National Bank Group reports profits in Jan-Sept

National Bank Group on Thursday said its profits from continuing operations after tax totaled 48 million euros in the January-September period, after losses of 103 million in the same period last year.

Paul Mylonas, CEO, commenting on the results said: “Economic conditions are steadily improving in Greece, and these developments should support NBG’s organic profitability as well as organic NPE reduction going forward. It will also facilitate NPE sales, especially as these will include loans with real estate collaterals. Indeed, house prices are up by 3.7% year-on-year in the third quarter of 2018. In this environment NBG’s comparative advantage of a high provision coverage of 60% will allow it to be more aggressive. NBG submitted recently a new NPE strategy to the SSM, committing to a reduction of 10 billion euros by the end of 2021. Our operating profitability performance in the nine-month period of 2018 stood at 84 million euros, contrasting sharply with a loss of 75 million in the same period last year. This notable improvement has been achieved due to a sustainable reduction in credit risk charges to c110bps, after achieving high provision coverage ratios. Following a sharp drop in NII, due to both deleveraging as well as new accounting standards, NII reached a trough in the past two quarters and is expected to begin to recover as corporate lending disbursements accelerate in 4Q to a level in excess of 1.0 billion euros. At the same time, NII quality has improved retaining a limited reliance on NPE interest. Operating costs will quickly benefit from the ongoing VRS, which will exceed 500 FTEs in 2018 as well as the ongoing programme of branch footprint optimization. Looking ahead, the implementation of the Transformation Programme – to be announced in the first quarter of 2019 – will lead profitability to substantially higher levels”.

National Bank said domestic NPE stock reduction continues for 10 straight quarters o NPE stock down 2.4 billion euros during the past 12 months. Net NPE reduction of 5.6 billion since the end of the fourth quarter of 2015 reflects organic negative formation (2.1 bn) and write-offs (3.5 bn), c2 bn of which subsequently sold o NPE and NPL coverage of 60% and 84% combined with NPE and NPL ratios of 43% and 30% in Greece; total coverage including collateral is well above 100% across all business lines.

Domestic deposits reach 40 billion euros, continuing to increase in Q3.18, driving the loans/deposits ratio to 71% in Greece. National Bank said it expected a zero impact on liquidity and funding cost from ECB’s waiver removal on the back of NBG issued investment grade covered bonds replacing sovereign bonds. Eurosystem funding at just 2.3 billion euros from 2.8 bn in the second quarter. CET1 ratio at 16.4% including Banca Romaneasca (BROM) impairment charge. Group PAT from continuing operations at 48 million euros in the January-September period against losses of 103 million last year. Operating profit of 62 million euros in Greece against losses of 100 million in 2017.