Autonomous Research Warns Greek Bank Rally Entering Maturity Phase

Autonomous Research has issued a more cautious outlook on Greek bank stocks, warning that much of the sector’s optimism has already been reflected in current valuations.

The independent research and analysis firm noted that, while fundamentals remain strong, the rally that lifted the country’s banking sector through 2024 and 2025 appears to be entering a mature phase.

Following a recent field visit to Athens, the firm concluded that “the Greek banking story has entered a phase of maturity, with valuations now reflecting a large part of the positive picture.” While meetings with bank executives and institutional stakeholders highlighted stable macroeconomic conditions and healthy profitability, Autonomous Research expressed reservations about further upside potential for the shares.

According to the report, Eurobank is the only major Greek bank still showing a meaningful upside potential of around 9%, whereas the valuations of other banks are considered either fully priced or slightly overvalued.

The firm maintains an Outperform rating for Eurobank, setting a target price of €3.82. It holds a Neutral rating for both the National Bank of Greece at €13.40 and Piraeus Bank at €7.30, while assigning an Underperform rating to Alpha Bank, with a target price of €2.76.

Based on market prices as of October 16, the potential upside stands at 9% for Eurobank, 1% for National Bank of Greece, 2% for Piraeus Bank, and a negative 21% for Alpha Bank.

This, the firm explained, “reflects our view that the market has already discounted most of the positive developments.”

The report also highlighted that net interest income is stabilising, with prospects of a modest recovery from 2026 onward. Bank executives cited narrowing corporate spreads, down by six to seven basis points per quarter, as evidence of improved country risk and growing market competition.

On the revenue side, non-interest income continues to expand through asset management and bancassurance, while net lending growth in 2025 is expected to remain measured, driven mainly by projects funded under the Recovery and Resilience Facility (RRF), which can finance up to 50% of each investment’s value.

Regarding capital policy, management teams across major banks confirmed their intention to distribute more than 50% of net profits. For the National Bank of Greece, the payout ratio could reach as high as 60%, pending approval from the Single Supervisory Mechanism (SSM).

Autonomous Research further observed that the SSM appears “more inclined to selectively approve mergers and acquisitions rather than higher dividends,” a position likely to shape banks’ strategic focus heading into 2026.

For Alpha Bank, the firm acknowledged the successful partnership with UniCredit, citing “strong momentum in co-underwriting and joint placements,” though it remains cautious due to valuation concerns.

Eurobank, meanwhile, stands out as a key outperformer thanks to its expanding operations in Cyprus and Bulgaria. The adoption of the euro in Bulgaria in 2026 is expected to add approximately €20 million to Eurobank’s net interest income. Additionally, the acquisition of Eurolife by Fairfax, which holds an 80% stake, is projected to generate returns of between 12% and 18% by 2027.

In the case of Piraeus Bank, the report notes that the full benefit from its acquisition of National Insurance will likely materialize after 2028, with a target Common Equity Tier 1 (CET1) ratio of 13% and a 50% payout ratio.

On the macroeconomic front, discussions with the Ministry of Finance and the Public Debt Management Agency (PDMA) underscored a continued decline in public debt, cash reserves of around €46 billion, and a bond spread about 70 basis points below Italy’s, with the goal of converging toward Portugal’s levels. The Finance Ministry also projects that investments will add roughly 1.5 percentage points to GDP growth in 2026, while any further credit rating upgrades will depend primarily on institutional reforms, particularly within the judicial system.

Autonomous Research concluded that the Greek banking story “remains fundamentally attractive”, but cautioned that there is now limited re-rating potential after the strong rally of 2024–2025. The firm added that investor focus is shifting away from valuations toward capital distribution policies and banks’ ability to convert excess capital into sustainable growth. 

By fLEXI tEAM