Greece’s four systemic banks (National Bank, Piraeus Bank, Eurobank and Alpha Bank) have recorded an excessive accumulation of profits over the last two years, which “can be called inflation of banking greed”, according to a survey by the Centre of Planning and Economic Research (KEPE).
More specifically, Greek banks have recorded some of the highest interest margins, far exceeding the eurozone median and average rate, as reported in the survey.
This was attributed to an asymmetric response of the Greek banks to the ECB interest rate hikes, with loan interest rates increasing immediately, while deposit interest rates initially remained unchanged and then increased slightly, resulting in the interest margin ‘breaking’ one historical record after another.
The Greek systemic banks, according to KEPE, probably taking advantage of the high concentration and low competition in the domestic sector – freed from the “bad loans” which were largely transferred from their balance sheets to the loan and credit management companies, and benefiting from the ECB’s reference interest rate hikes, recorded large increases in net interest income and high net interest margin values and, consequently, significant profits (estimated at 7.53 billion euros in the two-year period 2022-2023, after an annual reduction in the 9th month of 2023). This excessive accumulation of profits of the Greek banking system can also be called “banking greed” inflation.
According to KEPE, the excessive accumulation of systemic banks’ profits is due to net interest income, which is boosted by significant increases in net interest margin (NIM) and interest rate spread, and contributes to the “banking greed” inflation in Greece.
More specifically, the operating income amounts to 7.62 billion euros in the nine-month period of 2023, exceeding by 3.3% the corresponding period in 2022 (7.38 billion euros), while the net interest income increased by 56.1% (from 3.87 billion euros to 6.04 billion euros) in the nine-month period of 2023 compared to the same period in 2022.
In terms of operating income, net interest income has been increasing continuously since the second quarter of 2022 (46.28%). According to the latest available data, it stood at 79.25% in the third quarter of 2023.
