Overview

The article notes that Greek banks have transitioned from post‑crisis balance‑sheet repair to a focus on growth, earnings and shareholder returns, with J.P. Morgan forecasting 12 % annual earnings‑per‑share growth between 2025 and 2028 and mid‑teens returns on tangible equity.

Credit Quality and Profitability

Non‑performing exposure ratios have declined to roughly 2‑3 % from levels above 50 % during the financial crisis. Return on assets has risen to 1.3 %, compared with the euro‑area average of 0.6 %. Shareholder distributions resumed in 2023 after a 15‑year pause.

Funding Profile

Deposits now represent about 80 % of Greek banks’ liabilities, versus 52 % across the euro area, and the loan‑to‑deposit ratio stands at approximately 60 %. Around 80 % of deposits are held in current and savings accounts, providing a relatively inexpensive funding base.

Lending and Fee Growth Outlook

J.P. Morgan expects performing loans to expand 8‑10 % annually, driven by corporate investment, financing under the EU Recovery and Resilience Facility and a gradual recovery in mortgage lending. Additional earnings growth is anticipated from fee‑related activities, acquisitions and capital deployment.

International Investor Exposure

Greek equities are being added to the Euro STOXX and STOXX Europe 600 universes at the September rebalance, with the four systemic banks among the main additions. The inclusion is expected to generate about US$1 billion of passive inflows.

Index Classification

Greece will remain in MSCI’s emerging‑market index until May 2027, temporarily exposing the banking sector to both developed‑ and emerging‑market benchmark investors.

Valuation

Greek banks have appreciated 41 % year‑to‑date, outpacing the 21 % gain in the SX7E index, effectively closing most of their valuation discount to core European banks. They trade at roughly nine times estimated 2028 earnings, representing an approximate 10 % discount to comparable Southern European and Central and Eastern European banks despite faster expected earnings growth.

Highlights and Risks

J.P. Morgan identifies Eurobank and Piraeus as offering an especially attractive combination of growth, returns and valuation. Key sector risks cited include slower lending growth, margin compression, weaker fee expansion and challenges integrating acquisitions.