Greek Banks: The Battle for Non-Interest Revenue Gains Momentum

The battle to boost revenues from operations with significant growth margins, excluding retail clientele, is intensifying among Greek banks. This competition was sparked by Piraeus Bank’s acquisition of Ethniki Insurance, aimed at diversifying income sources during a period of declining interest rates and reduced interest income. Through this deal, Piraeus Bank aims to increase its non-interest revenue production to match international market levels, as Greek banks significantly lag behind their European counterparts in this area. According to SSM statistics, non-interest revenue accounts for 28.8% of total operating income for the 110 supervised systemic credit institutions in the EU, compared to just 17.3% for Greece’s four systemic credit institutions. This gap negatively impacts evaluations by regulators and investors, signaling risks of reduced income and profitability in a low-interest environment. Notably, following the Ethniki acquisition, Piraeus Bank expects non-interest revenue contributions to rise to 28% of total income by 2026-2028. In 2024, Greece’s four major banks reported €8.667 billion in interest income and €2.148 billion in non-interest income. Despite declining ECB interest rates, interest income remained resilient due to increased lending, bond income, and interest rate hedging strategies. Non-interest income grew, driven by banking-insurance activities and wealth management services. Specific highlights include: Piraeus Bank reporting €167 million in Q4 2024 non-interest income, up 7% quarterly and 17% annually; Eurobank showing a 22.4% increase in non-interest income; Alpha Bank achieving a 12% annual rise in such revenues; and National Bank maintaining steady growth with a 7% quarterly and 12% annual increase in non-interest income.