (up 5% quarter on quarter and 14% year on year), as higher ECB interest rates, loan growth and balance-sheet expansion more than offset pressure from funding costs.
Trading income also came in ahead of expectations at €30 million, 54% above forecasts, as did income from associates, at €18 million, 73% above forecasts. The net interest margin widened to 2.51%.
Net loans rose to €57.9 billion, with organic loan growth of about €1.1 billion in the quarter and €3.8 billion since the start of the year, driven mainly by business lending. The non-performing exposure ratio fell to 2.4%, while the cost of risk stood at 54 basis points.
Citi notes, however, that implementation of the law converting loans into Swiss francs could add about 40 basis points to the NPE ratio in the fourth quarter, with no impact on the cost of risk.
The CET1 ratio improved to 15.5%, but would stand at 14.3% on a pro forma basis following completion of the Eurolife acquisition, an impact of about 120 basis points. The acquisition is expected to diversify revenue, with Eurolife forecast to contribute €20 million-€22 million in fees in the fourth quarter and about €100 million a year from 2027.
Citi expects small upward revisions to market estimates and maintains its €5.10 target price, implying 12.8% upside from €4.52, or a total return of 17.6% including dividends.
Alpha Bank
Alpha Bank posted the biggest percentage beat against expectations. Third-quarter net profit came to €269 million, down 15% quarter on quarter but up 46% year on year, beating both the market consensus and Citi’s forecast by 15%. Recurring profit reached €283 million.
Net interest income was again the main driver, rising to €472 million (up 8% quarter on quarter and 17% year on year), 6% above expectations.
Fees fell 16% because there was no dividend from PRODEA, worth €39.6 million, as recorded in the second quarter; excluding this, underlying growth was 6%. Operating expenses fell 4%, with the cost-to-income ratio improving to 36.4% from 38.2%, while pre-provision profit (€402 million) beat expectations by 5%.
The net interest margin widened by 11 basis points to 2.28%.
The weak point was asset quality, which deteriorated slightly: the NPE ratio rose to 3.8%. The bank attributed this to a restructured European syndicated corporate financing and further mortgage restructurings, while the cost of risk increased to 42 basis points. Management does not, however, see any material deterioration in borrower behaviour.
Loans rose 11% year on year to €46.3 billion, deposits increased 13% to €59.9 billion, and the CET1 ratio reached 14.1%. The bank continues to provide for a 55% payout and will pay an interim dividend of €124 million in December.
No changes to guidance were announced ahead of the Investor Day due to take place this week. Citi sets its target price at €5.30, implying 17.3% upside from €4.52 and a total expected return of 19.8%.
Piraeus
By contrast, Piraeus reported net profit of €275 million, down 18% quarter on quarter and up 5% year on year, 11% below the market consensus and 3% below Citi’s forecast. RoTE fell to 13.5% from 16.7% in the second quarter. Citi describes the quarter as “mixed”: commercial momentum and the balance sheet were strong, but earnings performance was weaker.
Net interest income rose 7% quarter on quarter and 15% year on year, beating expectations by about 3%, while operating expenses fell 5%. Fees, however, declined 14% quarter on quarter—although they were up 33% year on year—trading income was negative because of volatility in markets and rising bond yields, and provisions rose to €90 million, 18% above expectations.
Organic cost of risk jumped to 80 basis points from 59, mainly because of impairments of about €50 million on the Parthenon portfolio, which was classified as held for sale. In addition, negative valuations of real estate and other assets, totalling €39 million, weighed significantly on results. Since the start of the year, however, organic cost of risk stands at 57 basis points, close to the target of about 60.
Asset quality continued to improve, with the NPE ratio falling to 2% and the stock of NPEs to €927 million. National Insurance contributed €36 million in fees in the quarter and €102 million in the nine-month period, putting the bank on track to exceed its target of about €110 million for 2026. The CET1 ratio reached 12.9%, while the bank will pay an interim dividend of €124 million in December.
Management reiterated its 2026 targets—earnings per share of about €0.90, normalised RoTE of about 15% and CET1 above 13%—and said there was scope to exceed its €2 billion target for net interest income.
It also raised its ambitions for 2027, targeting a net interest margin above 2.4%, RoTE above 15%, earnings per share growth of about 10% and CET1 above 13.5%. Citi notes that Bloomberg’s estimate of earnings per share of €0.98 this year is above management’s target and forecasts some small downward revisions. It nevertheless maintains its €11.40 target price, implying 13.9% upside from €10.01 and a total expected return of 19.3%.
National Bank of Greece
National Bank of Greece reports its results on Wednesday. Based on comments at the pre-results briefing, Citi made small adjustments to its model: the bank signalled weaker fees and trading income, but continued strength in net interest income. As a result, Citi marginally cut its 2026 earnings-per-share estimate by 0.4%, with no changes for subsequent years.
Citi expects third-quarter net profit of €292 million (€307 million on a recurring basis), net interest income of €571 million, fees of €125 million, recurring operating expenses of €252 million and a cost-to-income ratio of about 35%. Provisions are estimated at €41 million, with a cost of risk of about 38 basis points and RoTE of 12.9%.
Management says the acceleration in net interest income is underpinned by higher-than-expected interest rates and the repricing of assets, as only about one-third of the related benefit flowed through to second-quarter results. Budget assumptions are described as conservative, leaving scope to beat them in 2026 and 2027.
Fees are affected by the comparison base: revenue from the Recovery Fund was front-loaded in the second quarter, which also saw unusually strong capital markets activity.
The quarter’s only notable one-off charge relates to about €15 million for LEPETE, while a €25 million charge for school reconstruction is expected in the fourth quarter. Management also noted a marked revival in loan demand in October.
National Bank of Greece also offers the greatest upside among Greek banks in Citi’s coverage: its target price remains €20, against a share price of €16.15, implying 23.8% upside and a total expected return of 28.6% including dividends.