Greek banks remain in a strong position despite recent weakness in their share prices, according to fresh assessments by Jefferies and UBS, with both investment houses maintaining positive recommendations for the sector after meetings with bank management teams in Athens.

In a report, whose findings were shared by Greek business outlet Newmoney, Jefferies analyst Alexander Demetriou said the management teams of the country’s major lenders appeared comfortable with the outlook for 2026, supported by strong credit expansion, improving revenue diversification and stable asset quality.

The investment bank maintained buy recommendations for Alpha Bank, Eurobank, National Bank of Greece and Piraeus Bank, arguing that the sector’s underlying performance remains stronger than recent market movements suggest.

According to the report, Greek banks do not currently see any meaningful intensification in competition for deposits, despite some customer funds gradually shifting towards mutual funds.

Jefferies said the sector continues to benefit from strong excess liquidity, which helps contain funding costs and allows lenders to retain greater pricing flexibility.

The report also highlighted insurance activities as a major new growth pillar for Greek banks.

Jefferies stated that the Greek insurance market remains relatively underpenetrated compared with the rest of Europe, creating room for further expansion by the banking sector.

Both Piraeus Bank and Eurobank reportedly referred to potential capital benefits from the Danish Compromise framework linked to recent insurance transactions, with these gains expected to materialise around 2028.

At the same time, the banks were described as disciplined regarding acquisitions, insisting that any deals must strengthen earnings and provide clear strategic value.

On the issue of re-performing loans, both National Bank of Greece and Piraeus Bank identified opportunities for non-organic loan book growth.

Piraeus estimated the relevant market opportunity at between €3 billion and €4 billion, while National Bank of Greece placed the figure closer to €20 billion.

Jefferies said the key challenge remains preserving asset quality, even as banks continue to expand their lending portfolios.

The report also pointed to rapid growth among smaller lenders.

Optima Bank and CrediaBank both recorded annual loan growth of approximately 40 per cent during the first quarter of 2026.

Optima Bank was reported to be targeting a return on tangible equity (ROTE) of 25 per cent in 2025, alongside a cost-to-income ratio of just 22 per cent.

Meanwhile, CrediaBank was described as entering a new phase following its planned acquisition of 70 per cent of HSBC Malta, a transaction expected to double its asset base.

Jefferies said the broader message from its meetings in Athens was that Greek banks are now far better positioned to navigate an increasingly uncertain international environment.

The investment house stated that the sector no longer relies solely on post-crisis recovery dynamics, but is actively reallocating capital to create a more resilient revenue mix and stronger earnings visibility.

According to Jefferies, the strong Greek macroeconomic backdrop and the country’s fiscal buffers also provide additional protection against external shocks.

A central theme in the analysis was the view that net interest margins likely bottomed out during the first quarter of 2026.

From this point onward, banks are expected to record improvements in both net interest income and margins.

Jefferies identified upside risks stemming from three main areas, namely loan volumes, securities portfolios and interest rates.

The report said credit expansion remains the core investment argument for the sector, with loan disbursements rising by around 30 per cent year-on-year during the first quarter.

Bank management teams also reportedly expressed satisfaction with lending pipelines for the remainder of the year.

Separately, UBS also retained a positive stance on the Greek banking sector, maintaining buy recommendations for all four systemic banks while slightly increasing target prices following what it described as a strong start to 2026.

The Swiss investment bank said current business plans still appear relatively conservative when compared with the momentum being recorded in loans, fees and capital returns.

According to UBS, Alpha Bank offers the greatest potential upside among the four systemic lenders.

The bank assigned Alpha Bank a target price of €4.90, implying upside potential of 32 per cent.

For Piraeus Bank, UBS set a target price of €11.20, implying upside of 28 per cent.

The target price for National Bank of Greece was set at €18.20, representing upside potential of 26 per cent.

Meanwhile, Eurobank received a target price of €4.70, corresponding to potential upside of 21 per cent.

UBS also stressed that despite the strong rally in Greek banking shares in recent years, the sector’s investment story has not yet been exhausted.

The report said Greek banks are currently trading at a 2027 price-to-earnings ratio of 8.1 times, representing a 13 per cent discount compared with European peers.

This discount persists despite the sector’s stronger capital returns and growing capacity for shareholder distributions.

According to UBS estimates, Alpha Bank is trading at 7.7 times 2027 earnings and at approximately one time price-to-book value.

Piraeus Bank was valued at 8 times earnings and 1.26 times book value.

National Bank of Greece was estimated at 8.5 times earnings and 1.40 times book value.

Meanwhile, Eurobank was valued at 8 times earnings and 1.39 times book value.

UBS argued that these valuations remain attractive because Greek banks now display cleaner profitability, stronger capital positions and improved visibility regarding shareholder returns.

The report also projected rising returns on tangible equity across the sector.

UBS estimated Alpha Bank’s return on tangible equity at 11.8 per cent in 2026 and 13.4 per cent in 2027.

For Piraeus Bank, the corresponding figures were forecast at 15 per cent and 16.2 per cent.

National Bank of Greece was expected to achieve returns of 15.3 per cent in 2026 and 16.9 per cent in 2027.

Eurobank was forecast to deliver the strongest returns in the sector, reaching 16.8 per cent in 2026 and 18 per cent in 2027.

UBS also highlighted the resilience of corporate lending trends during the first quarter, a period that is usually characterised by seasonal weakness.

“Corporate lending trends remained strong during the first quarter, with growth of 3.9 per cent quarter-on-quarter and 14.4 per cent year-on-year, while National Bank of Greece stood out with quarterly growth of 6.3 per cent,” the UBS analyst said.

At the end of the first quarter, Piraeus Bank held the largest stock of performing loans in Greece at €38.64 billion.

It was followed by National Bank of Greece with €35.70 billion, Alpha Bank with €35.50 billion and Eurobank with €33.06 billion.

Combined, the four systemic lenders held performing loans totalling €142.89 billion, reflecting annual growth of 10.3 per cent.

On revenues, UBS highlighted Eurobank’s performance in net interest income, supported by its regional presence and broader income base.

Eurobank recorded quarterly growth of 2.6 per cent and annual growth of 4 per cent in net interest income.

The report added that net interest margins across the sector are beginning to stabilise, although Piraeus Bank continued to face pressure during the first quarter.

Fee income also remained strong.

“Fee generation remained resilient, with Piraeus Bank recording annual growth of 32 per cent and Alpha Bank posting growth of 30 per cent,” UBS said.

The bank added that stronger fee generation improves revenue quality and gradually reduces dependence on net interest income.

UBS also placed considerable emphasis on acquisitions, describing them as supportive for both earnings per share and capital returns.

According to the report, Alpha Bank’s five complementary acquisitions could add more than 9 per cent to earnings per share and over 1.2 percentage points to return on tangible equity by 2027.

For Piraeus Bank, the integration of Ethniki Insurance is expected to gradually increase the contribution of fees to revenues.

Meanwhile, UBS incorporated Eurobank’s planned acquisition of 80 per cent of Eurolife from August 2026 into its projections.

The report also described National Bank of Greece’s bancassurance partnership with Allianz as attractive.

Finally, UBS said Greek banks continue to offer defensive characteristics in a higher interest rate environment, supported by ongoing investment activity in the Greek economy.

The investment bank added that loan portfolios remain relatively diversified, with tourism accounting for approximately 6 per cent of lending exposure and shipping around 8 per cent, helping reduce concentration risks and supporting the sector’s overall resilience.