We expect the four systemic Greek banks to report higher annual profitability in 2026, driven by sustained loan growth, resilient margins, buoyant fee growth and moderate cost of risk. Return on risk-weighted assets should remain stable at 3% H1 levels.
Scope Ratings/By Alessandro Boratti, Financial Institutions
The four systemic Greek banks – National Bank of Greece (BBB+/Stable), Alpha Bank (BBB/Stable), Eurobank and Piraeus Bank – posted a solid set of first-half results. We have revised upwards our expectations for net interest margins by 10bp from our March Greek Bank Outlook (see link below), as higher Euribor rates will offset the compression of spreads on new lending. We also expect higher fee and commission income growth due to the momentum in sales of wealth and protection products as well as in transaction banking.
However, we also anticipate a higher cost of risk for the full year to above 50bp, because we expect banks to adopt a more prudent provisioning stance amid heightened geopolitical uncertainty and a less predictable macroeconomic environment. Piraeus Bank has already raised its full-year guidance to c. 60bp from 50bp, partly incorporating a one-off impact linked to the Katseli law on protected mortgage borrowers.
Strong operating conditions continue to underpin credit demand and support asset quality. Corporate investment activity remains robust, while tourism is set for another record year. At the same time, absorption of Recovery and Resilience Facility (RRF) funds is driving public investment to all-time highs, and unemployment continues to fall to multi-year lows. The government is using fiscal buffers accumulated through sustained primary surpluses to mitigate the impact of higher energy costs on households and businesses. It has already spent EUR 800m to this end.
Banks reported sustained loan growth in the second quarter. Eurobank lifted its guidance for net loan expansion to at least EUR 4.5bn from EUR 3.8bn, while Alpha Bank and Piraeus Bank both indicated they are on track to exceed their respective targets. Corporate lending remains the core activity of Greek banks. Bank of Greece data show that loans to non-financial companies increased by 9.8% YoY as of June 2026, with demand concentrated in infrastructure, energy-transition, tourism-related projects and shipping.
Growth momentum in net fees and commissions continues unabated, as management teams seek revenue diversification beyond traditional lending activities. This is evidenced by recent strategic moves: Alpha Bank’s integration of AXIA into a broader wholesale/investment-banking platform and the deepening of its UniCredit partnership; National Bank of Greece’s new bancassurance tie-up with Allianz and real-estate partnership with Dromeus Capital; and Piraeus Bank and Eurobank’s recent investments in insurance companies (Ethniki and Eurolife respectively).
Against this backdrop, we expect fee and commission income to account for around 25% of core revenue in 2026, up from 23% in 2025. Despite this progress, fee contribution will remain comparatively low by EU standards, leaving a lot of room for further convergence.
Asset quality and capital positions are solid
Banks have flagged little to no concern on asset quality. Except for some mortgage positions, legacy non-performing exposures have been largely resolved through disposals and securitisations. Gross NPE ratios continue to decline across the sector, ranging from 2.2% to 3.6% across the four banks in Q2 and supported by healthy coverage levels.
Capital generation has slowed because strong profitability is accompanied by lending growth and associated risk-weighted asset expansion. In some cases, this is compounded by M&A-linked capital consumption. Following the acquisition of Ethniki Insurance, Piraeus displays a relatively tight capital buffer of around 2.6%, while the other three banks maintain a more comfortable capital position – MDA buffers between 4.2% and 6.6%. In parallel, the ongoing reduction in deferred tax credits is a positive factor. This averages 40% of CET1 capital for the four systemic banks and we estimate DTC will fall below 20% for all four banks by 2030 at the latest.
Corporate lending activity warrants monitoring
The main risks to our benign picture derive from intensifying competition for corporate lending, which may encourage more aggressive underwriting and rising loan concentration. A meaningful share of current loan demand is linked to RRF-related investment projects, concentrating exposure around a narrower set of large corporates. The IMF recently estimated that aggregate exposures to large corporates across Greece’s four significant institutions amount to 122% of Tier 1 capital, even after taking risk-mitigating factors into account. Further evidence of concentration risk emerged in Q2, when a limited number of large corporate transactions accounted for much of the increase in customer deposits (+4.8% QoQ across the four banks).
Stable rating Outlooks
Our Stable rating Outlooks on National Bank of Greece and Alpha Bank reflect our view that upside potential from improving financial fundamentals and downside risks from rapid loan expansion and macro uncertainty are currently balanced.
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