Piraeus Bank Group on Tuesday said its pre-tax and provisions profits grew 16 pct to 844 million euros in the January-September period this year, with pre-tax and provisions profits rising 22 pct in the third quarter of 294 million euros, from 242 million in the same period last year.
Pre-tax and provisions earnings rose 19 pct to 822 mllion euros in Greece in the nine-month period and 25 pct in the third quarter of 288 million euros.
In an announcement, the bank said it was implementing rapidly and consistently its transformation plan and the Agenda 2020 programme. The bank also lowered its non-performing exposures (NPEs) and non-performing loans (NPLs), while improving liquidity conditions in the bank. Piraeus Bank said it also continued drastically reducing costs, with the cost/revenue index falling to 48 pct at the end of the third quarter form 54 pct a year earlier.
“Following a period of uncertainty in the beginning of the year, the Greek economy is now back on track. The main indicators in key sectors of the economy are returning to positive territory and sentiment is improving. GDP growth is expected to comfortably surpass 1% this year and 2% in 2018, while the labour market has started to rebound, with unemployment down to approximately 20% from a peak of 28%. These developments are gradually feeding into the banking market. In-line with our commitment to meet the NPEs targets agreed with our supervisory authorities, we outperformed market trends in both NPEs and NPLs reduction,” Christos Megalou, Chief Executive Officer said in an announcement.
In the third quarter NPEs decreased by 0.7 billon euros (quarterly) and by 3.9 billion euros from their peak in Sep.15. Pre write-off NPE formation was negative by -0.3 billion euros in the third quarter, the best quarterly performance for Piraeus to-date. NPLs decreased by 0.9 billion euros (quarterly), down 5.8 billion from the Sep.15 peak, reducing drastically the domestic NPL ratio from 40 pct to 36 pct. Pre write-off NPL formation was also negative by approximately -0.5 billion euros in the third quarter, he continued.
The positive trend in domestic customer deposits accelerated in the quarter, with a quarterly increase of 0.9 billion euros. ELA reliance decreased by 2.5 billion euros in the July-September quarter to 7.8 billion, reduced further to below 6 billion in late November, driven by additional deposit inflows and a more active interbank repo market. Piraeus’ ELA over assets and net loan-to-deposit ratios in Greece are both second best in the market. Piraeus’ pre-provision income rose by 16 pct (annually) in the nine-month period landing at 844 million euros, driven by a balanced 5 pct annual income growth and 5 pct cost reduction.
The core sources of banking revenues, net interest and fee income, recorded a strong increase in Q3 of 5 pct versus the same period of last year. The accelerated cost efficiency actions have driven cost-to-income ratio in Greece for the nine-month period to 48 pct from 54 pct in the same period last year.
“As we intensified our efforts to deal with legacy issues, provisions remained elevated, resulting in a marginal bottom-line loss for continuing operations of -19 million euros,” he said. At the end of September, the Group’s phased-in and fully-loaded CET-1 capital ratios, both increased quarterly, for the 2nd consecutive quarter, to 17.0 pct and 16.6 pct, respectively.
“The Bank’s transformation journey is progressing with speed and consistency. We are focused on the disciplined execution of our strategic plan, “Agenda 2020”, aiming at aggressive balance sheet de-risking and rapid normalisation. Our core banking franchise recorded a net profit of 311 million euros in the nine-month period, and a return on assets of 1.1 pct highlighting the strength and profitability potential of our business once the Group’s transformation is completed,” Megalou added.
Piraeus Core Bank delivered a solid set of metrics in the January-September period, including NIM of 309 bps and fees over assets of 87 bps. Piraeus Legacy Unit continued to contract RWAs by 0.6 billion euros quarterly. In the past few months, the bank has accelerated the pace of our non-core assets disposal program and is actively contemplating inorganic balance sheet normalisation initiatives, in-line with the de-risking strategy.
“The Bank’s reinvigorated management team, including our new Head of PLU, George Georgakopoulos, is working relentlessly towards the implementation of our plan, delivering on commitments and operational targets, while accelerating the clean-up of our balance sheet. We have already started the process for two NPE disposal transactions, one for business and one for consumer loans, of a total NPE on balance sheet amount of c. 2 billion euros. For the full year 2017, we are committed to the accomplishment of our NPE goals, and are targeting a positive bottom-line result,” he said.