In particular, first half 2019 results produce a Return on Equity (RoE) for systemic banks of only 2.1%, despite the satisfactory increase of pre-provisioning income compared to the same period last year. Net interest margin declined to 2.2% in the first half of 2019, compared to 2.4% in the same period of 2018, while the cost of risk continues to be close to 2%.
These trends indicate that unless NPLs are removed from bank balance sheets very quickly, Greek banks will not be able to generate enough capital internally. Moreover, such a high level of NPLs blocks Greek banks from extending much needed credit to the real economy.