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Piraeus Bank: Losses Due To PSI Impact And Loan Provisions In 9M11

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Piraeus Bank said that net loss attributable to shareholders from continuing operations amounted to €287 mn, excluding the PSI impact, due to increased loan provisions.

In a statement the bank said that including PSI impact (-€865 mn), after tax result attributable to shareholders from continuing operations amounted to -€1,153 mn.

The latest available economic data illustrate a significant deterioration of the economic environment in Greece. GDP contracted by -5.2% in Q3’11, unemployment rate for August at 18.4%, consumer confidence index at -84 points recorded a historical low in October and additional austerity measures will have a negative impact on disposable income. Against this backdrop, Piraeus Bank’s Management decided on the implementation of a stricter policy for refinancing loans, adjusting to current economic conditions.

As a result of the aforementioned developments, formation of non-performing loans demonstrated a significant acceleration in Q3’11 compared to the two previous quarters of 2011, resulting to a ratio of loans in arrears above 90 days (IFRS 7) at 11.7% compared to 9.5% in June ’11. 
Consequently, provisions increased in 9m’11 and amounted to €909 mn compared to €402 mn a year ago (+126% y-o-y), corresponding to 320 bps on average loans (141 bps in 9m’10). Thus, the coverage ratio stood at 46%.

€608 mn pre provision income, +30% y-o-y, while net interest income €916 mn, +4% y-o-y.

Net commission income €141 mn, increased by 1% y-o-y, mainly stemming from commercial banking commissions (+5% y-o-y).

Net revenues increased by 12% y-o-y at €1,202 mn.

Operating expenses improved by 4.4% y-o-y amounting to €576 mn, mainly attributable to the decrease registered in Greece (-6%).

Group personnel expenses decreased by 4% y-o-y at €274 mn, -5% y-o-y in Greece.

General administrative expenses were reduced by 7% y-o-y at €237 mn, -10% y-o-y in Greece.

Improvement of cost to income ratio to 48% from 56% a year ago.

Michalis Sallas, Chairman of BoD, commented: 

“In the second half of 2011, there was a significant increase in uncertainty in the international economic and financial environment. The sovereign debt crisis has spread to the core economies of the eurozone endangering both its cohesion and global economic growth. As time is short, important and bold decisions are required by the Leaders of the European Summit in December. A positive outcome from these discussions is vital to the Greek economy to restore stability and ensure a faster course to recovery by addressing, amongst other things, the severe problem of unemployment in the country. The immediate activation of development mechanisms such as EIB and NSRF funds, will contribute significantly to this. Regarding Piraeus Bank, we have reemphasized our policies to safeguard our balance sheet through the implementation of stricter evaluation criteria in the loan portfolio and a significant increase in provisions. This action along with the continuing improvement of organic revenues and decisive measures aimed at decreasing operating costs, that have already been decided, will enable the bank to improve its results in the forthcoming period."

Stavros Lekkakos, CEO, said: 

“In the midst of a particularly challenging environment, the Group’s pre provision profitability displayed resilience in 9m’11. Pre tax and provision profit amounted to €608 mn (*) compared to €468 mn in 9m’10 along with a 12% increase in net revenues and a significant 4% decrease in operating expenses (-6% in Greece). This reduction in operating expenses is in line with the target that was set for the full year 2011 (-5%), while actions have been undertaken aimed at achieving a significantly larger decline of operating costs for 2012. The worsening of all major indicators of the Greek economy in Q3’11 along with a stricter policy for refinancing loans resulted in the increase of the loans in arrears above 90 days ratio to 11.7% (+2 percentage points compared to 30.06.2011). Despite this increase in NPLs, the significant increase in provisions at €909 mn compared to €402mn a year ago, enabled the coverage ratio of provisions to be maintained at 46%, while cumulative provisions stood at 5.3% on average loans”.

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