Greek Banks: A Stronger Than Expected H1 Shapes Up Better Prospects For 2024

The commentary analyses the H1 2024 results for the four major Greek banks: Alpha Bank S.A., Eurobank S.A., National Bank of Greece S.A., and Piraeus Bank S.A.

Summary highlights from the commentary include:
-- Greek banks reported an aggregate net profit of EUR 2.3 billion in H1 2024, up 25% YOY.
-- Higher net interest income (NII) and net fees have supported revenues in H1 2024, despite significantly lower trading profits and other non-recurring income. Cost control helped offset inflationary pressures and higher expenditures for digitalisation.
-- Cost of risk reduced in H1 2024 when compared with previous years although remaining at higher levels than the European average. Risk profiles have strengthened further amidst continued de-risking and benign asset quality trends.
-- The sector's liquidity remains underpinned by large, growing and sticky deposits as well as increasing market issuance activity, despite the ongoing repayments of central bank funding. Capital buffers have strengthened further; however, the quality of capital remains weak.

"Higher core revenues, cost discipline, and lower loan loss provisions have driven higher profits in H1 2024" said Andrea Costanzo, Vice President from the Morningstar DBRS European Financial Institution Ratings team. "A stronger than expected H1 shapes up higher expectations for 2024 mainly because of higher than anticipated resilience in net interest margins which reflected a slower lowering of interest rates as well as better deposit mix and pace of credit growth."