2Q26 results: Solid +6% beat driven by strong core revenue momentum
29 Jul 2026 05:06:47 ET
CITI’S TAKE
Piraeus Bank reported 2Q26 net profit of €336m (+21% qoq, +22% yoy) or +6% vs. company collected consensus and +8% vs. Citi forecast. Normalised profit excluding one-offs was slightly higher at €340m. 2Q26 reported ROTE stood at 16.7%, up from 14.3% reported in 1Q26. The beat was driven by better revenues, particularly fee income (including Ethniki Insurance revenue) and better net interest income (NII), tempered by slightly higher OPEX and provisions than expected. The bank increased its NIM and fee guidance but this is tempered by slightly higher targeted cost of risk and the c€0.9 EPS target for this year was unchanged. Solid result.
PPOP — Pre-provision operating profit in 2Q26 grew +31% qoq, +14% yoy or +10% vs. company collected consensus and +13% above Citi estimates. This was driven primarily by better revenue growth (+19% qoq, +15% yoy, +7% vs. consensus, +9% vs. Citi) from better fees (+19% qoq, +52% yoy, +19% vs. consensus, +21% vs. Citi) and better NII (+6% qoq, +7% yoy, +3% vs. consensus, +5% vs. Citi) as well as a strong turnaround qoq in trading revenue (€28m in 2Q26 vs. -€31m in 1Q26). Ethniki Insurance contributed €46m of revenue in the quarter (included in fee income), up from €20m in 1Q26. Ex. Ethniki fee income grew +7% qoq, positively impacted by strong loan fees (of which c€10m is non-recurring RRF related) and better card fees. OPEX declined -1% qoq (+15% yoy) and came in +3% above consensus and +2% above Citi forecast. Ethniki Insurance OPEX amounted to €11m or unchanged qoq.
Asset quality — The NPE ratio increased c10bp qoq to 2.2% while provision coverage declined to 67% from 70% at end Mar-26. Organic cost of risk increased to 59bp in the quarter, up from 32bp in 1Q26. The bank increased its cost of risk guidance for this year to c60bp, up from c50bp previously.
Loans, funding, capital — Net loans grew +5% qoq, +11% yoy while deposits increased +9% qoq and yoy. Net credit expansion amounted to €1.8bn in 1H26 and the bank indicated that it was on track to exceed its target of >€3bn net credit expansion this year. The CET1 ratio expanded c20bp qoq to 12.8% (inclusive of a 57% dividend accrual). The bank indicated that it expected to outperform its c13% CET1 target for this year.
Outlook — Management increased its NIM guidance to 2.2% driven by strong loan growth and higher rates, up from 2.1% previously, and increased its fee income target to c€850m or >0.9% of assets from c0.9% of assets previously. The organic cost of risk target was raised to c60bp up from c50bp previously. The CET1 target was changed to >13% from c13% previously. All other targets were unchanged including the EPS target at c€0.9.
Implications — A strong result driven by strong revenue growth. Particularly encouraging was the strong contribution from Ethniki Insurance. We expect upward revisions to consensus earnings estimates following the result, despite management’s unchanged EPS target.
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.
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