The largest banks in Cyprus and Greece successfully exceeded all their financial targets for 2024, demonstrating robust profitability and strengthened balance sheets.

According to preliminary results released by the two largest Cypriot banks and the four largest Greek banks, and reported on by Stockwatch, all institutions reported solid profit growth and improved financial stability.

Net interest income, the primary source of revenue, increased at a steady rate of around 4 per cent, with Hellenic Bank standing out with a 12 per cent rise.

Eurobank Greece recorded a 15 per cent increase, attributed to the full consolidation of Hellenic Bank’s results.

However, the pace of growth in net interest income slowed compared to earlier in the year, in line with declining interest rates.

Fee and commission income saw a slight decline for Cypriot banks, whereas in Greece, it rose significantly, ranging between 12 and 16 per cent.

Total revenue showed a minor decrease for Bank of Cyprus but grew by 5 to 10 per cent for the other banks.

Operating expenses rose across the board compared to 2023, though Bank of Cyprus managed to limit this increase to just 1 per cent.

Provisions for non-performing loans (NPLs) were markedly lower, reflecting an overall improvement in the banks’ loan portfolios.

As a result, all banks under review achieved net profit growth of between 4 and 6 per cent, with Piraeus Bank significantly outperforming by increasing its net profits by 35 per cent.

These figures, however, were notably lower than those recorded in the first nine months of the year.

Throughout 2024, banks in both Cyprus and Greece attracted high levels of deposits, particularly in the final months of the year.

This led to deposit base growth exceeding the rates seen earlier in the year, ranging between 1 and 6 per cent.

In terms of loans, adjusted for provisions for non-performing loans, the variation ranged from a 5 per cent decline for Hellenic Bank to a 9 per cent increase for Piraeus Bank.

In Cyprus, net loan growth was smaller than deposit growth, leading to an improvement in the loan-to-deposit ratio.

Conversely, in Greece, the opposite trend was observed, resulting in an increased ratio.

This indicator highlights the significant improvements made by banks in both countries in recent years, as they have moved away from over-leveraged positions.

The systematic effort to offload problematic loans over the past decade has brought banks to a relatively stable level in terms of non-performing loans.

However, the NPL ratio in both Cypriot and Greek banks remains generally higher than the European Union average of 1.92 per cent.

Bank of Cyprus is the only institution to have matched the EU average, underlining the need for banks in both countries to continue efforts to improve their loan portfolios.

Nonetheless, the relatively high coverage ratio for non-performing loans suggests that annual provisioning requirements will continue to decline, which would positively impact net profits.

The current financial health of the banks is also evident in their strong Common Equity Tier 1 (CET1) capital ratios, which remain well above the minimum regulatory requirements.

This strong capital position provides a buffer against potential future economic shocks and allows banks to continue their dividend policies, which they resumed in recent years.

The positive financial results were also reflected in stock market valuations, as bank share prices surged over the past three months.

This led to an increase in the price-to-book ratio across all institutions compared to three months ago when most banks, except Hellenic Bank, were trading well below book value.

Hellenic Bank’s share price had already seen a significant rise due to its acquisition.

Looking ahead, the European Central Bank’s recent interest rate cuts, including the latest one last Thursday, are expected to put downward pressure on banks’ net interest income, creating profitability challenges.

However, the strong economic conditions in both Greece and Cyprus, where growth rates remain above the EU average and are projected to stay robust in 2025, provide optimism for maintaining profitability at satisfactory levels.

Further developments in the banking sector are eagerly anticipated, particularly following the announcement of Alpha Bank Cyprus’ acquisition of AstroBank.

*This article is a translated version of content originally published on StockWatch.