Piraeus Bank on Wednesday reported net profits of 23 million euros in the first quarter of 2015, while net revenues rose 6.0 pct year-on-year to 589 million euros. Net interest income rose 4.0 pct to 500 million euros, but fell 2.0 pct compared with the fourth quarter of 2014, largely reflecting the use of the ELA mechanism in the first three months of the year.
The Piraeus Bank Group, in an announcement, said that this development was offset by further containment of time deposits’ average monthly cost which fell to 180 basis points from 195 bps in December 2014. Despite market developments in first quarter, which resulted in significant deposit outflows, the downward trend in time deposits’ cost was not affected and therefore the rate of new time deposits at end April 2015 was set at 1.75 pct.
Net interest margin stood at 273 basis points versus 255 bps in the first quarter of 2014, net fees and commission income was 83 million euros, up 4 pct from the same period last year and down 4 pct on a quarterly basis, mainly due to the economic developments that negatively influenced loan commissions. Commissions from banking activities comprised 86 pct of total, while investment banking and asset management accounted for 7 pct and 8 pct, respectively.
The Group’s operating expenses stood at 344 million euros in the January-March period, of which 51 pct were related to staff expenses, 40 pct to administrative expenses and 9 pct to depreciation and other expenses. Operating costs in Q1.2015, normalized for one-off items, were €327 mn, down 9% qoq and marginally up 1% versus Q1.2014.
The Group’s recurring profit before tax and provisions was 266 million euros in the first quarter, compared to 252 million last year (+6 pct). The Group’s net results from continuing operations attributable to shareholders amounted to a loss of 69 million in the first quarter. It is noted that the parent Piraeus Bank posted a net profit of 23 million.
The Group’s customer deposits amounted to 46.5 billion euros, recording a 15 pct reduction or approximately 8 bn compared to year end 2014. The decline was almost in line with the decrease, which was recorded for the entire deposit market in Greece (-14% pct). Following the agreement attained at the Eurogroup meeting on February 20, 2015, the impact from deposit outflows was contained. Nonetheless, the decline in time deposits’ cost has not stopped, and continues at a milder pace during the first months of 2015. At the same time, it is worth noting that the bulk of outflows is channeled into banknotes and only a small portion is transferred abroad, a point that is important for the gradual return of deposits as soon as market conditions stabilize.
Deposits related to international operations increased 7 pct year-on-year, totalling 5.1 billion euros (mainly from Egypt, Bulgaria and Cyprus).
Gross loans before adjustments at the end of March 2015 amounted to 71.4 bln. Loans in Greece amounted to 64.5 bln and in international operations to 6.9 bln (10 pct of total loans). Business loans represented 65 pct of total Group loans, whereas retail loans made up 35 pct (25 pct mortgages and 10 pct consumer loans). Net loans amounted to 55.7 billion euros.
Loans to deposits ratio at the end of March 2015 stood at 120 pct. Piraeus Bank’s Eurosystem funding increased to 30.3 billion at end March 2015 from 14.1 bn in December.
Group NPL formation, which almost zeroed in the fourth quarter of 2014 following a long deceleration, increased slightly in the first three months of 2015 caused by the heightened economic uncertainty, settling at 0.3 billion. Specifically, new loans in arrears as a percentage of loans was 0.38 pct in Q1.2015. The Group’s NPLs ratio (post write-offs) stood at 38.9 pct at the end of March 2015. The coverage of loans in arrears over 90 days by cumulative provisions stood at 56.5 pct at the end March compared to 50.7 pct in March 2014.
“The forthcoming agreement between Greece and the institutions is significant, as it will remove any uncertainties and restore confidence in the economy and the Greek market. This development will enable the return of deposits into the banking system, its access to cheaper funding sources and enhance liquidity in the economy.
Restoring liquidity is imperative for stimulating business activity, creating jobs and enabling growth. The latter is the most appropriate way to address the economic and social crisis, as it allows for an increase in employment, as well as the implementation of a redistributive policy with the aim of improving the living standards of vulnerable social groups.
Piraeus Bank is preparing itself to respond to its heightened responsibilities and its role in the Greek economy,” Michalis Sallas, chairman of Piraeus Bank Group said.
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