Risks to financial stability in Greece remain mainly exogenous and are linked to geopolitical tensions, the rise of trade protectionism and the possibility of a sharp repricing of assets in international capital markets, the Bank of Greece’s Financial Stability Report says.

At the same time, it finds that in the first half of 2025, Greek banks further strengthened their fundamentals and their resilience to potential disruptions.

More specifically, as noted in the Financial Stability Report, in the first half of 2025 Greek banking groups recorded profits after taxes and discontinued operations amounting to 2.5 billion euros, compared to profits of 2.4 billion euros in the corresponding period of 2024. Net commission income and income from financial operations contributed positively to this development, which increased significantly, while negative impacted by the slight decrease in net interest income, the increase in operating expenses and provisions for credit risk.

The capital adequacy ratios of Greek banking groups remained at a high level. Specifically, the Common Equity Tier 1 ratio (CET1 ratio) on a consolidated basis decreased marginally to 15.8% in June 2025 from 16% in December 2024 and the Total Capital Ratio (TCR) increased to 20.4% from 19.8% in December 2024, very close to the average of the major banks in the Banking Union.

The quality of the loan portfolio of credit institutions improved. In June 2025, the ratio of non-performing loans to total loans in Greece stood at 3.6%, compared to 3.8% in December 2024. This percentage is the lowest since Greece joined the euro zone.

In terms of the outlook, uncertainty and risks in the international environment are the biggest challenge. The domestic banking sector has strong fundamentals and is in a much better position than in the past to weather any turbulence. However, any deterioration in international financial conditions may adversely affect economic activity and, indirectly, the domestic banking sector. Therefore, the further shielding of the financial system is a priority and vigilance is required from all the actors involved.

The Financial Stability Report, which is published twice a year by the Financial Stability Directorate, examines developments in the macroeconomic and financial environment, assesses the risks and resilience of the banking sector, insurance companies and other sectors of the financial system and analyzes the functioning of financial market infrastructures (payment systems, central depositories securities and central counterparties).

This Report focuses on the developments that took place in the banking sector in the first half of 2025, while two Special Topics are also presented:

a) Special Topic I presents the methodology and results of the pan-European stress simulation exercise conducted by the European Banking Authority (EBA). This exercise assesses banks’ resilience against different types of risk in an adverse scenario.

b) Special Topic II lists the main technical challenges and weaknesses of the standardized credit-to-GDP ratio index in the context of the assessment of cyclical systemic risks and the determination of the countercyclical capital buffer ratio in European countries.