November 28, 2017 / 4:57 PM / a year ago

UPDATE 1-Greece's Piraeus Bank back in the red as it steps up bad loan provisions

* Non-performing loans ease to 36.2 pct of book

* Higher loan-loss provisions lead to 19 mln euro loss

* NPE stock shrinks by 0.7 bln euros in July-September (Adds CEO comment, details)

By George Georgiopoulos

ATHENS, Nov 28 (Reuters) - Piraeus Bank, Greece’s largest lender by assets, swung back into the red in the third quarter as it increased provisions to cover bad loans.

Greek banks have been struggling with problem loan portfolios after a protracted recession pushed unemployment to record highs, making it hard for borrowers to service debts.

Piraeus had returned to profit in the second quarter of this year. It continued to see rising income from interest, fees and commissions in the third quarter but turned a loss as it accelerated provisions for bad loans.

Chief Executive Christos Megalou said the bank reduced its stock of bad loans by 300 million euros, before write-offs, the biggest quarterly reduction to date.

It met non-performing exposure (NPE) reduction targets agreed with the ECB’s Single Supervisory Mechanism (SSM) for the fifth quarter in a row and its stock of bad debt decreased for the eighth straight quarter.

“In line with our commitment to meet NPE (non-performing exposure) targets agreed with supervisory authorities, we outperformed market trends,” Megalou said in a statement.

Greek banks entered the 2008 global financial crisis with bad loans, or NPEs, of 14.5 billion euros, or about 5.5 percent of their loan books. But bad debts climbed to 106.9 billion euros, or 51 percent, last year.

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

Piraeus, which is 26.2 percent owned by Greece’s bank rescue fund HFSF, reported a net loss from continued operations of 19 million euros ($23 million) after a net profit of 7 million euros in the second quarter.

The group, with a current market value of 878 million euros, said bad debt provisions rose 20 percent quarter-on-quarter to 312 million euros.

An increase of 0.9 billion euros in domestic deposits in the third quarter, helped Piraeus reduce its borrowing from the Greek central bank by 2.5 billion at the end of September, with balances below 6 billion currently. (Reporting by George Georgiopoulos; Editing by Susan Fenton)

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