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Greece's Eurobank profitable for second straight quarter, rival NBG swings to loss
[ATHENS] Greek lender Eurobank has stayed profitable for a second straight quarter, helping it focus on a strategy to cut bad debts accumulated during Greece's extended recession. "The second consecutive profitable quarter enables the bank to focus on its strategic goals. Our main priority remains the active management of problem loans," Chief Executive Fokion Karavias said in a statement on Wednesday.
Greece's third-largest lender by assets, 2.4 per cent owned by the country's HFSF rescue fund after its recapitalisation late last year, reported net earnings of 46 million euros (S$70 million) versus 60 million in the first quarter.
By contrast rival National Bank (NBG) swung to a loss on higher bad credit charges.
Greek banks still carry large problem loan portfolios after a protracted recession pushed unemployment to record highs, making it hard for borrowers to service their debts.
More than 40 per cent of the sector's loans are non-performing, making the reduction of the bad loan stock the biggest swing factor for Greek lenders as they continue to provision for impaired credit.
Banks are also grappling with funding gaps after deposit flight last year that led to capital controls in June 2015. They still depend on central bank funding to plug the hole.
Eurobank's credit-loss provisions rose 27 per cent quarter-on-quarter to 222 million euros from 175 million in the first quarter.
Non-performing loans eased slightly to 34.7 per cent of its loan book from 34.8 per cent at the end of March.
Mr Karavias said the group, with subsidiaries in the Balkans, saw a 1.1 billion euro increase in deposits in the second quarter, reflecting its capacity to strengthen its deposit base and continue to reduce dependence on central bank funding.
Rival NBG was loss-making in the three months through June after booking higher bad debt provisions.
NBG, 40 per cent owned by rescue fund HFSF, reported a net loss of 23 million euros excluding assets held for sale and discontinued operations, versus a profit of 26 million in the first quarter.
At group level, NBG's non-performing credit dropped to 33.3 per cent of its loan book from 33.6 per cent at the end of March. Bad loan provisions rose 32 per cent to 208 million euros.
NBG reduced its borrowing from the European Central Bank and Greece's central bank to 13.2 billion euros in August from 22 billion. Its deposits were broadly stable, with inflows of 300 million euros.