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Piraeus Bank posts Q4'17 profit despite rise in loan impairment losses

Piraeus Bank SA reported a fourth-quarter 2017 net profit attributable to shareholders from continuing operations of €12 million, compared to a loss of €17 million in the previous quarter.

Net interest income dropped quarter over quarter to €398 million from €421 million, as did net fees and commission income, to €87 million from €124 million. Pre-provision income came in at €144 million, down from €296 million in the previous quarter.

The Greek bank booked €1.18 billion of fourth-quarter impairment losses on loans, meaning that it made a pretax loss of €1.17 billion, but it booked a €1.18 billion income tax gain, leaving it with the €12 million profit. Loan impairment charges in Greece amounted to €1.13 billion in what the bank called "a major step in addressing the problematic portfolio and substantially increasing coverage levels."

For full year 2017, the bank posted a net profit attributable to shareholders from continuing operations of €2 million, down from €37 million a year ago.

Net interest income for the year stood at €1.67 billion, lower than €1.77 billion in 2016, although net fees and commission income increased on a yearly basis to €369 million from €309 million. Pre-provision income declined year over year to €992 million from €1.04 billion.

The bank's impairment losses on loans rose year over year to €2.01 billion from €1.00 billion. Piraeus booked a pretax loss of €1.208 billion and an income tax gain of €1.206 billion.

Piraeus Bank said its nonperforming exposures and loans have been declining for nine consecutive quarters. NPEs stood at 56% of total loans at the end of 2017, NPLs at 35%.

Coverage of NPLs and NPEs stood at 75% and 47%, respectively, rising to 83% and 52% pro forma for the effect of the Jan. 1, 2018, implementation of IFRS 9 accounting rules.

The phased implementation of IFRS 9 will lead to an impact of approximately 25 basis points on Piraeus Bank's common equity Tier 1 ratio in 2018. Taking into account divestments in progress, the phased-in CET1 ratio as of Dec. 31, 2017, was 15.7%, or 15.4% pro forma for IFRS 9 effects.