Fitch expects more profits for major Greek banks

Fitch Ratings has said in a special report published yesterday that Greece’s major banks should be well placed to continue posting solid results in 2008, despite tighter funding conditions and some indications of slower loan growth in Greece and Southeastern Europe. «Most major Greek banks have, in recent years, benefited from a buoyant domestic market and have built up solid franchises in fast-growing neighboring economies, which should underpin further strong balance sheet growth and support the banks’ profitability,» says Christian Kuendig, associate director on Fitch’s financial institutions team. All six banks discussed in the report, National Bank of Greece (NBG), EFG Eurobank, Alpha Bank, Piraeus Bank, Emporiki Bank and ATEbank, were able to maintain or improve their profitability in 2007. Improvements were largely driven by strong loan growth (around 30 percent on aggregate), stable or even slightly improving net interest margins and progress in generating fee income. While capital market revenues were hit by a more difficult market environment in the second half of 2007, trading income as a proportion of total operating income tends to be small and banks had only minimal or no exposure to structured credit or the US subprime market. The banking environment in Greece and the SE Europe region should remain relatively benign in 2008, given solid GDP growth and private sector credit expansion; loan growth rates, however, are likely to be somewhat lower than in 2006 and 2007.

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