The quality of Greek banks’ assets and their levels of capital constitute the biggest challenges for the sector in 2019, and these two factors will also determine the course of Greece’s assessment by its creditors, Fitch analysts noted on Tuesday at an event in Athens.
Cristina Torella, a senior director at Fitch specializing in banking analysis, told the “Credit Outlook 2019” event that the prospects of the local banking sector are stable and progress is expected in the “fixing” of the systemic banks’ financial balances. However, she warned that the banks’ assessments will remain quite low due to the weak quality of their assets and the pressure on capital from the high volume of problematic assets.
The Fitch analyst stated that the two plans on the table for the reduction of Greek lenders’ nonperforming exposures, by the Hellenic Financial Stability Fund and the Bank of Greece, could be the means to achieve major changes in the sector and could be viewed as credit positive for Fitch as they will assist in the restoration of confidence and the increase of profits.
Torella conceded that there are also risks in these plans too, but said that if their implementation is delayed the consequences will become obvious during 2019.