The long-term credit rating of five Greek banks was upgraded by Standard & Poor’s on Thursday.
The rating agency upgraded the long-term credit rating of the four systemic banks and Aegean Baltic Bank, placing National and Eurobank one step before investment grade and, respectively, Alpha Bank and Piraeus two notches below investment grade.
Greek banks improved financial and financial outlook
S&P upgraded the long-term credit rating of National to BB+ from BB, keeping the short-term credit rating at B and the outlook positive.
The upgrade reflects the bank’s improved financial and financial outlook, which has reduced its nonperforming exposure (NPE) ratio to 3.7 percent, with provision coverage reaching a high of 85 percent.
S&P estimates that the NPE ratio will further decline to below 3 percent by the end of 2025, so the cost of risk is forecast to decline to close to 50 basis points by the end of 2026 from 95 bp at the end of 2023.
Eurobank’s long-term rating is raised to BB+ from BB, keeping the short-term rating at B and the outlook positive. The upgrade reflects the bank’s improved financial and financial outlook and improved organic capital generation through profitability.
The positive outlook for Eurobank over the next 12 months reflects the expectation that Eurobank’s business diversification will be strengthened by its Hellenic Bank deal.
Alpha had its long-term rating raised to BB from BB- keeping the short-term rating at B and the outlook positive.
The upgrade reflects expectations that Alpha will continue to perform strongly in the next two years, with a return on equity slightly above 10% at the end of 2025, and that the bank will be able to maintain its strengthened funding and improve asset quality by reducing the NPL ratio between 4% and 4.5% by end-2025.
The long-term credit of Piraeus rose to BB from BB-, keeping the short-term credit at B and the outlook positive. Piraeus reduced its NPE ratio to 3.5 percent at end-March, from 6.6 percent a year earlier, and increased its coverage to 60.2 percent.
Given the positive economic outlook, S&P expects asset quality to remain healthy over the next two years, while the positive outlook reflects the potential for further improvement in the bank’s operating performance.
S&P also raised Aegean Baltic Bank’s long-term rating to BB- from B+, keeping the short-term rating at B and the outlook positive.
Greek banks boosted by dividend distributions
Foreign analysts have recently expressed optimism regarding Greek bank stocks following the green light from European authorities for dividend distributions. This move is seen as a key driver for potential value appreciation in the sector, prompting a favorable reassessment by experts.
Expectations are high for updates from management, especially after Piraeus Bank’s recent disclosure, indicating a promising trajectory for performance this year based on a solid first quarter.
Axia considers the dividend approval as a crucial step towards the normalization of Greek banks post the 2010-2015 crisis. They maintain a bullish stance, projecting further growth and setting target prices for key players in the market.
Related: Greek Banks Win Credit Upgrades from Fitch and Moody’s
