Piraeus Bank’s one-off profit masks losses

Piraeus Bank said on Monday day that profits surged in the first quarter, after a one-off gain on the book value of its Cypriot bank operations masked the effect of rising bad loans caused by the country’s deep recession.

With Greece’s economy in its sixth consecutive year of recession and more than one-in-four Greeks without jobs, credit impairments continue to pound loan books, forcing banks to provision for losses.

The country’s second-largest lender reported net profits of 3.62 billion euros compared with 46 million euros in the same period a year earlier. The figure included 3.41-billion-euro goodwill write-back from the Cypriot takeover and a deferred tax asset of 540 million euros.

Excluding the one-off gain, Piraeus said it lost 336 million euros before taxes. Piraeus bought the Greek branches of Cypriot lenders Bank of Cyprus, Cyprus Popular and Hellenic Bank for 524 million euros to shield the Greek banking system from the island’s debt crisis.

The bank’s loan-loss provisions rose to 506 million euros in the first quarter from 296 million a year earlier, with its ratio of non-performing loans (NPLs) rising to 31 percent of its loan book from 23.3 percent in December. [Reuters]