Eurobank remains Morgan Stanley’s top Greek bank pick

Morgan Stanley has updated its outlook for Greece’s major banks following their second-quarter results, raising price targets for Alpha Bank and the National Bank of Greece while maintaining a positive stance on the sector and favouring Alpha Bank, Eurobank and Piraeus Bank over the National Bank of Greece in terms of investment appeal.

In its latest report, the findings of which were shared by Greek business outlet Insider, the US investment bank raised its price target for Alpha Bank to €5.00 from €4.90 and increased its target for the National Bank of Greece to €17.60 from €17.20, while leaving its target for Eurobank unchanged at €4.90.

It also reiterated its ‘overweight’ recommendation for Alpha Bank and Eurobank and maintained an ‘equal-weight’ rating for the National Bank of Greece.

Morgan Stanley had previously increased its target price for Piraeus Bank to €11.50 from €11.30 while also retaining an overweight recommendation.

For Alpha Bank, the investment bank said it sees the greatest potential for positive surprises ahead of the lender’s investor day in November.

It believes management could present stronger profitability forecasts supported by higher fee income growth, synergies from acquisitions and a lower cost of risk.

Morgan Stanley also expects additional capital strengthening through further recognition of deferred tax assets and believes the bank could deliver higher shareholder distributions in the coming years without compromising its capital position.

Reflecting that outlook, the firm raised its earnings per share forecasts from 2027 onwards and estimates the shares still offer around 15 per cent upside, arguing that the market has yet to fully price in the prospects of Alpha Bank’s new business plan.

Operationally, it highlighted that Alpha Bank recorded the strongest loan growth among Greece’s banks during the second quarter, driven primarily by corporate lending, while also posting particularly strong deposit growth.

Morgan Stanley said Eurobank remains its preferred long-term investment story in the Greek banking sector despite trimming its 2026 earnings forecast because of delays in completing the Eurolife transaction.

At the same time, it increased its 2027 earnings estimates, citing stronger net interest income and a lower credit risk cost.

The report pointed out that Eurobank was the only Greek bank to substantially upgrade its 2026 lending growth target, while also recording a significant rise in deposits.

According to Morgan Stanley, that additional liquidity provides scope for further growth in net interest income over the coming years.

It also highlighted that Eurobank was the only lender to reduce both its stock of problematic loans and its non-performing exposure ratio on a quarterly basis, while simultaneously improving loan loss coverage.

The investment bank expects Eurobank to continue outperforming both market expectations and its own business targets, delivering among the strongest performances in Europe in terms of earnings growth, dividends and tangible book value growth.

Despite the stock’s strong performance, Morgan Stanley left its €4.90 price target unchanged and maintained its overweight recommendation.

For the National Bank of Greece, Morgan Stanley adopted a more cautious stance despite increasing its target price.

The report acknowledged the bank’s strong capital ratios, high coverage of problematic loans, robust liquidity and significant investment in technology, but argued these strengths are already reflected in its valuation.

Finally, Morgan Stanley said the next major catalyst for the bank will be how it deploys its excess capital, either through earnings-enhancing initiatives or higher shareholder distributions, adding that a more ambitious capital allocation strategy will be needed before the shares warrant a further significant re-rating.