UBS Reports Positive Trends in Corporate Credit for Greek Banks
A recent report based on Bank of Greece data for April highlights a robust corporate credit cycle, revealing a 14% rise in related loans so far this year, despite a pause in momentum compared to March’s 2.5% increase.
Optimism on Achieving Financial Goals
According to UBS, the results from the first quarter of 2025 indicate that Greek banks are outpacing their credit expansion targets for the year, leading to optimism regarding net interest income (NII) objectives.
Even with the sector’s impressive performance this year, recording a 54% increase since January, UBS believes there is potential for upward adjustments in valuations, which remain appealing in both European and emerging markets.
Trends in Loans and Deposits
UBS noted a decline in corporate loan yields for Greek banks, which fell by 12 basis points in April to 4.64%, down from a peak of 6.47% in 2023. In the household sector, mortgage loans are stabilizing with net credit flows nearing positive territory, while a slight quarterly uptick in consumer loans follows a significant reduction in Greek household lending.
Specifically, housing loans have declined by as much as 70% from their previous highs, while consumer loans have dropped by 80%.
Additionally, the cost of deposits has begun to decrease, down by 3 basis points monthly and 9 points year-to-date, reaching 0.40%. The annual reduction includes an 8 basis point drop for household term deposits and a 12 point decrease for corporate term deposits. The deposit mix also remains favorable, with demand deposits accounting for 75% of total deposits at a minimal cost of just 5 points.
