Upgrades for Greek banks continue, as after Fitch it is the turn of Goldman Sachs and Morgan Stanley. In particular, GS raised its target prices again, citing strong second quarter results. It said systemics exceeded net income estimates by 9% on the back of better-than-expected net interest income, which moved 2% higher than consensus.

THE PREDICTIONS

Against the backdrop of bank growth, the house is revising its targets for the domestic banking system. In particular, it expects net interest income to average 5% in 2024-2027. This forecast, combined with lower provisioning costs, leads analysts to estimate a 7% increase in net income over the 2025-2027 period.

Goldman Sachs forecasts ROTE return on equity at 15%, 13% and 12%, respectively by 2024, 2025 and 2026. They also expect CET1 ratio from 15.6% in 2023 to 18.2% in 2026 and NPE ratio from 4% last year to 2.4% in 2026. 

HOW IT RATES THE BANKS

Based on the above, analysts give a buy recommendation for Ethniki, Eurobank and
Piraeus, while moving to increase the target prices of the stocks:

• For NBG t €11 (from €10)
•  For Eurobank at €2.70 (from €2,50)
• For Piraeus at €5.90 (from €5.30)
• For Alpha Bank at €2.00 (from €1.95)

THEY REMAIN CHEAP

Despite a 24% rally in 2024 and their outperformance against the Stoxx 600, Goldman Sachs stresses that they remain undervalued and cheap. It believes they have upside potential as they trade at an average P/TBV for 2025 of 0.66x, giving a discount of around 24%. 

THE MORGAN STANLEY MOVE

Buy Greek bank stocks," Morgan Stanley says in turn, noting: "In our base case scenario, we see dividend yields of 7% in 2024 on average for Greek banks and 9% in 2025 based on payout ratios of 30%-50% in 2024 We expect payouts of 24% at 2424% in 2024 and 40-60% in 2025. This compares to a 50% payout ratio provided by Eurobank guidance in 2025, 30%, expected by Piraeus in 2024 (and 50% in 2025/2026) and 35% provided by Alpha Bank guidance in 2024 (and 50% in 2025/2026). After dividend payout for the banks, we estimate excess capital of 260 bps above management targets in 2025 and 300 bps in 2026. ETE stands out with the highest total capital ratio among Greek banks, at 20.9% as of Q2 this year."

THE ESTIMATES

Morgan Stanley maintains an overweight recommendation on all Greek banks and believes the shares are undervalued to an undue degree. The target prices of Greek banks are:

• For Piraeus Bank €5.51
• For Alpha Bank: €2.5
• For the National Bank, €10,43
• Eurobank €2,66

Regarding dividend policy, Morgan Stanley says that surplus capital is significant and even after dividends, 23% of banks' capitalization will be surplus capital for 2026, while the DTC will be amortized over 10 years versus 20 years.