S&P Global Ratings upgrades the ratings of National Bank, Eurobank, Piraeus Bank and Aegean Baltic Bank and confirms the rating of Alpha Bank, citing the stronger institutional environment and the improved capital quality of the sector.

The rating agency notes that the strengthening of the supervisory authorities' ability to act proactively against the challenges of the Greek banking system has reduced risks in the sector.

Specifically, analysts refer to the initiatives of the Bank of Greece to accelerate the consolidation of the banking system, particularly the Hercules program.

At the same time, the consolidation of the Greek banking system and the implementation of macroprudential measures have contributed to the reduction of risks.

S&P considers that the institutional framework of the Greek banking sector is now aligned with that of most euro area countries.

Coupled with good operating performance, the big four banks also aim to accelerate the amortization of deferred tax (DTC), which will improve capital quality, the house notes.

Furthermore, the banking system has reached a critical juncture where it must allocate capital to expand balance sheets, sustain profitability, and limit the inflow of new bad loans.

S&P estimates that systemic banks ended 2024 with NPEs between 2.5% and 4%, with return on equity at 13.5%.

The agency upgrades the long-term and short-term ratings of National Bank and Eurobank to BBB-/A-3 from BB+/B. For Alpha Bank, the BB+/B rating is confirmed. Piraeus Bank is upgraded to BB+ from BB, and Aegean Baltic Bank is upgraded to BB from BB-.