National Bank Group returned to profitability in the January-September period, with after tax earnings totaling 26 million euros, from a loss of 1.7 billion in the corresponding period in 2015, reflecting positive trends in Greece and profitability in Southeastern Europe, where after tax earnings totaled 81 million euros from 43 million in 2015.
Consolidated revenue grew 5.0 pct on an annual basis, positively affected from a de-escalation of borrowing costs, while net interest margin improved by 11 basis points to 289 bps in the nine-month period.
Operating spending fell 2.7 pct in the January-September period, reflecting an 1.4 pct decline in personnel spending and a 6.9 pct decline in administrative spending. A forthcoming voluntary exit program is expected to further reduce spending in 2017.
Pre-provision earnings rose 17 pct on an annual basis, while the cost of credit risk was 191 bps in the third quarter of 2016 from 216 bps in the second quarter and 189 bps on a nin-month level, reflecting a smoothening of bad debt provisions in Greece.
Borrowing from ELA mechanism fell by 13.1 billion euros to just 4.5 billion in November, almost 1/3 of the exposure of the remaining systemic banks in Greece. The bank has the ability to further drain 10.2 billion euros from the Eurosystem, or 28 pct of deposits in Greece. Deposit inflows totaled 300 million euros in Greece, which combined with a further deleverage of loans led the loan/deposit rate to 89 pct in Greece, the lowest in the banking system.
CET 1 rate was 16.9 pct, excluding convertible CoCos and taking in mind the sale of Astir Palace Vouliagmeni Hotel which was completed at the end of October.
National Bank said its NPEs fell by 1.0 billion euros on a quarterly basis, for the second successive quarter, reflecting successful restructuring and write offs of loans.
Bad debt provision coverage was 56.8 pct in Greece and 56.3 pct in Group level, while the loans in delay of more than 90 days was 35.4 pct in Greece and 34.1 pct in Group level.
“National Bank of Greece’s results demonstrate increasing balance sheet strength and improving operating performance. On the asset quality front, the Bank has managed to reduce the stock of NPEs by 2 billion euros since the beginning of the year, on the back of favorable curing trends, solid collection efforts and write offs on fully provided loans. In light of that performance, the Bank is frontloading its NPE reduction relative to its targets. On the liquidity side of the business, results have been equally impressive, as NBG has reduced ELA exposure by an impressive 13.1 billion since the imposition of capital controls to a level of 4.5 billion currently. Domestic deposit inflows of 0.3 billion euros in Q3 and the completion of the disposals of NBGI Private Equity and Astir Palace Hotel aided towards that accomplishment. As regards to operating results, Group pre-provision profit covered the cost of risk, yielding positive operating and net profitability. Our SEE operations remained profitable, growing almost 2x fold year-on-year. The Group’s CET 1 ratio remained strong standing at 16.9 pct post the anticipated repayment of the CoCos and will be further enhanced through organic profitability, as well as through the continued successful implementation of the restructuring plan,” Leonidas Fragkiadakis the bank’s Chief Executive Officer, said.