GREECE
Macro/Political:
- Data released by Eurostat showed that the annual inflation in Greece is expected to be 3.9% in June 2026 from 4.9% in May 2026(m-o-m), and 3.6% in May 2025(y-o-y).
Source: Eurostat
- Greece’s Manufacturing PMI rose to 53.8 in June 2026 from 53.3 in May 2026, and signalled the strongest improvement in the health of the goods -producing sector since March. The overall upturn was supported by a quicker rise in new sales midway through the year. New orders increased solidly and at the fastest rate for three months. Companies were more confident in the outlook for output over the coming year in June, with the degree of optimism hitting its highest level since the war in the Middle East began. Planned investment, new product development and hopes of further growth in new orders underpinned panellist expectations. Finally, Greek manufacturers expanded their purchasing activity again in June, with input buying rose at a solid rate that was the fastest since March.
Source: PMI
- The seasonally adjusted unemployment rate in May 2026 amounted to 8.1% compared to the upward revised 8.7% in May 2025 (y-o-y) and to the downward revised 9.1% in April 2026.
Source: ELSTAT
Markets:
- Fitch Ratings upgraded Eurobank’s Long-Term Issuer Default Rating to BBB from BBB-, while revising the outlook from Positive to Stable.
According to the agency, the upgrade reflects its revision of Greece’s operating environment score to BBB, supported by healthy economic growth and declining unemployment, which are driving strong corporate credit demand, a recovery in retail lending after years of contraction, and healthy growth in fee-generating products. Fitch also noted that the rating reflects Eurobank’s strong franchise in Greece and the improved operating environment.
Furthermore, Fitch highlighted Eurobank’s sound asset quality, noting that the bank reduced its impaired loans ratio to 2.8% at the end of March 2026, broadly in line with the European average. The agency expects the ratio to remain at or below 3% during 2026–2028, supported by resilient borrower performance and continued loan growth.
Fitch also described Eurobank’s profitability as healthy, with operating profit reaching 3.0% of risk-weighted assets (RWAs) in 2025. The agency expects profitability to improve further to around 3.5% of RWAs over 2026–2028. In addition, Fitch expects the bank to benefit from higher fee income following the acquisition of an 80% stake in Eurolife Life Insurance. While profitability remains sensitive to the interest rate cycle, the agency noted that Eurobank benefits from a degree of international diversification.
In terms of capitalisation, Fitch stated that Eurobank maintains adequate capital buffers, with a Common Equity Tier 1 (CET1) ratio of 15.4%, comfortably above the regulatory minimum requirements. The agency expects the CET1 ratio to remain above 14%, despite the acquisition of Eurolife Life Insurance.
Fitch noted that the ratings could be downgraded if there is a material deterioration in Greece’s operating environment or if Greece’s sovereign rating is downgraded. A downgrade could also result if the impaired loans ratio rises above 5%, leading operating profitability to fall below 1.5% of RWAs. In addition, a sustained decline in the CET1 ratio below 13% could put downward pressure on the ratings.
Conversely, the ratings could be upgraded if Greece’s sovereign rating is upgraded, leading to a further improvement in the country’s operating environment score. An upgrade would also require the impaired loans ratio to remain structurally below 3%, the CET1 ratio to be maintained above 14%, and operating profit to remain sustainably above 2.5% of RWAs throughout the interest rate cycle, without a material deterioration in the bank’s risk profile or funding profile.
Source: Fitch
- Fitch Ratings upgraded NBGs Long-Term Issuer Default Rating to BBB from BBB-, while revising the outlook from Positive to Stable. According to the agency, the upgrade reflects its revision of Greece’s operating environment score to BBB, supported by healthy economic growth and declining unemployment, which are driving strong corporate credit demand, a recovery in retail lending after years of contraction, and healthy growth in fee-generating products. Fitch also noted that the rating reflects NBG’s strong franchise in Greece and the improved operating environment. Furthermore, Fitch highlighted NBG’s sound asset quality, noting that the bank reduced its impaired loans ratio to 2.5% at the end of March 2026, broadly in line with the European average. Fitch also described NBG’s profitability as healthy, with operating profit reaching 3.9% of risk-weighted assets (RWAs) in 2025. The agency expects profitability to improve further to around 3.5% of RWAs over the medium term. In terms of capitalisation, Fitch stated that NBG maintains comfortable capital buffers, with a Common Equity Tier 1 (CET1) ratio of 17.4%, which is the highest among their peers. Fitch expect capital buffer to decline, as the bank uses excess capital for capital distributions or business growth, but they should remain sound, supported by structurally improved profitability. Fitch noted that the ratings could be downgraded if there is a material deterioration in Greece’s operating environment or if Greece’s sovereign rating is downgraded. A downgrade could also result if the impaired loans ratio rises above 5%, leading operating profitability to fall below 1.5% of RWAs. In addition, a sustained decline in the CET1 ratio below 13% could put downward pressure on the ratings. Conversely, the ratings could be upgraded if Greece’s sovereign rating is upgraded, leading to a further improvement in the country’s operating environment score. An upgrade would also require the impaired loans ratio to remain structurally below 3%, the CET1 ratio to be maintained above 14%, and operating profit to remain sustainably above 2.5% of RWAs throughout the interest rate cycle, without a material deterioration in the bank’s risk profile or funding profile.
Source: Fitch
CYPRUS
Macro/Political:
- Data released by Eurostat showed that the annual inflation in Cyprus is expected to be 4% in June 2026 from 3.5% in May 2026(m-o-m), and 0.5% in May 2025(y-o-y).
Source: Eurostat
- KEDIPES initiated a new payment of EUR 50mn for the 2Q26 in the context of the repayment of state aid. With the new payment, the total amount of the
repayment of state aid in cash since the commencement of KEDIPES’ operations amounted to EUR 1.87bn.
Source: KEDIPES
- The Turnover Value Index of Retail Trade (except of motor vehicles) for May 2026 increased by 7.5% compared to the corresponding month of the previous year. For the same month, the Turnover Volume Index of Retail Trade increased by 7.5% compared to the corresponding month of previous year.
Source: CyStat
- The Central Bank of Cyprus (CBC), in its June economic bulletin, noted that Cyprus’ economy continues to demonstrate significant resilience and adaptability. The CBC according to the latest 1H26 data expects that the country’s growth rate in 2026 will be 2.5%. For 2027 and 2028, growth is expected to be 2.9% and 3.1% respectively, with private consumption as the primary driver. Unemployment is projected to be 4.6% in 2026 and 4.5% in 2027 and 2028, while inflation is expected to increase to 3.2% in 2026, before decrease to 1.9% in 2027 and 2028. Debt to GDP in March of 2026 declined to 52.8%, compared to 59.7% in March of 2025.
Source: CBC
