Local credit system is steady
Unfazed by the global jitters, Greek banks are robust and expect another prosperous year
Against the backdrop of this month’s global financial system turmoil, Greek banks announced results that show that the chapter of losses from the management of bad loans has been closed for good and they are now focusing on the qualitative improvement of their profitability.
The profitability target comes after seven consecutive years of losses totaling 18.2 billion euros, and although last year’s €3.3 billion profit did not offset losses from previous years, it signals a shift towards a sustainable positive outlook. This signal was issued by the managements of all four systemic banks when announcing the results of 2022, pointing to another positive year.
The turmoil in global markets certainly gives cause for concern, but it is not unduly alarming local bank managers, who assure that the Greek banking system is not only at the best it has been in a decade but is actually in a much better state today than it was even 25 years ago.
The figures they have released reaffirm this view. The distance that has been traveled is evident, given that before the Greek financial crisis the capital held by banks was in the single digits of 8%-9%, while today the respective indices are close to 15%. The capital ratios are strengthened by a percentage that reaches 20% if the funds for the Minimum Requirements for own funds and Eligible Liabilities are also taken into account, which behind the acronym MREL constitute yet another safeguard for the banks’ capital shielding so that they can respond to emergency situations.
The ratio of loans to deposits has dropped from 110%-120% in 2008 to 60%-70%, creating sufficient liquidity for the smooth financing of a healthy economy. Based on 2022 figures, new disbursements exceeded €30 billion and net credit growth amounted to €8.5 billion, despite the fact that the dynamics of the Recovery Fund’s resources have not yet been fully reflected in new financing. According to the banks’ estimates, the positive credit expansion will continue this year as well.
