Piraeus Bank

Where we land

Piraeus Bank has spent five years turning itself from a heavy loss-maker into a steady earner of about 1.1bn a year. In late July it reported record profitability and raised its targets for 2026, and the analysts who follow it have been lifting their forecasts far more often than cutting them. Yet the share price, on our reckoning, still assumes that earnings will shrink over the coming years.

We think that caution undersells a bank that has rebuilt itself, and we award it gold. The main thing that could prove us wrong is an outside shock rather than anything in the bank's own plan: oil and gas prices have surged, and the Greek households and businesses that borrow from Piraeus have to pay those bills before they repay their loans.

What the business is

Piraeus is a Greek bank doing the ordinary work of banking at scale in its home market. It gathers deposits from Greek savers and businesses, lends that money out, and earns the difference between what it pays on deposits and what it charges on loans, with fees from services on top. Its growth comes from that core Greek lending and deposit franchise rather than from anything exotic.

It runs that business profitably. After paying for staff, branches, technology and everything else it takes to operate, about 36% of its revenue is left over as operating profit, a healthy margin for a bank.

Why now

In the twelve months to June 2021 the bank lost 3.0bn. A year later it was just about breaking even, and by the twelve months to June 2023 it was making 584m. Net profit reached 1.1bn in the year to June 2024 and has sat at that level ever since, through the year to June 2026, while operating profit crept up to 1.5bn.

That is a remarkable turnaround followed by a plateau, and the plateau is why, measured against every listed company, its growth record has slipped over the past year: a bank whose profit has stopped climbing no longer looks like a grower, however impressive the recovery before it.

What has changed is the news from the bank itself. Revenues are expanding across the Greek business, profit is running ahead of plan, and management has raised its 2026 targets. If the plateau is giving way, this is the moment it would start to show. We have held the shares in the Conviction 10, our portfolio of ten highest-conviction holdings, since May 2026, and the bank still meets the requirements for a place there.

The case for

The case starts with the distance travelled. A bank that lost billions now earns a steady profit year after year, and steadiness is worth something in an industry where Greek lenders were once synonymous with crisis. Net profit has been flat since 2024, so the question is whether growing sales will finally lift the bottom line, and there is reason to think they can: revenue is still rising by 11.4% a year.

The most recent evidence points the right way. Management raising its own goals partway through the year, on the back of expanding revenues, is a stronger signal than simply hitting them, because it means the business is running ahead of what the people closest to it expected.

Analysts have reacted in kind. They expect earnings per share, the profit attributable to each share, to be 0.97 this year and 1.12 next, a rise of about 15%. Over the past 45 days forecasts were raised 14 times and cut only 5. When estimates move up that consistently, results are usually surprising people in the bank's favour, which is exactly what a turn from plateau to growth would look like from the outside.

Where the growth could come from

The engine carrying the results today is simply the core bank: record profits and raised targets came from revenue growing across lending and deposits. What would show this continuing is further results landing at or above the upgraded targets, with revenue still growing rather than flattening.

The next lift most likely comes from interest rates. The European Central Bank has raised its deposit rate twice this year, in June and again in September, taking it to 2.50%. For a Greek bank with a large base of cheap deposits, higher rates usually mean earning more on loans and cash than it pays out to savers, and that spread is the bulk of its income. The market had braced for falling rates to squeeze those margins; rising rates turn that worry into support. The confirmation would be a wider gap between loan yields and deposit costs, with what the bank pays depositors rising more slowly than what it earns.

A slower-building second engine is fee and insurance income. Piraeus agreed in 2025 to buy the insurer Ethniki Insurance, with the aim of selling insurance through its branches, and it is also growing asset management and payment fees. These are a minority of income next to lending, so this is an option rather than today's driver. It matters because fees and premiums tend to be steadier than interest income, making the bank less dependent on where the central bank sets rates. The sign it is working would be fee and insurance income rising faster than lending income, with insurance increasingly sold to existing customers.

Then there is what the bank does with its profits. Record earnings build spare capital that can go back to shareholders as dividends or buybacks. Buybacks shrink the share count, so each remaining share earns more even if total profit stands still, and generous payouts widen the pool of investors willing to own a Greek bank. A higher planned payout or a larger buyback announced alongside results would show this lever being pulled.

The case against

The first argument is that the shares have already done a lot. Over the past six months they have climbed strongly enough to sit near the top of the market for price strength. But that is a recovery rather than a breakout: relative to the market, they stand slightly lower on that measure than a year ago. Meanwhile the growth record has slipped because profit has been flat. The share price has been running ahead of the fundamentals, and it can just as easily fall back to meet them.

The second is that the bargain is getting smaller. The shares trade at about 11 times earnings and about 1.4 times book value, meaning the price is a little above the accounting value of what the bank owns minus what it owes. On both measures Piraeus still sits well inside the cheaper part of the market, but that cheapness has been eroding steadily over the past year as the shares have been re-rated upward. Investors who bought it because it was cheap have less of that cushion left.

The third is the most serious, and it comes from outside the bank. Alongside this year's two rate increases, Brent crude has risen by 88% over the past year and European natural gas by 132%. Higher borrowing costs and much dearer energy hit Greek households and businesses at once, and those are the people a Greek lender depends on to repay. Higher rates may help the bank's margins, but less so if the borrowers paying them start to struggle.

What the price assumes

One way to see what the market is pricing in is to ask what earnings would have to do to justify today's share price five years from now. Suppose the price stays where it is and, in five years, the shares are valued at 18.5 times earnings, the typical multiple across the profitable listed companies we cover. For that to hold, earnings per share would need to fall to about 0.53, shrinking by about 10% a year for five years.

Set that against the bank's own record. Over the past three years operating profit has grown by about 13% a year. If that trend simply continued, which is the past carried forward and not a forecast, earnings per share would reach about 1.62 in five years, 304% of what the price requires. The analysts' forecast for next year points the same way as the trend, not the way the price does.

The shares are up 45% over the past year and 23% over six months, so the market has noticed the improvement. It has simply not priced in growth; it has priced in decline. The bank does not need to be exceptional to beat that bar. It needs to avoid going backwards.

The other side of the medal

If one thing breaks this case, it is most likely an oil and gas price shock straining Greek borrowers, because it strikes exactly where the argument for the bank is strongest. Rising profits and raised targets assume loans keep being repaid. Dearer fuel, heating and power eat into household budgets and company margins, and when borrowers fall behind, a bank has to set money aside to cover loans that may go bad. Those set-asides come straight out of profit.

The timing makes it sharper. A rise in bad loans would arrive just as profits are peaking and the market is starting to believe the plateau is over, so the upgraded targets could slip and the run of upward forecast changes reverse at the same moment. The first sign would be a rise in new non-performing loans, meaning loans whose borrowers have stopped paying, and in the charges the bank takes for expected losses.

What to watch

The test that matters most is loan quality. The signals that move first are the ones squeezing borrowers: European gas and oil prices, and where the central bank takes its deposit rate next. If energy stays this expensive while rates keep rising, arrears are likely to follow, showing up in the bank's next results as new non-performing loans and loan-loss charges, which would make the expected 15% rise in earnings per share next year harder to reach.

The direction of analysts' forecast changes is the other early signal. While upward changes keep outnumbering cuts, the market's reading is that profit is beating plans. If net profit stays stuck near 1.1bn into next year and analysts start cutting rather than raising estimates, the plateau will look less like a pause before more growth and more like the top.

The numbers

Research for information, not personal investment advice or a recommendation to buy, sell or hold any security: see Important information. Data as at 31 October 2026.