For the first time since the fiscal year 2008 the Greek banks they are sending their shareholders to the “treasury” this summer. They will distribute dividends which amount to the height of 814 million eurossealing the return of Greek banks to normality, having traveled a difficult path for the Greek banking system.

  • H Eurobank will give a total dividend of 342 million euros,
  • the National 332 million euros,
  • the Piraeus will pay a dividend of 79 million euros and
  • the Alpha Bank 61 million euros.

Foreign and domestic investment houses are increasing their target prices for Greek banks following the first quarter results and the ECB’s decision to give the green light to dividend payments for the first time in 16 years.

Analysts see the dividend distribution as a positive catalyst for the course of banking shares and estimate that it will “unlock” value.

The positive outlook for the sector is due to the optimistic business plans presented along with the 2023 results, which forecast resilience in profitability for the years 2024-2026, despite falling interest rates and dividend distribution from 2023 earnings, which is expected to increase in the future.

The dividend yield of Greek banks will reach 10% in 2026, as it will align with that of European competitors, Jefferies estimates. Although dividends start at low levels (10-30% of 2023 profits), by 2026 they are expected to reach the European average of 50%. JP Morgan’s view is that distribution ratios will align with European averages by 2025-2026.

Profitability

Banks are emerging strongly from the Greek debt crisis and are well positioned to capitalize on the strong macroeconomic recovery and credit cycle. Analysts see high upside margins in conservative, as they call them, three-year business plans.

Another strong quarter of profitability is coming for the Greek banks, which from next week will start announcing the results for the second quarter of 2024.

Banks are on track for strong profitability in the first quarter of 2024, with analysts estimating they will exceed their full-year targets.

The total profits of the four systemic banks amounted, in the first quarter of 2024, to 1.09 billion euros, compared to 788 million euros in the corresponding quarter of 2023, increased by +38.4%.

Ethniki presented a net profit of 358 million euros (+38%), Eurobank 287 million euros (+21.4%), Piraeus 233 million euros (+29.4%) and Alpha Bank 211 million euros (+89.91%).

Upgrade

All Greek banks have been upgraded to investment grade, two levels above the minimum. Recently, Standard & Poor’s and Moody’s gave a strong vote of confidence to the banks by proceeding to upgrade the Greek

As S&P notes, the active clean-up of the Greek banking system’s balance sheets is coming to an end, as Greek banks achieve a full post-crisis recovery and begin to benefit from the positive economic momentum in Greece.

Banks in Greece have also individually, according to the house, made significant progress towards improving profit generation and the resilience of their business model. Three of the four largest Greek banks are already showing non-performing exposure (NPE) ratios of 3%-4% at the end of Q1 2024, and S&P expects further improvement by the end of 2026.

They are raising the bar for banking stocks

Foreign and domestic investment houses are raising target prices for Greek banks in anticipation of another strong quarter and the ECB’s decision to give the green light to dividend payments for the first time in 16 years, while they consider management guidance upgrades almost certain of the banks.

The coverage of the Greek banks was started by the powerful Swiss investment house, UBS, declaring itself a “buyer” of all four systemic banks with high price targets. It gives a target price for Alpha Bank at 2.30 euros, for Eurobank at 2.60 euros, for National Bank at 11 euros and for Piraeus at 5.50 euros.

The target prices given by JP Morgan are 2.40 euros for Alpha Bank, 2.40 euros for Eurobank, 8.30 euros for National Bank and 5.35 euros for Piraeus.

Goldman Sachs gives a target price of 10 euros for Ethniki, 5.30 euros for Piraeus, 1.95 euros for Alpha and 2.5 euros for Eurobank.

Jefferies confirms its buy recommendations for the shares with a target price of 2.60 euros for Alpha Bank, 10.35 euros for Ethniki, 5.25 euros for Piraeus and 2.70 euros for Eurobank.

Eurobank Equities upgrades the target price for Piraeus to 5.78 euros from 5.40 euros. For Alpha Bank the target price is 2.41 euros and for National Bank 10.37 euros.

Axia reiterates its “buy” recommendations for the four Banks. He increases the target prices for Alpha Bank to 2.50 euros, Eurobank to 3.00 euros, National Bank to 10.50 euros and Piraeus to 5.30 euros.

Euroxx maintains “overweight” recommendations, giving a target price of 2.5 euros for Eurobank, 9.8 euros for National Bank, 2.4 euros for Alpha Bank and 5.4 euros for Piraeus.

NBG Securities has raised its target prices for Greek banks, maintaining its outperform recommendations. The new target prices are 2.50 euros for Alpha Bank, 2.85 euros for Eurobank and 5.30 euros for Piraeus.