JP Morgan is now moving toward a distinctly more positive reading of Greek banks, seeing Greece transition from the period of balance sheet repair into a new phase of growth and convergence with the rest of Europe. The American bank considers that Greece's strong macroeconomic environment, clean bank balance sheets, particularly robust deposit base, and high market concentration support its positive view of the sector over a medium-term horizon. Despite the fact that after several years of outperformance the large discount of Greek banks relative to European peers has largely closed, JP Morgan points out that Greek equities in the banking sector continue to trade at an approximate 10% discount compared to more comparable lenders in Southern and Central Eastern Europe, while simultaneously demonstrating higher earnings growth. JP Morgan maintains an Overweight rating for all four Greek banks, estimating upside potential of roughly 20%-30%, with Eurobank and Piraeus standing as its preferred top choices.
Robust growth for Greek banks
According to JP Morgan, Greek lenders have now left behind the majority of their balance sheet restoration efforts and are entering a multi-year growth phase. The American bank forecasts a 12% compound annual growth rate in earnings per share (EPS CAGR) for the 2025-2028 period, driven primarily by 8%-10% loan growth, higher net interest margins (NIMs), and double-digit fee revenue expansion. Based on these projections, Greek banks can sustain return on tangible equity (ROTE) at mid-teens levels throughout the entire macroeconomic cycle. At the same time, the inclusion of the sector in the SX7E index is expected, according to JP Morgan, to significantly broaden the investor base for Greek institutions. Greece will simultaneously remain in the MSCI Emerging Markets index until May 2027, creating an unusual period during which investor exposure will coexist across both emerging and developed market benchmarks.
The Greek stock market takes the next step toward Europe
JP Morgan highlights that Greek shares are entering, during the September rebalancing, the broader universe of the Euro STOXX and STOXX Europe 600 indices, marking one of the final steps toward full market re-convergence with developed European markets. JP Morgan attaches particular importance to the inclusion of Greek lenders in the SX7E index, estimating that Greek banks will move from off-benchmark exposure into an investment universe where they are systematically tracked by a far wider pool of European banking sector investors. JP Morgan notes that its analysis is specifically addressed to new investors, re-evaluating the fundamental metrics of the industry and comparing Greek banks with regional peers regarding macro conditions, credit growth sustainability, asset quality, and valuation multiples.
Earnings estimates raised for 2026-2028
JP Morgan is implementing significant upward revisions to its estimates for the adjusted net profits of Greek financial institutions for the 2026-2028 period. For Alpha Bank, it increases its estimates by 3%, 9%, and 4% respectively for the years 2026, 2027, and 2028. For Eurobank, the upward revisions amount to 8%, 8%, and 7%. For National Bank of Greece (NBG), the increases stand at 6%, 9%, and 9%. For Piraeus Bank, estimates are raised by 8%, 9%, and 6%. These revisions are mainly driven by higher net interest income (NII), as JP Morgan incorporates into its forecasts an average three-month Euribor of 2.75% for 2027 and 2.50% for 2028, along with stronger growth in fee revenues. JP Morgan estimates that Eurobank and Piraeus will post the highest returns, with ROTE around 17% in 2028, while NBG will stabilize above 15% by utilizing its excess capital. For Alpha Bank, it forecasts a ROTE of around 13.5% as the expansion of fee income continues. On average, JP Morgan's earnings forecasts are 6%, 4%, and 1% above consensus figures.
The large discount has narrowed – but not entirely
JP Morgan points out that Greek banks have staged a powerful rally, with the sector gaining 41% year-to-date against a 21% rise for the SX7E index. Despite this rally, Greek banks are currently trading at 9.0 times estimated 2028 earnings (P/E) and 1.4 times tangible book value (P/TBV), delivering a 12% EPS CAGR and a 16.0% ROTE in 2028. For core European banks, JP Morgan assigns a valuation of 9.0 times P/E and 1.6 times P/TBV, with an 18.5% ROTE. However, the comparison with Southern European and Central Eastern European banks provides far greater support for Greek bank valuations. Peer banks trade at 10.2 times 2028 earnings for an EPS CAGR of just 8%, meaning that Greek banks still display a discount of approximately 10%, despite offering higher per-share earnings growth.
Eurobank and Piraeus in focus
JP Morgan maintains an Overweight stance on all four Greek banks, with Eurobank and Piraeus Bank sitting at the top of its preference list. For Eurobank and Piraeus, it calculates upside margins of 30% and 28% respectively, followed by Alpha Bank at 21% and National Bank of Greece at 19%. JP Morgan rolls its target prices forward to December 2028 from December 2027, now valuing the banks using a cost of equity (COE) of 10%. Additionally, it separately recognizes the value of distributable capital, adjusted for deferred tax credits (DTC), above the 13% CET1 target. For NBG, this adjustment adds €1.10 per share to JP Morgan's valuation target.
Risks identified by JP Morgan
Despite its bullish stance, JP Morgan also outlines a series of risk factors facing the Greek banking sector. Key downside risks include lower-than-expected credit expansion, margin compression, potential delays in broadening fee income streams, as well as risks associated with M&A integration. Finally, particular attention is drawn to Alpha Bank's planned Investor Day on November 5, which JP Morgan highlights as an event worth watching for market participants. The overall picture described by JP Morgan is that of a Greek banking market transitioning from restructuring to expansion, backed by stronger profitability, high returns on capital, and gradual integration into the developed European investment universe.
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