Greek Banks Backed by Strong Credit Expansion and Macro Out performance, Jefferies Says

A new report from Jefferies maintains a positive stance on Greek banks, keeping a buy recommendation for Alpha Bank, Eurobank, National Bank of Greece, and Piraeus Bank, arguing that the resilience of the Greek economy continues to support a favourable investment case.

According to Jefferies, Greek banks are operating within one of the most attractive macroeconomic environments in Europe. The report highlights that the sector still trades at roughly a 15% discount compared with the broader European banking sector, a gap the bank views as supportive of valuation upside.

The analysis, as relayed by Greek business outlet Newmoney, focuses on recent economic developments following Greece’s first-quarter 2026 GDP data. Jefferies notes that Greece continues to outperform the European Union in growth terms.

The country recorded real GDP growth of 2.1% in 2025, compared with 1.4% for the EU, marking a fifth consecutive year in which Greece has outpaced the bloc. The momentum persisted into 2026, with Greece posting 2.0% year-on-year growth in Q1, versus 0.7% for the European Union.

Jefferies attributes the main drivers of this expansion to investment and private consumption. The Bank of Greece is cited as projecting GDP growth of around 2% for 2027–2028, even after the conclusion of NextGenerationEU funding in 2026.

The report also references comments from the governor of the Bank of Greece, who said the country is transitioning from recovery toward what he described as “strategic acceleration”, aiming for long-term convergence with the European Union by closing the investment gap and avoiding past macroeconomic imbalances.

On fiscal performance, Jefferies underscores Greece’s strengthened position, noting that it was among only five European countries to record a budget surplus in 2025. The surplus reached 1.7% of GDP, compared with an EU average deficit of 3.1%. The primary surplus stood at 4.9% of GDP.

For 2026, Jefferies expects continued fiscal strength, projecting a primary surplus of 3.2% of GDP. The report also highlights the government’s ability to deploy €0.8 billion in support measures after the strong 2025 outcome, aimed at mitigating pressures from higher energy costs.

Between January and April 2026, Greece’s primary budget balance exceeded expectations by €2.9 billion, reflecting stronger-than-anticipated revenues.

Debt reduction remains a central theme. Although public debt remains elevated at 146% of GDP, compared with 89% in the EU, Jefferies notes a significant downward trajectory over time. Greek debt has fallen by 40% since 2016 and by around 60% since 2020, supported by sustained economic growth and fiscal discipline.

Based on International Monetary Fund projections, Greece is expected to fall below Italy in the current year and below France by 2029, with the debt ratio forecast to decline to under 100% of GDP by 2035.

For the banking sector specifically, Jefferies identifies credit expansion as the most immediate channel of macroeconomic support. In April, total lending in Greece grew by 8%, while business loans increased by 11%, which the report highlights as the primary driver of credit growth.

These growth rates remain significantly above the European Union average, reinforcing stronger lending momentum in Greece.

Investment activity also continues to underpin the outlook. Investment rose by 8.9% in 2025 and is expected to increase by a further 8.8% in 2026. However, investment still accounts for only 17% of GDP, compared with 21% in the EU, suggesting further convergence potential ahead.

Additional support is expected from the Recovery Fund lending programme, under which Greece is allocated €18 billion. Of this, €5.8 billion has already been disbursed to final beneficiaries, alongside €3.9 billion in bank co-financing.

Jefferies concludes that the combination of stronger economic growth, improved fiscal discipline, declining public debt, and robust credit demand continues to position Greek banks favourably relative to their European peers.

By fLEXI tEAM