Jump in bad debt provisions squeezes Alpha Bank’s profit

By George Georgiopoulos

ATHENS, Nov 30 (Reuters) — Alpha Bank on Thursday reported lower third-quarter profit compared to the previous quarter after booking higher provisions for impaired loans.

Alpha’s net profit from continuing operations was 35.6 million euros ($42.39 million), down from 70.7 million in the second quarter.

The results were above market expectations as analysts had expected net earnings from continuing operations of about 23 million euros. In the second quarter, the bank, Greece’s fourth-largest lender by assets, had a one-off loss of 69.4 million euros on the sale of its Serbian subsidiary.

Greek banks are still struggling with problem loan portfolios after a long recession pushed unemployment to record highs, making it hard for borrowers to service debts.

They entered the 2008 global financial crisis with bad loans, or non-performing exposures (NPEs), of 14.5 billion euros, or about 5.5 percent of their loan books. But bad debts climbed to 106.9 billion euros, or 51 percent, last year.

Banks have agreed with regulators to cut the level to 66.7 billion euros by 2019, bringing the ratio down to 34 percent.

«We continue to perform in line with our targets and strategic objectives, delivering a profitable performance for a fifth consecutive quarter despite asset deleveraging,» CEO Dimitris Mantzounis said in a statement.

He said the bank was shrinking its bad loans in line with plans with the reduction set to accelerate in the coming quarters.

Alpha’s ratio of non-performing loans (NPLs), credit past due for more than 90 days, edged lower to 37.3 percent of its book from 37.6 percent at the end of June. Loan write-offs at home reached 500 million euros in the quarter.

Provisions for bad debt rose 38 percent quarter-on-quarter to 298 million euros from 217 million in the second quarter.

Weaker net interest income due to lower loan balances was partially offset by lower central bank funding costs.

Alpha, 11 percent owned by Greece’s bank rescue fund HFSF, decreased its central bank borrowing by 3.4 billion euros during the third quarter to 11.6 billion, helped by increased repo and interbank transactions and a rise in deposit inflows. ($1 = 0.8398 euros) (Reporting by George Georgiopoulos. Editing by Jane Merriman)

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