Fitch says Greek banks’ efforts could lead to greater efficiency

Fitch rating agency on Wednesday forecast that the four largest Greek banks’ efforts to restructure and integrate recent bank acquisitions could deliver cost synergies and support earnings and capital.

It added however that there remain downside risks if there is a prolonged and deeper recession in Greece and planned cost savings do not materialize.

In a statement released on Wednesday, Fitch said that “we expect the restructuring and integration costs recognized in the first half of the year to eventually produce greater efficiency.”

It warned that “integrating weaker-performing banks in a poor operating environment will be challenging. We currently forecast Greece’s GDP to return to growth in 2014, but by only 0.3 percent. Low interest rates, subdued business activity and further balance-sheet deleveraging depressed operating revenue in H1. The country’s macroeconomy remains fragile and uncertain. Nevertheless, the four banks improved profitability in H1, largely benefiting from a decline in loan impairment charges as the inflow of problem loans decelerated and from lower funding costs. Integration synergies from recent acquisitions, together with a further reduction in funding costs and a slower pace of asset-quality deterioration could improve domestic operating profitability in H2 and in 2014,” Fitch said.


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