Moody’s identifies four key risks facing Greek banks

This is the assessment of international credit rating agency Moody’s in a recent analysis covering Eurobank, National Bank of Greece, Piraeus Bank, Alpha Bank, CrediaBank and Optima Bank.

Drawing on the Bank of Greece’s latest Financial Stability Report, which confirms that Greek banks maintained their profitability during the first half of 2026, Moody’s identifies four key sources of potential risk: an increase in new non-performing loans (NPLs), the high proportion of deferred tax credits (DTCs) in regulatory capital, the growing complexity of cyber threats and heightened uncertainty in the international macroeconomic environment.

Nevertheless, according to the rating agency, these risks remain manageable at present and do not warrant an immediate reassessment of Greek banks’ credit profiles.

Moody’s notes that strong profitability, adequate capitalisation and ample liquidity provide banks with considerable capacity to absorb potential losses. However, the impact of emerging risks will depend on their severity and duration. A sharp increase in new non-performing loans, particularly if accompanied by an external economic or geopolitical shock, could test the resilience of the banking system.

Strong Profitability, Capital Adequacy and Liquidity

The financial results for the first half of 2026 confirm the positive outlook for the Greek banking sector, according to Moody’s.

Specifically, Greek banks recorded a return on assets (ROA) of 1.3% and a return on equity (ROE) of 12.1%. Meanwhile, the cost-to-income ratio stood at 37.8%, significantly below the corresponding European average of 54.6%, reflecting the sector’s improved operating efficiency.

The consolidated Common Equity Tier 1 (CET1) capital ratio stood at approximately 14.8% in June 2026, compared with 16% for European Union banks supervised by the European Central Bank’s Single Supervisory Mechanism (SSM).

At the same time, asset quality remained satisfactory, with the non-performing loan (NPL) ratio standing at 3.4% in June 2026.

Liquidity also remained strong, with the loan-to-deposit ratio reaching 63.5%, approximately 40 percentage points below the average for European banks.

Four Key Emerging Risks

Despite the sector’s positive overall performance, Moody’s points out that the four risks identified by the Bank of Greece could adversely affect banks’ financial performance and position if they materialise more severely than expected.

1. Increase in New Non-Performing Loans

During the first half of 2026, approximately €1.7 billion in loans that had previously been performing were reclassified as non-performing, while only €388 million of existing non-performing loans returned to performing status.

As a result, the total stock of NPLs increased by 9.3% during the period, primarily reflecting the net inflow of new non-performing exposures. Despite this increase, the overall NPL ratio remained broadly unchanged at 3.4%, compared with 3.3% in December 2025.

The deterioration in asset quality is concentrated primarily among micro-enterprises and small and medium-sized enterprises (SMEs), where NPL ratios reached 11.2% and 4.6%, respectively. By contrast, the corresponding ratio for large corporations stood at just 0.9%.

2. Capital Quality and Composition

Another area of concern relates to the share of deferred tax credits (DTCs) in banks’ regulatory capital.

In June 2026, DTCs accounted for 36% of CET1 capital, limiting the overall quality of banks’ capital composition. Nevertheless, this proportion has declined from approximately 40% at the end of 2025, as banks have accelerated the process of phasing out these deferred tax assets.

3. Cybersecurity and Operational Risks

The increasing sophistication of cyberattacks, particularly those leveraging artificial intelligence tools, combined with banks’ growing reliance on external technology providers, makes further strengthening their digital resilience increasingly important.

At the same time, geopolitical tensions are heightening the risk of targeted attacks against critical financial infrastructure.

The growing incidence of social engineering attacks and Authorised Push Payment (APP) fraud, combined with the speed of instant payment execution, is making it increasingly difficult to recover funds obtained through fraudulent transactions.

A serious cybersecurity incident could result not only in direct financial losses but also in significant reputational damage for Greek banks.

4. Macroeconomic and Geopolitical Challenges

Ongoing geopolitical tensions and rising energy prices are intensifying inflationary pressures, disrupting international trade flows and potentially creating further disruptions to global supply chains.

Furthermore, prolonged uncertainty could constrain foreign direct investment inflows and lead businesses to postpone investment decisions, adversely affecting economic activity and, consequently, credit growth and the quality of banks’ loan portfolios.

Moody’s Maintains Stable Outlook for the Next 12–18 Months

Despite the risks outlined above, Moody’s baseline scenario for Greece’s four systemic banks does not anticipate any material deterioration across these areas over the next 12 to 18 months.

However, the rating agency warns that a sharp increase in non-performing loans, particularly if accompanied by an external economic shock, could reverse some of the progress achieved in recent years in improving asset quality and slow the generation of new capital.

In such a scenario, Moody’s would reassess the credit profiles of the banks, potentially resulting in changes to their credit ratings and outlooks.

The central conclusion of the analysis is that Greek banks currently benefit from strong financial safeguards and considerable resilience against existing risks. Nevertheless, their ability to maintain this positive position will depend on how effectively they manage the evolution of new credit impairments, capital-related challenges and growing technological and geopolitical threats.