Greek banks’ performance in Q1 2026 reflects the continuation of strong underlying fundamentals established over the last years, with profitability remaining robust despite interest rate margin normalisation and higher operating expenses. Sustained loan growth and stronger fee income generation contribute to alleviate pressure from declining rates while strong operating efficiency and lower credit costs remain key drivers, sustaining double-digit ROE for the sector.
Asset quality metrics remain close to European average levels, supported by moderate new nonperforming loan (NPL) inflows as well as conservative NPL coverage ratios and loan book expansion. Capitalisation and liquidity are strong, underpinned by solid internal capital generation, stable deposit growth, and improved market access. Capital buffers over supervisory requirements remain ample despite higher shareholder remuneration, deferred tax credit amortisation, credit expansion, and acquisitions. This provides capacity for further lending growth and capital distribution or to pursue additional acquisitions to enhance scale and diversification.
In Morningstar DBRS’ view, the operating outlook for 2026 is stable, underpinned by resilient domestic economic conditions, continued credit expansion, and further growth in fee-based activities. Loan growth is expected to remain above the European average, mainly supported by corporate lending and a gradual recovery in retail lending. The sector’s credit profile is supported by structurally improved profitability, stronger capital quality and increasing business diversification, including expansion into fee income businesses such as insurance, wealth management, and advisory. Key risks to the outlook stem from external factors, including geopolitical uncertainty and potential macroeconomic slowdown.
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