Piraeus Bank will turn profitable this year, helped by cost cuts and lower provisions for nonperforming loans, its chairman said on Wednesday.
Greece’s second-largest lender by assets, like its domestic rivals, has been grappling with large problem loan portfolios after the country’s deep recession pushed unemployment to record highs, making it hard for borrowers to service their debts and forcing lenders to make provisions for impaired credit.
“In 2016 we will be profitable,” Piraeus Bank’s chairman, Michalis Sallas, told reporters.
“The easing in nonperforming loans in the last quarter of 2015 is continuing in the first quarter. This leads to lower provisions.”
Piraeus, which is 26.2 percent-owned by the country’s bank HFSF rescue fund after its recapitalization last year, booked loan-loss provisions of 1.4 billion euros in last year’s final quarter, leaving it with a 1.24-billion-euro loss.
The provisioning increased the coverage ratio of impaired loans to 65 percent from 61 percent in September.
Sallas said that improving trends on bad loans continued in the first quarter and he expects the group to lower its ratio of nonperforming loans – credit in arrears for more than 90 days – to come to less than 17 percent of its book by 2018.