March 20, 2014 1:38 p.m. ET
The National Bank of Greece, the largest Greek lender, swung to a robust fourth-quarter profit of more than half a billion euros on tax benefits carried over from earlier years that helped offset continuing large provisions for bad loans.
The bank said it earned 547 million euros ($754 million) in the three months to the end of December, compared with an EUR81 million loss in the third quarter, reflecting EUR531 million in income from deferred tax assets and exceptional items.
Excluding those tax assets and items, the bank had a net profit of EUR16 million in the final quarter of 2013, compared with EUR8 million in the third quarter. Provisions remained high at EUR388 million in the fourth quarter, little changed from the July-September period.
Due to mergers and material changes to Greece's banking system, NBG's latest earnings aren't directly comparable with year earlier data.
After a deep, six-year recession, the pricking of the Greek property bubble, withdrawals by depositors and a EUR200 billion sovereign-debt restructuring, Greece's banks are struggling. Last year, they were recapitalized with the help of a European Union loan, but together the banks still hold some EUR70 billion in bad loans among them, a sum equal to a third of Greece's annual gross domestic product.
After a deep, six-year recession, the pricking of the Greek property bubble, withdrawals by depositors and a EUR200 billion sovereign-debt restructuring, Greece's banks are struggling. Last year, they were recapitalized with the help of a European Union loan, but together the banks still hold some EUR70 billion in bad loans among them, a sum equal to a third of Greece's annual gross domestic product.
Earlier this month, Greece's central bank said the country's four big lenders—NBG,Piraeus Bank SA, Alpha Bank AE and Eurobank Ergasias—would need to raise another EUR5.8 billion in total to shore up their fragile balance sheets and cope with that mountain of bad loans.
Updated March 6, 2014 2:20 p.m. ET
"Eurobank, now under state control, faces the biggest shortfall—it needs another €2.9 billion in capital—followed by market leader National Bank of Greece, which must raise some €2.2 billion, the central bank said. Piraeus faces a €425 million shortfall, and Alpha Bank needs €262 million. Including two other, smaller lenders, the capital needs facing Greece's entire banking sector total €6.4 billion. The four big banks hold about 95% of the country's banking-sector assets".
Leading Greek Lender Returns to Profit
ATHENS--National Bank of Greece SA (NBG), the country's leading lender, turned a profit in the first half of the year, boosted by gains from international operations and lower provisions for bad loans at home.
The bank reported a net profit of EUR344 million versus a loss of EUR1.9 billion in the same period a year earlier. For the second quarter of 2013, NBG postd an adjusted net profit of EUR126 million.
With the country in its sixth year of recession, NBG booked EUR853 million in losses on sour loans, down 29% year-on-year.
The bank, which had expanded into neighboring markets before the country's debt crisis erupted three years ago, said that operations in southeastern Europe were starting to turn profits. Its Turkish unit Finansbank added EUR180 million to the bank's core profitability.
"NBG has the comparative advantage of its significant presence both in Turkey and Southeast Europe, dynamic regions that enable it to diversify its sources of income, thus adding substantial value to the group," said CEO Alexandro Tourkolias in a statement.
"Our second quarter performance adds to the more optimistic climate. In particular, the group's core profitability was positive for a third consecutive quarter, pointing to a return to healthy results, a necessary condition for sustainable growth."
Net interest income, a measure of the bank's core revenue, fell 9% year-on-year to EUR1.6 billion.
Like other Greek lenders, NBG said that it has improved its funding mix and reduced its reliance on emergency loans from the Greek central bank, which fell below the one billion mark at the end of August.
