KEPE: Risks from ‘inflation of greed’ of banks

For risks to the Greek economy he warns an analysis of the Centre for Planning and Economic Research (KEPE) published today (13.3.2024), as he says that in the last two years there has been an excessive accumulation of profits in the four systemic ones, which can be called bank greed. As indicated in the analysis by the Greek banks, they record from the highest interest margins, far above the median and average value of the euro area, which falls within the criteria of ‘inflation of greed’. More specifically, a strong asymmetric response of the Greek banks to the ECB’s interest rate increases was recorded, with interest rates on loans rising immediately, while the corresponding deposits remained initially unchanged and then increased slightly, resulting in the interest margin breaking one historical record after another. According to the JEP, the excessive accumulation of the profits of systemic banks is due to net interest income, which is reinforced by the colossal increases in the net interest margin (NIM) and interest rate spread, and contributes to inflation of “bank greed” in Greece. More specifically, operating income amounts to 7.62 billion euros in 9 months 2023, surpassing 3.3% the sum of 9 months 2022 (7.38 billion euros), while net interest income increased by 56.1% (from 3.87 billion to 6.04 billion euros) in 2023 compared to 9 months 2022. In terms of operating income, net interest income is constantly increasing from the 2nd quarter 2022 (46.28%) and the last available price is for the 3rd quarter 2023 to 79.25%. The KEPE warns that the combination of high interest rates and the high debt of Greek households – whose purchasing power shrinks – constitute an “explosive cocktail” for Greece, which could worsen the country’s position in terms of poverty and social exclusion. Already Greece has over time the 3rd highest rate of poverty or social exclusion (26.3% in 2022), since 2015 when Eurostat began recording the data, behind Bulgaria (32.2% in 2022, and 2nd place in time) and Romania (34.4% in 2022, and 1st place in time).