Greek banks outperform European average on profitability and efficiency

Profitability and efficiency at Greek banks remained above the European average in the second quarter, according to data from the European Central Bank.

The return on equity (RoE) of Greece’s four largest banks rose to 12.29%, from 10.97% in the first quarter, compared with 10.73% for European banks as a whole.

The cost-to-income ratio fell to 36.96%, from 37.35% in the previous quarter, remaining significantly below the European average of 53.06%.

The figures highlight the significantly higher operating efficiency of Greek banks, while the improvement in profitability came despite a slight decline in the net interest margin (NIM), to 2.67% from 2.72%. Among European banks, the NIM remained unchanged at 1.54%.

Asset quality

On the asset-quality front, the non-performing loan ratio of Greek banks stood at 2.98%, marginally up from 2.97% in the first quarter and significantly above the European average of 2.17%. It is the highest in the euro area, although it is just one-tenth of the level recorded five years earlier, when the ratio exceeded 30% at the beginning of 2020.

Capital adequacy and liquidity

The CET1 ratio fell to 14.91%, from 15.18%, but remained at strong levels. The total capital ratio also edged down, to 19.7% from 20.07%, compared with 20.13% in Europe. By contrast, liquidity improved significantly, with the liquidity coverage ratio (LCR) rising to 198.41%, from 188.62%, compared with 154.91% for European banks.

The funding structure of Greek banks also remains strong. The net stable funding ratio (NSFR) stood at 131.91%, compared with 125.14% for European banks as a whole, while the leverage ratio came to 5.41%, compared with 5.78% in the euro area.

Household deposits account for 55.97% of total funding for Greek banks, compared with a European average of 33.83%, highlighting their significantly greater reliance on retail deposits.

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