Greek Banks to Pay Dividends for the First Time in 16 Years

Published by
Athens Bureau

This marks a significant milestone in the sector’s recovery from a prolonged financial crisis.

The dividends will be divided among major banks as follows: Eurobank (€342 million), National Bank of Greece (NBG) (€332 million), Piraeus Bank (€79 million), and Alpha Bank (€61 million). This distribution signals a return to financial stability for Greek banks.

The European Central Bank’s recent approval of dividend payments after a 16-year gap has bolstered investor confidence.

Analysts perceive this development as a positive indication that could unlock further value in bank stocks.

The strong performance of Greek banks in the first quarter of 2024 and their positive future projections support this outlook.

Investment firm Jefferies predicts that Greek banks’ dividend yield will reach 10 percent by 2026, aligning with the European average.

Although the current dividends are modest—ranging from 10 to 30 percent of 2023 earnings—they are expected to rise to 50 percent by 2026. JP Morgan also forecasts that dividend payouts will meet European standards by 2025-2026.

Greek banks are emerging robustly from the debt crisis and are well-positioned to take advantage of Greece’s economic recovery and favorable credit environment. Analysts see substantial growth potential in their business plans over the next three years.

In addition to the dividend news, Greek banks are expected to report strong second-quarter results for 2024, with announcements due next week. In the first quarter of 2024, the combined profits of the four major Greek banks reached €1.09 billion, a 38.4 percent increase from €788 million 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 attained investment-grade ratings from international agencies. Standard & Poor’s and Moody’s have both shown strong confidence in these banks, noting their progress in overcoming the financial crisis and benefiting from an improving Greek economy.

Three of the four largest Greek banks now have 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 raising their target prices for Greek banks, anticipating continued strong performance and positive developments.

Swiss investment firm UBS has begun covering Greek banks, advising a “buy” rating for all four major banks with the following target prices: Alpha Bank (€2.30), Eurobank (€2.60), National Bank of Greece (€11), and Piraeus Bank (€5.50).

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