Greek banks project €4.7bn profits amid strong credit growth
Greece’s four systemic banks have posted strong profitability in the second quarter, with projections indicating that total earnings could reach €4.7 billion by the end of 2025.
According to Greek news outlet Newmoney, the robust performance is largely driven by sustained credit activity, with full-year estimates for net credit expansion projected at €13 billion or more.
Newmoney reported that the banks’ credit operations remain extremely strong, with business lending expanding rapidly due to broader economic growth and disbursements from the Recovery and Resilience Facility.
Despite this growth, mortgage lending remains subdued, affected by elevated property prices and limited household incomes.
Eurobank’s foreign loan portfolio has made a significant contribution to overall results, while domestic mortgage credit continues to stagnate.
Dividend distribution is also back in focus, with all four systemic banks — Piraeus, Eurobank, National Bank of Greece (NBG), and Alpha Bank — approving interim cash dividends in line with international norms.
Dividend payouts range from 10 per cent to 20 per cent of net profits, with dividend yields varying between 1.2 per cent and 2.4 per cent.
NBG leads with a €260 million distribution, the highest both in absolute terms and as a share of profits at 20 per cent.
Piraeus Bank is opting for a more conservative approach, allocating 10 per cent of earnings to shareholders.
Newmoney noted that these decisions reflect a return to normalcy and confidence in the banking sector’s stability while providing value to shareholders.
Some banks are holding back on share buyback programmes for now due to high stock valuations, though they intend to resume these plans at a later stage.
NBG also left open the possibility of a final dividend payout potentially exceeding 60 per cent of total annual earnings.
Net interest income remains resilient across the board, supported by strong lending volumes and the fact that a large portion of deposits remains in low-yielding savings and current accounts.
According to NBG’s presentation, 80 per cent of Greek retail savings deposits are held in its portfolio.
All banks anticipate a rate cut in September, but do not expect interest rates to fall below 1.5 per cent.
Newmoney reported that the banks’ strong results are underpinned by interest income and commissions, enabling them to forecast nearly €4.7 billion in profits for the full year.
The more resilient the banks are in maintaining interest income, the more optimistic their 2025 forecasts appear, especially when compared to last year’s performance.
Capitalisation remains solid across all four banks, with NBG once again posting the best figures.
In terms of mergers and acquisitions, each bank appears to be following its own strategy.
NBG is continuing its search for acquisition opportunities but has not provided further details.
Alpha Bank stated that any acquisition must be meaningful.
They explained that the bank is applying strict investment criteria, requiring that the return on investment exceed 15 per cent and contribute positively to capital and earnings per share within two to three years, without affecting its dividend policy.
Eurobank expressed interest in the banking, insurance, and asset management sectors, primarily outside of Greece.
They noted that they are closely monitoring consolidation trends in Bulgaria’s banking market, where they have a specific strategic interest.
Piraeus Bank, having already undertaken key initiatives, is prioritising the completion of its process regarding National Insurance.
It is also focused on finalising a Danish settlement that is expected to stabilise the bank’s capital at higher levels.