The credit expansion in Greece underpins a bullish outlook for Greek banks, as highlighted in a recent report by Jefferies. The investment bank has maintained a buy recommendation for major players including Alpha Bank, Eurobank, National Bank of Greece, and Piraeus Bank. This positive sentiment is largely attributed to the ongoing resilience of the Greek economy, which continues to outperform many of its European counterparts.
Credit expansion: Robust Economic Growth Outpacing EU
According to Jefferies, Greek banks operate in one of the most attractive macroeconomic environments across Europe. The report, which was shared by Greek business outlet Newmoney, noted that Greece’s real GDP growth reached 2.1 per cent in 2025, significantly higher than the 1.4 per cent growth recorded by the European Union. This trend of outperformance has now stretched to five consecutive years.
In the first quarter of 2026, Greece achieved a year-on-year growth of 2.0 per cent, while the EU managed only 0.7 per cent, further solidifying Greece’s position as a growth leader within the region.
Key Drivers of Economic Expansion
Investment and private consumption have been identified as the main drivers of Greece’s economic expansion. The Bank of Greece anticipates GDP growth will hover around 2 per cent for 2027 to 2028, even post the completion of the NextGenerationEU funding in 2026. The governor of the Bank of Greece remarked that the country has shifted its focus from mere recovery to “strategic acceleration.” This aims to close the investment gap and mitigate past macroeconomic imbalances, setting Greece on a path for long-term convergence with the EU.
Favourable Fiscal Position
Jefferies highlighted Greece’s improved fiscal standing, noting it was one of only five European nations to record a budget surplus in 2025. The surplus amounted to 1.7 per cent of GDP, contrasting sharply with the EU’s average deficit of 3.1 per cent. Additionally, Greece’s primary surplus stood at an impressive 4.9 per cent of GDP.
Looking ahead, Jefferies projects that Greece will maintain a robust fiscal position, estimating a primary surplus of 3.2 per cent of GDP for 2026. The government has been proactive, introducing €0.8 billion in support measures aimed at alleviating the pressure from rising energy costs, following a strong fiscal outcome in 2025.
Improved Budget Balance and Debt Reduction
Between January and April 2026, Greece’s primary budget balance exceeded expectations by €2.9 billion, showcasing stronger-than-anticipated revenues. While Greece’s public debt remains high at 146 per cent of GDP compared to the EU average of 89 per cent, Jefferies noted a significant decline in the debt ratio over time. Specifically, Greek debt has fallen by 40 per cent since 2016 and approximately 60 per cent since 2020, bolstered by sustained economic growth and fiscal discipline.
Projections from the International Monetary Fund suggest that Greece is on track to fall below Italy’s debt level this year and below France’s by 2029, with expectations for the debt ratio to dip below 100 per cent of GDP by 2035.
Credit Growth as a Positive Trend
For the banking sector, the current macroeconomic landscape has resulted in notable credit expansion. In April 2026, total lending in Greece increased by 8 per cent, with business loans surging by 11 per cent, marking them as the primary driver of credit growth. Jefferies noted that these growth rates are significantly higher than the EU average, indicating a more vigorous lending environment in Greece.
Investment activity is also expected to thrive, with an increase of 8.9 per cent in 2025 and an anticipated rise of 8.8 per cent in 2026. However, investment still accounts for only 17 per cent of Greece’s GDP, compared to 21 per cent within the EU, suggesting further room for convergence.
Support from Recovery Fund
Additional backing is expected from the Recovery Fund lending programme, which allocates €18 billion to Greece. Of this, €5.8 billion has already been disbursed to final beneficiaries, along with €3.9 billion in bank co-financing. Jefferies concluded that the combination of robust economic growth, disciplined fiscal policies, decreasing debt levels, and increasing credit demand positions Greek banks favourably compared to their European peers.
