Jefferies: Maintains "Buy" Rating with a €6.25 Target PriceJefferies: Piraeus' Acquisition of National Insurance Boosts Profitability and Capital Position – Maintains "Buy" Rating with a €6.25 Target Price
The acquisition of 90% of National Insurance by Piraeus Bank for €540 million is a highly strategic move that, according to Jefferies' analysis, will significantly enhance the bank's profitability and overall financial position.
A Deal That Strengthens Piraeus – “Buy” Rating Maintained
Jefferies estimates that the National Insurance acquisition diversifies Piraeus' revenue streams and strengthens its fee income sector, bringing it closer to leading European banking institutions.
The investment firm maintains its “buy” rating for Piraeus Bank, setting a €6.25 price target, confirming its confidence in the bank’s prospects following this strategic move.
Profitability & Return on Equity Boost
This transaction is expected to increase earnings per share (EPS) by approximately 5%, while return on tangible book value (RoaTBV) is projected to rise by 100 basis points (bp). At the same time, Piraeus continues to target a cost-to-core-income ratio of around 35% for the 2025-2027 period, maintaining strong operational efficiency.
Positive Capital Impact – Danish Compromise Implementation
The acquisition will impact Piraeus’ total capital ratio by 150 basis points, reducing it from 20% to over 18.5% in 2025. However, the bank plans to apply the Danish Compromise, which, if implemented, would reduce the impact by 50 basis points, keeping the net effect at 100 basis points.
Importantly, the CET1 ratio is expected to remain above 13% throughout the 2025-2027 business plan, while the dividend distribution policy at 50% of profits remains unchanged.
National Insurance: A Leading Player in the Greek Market
National Insurance is the top insurance company in Greece, with 15.8% growth in gross written premiums (GWP) in 2024, surpassing the market average of 8.7%. The company is expected to maintain a 14.6% market share in 2024, with 17% in life insurance and 11% in general insurance.
With total assets of €4 billion and equity of €400 million, National Insurance reported normalized net earnings of €100 million in 2023. Its extensive network of corporate and affiliated insurance agencies generates a significant portion of its revenue.
Strong Growth in the Bancassurance Market
Piraeus Bank expects the Greek insurance market to continue expanding, with gross written premiums rising to €7 billion from €5.5 billion by the end of 2024.
In Bancassurance, a key strategic sector for Piraeus, the market size is projected to grow from €1.4 billion to €2 billion, highlighting the increasing significance of bank-led insurance services in Greece.
