Bank analysts expect gradual recovery in funding

A decision by Moody’s Credit Rating to upgrade Greek banks’ outlook to stable from negative is a first positive step in Greek banks’ effort to restore their access in international funding sources with a relatively low cost, Eurobank’s analysts told ANA on Friday.

Referring to the Greek banking system, Eurobank’s analysts said it was encouraging the fact that the growth rate of new NPLs fell significant in 2016 and noted that in order to remain on its course all pending issues related with a new legislative framework on NPLs should be completed, while at the same a new environment must be created that will allow the return of the Greek economy to sustainable growth course.

Dr. Theodoros Stamatiou, Senior Economist and Anna Dimitriadou, analyst, told ANA that Moody’s upgrade was a first positive step but much needed to be done, while effort will not be easy and could be affected by several external risks. They noted that Greek banks should focus on implementing all actions needed to reduce NPEs by 40 pct by the end of 2019 and added that achieving this goal and creating a climate of confidence for the return of deposits was directly related with a return of the Greek economy to positive and sustainable growth rates. Eurobank’s analysts underlined that uncertainties over the real growth rate in 2017 should not be underestimated. Eurobank Research sees a 2.3 pct growth rate while market consensus expects a real growth rate of around 1.3 pct. Reducing this uncertainty would need a successful completion of a second review of the Greek program before the end of the year, implementing short-term debt relief measures and inclusion of the country in European Central Bank’s QE program.

Additional preconditions are deepening a reform program, a recovery in export of goods and services and of investments, improving capital flows from community funds, political stability and a minimum consensus between political parties.