Model Update, 20 Jul 2026 11:41:27 ET
CITI’S TAKE
We make very minor adjustments to our earnings model following the bank’s 2Q26 pre-close call which lead us to slightly increase forecast fee income, namely from strong wealth, asset management and brokerage fees, and net interest income (NII) given tailwinds from higher rates, tempered by slightly lower trading income despite indications on the pre-close that the trading loss booked in 1Q26 of €18m has ‘fully recovered’ in 2Q26. This leads us to increase our underlying EPS estimates by 0.5% this and next year, by 0.3% in 2028 and 0.2% in 2029 while our underlying EPS estimates remain unchanged in 2030. We leave our target price unchanged at €11.35 and reiterate our Buy rating on the shares.
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Pre-close call – Management flagged the following on its 2Q26 pre-close call: NII is expected to continue its growth, benefiting from positive tailwinds from base rates, suggesting potential upside to the bank’s FY26 NIM target of 2.1%. Trading income has fully recovered from the negative impact experienced in 1Q26. Costs in 2Q26 are expected to be similar to 1Q and are on track to meet the bank’s full-year target. Cost of risk for 2Q26 is set to confirm the FY26 target of 50bp. Asset quality trends remain very good, with the non-performing exposure (NPE) ratio holding largely stable. The bank indicated that one-offs impacting the 2Q26 result will be ‘minimal’, namely a few millions for some CSR actions and a few millions related to the recent Supreme Court decision on the Katseli law. Loan growth in the first half of the year is consistent with the bank’s full-year growth target of c8%-9%. The bank saw a strong recovery in deposits during 2Q26, in line with the broader Greek market, primarily led by increased capital markets activity from corporates. The bank guided to a marginal qoq increase in the CET1 ratio with solid profitability and a SRT benefit of approximately 20bp, offset by dividend accrual, accelerated DTC amortisation, capital consumption from increased participation in the Trastor and Snappi subsidiaries, and 1H AT1 coupon costs. The bank continued to guide to be above its 13% CET1 target by year-end.
2Q26 Results Preview – Piraeus reports 2Q26 results on 29 July. We expect the bank to report a reported net profit pre-AT1 expense of €311m (+13% yoy, +11% qoq) and an underlying profit pre-AT1 expense of €316m (+7% yoy, +10% qoq). We forecast +2% yoy (+1% qoq) growth in NII to €485m, a +25% yoy (-2% qoq) increase in fees to €207m (of which €20m is Ethninki Insurance or the same as booked in 1Q26), and trading & other income of €30m in the quarter (following a loss of €31m in 1Q26). We forecast OPEX of €240m (+13% yoy, -2% qoq) and a total provision charge (inclusive of servicing and credit protection fees) of €54m (-42% yoy,+24% qoq). We have assumed negative one-offs of -€6m pre-tax, -€4m post tax. We expect underlying EPS (inclusive of pro-rata AT1 coupon expense of €18m in the quarter) of €0.24 (+7% yoy, +11% qoq). ROTE (reported) is expected to increase to 15.3% in 2Q26 from 14.2% in 1Q26 and 14.1% in 2Q25. We expect CET1 to rise by 10bp qoq to 12.7%.
Correction: In a previous version of this note, we incorrectly indicated that the CET1 ratio is expected to rise by 10bp qoq to 14.7%, when in fact it is expected to rise 10bp qoq to 12.7%.
Valuation
We use a warranted equity valuation model approach to value Piraeus. Our model assumes a sustainable ROTE of 16%, CoE of 11% and growth rate of 3% in 2030, which we assume are sustainable. This leads us to value the bank at 1.62 2030 forecast TBVPS, which we discount back to 12 months today, including discounted expected dividends, arriving at a target price of €11.35, excluding 12-month expected dividend per share of €0.40.
Risks
A number of risks could prevent the shares from achieving or exceeding our target price. These include:
(1) Worse-than-expected revenue development trends, driven by margins, volume trends, and the ability to impose fees on clients;
(2) Inabililty to achieve planned cost savings from internal efficiency measures and reduction in NPEs;
(3) Higher-than-expected provisions due to macro uncertainties and/or new regulatory requirements;
(4) Execution risk associated with planned NPE reduction; and
(5) Potential negative impact of political or regulatory initiatives.
(6) Better or worse execution of M&A and/or development of their digital bank, Snappi.
(7) A more prolonged conflict in the Middle East than anticipated with negative implications for energy prices, inflation, and business confidence.
