Banks Ramp Up Lending as Credit Growth Gains Momentum Across Greece and Cyprus

Banks in Greece and Cyprus are significantly increasing their lending activity, with total credit expansion expected to reach or even surpass €15 billion this year, reinforcing both banking sector profitability and wider economic growth.

According to figures published by Greek business outlet Newmoney, credit expansion has now emerged as the key engine of sustainable profitability for banks, while simultaneously supporting broader economic activity. The banking sector appears to have entered 2026 with considerable momentum, as first-quarter figures revealed a marked acceleration in lending across the market.

Among the major lenders, Eurobank has set a target of €3.8 billion in credit expansion for the year. The National Bank of Greece and Piraeus Bank are each aiming for €3 billion, while Alpha Bank is targeting €3.5 billion in new lending growth. Smaller institutions are also pursuing ambitious goals, with CrediaBank aiming for €1.2 billion and Optima Bank targeting €1.1 billion.

Banks that have already published first-quarter financial results reported combined credit expansion of €4.7 billion, underlining the strong pace of lending activity during the opening months of the year.

Piraeus Bank delivered one of the strongest performances, with its total loan portfolio increasing to €38.6 billion. The bank recorded net credit expansion of €1.3 billion, driven by growth across all major business divisions.

The National Bank of Greece also posted solid lending figures, with new loan disbursements rising by 50 per cent and net credit expansion reaching €500 million during the quarter.

Eurobank announced net credit expansion of €1.1 billion, representing a 9.8 per cent increase compared with the previous period.

In Cyprus, the Bank of Cyprus reported new lending worth €829 million in the first quarter, reflecting a 9 per cent increase compared with the end of 2025. Optima Bank also maintained strong momentum, with loan disbursements climbing to €1 billion, marking a 27 per cent year-on-year increase.

A recent UBS report confirmed that credit growth remains particularly strong across the sector. Business loans rose by 10.9 per cent year-on-year in March, while consumer lending increased by 7.7 per cent. Housing loans also continued to grow, albeit at a slower pace, rising by 1.1 per cent.

The UBS report further showed continued improvements in asset quality. Non-performing loans accounted for 3.3 per cent of total loans in the fourth quarter of 2025, representing a decline of 30 basis points compared with the previous quarter.

Despite the sharp increase in lending activity, overall profitability across the banking sector remained relatively stable during the first quarter of 2026.

Combined net profits for major banks, including the National Bank of Greece, Piraeus Bank, Eurobank, Optima Bank and the Bank of Cyprus, reached €1.12 billion. This represented a marginal year-on-year decline of 0.27 per cent.

The National Bank of Greece reported profits of €344 million, down by 9.9 per cent, while Piraeus Bank posted profits of €278 million, reflecting a decline of 1.42 per cent.

Eurobank, however, recorded a 5.3 per cent increase in profitability. The Bank of Cyprus also reported improved earnings, posting profits of €121 million, up 3 per cent. Optima Bank achieved the strongest growth rate, with profits reaching €47.5 million, representing a 22 per cent increase.

Across the sector, net interest income totalled €1.93 billion during the first quarter, slightly higher by 1.4 per cent compared with the same period in 2025.

The National Bank of Greece generated €541 million in net interest income, a decrease of 1.3 per cent, while Eurobank recorded €664 million, rising by 4 per cent. Piraeus Bank remained broadly unchanged at €481 million.

The Bank of Cyprus posted €181 million in net interest income, down 3 per cent, whereas Optima Bank recorded €62 million, marking a strong increase of 25 per cent.

Fee income showed even stronger growth across the banking sector, rising by 20 per cent to €590 million from €490 million during the same quarter last year.

The National Bank of Greece generated €114 million in fee income, an increase of 7.6 per cent. Piraeus Bank reported €210 million, representing a 31 per cent rise, while Eurobank posted €203 million, up 20 per cent.

The Bank of Cyprus maintained stable fee income at €44 million. Meanwhile, Optima Bank increased its fee income to €19 million from €12.1 million, recording an impressive 57 per cent increase.

Looking back at the full-year performance for 2025, listed banks in Greece and Cyprus reported total post-tax profits of €5.458 billion, representing annual growth of 15.4 per cent.

However, net interest income declined by 4.2 per cent during the same period, falling to €9.307 billion.

Asset quality continued to improve substantially throughout 2025. The stock of non-performing loans declined to €5.7 billion, representing a reduction of 5.2 per cent, or €310 million, compared with December 2024.

Since reaching their peak in March 2016, non-performing loans across the banking sector have been reduced cumulatively by 94.7 per cent, equivalent to a decline of €101.5 billion, highlighting the extensive clean-up of bank balance sheets carried out over the past decade.

By fLEXI tEAM