Explore the latest banking share news on Greek banks, highlighting Piraeus Bank’s strong returns and the focus on shareholder remuneration amid rising valuations.
In a recent analysis, NBG Securities has issued new target prices for Greek banks, highlighting significant upside potential for investors. The report emphasizes the increasing focus on shareholder remuneration, positioning Greek banks as attractive investment opportunities amidst a recovering economic landscape.
Target Prices and Investment Recommendations
NBG Securities has set ambitious target prices for several key players in the Greek banking sector. Piraeus Bank emerges as the top choice, with a target price of €6.25, reflecting a remarkable upside margin of 47%. Eurobank follows closely with a target price of €3.50, also indicating a 47% upside, while Alpha Bank is projected to reach €2.55, showcasing a 48% potential increase. These recommendations underscore a bullish outlook for the Greek banking industry, with all banks rated as outperform.
Strengthening Capital and Dividend Prospects
The Greek banking sector is witnessing a robust generation of capital, alongside an accelerated amortization of deferred tax credits (DTCs). This positive trend is expected to enhance dividend payments significantly, with projections indicating a payout ratio of approximately 50% by 2025-2026. Current dividend yields for Greek banks range from 7.5% to 9.8%, averaging around 8.5%. Such attractive yields are likely to draw increased interest from investors seeking reliable income streams.
Performance and Valuation of Greek Banks
Despite the strong performance of Greek banks, which recorded a sector growth of 21% year-on-year in 2024, their shares continue to trade at a discount compared to their European counterparts. This discrepancy is attributed to specific risks associated with the Greek economy and banking industry. As of early 2025, Greek banks have shown a positive start to the year, achieving gains of 8% and outperforming both the Greek market and their EU peers by 4% and 1%, respectively.
In terms of relative valuation, Greek banks are currently trading at an average price-to-tangible book value (P/TBV) ratio of 0.83 times, with a return on tangible equity (ROTE) of 13.6%. In contrast, their European counterparts are trading at 1.08 times, indicating a substantial discount of 23%. This valuation gap may narrow as Greek banks successfully implement updated business plans, leading to sustainable earnings growth and an acceleration in dividend payouts.
Credit Growth and Revenue Outlook
A key positive aspect of the Greek banking sector is the anticipated domestic credit growth, projected at 5.8% year-on-year in 2025, despite a decline from the previous year’s 11%. This growth is expected to mitigate the adverse effects of the European Central Bank’s (ECB) declining interest rates on net interest income. For the three systemic banks, net interest income is projected to reach €6.05 billion, reflecting a slight decrease of 2.8% year-on-year.
Revenue support is anticipated from increased bond income, hedging activities, and higher fees, even in light of government initiatives aimed at reducing costs for bank customers. Core revenues for the current year are expected to total €7.76 billion, representing a modest decline of 1.1% year-on-year. Notably, net interest income is projected to contribute 77% of total revenues in 2026, down from 80% in 2023.
A Bright Future for Greek Banks
The outlook for Greek banks appears increasingly optimistic, driven by strong capital generation, attractive dividend yields, and positive credit growth. As the sector continues to navigate the challenges posed by economic fluctuations and regulatory changes, the potential for enhanced shareholder remuneration remains a focal point for investors. With NBG Securities’ revised target prices and a bullish stance on the sector, Greek banks are poised for a promising trajectory in the coming years. Investors looking for opportunities in the European banking landscape should closely monitor developments within this dynamic sector.