Moody’s Credit Ratings has upgraded Greek banks, shifting their outlook from positive to stable.
Specifically, Moody’s upgraded the long-term deposit ratings and senior ratings of the National Bank of Greece (NBG) to Baa1 from Baa2, as well as its standalone Baseline Credit Assessment (BCA) to baa3 from ba1.
The bank’s long-term Counterparty Risk Rating (CRR) was also upgraded to Baa1 from Baa2, while its long-term and short-term Counterparty Risk Assessments (CR Assessment) were raised to Baa2(cr)/P-2(cr) from Baa3(cr)/P-3(cr). The short-term deposit ratings and CRR were confirmed at P-2, Moody’s notes.
Similarly, Eurobank saw its long-term deposit and senior ratings upgraded to Baa1 from Baa2, with its BCA and Adjusted BCA raised to baa3 from ba1. The bank’s short-term deposit ratings were affirmed at P-2.
The upgrade of NBG’s BCA from ba1 to baa3 follows Greece’s sovereign credit rating upgrade to investment grade (Baa3 from Ba1), as the bank’s standalone credit profile was previously constrained by the country’s rating due to its significant exposure to Greek government bonds.
Moody’s notes that the BCA upgrade also reflects NBG’s stronger capital position, with its Common Equity Tier 1 (CET1) ratio rising to 18.3% in December 2024 from 17.8% in December 2023, providing a solid growth trajectory and a higher loss-absorption buffer compared to its local peers.
However, Moody’s highlights a challenge in NBG’s capital quality, as Deferred Tax Credits (DTCs) still account for 51% of CET1 capital, though the bank plans to accelerate their reduction, aiming to bring this figure below 25% by 2027.
NBG’s solvency is further supported by its significantly improved asset quality, with its Non-Performing Exposure (NPE) ratio falling to 2.6% as of December 2024, alongside the highest provision coverage among Greek banks at 98%.
Additionally, NBG holds a €300 million portfolio of government-guaranteed net loans (primarily mortgages), which are not classified as NPEs and are fully covered by capital as of December 2024. Moody’s expects that these loans will be gradually repaid by the Greek government over the next two years.
