A new report on Greek banks was published by Mediobanca. It initiates coverage of Eurobank, with a "neutral" recommendation and a target price (TP) of €2.8/share. Eurobank, it notes, is the largest Greek bank among the four systemic banks in terms of total assets as well as deposits.

It is also more geographically diversified than the other groups, with a third of its loans and more than 50% of its profits coming from outside Greece, mainly from Cyprus and Bulgaria (where it is the 2nd and 4th largest bank, respectively).

THE ACQUISITION OF THE HELLENIC BANK

The recent acquisition and consolidation of Hellenic Bank was a key factor in diversifying and strengthening its growth profile. "We expect the bank to continue to fuel its growth through organic and inorganic initiatives. However, we believe Eurobank is fairly valued (with a P/TE of 0.95x for 2025 and a stable Adjusted RoTE of 15% for the 2025-27 period), with limited room for further earnings per share (EPS) upgrades in the near term," it said.

"GROWTH STORIES"

Greek banks are "growth stories," supported by the country's macroeconomic recovery after a period of deep restructuring, which is leading to a normalization of underlying trends. Thus, strong loan growth, higher dividends, strong capital cushions and new growth opportunities are factors that will continue to support the recovery of Greek banks.

"Our preference goes to Alpha (target price of €2.3 from €2) and Piraeus (target price of €5.4 from €4.3). Both are upgraded to an outperform recommendation: the former for its more resilient net interest income (NII) trajectory compared to the others for 2025 and the latter for its growth and diversification strategy."

These, the house notes, should reassure the market on the sustainability of their future RoTE, causing a compression of the valuation gap versus the sector (discount 30% versus the sector, i.e., Alpha Bank at 0.55x P/TE for a fixed RoTE of 10% and Piraeus at 0.7x P/TE for a fixed RoTE of 14%).

NII

In this context, analysts believe that Alpha and Eurobank will be able to show stable or even increasing NII in 2025: the former thanks to a negative net cash position (which eventually turns into a positive factor compared to the rate hike cycle), the latter due to the full consolidation of Hellenic from Q3 2024.

For NBG and Piraeus, NIIs for 2025 are expected to decline by single digits due to loan repricing (as in their peers) and larger net cash positions compared to Alpha. "Finally, we expect interest rate stabilization, coupled with strong loan growth, to enable NII growth of 2-6% for all Greek banks in 2026-27. Greek banks are redefining their strategies to expand, strengthen and diversify their business models. Thus, commission generation is at the center of their focus."

NATIONAL INSURANCE

Finally, as stated, "We believe that the potential acquisition of Hellenic General Insurance by Piraeus will unlock further growth and diversification (+5% EPS acceleration, double-digit RoAC, +3 percentage points in commissions/core revenues). We believe that the implementation of the Danish Compromise will be decisive for the further development of this asset.".