As Piraeus and the remaining systemic banks announce results today, the time of the banks has come. The focus of the analysts' briefing on the figures to be announced is the reduction in interest rates and their impact on banks' revenues. As domestic and foreign analysts say, credit expansion is the key way to offset revenue losses.
NEW LOANS
Banks have already started to give out more loans, both housing and business loans, with reports suggesting that credit expansion could reach as much as €6 billion. Besides, lower interest rates create more favourable conditions for borrowers. According to the BoE, the weighted average interest rate on new business loans has fallen by 28 basis points since the beginning of the year, to 5.73%, while the weighted average interest rate on existing business loans has fallen by 43 basis points, to 5.95%, from 6.38%. In September, loan flows to the private sector, i.e. to households and businesses, increased by €1.94 billion, with businesses accounting for the lion's share with €1.91 billion of new loans; of this, net new loans to non-financial corporations were €1.61 billion.
COMMISSIONS
Another way of reducing revenue risk is through commissions. Despite being rationalised, revenues from this area are expected to remain high.
DEFERRED TAX
Finally, the analysts of the international firms are going to focus on the issue of deferred tax, as it constitutes a large part of the banks' capital. The Bank of Greece has called for changes in order for banks to pay and reduce it more quickly. Besides, this is also what the SSM wants, which envisages halving the time for writing off deferred tax. In essence, the mechanism is expected to attract the interest of analysts, as is the design and the rate of reduction of the DTC.
THE MEASURES
However, the market anticipates banks to report higher profits, solid numbers, and strong revenues as well as confirmation of the management's guidance to reward shareholders. That is, for the dividend, which also marks their definitive return to growth.
