Moody’s Note Lauds Greek Banks, Ahead of the Credit Agency’s Mar. 15 Evaluation

Ahead of its official evaluation of the Greek economy, expected on March 15, Moody’s Credit Rating Agency gave a foretaste of its positive disposition about the performance of Greek banks singing their praises in a surprise note released today.

The unexpected note is a positive indication, as Moody’s is considered one of the most rigorous of the systemic rating agencies and the only one so far that has not assigned an investment grade to Greece.

Moody’s outlines that data published by the Bank of Greece (BoG) on March 4 indicated that the interest rate spread between the weighted average loan interest rate (an average that is adjusted to reflect the contribution of each loan to the total debt) and the weighted average deposit interest rate for Greek banks remained above the 5.6% level in January.

The high margin indicates that deposit betas— a measure calculating the sensitivity of a bank’s deposit cost to changes in the short-term interest rate—remain relatively low, a fact that would buttress net interest margins (NIMs) – a metric examining the success of a bank’s investment decisions compared to its debt situations – and the profitability of Greek banks in 2024. These expectations for sustained robust profitability in 2024 are one of the key factors behind Moody’s positive outlook for Greek bank deposits.

The weighted average interest rate charged by Greek banks on new loans in January amounted to 6.15%, while the weighted average interest rate paid on new deposits was only 0.53%, resulting in a weighted average interest margin of 5.62%.

The corresponding figures for non-performing loans and deposits, which have a much greater impact on bank performance, were 6.36% for loans and 0.53% for deposits, resulting in an even higher weighted average interest margin of 5.83% compared to an average of 5.67% in 2023, Moody’s explains.

Positive Outlook

Moody’s maintains positive outlooks for Greek banks, which it currently evaluates as follows:

Eurobank – Baa3/Ba1 positive, ba21
National Bank of Greece – Baa3/Ba1 positive, ba2
Alpha Bank – Ba1/Ba2 positive, ba3
Piraeus Bank – Ba1/Ba2 positive, ba3
Pancreta Bank – B2 positive, caa1
Attica Bank – B3 positive, caa2

Source: tovima.com