If banks want to maintain their profitability in the coming years, given the ECB’s interest rate cuts, as it relies significantly on interest-bearing loans, they will need to increase primarily their loan portfolio.
Given the reduction in interest rates, strengthening credit expansion is the key lever for sustainable and strong bank profitability.
The major Greek banks (Alpha Bank, Eurobank, National Bank and Piraeus Bank) announced total net profits of €2.4 billion for the first half of 2025, recording a 4% increase compared to the corresponding period last year.
In the first half of 2025, the four systemic banks increased their performing loans and consequently their revenue base by approximately €7.7 billion.
Net credit expansion at Eurobank reached €2.2 billion (+11%), at National Bank €1.5 billion (+12%), at Piraeus €2.2 billion (+15%) and at Alpha Bank €1.8 billion (+14%).
Greek bankers, as they stated in late 2024 meetings with major international investment houses, had set a target for new loans of at least €10 billion for 2025. However, based on first-half results, systemic bank managements upgraded their credit expansion targets and according to new estimates will reach €13 billion.
Greek banks benefit significantly from the Greek recovery narrative and increased corporate lending, according to international analysts’ estimates.
In its assessments of Greek banks, S&P forecasts that Greece’s real GDP will grow by an average of 2.4% during 2024-2027, outperforming other eurozone countries.
Continued absorption of EU support funds will boost demand for new corporate loans. S&P expects bank loan portfolios to grow by 4% in 2025.
The upgrade of the government’s creditworthiness also upgrades the banks’ creditworthiness, allowing them to borrow at lower interest rates.
According to rating agency DBRS, Greek banks’ revenue structures rely significantly on net interest income (NII), which is why continued interest rate declines will negatively affect their revenue generation. However, new loan flows, which appear to be stronger in Greece compared to the rest of Europe, will help partially offset the negative impact on NII from lower interest rates.
Bank of Greece
In April 2025, the annual growth rate of financing to non-financial corporations (NFCs) reached the highest level (17.2%) observed since early 2009, according to the Bank of Greece.
Business lending was supported by co-financing and guarantee programs from development agencies, as well as bank co-financing loans for investment projects included in the Recovery and Resilience Facility (RRF).
The expected GDP rise in 2025 is estimated to support increased bank lending to NFCs. Moreover, lower lending rates, thanks to the transmission of Eurosystem policy rate cuts to bank rates, will have positive effects on credit expansion. Absorption of loan resources under the RRF is expected to be higher in 2025-2026, contributing to enhanced NFC financing, as (a) several loans have already been contracted and are pending disbursement, and (b) new contract signings are expected, given the program’s approaching deadline. Finally, new bank lending will be supported by European Investment Bank Group programs under the NSRF framework (2021-2027), as well as programs from the Hellenic Development Bank.
2024
The credit expansion rate in 2024 moved above initial expectations.
In 2024, the four systemic banks increased their performing loans and consequently their revenue base by approximately €13.8 billion, representing the strongest performance in the last 15 years, compared to €5.8 billion in 2023.
In 2024, net credit expansion at Eurobank reached €3.9 billion from €1.8 billion in 2023, at National Bank €3.1 billion from €1.3 billion, at Piraeus €3.6 billion from €1.5 billion and at Alpha Bank €3.2 billion from €1.2 billion in 2023.
Credit expansion strengthened by 9% for 2024 and according to Bank of Greece data, it increased by approximately 9% across the private sector, by 13.8% for non-financial corporations, by 0.7% for freelancers, farmers and sole proprietorships, and by 6.3% for consumer loans to individuals. Conversely, credit expansion remained negative for housing loans by 2.6%.
Fifteen-year record for deposits
Greek banks are primarily funded through deposits. Customer deposits accounted for approximately 89% of total funding at the end of 2024 and came mainly from retail customers, who are typically stable.
It should be noted that the loan-to-deposit ratio was already at 67.2% at the end of 2024, demonstrating the existence of surplus deposits and abundant liquidity.
Private sector deposits increased in June to the highest level in almost 15 years, after a “jump” of €5 billion compared to May.
They reached €204.5 billion, according to the latest Bank of Greece data, the highest level since January 2011. During the crisis period, total deposits had declined to below €120 billion.
