National Bank reports 131 million euros in profits in Q1

National Bank Group (NBG) on Tuesday said its after-tax earnings from continuing operations totaled 131 million euros in the first quarter of 2019, reflecting a significant increase from net interest revenue, cutbacks in operating spending and a recovery of revenue from financial transactions.

Net interest revenue grew to 290 million euros in the January-March period, up 5.0 pct from the previous quarter, while provisions for bad debt totaled 100 million euros. The cost of a voluntary retirement program was 94 million euros. The bank said that non-performing exposure fell by 1.1 billion euros on a quarterly basis, with the NPEs rate at 39 pct and the NPEs coverage rate at 58 pct in Greece.

National Bank said deposits totaled 41.2 billion euros in Greece, up 7.0 pct compared with the same period last year. Funding from the Eurosystem was 2.3 billion euros (TLTRO), while the CET1 rate was 15.7 pct.

“The results of the first quarter are beginning to reflect NBG’s significant efforts at transformation. The main achievements on the revenue side are the exchange into GGBs of the IRS with the Greek State, the reversal of a traditionally loss making trading result and the rejuvenated corporate banking, gaining a leading market share in new production in this segment,” it said.

It added, “On the cost side, the 2018 VES far exceeded its initial targets, facilitating the departures of 780 FTEs. Furthermore, a new VES was just launched, with a higher target. Efforts on domestic G&As containment are already bearing results. As a result of these actions, PAT from continued operations before a one off restructuring charge reached 131 million euros in Q1, more than double the FY.18 result.”

As for NPEs, “they declined by 1.1 billion euros in Q1, driven by Project Symbol and negative formation; another 1bn euro reduction is expected very soon from a sale process for unsecured consumer loans.” The bank said that its high provision coverage “bodes well for the continuation of a series of sales and other closure actions, in rapid succession. More important than the good results reported in Q1, the conditions are in place for an acceleration in NBG’s performance across the balance sheet and the P&L.”

First, it said, the new management team is in place and is leading the implementation of the bank’s fully-articulated transformation programme, which is currently in its second quarter of implementation. Second, the macro environment is steadily improving, and the legal environment is becoming friendlier to NPE clean up. “NBG will present its strategy to the public, starting with the investor community in London on May 16. We have a huge opportunity to transform NBG into a highly profitable bank with a clean balance sheet and a paradigm for the sector regarding the quality of service and the modern management of its people, thus becoming the bank of choice in the Greek market. We will take full advantage of it,” CEO Paul Mylonas.