UBS ‘Bullish’ on Greek Banks

International investment bank UBS remained “bullish” on the prospects of Greek banks, following the most recent data about lending and deposits released by the Bank of Greece (BoG), the country’s central bank.

In its note, UBS highlights the positive trends in loans and savings and the financing cost, stressing corporate credit expansion acts as the driving force for the banking sector’s profit margins.

Growth accelerated to an impressive 16.5% year-on-year (+2.2% on a monthly basis), a figure that stands out notably within the context of European banks. This strong performance marks an excellent start for Greek banks’ three-year plans (with UBS estimating a compound annual growth rate (CAGR) of 9% in corporate loans through 2026) and exceeds their projection for 2024, which forecasts an 11% growth.

UBS analysts remind us that they project Greek economic growth of 2.8% in 2025, alongside a compression in the yield of 10-year bonds by 75 basis points this year, reaching 2.8%.

UBS: Strong Corporate Credit, Shrinking Retail Lending, Favorable Deposit Mix
The overall growth in private sector credit accelerated to 9.1%, with corporate lending climbing to 16.5%. Meanwhile, household credit continues to shrink (-3.8% year-on-year), although it remains stable on a monthly basis.

According to UBS, a noteworthy development is the net credit flows, which highlight robust corporate borrowing as of September 24, alongside a slowdown in the decline of mortgage loans.

The deposit mix has not shifted towards term deposits as banks initially anticipated. Sight deposits remain steady at approximately 75%, supporting net interest margins (NIM) in the medium term.

Source: Tovima.com