1Q26 key trends on track, we see upside to conservative plans
We show the key quarterly trends in the charts inside, revealing solid trends with the banks on track to deliver their FY26 plans. As discussed in our post results notes (Alpha, Euro, NBG and Piraeus) key trends were largely in line with some beating on revenue, resulting in modest EPS upgrades for FY26, NBG by 5% as it beat on trading revenue (also upgrading medium-term EPS by ~5% on the bancassurance arrangement with Allianz). A key theme is accretive acquisitions that continue to increase ROTEs. We have also seen several voluntary staff reduction schemes in the quarter with associated costs below the line, underpinning cost efficiency going forward. The banks indicated the impact of the Middle East conflict remains limited with structural investment continuing. We remain buyers with slightly higher price targets (key figures in Figure 1 below).
Solid trends in Q1, strong corporate credit growth, sequential NII growth
Corporate credit trends remained strong in an usually seasonally subdued Q1 (+3.9% qoq, +14.4% yoy) with NBG standing out with +6.3% qoq (see Figure 2 inside). Benefiting from its regional franchise, Eurobank’s stronger NII growth trajectory off a higher base stands out (+2.6% qoq, +4% yoy, Figure 19). NIMs have started to stabilise (Figure 25), although Piraeus the exception with further compression in Q1 (Figure 25). Fee income generation remained robust, calling out fees growth of Piraeus (+32% yoy) and Alpha (+30% yoy).
Plans look conservative, accretive acquisitions to start to boost EPS
A key trend is continued acquisitions that are EPS and ROTE accretive, revealing higher ROTEs over time. Alpha has 5 bolt-on acquisitions that would add >9% to EPS and >1.2% to ROTE by FY27E. We have also fine-tuned our modelling of the integration of Enthniki for Piraeus, which adds substantially to fee generation over time, while we think there is upside to our fee income forecast relatively to the other banks (Figure 24). We fine-tuned our modelling of Eurobank’s acquisition of 80% of Eurolife (included from Aug-26) and factored in NBG’s bancassurance agreement with Allianz, an attractive transaction, in our view.
Valuations attractive, remain positive on the sector, see further re-rating
The sector is on a PE of 8.1x (FY27E), a 13% discount to European banks. Greek banks look defensive in a higher rates environment, underpinned by structural investment in the economy. The loan books are diversified with tourism ~6% of loans and shipping ~8%. We see the most upside in Alpha at the moment as it has lagged the sector this year and is back to TNAV, while several acquisitions underpin strong EPS growth and a rising ROTE. We also think the higher rated names, NBG and Eurobank, are attractively valued considering the outlook, NBG offering continued high distribution potential and ROTEs, and Eurobank strong regional earnings delivery. Piraeus remains too cheap vs. its longer-term ROTE expansion potential, in our view.
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