EUR 300.00 For Business Accounts Only

GREEK BANKS | Constructive but more selective

Broad earnings resilience, but no spark for upgrades… – Systemic Greek banks delivered results broadly in line with our estimates and consensus. NII momentum stabilised in 3Q (-0.2% q/q), effectively marking the trough after three consecutive quarters of deceleration, given Euribor’s plateauing. Fees posted a mild q/q decline—consistent with our forecasts—reflecting seasonal softness in payments and money transfers, while bancassurance and asset-management’s AuMs continued to expand at a strong double-digit rate (>20% y/y). Trading income also moderated, while opex increased marginally (+1.6% q/q), broadly matching expectations. The uptick reflects ongoing talent-refresh initiatives and upfront integration costs (e.g. Snappi), yet cost discipline remained intact, with the sector delivering a best-in-class efficiency ratio of c37%, well below the c45% periphery average. Credit quality stayed resilient, with the average CoR broadly unchanged at c50bps. As anticipated, profitability within the systemic cohort was strongest at Eurobank and NBG, generating RoTEs of c16.2% and c15.6% respectively, followed by Piraeus at 14.6% and Alpha at 11.7%, while Optima and BoC posted standout returns of c24% and 18.4% respectively. Capital positions remained robust, with pro-forma CET1 at 16.2% (+10bps q/q), as organic profitability absorbed dividend accruals and RWA inflation. Notably, nearly all banks upgraded FY guidance on higher loan volumes, lower CoR and improved revenue visibility, signalling that the drag from rate-cut expectations is waning and paving the way for potential 2026–27 upgrades at FY results.

Trivial changes, earnings narrative unchanged – We revise our models to reflect an ECB terminal rate at 2.00% in 2025–26, rising to 2.25% in 2027, together with recent MREL issuances, the FX impact on loans and updated mgt guidance. We remind that Alpha Bank raised its reported profit outlook to €890m (from €850mn previously), while NBG reiterated that 2025 normalised EPS will reach €1.4 (RoTE >15%). We also factor in a €400mn AT1 for Piraeus Bank. Other modelling updates include: marginally higher deposit beta (slower passthrough), slightly lower CoR, higher securities allocation and other minor mark-to-market adjustments (e.g. school donations). Overall, we end up with just modest upgrades to our adj. net income forecasts, namely +2.2% / +3.9% / +2.9% for 2025–27e for systemic banks, and +3.4% / +4.2% / +6.0% for Optima.

Valuation remains undemanding, but becoming more selecting; Piraeus remains top pick and BoC added as our 2nd preferred name – Filtering through the above, we raise slightly our PTs across our bank universe (excluding BoC, recently initiated). Our revisions are driven primarily by lower CoE assumptions (c-90bps), reflecting improved earnings visibility and strengthened capital-return prospects, and to a lesser extent by the small earnings upgrades. Our updated CoEs now stand at 11.4% for systemic banks, 13.1% for Optima and 11.3% for BoC, conservatively still well above the SX7E-implied 80% YTD rally and Greek banks hovering around 15-year highs, valuations remain attractive at 1.22x 2026e P/TBV and 8.7x P/E (vs 1.50x / 9.7x for peers) for c14% RoTE and c6% shareholder yield. We reiterate our overall constructive stance across the sector, given the undemanding valuation and the scope for further re-rating for EU banks underpinned by the end of the rate-cutting cycle. That said, we lower our rating for: i) Alpha (Hold), where we see more limited upside given its RoTE profile and the >2ppt RoTE gap vs Piraeus, and ii) Optima (Hold), where our TP already embeds a quite rich 2027e P/TBV of 1.9x. Piraeus remains our top pick, with BoC positioned as our 2nd preferred name in the sector.