For the first time since 2008, Greek banks will distribute dividends this summer, amounting to a total of €814 million.
The move marks a significant recovery for the sector, which has faced a prolonged financial crisis.
The dividends will be distributed among the major banks as follows: Eurobank will pay out €342 million, the National Bank of Greece (NBG) will provide €332 million, Piraeus Bank will issue €79 million, and Alpha Bank will distribute €61 million. This payout represents a major milestone in the recovery of Greek banks, signaling their return to financial stability.
The European Central Bank's recent decision to approve dividend payments, after a 16-year hiatus, has boosted investor confidence.
Analysts view this development as a positive sign that could unlock additional value for bank stocks.
The strong performance of Greek banks in the first quarter of 2024, along with their optimistic projections for the coming years, supports this outlook.
According to investment firm Jefferies, the dividend yield for Greek banks is expected to reach 10 percent by 2026, aligning with the European average.
Although the current dividends are relatively modest—ranging from 10 percent to 30 percent of 2023 earnings—they are projected to increase to 50 percent of earnings by 2026. JP Morgan also forecasts that dividend payouts will match European standards by 2025-2026.
Greek banks are emerging robustly from the debt crisis and are well-positioned to capitalize on Greece’s economic recovery and a favorable credit environment. Analysts believe there is substantial growth potential in their business plans over the next three years.
In addition to the dividend news, Greek banks are anticipated to report strong results for the second quarter of 2024, with announcements expected next week. In the first quarter of 2024, the combined profits of the four major Greek banks reached €1.09 billion, reflecting a 38.4 percent increase from €788 million in the same period the previous year.
Specifically, the National Bank of Greece reported €358 million in profits (up 38 percent), Eurobank earned €287 million (up 21.4 percent), Piraeus Bank generated €233 million (up 29.4 percent), and Alpha Bank posted €211 million in profits (up 89.9 percent).
All major Greek banks have recently received upgrades to investment grade from international rating agencies. Standard & Poor’s and Moody’s have both expressed strong confidence in these banks, noting their progress in overcoming the financial crisis and benefiting from the improving Greek economy.
Three of the four largest Greek banks have now reported non-performing loan ratios of 3%-4% as of the end of the first quarter of 2024, with further improvements expected by 2026. Investment firms are increasing their target prices for Greek banks, anticipating continued strong performance and positive developments.
The Swiss investment firm UBS has started covering Greek banks, recommending a "buy" rating for all four major banks with the following target prices: Alpha Bank at €2.30, Eurobank at €2.60, the National Bank of Greece at €11, and Piraeus Bank at €5.50.