ECONOMY

Positive outlook for banks

The Greek banking sector is poised for better days after having got over the worst, based on first-quarter results, P&K Securities said in a research note yesterday as it upgraded its outlook for the sector to positive. «We believe, after three consecutive years of decreasing profitability, that the worst is over and increasing core operating profits predispose higher quality earnings and therefore, a gradually improving outlook,» analyst Manos Giakoumis wrote. The banks, which reported their first-quarter earnings last month, have been able to sustain the improvement in their core operating earnings, with «healthy top-line growth, reflecting the solid rise of net interest income and moderate increase of commission income,» said Giakoumis. The sector’s efforts in controlling costs were also paying off. The banking sector posted, on average, a 3.8 percent rise in earnings before tax and after minorities and a 23.4 percent jump in core operating profits. Giakoumis said four factors are expected to impact on the sector this year. Credit expansion, while slowing down, is still seen as robust and is expected to contribute significantly to revenues. Banks’ ability to control higher credit risks is also considered a key issue, he said. Spreads in turn are seen as increasing, underscoring the sector’s focus on profitability rather than on market share. This could encourage banks to improve their services to attract clients. The turnaround in the stock market is also expected to lead to higher stock market-related fees, reversing the adverse revenues of the last few years, he said. Lastly, banks appeared to be making consistent efforts to keep costs down.