UBS sees a strong corporate credit cycle, with continued momentum for Greek banks, according to a new report based on Bank of Greece data for April, which shows a 14% increase in related loans so far this year.
This is despite stagnation compared to the strong base in March, when it increased by 2.5%.
Optimism about achieving their goals
According to UBS assessment, the results of the first quarter of 2025 showed that Greek banks are ahead of their plans for the year in terms of executing credit expansion, with management maintaining its optimism about achieving net interest income (NII) targets.
Despite the fact that the sector has performed well this year (+54% since the beginning of the year), UBS estimates that there is room for an upward revision of valuations, as valuations remain attractive in both European and emerging markets.
Loans and deposits
As UBS pointed out, Greek banks’ corporate loan yields fell by 12 basis points in April to 4.64%, from a high of 6.47% in 2023. Regarding household mortgage loans, UBS sees stabilization, while net credit flows are close to turning positive. At the same time, it sees a small quarterly increase in consumer loans, following the large reduction in Greek household loans.
More specifically, housing loans fell by up to 70% from their highs and consumer loans by 80%.
Moreover, the reduction in the cost of deposits has started to gain ground (-3 on a monthly basis, -9 points since the beginning of the year) to 0.40%, as the cost of household term deposits decreased by 8 basis points annually and corporate term deposits by 12 points. Also, the deposit mix remained favorable with demand deposits contributing 75% of total deposits at a cost of only 5 points.
