ECONOMY

NBG posts remarkably high profits

National Bank’s first-quarter results, issued on Friday, show a reversal in the declining course of recent years that reflects the improvement in the country’s finances. The group showed profits for the second quarter in a row, while proceeding to a reduction in provisions in Greece for the first time since the start of the crisis.

The NBG group announced that net profits from regular sources in the January-to-March period amounted to 186 million euros against losses of 265 million euros in the same period last year. However, the one-off cost of the acquisition of Eurobank, amounting to 159 million euros, reduced the net profits to 27 million euros.

The contribution of the NBG subsidiary in Turkey, Finansbank, in the group’s profits was once again crucial, as it overturned he losses of 139 million euros in Greece with profits of 155 million euros (from 125 million in 2012). Other subsidiaries in the region also contributed in profits with earnings of 13 million euros (from 7 million last year).

Provisions declined considerably from 419 million euros in the first quarter of 2012 to 318 million in Q1 of 2013 thanks to the significant slowdown in the rate of new non-performing loans. National also reduced its operating costs in this period by 10 percent in Greece and 3 percent in Southeast Europe, with chief executive Alexandros Tourkolias saying that since the start of the crisis National has reduced its operating costs by about a quarter.

The announcement coincides with the share capital increase of the country’s oldest lender, 12 percent of which is set to be covered by private investors.

Yet the 9.75-billion-euro recapitalization will not be enough to lift the bank’s EBA Core Tier I asset index above the 9 percent threshold, taking it only to 7.8 percent, according to an NBG statement on Friday.

As a result the bank says it is planning for the sale of its so-called “non-core assets,” which will take affect after the share capital increase.

“The group will proceed with additional moves, of which the Bank of Greece is already aware, in order to further enhance its capital adequacy and satisfy the 9 percent threshold,” the bank said in its statement.