Group Performance Highlights
First Half & 9month 2015 Results
Recurring profit before tax and provisions was €875 mn in 9month 2015, up 17% versus 9month 2014. In Q3.2015, it was €330 mn, 20% higher versus €275 mn in Q2.2015 (excluding one-off income and cost items)
Group net interest income reached €1,435 mn in 9month 2015, 3% lower versus 9month 2014. In Q3.2015, net interest income was €470 mn, slightly lower compared to Q2.2015 (€472 mn), driven by the increased use of ELA funding that resulted from the significant deposit outflows and the ECB’s decision to stop accepting Greek government bonds and guarantees as collateral for refinancing. However, this was offset by the reduction of time deposits cost in Greece for the second and third quarter of 2015 (156 bps in Q3.2015 from 177 bps in Q2.2015 and 183 bps in Q1.2015).
Net fees & commission income was €233 mn in 9month 2015, 3% lower versus 9month 2014, while net fees & commission income in Q3.2015 reached €73 mn, 7% lower versus Q2.2015. In H1.2015, net fees & commission income was affected by the economic uncertainty, the imposition of a bank holiday, that lasted 3 weeks (28 June -20 July 2015) and the capital controls.
Net recurring operating revenues were €1,820 mn in 9month 2015, 5% higher versus 9month 2014 (excluding one-off items), while net operating revenues in Q3.2015 reached €635 mn, up 7% qoq (€597 mn in Q2.2015).
Recurring operating expenses were €945 mn in 9month 2015, down 4% versus 9month 2014, while operating expenses in Q3.2015 amounted to €305 mn, displaying a 5% qoq reduction.
The loans in arrears over 90 days ratio reached 40.5% at the end of September 2015 from 39.4% as at 30 June 2015 and 38.9% at the end of March 2015. Non-performing loans formation increased to €385 mn in Q3.2015 from €111 mn in Q2.2015 or 56 bps from 16 bps as percentage of gross loans versus €264 mn in Q1.2015 (including €332 mn formation of non-performing loans in Greece from -€7 mn in Q2.2015 and €191 mn in Q1.2015). The coverage ratio of loans in arrears over 90 days by cumulative provisions increased significantly to 61% as at 30 September 2015 from 56% in March 2015.
Loan impairment charges in Q2.2015 and Q3.2015 reached a combined €1,843 mn from €278 mn in Q1.2015, which resulted in cumulative provisions representing 24.6% of gross loans at the end of September 2015. The increased loan-loss allowance in Greece is mainly related to changes in the domestic market conditions. The high provisioning levels of 9m.2015 further support the financial position of Piraeus Bank and allow the Bank to, among others, move towards the active management of its non-performing loan portfolio in Greece, through the Recovery Banking Unit.
Net result from continuing operations attributable to shareholders amounted to -€635 mn in 9month 2015, with €495 mn of profit arising in Q3.2015 and losses equal to -€1,059 mn occurring in Q2.2015 due to the increased provisions for loan losses.
Volumes as of 30 September 2015
Group total assets amounted to €85.9 bn at the end of September 2015.
Customer deposits totalled €38.1 bn (-29% since the beginning of the year, excluding Piraeus Egyptian operations), of which €34.5 bn in Greece. The adverse economic and political developments caused extensive uncertainty in the market which led to high deposit outflows in the first six months of 2015. However, after the imposition of capital controls, the bank holiday and the reopening of Greek banks on 20 July, deposit levels for the market as well as for Piraeus Bank appear to be stabilising with a moderately upward trend. The market conditions showed signs of stabilisation after the agreement of the Greek government with the Institutions in mid-July. Specifically for Piraeus Bank, in the period from the end of the bank holiday on 20 July 2015 until the end of October 2015, net deposit inflows reached €0.5 bn. Despite the deposit base reduction, the downward trend in the time deposits cost continued until September 2015 (1.11% new time deposits cost in September 2015 versus 1.74% in June 2015).
The significant deposits outflow in the first six months 2015 led to a subsequent increase in Eurosystem funding which reached €37.3 bn in June 2015 from €30.3 bn in March 2015. In Q3.2015 and after the imposition of capital controls, a slight easing of the Eurosystem funding was observed, resulting in reduction to €35.8 bn at the end of September 2015, of which €21.2 bn, was in the form of ELA down from €22.2 bn in June.
Gross loans before adjustments decreased by 2% in 9month 2015, reaching €68.8 bn in September 2015 compared to June 2015 (€70.0 bn), continuing their deleveraging course. Net loans amounted to €51.9 bn.
Net loans to deposits ratio was 136% in September 2015 (from 137% in June and 101% in December 2014), in line with the Greek market average.
The Common Equity Tier 1 ratio of the Group was mainly affected by the increased provisions for the period and reached 11.2% at the end of September 2015.
The Group’s branch network in Greece was reduced by 51 branches in the first nine months of 2015, with the Restructuring Plan target (870 branches in 2017) having already been achieved since the end of 2014. The Group’s branch network had 1,071 branches in total at the end of September 2015, of which 778 branches in Greece and 293 abroad.
The Group’s headcount at the end of September 2015 was 19,769 employees, with 15,715 in Greece, almost reaching the Restructuring Plan targets three years in advance. The international operations’ headcount was 4,055.