25/04/2007 10:04
Fitch Ratings expects the major Greek banks to continue reporting good performances in 2007. According to its report released recently, this will be achieved due to the “continued demand for credit, adequate cost control and good progress in cross-selling”. “However, rapid retail loan growth in Greece and South Eastern Europe (SEE) could - if not properly controlled - lead in the medium-term to asset quality problems should economic conditions deteriorate and dent the banks' good performances”, it added.
“All major Greek banks considerably improved their pre-impairment operating profits in 2006 and, with the exception of Emporiki Bank, a falling share of impairment charges has additionally boosted their operating profitability”, Director in Fitch's Financial Institutions group, Christina Torrella noted.
Real GDP growth in Greece was 4.2% in 2006 and even higher in SEE countries where most Greek banks are increasingly expanding their operations. Fitch expects growth rates for the region to remain broadly unchanged in 2007 and 2008.
According to Fitch, “Strong loan growth, particularly in mortgages, SME and consumer lending, is also expected to continue as Greece and the SEE economies are converging towards penetration levels seen in Western Europe. The banks' operating improvements in 2006 were largely driven by strong loan growth, which, together with broadly stable net interest margins, led to an increase in net interest income of 20% on aggregate”. “Recent efforts by the banks to improve their commissions line through improved cross-selling appear to have paid off as indicated by a 21% net fee income growth on aggregate”, Mrs. Torrella stated.
“The outlook for Greek banks continues to be broadly positive for 2007, underpinned by expected strong performances of the Greek and most other regional economies, continued private-sector demand for bank credit, and internal bank restructuring programmes under way at most banks. However, there remain also challenges for Greek banks' including reducing their reliance on still wide but narrowing domestic lending spreads, making progress in fee income generation and cost efficiency and managing their regional expansion prudently, in particular with regards to controls and risk management systems”, the report concluded.
“All major Greek banks considerably improved their pre-impairment operating profits in 2006 and, with the exception of Emporiki Bank, a falling share of impairment charges has additionally boosted their operating profitability”, Director in Fitch's Financial Institutions group, Christina Torrella noted.
Real GDP growth in Greece was 4.2% in 2006 and even higher in SEE countries where most Greek banks are increasingly expanding their operations. Fitch expects growth rates for the region to remain broadly unchanged in 2007 and 2008.
According to Fitch, “Strong loan growth, particularly in mortgages, SME and consumer lending, is also expected to continue as Greece and the SEE economies are converging towards penetration levels seen in Western Europe. The banks' operating improvements in 2006 were largely driven by strong loan growth, which, together with broadly stable net interest margins, led to an increase in net interest income of 20% on aggregate”. “Recent efforts by the banks to improve their commissions line through improved cross-selling appear to have paid off as indicated by a 21% net fee income growth on aggregate”, Mrs. Torrella stated.
“The outlook for Greek banks continues to be broadly positive for 2007, underpinned by expected strong performances of the Greek and most other regional economies, continued private-sector demand for bank credit, and internal bank restructuring programmes under way at most banks. However, there remain also challenges for Greek banks' including reducing their reliance on still wide but narrowing domestic lending spreads, making progress in fee income generation and cost efficiency and managing their regional expansion prudently, in particular with regards to controls and risk management systems”, the report concluded.
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