Greek banks are positioned for strong outperformance over multiple years, driven by domestic economic momentum, sustained credit expansion and gradual diversification of revenue sources, according to a new analysis.

The findings of the report, which were shared by Greek business outlet Newmoney, highlighted how the sector has moved far beyond the debt crisis era that once placed both the economy and banking system at the centre of euro area turmoil.

More than a decade after that crisis period, both pillars are now regarded by the international investment community as textbook examples of recovery and resilience on the European periphery.

Andrea Costanzo, vice-president of European financial institution ratings at Morningstar DBRS, told S&P Global Market Intelligence that the sector has largely completed its post-crisis restructuring.

“We expect Greek banks to maintain their strengthened credit profiles over the short and medium term, supported by favourable economic conditions, sustainable credit expansion, improving revenue diversification and significantly upgraded risk profiles,” Costanzo said.

Despite challenges and geopolitical turbulence from the Middle East, profitability at Greece’s systemic banks is forecast to move slightly higher in 2026 compared with 2025.

Alessandro Boratti, deputy managing director and head of Greek bank analysis at Scope Ratings, said profitability is being balanced by the boost from sustained interest rates, the dynamism of new lending and rising fee income.

“Beyond 2026, we see profitability remaining strong relative to the European average, supported by consistent domestic growth and further business diversification,” Boratti said.

Based on Visible Alpha consensus estimates, total net profits for the country’s four major banks – National Bank of Greece, Alpha Bank, Eurobank and Piraeus Bank – are expected to increase by 6.7 per cent in 2026, before accelerating further by 14.8 per cent in 2027 and maintaining strong momentum into 2028.

National Bank of Greece, Alpha Bank and Eurobank have already raised their earnings per share targets for 2026, while Piraeus Bank confirmed it is on track to meet its own earnings per share target of €0.90.

Fokion Karavias, chief executive of Eurobank, emphasised that second-quarter results demonstrated solid organic growth at a faster-than-expected pace, both in Greece and across the south-eastern Europe region.

“Despite ongoing geopolitical risks, the strength of underlying trends gives us confidence that we will exceed our annual targets,” Karavias said.

Meanwhile, Greece continues to consistently outperform the European Union average in GDP growth rates.

Although the conflict in the Middle East and Iran has affected neighbouring regions such as Cyprus, the impact on the Greek economy remains limited, with the tourism sector showing no signs of deterioration, according to a Morgan Stanley analysis.

Credit expansion in Greece is moving at rates faster than the European average, fuelled mainly by corporate lending in sectors such as infrastructure, energy, tourism and Recovery and Resilience Fund projects.

Agapi Mavrogianni, an analyst at Beta Securities, explained to S&P Global Market Intelligence that loan growth focused on businesses makes credit expansion more resilient to short-term geopolitical shocks.

“Banks with a strong deposit base and a low loan-to-deposit ratio have additional room to absorb and support greater credit expansion,” Mavrogianni said.

From Piraeus Bank’s perspective, chief executive Christos Megalou described the increase in lending as the “pillar” of the bank’s performance, noting that credit expansion permeates all sectors of the economy, while an encouraging recovery is also being observed in households.

Net interest income will continue to be the main source of revenue for Greek institutions in the coming years, Mavrogianni stressed.

After a temporary adjustment in 2025 partly due to falling interest rates, net interest income for the four systemic banks is forecast to expand by 7.8 per cent in 2026, 9.2 per cent in 2027 and 5.5 per cent in 2028, according to Visible Alpha estimates.

At the same time, profitability will be significantly supported by the growth of fee income, mainly through wealth management and bancassurance products.

Net fee income is expected to jump by 18.9 per cent in 2026, while it is estimated to represent approximately 24 per cent of total revenue during the 2026-2028 period, compared with 19.6 per cent in 2025.

In this context, Christos Christodoulou, chief financial officer of National Bank of Greece, said the bank is making visible progress in creating a more diversified revenue base, focusing on strengthening fees that will substantially support organic profitability from 2027 onwards.

He made special reference to the collaboration with Allianz to strengthen insurance products, a trend followed by other Greek banks through acquisitions and partnerships.

Total bank revenue is estimated to grow at rates above 9 per cent in 2026 and 2027, before normalising at 5.6 per cent in 2028.

The asset quality of Greek banks has improved dramatically, with non-performing loan ratios and their coverage now aligned with the European average.

According to Mavrogianni, non-performing exposures are steadily decreasing towards the 2 per cent level by 2028, while the cost of risk is expected to gradually retreat to between 25 and 45 basis points.

“The main risk to reversing the trend would be a sharp macroeconomic or geopolitical deterioration, which would accelerate the creation of new problem loans and push the cost of risk higher,” the Beta Securities analyst warned.

From Scope Ratings’ perspective, Boratti noted that banks are increasingly focusing their lending on large corporations, which increases concentration risk and requires close monitoring.

Finally, regarding domestic legal and regulatory factors, such as recent Supreme Court rulings on the Katselis law or Swiss franc loans, Morningstar DBRS estimates that despite any one-off impacts, they are not expected to shake the fundamental credit metrics of the Greek banking sector.

Greek banking groups with operations in Cyprus, including Eurobank and Alpha Bank which maintain direct banking operations on the island, have delivered stronger-than-expected second-quarter results, with faster lending growth, resilient interest income and rising fee revenue prompting analysts to remain upbeat about the sector’s prospects for 2026 and 2027.