Impact on Greek banks from his freezing. interest rate basis for home loans floating interest rate, estimates Axia Venturesat the same time, he sees that this initiative will also benefit the industry.

While not all details are available, Axia notes that the potential proposal would aim to cap mortgage rates based on the one- and three-month Euribor or its base rate. ECB, using the level as of March 31, 2023 as the base rate for an initial period of 12 months. He recalls that the lion’s share of mortgages in Greece are floating rate, which suggests that the outstanding mortgages included in this agreement will be around 24 billion euros (excluding associated NPEs).

He points out that there are two key assumptions that will determine how much of the theoretical increase in net interest income the four systemic banks will lose due to this arrangement: one-month Euribor on March 31, 2023 as a benchmark) and b) the ECB’s final deposit lending rate , which he sets at 3.5% (assuming a further increase of 50 basis points from the current fixed value).

Based on these assumptions, the theoretical interest income loss for banks could be €146m (from €31m to €41m per bank), or 2.2% of the interest income target for this year.

“In our view, this impact is negligible, but we also need to emphasize that this additional net interest income has not been budgeted for banks in 2023, as all four systems assume a 2.5% deposit rate (i.e. below the top level). ),” emphasizes Axia. Thus, the banks’ targets will be met and may even be exceeded, since there will be no ceiling on other loans, including business loans, he adds.

This new initiative will also have other benefits as it: (a) demonstrates the growing social awareness of banks and (b) alleviates any concerns about the quality of mortgage assets by reducing the monthly interest burden during a period of declining disposable income.