Turkey keeps NBG profits afloat
National Bank (NBG) reported a sharp drop in first-half net profit but the figures were better than expected, thanks to resilient interest income and its profit-churning Turkish subsidiary. NBG said first-half net profit plunged 79 percent to 146 million euros, hurt by one-off tax charges, mark-to-market valuation losses in its Greek sovereign bond portfolio and higher provisions for nonperforming loans (NPLs). Analysts were expecting a figure of around 132 million euros. «NBG succeeded in posting profitability in the first half of this extremely difficult year, maintaining strong liquidity and robust capital adequacy while fortifying its balance sheet with higher provisions in the face of a deteriorating asset quality picture,» Apostolos Tamvakakis, CEO of NBG, said. Apart from 93 million euros in additional taxes, a 249-million-euro loss stemming from its bond portfolio weighed on profits, in addition to provisions for loan impairments which rose 55 percent to 467 million euros. Greek banks have been forced to put aside increasingly larger amounts for bad loans as the economy moves deeper into recession, sending jobless numbers higher and making it harder for households to repay credit. A breakdown of NBG profits shows that its Turkish unit Finansbank contributed 251 million euros to earnings, up from 219 million in the same period a year earlier. Profit in Southeastern Europe and Cyprus fell 16 percent to 54 million euros. «The [earnings surprise] was on resilient net interest income and somewhat contained operating costs. The Turkish unit also performed well,» Alpha Finance analyst Nikos Lianeris told Dow Jones Newswires. Looking ahead, NBG said Greece’s progress in its deployment of fiscal measures and structural reforms allows room for optimism. «[This] allows us to expect that during the rest of the year, the extreme conditions seen in the first half, with their inevitable impact on the banking sector, will not recur,» Tamvakakis said.
