Morgan Stanley favours Greek banks, with Alpha Bank its top pick

Athens, Greece. Morgan Stanley has reaffirmed its favourable assessment of Greek banks, naming Alpha Bank its preferred investment and pointing to Eurobank’s profit prospects. The US investment bank said robust lending growth, resilient interest earnings and the potential for larger shareholder payouts could support additional gains in banking shares.

Price targets unchanged

Morgan Stanley left its targets unchanged in its latest report, whose findings were reported by Greek business publication Newmoney.

Alpha Bank had the greatest potential upside among the banks covered, at 28.9 per cent, based on a target price of €5.50. Eurobank followed with potential appreciation of 21.6 per cent and a €5.40 target.

Despite its positive assessment, Morgan Stanley said third-quarter earnings were unlikely, on their own, to significantly lift most Greek bank stocks.

Interest income forecasts exceed consensus

The investment bank expects third-quarter performance to largely match market forecasts, although it projects net interest income to beat consensus by 0.5 per cent to 0.8 per cent.

Its forecasts for that income measure in 2027 and 2028 exceed market estimates by 3 per cent to 4 per cent. Morgan Stanley said this could allow analysts to raise their earnings-per-share projections.

Eurobank earnings and Eurolife acquisition

For Eurobank, Morgan Stanley projects €406 million in net profit, exceeding consensus by 4 per cent. It expects net interest income to come in 0.6 per cent above forecasts, compensating for fee income below expectations.

The investment bank forecasts Eurobank’s common equity tier one ratio, or CET1, at 15.4 per cent. Including the Eurolife acquisition would bring that figure down to 14.2 per cent.

Morgan Stanley said a delay in finalising the acquisition would not cause earnings losses; instead, Eurobank would retain a larger capital base.