Moody’s Credit Rating Agency more-or-less alluded to an expected positive evaluation of Greece’s systemic and main non-systemic banks on March 15, in a note released on Wednesday.

The unexpected note is a positive indication, as Moody’s is considered the strictest of the international rating agencies and the only one so far that has not restored an investment rating to Greece.

Moody’s outlines that data published by the Bank of Greece (BoG) on March 4 indicated that the interest rate spread between the weighted average loan interest rate (an average that is adjusted to reflect the contribution of each loan to the total debt) and the weighted average deposit interest rate for Greek banks remained above the 5.6% level in January.

The high margin indicates that deposit betas— a measure calculating the sensitivity of a bank’s deposit cost to changes in the short-term interest rate—remain relatively low, a fact that would buttress net interest margins (NIMs) – a metric examining the success of a bank’s investment decisions compared to its debt situations – and the profitability of Greek banks in 2024. These expectations for sustained robust profitability in 2024 are one of the key factors behind Moody’s positive outlook for Greek bank deposits.

The weighted average interest rate charged by Greek banks on new loans in January amounted to 6.15%, while the weighted average interest rate paid on new deposits was only 0.53%, resulting in a weighted average interest margin of 5.62%.

The corresponding figures for non-performing loans and deposits, which have a much greater impact on bank performance, were 6.36% for loans and 0.53% for deposits, resulting in an even higher weighted average interest margin of 5.83% compared to an average of 5.67% in 2023, Moody’s explains.

Positive Outlook

Moody’s maintains positive outlooks for Greek banks, which it currently evaluates as follows:

  • Eurobank – Baa3/Ba1 positive, ba21
  • National Bank of Greece – Baa3/Ba1 positive, ba2
  • Alpha Bank – Ba1/Ba2 positive, ba3
  • Piraeus Bank – Ba1/Ba2 positive, ba3
  • Pancreta Bank – B2 positive, caa1
  • Attica Bank – B3 positive, caa2