Model Update/CITI’S TAKE
We make minor adjustments to our earnings model, revising upwards our underlying EPS estimates by +2% this year and +1% next year (they remain unchanged in FY28). The key driver of the upgrade is better net interest income (NII) driven by higher rates, as well as slightly higher forecast fee income given strong capital market trends. We leave our target price unchanged at €5 and reiterate our Buy rating on the share.
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2Q26 preview – Eurobank reports 2Q26 financial results next Thursday, 30 July. We expect an underlying net profit before minorities and before AT1 coupon cost of €377m (+8% QoQ, +4% YoY); our expectation for reported net profit after minorities and before AT1 coupon cost is €374m (+13% QoQ, –1% YoY). Our ROTE forecast is 15.7%, up from 14% in 1Q26. We expect good volume growth and the tailwind from higher rates to drive +2% QoQ growth in NII to €674m. We forecast +8% QoQ growth in fees to €219m on the back of strong loan volumes and strong capital market activity, as well as more muted trading and other income of €8m, down from €11m in 1Q26. We forecast flat opex at €330m over the quarter. We also forecast a +3% QoQ increase in loan loss provision to €79m. We expect modest one-offs of €3m related to provisions linked to the recent Supreme Court ruling on “Katseli” restructured mortgages in the quarter. We expect gross loans to expand +2% QoQ, while deposits should grow +1% QoQ. We expect the CET1 ratio to remain stable at 15.4% over the quarter.
Eurobank Valuation
We use a Warranted Equity Valuation (WEV) approach to valuing Eurobank adjusted for excess equity assuming a CET1 of 14% is adequate longer term. Our model assumes a sustainable excess equity adjusted ROTE of 16.5%, a COE of 11% and a growth rate of 3%. This drives our target price of €5.00. We note our target price excludes 12-month forecast DPS of €0.21.
Risks
A number of risks could prevent Eurobank’s share price from achieving our target price:
(1) Better- or worse-than-expected revenue development trends, driven by margins, interest rate developments, volume trends, ability to impose fees to clients, changes to the competitive environment as well as domestic and global macro conditions.
(2) Inability to achieve planned cost savings from internal efficiency measures and reduction in NPE related management costs.
(3) Higher/Lower provisions due depending on performance of the economy.
(4) Unexpected regulatory initiatives that impact earnings.
(5) Better or worse execution of recent M&A.
If the impact on the company from any of these factors differs from our base case expectations, the stock could have difficulty achieving our target price or could increase more than we expect.
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