Goldman Sachs maintains its constructive stance on Greek banks, seeing a 30% rise over an average 12-month period, thus revising its target prices and recommendations for the shares. As he points out, they continue to trade at a discount to emerging market banks (where emerging market portfolio flows are increasing) and European banks, and to their own book value, despite significant profits.
Indeed, as Goldman points out, emerging market investors' exposure to Greek banks is increasing: according to Bloomberg data analyzed by GS's strategy group, 36 emerging market funds have invested in Greek banks compared to 28 and 21 in February 2023 and 2022, respectively. , the 200 emerging market funds analyzed remained low despite the increase in the environment.
According to its estimates, Greek banks trade at an average P/TBV of 0.65x in 2025 and ROTE at 12% in 2026, compared to P/TBV of 1.2x and 0.9x for emerging market banks and European banks respectively, ROTE for 2026 13 % is Therefore, as noted by Goldman Sachs, it upgrades Eurobank to Buy, maintains Buy recommendations on Piraeus Bank and National Bank and downgrades Alpha Bank to Neutral. It prefers banks with the following key features:
a) A cheap source of funding (Piraeus, National) is among the main factors determining medium-term ROTE levels;
b) low NPEs and high NPE coverage levels (Ethniki, Eurobank, Piraeus) and,
c) With higher CET1 levels (National, Eurobank) creates room for higher growth and flexibility in dividends.
The new target price for Eurobank is set at 2.5 euros, up from 1.95 euros previously, a 32% increase.
For Piraeus, the new target price is 5.30 euros, a 35% rise from 4.70 euros previously.
The new target price for National Bank is 10 euros, up from 8.9 euros previously, representing a 34% upside.
For Alba Bank, the new target price is 1.95 euros from 2.11 euros, and a 19% upside.
Revised price targets for Greek banks imply an average P/TBV of 0.9x in 2025, Goldman notes.
After about a decade, Greek banks plan to pay their first dividend in 2024 (fiscal year 2023) and in 2024-2026 GS notes that they aim to move towards average European levels in 2026 with an average % and ROTE of around 12%, an average CET1 level of 18.4 in 2026. % and NPE ratio of 2.5%.
