Moody’s: Greece’s bad-loan front remains open

International standing bureau Moody’s describes Greece’s recognition conditions arsenic a thorn successful the broadside of Greece’s recognition rating, arsenic while they person improved successful caller years, they stay negative, with important challenges connected the lending beforehand affecting the prospects of the system and banks.

Despite the information that banks person offloaded these nonperforming vulnerability (NPEs), they proceed to stay successful the system, while caller loans are being issued that person not been tested successful the economical cycle, arsenic it points out.

Moody’s notes that recognition conditions successful Greece, which it rates arsenic negative, person improved successful the past three to 4 years, with a important simplification successful banks’ NPEs, which, however, stay higher than those of European bonds.

As it says, banks’ NPEs person decreased to 6 cardinal euros, oregon 3.8% of total loans (according to March 2025 data), from €47.2 cardinal (or 30% of loans) successful December 2020.

Nevertheless, Moody’s points retired that astir €78.3 cardinal of nonperforming loans, which interest some households and businesses, stay successful the hands of servicers and so impact the wide appraisal of recognition conditions successful Greece.

The important simplification successful total credits reflects the removal of non-core assets from banks’ equilibrium sheets, the securitization/sale of NPE portfolios and write-offs, Moody’s says.

Greek banks, however, person started to assistance caller loans, aiming to capitalize connected the economical betterment and the affirmative effects of the Recovery Fund. According to the Bank of Greece, the nett recognition travel betwixt June 2024 and June 2025 was significant, astir €12.6 billion, it said.

“However, this caller lending to the existent economy, which chiefly includes firm loans arsenic households proceed to deleverage, has not yet been tested successful a afloat economical cycle. This origin leads to the antagonistic accommodation to our appraisal of recognition conditions successful Greece,” Moody’s notes.

The agency, however, estimates that immoderate imaginable risks to vulnerable borrowers are expected to beryllium offset by the resilience of the concern assemblage and caller loans related to Recovery Fund projects, which will assistance banks’ performing indebtedness portfolios proceed to expand.