US bank Morgan Stanley shifted its focus to long-term sustainable returns and concludes that Greek banks show prospects to achieve higher performance. As we get closer to the interest rate peak, it shifts its preference to more defensive deposit bases and changes its recommendation for the National Bank of Greece to overweight from Eurobank to neutral (equal-weight). Piraeus Bank remains Morgan Stanley’s top pick.

The “overweight” recommendation on Piraeus Bank’s shares comes with a target price increase to EUR 4.27 from EUR 4.04 previously. National Bank’s share with a new overweight recommendation is upgraded to EUR 7.71 from EUR 7.05 previously. For Alpha Bank, the target price is raised to EUR 2.11 from EUR 1.98 previously, and for Eurobank the target price is EUR 2.10.

Greek banks are up around 65% this year, supported by earnings upgrades (+39%), structural macroeconomic recovery, and cheap valuations.