Greek banks have once again emerged as "champions" in the Eurozone in terms of interest rate spreads and red loans, as the latest data released today by the European Central Bank show.

According to these data, which relate to the second quarter of 2024, Greek banks continue to operate with an interest rate margin of 3.32%, which is one of the highest in the Eurozone. As for red loans, despite the large reduction in recent years, the ratio of red loans (for the same period always) reaches 4.10% and is almost double the Eurozone average, which is maintained at 2.30%.

In more detail, as shown by the ECB data, the interest rate margin of Greek systemic banks was 3.32% in the quarter of 2024, while it is higher only in Slovenia (3.63%), Lithuania (3.67%), and Latvia (3.78%). In contrast, the interest rate spread, i.e., the difference between deposit-lending rates in Belgium, is only 1.41% in Germany (1.07%), in Italy (2.31%), and in Portugal (2.96%).

As regards the evolution of NPLs, a significant improvement is recorded as the relevant ratio has fallen from 5.70% a year ago (second half of 2023) to 4.10%. However, it is almost double (2.30%) the euro area average. Based on ECB data, Greek banks continue to have proportionally the most red loans in the entire euro area. Indicatively, the relative ratio of red loans is 1.66% in Germany, 1.64% in Belgium, 2.67% in Italy, and 3.14% in Spain. In Cyprus, the relevant indicator is almost zero.

For the euro area as a whole, the non-performing loan (NPL) ratio excluding cash balances at central banks stood at 2.30% in the second quarter of 2024. The stock of NPLs (numerator) increased by €1.33 billion to €356 billion, while total loans and advances (denominator) increased by €111.72 billion to €15,456 billion, keeping the ratio stable compared to the previous quarter (2.31%).

Regarding the breakdown of NPLs in the second quarter of 2024 by activity sector, the relevant ratio stood at 3.57% for loans to non-financial corporations (NFCs) (from 3.55% in the previous quarter and 3.38% a year ago) and at 2.23% for loans to households (from 2.24% in the previous quarter and 2.20% a year ago). The NPL ratio for loans to non-financial corporations (NFCs) secured by commercial real estate was stable at 4.61% (compared to 4.60% in the previous quarter), while for loans to households secured by residential real estate, the NPL ratio decreased slightly to 1.58% (from 1.61% in the previous quarter).

The overall share of NPLs in "Stage 2" (loans that are in default but not in default) of total loans decreased to 9.45% (from 9.50% in the previous quarter). The stage 2 ratio decreased to 13.57% for loans to MFIs and to 8.80% for loans to households (from 13.60% and 8.84%, respectively, in the previous quarter).