BANKS
Citi reiterated its buy recommendation on Alpha Bank, Eurobank and Piraeus Bank. And we are not talking about a routine coverage update. We are talking about revised, higher price targets that imply upside of more than 20% in the base case and 45% to 53% in the optimistic scenario.
Someone might say, Do we not hear this every year? Not this time. Because what we are seeing is not just better numbers. We are seeing a shift in perceived risk.
For example, for Alpha the price target rises to €4.90 and in the bull case it reaches €6.20. Even though earnings per share are revised slightly lower in some years, the valuation increases because the cost of equity declines. In other words, the market requires a lower return to invest in Greece.
For Eurobank, the new price target increases to €4.70, with a clear shift toward higher dividend distributions. The bank appears to favor cash distribution over aggressive buybacks, which makes it more attractive for income focused investors.
As for Piraeus, the price target rises to €10.20, with an estimated dividend yield above 4%. Here we also see the impact of integrating Ethniki Asfalistiki and the strengthening of fee income, which is now a key pillar of profitability.
There is something particularly interesting. In some cases, earnings per share are revised slightly downward. Yet price targets move higher. Why? Because the risk premium declines. The perceived country risk declines. The probability of a negative scenario declines.
When a country is considered less risky, valuations rise. It is not just about earnings. It is about confidence, stability and predictability.
Greek banks have drastically reduced non performing exposures, strengthened capital adequacy ratios, diversified their revenue streams and are now discussing stable and generous shareholder distributions. From being the problem child of Europe, they have become normal, profitable European banks.
And this is not merely accounting improvement. It is a strategic transformation.
PRIMARY SURPLUS
Let’s move to the second major development, which in my view is equally important but often misunderstood.
The primary surplus in January reached €3.51 billion, while the target was €1.75 billion. At first glance, it looks impressive. Double the target.
A significant part of the difference is due to timing effects in expenditures. Some payments were shifted and therefore not recorded in January. This means the headline figure is inflated compared to the underlying fiscal reality.
If we remove these technical effects, the outperformance narrows. Even so, there remains a positive deviation from the target. Tax revenues are slightly above projections and spending is broadly under control.
And that is what matters to markets. Not the excitement of a single month, but consistency in execution.
A country that manages its budget effectively gradually reduces its debt to GDP ratio, improves its credit profile, borrows at lower cost and becomes more credible in the eyes of investors. When country risk declines, banks, businesses and ultimately valuations are the first to benefit.
You can see how everything connects.
The bank upgrades and the strong primary result are not unrelated news items. They are two sides of the same story. A story of gradual normalization, where Greece is no longer treated as a special case but increasingly as a normal European economy.
ENERGY
Now let’s turn to the third pillar, which is more long term but equally strategic.
The signing of concession agreements with Chevron for exploration south of Crete and the Peloponnese marks an important step. We are talking about an exploration program that, if successful, could lead to natural gas production between 2032 and 2035.
There are commitments for substantial investments that, over a decade, could reach €790 million, along with royalties and tax benefits for the Greek state.
Let’s be clear. Exploration does not mean a confirmed discovery. It does not mean that Greece becomes an energy superpower overnight. There is geological risk, technical risk and timing uncertainty.
But it does mean that Greece is expanding its energy footprint, attracting a global energy major, strengthening its geopolitical position and positioning itself in a sector that is critical for Europe.
If discoveries are confirmed, the country would not merely be a transit hub. It would gain a production base as well, and that would alter the long term balance of power.