Greek banks recorded the biggest fall in the cost of risk (CoR) since 2024 among all countries in Morningstar DBRS’s European sample. Despite that, they remain, alongside Spanish banks, among those with the highest CoR in absolute terms. This is the finding of a new report by the rating agency covering 53 European banks, based on data for the first half of 2026.
According to the report’s charts, the average cost of risk for Greece’s four systemic banks fell to about 55 basis points in the first half of 2026, on an annualised basis. It was about 74 bps in 2025 and about 90 bps in 2024. The decline amounts to 35 bps compared with 2024 and 19 bps compared with 2025. Greece recorded the biggest improvement in Europe in both comparisons.
DBRS places Greece in the southern European group, alongside Italy, Spain and Portugal. Banks in these countries continue to record the largest declines in provisions, a trend that began in 2022. However, the agency notes that, overall, Greek and Spanish banks still have the highest cost of risk in the sample. UK and French banks follow. The European average stood at 25 bps in the first half, down from 30 bps in 2025.
The picture by bank
Among individual banks, Alpha Bank recorded the biggest decline. Its cost of risk fell to about 63 bps, from about 112 bps in 2025 and more than 140 bps in 2024. Piraeus Bank stood at about 51 bps, down from about 79 bps in 2025. Eurobank was at about 61 bps, down from about 78 bps.
The National Bank of Greece has the lowest cost of risk of the four, at about 43 bps. It is, however, the only one to record an increase compared with 2025, when its CoR had fallen to about 25 bps. It remains below its 2024 level, when it was about 57 bps.
Resilience despite high interest rates
DBRS says the deterioration in asset quality expected after the sharp rise in interest rates did not materialise. This was true both during the period when the ECB’s deposit facility rate stood at 4% (September 2023 – June 2024) and in the 18 months that followed. In previous cycles, credit stress typically emerged during this period.
The agency attributes this resilience to a combination of factors:
– Years of balance-sheet repair and deleveraging.
– Tighter lending standards.
– A strong regulatory framework.
– Higher savings following the pandemic.
– Resilient labour markets.
It also notes that the pressures since 2022 have been confined to specific sectors, such as commercial real estate, and to some highly leveraged borrowers. They have not spread broadly across mortgage, SME and corporate portfolios.
The test over the next 12–18 months
The picture is different across Europe. More than half of the banks in the sample (29 of 53) reported a higher cost of risk in the first half than in 2025. Only six recorded net releases of provisions.
According to DBRS, the increase is partly due to model updates and additional provisions outside the models (post-model adjustments). These take account of the conflict with Iran, rising energy prices and inflationary pressures. The divergence between regions is widening: the South is improving, while the North and the “core” (the UK, France and Germany) are recording gradual increases, albeit from low levels.
The agency expects a moderate increase in the cost of risk over the next 12–18 months, as the ECB has resumed monetary tightening and further rate rises cannot be ruled out. DBRS’s baseline macroeconomic scenario forecasts tepid but resilient growth and stable unemployment in Europe in 2026–27. Risks, however, are tilted to the downside because of possible prolonged disruptions to energy supplies from the Middle East.
The report concludes that this period will show whether European banks have structurally lowered their cost of risk “through the cycle” or whether the impact of higher interest rates is merely being delayed. In any case, DBRS believes banks are in a position to absorb a potential normalisation, supported by their strong capital positions, liquidity and profitability.