Eurobank: Risks from Interest Rate DependenceEurobank: Risks from Interest Rate Dependence – Losing Ground to Competitors – (Morgan Stanley Analysis)
Eurobank, although still one of the strongest Greek banks, is facing challenges that could impact its growth trajectory and attractiveness to investors. According to the latest Morgan Stanley report, the bank has been downgraded from Overweight to Equal-weight, reflecting concerns about its prospects compared to its competitors in the Greek banking sector.
Downgrade and Limited Upside Potential
Eurobank, which was previously considered one of the most robust Greek banks, has lost its privileged position as analysts have downgraded its stock. The new price target set by Morgan Stanley is €3.18, slightly up from €2.77, but with a lower profit potential compared to other Greek banks such as Piraeus and Alpha Bank, which maintain higher upside potential. This development indicates that, despite its positive financial results, Eurobank does not offer the same investment appeal as its competitors.
Lower Return on Equity
One of the key issues affecting Eurobank’s investment position is its performance relative to its competitors. Its Return on Tangible Equity (ROTE) is estimated at 15.4% for 2025 and 14.8% for 2026, slightly lower than National Bank of Greece (15.1%) and Piraeus Bank (13.7%). While these numbers are strong in absolute terms, they highlight that Eurobank does not have the same profit growth potential as other Greek banks.
Limited Loan Growth and Lower Net Interest Income
Eurobank is experiencing moderate loan growth, with an estimated increase of 4.9% in 2025 and 2.8% in 2026, compared to 7.5%-8% for Piraeus Bank. This means that Eurobank may not benefit as much from Greece’s economic recovery and rising investment activity in the country. Additionally, its Net Interest Income (NII) is expected to reach €2.5 billion in 2025, marking only a small increase, which limits the bank’s ability to achieve higher profitability.
Interest Rate Risks and Capital Reserves
Another concern for Eurobank is its sensitivity to interest rate cuts. The Greek banking market is highly dependent on ECB interest rates, and a potential reduction in these rates could negatively impact the bank’s interest income. Furthermore, although its capital position is adequate, it is not as strong as its competitors. Its CET1 ratio is expected to be 16.8% in 2026, lower than National Bank of Greece (17.8%).
Although Eurobank remains one of the top Greek banks, it faces significant challenges that limit its growth potential. The downgrade of its stock, lower growth dynamics, and sensitivity to interest rate changes make it a less attractive investment choice compared to Piraeus and Alpha Bank. If the bank fails to achieve higher loan growth and improve its profitability, it may lose ground to its competitors, limiting its stock’s upside potential.
