Greece’s systemic banks are set to show they have remained in the black over the first quarter of the year and successfully weathered the uncertainty that has prevailed during much of the long runup to the completion of the second bailout review.
Eurobank will issue its January-March performance details on Friday, followed by National and Piraeus on May 24, while Alpha Bank will issue its results on May 31.
Bank officials say that the first quarter is traditionally weak, but Q1 this year was particularly tough due to the review delays. The deterioration of the economic environment was reflected both in the outflow of deposits and the deterioration of loan portfolio quality. In this context the small profits banks did manage to generate in the year to end-March carry additional value, creating expectations for the rest of the year.
No doubt the first few months of 2017 will have a significant impact on the banks’ results. The 0.5 percent year-on-year economic contraction in Q1 led to the 2.7 percent growth target for 2017 being downwardly revised close to 1.5 percent, with many economists even expecting it to drop below 1 percent this year.
Due to these developments banks have been forced to bring down their own key targets for the year set in late 2016. The revision of targets to more conservative levels concerns deposits, new loans, nonperforming loans and profits.
The completion of the bailout review with the voting of the new measures should banish uncertainty and pave the way for the country to return to a growth course as long as the reforms are implemented. Bank officials stress that merely completing the review is not enough. It includes extra austerity measures to make sure that the long-term fiscal targets are met. The debate on the national debt has started, potentially leading to Greece’s inclusion in the European Central Bank’s quantitative easing (QE) program, which in turn will boost confidence. All this should allow banks to recover and up their pace toward dealing with their backlog of NPLs.