National Bank (NBG) and Alpha, two of Greece’s largest lenders, increased provisions to cover anticipated loan impairments from the coronavirus crisis as they kicked off the first quarter earnings season for the sector on Thursday.
The coronavirus pandemic struck just as Greece’s banks were making headway in their bid to sell, write off or restructure billions of euros of bad debt accumulated during the last financial crisis.
The country’s economy is seen contracting by 6% this year, under the central bank’s baseline scenario, hit by restrictive measures to slow the spread of the virus, the global recession and an expected sharp drop in tourism.
The stock of non-performing loans (NPLs) declined by 16% last year but remained at a high 40% of gross loans, hampering banks’ ability to lend and finance economic recovery.
National Bank NBG, 40% owned by the country’s HFSF bank rescue fund, posted net profit from continued operations of €409 million in the first quarter, up sharply from €18 million in the fourth quarter of 2019 and boosted by gains in Greek government bonds.
Loan impairment provisions amounted to €486 million, up from €107 million in the fourth quarter, reflecting the full absorption of anticipated COVID-19 related lending losses.
Peer Alpha Bank, 11% owned by the HFSF, fell to a net loss from continuing operations of €10.9 million versus net earnings of €5.4 million in the previous quarter, due to higher loan impairment provisions and weaker trading income.
«We expect the €24 billion of stimulus measures, at 13% of GDP, to limit the recessionary impact of COVID-19 in 2020 and pave the way for a strong recovery in 2021,» the bank’s CEO Vassilis Psaltis said.
Alpha’s NPLs inched down to 30% of its loanbook from 30.1% in the fourth quarter.
National Bank’s ratio of non-performing exposures (NPEs), which includes NPLs and other credit likely to turn bad, fell to 30.9% of its loanbook from 31.3% in December.
The economic fallout from the coronavirus pandemic will likely delay planned securitisations to shift legacy bad loans off balance sheets. In response to the crisis, Greek banks have introduced moratoria on debt payments to individuals and businesses that were performing before the outbreak.
Original Story: Reuters | George Georgiopoulos
Photo: Photo by Michalis Famelis / Wikimedia Commons
Edition: Prime Yield