Piraeus Bank swings to loss as loan-loss provisions rise

Piraeus Bank, Greece’s largest lender by assets, on Monday reported a first-quarter loss after “frontloading” loan impairment provisions to take into account the impact of the coronavirus crisis.

Piraeus Bank, which is 26.2% owned by the country’s HFSF bank rescue fund, reported a net loss of 232 million euros ($258.08 million) compared with a net profit of 14 million euros in the same period a year earlier.

The coronavirus pandemic struck just as Greece’s banks were making headway in their bid to sell, write off or restructure billions of euros of bad debt accumulated during the last financial crisis.

Piraeus said the worse-than-previously-expected macroeconomic outlook led to incremental impairments of 324 million euros, reflecting the impact of the COVID-19 pandemic.

Taking into account its effect on trading, the total impact amounted to 370 million euros, including a 46 million hit on the bank’s trading results.

Piraeus Bank said the frontloading of bad-debt provisions for subsequent quarters would allow the bank to execute its 2020 budget.

Greek banks have offered businesses hit by the coronavirus crisis a six-month freeze on loan payments as part of relief efforts to help borrowers to cope with the economic shutdown.

Piraeus said loans under payment moratoria, provided to eligible clients with no non-performing loans, amounted to 4.0 billion euros.

“Asset quality trends have been supportive in the first quarter despite the market headwinds. It is still too early to see whether flows will deteriorate post the lifting of the debt moratoria,” CEO Christos Megalou said.

He said the bank was working a preparatory phase to securitise 7.0 billion euros of soured loans, transactions which under its baseline scenario are targeted to take place in this year’s fourth quarter. 

[Reuters]