By end-September Greece’s four systemic banks had reduced their bad loans by more than 15 billion euros compared to the same time last year, trimming their nonperforming credit to 74 billion euros on a group level from 89.6 billion at end-September 2018. This has paved the way for a dynamic fourth quarter, by the end of which some important sale and securitization transactions will have been agreed.
These include the securitization of Eurobank’s Cairo portfolio worth 7.5 billion euros and the sale of its FPS loan management offshoot expected by year-end, and the securitization of Alpha’s Galaxy portfolio of 12 billion euros along with the sale of Cepal in the first half of 2020. Next year Piraeus will make two transactions of 3 billion euros in total and National will securitize loans equal to 3.5 billion.
The acceleration in the streamlining of the bank figures, which is in the final phase, will not be bloodless. The common enemy in the next quarters will be the losses all banks will have to record through these transactions, absorbing part of their capital stock, although bankers assure this will not threaten the lenders’ capital adequacy.
In their effort to lay the groundwork for recording profits, the banks will prioritize the reduction of their operating expenses, helped by the gradual increase of their activity which should bolster interest revenues and takings from commissions.
The third-quarter results published last week showed that all four core banks have improved their earnings: National saw its profits grow sixfold this year to 396.7 million against 63.7 million in 2018. Alpha’s earnings rose from 53.7 million last year to 91.5 million, Eurobank enjoyed a marginal increase to 82.1 million euros, while Piraeus swung from losses of 300 million to profits of 87.1 million euros in January-September 2019.