Morgan Stanley expects upbeat second quarter from Greek banks

Morgan Stanley expects the Greek banking sector to enter earnings season with higher profit forecasts, robust credit growth and a string of second-quarter upside surprises.

In its report, the findings of which were shared by Greek business outlet Newmoney, the US investment bank said it that remains constructive on the sector, arguing that the macroeconomic backdrop is still supportive, loan growth is continuing at a brisk pace and valuations remain attractive.

Morgan Stanley said its top picks ahead of results are Piraeus Bank and Eurobank, which it believes have the greatest scope to beat market expectations and lift full-year guidance.

The bank set target prices of €11.30 for Piraeus Bank, €4.90 for Eurobank, €4.90 for Alpha Bank, €17.20 for the National Bank of Greece and €1.16 for CrediaBank.

It kept an Overweight rating on Piraeus Bank, Eurobank and Alpha Bank, while assigning Equal-weight to the National Bank of Greece and CrediaBank.

Morgan Stanley said the pace of credit expansion remains impressive, noting that new loan production in April and May was about 40 per cent higher than in the previous quarter and 16 per cent above the same period a year earlier, with business lending leading the way.

Loan balances are rising at an annual rate of 7.4 per cent, the bank said, while term deposits now account for 23 per cent of total deposits, which raises funding costs but does not materially alter the overall picture for the sector.

For Piraeus Bank, Morgan Stanley expects net profit of €324m for the second quarter, about 7 per cent above the market consensus.

It stated that net interest income and fees should drive stronger operating profitability, and it sees room for guidance on 2026 net interest income to rise by about 5 per cent, with a significant upgrade likely to fee targets through 2028.

The bank therefore increased its earnings per share forecasts for the 2026-2028 period.

For Eurobank, Morgan Stanley projected net profit of €414m, around 8 per cent above the average analyst estimate.

It expects the lender to post a strong performance in both net interest income and fees, which could lead to a roughly 6 per cent upgrade in 2026 net interest income guidance.

The analysts also lifted their earnings per share forecasts by 2 per cent to 3 per cent, mainly because of a better fees outlook.

For Alpha Bank, Morgan Stanley forecast net profit of €244m, slightly above market expectations.

It said the biggest upside surprise should come from fees, helped by one-off income as well as momentum in investment banking, asset management and lending.

The bank’s capital adequacy is expected to remain close to 14.7 per cent.

For the National Bank of Greece, Morgan Stanley forecast net profit of €315m, about 6 per cent above the market consensus.

It said a guidance upgrade on net interest income is possible, with management potentially moving from a previous estimate of low-single-digit growth to around 5 per cent annual growth, while it also expects a better contribution from fees.

For CrediaBank, Morgan Stanley kept a neutral stance and expects second-quarter net profit of about €9m.

It forecast a 12 per cent rise in net interest income and a 10 per cent increase in fees from the previous quarter, as the lender continues its strategy of growing loans faster than its rivals.

That strategy, however, also pushes up deposit costs, while the CET1 capital ratio is expected to come in at 16 per cent, slightly lower because of higher risk-weighted assets.

Morgan Stanley said Greek banks still offer one of the most attractive combinations of growth and valuation in Europe.

It added that the economy’s resilience, continued lending growth, high fees and the prospect of further earnings upgrades all strengthen the bullish case for the sector, with particular preference for Piraeus Bank and Eurobank.