Banks profitable after 7 years

The first clear signs of recovery in the banking system and its return to healthy organic profitability have emerged from the results for 2022, which will be the first profitable year after the last recapitalization of Greece’s lenders.

Pending the announcements by the three systemic banks – Alpha, National and Eurobank – of the annual results for 2022 next week and the positive results announced by Piraeus Bank, the profitability target is being achieved after seven consecutive years of losses. Those losses of the four systemic banks totaled 18.2 billion euros, as a consequence of the high provisions they had to take in over the previous years to cover bad loans.

However, the full armoring of the banking system, which is called upon to further strengthen its capital by at least 150 basis points in order to reach the European average, has not been completed yet and, as has been pointed out by the most official source – the head of the Single Supervisory Mechanism’s supervisory board Andrea Enria in a recent interview with Kathimerini – the only way forward is to consolidate profitability.

Kathimerini understands the consolidation since 2016 has required accumulated provisions of more than €30 billion and, apart from a short break in 2019, has led to total losses of €9.5 billion in the 2016-2021 period (€18.2 billion since 2015) – which remain on the banks’ balance sheets and are offset against profits for the year.

Only recently did the four systemic banks in total record losses of €1.7 billion and €4.7 billion for the years 2020 and 2021 respectively, so that the cumulative result of the last three years remains strongly negative – over €3 billion – despite the positive 2022 result.

Estimates for 2022 raise profitability to €3.5 billion, but given that this result is also based on extraordinary gains, such as the sale of the card management division that brought in total revenues of €1.2 billion (before taxes for all four systemic banks), but also in significant non-recurring financial income, real profitability remains a key pursuit.