Multinational investment bank UBS is “bullish” on the Greek banks, arguing it will benefit the most from the country’s wider economic growth cycle.
In this vein, the Swiss-based firm set the target price for Alpha Bank at €2.32, for Eurobank at €2.74, for National Bank of Greece at €11.20, and for Piraeus Bank at €5.70, maintaining its “buy” recommendation for all four stocks.
As UBS notes, the financial institution sector in Greece presents an appealing prospect for higher profit margins for prospective investors, with shareholders reaping the benefits.
Greek banks are well-positioned to benefit from an investment cycle facilitated by the European RRF (Recovery and Resilience Facility) funds and a strong macroeconomic recovery of the Greek economy. According to UBS, a strong corporate credit cycle is underway, with a forecast for loan performance growth at 8.7% annually (2023-2026).
Although net interest margins (NIM) are now acting as a drag, risk-hedging activities provide some protection, as does the steady growth in loans. The outlook for strong growth in fee and commission (F&C) income also supports revenue in the medium term.
Non-performing exposures (NPEs) have largely normalized, with UBS seeing any credit risks subsiding.
Greek banks are lucrative picks, UBS says, in the context of the Global Emerging Markets Risk Database Consortium (GEMs) and European banks.
The National Bank of Greece (NBG) is UBS’s top choice for quality exposure to the recovery story of Greece, with high profitability, a strong capital position, good credit quality, and the ability to return excess capital.
