In recent days, on the one hand, the draft 2027 Budget was submitted to Parliament, while on the other, the Athens Stock Exchange reacted strongly after a difficult week and moved back toward the 2,700-point level.
And once again, leading the way are... the banks.
FORECASTS FOR 2027
Let's start with growth. The government forecasts that the Greek economy will grow by 2.3% in 2027, up from 2% this year.
“And is that really a lot?” you may be wondering. The European Commission sees the Eurozone growing by 0.9% this year and 1.2% in 2027. In other words, Greece is growing at roughly twice the pace.
And if these forecasts are confirmed, it will be the seventh consecutive year that Greece grows faster than the Eurozone average.
And what is the engine driving this growth? Investment. It is expected to increase by 7.9% in 2027. In the Eurozone? Just 1.7%. Yes, you read that correctly.
Unemployment is expected to fall from 8.4% to 7.9%, its lowest level since 2008.
Wages are expected to rise by 3.9%, while inflation is expected to decline from 3.8% this year to 2.6%.
Of course, there is a big “but.” And it is called energy. The inflation forecast assumes that energy prices will gradually decline. The problem is that Brent crude has reached $100 a barrel.
That is why the Budget sets aside €200 million for the energy crisis.
SURPLUSES, DEBT AND WHAT CHANGES FOR US
Now let's move on to public finances.
The primary surplus is forecast at 3.3% of GDP in 2027. What does that mean? In very simple terms, the government collects more than it spends, excluding interest payments.
But the most impressive figure is the debt. From 136.7% of GDP this year, it is expected to fall to 128.8% in 2027.
In fact, for the seventh consecutive year, Greece is expected to record the largest debt reduction in the entire EU. This year alone, early debt repayments are expected to reach around €12.8 billion.
And according to Bloomberg, this will probably mean that Greece will no longer be the most indebted country in the Eurozone.
And we are not the only ones saying this. Scope recently gave Greece its highest credit rating since the beginning of the Eurozone debt crisis.
BANKS REMAIN IN THE LEAD
And this brings us to the stock market. Yesterday, the General Index rose 1.75% to 2,686 points, recovering part of the losses from the previous week.
And who pulled it higher? The banks, of course. The banking index rose 2.88%, with Optima, National Bank of Greece, Piraeus and Alpha gaining more than 3%.
Obviously, it is not all sunshine and roses. The move was concentrated in a handful of stocks, while a large part of the market remained out of the spotlight.
So the market has not yet convinced us that risk appetite is returning.
But why are the banks always leading the way?
Because their numbers are very strong. According to UBS, in the first quarter of 2026, loans to businesses were up 14.4% compared with last year.
Piraeus's fee income increased by 32% and Alpha's by 30%. And this matters because it makes them less dependent on interest income.
UBS RAISES THE BAR
And this is where things get even more interesting. UBS is raising its price targets for the four major banks by 2% to 6%.
In May, it had Piraeus at €11.20, National Bank at €18.20, Alpha at €4.90 and Eurobank at €4.70.
Today, it sees Piraeus at €12.50, National Bank at €19.70, Alpha at €5.20 and Eurobank at €5.40. And it has a Buy rating on all four.
“And why so much optimism?” you may be wondering.
The answer is interest rates. UBS expects the ECB to make one more rate hike in December, taking rates to 2.75%.
And Greek banks are highly sensitive to this. For every 25 basis points that Euribor rises, their earnings per share increase by 1.5% to 2.5%.
That is why UBS expects net interest income to increase by 8% to 10.7% this year.
Where does it see the greatest upside potential? Piraeus, because it believes its assumptions are still conservative.
For Alpha, the key date is November 5, when its new business plan will be presented. Although UBS is not expecting a major positive surprise.
And Optima? UBS recently initiated coverage, with a Buy rating and a €16 price target. It is the most interest-rate-sensitive of all.
However, its stock is already quite expensive, so UBS sees greater upside potential in the large banks.
And one final point.
In May, based on 2027 earnings, Greek banks were 13% cheaper than their European peers. Based on 2028 earnings, that gap has now largely closed.
And UBS believes they could even trade at a premium.
The Greek market has already been reclassified as a developed market this year, and inclusion in the MSCI Developed Markets Index is expected by May 2027.
