The Bank of Greece released its Financial Stability Report today, indicating positive prospects for the Greek banking sector, although these are closely tied to the country's macroeconomic trajectory and external factors.
In the first half of 2024, Greek banks reported profits after tax of €2.3 billion, up from €1.9 billion in the same period last year. This growth was driven by increased net interest income and fees, bolstered by revenues from payment transactions and asset management.
The sector's capital adequacy remained stable, with the Common Equity Tier 1 (CET1) ratio slightly decreasing to 15.4% in June 2024 from 15.5% in December 2023. The Total Capital Ratio (TCR) held steady at 18.8%, both figures trailing behind the European averages of 15.8% and 19.9%, respectively.
Liquidity conditions in the Greek banking sector remained satisfactory, with the liquidity coverage ratio at 209.3% as of June 2024. However, the quality of loan portfolios slightly deteriorated, with the non-performing loans (NPL) ratio increasing to 6.9%, significantly above the European average of 2.3%.
The report warns that geopolitical risks and sudden asset repricing in international markets could negatively impact the global economy and, consequently, the Greek banking sector. Additionally, climate change and cyber threats pose significant risks to financial stability.
Overall, the report emphasizes the need for further strengthening the Greek banking sector and implementing necessary reforms to deepen the Banking Union and enhance competitiveness within the EU.