The loans Greek banks will issue annually in 2022-2024 will exceed 20 billion euros or 12% of gross domestic product, JP Morgan has estimated. This estimate, combined with the implementation of plans for the reduction of nonperforming loans, will be the two key catalysts in a strong investment drive by local lenders.
In the last year the prospects of the domestic credit sector have improved considerably, the US banks notes, expressing its optimism about the sector. Even during the pandemic, nonperforming exposures were reduced last year by about €17 billion, or about a quarter of the €65 billion of 2019; they are now expected to shrink by a further €40 billion in 2021-2022, with banks’ NPE indexes dropping below 10% from early 2022, matching those of European lenders.
These developments will pave the way for normalizing risk costs, with a further boost for profits from the increase in loans issued, from further opportunities on the revenues front from commissions and from operating efficiency earnings.
JP Morgan also comments that the market has been underestimating the growth and return momentum Greek banks currently enjoy.