ECONOMY

Piraeus Bank shows unexpectedly large loss for 2010

Piraeus Bank, Greece’s fourth-largest lender, posted a bigger loss than expected last year as a contracting economy contributed to a rise in bad debt provisions.

The bank’s net loss was 20 million euros, compared to net income of 202 million euros in 2009. Analysts were looking for a loss of around 10 million euros, according to Bloomberg.

The rise in provisions matched the trend in the Greek banking system, which has seen a sharp rise in nonperforming loans as the country slogs through a third year of a grinding recession.

Piraeus set aside 601 million euros for bad loans in 2010, up from 491 million a year earlier. The bank’s trading division reported no profits, compared to a 177-million-euro profit a year earlier. These more than offset positive growth in net interest income for the year, which rose to 1.21 billion euros from 1.11 billion in 2009.

The bank vowed to step up cost-cutting initiatives in the year ahead.

“The annual reduction of operating costs by 4 percent in Greece and by 1 percent at a group level was in line with the initial target set for 2010, while the goal for 2011 is a further reduction of 5 percent at a group level,» Stavros Lekkakos, Piraeus?s chief executive, said in a statement on Thursday.

The bank’s reliance on funding from the European Central Bank was 17.2 billion euros at the end of the year. Greek banks have been reliant on the ECB amid concern over their Greek government bond holdings. Piraeus had a Greek government bond portfolio of 8.7 billion euros at the end of the year.