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A major obstacle to the profitability of Greek, as well as European, banks is about to go away.
In particular, as UBS notes, the pressure on banks’ net interest income was one of the main concerns this year due to the easing of monetary policy.
However, UBS economists now believe that the ECB’s easing cycle is complete, with the key interest rate remaining at 2%, while they expect the first interest rate increase from the ECB at the end of 2026.
The end of the interest rate reduction cycle, and indeed at higher levels than initially expected (1.75%), will strengthen the estimates for banks, including Greek ones.
“The banks that will stand out very soon, due to their location in markets that are more sensitive to interest rate movements, are those of Greece, Spain, Italy, Sweden and Ireland,” UBS notes.