Greek Banks: Improved Operating Performance and Risk Profile Support Further Strengthening in Capitalisation in H1 2023

The commentary analyses the H1 2023 results for the four major Greek banks: Alpha Bank, Eurobank, National Bank of Greece, and Piraeus.

Summary highlights from the commentary include:

• Greek banks reported an aggregate net profit of EUR 1.8 billion in H1 2023, down 22% YOY, although H1 2022 included sizeable positive one-off items attributable to trading and other income

• Revenues in H1 2023 have seen a strong increase in net interest income (NII) with benefits from the rapid hike in interest rates despite lower new loan volumes, as well as higher net fees. Operating efficiency remained strong.

• In H1 2023, the annualised cost of risk was in line with 2022 but below the very high levels of the recent past, and asset quality has continued to improve.

• Ample and sticky deposit bases have enabled Greek banks to keep a comfortable liquidity position despite TLTRO III repayments.

• Sustained organic capital generation in H1 2023 has strengthened capitalisation, however the quality of capital remains relatively weak.

“Higher core revenues, cost control and lower credit costs supported results in H1 2023” said Andrea Costanzo, Vice President from the DBRS Morningstar European Financial Institutions team. “We expect NII to decelerate in coming quarters, reflecting our view of a slowdown in the tightening of the ECB monetary policy, as well as the likely increase in funding costs, and the introduction since May 2023 of an interest rate cap on performing domestic retail mortgages.”