Morgan Stanley maintains its constructive stance on Greek banks, following meetings between the firm's analysts and bank management, government officials and industry players.

"Our meetings with Greek banks, government officials and industry players keep us constructive. While interest rate cuts are leading to adverse conditions for net interest income (NII), banks are seeing offsets in loan growth, fees and lower-than-expected deposit betas against 2026 projections," it said in a statement. 

LOANS

According to analysts at the international rating agency, "it is important that the commitment to return of capital remains high. The strength of loan growth is expected to continue. In H1 2024, loan performance growth for Greek banks was +6.6% year-on-year. Although the sector's loan growth is down -0.6% (since August) from the end of Q2 (+4.7% y/y), this is likely to be due to seasonality as loan growth is expected to pick up in the coming months. The management teams of Greek banks remain confident of achieving the 5% to 7% loan growth target for 2023-2026, in line with the guidelines."

The U.S. investment house meanwhile notes that "the project pipeline remains strong, with banks expecting an acceleration in business loan growth from H2 onwards as RRF-linked projects and investments in the country continue. Corporate lending is expected to continue to be the key growth driver, with green trends in consumer loans. Bank managements are aiming to adopt a more digital, data-driven approach to promote consumer loans. The downturn in mortgage loans is expected to continue (since the beginning of the year, mortgage loans have fallen by 4.1%), although they expect the rate of decline to slow. At the same time, the NPEs and serviced segments market represents a medium-term opportunity for banks." 

NEW TARGET PRICE 

Morgan Stanley also made a small reduction in target prices for bank stocks.

• Alpha Bank: €2.28 from €2.50
• NΒG: €10.25 from €10.43
• Piraeus Bank: €5.39 from €5.51
• Eurobank: €2.63 from €2.66

"The management teams of Greek banks remain committed to achieving their 2026 plans for dividend payments of at least 50%. We do not see DTCs as a barrier to higher payouts for Greek banks, and our meetings in Athens reinforced this view," Morgan Stanley analysts note.

NATIONAL BANK

According to analysts' estimates, National Bank offers the highest average annual yield, around 10.3% in 2024-2026. This implies a payout of about €2 billion (about 31% of market capitalization) to shareholders, in line with the company's targets. On average, analysts' forecasts imply a total return of around 8.9% in 2024-2026 for Greek banks. "We expect clarity on higher payouts to be a key catalyst for Greek bank stocks," the same analysis said.