Piraeus resilient despite profit drop

Greece’s fourth-largest lender by assets, Piraeus Bank, yesterday reported a sharp drop in first-half profits, hurt by a one-off retroactive tax on 2009 earnings, weak loan growth and higher provisions. The bank said net earnings fell 92 percent to 10 million euros, beating market expectations. Analysts on average were forecasting a loss of 8 million euros, according to a Reuters poll. The group booked a 28-million-euro windfall tax the government imposed to shore up public finances in the second quarter. «In the second quarter, Piraeus managed the volatility of the economic environment and succeeded in improving organic profitability,» Michalis Sallas, the bank’s chief executive and chairman, said. «In the second semester of 2010, and according to current indications, the group’s performance is expected to be resilient.» A deepening recession in Greece weighed on loan demand and asset quality, leading to higher loan-loss provisions in the first half, which rose 30 percent to 268 million euros. Piraeus Bank said net interest income rose 12 percent year-on-year to 591 million euros. Its net interest margin improved to 2.7 from 2.5 percent in the same period last year. Analysts said they were «positively surprised» by the results from Piraeus, the first of Greece’s four main banks to report first-half results. Operating expenses were in line but provisions were lower than expected, assisting Piraeus’s good performance, said one analyst. Shares in the bank gained 3.75 percent to 4.15 euros yesterday, outperforming a 1.69 percent advance on the broader market.