ECONOMY

Piraeus Bank profit drops on higher loan-loss provisions

piraeus-bank-profit-drops-on-higher-loan-loss-provisions

Piraeus Bank, one of Greece’s four largest banks, on Monday reported a sharp drop in third-quarter profit compared with the previous quarter on the back of higher loan impairment provisions and weaker trading income.

The bank, which is 26.2% owned by the country’s HFSF bank rescue fund, reported a net profit from continued operations of 3.0 million euros ($3.55 million), down from net earnings of 85 million in the second quarter.

Piraeus Bank said loan impairment provisions rose 10% quarter-on-quarter to 175 million euros in July-to-September from 160 million in the second quarter.

The bank said it had 5.3 billion euros of loans under payment moratoria at the end of September.

“We need to see the duration of the second lockdown, as well as the gradual expiration of debt moratoria, in order to have a better picture of the impact on economic activity and the financial health of our borrowers,” CEO Christos Megalou said in a statement.

He said recent developments on Covid-19 vaccines were encouraging and provided grounds for optimism.

Earlier on Monday, the bank said its request to pay a 165 million euro coupon on a contingent convertible bond (CoCo) held by the HFSF bank rescue fund was rejected by the European Central Bank.

The decision will lead to the bond’s conversion into common shares, raising the HFSF fund’s stake to 61%, but it will also result in savings of 495 million euros in total up to 2022, boosting Piraeus’ regulatory capital to step up derisking efforts, Megalou said.

[Reuters]