Rising dividends are becoming the main lure as earnings momentum recedes, HSBC argues in its analysis of the shares of the four systemic banks. Strong earnings performance in the nine months to 2024, capital boost from solid profitability and improved credit ratings, limited drag from faster amortisation of the deferred tax credit (DTC), make 50% payout ratios achievable across all banks in 2026, the house writes.

PROFITABILITY FORECASTS

Although earnings will decline amid falling interest rates, higher payouts could lead to a 27% increase in dividend per share (DPS) in 2026, bringing dividend yields into the 7%-10% range. Lower book valuations and high dividend yields leave room for further appreciation of Greek bank stocks. 

The house raises its earnings forecast on average

• 16% in 2024
• 14% in 2025
• 20% in 2026

reflecting:

• Significant 10% credit expansion in 2024 in Greece, albeit from a few large projects in Q2
• Early stabilization of beta deposits at low levels
• Momentum in asset management and bancassurance fees partially offsetting the adverse
• regulations on bank fees imposed by the government
• Reduction in cost of risk amid favourable asset quality

For this year, the house expects profits to fall 9% amid headwinds from falling interest rates and commission regulations, while for 2026, it expects a 3% increase.

ESTIMATES

HSBC's forecasts are 6% below consensus for 2025, with the largest negative divergence in National Bank. Piraeus is the only bank for which our estimates are significantly above average estimates, it notes. The new target values he gives are:

• Eurobank: €3.5
• NBG: €9.9 
• Piraeus: €7.25
• Alpha Bank: €3.05