Banks boost lending as credit growth gathers pace

Banks in Greece and Cyprus are accelerating lending activity, with credit expansion expected to approach or exceed €15 billion this year, supporting both profitability and economic growth.

The figures, shared by Greek business outlet Newmoney, indicate that credit expansion has become the main driver of sustainable banking profitability, while also underpinning broader economic momentum.

Banks appear to have started the year strongly, with the first quarter of 2026 showing a clear increase in lending activity across the sector.

In terms of annual targets, Eurobank is aiming for €3.8 billion in credit expansion, while the National Bank of Greece and Piraeus Bank are each targeting €3 billion.

At the same time, Alpha Bank is aiming for €3.5 billion, while smaller institutions such as CrediaBank and Optima Bank are targeting €1.2 billion and €1.1 billion respectively.

During the first quarter alone, banks that have already reported results recorded credit expansion of €4.7 billion, highlighting the strong pace of lending.

Piraeus Bank reported a particularly strong performance, with its loan portfolio rising to €38.6 billion and net credit expansion reaching €1.3 billion, supported by all major business segments.

The National Bank of Greece also recorded robust activity, with new loan disbursements increasing by 50 per cent and net credit expansion amounting to €500 million.

Eurobank posted net credit expansion of €1.1 billion, representing an increase of 9.8 per cent.

In Cyprus, the Bank of Cyprus reported new lending of €829 million in the first quarter, marking a 9 per cent increase compared with the end of 2025.

Meanwhile, Optima Bank saw loan disbursements reach €1 billion, up 27 per cent year-on-year, reflecting continued momentum in its lending activity.

A recent report by UBS confirmed that credit expansion remains strong, with business loans increasing by 10.9 per cent year-on-year in March, consumer loans rising by 7.7 per cent, and housing loans growing by 1.1 per cent.

The same report showed that non-performing loans stood at 3.3 per cent in the fourth quarter of 2025, down by 30 basis points compared with the previous quarter, indicating further improvement in asset quality.

Despite the strong lending growth, overall profitability remained broadly stable in the first quarter.

Combined net profits for major banks, including the National Bank of Greece, Piraeus Bank, Eurobank, Optima Bank and the Bank of Cyprus, reached €1.12 billion, representing a slight decline of 0.27 per cent year-on-year.

The National Bank of Greece reported profits of €344 million, down 9.9 per cent, while Piraeus Bank posted €278 million, down 1.42 per cent.

Eurobank recorded an increase in profitability of 5.3 per cent, while the Bank of Cyprus reported €121 million in profits, up 3 per cent, and Optima Bank posted €47.5 million, rising 22 per cent.

Net interest income across the sector stood at €1.93 billion, slightly higher by 1.4 per cent compared with the first quarter of 2025.

The National Bank of Greece recorded €541 million in net interest income, down 1.3 per cent, while Eurobank posted €664 million, up 4 per cent, and Piraeus Bank remained broadly stable at €481 million.

The Bank of Cyprus recorded €181 million in net interest income, down 3 per cent, while Optima Bank reported €62 million, an increase of 25 per cent.

Fee income rose more sharply, increasing by 20 per cent to €590 million, compared with €490 million in the same period last year.

The National Bank of Greece generated €114 million in fee income, up 7.6 per cent, while Piraeus Bank recorded €210 million, rising 31 per cent.

Eurobank posted €203 million in fees, up 20 per cent, while the Bank of Cyprus remained stable at €44 million and Optima Bank increased to €19 million from €12.1 million, marking a 57 per cent rise.

Looking back at 2025, listed banks in Greece and Cyprus reported total post-tax profits of €5.458 billion, representing an increase of 15.4 per cent.

However, net interest income declined by 4.2 per cent to €9.307 billion during the same year.

Asset quality also continued to improve, with the stock of non-performing loans falling to €5.7 billion, a reduction of 5.2 per cent or €310 million compared with December 2024.

The cumulative reduction in non-performing loans since their peak in March 2016 reached 94.7 per cent, equivalent to a decrease of €101.5 billion, reflecting a significant clean-up of bank balance sheets.

المصدر: Cyprus Mail