DBRS Morningstar said in a commentary last week that the coronavirus outbreak will hamper the effort of Greek banks to reduced their nonperforming exposures (NPEs).
It noted this year was widely anticipated to be a pivotal one for the Greek banking sector.
“Asset quality trends looked set to continue improving, largely assisted by the recovering macroeconomic environment, while the legislation of a system-wide asset protection scheme in late 2019 aspired to facilitate the disposal of significant volumes of nonperforming loans, hence bolstering the ongoing efforts of the four systemic Greek banks. However, the outbreak of the Covid-19 pandemic has blurred the positive outlook, given elevated uncertainty with regard to its impact on the domestic economy and significant disruptions in the financial markets,” it noted.
“DBRS Morningstar considers that the NPE reduction plans of the four major Greek banks will likely be impacted by the coronavirus outbreak. However, the fiscal measures announced at a national level along with the relaxation of certain supervisory standards are expected to mitigate some of the impact of the economic slowdown,” said Lito Chousiada, assistant vice president at the ratings agency.