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HSBC Adjusts Target Prices For Greek Banks, Highlights Rising Dividends As Key Attraction

HSBC has revised its target prices for Greek banks, with an emphasis on increasing dividends as the main factor attracting investors, even as profitability momentum slows.

For Alpha Bank, the target price is set at €3.05, up from €3, with a “buy” recommendation and a potential upside of 75.3%. Eurobank’s target remains unchanged at €3.50, also with a “buy” rating and a 44% upside potential. National Bank’s target has increased to €9.90, up from €9, with a “hold” recommendation and a 16.2% upside margin, while Piraeus Bank’s target is raised to €7.25 from €6, with a “buy” rating and a 63.7% upside potential.

HSBC notes that the sector’s main appeal lies in the anticipated rise in dividends, with a forecasted 27% increase in dividends per share by 2026, leading to dividend yields of 7-10%. The outlook is supported by strong nine-month 2024 results, improving capital strength, better credit ratings, and the limited impact of faster DTC amortization, which positions all banks to achieve a payout ratio of 50% by 2026.

Despite profitability declines due to lower interest rates, higher payouts will likely drive further stock appreciation, with HSBC indicating that lower book valuations and high dividend yields leave room for gains. The profitability of Greek systemic banks is expected to decline by 9% in 2025, but this follows a strong base. However, HSBC has revised its 2024/25/26 profit forecasts upwards by 16/14/20% on average, reflecting factors like robust credit expansion in Greece, asset management momentum, and a reduction in the cost of risk.

HSBC has downgraded National Bank to a “hold” from a “buy” due to limited downward adjustment potential in its funding costs, which may result in weaker net interest income (NII) prospects over the next two years. Conversely, Piraeus Bank stands out with a 10% dividend yield for 2026, one of the highest in CEEMEA. Eurobank is favored for its successful capital allocation and attractive valuation, while Alpha Bank is seen as the most accessible exposure to Greek banks, with a positive earnings outlook and a compressed valuation.

While Greek banks are appealing, HSBC also highlights alternatives with better combinations of earnings growth and dividend yield, including PKO, Moneta, and Isbank, particularly due to factors such as reduced mortgage loan provisions and favorable shifts in interest rates.

Cyprus Income Distribution 2024: An In-Depth Breakdown of Economic Classes

New findings from the Cyprus Statistical Service offer a comprehensive analysis of the nation’s income stratification in 2024. The report, titled Population By Income Class, provides critical insights into the proportions of the population that fall within the middle, upper, and lower income brackets, as well as those at risk of poverty.

Income Distribution Overview

The data for 2024 show that 64.6% of the population falls within the middle income class – a modest increase from 63% in 2011. However, it is noteworthy that the range for this class begins at a comparatively low threshold of €15,501. Meanwhile, 27.8% of the population continues to reside in the lower income bracket (a figure largely unchanged from 27.7% in 2011), with nearly 14.6% of these individuals identified as at risk of poverty. The upper income class accounted for 7.6% of the population, a slight decline from 9.1% in 2011.

Income Brackets And Their Thresholds

According to the report, the median equivalent disposable national income reached €20,666 in 2024. The upper limit of the lower income class was established at €15,500, and the threshold for poverty risk was set at €12,400. The middle income category spans from €15,501 to €41,332, while any household earning over €41,333 is classified in the upper income class. The median equivalents for each group were reported at €12,271 for the lower, €23,517 for the middle, and €51,316 for the upper income classes.

Methodological Insights And Comparative Findings

Employing the methodology recommended by the Organisation for Economic Co-operation and Development (OECD), the report defines the middle income class as households earning between 75% and 200% of the national median income. In contrast, incomes exceeding 200% of the median classify households as upper income, while those earning below 75% fall into the lower income category.

Detailed Findings Across Income Segments

  • Upper Income Class: Comprising 73,055 individuals (7.6% of the population), this group had a median equivalent disposable income of €51,136. Notably, the share of individuals in this category has contracted since 2011.
  • Upper Middle Income Segment: This subgroup includes 112,694 people (11.7% of the population) with a median income of €34,961. Combined with the upper income class, they represent 185,749 individuals.
  • Middle Income Group: Encompassing 30.3% of the population (approximately 294,624 individuals), this segment reports a median disposable income of €24,975.
  • Lower Middle And Lower Income Classes: The lower middle income category includes 22.2% of the population (211,768 individuals) with a median income of €17,800, while the lower income class accounts for 27.8% (267,557 individuals) with a median income of €12,271.

Payment Behaviors And Economic Implications

The report also examines how income levels influence repayment behavior for primary residence loans or rental payments. Historically, households in the lower income class have experienced the greatest delays. In 2024, 27.0% of those in the lower income bracket were late on payments—a significant improvement from 34.6% in 2011. For the middle income class, late payments were observed in 9.9% of cases, down from 21.4% in 2011. Among the upper income class, only 3% experienced delays, compared to 9.9% previously.

This detailed analysis underscores shifts in income distribution and repayment behavior across Cyprus, reflecting broader economic trends that are critical for policymakers and investors to consider as they navigate the evolving financial landscape.

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