Piraeus Bank profits nearly wiped out

Piraeus Bank, Greece’s fourth-largest lender, reported yesterday a massive 94 percent drop in nine-month profits, hurt by higher taxes, weak loan growth and greater provisions. Net earnings dropped to 14 million euros, broadly in line with market estimates. A deepening recession weighed on loan demand and asset quality, leading to higher loan-loss provisions, which rose 26 percent to 418 million euros. Net interest income rose 10 percent year-on-year to 897 million euros. Deposits slightly increased between July and September by 1.2 percent from the previous quarter, to 24.4 billion euros. Piraeus booked in the second quarter a 28-million-euro windfall tax the government imposed to shore up public finances and help plug its budget shortfall. Piraeus plans to raise 1.05 billion euros from an 800-million-euro rights offer in January and the sale of 250 million euros in convertible bonds. The bank will ask shareholders to approve the plan to bolster its finances at a December 6 meeting. »The bank’s major shareholders have responded very favorably (to the share-capital increase plan),» Piraeus Chairman Michalis Sallas said in a statement. The bank plans to reduce operating costs to below the 893 million euros reported in 2009. That will involve introducing a voluntary sabbatical program for employees in Greece under which wages would be cut to 40 percent to 50 percent of existing rates for as long as three years. Shares in Piraeus trimmed mid-session losses of more than 3 percent to end off 0.33 percent at 3.04 euros on the Athens bourse yesterday, versus a 0.28 percent dip on the broader market.