What the heads of the four systemic banks value after the upgrade by Moody’s

The assessments of the managing directors of the four systemic banks, which were made on the occasion of the announcement of the financial results for the nine months of 2022, converge in the common conclusion that the Greek economy and businesses show resilience in the face of the major challenges facing the European economies.

The managing directors of the banks emphasized that the domestic banking system finances the Greek economy and operates it with strong profitability, capital adequacy and liquidity, emphasizing the utilization of funds from the Recovery and Resilience Fund. They also highlighted that the banks’ transformation programs are at an advanced stage and are taking the banking system into the next day for the benefit of their customers.

The estimates of the four for the Greek economy

Piraeus Bank CEO Christos Megalou pointed out that unlike its European partners, Greece remains on an economic growth trajectory in 2023 and beyond, due to the different phase in the economic cycle for the Greek economy, and the country’s improved resilience and competitiveness .

The managing director of the National Bank, Pavlos Mylonas, pointed out that economic activity continued to show resilience against the difficult conditions resulting from the energy crisis, with the country’s GDP growth rate remaining among the highest in the euro zone.

As Mr. Mylonas mentioned, tourism continues to be a key pillar of the growth of the Greek economy, with the data so far suggesting that tourism revenues will reach a new historic high this year. At the same time, the profitability of the private sector, the positive developments in the labor market and the fiscal support measures amounting to about €13 billion, in gross value, help to moderate the impact of inflation on the real economy. The acquired momentum due to the strong economic performance of the nine months of 2022, the defensive characteristics of the Greek economy, in terms of its position in the business and credit cycle, the resilience of businesses that have been forged through multi-year restructuring and maintain low levels of leverage, as well as the investment recovery guided by the European Recovery and Resilience Mechanism (RRF), make Greece relatively resistant to economic pressures, Mr. Mylonas estimated.

Alpha Bank CEO Vassilis Psaltis said that as geopolitical instability casts its shadow on the global macroeconomic picture, the Greek economy has performed strongly and is better positioned to handle external shocks. Greek GDP is expected to grow by 2% in 2023, well above the EU average, proof of the resilience that the Greek economy has developed in recent years. Funds from the EU Recovery and Resilience Fund and the continued significant inflow of investment into Greece bode well for continued expansion of the bank’s loan portfolio, he added.

The managing director of Eurobank Fokionas Karavias stated that in an environment full of economic and geopolitical uncertainties, the Greek economy continues to positively surprise, with the growth rate now forecast at 6% for this year. The continued rise in interest rates and the prolongation of the war in Ukraine are creating recessionary pressures on the European and international economy, with the risks increasing. The strong performance of 2022, together with the continuous investment interest in the country and the good course of absorption of European resources, lead to the assessment that we will have a positive growth rate in 2023, but at a significantly lower level. However, it will remain above the European average, keeping Greece on the path of real convergence, estimated Mr. Karavias.

The developments in the smaller banks

Developments in two smaller banks are also positive, according to what emerged last week.

With regard to Pancreatia, according to Bank sources, with sufficient capital (after the share capital increase) and a now strong main shareholder, Pancreatia is proceeding with the implementation of its business plan, with increasing momentum and with the main axes of development being the acquisition of the activity of Greek branch of HSBC, as well as the merger by absorption of the Cooperative Bank of Chania. For Pankritia Bank, the new day has already begun, making it now the favorite for the creation of the fifth banking pole in the country, aiming at the significant support of entrepreneurship and the Greek economy in general, the same sources report on the occasion of the upgrade of rating by Moody’s.

On the part of Optima bank, on the occasion of the successful completion of the issuance of a convertible bond loan (MOD) from which the bank drew the amount of 60 million euros, the bank’s management pointed out that the bank is further strengthening its financial figures. As pointed out, the bank succeeded and became profitable just 18 months after its launch, a rare fact even at the international level. The bank’s profits in 2021 amounted to 16.7 million euros with estimates for 2022 hovering around 30 million euros. Loans amount to 1.5 billion euros and deposits to 2 billion euros, with non-performing loans at 0%. Optima bank, having already invested over 20 million euros, currently has a network of 26 branches in Athens, Corinth, Thessaloniki and Heraklion in Crete, while in the next few days the bank’s branch in Larissa is also opening and plans new expansion in areas where there is a strong economic activity that entails the need to provide banking products and services. At the same time, the bank has a strong presence in alternative digital networks.

In the wake of the upgrade from Moody’s

These strong financial results of the banks came in the wake of their upgrade by the credit rating agency Moody’s, which proceeded to upgrade the long-term deposit rating of six Greek banks by one or two notches, as well as the stand-alone basic credit assessment (BCA) of three of these banks, which according to banking sources is a vote of confidence in the prospects of the domestic banking system and signals the next day which has already begun.

The long-term deposit credit outlook for two banks changed to stable from positive following their upgrades, while the remaining four banks remained positive. According to Moody’s, the upgrades were driven by the structural improvements in the Greek economy, the significant reinforcements in the banks’ asset quality, the improvement in profits from their main sources of activity. A key driver for the new ratings is Greece’s improved financial position, with better operating and credit conditions, which offer a more supportive operating environment for the country’s banks. These positive developments in the operating environment also signal lower risks for the solvency profiles of Greek banks.

As the rating agency estimates, the strong tourism sector, domestic consumption and investment will lead to a strong increase in real GDP of around 5.3% in 2022 based on the agency’s expectations, higher than the increase of 2.2 % for the Eurozone average. Although growth will slow significantly to 1.8% in 2023 as high energy prices spill over into broader inflationary pressures and weaken household purchasing power, while rising interest rates weigh on investment, the Greek economy will continue to grow at a higher rate than other EU countries, the rating agency estimates.

RES-EMP

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