Alpha Finance-AXIA has raised its price target for Bank of Cyprus (BoC) to €12.30 from €11.60, citing strong profitability, a solid capital position and shareholder returns as it lifted its targets across the Greek banking sector.

The investment banking and brokerage firm maintained its Buy recommendation on BoC, Eurobank, National Bank of Greece and Piraeus Bank, with the Cypriot lender offering a potential total return of 25.7 per cent, including dividends, based on September 24 share prices.

According to Newmoney, Alpha Finance-AXIA now expects BoC to deliver a dividend yield of 9.5 per cent in 2026, rising to 10.8 per cent in 2027 and 11.2 per cent in 2028, among the highest in the European banking sector.

The investment case for the Cypriot lender rests mainly on its high profitability, strong capital base and distributions to shareholders, the brokerage said.

The revised BoC target comes as Alpha Finance-AXIA also lifted its target for Eurobank to €5.70 from €5.30, National Bank of Greece to €19 from €17.50 and Piraeus Bank to €11.60 from €10.60.

Its Buy recommendation was retained for all four banks. The brokerage is currently restricted on Alpha Bank and therefore publishes neither a recommendation nor a target price for the lender.

Based on September 24 prices, Alpha Finance-AXIA estimated total potential returns, including dividends, of 27.9 per cent for Eurobank, 25.7 per cent for BoC, 21.6 per cent for National Bank and 19.7 per cent for Piraeus.

The revisions primarily reflect stronger earnings expectations, with Alpha Finance-AXIA now forecasting sector-wide return on tangible equity above 16 per cent over 2026-2028.

Its revenue forecasts for the sector over the three-year period have been raised by about 4.1 per cent, while estimates for pre-provision profit are up 5.5 per cent and net profit forecasts by around 5 per cent.

The brokerage has factored in interest rates remaining higher for longer, stronger-than-expected fee income and revised guidance issued by bank management teams following second-quarter results.

It also expects profitability to be supported by factors beyond the interest-rate cycle, including a continued reduction in non-productive assets and gradually lower capital burdens.

Credit growth remains another important driver. Performing loans increased 11 per cent year on year in the first half of 2026, while corporate lending rose 12.4 per cent.

Alpha Finance-AXIA expects corporate credit to continue expanding by around 9 to 11 per cent over the medium term, supported in particular by investment in energy and infrastructure and the financing needs associated with those projects.

At the same time, fees are becoming a larger source of bank earnings. The brokerage forecasts average annual fee growth of 11.2 per cent between 2026 and 2028, with fees expected to account for around 21 per cent of total revenue by 2027-2028.

Expansion into wealth management, insurance and investment banking is expected to gradually reduce reliance on net interest income.

For Eurobank, Alpha Finance-AXIA described its platform as the most diversified among the Greek lenders, with operations in Greece, Cyprus and Bulgaria.

It expects Eurobank to report net profit of €1.64 billion in 2026, rising to €1.85 billion in 2027 and almost €1.99 billion in 2028, with return on tangible equity of between 17.1 and 17.8 per cent.

At National Bank of Greece, the brokerage pointed to its strong capital position and scope for higher shareholder distributions. Net profit is forecast at €1.27 billion this year, €1.46 billion in 2027 and €1.55 billion in 2028.

Its dividend yield is projected to rise from 6.9 per cent in 2026 to 8.4 per cent by 2028.

For Piraeus Bank, Alpha Finance-AXIA highlighted domestic lending growth and the contribution of Ethniki Insurance to fee income.

Net profit is forecast at €1.24 billion in 2026, €1.44 billion in 2027 and €1.55 billion in 2028, while return on tangible equity is expected to be around 17 per cent from 2027.

The revisions follow a strong year for Greek banking shares. The sector index had risen 37.7 per cent since the start of 2026 through September 22, outperforming European banks, according to the brokerage.

Alpha Finance-AXIA attributed the performance to stronger fundamentals as well as capital flows linked to the Greek market’s transition to developed-market status.

However, it said valuations have now closed much of their previous gap with European peers, leaving room for a period of consolidation or a mild correction following the rally, while maintaining its positive medium-term view.

For 2027, the sector is valued at about 1.5 times tangible book value and 9.5 times earnings, with return on tangible equity forecast above 16 per cent and average annual earnings-per-share growth of around 11 per cent between 2026 and 2028.