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ATHENS, May 10 (Reuters) - Greece’s third-largest lender Alpha Bank swung to a net profit in the first quarter after it wrote up the value of a rival lender it acquired last October and lowered its reliance on a costly emergency funding mechanism.
Net profit was 2.88 billion euros ($3.75 billion), compared to a loss of 82.5 million in the same period a year earlier, the bank said on Friday. Earnings were boosted further by a 427 million euro tax credit.
Alpha Bank acquired Emporiki Bank from Credit Agricole for a nominal consideration of 1 euro.
The French lender pumped in 2.9 billion euros to recapitalise Emporiki under the deal. Alpha, consolidating Emporiki’s results for the first time, booked most of that amount as a goodwill write-back.
Alpha said net interest income rose 12 percent quarter-on-quarter to 321 million euros as reduced recourse to the Greek central bank’s costly emergency liquidity funding mechanism (ELA) eased funding costs.
Greek banks resumed funding directly from the European Central Bank in December. ECB funding is about 2 percentage points cheaper than ELA funding.
Excluding the 2.6 billion euro positive contribution from the consolidation of Emporiki, Alpha’s net profit came to 244 million euros.
With Greece’s economy in its sixth consecutive year of recession and more than one in four Greeks without jobs, credit impairments continue to pound loan books, forcing banks to provision for losses.
The economy is projected to shrink by 4.2 to 4.5 percent, this year, meaning non-performing loans could rise further.
Alpha’s provisions in the first quarter rose 58 percent year on year to 505 million euros, with its ratio of non-performing loans (NPLs) rising to 30.1 percent of its loan book.
“We are seeing a slowdown in the rate of increase in NPLs, which is consistent with our projection that in absolute numbers they may peak in the beginning of 2014,” Alpha’s Chief Operating Officer Spyros Filaretos told Reuters. (Reporting by George Georgiopoulos; Editing by Tom Pfeiffer)