Moody’s Ratings has raised the outlook on National Bank of Greece’s long-term deposits to positive from stable, while affirming the lender’s long-term deposit and senior unsecured debt ratings at Baa1.

The action, reported by Greek business outlet Newmoney, follows an improvement in the outlook for Greece’s sovereign rating, which remains at Baa3. Moody’s also revised the outlook on the bank’s senior unsecured debt to stable from negative and confirmed its Baseline Credit Assessment and Adjusted Baseline Credit Assessment at Baa3.

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The agency further affirmed the bank’s short-term deposits at P-2, its counterparty risk ratings at Baa1/P-2 and its Tier 2 debt rating at Baa3.

How The Sovereign Outlook Is Feeding Through

The positive outlook on the National Bank of Greece’s long-term deposits is directly tied to the recent shift in Greece’s sovereign outlook to positive from stable. Moody’s said the bank’s credit profile continues to be supported by strong recurring profitability, high capitalisation, solid asset quality and a particularly robust liquidity position.

At the same time, the lender’s standalone credit profile remains constrained by Greece’s sovereign rating, reflecting its meaningful exposure to domestic sovereign risk.

Strong Profitability And Efficiency

In the first half of 2026, National Bank of Greece delivered an annualised return on tangible equity of 15.5%, while core revenue rose 3% year on year. The increase was driven by higher net fee and commission income.

Operating expenses climbed 8% over the period, with Moody’s attributing part of the increase to ongoing investment in personnel, technology and digital infrastructure. Even so, operating efficiency remained strong, with the normalised cost-to-income ratio at about 35% in June.

Capital strength remained another pillar of the rating. The bank’s common equity Tier 1 ratio stood at 17.3% in June 2026, well above its internal target of about 13%. That provides a sizeable buffer to absorb losses, support balance-sheet expansion and potentially finance strategic acquisitions.

Moody’s did note the continuing impact of deferred tax credits on capital quality. These credits represented roughly 38% of CET1 in June, down from 46% a year earlier. The ratio is now declining more quickly under a revised framework for amortising deferred tax credits.

Asset Quality And Liquidity Remain Strong

Asset quality also remained resilient, with the bank’s non-performing exposure ratio at a low 2.4%. Coverage on NPEs stood at 105%, which Moody’s said offers meaningful protection against a deterioration in credit quality.

The cost of risk eased to 38 basis points in the first half, from 43 basis points in the same period of 2025, underscoring continued improvement in the loan book.

Liquidity remained a further strength. The bank’s loan-to-deposit ratio was 67%, while its liquidity coverage ratio reached 227% and its net stable funding ratio 143%.

Customer deposits accounted for about 91% of total net funding, helping keep funding costs low and stable.

What Could Drive An Upgrade

The positive outlook on the bank’s long-term deposits reflects the upward pressure created by the stronger outlook on Greece’s sovereign credit profile. Moody’s said the deposit ratings could be upgraded if Greece itself is upgraded and National Bank of Greece continues to post strong profitability, high capitalisation and good asset quality over the next 12 to 18 months.

An upgrade of the bank’s senior unsecured debt is considered less likely within the outlook period, even if the bank’s Baseline Credit Assessment improves.

Moody’s also highlighted the main downside risks: a material weakening in non-performing exposures or recurring profitability, or a significant deterioration in the bank’s capital position, funding profile or operating environment.

For now, the assessment points to a lender with a strong operating profile and a positive trajectory. If the momentum in both the bank’s results and the Greek economy continues, the conditions for a further improvement in credit standing are increasingly visible.