Greek Banks Target Higher Payouts as Europe Grapples with Energy Costs, Political Scrutiny

National Bank of Greece (NBG) lags its domestic rivals in mergers and acquisitions aimed at boosting non-interest income, such as insurance company acquisitions. However, the bank began the year with a dual advantage: a substantial capital surplus and a cleaner balance sheet, demonstrating minimal exposure to step-up loans and Swiss franc-denominated debt.

This positions NBG, similar to Bank of Cyprus, with a more defensive investment profile. The market anticipates a higher payout, at least 70%, and some expectations for additional capital returns have emerged.

Last year, NBG’s high dividend yield, combined with approximately 10% EPS growth, attracted income funds. This resulted in a share performance on par with the broader European banking sector, despite the stock not being a top pick for domestic or foreign brokerages. Its performance in the early months of this year will serve as a bellwether for investment trends, according to JP Morgan’s analysis department.

Analysts project NBG’s Return on Tangible Equity (RoTE) to dip slightly below 15% this year. This decline is primarily attributed to peak depreciation from technology investments made in previous years. For the nine-month period, NBG recorded nearly double the depreciation in Greece compared to Eurobank (€144 million vs. €73 million), and significantly higher figures than Piraeus Bank (€96 million) and Alpha Bank (€90 million). NBG is already realizing benefits from its substantial technology investments, which have resulted in annual savings of €150 million, according to CEO Pavlos Mylonas.

Europe’s Energy Cost Disadvantage

European leaders often avoid direct discussions on the continent’s electricity costs, instead focusing on “energy security,” “green” energy, and the perceived “energy autonomy” within the EU. The reality, however, is that a significant portion of Europe’s economic competitiveness and inflation challenges stem from the vast disparity in electricity costs compared to other regions and countries.

Data from late 2024, which is expected to show minimal change into 2025, illustrates this gap: electricity costs in the U.S. are 3-4 times lower for industrial uses and less than half for households. This cost discrepancy carries a strategic implication: Artificial Intelligence relies on massive data centers, where electricity constitutes the largest operational expense. Consequently, until this energy price gap narrows, the EU operates at a disadvantage in what experts consider foundational for developing robust AI capabilities. While not the continent’s sole drawback, it exacerbates the situation.

This divergence in electricity costs stems partly from the abandonment of cheaper Russian gas. However, it is also largely linked to European policies that have burdened electricity bills with various “transition costs,” as well as the “European system” for energy price determination itself, from which Spain and Portugal are exempt. International experts suggest that as long as these regulations persist, and with anticipated increased costs for energy transmission network upgrades, the situation is unlikely to change substantially, even with new, cheaper renewable energy storage methods. A fundamental shift in how energy costs are addressed is necessary. Eurostat data provides further insights into European electricity prices.

Greek Political Dynamics

PASOK and Hellenic Solution engaged in an informal contest over the past 24 hours, each vying to prove they are not the government’s primary “crutch.” This followed the Prime Minister’s call for consensus on electing heads of independent authorities. Sources from Harilaou Trikoupi, PASOK’s headquarters, stated, “Kyriakos Mitsotakis is knocking on the wrong door,” suggesting the Prime Minister “can turn to Kyriakos Velopoulos for such ‘tasks’,” implying Hellenic Solution’s votes contributed to the removal of Christos Rammos from the Hellenic Authority for Communication Security and Privacy (ADAE).

Kyriakos Velopoulos’s party swiftly responded, labeling PASOK “the real crutch of the Mitsotakis government” for voting in favor of “50% or more of its bills.” The main opposition “picked up the gauntlet,” accusing Velopoulos, described as the “blood brother of Messrs. Voridis and Georgiadis,” of “going all out to participate in a Mitsotakis government.” This political squabble, of course, does not bother the government.

University Reforms and Prime Minister’s Outing

The government’s mood was almost celebratory following the completion of the deletion of so-called “eternal students” from universities. Both the government spokesperson and the Minister of State publicly commented on the development. Pavlos Marinakis, the government spokesperson, stated in a post that “2026 finds Greek public universities without eternal students, without active occupations, and with approximately 30% more funding compared to 2019.” Minister of State Akis Skertsos highlighted “four victories”: no active university occupations, dozens of collaborations between Greek higher education institutions and major foreign universities, the operation of non-state, non-profit universities in Greece, and public university administrations acting with fairness and strictness against past anachronisms, such as the informal “institution” of the “eternal student.” Maximos Mansion, the Prime Minister’s office, is intensifying efforts to communicate and publicly promote its reform agenda, with initiatives concerning public universities ranking high on that list.

Prime Minister Kyriakos Mitsotakis attended a screening of Yiannis Smaragdis’s much-discussed film “Kapodistrias” at a cinema in Ampelokipi, accompanied by his recently engaged son, Konstantinos. Both appeared in good spirits and were photographed with the cinema owner, who subsequently shared the event on social media.

Hellenic Defense Systems and Retail Expansion

The tender for the decontamination of Hellenic Defense Systems (EAS) facilities in Lavrio has generated considerable debate and criticism recently, including appeals to the Single Public Procurement Authority (EADHSY) to halt the process. However, shortly before year-end, EADHSY convened and ruled the tender process chosen by EAS management as entirely lawful and in the public interest. Under Christoforos Boutsikakis’s leadership, EAS has undergone a swift turnaround, a development that has met with resistance from various business and political circles.

Lefties, the budget-friendly chain owned by Spanish retail giant Inditex (known for Zara), is expanding its Lefties Home line into small appliances through a collaboration with Spanish company Create. This move into home appliances marks a strategic shift for a chain previously associated solely with “fast fashion.” Following a redefinition of its role within the Inditex group, a management overhaul, and expansion into major European cities, Lefties appears to be aiming for more than just being an affordable alternative. The question remains whether, and when, the chain will enter the Greek market.

While the affordable sports retail chain Decathlon has yet to achieve significant performance in Greece, it is expanding across Europe. Decathlon Pulse, the company’s investment arm, recently acquired a 65% majority stake in Bikeleasing. The two companies already collaborate in Germany, allowing customers to lease Decathlon bicycles and e-bikes through Bikeleasing. In Greece, based on its latest published balance sheet for 2024, Decathlon operates three stores in Corinth, Spata, and Egaleo, alongside an e-commerce platform. The company increased its sales by €2.726 million, reaching €22.863 million. Pre-tax profits climbed to €1.286 million, up from €824,787 in 2023.

Stock Market Activity: Small and Mid-Caps

Alongside Friday’s banking sector gains, small-cap stocks also saw activity. Frigoglass, for instance, rose to €0.491, an increase of 17.18%. A total of 354,000 shares changed hands, a volume not seen since mid-August when the stock hit its 2025 high of €0.608. It subsequently trended downwards, ending last year at €0.419, 31% below its peak.

Proodeftiki showed a similar pattern. The stock reached a yearly high of €0.69 on August 13. Its trajectory since then has been downward, closing 2025 at €0.45, a 35% drop. However, it started the new year at €0.498, up 10.67%, with €39,400 worth of shares traded. Kekrops shares also moved higher, gaining 7.97% to €2.1. The stock had been confined to a narrow trading range since early October, with its yearly high of €2.3 recorded on September 30.

The rebound of two mid-cap stocks that faced significant sell-offs at the close of 2025 is also noteworthy. Autohellas experienced heavy sell-offs during the last two trading sessions of last year, cumulatively losing 3.84% to close at €11.5. It more than recovered these losses, ending Friday at €12.2, up 6.09%. Kri Kri also saw volatile trading. It dropped 4.33% on Tuesday, closing at €19, but rebounded 5.79% on Friday to reach €20.1.