May 16, 2019 / 8:51 AM / a year ago

UPDATE 2-Greece's NBG aims to nearly wipe out non-performing loans by 2022

* NBG expects NPLs to fall to 5% of loans by 2022 vs 41% end 2018

* Soured loans biggest challenge facing Greek banks

* NBG to close branches, cut staff costs by 40% within 4 years (Adds detail)

By Lefteris Papadimas

ATHENS, May 16 (Reuters) - Greece’s second-largest lender National Bank (NBG) plans to reduce its non-performing loan portfolio to around 5% of total loans by 2022, it said on Thursday, from 41% at the end of 2018.

Soured loans are the biggest challenge facing Greek banks, the legacy of a multi-year debt crisis that shrank the country’s economy by a quarter and drove unemployment to a high of nearly 28% in 2013.

NBG told an investor presentation that it saw a “material reduction” in its exposure to non-performing debt by 2020, driven by sales in consumer and corporate portfolios.

It also anticipates large mortgage securitisations between 2021 and 2022, when market conditions are expected to have improved.

Gross non-performing exposures were seen at around 1.7 billion euros ($1.9 billion) in 2022, down from 16.3 billion at the end of 2018.

NBG is 40% owned by the country’s bank rescue fund HFSF, which acquired stakes in major Greek banks during the years of crisis.

Greek banks need to slash their non-performing loan rate to below 10% of total loans to return to sustainable growth, HFSF said earlier this year.

The banking sector’s non-performing exposures stood at 81.8 billion euros in December, or 46.7% of banks’ loan books, the highest among euro zone countries.

NBG expects its net interest income to rise to 1.27 billion euros in 2022 from 1.0 billion in 2018, as the Greek economy improves, and sees fee incomes rising to 350 million euros from 228 million euros last year.

It plans to reduce its staff costs by 40% over the next four years, cutting its branch network to 390 from 460 currently.

Additionally, it expects a return on equity at about 11% and CET1 hovering at about 15% in 2022.

$1 = 0.8917 euros Reporting by Lefteris Papadimas; Writing by Michele Kambas; Editing by Mark Potter and Susan Fenton

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