![Greek Banks: Profit windfall in Q3 2023](https://www.ot.gr/wp-content/uploads/2023/10/ot_banking36-768x450-1.png)
The publication of the financial statements of the four systemic groups for the third quarter of 2023 begins, with analysts expecting a significant further strengthening of their organic profitability.
Alpha Bank and Piraeus Bank are making the start today, before the opening of the stock market, while Eurobank and National Bank will announce their figures next Tuesday.
An improvement in net interest income is certain to be a catalyst for their continued upward trend in earnings in this period as well.
This is because the European Central Bank (ECB) indices were adjusted by 75 basis points since last June, pushing the Euribor interbank rates, to which most loans in Greece are linked, to higher levels.
This development is estimated to have driven the net interest income of the big four in the sector to the region of 6 billion euros in the nine months of 2023, higher by approximately 55% compared to the corresponding period last year.
Also very important is the fact that net NPL flows reportedly remain at very low levels, with most borrowers showing excellent adaptability to the new higher rates.
The differences with 2022
Therefore, relying on income from traditional operations, the banks are expected to show a net result of close to 4 billion euros for the entire current year, higher compared to 3.6 billion euros in 2022.
Between the two years, however, there is a significant qualitative difference in relation to the origin of profitability.
Specifically, in 2022 over 50% came from non-recurring results, whose participation this year will be extremely small.
In addition to net interest income, support for banks’ results is provided by the following:
- Net commission income continues to grow, largely driven by the sale of investment products, for which demand has been strengthened in 2023 by depositors seeking better returns than ordinary deposit schemes.
- The increase in the cost of credit risk, in the context of the precautionary measures taken against the possibility of the creation of new bad debts in the current environment of tight monetary policy and high inflation, is small.
- Operating costs remain under tight control despite inflationary pressures, while wage increases for workers initiated under the industry’s new collective bargaining agreement are small. At the same time, the banks are enjoying the benefits of the voluntary exit programs completed in the previous months.
The dangers
Of course, not everything is rosy in the industry. There are also areas that concern bank administrations.
The main sources of concern are the following:
In today’s high-cost borrowing environment, creditworthy borrowers, primarily in business and secondarily in home equity, are paying off their balances early. This is a trend that started in the first quarter of 2023, following the first increases in ECB interest rates, and which has not yet stopped.
Given that the Eurobank will keep its indicators at historically high levels for a long time, without ruling out a new readjustment if inflation is not controlled, it is extremely likely that this practice will continue.
In recent months, there more than a few companies that request the reduction of profit margins (spreads) in their contracts with the aim of limiting the total cost of servicing their debts. Many of these requests are accepted by banks, at the risk of late payments from their customers.
It is not excluded that they will multiply in the next period, as interest rates will remain at high levels at least until the summer of 2024.
Their long-term maintenance at high levels will also affect the demand for new financing.
Lending requests are already showing a negative change compared to last year, making it extremely difficult to achieve the goals for credit expansion that the banks had set at the beginning of the year.
Pressure on net interest income will be exerted by the expected increase in interest expenses on term deposits. This will come both from the upward adjustments of yields, which it is estimated that the banks will proceed in the coming months, and from the expected transfer of deposits from the savings bank to term accounts.
Finally, it remains to be seen whether the good course of collections on existing loans will be denied or if banks will be forced to write more provisions to cover any new non-performing exposures.
![ot.gr](/wp-content/themes/whsk_otgr/common/imgs/fav.ico/favicon-32x32.png)
![ot.gr](/wp-content/themes/whsk_otgr/common/imgs/fav.ico/favicon-32x32.png)
Latest News
![Gov’t Eyes Return of Power Subsidies Amid Spike in Rates](https://www.ot.gr/wp-content/uploads/2024/07/power-lines-2048x1365-1-600x400.jpg)
Gov’t Eyes Return of Power Subsidies Amid Spike in Rates
According to reports, the government will resume an electricity subsidization program, given that forecasts cite disruptions – i.e. higher rates
![ELSTAT: 6.3% Increase in Output Price Index for Agriculture and Livestock](https://www.ot.gr/wp-content/uploads/2024/07/ot_georg_PROIONTA_money-1-600x352.png)
ELSTAT: 6.3% Increase in Output Price Index for Agriculture and Livestock
The 6.3% rise in May 2024 is largely driven by an 8.8% increase in the crop output group, particularly due to changes in olive oil prices, and a 0.5% increase in the animal output group.
![Balkans Blackout Highlights Climate Threats to Power Grids](https://www.ot.gr/wp-content/uploads/2024/07/blackout-1-600x457.png)
Balkans Blackout Highlights Climate Threats to Power Grids
The surge in electricity demand during the heat wave and the power deficit in Balkan markets have driven up prices in the Greek wholesale electricity market.
![Greece in Top 4 Destinations Favored by European Tourists](https://www.ot.gr/wp-content/uploads/2021/06/ploio-600x400.jpg)
Greece in Top 4 Destinations Favored by European Tourists
Greece was selected by 5.9% of respondents who were asked where they would vacation this year, up from 5.4% in the same survey last year
![Scope Affirms Greece’s BBB- Ratings; Revises Outlook to Positive](https://www.ot.gr/wp-content/uploads/2024/06/euros-2048x1365-1-600x400.jpg)
Scope Affirms Greece’s BBB- Ratings; Revises Outlook to Positive
The international ratings firm raised Greece to investment grade in early August 2023
![First Seaplane Test Flights to Skopelos, Alonissos, Skyros](https://www.ot.gr/wp-content/uploads/2024/06/hellenic-seaplanes-pilotikes-ptiseis-ydatino-pedio-lavriou-600x450.jpeg)
First Seaplane Test Flights to Skopelos, Alonissos, Skyros
After decades of on-again, off-again efforts to schedule regular seaplane routes to Greece's numerous island and coastal destinations the prospect now appears within sight
![ELSTAT- Overall Import Price Index for May 2024 up 2.8% y-o-y](https://www.ot.gr/wp-content/uploads/2023/08/unnamed-41.jpg)
ELSTAT- Overall Import Price Index for May 2024 up 2.8% y-o-y
The same price index had decreased 20.8% from May 2022 to May 2023
![Over 7 in 10 Employees Feel Their Contributions Are Not Appreciated](https://www.ot.gr/wp-content/uploads/2024/06/ergasia-ergazomenos-600x300.jpg)
Over 7 in 10 Employees Feel Their Contributions Are Not Appreciated
Specifically, the option "Subjective opinions are prioritized over objective data" ranked highest in importance for young employees, with a score of 3.89 out of 4
![OECD: Job Vacancies on the Rise in Greece](https://www.ot.gr/wp-content/uploads/2024/07/ergasiabusinness-768x556-1-1-600x434.jpeg)
OECD: Job Vacancies on the Rise in Greece
By the fourth quarter of 2023, job vacancies per unemployed person had risen by more than 4, with the index reaching 446 units compared to 100 units in late 2019
![OTE Group: FTTH Program Advancing in Semi-Urban and Rural Areas of Greece](https://www.ot.gr/wp-content/uploads/2024/05/ΟΤΕ-Group_1-600x450.jpg)
OTE Group: FTTH Program Advancing in Semi-Urban and Rural Areas of Greece
This initiative will provide ultra-fast internet speeds of up to 1Gbps to over 350,000 households and businesses in semi-urban and rural areas across the country