Greek banks Alpha and NBG reduce bad debt pile in second quarter

ATHENS (Reuters) – National Bank of Greek Lenders NBGr.AT and Alpha ACBr.AT continued to repair their balance sheets in the second quarter, reducing their bad credit loans as the country’s economy recovers from a 10-year debt crisis.

FILE PHOTO: A man withdraws money from an ATM at the Alpha Bank branch in central Athens, Greece July 19, 2015. REUTERS / Yiannis Kourtoglou

Struggling with 80 billion euros ($ 89.15 billion) in non-performing loans, a legacy of a debt crisis that shrunk the economy by a quarter, Greek banks have divested themselves of non-performing assets. essentials and have shrunk their branch networks as they shrink the stack.

Alpha Bank, the country’s fourth-largest lender, reduced its non-performing loan ratio to 32.7% of its portfolio, from 33% in the first quarter, in line with the average pace of previous quarters.

The increase in fees and commissions allowed the bank, 11% owned by the Greek rescue fund HFSF, to increase its net profit to 59.4 million euros, against 27.5 million between January and March.

Greece’s second-largest lender, National (NBG), said its non-performing exposure ratio, which includes non-performing loans and other credits that could go wrong, fell to 36.5% from 38, 9% in March.

He announced a decline in net profit from continuing operations of 122 million euros due to lower trading gains.

Greek banks aim to reduce their ratio of credit to total loans to less than 20% by the end of 2021 from 45.2% at the end of the first quarter – an ambitious but crucial target to enable them to finance the recovery economy of the country.

Greece emerged from the shackles of strict surveillance under three bailouts in August last year. Earlier this week, his new Conservative government completely lifted the remaining capital controls imposed since June 2015.

No longer facing restrictions on money transfers abroad, households and businesses are likely to return cash held outside the banking system.

The return to growth in the economy was accompanied by an increase in private sector bank deposits, a sign of increased confidence.

From June 2015 to June of this year, deposits increased by about 12% or 15 billion, supported by improving market sentiment, economic expansion and rising employment.

The Greek economy, which grew at an annual rate of 1.3% in the first quarter, is expected to grow 2.2% this year and 2.5% in 2020, according to rating agency Moody’s.

“We are seeing a significant improvement in the economic outlook, as evidenced by the sharp decline in Greek government bond yields,” Alpha CEO Vassilis Psaltis said in a statement.

He said the lifting of capital controls was another step towards “restoring full normality” as Alpha focuses on executing its bad debt reduction plan.

Reporting by George Georgiopoulos; Editing by Jan Harvey

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