According to a Deutsche Bank analysis, Greek and Cypriot banks are in a phase of strong operational momentum within an international environment that remains volatile and full of uncertainties. Despite external pressures, the banking sector is showing resilience and growth rates that stand out compared to the European average, creating a narrative that the market—according to the report—has not yet priced correctly. In fact, Deutsche Bank is raising its price targets. For Alpha Bank, the new price target is at 4.80 euros, up from 4.45 euros previously; for Bank of Cyprus, it is at 11.25 euros, up from 10.40 euros; for Piraeus Bank, it is at 10.15 euros, up from 8.95 euros; for Eurobank, it is at 5 euros, up from 4.35 euros; and for the National Bank of Greece, it is at 17.10 euros, up from 15.95 euros.
Strong loan growth and resilient revenues
The picture being recorded is that of a banking market with intense credit expansion, where business financing is growing at double-digit rates and supporting the overall dynamics of the sector. This, according to Deutsche Bank, leaves room for outperforming current estimates. At the same time, net interest income is stabilizing at satisfactory levels, while fee income is strengthening at a faster pace, forming a higher-quality revenue mix.
Improvement in efficiency and normalization of risks
At an operational level, the sector is showing high efficiency, while asset quality continues to improve, now moving toward more "normalized" levels. This evolution strengthens the visibility of earnings and creates a more stable foundation for valuations, even within an uncertain international environment.
The market "ignores" the fundamentals
Despite the positive performance, Greek and Cypriot banks continue to trade at a significant discount compared to European banks. Deutsche Bank attributes this undervaluation mainly to entrenched perceptions of the past and the confusion that still exists between "emerging" and "developed" markets. However, it emphasizes that current fundamental data do not justify such a discrepancy to this extent.
Capital, dividends, and re-rating prospects
The strengthening of capital ratios, the potential for higher distributions to shareholders, and share buybacks create, according to the report, an environment that could lead to a further re-rating of the sector. The combined picture of strong profitability and capital adequacy reinforces the investment narrative.
Eurobank at the top of choices
At the level of individual banks, Deutsche Bank maintains a positive stance on all Greek and Cypriot banks it covers, with Eurobank standing out as the top pick due to its acquisition strategy and strong profitability. It is also positive regarding Alpha Bank, which is benefiting from operational improvement and potential synergies.
Piraeus, National, and Bank of Cyprus
Piraeus Bank is presented as a case of successful operational restructuring with an improved risk-return profile. The National Bank of Greece remains particularly strong in capital and operational performance, although it is considered less attractive due to a higher valuation. The Bank of Cyprus stands out as a consistently efficient "niche" player with the potential to exceed its targets.
A sector that has not yet been priced correctly
Deutsche Bank's overall conclusion is that Greek and Cypriot banks are in a phase of strong upgrading, which the market continues to undervalue. The result, according to the report, is an investment narrative that combines growth, stability, and significant room for further convergence with Europe.
www.bankingnews.gr
Σχόλια αναγνωστών