Goldman Sachs Upgrades Greek Banks’ Target Prices

Goldman Sachs is bullish on Greek banks, assessing that their shares will continue to rally, despite a 58% rise since the start of the year.

The American-based multinational investment bank upgraded its target prices for the country’s systemic banks, suggesting a substantial margin of increase ranging between 9% and 23%.

More specifically, Goldman Sachs set a new target price for Alpha Bank at €3.7 from €2.7, for Piraeus Bank at €7.4 from €6, for the National Bank of Greece (NBG) at €13.1 from €10.7, and €3.3 from €2.9 for Eurobank. The bank recommends “buy” for the first three Greek banks and “neutral” for Eurobank.

The recent sharp rally in Greek banking stocks is the result of a combination of Greece-specific factors and a broader reassessment of European banks, according to analysts. Goldman Sachs justifies its report by highlighting recent forecasts and management commentary from Greek banks that support the continuation of strong trends across key financial indicators.

The report underscores a growing investor confidence in Greek banks’ structural improvements and resilience, even in a shifting monetary policy landscape.

Goldman’s updated outlook on the Greek banking sector notes:

– ROTE (Return on Tangible Equity) is projected at around 14% for the period 2025–2029, aligning with the EU average, signaling solid profitability prospects for Greek lenders.

– Dividend payout ratios are expected to rise, with all major Greek banks now guiding for a minimum payout of 50% starting in 2025—an increasingly attractive proposition for investors.

– Further reductions in non-performing exposures (NPEs) are anticipated, with levels forecast at around 3% in 2025 and declining to approximately 2% during 2026–2029, bringing them in line with European peers.

– CET1 capital ratios are expected to remain robust, at around 16–17% over 2025–2029, well above management targets of 14%, reflecting solid capital buffers.

– Loan growth is projected to be strong, averaging around 8% annually for 2025–2027, a rate that significantly outpaces the sluggish credit expansion expected in the broader European banking sector.

While the European Central Bank’s interest rate forecasts have moderated compared to what Greek banks had anticipated earlier in the year, Goldman Sachs believes this will be offset by stronger-than-expected loan growth, higher revenue contributions from securities, and better-than-anticipated net interest margin performance.

Source: pagenews.gr