G. Provopoulos
The rising course of banks in Greece will carry on in 2006 and profits will stay at relatively high levels. The financial environment favors the development of banking activity, given the high growth rates of the economy. The further penetration of retail banking will still be the key strategic choice. Despite the relative slowdown in the growth rate of household borrowing, the creation and promotion of new products will boost revenues considerably, also helped by the expansion and restructuring of branch networks that many banks began in 2005, as well as the development of new networks distributing banking products. The effort to reduce operational costs will continue in order to increase profits and performance. For profits, banks are also turning abroad: For 2006 a crucial target will be the expansion of the bigger banking groups in Southeastern Europe, where five groups have already made an impact. Greek groups have a comparative advantage in that they can emerge as vital regional players, reaping significant benefits in the next few years from the rapid growth of the banking system there. They can also support the expansion of Greek entrepreneurship in the region. In 2006 emphasis must be laid on improving risk management infrastructure. Although in recent years some steps have been taken to upgrade risk measurement and management systems, banks need to incorporate these in their decision-making process, given new regulations from the Basel II capital accord. Georgios Provopoulos is president and CEO of Emporiki Bank.
