ECONOMY

Bank profits to slip in Q2

With the second-quarter reporting season for blue chips starting this week, Greek and Cypriot banks are expected to report an annual 8.5 percent drop in net profits, according to National P&K Securities. In a research note, the brokerage said overall volumes are expected to be good, though with higher interest expenses and lower market-related revenues. «Household lending growth has begun its anticipated deceleration in relation to consumer loans and more evidently in mortgage loans,» it said. «Business loan demand, on the other hand, has continued accelerating.» Increasing competition has lead to business loan spreads – the difference between the interest rate a bank charges a borrower and the interest rate a bank pays a depositor – remaining stable, while a higher cost of funding is evident in household pricing. Over the last year, Greek and Cypriot banks stocks have lost 38 percent, roughly in line with a 42 percent decline on the DJ Euro Stoxx Bank Index.