Updating post 2Q26, upgraded guidance, some upside to consensus
Adj EPS guidance raised to >€1.40 (FY26E), our forecast already there
Q2 results beat slightly, while we are already factoring in the upgraded guidance of FY26E adj. EPS of >€1.40 (UBSe €1.45), having only made small changes to our modelling (trimmed by 1%). There appears to be some upside to consensus with Refinitiv adj. EPS at €1.37 and VA cons. pre results at €1.38. With the company accruing for a normal payout of 60%, there is upside to payout depending on M&A opportunities (we include a small special dividend of €150m in FY26). We see the CET1 ratio at 16.8% by year-end, leaving it with substantial capital flexibility to do bolt-on acquisitions or increase payout further.
Excess capital deployment a focus area
With a CET1 ratio of 17.3% after distribution accrual, NBG has about €1.8bn of excess capital while it generates more organic capital than consumed by RWA growth. In 2Q26 it generated ~70bps of capital, of which 40bps was consumed by RWA growth, leaving 30bps of excess vs. a normal distribution accrual of ~40bps. Its plan indicates excess capital would be used for 1) special distributions (UBSe €150m in FY26), 2) bolt-on-acquisitions and value accretive M&A (the Allianz transaction and Dromeus Capital real estate investment), and 3) the purchase of re-performing assets (there is about €80bn of loans outside of the banking industry of which ~15% are performing).
Strong credit trends, NII inflecting towards growth
NBG continues to show strong corporate credit growth trends with its preforming book increasing by €1.3bn in Q2 and €2.1bn in 1H26 vs. a FY26 target of >€3bn, with the performing corporate credit book growing by 4.6% qoq in Q2 following 2.6% qoq in Q1, and +12.7% yoy in FY25. With its NIM having stabilised at 2.73% in Q2 and expected to expand towards 2.80% in FY26, NII has started to accelerate, now expected to reach mid-single digit growth in FY26E (UBSe +6.6%), raised form low SDs, on track to achieve its medium-term targeted NII growth of ~7% pa.
Valuation: Re-rated, on P/TB of 1.6x, ROTE 19.7% (on CET1 of 13.5%)
Our two-stage GG derived price target is unchanged at €18.70 (Figure 3 within), based on a sustainable ROTE of 18.5%, COE 11.0%. The shares are on a FY27E PE of 9.7x on our numbers, still a 6% discount to European banks on 10.3x. It is a high return business model, currently delivering a ROTE of 20.3% (on a CET1 of 13%), with the lowest cost of deposits of Greek banks at 17bps.
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