**Eurobank and Alpha Bank Lead Axia’s Banking Picks**
In a recent report, investment firm Axia-Alpha Finance has reiterated its bullish stance on Greek and Cypriot bank shares, forecasting continued outperformance in the sector. The firm has raised target prices for several banks while maintaining buy recommendations, highlighting Eurobank and the Bank of Cyprus as its top investment choices.
The report, shared by Greek business outlet Insider, emphasizes that the positive investment narrative surrounding Greek and Cypriot banks remains robust. This outlook is underpinned by improving fundamentals, resilient profitability, and favorable macroeconomic conditions. Since the beginning of the year, bank shares have surged by 24.7%, significantly outperforming the Euro Stoxx Banks Index, which has seen a rise of 12.9% during the same timeframe.
Axia attributes this strong performance to several key factors, including high and sustainable profitability, strong capital ratios, ample liquidity, and increasing shareholder distributions. Among the banks analyzed, Eurobank has emerged as the top pick, praised for its geographical diversification and extensive international presence. The firm has increased Eurobank's target price from €4.50 to €5.30.
The Bank of Cyprus has also been highlighted as a preferred investment due to its strong profitability and generous shareholder distributions. Axia has raised its target price for the Bank of Cyprus from €10.90 to €11.60.
Additionally, the National Bank of Greece has seen its target price increased to €17.50 from €14.50, with Axia describing it as particularly appealing for investors seeking dividend income. Piraeus Bank's target price has also been adjusted upward, now set at €10.60, up from €8.50, as Axia notes its potential for benefiting from the growth prospects of the Greek economy.
The report underscores a positive outlook for the banking sector, predicting that both macroeconomic conditions and institution-specific developments will bolster core revenues. Changes in monetary policy are expected to enhance net interest margins while supporting ongoing credit expansion. Recent acquisitions within the sector are anticipated to further accelerate growth in fee and commission income.
In light of these developments, Axia believes that bank management teams may revise their financial targets for 2026 upwards, which could lead to heightened profitability and increased distributions to shareholders. The firm has also adjusted its forecasts for the 2026 to 2028 period, taking into account recent business trends and the expectation of two interest rate hikes in 2026, which may be reversed in 2027. Pre-provision profits are projected to increase by 2.6%, while net profits are expected to rise by 2.9%.
Axia anticipates that the sector's average return on tangible equity (RoTE) will reach 16.0% in 2026, 16.1% in 2027, and 16.4% in 2028. Despite the notable rally in banking shares, the report argues that valuations remain attractive, with the sector currently trading at approximately 1.45 times tangible book value (P/TBV) and 9.4 times estimated earnings for 2027.
An additional factor that could further enhance the sector's appeal is the expected reclassification of the Greek stock market to a developed market status by S&P, Stoxx, and FTSE in September 2026. This upgrade is anticipated to attract increased capital inflows into Greek equities.
However, Axia has cautioned investors to consider a gradual approach to building their positions, given the substantial gains already realized and the potential for increased market volatility. The firm advises against making large allocations at once, suggesting a more measured investment strategy in light of the current market dynamics.
As the banking sector continues to evolve, the insights provided by Axia-Alpha Finance will be closely monitored by investors looking to capitalize on the opportunities presented by Greek and Cypriot banks. The combination of strong fundamentals, favorable macroeconomic conditions, and strategic management decisions positions these banks as compelling investment options in the current financial landscape.