If banks want to maintain their profitability in the coming years, given the reduction of interest rates from the ECB, as it is significantly based on interest rates, they should mainly increase their loan portfolio.

Given the reduction of interest rates, boosting credit expansion is the key driver for a viable and strong profitability of banks. The rate of credit expansion was moved in 2024 over the initial expectations.

Reduce interest rates, coupled with the good performance of the Greek economy and increasing investment in the country, has supported credit expansion, according to DBRS.

In 2024, the four systemic banks increased their up -to -date loans and, consequently, their revenue base of about € 13.8 billion, which is the strongest performance of the last 15 years, compared to $ 5.8 billion in 2023. During the last quarter of 2024, the net credit expansion was raised.

Funding to GEK TERNA to acquire the exploitation of the Attica Road road axis largely explains this performance, as it has raised the increase in informed loans by about 2.55 billion euros.

The net credit expansion to Eurobank stood at 3.9 billion. from 1.8 billion. In 2023, in the National at € 3.1 billion from € 1.3 billion, in Piraeus at € 3.6 billion from € 1.5 billion and Alpha Bank at € 3.2 billion from € 1.2 billion in 2023.

The credit expansion was reinforced by 9% for 2024 and based on BoG data. About 9% of the total private sector, by 13.8% in non -financial enterprises, was 0.7% in terms of freelance farmers and individual businesses and 6.3% on consumer loans to individuals. On the contrary, the credit expansion remained negative in terms of mortgage loans by 2.6%.

At the same time, banks continued to reduce the NPS index (NPEs) last year.

The average NPES index improved to 2.6% in 2024 from 3.5% in 2023, below Spanish (3.0%) and near Italian banks (2.4%). As for the NPEs index, National reduced the index to 2.6% of loans from 3.7% in 2023, Eurobank to 2.9%, from 3.5%, Piraeus to 2.6% from 3.5% and Alpha Bank to 3.8% from 6.0%.

In 2025

Greek bankers, as they have stated in their meetings with large international investment houses, aim for new loans of at least 10 billion euros in 2025. Greek banks are significantly benefiting from the Greek recovery story and increased corporate lending, according to international houses. Greek banks are coming out of the Greek debt crisis dynamically and are able to benefit from strong macroeconomic recovery and business credits.

UBS expects a strong corporate credit circle of 8% annually by 2026, which will have to offset the compression of the interest rate margin (NIM) as interest rates are reduced.

In its estimates for Greek banks, S&P predicts that Greece’s real GDP will increase by 2.4% on average in the period 2024-2027, over-the-day eurozone countries. The ongoing absorption of EU support funds will boost demand for new corporate loans. S&P expects that bank loan portfolios will increase by 4% both this year and 2025. In addition, the house assumes that high demand for precarious Greek loans will continue. Positive prospects in domestic real estate markets and increased recovery prospects due to reforms will support this development.

Upgrading the public credit rating also upgrades the debt of banks, which can be borrowed at lower interest rates. It should be noted that all Greek banks have been upgraded to an investment level and even two scales above the minimum. Cheaper lending to banks means equally cheap loan for businesses and households.

Banks’ liquidity indicators, also monitored by the supervisor, far exceed the minimum required. After all, private deposits are on a constant upward trend after 2019.

According to the DBRS rating house, Greek banks’ revenue structures are significantly based on net interest revenue (NII), so the continued reduction in interest rates will negatively affect their revenue. However, new loan flows, which appear to be stronger in Greece than the rest of Europe, will contribute to the partial offsetting of the negative effect on NII from the lowest interest rates.

The business portfolio for businesses in Greece increased by 14.2% annually in December 2024, significantly better than the eurozone, and was significantly accelerated in the fourth quarter of 2024 to finance important projects related to the country’s development.

Geopolitical tensions and threats to global trade through duties are expected to negatively affect loan growth in 2025. However, the best prospects for the Greek economy compared to Europe, as well as the opportunity for banks to continue lending to their loans.

Deposits

Greek banks are mainly funded through deposits. Customer deposits account for about 89% of total funding at the end of 2024 and came mainly from retail customers, who are usually stable.

Household deposits in Greece, exceeding 150 billion euros in December 2024augmented with interest of the year, as at the end of each year. Although household deposits were reduced by 1 billion euros this year In January, at 149.35 billion euros, from € 150.35 billion, they have, however, returned to the nominal levels of the second half of 2011. It is noted that the loan ratio was at 67.2%, which demonstrates the existence of surplus in deposits and plenty.