Resilient tourism and corporate lending fuel growth for banking sector, says UBS

Greek lenders, some of which also operational in Cyprus, remain on course for strong growth despite geopolitical tensions in the Middle East and concerns over the tourism season, with UBS saying that resilient tourism trends and continued corporate lending expansion are supporting the sector’s outlook. In a recently published piece of analysis, the findings of which were shared by Greek business outlet Newmoney, the investment bank said the impact of regional instability on Greece’s economy and banking sector has so far been limited, based on the latest available tourism and lending data. The assessment draws on weekly international arrival figures at Athens International Airport, which UBS uses as a key indicator for the performance of the Greek tourism industry. According to data available up to June 8, 2026, international arrivals continue to rise on a seasonal basis, although growth has slowed significantly compared with recent years. Arrivals were up approximately 1.1 per cent year-on-year, compared with growth of around 12 per cent in 2025, 19 per cent in 2024, and 23 per cent in 2023. Even so, UBS pointed out that the trend has improved compared with April, when international arrivals were down by roughly 8 per cent year-on-year. The bank said the figures suggest that concerns surrounding the conflict in the Middle East have not yet translated into a meaningful deterioration in tourism demand. Bank executives have not reported signs of disruption UBS also highlighted comments made by Greek bank management teams during their second-quarter earnings presentations. According to the report, executives across the sector have adopted a reassuring tone regarding the impact of developments in the Middle East. The investment bank said lenders have not identified any negative effects on business loan demand or broader economic activity that could be linked directly to the regional conflict. This is particularly important, UBS said, because strong corporate credit expansion remains the principal driver of profitability for Greek banks over the coming years. As long as businesses continue to borrow and invest, the sector is expected to maintain healthy earnings growth despite external uncertainties. Tourism exposure remains relatively limited A central conclusion of the report is that, despite tourism’s importance to the Greek economy, the direct exposure of banks to the sector remains relatively modest. UBS estimates that tourism-related lending accounts for around 6 per cent of the total loan portfolios of Greece’s four systemic banks and approximately 8 per cent of their corporate lending books. Among the major lenders, Piraeus Bank has the highest exposure, with roughly 7.7 per cent of its loans linked to tourism. It is followed by Alpha Bank at approximately 6.7 per cent. For the National Bank of Greece, the equivalent figure stands at 4.7 per cent, while Eurobank has the lowest exposure at around 4.5 per cent. UBS argued that the broad diversification of loan portfolios provides an important layer of protection against sector-specific shocks. Across the four banks, housing and consumer lending represent approximately 28.2 per cent of total portfolios. Trade accounts for about 16 per cent, while manufacturing and financial services each contribute roughly 8.8 per cent. Shipping, another sector potentially exposed to developments in the Middle East, represents approximately 7.6 per cent of total lending portfolios. Although geopolitical tensions could theoretically affect maritime trade and shipping activity, UBS said banks continue to report strong performance from their shipping loan books and that overall exposure remains manageable. Buy rating maintained across the sector Against this backdrop, UBS reiterated its positive stance on the Greek banking sector and maintained its buy recommendation for all four systemic banks. The investment bank believes that continued growth in corporate lending, together with acquisitions being pursued across the sector, will continue to support earnings per share and returns on equity in the years ahead. In valuation terms, UBS sees the greatest upside potential in Piraeus Bank and Alpha Bank. The bank set a target price of €11.20 for Piraeus Bank, implying potential upside of around 20 per cent from current levels. For Alpha Bank, the target price stands at €4.90, representing potential upside of approximately 19 per cent. UBS set a target price of €18.20 for the National Bank of Greece and €4.70 for Eurobank. The investment bank’s overarching view remains that strong corporate credit demand, resilient tourism activity and limited direct exposure to sectors most vulnerable to geopolitical uncertainty continue to underpin the investment case for Greek banks.