2025 will be another positive year for the banking sector, given that profitability will remain high (return on equity >13%) and higher dividend yields of 8% are expected from 2024 earnings, Alpha Finance estimates in a new report.

The new elevated target prices suggest significant upside from current levels (of 30% and above including dividends) justifying a buy recommendation for all three banks (Eurobank, National Bank, Piraeus) covered.

EUROBANK STANDS OUT

More specifically, Eurobank shows the highest upside with a target price of €3, reflecting among other things the synergies from the integration of Hellenic Bank, while both Piraeus Bank, with a target price of €5.30, and National Bank (target price of €9.70) have significant upside, based on the brokerage's estimates.

Analysts believe that the valuation of the sector is particularly attractive at current levels, as Greek banks are trading at valuation ratios of 0.75x P/TBV and 6.0x P/E based on 2025 estimates, taking into account their profitability, as well as the prospects of higher dividend distributions, which are expected to play an important role in strengthening the investment proposition of Greek banks.

THE NEW ESTIMATES

Alpha Finance is updating its estimates for Greek banks' profitability, incorporating a slightly larger than previously lower interest rate cut offset by a favourable deposit mix given trends so far, the impact of recent government announcements on commissions, and for Eurobank the expected full integration of Hellenic Bank and related synergies.

.STRONG PROFITABILITY

The brokerage's analysis department notes that despite the ongoing normalisation of monetary policy, which is expected to impact revenues, Greek banks' profitability is expected to remain strong over the medium term, with return on equity above 12%, based on loan portfolio growth of around 5%-6% per annum or €6-€7 billion, low funding costs, limited cost growth and supportive asset quality trends with NPL ratios below 3%.