GREECES ECONOMY RISING INFLARION AND RECORD BANK PROFITS

This week, the Greek economy presented us with two pictures that do not seem to fit together very well. On the one hand, natural gas prices are up 80% year over year. Housing costs are up 15%. And inflation has climbed to 5.7%. On the other hand, the country's four systemic banks generated €3.7 billion in profits in just nine months. And as if that weren't enough, they are preparing to distribute approximately €690 million to shareholders before Christmas. Somewhere in between, Fitch also arrived to give its assessment of the country.

WHAT'S HAPPENING WITH INFLATION?

The Hellenic Statistical Authority (ELSTAT) announced that inflation reached 5.7% in October. It stood at 5% in September. And a year ago? Just 2%.

"Where exactly have prices gone up?" you might be wondering.

Mainly in energy and housing. Natural gas prices are up 80%. Yes, you read that correctly. Heating oil is up 37.5%, while housing costs have increased by 15.1%.

On the other hand, food prices rose by just 2.1%, while olive oil actually became 8.4% cheaper.

In other words, 5.7% is an average. If most of your expenses go towards rent and heating, the inflation you feel in your wallet is probably much higher.

FITCH AND THE BBB RATING

And this is where Fitch comes in.

On Friday evening, the rating agency affirmed Greece's BBB rating with a stable outlook. No upgrade, no downgrade.

"So, no news?" you might be wondering.

Not exactly. What's interesting is what Fitch says about where the country is heading.

Let's start with the positives.

Greece's public debt stood at 146.1% of GDP in 2025. Fitch expects it to fall to 124.6% by 2028. And by the end of 2026, Greece is expected to fall below Italy's debt level.

In other words, we will no longer be the most indebted country in the eurozone.

Additionally, Fitch expects Greece to record a primary surplus of 0.6% of GDP this year and economic growth of around 2% annually through 2028.

Of course, not everything is rosy.

Public debt remains the main factor holding back Greece's credit rating. Then come the country's external imbalances.

Fitch expects Greece's current account deficit to reach 6.5% of GDP in 2026.

In simple terms, the country pays considerably more money abroad than it receives from overseas.

And as if that weren't enough, Fitch also points to Greece's high dependence on energy imports and inflation that remains above the eurozone average.

Yes. Exactly what we saw earlier in the ELSTAT figures.

THE BANKS ARE RAKING IN PROFITS

Now let's move on to the part I've saved for last: the banks.

Greece's four systemic banks generated a combined €3.71 billion in net profits during the first nine months of the year, up 7.6% compared with last year.

If we look at adjusted profits, the figure comes close to €3.9 billion.

Total revenues reached €8.95 billion, up 9.1%.

But the most impressive figure comes from the third quarter alone. Profits reached €1.29 billion, representing a 21.3% increase.

"So where exactly are banks making all this money?"

From two main sources.

The first is net interest income. What does that mean?

Put simply, it is the difference between what a bank earns from loans and what it pays on the money it borrows and on customer deposits.

This figure reached €6.61 billion, up 7.8%. In the third quarter alone, it increased by 14.2%.

The second source is fees and commissions, which generated €2.16 billion, up 23.8%.

And this is where things get even more interesting.

Fee and commission income is growing three times faster than interest income. In other words, it is not just interest rates filling the banks' coffers.

One more thing worth looking at: how much do banks spend to generate all this revenue?

That is measured by the cost-to-income ratio.

Piraeus Bank stands at 33%, National Bank of Greece at 34.4%, Eurobank at 35.8%, and Alpha Bank at 38%.

The lower the ratio, the more efficient the bank is considered to be.

BANKS AND DIVIDENDS

Eurobank came first, reporting €1.16 billion in profits, up 12.4%, and €3.8 billion in net new lending.

Its CEO, Fokion Karavias, also raised the bank's full-year net interest income growth target to 9%, up from the previous target of 7%.

Piraeus Bank reported €893 million in profits, up 8.9%.

The most impressive figure here was the increase in fee and commission income, which surged by 38.9%.

Its CEO, Christos Megalou, also raised the target for the bank's net interest margin in 2027 to above 2.4%.

National Bank of Greece reported €888 million in profits, or €996 million on an adjusted basis.

Its credit expansion this year has reached €2.2 billion, and CEO Pavlos Mylonas says he expects the bank to exceed its targets.

Finally, Alpha Bank reported €766 million in profits, up 8.3%.

It recorded the largest increase in net interest income among the four banks, at 10.7%.

Its CEO, Vassilis Psaltis, raised the bank's full-year net interest income target to €1.8 billion.

And now comes the best part for shareholders.

Approximately €690 million will be distributed to shareholders before the end of the year.

National Bank of Greece is paying €230 million, equivalent to approximately €0.26 per share, on November 20. That is an 18% increase compared with last year.

Eurobank will distribute €214 million on November 26.

Alpha Bank will pay €124 million on December 4.

And Piraeus Bank will distribute approximately €124 million, or €0.10 per share, on December 28.

Of course, there is one major catch.

Fitch considers the Greek banks' profitability, liquidity and capital positions satisfactory. Nevertheless, it points out that they still rely on deferred tax credits.

It also notes that loan quality has deteriorated slightly, mainly due to restructurings involving older retail loans.