November 22, 2017 / 4:39 PM / 25 days ago

UPDATE 1-Greece's National Bank shrinks loss, bad debt provisions fall

(Adds, CEO comment, details)

ATHENS, Nov 22 (Reuters) - Greece’s second largest lender by assets National Bank (NBG) was loss-making in July-to-September as weak net interest income and trading losses offset a decline in bad debt provisions.

NBG, 40 percent owned by the country’s bank rescue fund HFSF, on Wednesday reported a net loss from continued operations of 44 million euros ($51.87 million) versus a net loss of 52 million euros in the second quarter.

Greek banks, which face a new health check by the European Central Bank early next year, are still struggling with problem loan portfolios after a protracted recession pushed unemployment to record highs, making it hard for borrowers to service debts.

Entering the 2008 global financial crisis with bad loans, or non-performing exposures (NPEs), of 14.5 billion euros, about 5.5 percent of their loan books, banks saw bad debts climb to 106.9 billion euros, or 51 percent, last year.

They have agreed with regulators to cut the level to 66.7 billion euros by 2019, bringing the ratio down to 34 percent.

NBG Chief Executive Leonidas Fragiadakis said efforts to reduce the bank’s bad debt continued unabated for a sixth straight quarter in July-to-September, with the stock of NPEs dropping by 200 million euros quarter-on-quarter.

The bank has reduced NPEs by 3.5 billion euros since the last quarter of 2015.

“Curing contributed more than half of this quarter’s NPE reduction, with coverage remaining at a sector-high of 57 percent in Greece, enhanced by 40 basis points from the previous quarter,” Fragiadakis said in a statement.

NBG’s loan impairments fell 22 percent to 156 million euros while its ratio of non-performing exposures, which include loans past due for more than 90 days plus other credit likely to turn bad, edged up to 45.2 from 45 percent in the second quarter.

Helped by a recent issue of a three-year covered bond which raised 750 million euros, NBG’s borrowing from the ECB and the domestic central bank dropped markedly to 4.7 billion euros last month - the lowest such borrowing among its Greek peers.

The bank’s core equity tier-1 capital ratio stood at 16.8 percent, excluding the positive impact from already agreed subsidiary divestments that are expected to be completed early next year.

“These will provide additional capital buffer that will be utilised in the upcoming regulatory exercise,” NBG’s CEO said. ($1 = 0.8483 euros) (Reporting by George Georgiopoulos, editing by David Evans)

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