Moody’s, in its credit outlook published last week, said it considers the decline in Greek banks’ NPLs formation and the banks’ reduced cost base in Q2’16 as credit positive, although loan-loss provisions continue to consume a large part of their pre-provision income.
As per the rating agency, in Q2’16, the banks’ accumulated NPLs decreased by around €375m, with only Alpha Bank reporting a positive (but still decelerated) NPL formation of €110m.
In addition, all four banks reported lower operating expenses in the period versus a year earlier as a result of significant cost-cutting measures, including job cuts. According to Moody’s lower NPLs and a smaller cost base will help the banks return to profitability following sizable losses over the past few years.
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