In four questions investors are concerned about Greek banks focuses on Goldman Sachs in its analysis, while at the same time confirming its positive attitude towards the sector’s prospects, taking into account the results of the first quarter. As he notes, he received several questions from investors about: 1) liquid position, 2) familiarity with commercial real estate, 3) capital adequacy and 4) asset quality.

According to his analysis, Greek banks have the strongest liquidity/funding buffers in the euro area with an average liquidity coverage ratio (LCR) of 198% (compared to the EU average of 153%) and an average loan to deposit ratio (LDR) of 0.7x vs. 0.9x in the EU. The deposit base of Greek banks mainly consists of retail funding with a rate of approximately 73% of total deposits (with a net fixed funding ratio for Greece of 132%). In addition to the LCR ratio, Goldman looked at other liquidity metrics such as cash and available-for-sale and marketable securities as a percentage of deposits, and Greek banks also moved strongly in this direction.

In terms of Greek banks’ exposure to commercial real estate loans (CRE), Goldman notes that on average it is relatively higher than that of other European banks. In the first half of 2022, loans secured by commercial real estate in Greece accounted for 15% of total loans, compared to 9% on average in the EU. However, CRE’s loan portfolios as a percentage of tangible book value are in line with the European average. According to Goldman’s analysis, non-performing loans linked to CRE loans account for about a third of the non-performing loans of Greek banks and account for about 2% of the total gross loan book. However, he notes that his non-performing CRE portfolio is approximately 41% covered by provisions that protect it from impairment risks.

In terms of capital adequacy, Goldman notes that Greek banks have significantly improved their CET 1 ratios in 2022, by around 1.8% to 13.7%, while management estimates suggest a further improvement of around 1.0% – 1.5% in 2023 and 2.5%-. 3.5% until 2025. In particular, the CET1 standards of Ethnica, Eurobank, Alfa-Bank and Piraeus were formed in 2022 at the level of 15.8%, 15.2%, 12.3% and 11.5%, respectively, and the total capital adequacy ratios were at the level of 16 .8%, 18.2%, 16.1% and 16.4%. Finally, in terms of asset quality, the average non-performing loan ratio (NPE) of Greek banks in 2022 is estimated to continue declining in 2023-2024 to 5% and 3.5% respectively, approaching the EU average. 2%-3%.