The systemic Greek bank Eurobank Ergasias SA turned a modest profit in 2017, while boosting its provisions and common equity capital, thanks to an improvement in loan repayments spurred by an increase in foreclosures, CEO Fokion Karavias said on an earnings call March 12.
Karavias said auctions of foreclosed properties would accelerate in 2018.
"What we see in terms of auctions is very encouraging," said Karavias, noting that in January and February this year the bank sold 26 properties at auction, and it is set to conduct 200 more such deals in March, toward a 2018 target of around 1,000. The increase comes after legislative changes in Greece removing debtor protections that the central bank has said were being used by so-called strategic defaulters to avoid repaying their loans.
The banking sector in Greece is already experiencing a "positive impact" from the growing number of foreclosures and auctions of defaulted mortgaged properties, said Karavias. "The banks are performing more aggressive actions towards strategic defaulters."
The bank continues to buy many of the properties sold in its own auctions, the executive confirmed, but said that a buoyant commercial property market, especially for tourism, logistics and office space, means it will likely be able to re-sell on the open market. As of the end of 2017, Eurobank held repossessed real estate with an estimated value of €400 million, according to its investor presentation.
€596 million of Eurobank's nonperforming exposures became performing during the course of 2017, of which €311 million became performing during the fourth quarter.
Eurobank held nonperforming exposures, including some restructured loans, equivalent to 42.6% of its book, or €18.1 billion, at the end of 2017. Its NPE ratio was 46% at the end of the previous year. It aims to cut its total bad asset pile to €15.6 billion by the end of 2018.
Loan loss provisions grew in the fourth quarter of 2017 to €206 million, from €178 million in the third quarter and €182 million in the fourth quarter of 2016, putting the total coverage of nonperforming exposures at 50.4%.
Its net profit for the fourth quarter was €42.9 million, up from a loss of €15.3 million in the third quarter. For the full year 2017, the bank turned a profit of €103.8 million, compared to the €235 million of 2016. Its fully loaded common equity Tier 1 ratio stood at 15.3% at the end of December 2017, up from the 13.8% of December 2016.
