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Goldman Sachs Puts Greek Banks Ahead Of Spain In A More Selective European Banking Market

Goldman Sachs has named Greek banks among its highest-conviction European banking ideas for September and the final quarter of 2026, arguing that their valuations remain compelling relative to peers, especially in Spain.

A Valuation Gap At The Center Of The Call

The investment bank described Greek lenders as a top long rate sensitive choice, a designation that suggests they should benefit disproportionately from the current interest-rate backdrop. In Goldman Sachs’ view, the key opportunity lies in the widening valuation gap between Greek and Spanish banks, even though the two markets share broadly similar underlying fundamentals.

That gap is becoming more important as investors demand greater selectivity across European financials. Goldman Sachs noted that valuations in markets such as Spain and Sweden have moved materially higher, making it harder to find clear upside without paying a premium.

Spain Moves Into The Short Column

The bank’s caution is most visible in Spain, where it has placed lenders including Sabadell and Unicaja among its preferred short positions. By describing those names as expensive, Goldman Sachs is effectively signalling a preference for Greek banks over their Spanish counterparts.

At the same time, Greek lenders have a near-term technical catalyst on their side. Goldman Sachs expects them to be included in the SX7E European banking index in September, a move that could support flows and improve market visibility.

A Supportive Backdrop For European Banks

The broader sector picture remains constructive. Second-quarter earnings have continued to drive upward revisions to forecasts, reinforcing the view that European banks are still benefiting from a resilient operating environment.

Higher-for-longer interest rates remain supportive of net interest income, while strong shareholder returns continue to underpin investor appetite. Even after recent gains, European banks still trade at a discount to the wider equity market and to US banks, leaving room for further re-rating if earnings momentum holds.

Why Greek Banks Stand Out

For Goldman Sachs, the case for Greek lenders rests on three converging forces: improving earnings momentum across European banking, materially lower relative valuations than Spanish banks and the immediate catalyst of SX7E inclusion.

Taken together, those factors place Greek banks at the top of Goldman Sachs’ preferred list among lenders best positioned to benefit from the current rate environment.

Cyprus Government Surplus Rises To €1.61 Billion In First Nine Months Of 2026

Cyprus recorded a general government surplus of €1.61 billion in the first nine months of 2026, equal to 4.0% of gross domestic product, as revenue growth outpaced the rise in public spending. Higher receipts from income taxes, social contributions and value-added tax (VAT) drove the improvement, while lower capital expenditure helped restrain spending.

Preliminary figures released Tuesday by the Statistical Service of Cyprus show the surplus rose to €1.17 billion, or 3.0% of GDP, up from € 442.1 million in the same period of 2025.

Total government revenue increased 6.5% to €12.09 billion, while expenditure rose 2.9% to €10.48 billion.

Key Fiscal MeasureJanuary–September 2025January–September 2026
Total revenue€11,353.9 million€12,091.8 million
Total expenditure€10,186.2 million€10,482.1 million
Government surplus€1,167.6 million€1,609.7 million
Surplus as a share of GDP3.0%4.0%

Income Taxes And VAT Lead Revenue Growth

Taxes on income and wealth made the largest contribution to the increase in revenue. Receipts in this category climbed by €442.2 million, or 15.3%, to €3.34 billion, compared with €2.89 billion a year earlier.

Social contributions rose by €235 million, or 6.6%, to €3.78 billion. Taxes on production and imports increased by €251.5 million, or 7.2%, reaching €3.77 billion.

Net VAT receipts, after refunds, totalled €2.64 billion, up €293.1 million, or 12.5%, from €2.35 billion in the first nine months of 2025.

Some Revenue Streams Decline

Not all revenue categories moved higher. Capital transfers fell by €74.6 million to €96.7 million, while current transfers declined by €71.6 million, or 20.5%, to €278.2 million.

Revenue from services slipped 1.0% to €743.5 million. Interest and dividend receipts dropped by €37 million, or 28.6%, to €92.4 million.

Social Benefits And Personnel Costs Increase

On the expenditure side, social benefits rose by €199.6 million, or 4.9%, to €4.27 billion. Compensation of employees—which includes imputed social contributions and public-sector pensions—increased by €108.3 million, or 3.8%, to €2.99 billion.

Intermediate consumption, covering goods and services used in the delivery of public services, rose by €114.3 million, or 11.0%, to €1.16 billion. Interest payments increased by €8.7 million, or 2.6%, to €340.7 million. Current transfers were up €68.7 million, or 10.6%, at €714.7 million.

Lower Capital Spending Limits Expenditure Growth

The overall increase in spending was tempered by a decline in capital expenditure. Capital-account spending fell by €189.9 million, or 16.9%, to €936.2 million from €1.13 billion in the same period last year.

Investment in fixed capital declined by €94.1 million, or 12.1%, to €686.4 million. Other capital transfers fell by €95.8 million, or 27.7%, to €249.8 million. Subsidies also decreased, dropping by €13.9 million, or 15.5%, to €75.8 million.

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