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Greece's Big 4 banks expect €5B hit from IFRS 9

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Greece's Big 4 banks expect €5B hit from IFRS 9

Greece's four largest banks estimated a combined impact of €5.25 billion from the implementation of the new IFRS 9 accounting standards, which require lenders to make provisions for potential losses in the future.

Piraeus Bank SA projected a €1.6 billion preliminary impact from first-time adoption of the new accounting standards, adding that the estimated hit on its common equity Tier 1 ratio is roughly 25 basis points. The bank, which is due to report its full-year 2018 results March 28, expects a transitional CET1 ratio of around 15.5% as of Dec. 31, 2017.

The bank added that its loan provision expenses for full year 2017 is estimated to increase to €2.0 billion from €1.0 billion in 2016, with its nonperforming exposure and nonperforming loan coverage ratios standing at 47% and 75%, respectively, at 2017-end. Pro forma for the new accounting rules, the bank's NPE and NPL coverage ratios will rise to 52% and 82%, respectively, it said.

Piraeus expects its net result from continuing operations attributable to shareholders for 2017 to be at "break-even level," noting that its cost of risk rose in the final quarter of the year. The bank added that it is "progressing" on its efforts to reduce its NPEs.

Meanwhile, National Bank of Greece SA estimated the impact of the IFRS 9 on group shareholders' equity at around €1.45 billion, of which €1.2 billion entails changes in impairment requirements and €250 million due to classification and measurement. The impact on the lender's CET1 ratio is estimated to be around 50 basis points as at Jan. 1 on a transitional basis, and roughly 350 basis points on a fully loaded basis.

Eurobank Ergasias SA estimated an impact of €1.1 billion before tax from the implementation of the IFRS 9, adding that the impact on its phased-in CET1 ratio, which stood at 15.8% at 2017-end, will be 16 basis points.

Alpha Bank AE also expects the application of the new accounting standards to have a roughly €1.1 billion after tax impact on its shareholders' equity. The estimated impact on the bank's phased-in CET1 for the first year of application is 0.1% based on data available as of Dec. 31, 2017. The bank's CET1 ratio as of Sept. 30, 2017, was 17.8%. The estimated increase in the accumulated allowance for loans and advances to customers is 8.1%, according to the bank.