Greece’s banking sector: Facts & Figures
Updated September 2018 – For earlier editions of Facts & Figures click here
After an eight-year period of deep and prolonged recession, with the brief interval of anemic growth in 2014, Greece’s economy started to grow confidently again in 2017. Greece’s real GDP grew by 1.4% in 2017 compared to 2016, driven mainly by a 6.8% rise of exports and a 9.6% increase in investment. In 2017, the general government primary balance is estimated to have registered a surplus – for the fourth time in five years– of 4% of GDP in ESA 2010 terms. The unemployment rate dropped further, at 20.8%, while employment increased by 2.2%. According to official estimates, real GDP forecast/outlook for 2018 ranges between 2% to 2.6%. Capital controls, albeit materially relaxed, still remain in place after almost three years. The preparatory work for the successful completion of the final fourth review of the last third Economic Adjustment Programme and the discussions over the post-programme relation of the country with its official creditors are already under way.
The number of domestic credit institutions was drastically reduced since 2009 from 35 to 17, of which eight are commercial and nine cooperative. Of the eight commercial banks only four are deemed “systemically significant”, according to the respective SSM definition and these control about 96% of the banking assets. Foreign banks have insignificant market share, since all but one of the foreign banks with retail customer service networks have divested from Greece. Branches of 21 foreign banks operate in Greece. Finally, the number of branches (2,168) has decreased by 46% since 2010 and similarly, the number of employees (41,707) and of ATMs (5,532) dropped by 34% and 22%, respectively.
Greek banks committed themselves to implementing restructuring plans following extensive use of State aid. Greek banks are already delivering on the commitments with significant divestments of banking subsidiaries in the SEE region, as well as from non-core assets in Greece (insurance, hotels and real estate investment trusts).
Following the implementation of capital controls in June 2015, businesses and consumers have adapted, to a considerable extent, to cashless payments. In particular, there has been a sharp rise in the use of payment cards. The number of point-of-sale (POS) terminals increased by 87% in 2017. The number and value of payment card transactions rose by 79% and 45%, respectively, to 555 million and €23 billion. The average card transaction value dropped by 19% year-on-year to €41, while the average electronic credit transfer transaction in 2015 was €1,990 (down 34% year-on-year).
In 2017, total domestic deposit inflows reached €5.7 billion, in parallel to an improvement in economic sentiment. The return of private sector deposits, the re-establishment of market funding and the elimination of Eurosystem dependency constitute the main challenges which the Greek banking sector still has to face in the period ahead.
Greek banks have contributed to economic recovery through, among other things, the funding of all large-scale infrastructure projects and ongoing funding of the tourism industry.
Greek banks have submitted to the Bank of Greece and the SSM operational targets for the management of non-performing exposures (NPEs) for the period up to the end of 2019. In 2017, a revision took place moving the end-target in 2019 lower by €2 billion versus the initial target to €64.6 billion (that is, a 40% reduction).
At end-December 2017, NPEs decreased by 10% compared to the end of December 2016, reaching 43.1% of total exposures. Significant amounts of write-offs, portfolio sales, restructuring, and enforcement recovery, resulted in the reduction of NPEs by €13 billion or 12% since March 2016.
Greek banks underwent four severe stress tests in the 2012-2015 period leading to three rounds of recapitalisation of €64 billion cumulatively. The capital raisings of 2015 led to strong capital ratios across all the significant credit institutions. The CET1 ratio of the four significant credit institutions stood at 16.8% in 2017 (2016: 17%). The European Banking Authority classifies Greek banks among the most adequately capitalised within the EU versus an EU average of around 14%.
Contributor: Anna Vasila firstname.lastname@example.org