**Morgan Stanley Raises Price Targets for Alpha Bank and National Bank of Greece**
In a recent report, Morgan Stanley has revised its price targets for two of Greece's major banks, Alpha Bank and the National Bank of Greece, following their second-quarter financial results. The investment bank has maintained a positive outlook for the Greek banking sector, highlighting its preference for Alpha Bank, Eurobank, and Piraeus Bank in terms of investment appeal.
Morgan Stanley raised its price target for Alpha Bank to €5.00, up from €4.90, while also increasing the target for the National Bank of Greece from €17.20 to €17.60. In contrast, the price target for Eurobank remains unchanged at €4.90. The firm continues to hold an ‘overweight’ recommendation for both Alpha Bank and Eurobank, while maintaining an ‘equal-weight’ rating for the National Bank of Greece.
The report, shared by the Greek business outlet Insider, indicates that Morgan Stanley sees significant potential for Alpha Bank ahead of its investor day scheduled for November. The bank's management is expected to present optimistic profitability forecasts, buoyed by anticipated growth in fee income, synergies from recent acquisitions, and a reduction in the cost of risk. Additionally, Morgan Stanley anticipates that Alpha Bank will strengthen its capital position through further recognition of deferred tax assets, enabling the bank to increase shareholder distributions in the coming years without jeopardizing its capital stability. The firm has also raised its earnings per share forecasts for Alpha Bank from 2027 onwards, estimating that the shares still offer approximately 15% upside potential, as the market has yet to fully recognize the implications of the bank's new business plan.
Operationally, Alpha Bank demonstrated the strongest loan growth among Greek banks in the second quarter, primarily driven by corporate lending, alongside robust deposit growth.
Morgan Stanley continues to favor Eurobank as its top pick in the Greek banking sector, despite slightly lowering its 2026 earnings forecast due to delays in the completion of the Eurolife transaction. However, the investment bank has increased its earnings estimates for 2027, attributing this to stronger net interest income and a reduced cost of credit risk. Eurobank was noted as the only Greek bank to significantly upgrade its 2026 lending growth target and also achieved a notable increase in deposits. Morgan Stanley highlighted that this additional liquidity positions Eurobank well for future growth in net interest income. Furthermore, the bank has successfully reduced its stock of problematic loans and improved its non-performing exposure ratio on a quarterly basis, while enhancing loan loss coverage.
Despite Eurobank's strong performance, Morgan Stanley has opted to keep its price target at €4.90 and maintain its overweight recommendation.
In contrast, Morgan Stanley has taken a more cautious approach regarding the National Bank of Greece, even after raising its price target. While the report acknowledges the bank's strong capital ratios, high coverage of problematic loans, robust liquidity, and significant investments in technology, it suggests that these strengths are already reflected in the bank's current valuation. The investment bank notes that the next major catalyst for the National Bank of Greece will be how it utilizes its excess capital, whether through initiatives aimed at enhancing earnings or increasing shareholder distributions. A more ambitious capital allocation strategy will be essential for the bank to justify a further significant re-rating of its shares.
In summary, Morgan Stanley's updated outlook reflects a nuanced view of the Greek banking sector, with a clear preference for Alpha Bank and Eurobank, while maintaining a more reserved stance on the National Bank of Greece. As the banks navigate their growth strategies and respond to market conditions, investors will be watching closely for developments in the coming months.