Jefferies bullish on Greek banks

Eurobank remains the top pick among Greek lenders, according to the latest analysis by Jefferies, a global, full-service investment banking and capital markets firm.

The firm maintained its “buy” rating on Eurobank shares, reaffirming a price target of €3.70 and citing strong second-quarter performance and the bank’s robust international footprint.

Roughly half of Eurobank’s profits are now generated outside Greece, underlining its position as the most diversified franchise among its domestic peers.

Return on tangible book value reached an impressive 16.6 per cent in the second quarter, driven by a 15 per cent quarterly increase in fee income, which helped offset a slight one per cent decline in net interest income.

Despite the mild pressure on interest revenue, Jefferies highlighted the resilience of Eurobank’s underlying business, particularly given the backdrop of a declining interest rate environment.

The bank revised upward its 2025 guidance for credit expansion to €4 billion, up from €3.5 billion, with growth expected both from Greek corporate lending and operations in Bulgaria, where loan growth is running at an annual pace of 18 per cent.

Bulgaria’s planned entry into the eurozone in 2026 is expected to offer a macroeconomic tailwind, with approximately €1 billion in liquidity projected to be released from reduced reserve requirements.

This capital could be redeployed at spreads exceeding 200 basis points, adding to the bank’s return-generating potential.

Capital strength is also on the rise, following the successful AT1 issuance in May, which boosted Eurobank’s buffer to 390 basis points, up from 290 basis points in the first quarter.

This development gives the bank room to pursue organic expansion or in-market acquisitions, with management open to merger and acquisition opportunities, though no concrete discussions are currently under way.

Valuation remains attractive, with Eurobank trading at a 2026 price-to-earnings multiple of 7.7 times and a return on tangible equity expected to reach 18 per cent by 2027.

According to Jefferies, this profile could support a re-rating in valuation multiples going forward.

Alpha Bank also retained a “buy” recommendation from Jefferies, with a target price of €3.80, following what the firm called a pivotal shift in core earnings.

After five consecutive quarters of decline, net interest income returned to growth, driven by lower funding costs, particularly from deposits, and higher returns on its securities portfolio.

Reinvestment yields in the bond book are now hovering around 2.6 per cent, which has helped stabilise and expand the bank’s net interest margin.

This recovery has led Jefferies to revise its forward estimates upward, reflecting improved profitability.

Fee-based revenues have also strengthened, especially in asset management, which has reinforced the bank’s pre-provision income and supported a three per cent increase in projected net profit for 2026.

Alpha Bank’s non-performing exposures have fallen to 3.5 per cent, while coverage ratios have risen to 57 per cent, indicating improved credit quality and a stable cost of risk near 45 basis points.

The bank’s €245 million deferred tax asset gain was used to increase provisions rather than inflate headline profits, a decision Jefferies described as evidence of a quality-first management approach.

Capital adequacy remains strong, with a common equity tier one ratio at 15.7 per cent and a capital buffer of more than 320 basis points above regulatory requirements.

Based on both Jefferies’ analysis and management’s guidance, Alpha Bank is expected to return more than 30 per cent of its market capitalisation to shareholders by 2027, while maintaining the flexibility to pursue targeted strategic actions such as those involving AXIA Ventures or AstroBank.

Valuation continues to look compelling, with a 2026 forward price-to-earnings ratio of 7.7 times and an implied return on tangible equity of 15 per cent.

Its price-to-tangible book value ratio remains below one, providing investors with favourable valuation asymmetry.

Jefferies believes both banks present highly attractive risk-return profiles, particularly in the current macroeconomic setting of lower interest rates, healthy organic capital generation, and an increased focus on capital returns.

Stable net interest margins, rising fee income, and contained credit costs together create a robust profit leverage framework with limited downside relative to valuation.

Alpha Bank offers a high-quality re-rating opportunity, bolstered by capital distributions and potential buybacks, while Eurobank combines resilience, geographic diversification, and return metrics that rival international peers.

In a market narrative increasingly driven by growth and quality, Jefferies concluded that exposure to both lenders provides a compelling case for strong investment conviction.