An increase in interest income from 50% to 75% was recorded four system banks in the first quarter of the year due to the growth of interest rates on the loan portfolio and containment of interest rates on deposits. Total interest income reached 1.9 billion euros compared to 1.2 billion euros (up 58%) in the corresponding quarter of 2022 and became the main source of support profitabilitywhich amounted to 788.4 million euros. According to the results of the first quarter of 2023, the net profit after tax of the four systemically important banks is reduced by 38.2% compared to the first quarter of 2022.

However, on an adjusted basis, that is, excluding the cost of the securitization that took place in the previous year and excluding the extraordinary results from discontinued operations, earnings increased by an average of 7%. This trend sets the stage for sustainable profitability in the current year, which in turn will allow the distribution of dividends for the current year, i.e. for 2024, and, according to management, the dividend distribution target is between 10% and 30% of organic profits. The one-year deferral of the target was the result of the intervention of the SSM, which considered the distribution of dividends for this year to be premature.

According to analysis by Eurobank Equities, net interest income at the industry level increased by 10% compared to the fourth quarter of 2022 and is expected to peak between the second and third quarters of 2023. The key feature of the first quarter was the increase in payments. produced by highly liquid industries. Thus, despite the fact that the issuance of new loans remained at a high level (1.7 billion euros for Alfa Bank, 1.5 billion euros for the National Bank and 2 billion euros for Piraeus Bank), repayments offset new loans, and outstanding Greek loan balances were almost unchanged. at the same level compared to the last quarter of 2022. This trend is expected to soften in the coming quarters, and according to Eurobank Equities, credit growth will be in positive territory, but in single digits for the year. As can be seen from the data for the first quarter, interest income growth was supported by:

• In the ECB’s interest rate hike, which began in July last year and is reflected in a comparison of results between the first quarter of 2022 and 2023.

• Strengthening the portfolio of non-performing loans, which increased by 7.7%, namely from 114.6 billion euros to 123.5 billion euros.

• Containing interest rates on deposit rates, resulting in a 90 basis point increase in net interest margin, namely from 1.50% in the first quarter of 2022 to 2.4% in the first quarter of 2023.

• An increase in interest income from a bond portfolio of approximately EUR 286 million.

In terms of asset quality, non-performing loan balances in Greek banks declined as inflows of new non-performing loans remained low and there were no signs of worsening service performance from households and businesses. The share of bad loans was 6.1% and the reserve coverage ratio was 64%, with the National Bank performing best with a coverage ratio of 89%, followed by Eurobank with 74%, Piraeus Bank with 55% and Alfa. Bank with 40%. Regulatory capital improved further in the first quarter, with an average core capital ratio (FL CET1) of 14.2%, up 50 basis points.