The Bank of Greece has released its latest Financial Stability Report, painting a picture of a Greek banking sector that is stronger and better equipped to handle future shocks than in years past.
Despite some deterioration in loan quality, the report highlights positive trends in profitability and liquidity, positioning Greek banks to continue fulfilling their crucial role in the economy.
Greek banks recorded a significant boost in profitability in the first half of 2024, with post-tax profits reaching €2.3 billion, up from €1.9 billion in the same period last year.
This growth was largely fueled by increased net interest and fee income, with payment transactions and asset management activities contributing significantly.
While capital adequacy remains stable, it still lags behind the European average. The report shows a slight dip in the Common Equity Tier 1 (CET1) ratio to 15.4% in June 2024, compared to 15.5% in December 2023. Similarly, the Total Capital Ratio (TCR) held steady at 18.8%, but remains below the European average of 19.9%.
Despite these positive indicators, the report acknowledges challenges, particularly concerning non-performing loans (NPLs).
The NPL ratio rose to 6.9% in June 2024, significantly higher than the European average of 2.3%. This increase is partly attributed to the reclassification of certain state-guaranteed loans as NPEs, in line with regulatory changes.
Looking ahead, the Bank of Greece emphasizes that the banking sector's performance is intrinsically linked to the overall health of the Greek economy, which faces potential headwinds from global geopolitical risks and the possibility of abrupt asset repricing in financial markets.
The report also identifies climate change and cyberattacks as significant threats to financial stability.
To mitigate these risks and ensure the continued resilience of the banking sector, the Bank of Greece calls for further strengthening of banks' financial positions and advocates for reforms to deepen the Banking Union and enhance competitiveness within the European Union.