The impact of the deterioration in the operating environment along with a more challenging macroeconomic outlook for the domestic economy as a result of the Covid-19 outbreak is already evident in the financial statements of Greece’s four systemic Greek banks, DBRS Morningstar said in a commentary published on Wednesday.
It noted that this impact became apparent during the first half of the year, mainly through higher levels of impairment charges.
Asset quality indicators remained relatively unaffected, largely reflecting the various fiscal and financial support measures in place, as well as the accommodative supervisory treatment of borrowers impacted by the pandemic.
However, the 18 billion euros of domestic loans under moratorium as of end-June 2020 creates potential downside risks for the banks, given the uncertainty surrounding the performance of these loans once the payment holiday period expires, DBRS argued.
“We consider that the impairment charges taken to date in 2020 are pointing towards differentiated approaches amongst the banks on the Covid-19 related impairment charges, with two banks (National and Piraeus) appearing to have front-loaded the expected full amount,” commented the Canada-based ratings firm, which warned that “overall second-half impairment charges are still expected to be at similar or somewhat higher levels compared to the first half,” and cited the different dynamics across banks’ portfolios, the coronavirus-related provisioning to date and the varying stage each bank is at in its bad loan reduction plan.