**Alpha Finance-AXIA Raises Bank of Cyprus Price Target Amid Positive Outlook for Greek Banking Sector**
Alpha Finance-AXIA has increased its price target for the Bank of Cyprus (BoC) from €11.60 to €12.30, reflecting the bank's strong profitability, robust capital position, and attractive shareholder returns. This adjustment is part of a broader revision of targets across the Greek banking sector, with the firm maintaining its "Buy" recommendations for BoC, Eurobank, National Bank of Greece, and Piraeus Bank.
The updated target for BoC suggests a potential total return of 25.7%, including dividends, based on share prices as of September 24. Alpha Finance-AXIA anticipates that BoC will deliver a dividend yield of 9.5% in 2026, rising to 10.8% in 2027 and 11.2% in 2028, positioning it among the highest yields in the European banking sector.
The investment case for BoC is primarily driven by its high profitability and strong capital base, along with its commitment to shareholder distributions. The brokerage has also raised its price targets for other Greek banks: Eurobank's target is now €5.70 (up from €5.30), National Bank of Greece's target is €19 (up from €17.50), and Piraeus Bank's target is €11.60 (up from €10.60). The Buy recommendation remains in place for all four banks, while Alpha Finance-AXIA has refrained from providing a recommendation or target price for Alpha Bank due to current restrictions.
Based on the same September 24 share prices, the brokerage estimates total potential returns, including dividends, of 27.9% for Eurobank, 25.7% for BoC, 21.6% for the National Bank of Greece, and 19.7% for Piraeus Bank. The revisions in targets are attributed to stronger earnings expectations, with Alpha Finance-AXIA forecasting a sector-wide return on tangible equity exceeding 16% from 2026 to 2028.
The firm has raised its revenue forecasts for the banking sector by approximately 4.1% for the three-year period, while estimates for pre-provision profit have increased by 5.5%, and net profit forecasts have been revised up by around 5%. These adjustments take into account the expectation that interest rates will remain elevated for an extended period, alongside stronger-than-anticipated fee income and updated guidance from bank management teams following second-quarter results.
Alpha Finance-AXIA also notes that profitability will be bolstered by factors beyond the interest rate cycle, including a continued reduction in non-productive assets and gradually decreasing capital burdens. Credit growth is identified as another key driver, with performing loans increasing by 11% year-on-year in the first half of 2026, and corporate lending rising by 12.4%. The brokerage expects corporate credit to continue growing at a rate of 9% to 11% in the medium term, particularly supported by investments in energy and infrastructure projects.
Furthermore, the firm anticipates that fees will become an increasingly significant source of bank earnings, projecting an average annual fee growth of 11.2% between 2026 and 2028. By 2027-2028, fees are expected to account for around 21% of total revenue, as banks expand into wealth management, insurance, and investment banking, thereby reducing their reliance on net interest income.
For Eurobank, Alpha Finance-AXIA describes its operational platform as the most diversified among Greek lenders, with activities spanning Greece, Cyprus, and Bulgaria. The brokerage forecasts Eurobank's net profit to reach €1.64 billion in 2026, increasing to €1.85 billion in 2027 and nearly €1.99 billion in 2028, with return on tangible equity projected between 17.1% and 17.8%.
At the National Bank of Greece, the firm highlights its strong capital position and potential for higher shareholder distributions, forecasting net profit of €1.27 billion this year, €1.46 billion in 2027, and €1.55 billion in 2028. The dividend yield is expected to rise from 6.9% in 2026 to 8.4% by 2028.
For Piraeus Bank, Alpha Finance-AXIA points to domestic lending growth and the contribution of Ethniki Insurance to fee income. The net profit forecast for Piraeus Bank stands at €1.24 billion in 2026, €1.44 billion in 2027, and €1.55 billion in 2028, with return on tangible equity expected to hover around 17% from 2027 onwards.
These revisions come on the heels of a strong performance by Greek banking shares, with the sector index rising by 37.7% since the beginning of 2026, outperforming European banks. Alpha Finance-AXIA attributes this growth to improved fundamentals and capital flows linked to Greece's transition to developed-market status. However, the firm cautions that valuations have now aligned more closely with European peers, suggesting a potential period of consolidation or mild correction following the recent rally, while maintaining a positive medium-term outlook.
For 2027, the Greek banking sector is projected to be valued at approximately 1.5 times tangible book value and 9.5 times earnings, with a return on tangible equity forecasted to exceed 16% and average annual earnings-per-share growth expected to be around 11% from 2026 to 2028.