Investing.com -- On Tuesday, April 1, 2025, Fitch Ratings announced an upgrade to the National Bank of Greece S.A.’s (NBG) Long-Term Issuer Default Rating (IDR) from ’BB+’ to ’BBB-’. The outlook for the bank remains stable.
The rating upgrade comes as a result of consistent improvements in NBG’s standalone credit profile, including a sustained record of solid earnings and a decrease in non-performing exposures (NPE) and credit losses. Fitch’s updated positive assessment of Greece’s operating environment (OE) to ’bbb-’ also influenced the upgrade.
Fitch anticipates that the Greek economy will continue to outperform the eurozone average, bolstered by an increase in investments, moderate consumption growth, and a further decrease in unemployment. The deployment of the country’s Recovery and Resilience Fund is expected to enhance banks’ ability to seize profitable business opportunities.
NBG’s ratings reflect its strong position in the Greek domestic market, which underpins its business and profitability prospects, stable deposit-based funding, and robust liquidity. The ratings also take into account above-sector average capital ratios and significantly improved earnings generation.
Fitch expects business opportunities for Greek banks to benefit from resilient economic growth of 2.3% in 2025 and in 2026. This growth, driven by real wage increases, falling unemployment, and solid investments, should continue supporting banks’ business model sustainability, asset quality performance, profitability resilience, and internal capital generation.
NBG is one of four systemically important banks in Greece, where it has strong market shares in retail and commercial banking. The bank’s focus on traditional commercial banking activities, resolved legacy asset quality issues, sustainable profitability prospects, and improved digital positioning were also factors in the rating upgrade.
NBG’s NPE ratio has significantly decreased to the lowest levels in the sector. The bank’s low exposure to foreclosed assets, high NPE reserve coverage, and moderate credit losses following the completion of the asset quality clean-up were also considered in the upgrade.
NBG’s profitability has stabilized, in line with its progress with restructuring and deleveraging of legacy problem assets. The bank’s operating profit/risk-weighted assets (RWA) ratio was high at 4.1% in 2024, and Fitch expects it to remain healthy over the medium term.
NBG’s common equity Tier 1 (CET1) ratio of 18.3% at the end of 2024 was the highest among domestic peers. The bank’s stable and granular deposit base benefits from large domestic market shares in retail banking. Market access has improved significantly over the past few years as NBG has repeatedly tapped the unsecured debt markets.
NBG’s ratings could be downgraded if there was a material deterioration in Greece’s OE, or if the sovereign rating was downgraded. An upgrade would be contingent on a positive reassessment of Greece’s OE score, improved business opportunities for the banking sector, and an upgrade of Greece’s sovereign rating.
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