February 28, 2014 / 4:30 PM / 4 years ago

UPDATE 1- Greece's Eurobank posts 2013 loss, hurt by loan-loss provisions

(Adds CEO comment, details, background)

* Loss widens to 913 mln euros in Q4

* Bad debt provisions increase to 660 mln euros

* Non-performing loans at 29.4 pct of book vs 27.7 pct in Q3

ATHENS, Feb 28 (Reuters) - Greece’s third largest lender Eurobank lost 1.15 billion euros last year, hurt by provisions for bad loans and one-off charges including the cost of a voluntary exit scheme.

Greek banks continue to struggle with loan impairments amid a deep recession. Record unemployment of 28 percent has made it hard for borrowers to service their loans, forcing banks to provision for bad debt, although the pace of rise is slowing.

Non-performing loans (NPLs) are the focus of a health check the country’s central bank has run to assess whether Greece’s top lenders are adequately capitalised to absorb further credit deterioration.

Eurobank, 95 percent owned by Greece’s HFSF bank rescue fund, said provisions rose to 660 million euros as impaired loans increased to 29.4 percent of its book from 27.7 percent in the previous three-month period.

The bank said it beefed up provisions to raise the coverage ratio of its impaired loans by 130 basis points to 50.1 percent.

“We proceeded to further clean up and fortify our balance sheet with a conservative provisioning policy,” the bank’s Chief executive Christos Megalou said in a statement.

Based on central bank data, non-performing loans held by Greek banks rose to 31.2 percent of their total loan book at the end of the third quarter last year from 29.3 percent at the end of the first half.

Eurobank, slated for a return to private ownership, said net interest income rose by 16 percent to 361 million euros in the fourth quarter, helped by lower funding costs as deposit rates eased and exposure to costly Greek central bank liquidity assistance (ELA) dropped to 5.6 billion euros.

The bank plans to issue about 2 billion euros ($2.71 billion) worth of new shares to boost its capital by March. It became 95 percent-owned by the HFSF after it failed to attract private investors in its recapitalisation last year.

It shed more than 10 percent of its workforce through a voluntary redundancy scheme last year aimed at cutting costs and making it fit for privatisation. (Reporting by George Georgiopoulos; Editing by Elaine Hardcastle)

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