If they want to maintain their profits over the next few years, given the ECB’s reduction in interest rates, as it is based significantly on interest income, they should increase their portfolio in particular. Bank administrations say that the credit expansion in 2024 is expected to range to 7 billion to 8 billion euros. According to the data from the AnaCredit database (based on analytical credit data from the TIF), the new loan disbursements to non-financial corporations (SMEs) in 2023 amounted to around EUR 9 billion, reduced by one third compared to 2022 but are still much higher than the corresponding amount in 2021 (EUR 7.0 billion). Credit expansion in business loans slowed significantly during 2023 due to higher interest rates and the weakening of economic growth, but in recent months recovered. Banking loans to households continue to be reduced due to the de-incentives of housing loans. Since the peak achieved in September 2022 (12.3%), the credit expansion of business loans has slowed significantly due to higher interest rates and the weakening of economic growth supporting lower loan demand. However, since September 2023 the annual rate of increase in corporate loans has recovered. Greek banks benefit significantly from the Greek recovery story and the increase in corporate lending. The Swiss house UBS that started covering Greek banks with market ratings points out, among other things, that Greek banks are dynamically emerging from the Greek debt crisis and are able to benefit from strong macroeconomic recovery and credit to businesses. “We believe that Greece offers an exciting history of macroeconomic recovery, as we maintain a forecast for GDP growth by 2.5% (2024) and 3.0% (2025). Having received about EUR 15 billion of the funds available of EUR 36 billion of the Recovery and Durability Mechanism (RRF), the use of the remaining funds over the next three years is a catalyst for investments,” UBS notes. And it expects a strong corporate credit cycle of 8% per year (2023-2026), which should compensate for the compression of the interest margin (NIM), as interest rates are reduced, with Greek banks having benefited from the very low cost of financing. In recent estimates, for Greek banks, S&P predicts that Greece’s real GDP will increase by 2.4% on average in 2024–2027, overturning the rest of the eurozone countries. Continued absorption of EU support funds will boost demand for new corporate loans. S&P expects bank loan portfolios to increase by 4% both this year and 2025, although the probability of underperformance remains high due to economic risks. Furthermore, the house assumes that the high demand for unsafe Greek loans will continue. The positive prospects on domestic real estate markets and the increased recovery prospects due to reforms will support this development. Upgrading the government’s credit rating also increases the creditworthiness of banks, which can be borrowed at lower interest rates. Please note that all Greek banks have been upgraded to an investment level and even two scales above the minimum threshold. The cheapest loan for banks means equally cheap borrowing for both businesses and households. Bank liquidity indicators, also monitored by the supervisor, far exceed the minimum required. After all, private deposits are on a continuous rise after 2019. They have increased from 143 billion in 2019 to 194 billion today, that is by about 50 billion. It is noted that at the end of 2023 the ratio of loans to deposits was 67.2%, i.e. much below the unit, which demonstrates the existence of surplus deposits and ample liquidity.