HSBC Raises Profit Outlook for Greece’s Systemic Banks Amid Sustained ECB Rate Tightening

Global banking giant HSBC Holdings PLC has issued a new investment report projecting stronger profitability for Greece’s systemic lenders, arguing that the country’s banking sector remains one of the chief beneficiaries of the European Central Bank’s tighter monetary policy environment.

HSBC has revised its macroeconomic assumptions to include three additional ECB interest rate increases totaling 75 basis points during the second half of 2026. The banking group expects these hikes to be followed by a gradual easing cycle beginning in 2027.

Analysts at the international financial institution stressed that Greek banks continue to demonstrate exceptionally high sensitivity to changes in benchmark interest rates, a factor that is significantly reinforcing net interest income throughout the domestic banking system.

The report explained that the sector’s resilience is largely driven by the structure of Greek bank balance sheets. Between 45 percent and 60 percent of interest-earning assets are financed through low-cost sight and savings deposits, while most lending portfolios across the country are linked to variable floating interest rates.

Reflecting these conditions, HSBC upgraded its average earnings-per-share forecasts for Greece’s systemic lenders by 3 percent for 2026 and by 5 percent for 2027, while leaving its 2028 projections broadly unchanged.

At the same time, the group lifted its structural forecasts for net interest income by 2 percent for 2026 and by 4 percent for 2027.

Within the Greek banking landscape, Piraeus Bank and National Bank of Greece are expected to receive the most substantial upgrades because of their heightened balance-sheet exposure to changing interest-rate benchmarks.

HSBC maintained a “buy” recommendation on all four of Greece’s systemic banks, while specifically identifying Piraeus Bank and National Bank of Greece as its preferred equity picks.

“The greater structural exposure to moving yields accelerates earnings momentum and further heightens the investment appeal of future dividend distributions,” the investment team stated in the report.

Greek lenders continue to trade at an estimated 15 percent discount on a price-to-earnings basis relative to comparable banks across the Central and Eastern Europe, Middle East and Africa region, despite offering dividend yields that reach as high as 7 percent.

HSBC also revised upward its expectations for long-term profitability, forecasting a compound annual growth rate of 10 percent in earnings per share between 2025 and 2027, compared with an earlier projection of 8 percent.

The updated forecast positions Greece approximately 3.5 percentage points above the median growth rate for emerging-market banks in the wider region, reinforcing the country’s status as one of the strongest banking growth stories in the market.

The investment bank assigned a target share price of €4.85 for Alpha Bank and €18.45 for National Bank of Greece.

Meanwhile, analysts raised their target valuation for Eurobank Ergasias Services and Holdings to €4.80 from a previous estimate of €4.70.

Finally, HSBC increased its target price for Piraeus Bank shares to €12.10, up from the earlier valuation benchmark of €11.70.

By fLEXI tEAM