S&P Global Ratings upgraded the credit ratings of four Greek banks, the National Bank of Greece, Eurobank, Piraeus and Aegean Baltic Bank on Friday, and affirmed the rating of Alpha Bank, citing the stronger institutional environment and the improved capital quality of the sector.
As the American agency notes, the strengthening of the supervisory authorities’ ability to act proactively against the challenges of the Greek banking system has reduced risks in the sector. Its analysts refer to the initiatives of the Bank of Greece to accelerate the consolidation of the banking system and mainly to the Hercules program.
At the same time, the consolidation of the Greek banking system and the implementation of macroprudential measures have contributed to the reduction of risks. S&P believes that the institutional framework of the Greek banking sector is now aligned with that of most eurozone countries.
The banking system has reached a turning point where it will seek to utilize capital to grow balance sheets and maintain profitability while keeping new flows of bad loans limited. S&P estimates that systemic banks ended 2024 with NPEs between 2.5% and 4%, with a return on equity of 13.5%.
Last September Fitch Ratings upgraded the credit ratings of Greece’s four systemic banks, the National Bank of Greece, Piraeus Bank, Alpha Bank, and Eurobank. This upgrade reflected the improved assessment of Greece’s operating environment, now rated at ‘BB+’.
The main drivers for the upgrade, according to Fitch’s announcement, were the favorable dynamics of the Greek debt, the commitment to fiscal adjustment, resilient growth, policy continuity, and the improvement of the banking system.
The Fitch Ratings upgrade indicated that Greece’s economy was on an upward path as regards to government policies. It also opened new perspectives for foreign investment.
Strong profits for the Greek banks
Greek banks showed a strong profit performance during 2024. The performance of the four systemic banks has led to increased earnings forecasts and dividend payouts for the year. They are collectively projected to achieve net profits of €4.5 billion in 2025.
During the January-September period, the four banks recorded combined profits of €3.49 billion, a 22.66 percent increase compared to €2.85 billion during the same period last year.
This has led to accusations of profiteering, especially when other sectors or individuals struggle financially. Socialist PASOK, now Greece’s main opposition following the demise of SYRIZA, is calling on the government to impose a one-off levy on the banks’ profits.
PASOK leader Nikos Androulakis, in a post on social media on Tuesday, stated: “Now that the banks have entered a phase of strong profitability the time has come for a portion of these benefits for the banking system to also go to the Greek taxpayer.”