It changes the narrative around Profits this year Of banks n Moody's With a revealing analysis, Greek bank profits will remain strong in 2024-2025, despite expected interest rate cuts from the European Central Bank.
According to the rating agency: Red NPE Loans It is on track to converge with European capital indices, and is comfortably above supervisory requirements, while stipulating that Greek banks will pay dividends for the first time this year, after many years.
In particular, the rating agency reported on Greek banks' profits in 2024-2025 that they “will remain strong, despite the relative pressure on profit margins. Customer deposits support comfortable funding and liquidity for banks.”
High lending rates and now lower write-offs for securitization of non-performing loans are what supported banks' results in 2023, according to the rating agency.
“The four systemic banks in Greece announced Strong profits for 2023, supported by high lending rates and a relatively low debt provision, while managing to further reduce its non-performing loans and maintain comfortable funding and liquidity, converging closer to the average of major EU banks.
The House now estimates that non-performing loans are falling further and are on track to converge with the European average 2,3% Although Greek banks now have an average NPE ratio of approx 4.1%from 6,2% the 2022 It is maximum 49% In December of 2016.
It is estimated that the downward trend in bad loans will continue this year, but without dramatic improvements. The Council stresses that “banks will find it more difficult to achieve any significant reduction in NPE amid rising interest rates, although the downward trend is likely to continue.”
the net income Home says interest rates (NII) have risen to a staggering 51% by 2023, supporting its core operating income, with the main source coming from higher interest rates and new loan disbursements. This new financing came mainly from corporate demand, which combined with lower impairment charges and continued cost rationalization supported banks' profitability.
the Local deposits The number of clients grew by about 2% during 2023, compared to 5.5% in 2022, and their liquidity remained comfortable with the LCR liquidity ratio at 218% at the end of 2023.
About half of the banks' liquid reserves are Greek government securities, while all four banks are on track to meet the minimum requirements for own funds and eligible liabilities (MREL).
Bank money
According to Modi et al Four Greek banks It reported relatively comfortable regulatory capital ratios in 2023 above its minimum requirements, supported by its strong profitability and organic capital generation.
The common equity Tier 1 (CET1) ratio averaged 15.7% in 2023 compared to 13.8% in 2022, if Moody's preferred ratio (TCE) was significantly lower in the year due to still high deferred tax assets on its books. .
Loan coverage provisions have also improved in recent years. The average provision coverage for the four banks rose to about 70% in 2023 from 65% in 2022.
The Council concludes that the enhancement of banks' organic capital is comfortably above the requirements, with the aim of increasing capital measures, which notes that “after creating significant organic capital during 2023, Greek banks reported relatively comfortable supervisory capital, above the threshold.” The lowest it has. requirements.
The average fully loaded common equity ratio (CET1) was 15.7% in 2023 compared to 13.8% in the previous year (15.6% in Europe), while the total capital adequacy ratio (CAD) averaged 19.1% in 2023 from 16.9% in 2022, (19.7% in 2023). Europe). Greek banks have managed to achieve capital levels similar to their bond counterparts, with the aim of increasing their core capital by 2026.
She said that the CET1 capital of the four banks witnessed a much greater increase compared to the growth in their risk-weighted assets during 2023.
The capital base of the four banks was supported by retained earnings, while these indicators also include plans for modest dividend payments in 2024 (more than a decade away), subject to regulatory approval.
Moody's rates Greece's systemic banks as follows:
- Alpha Bank (Ba1/Ba2 positive, Ba3),
- Eurobank (Baa3/Ba1 cash, ba2),
- National Bank (Baa3/Ba1 positive, Ba2) and
- Piraeus Bank (Ba1/Ba2 positive, ba3)
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