National Bank of Greek (NBG) on Thursday said its Group net profit totalled 157 million euros in the first quarter of 2011, compared with 21 million in the same period last year, despite the persistence of high provisions, which amounted to 381 million euros, up +21 percent from 2010.
NBG, said that under extremely stressed conditions, the Group succeeded in growing its net income and, above all, sustaining its strong liquidity and keeping its capital base (Tier I CAD ratio) robust at 12.9 percent, while fortifying its balance sheet with higher provisions. At the same time, operating expenses declined by -1 percent yoy, mainly due to the drastic reduction in operating costs in Greece (down -8 percent year-on-year), as well as in SE Europe (down -3 percent). In addition, in the January-March period the Group maintained its strong liquidity, successfully keeping the level of its deposits in Greece unchanged despite the general contraction in retail savings in the country. At the same time, deposits experienced growth in Turkey (up +1 percent on the previous quarter, in Turkish Lira) and in SE Europe (up +5 percent on a quarterly basis). The Group’s loan-to-deposit ratio remained at the healthy level of 102 percent, while in Greece it improved further to 92 percent (down -2 percentage points qoq). With regard to the quality of its liquidity support, it is significant that net dependence on the ECB’s lending facility has declined: at the end of March, ECB liquidity support totalled 16.7 billion euros. The success in sustaining profitability in the banking business in Greece and the geographical dispersion of the Group’s sources of income reflect its resilience in periods of crisis. More specifically in:

-Group net profit grew to 157 million euros, compared with 21 million in the first quarter of 2010, reflecting strong performance in Turkey, the continued positive input of SE Europe, and the marginally positive result reported for Greece.

-Net interest margin remains at the high level of 3.7 percent, down slightly on the previous quarter, despite competitive pressure on deposit pricing.

-Operating expenses in Greece and SE Europe declined by 34 million euros, down -7 percent from 2010, underscoring the emphasis placed by the Group on sustained cost-cutting measures and enhancing efficiency. In Greece, the first quarter of the year saw an impressive -8 percent decline in operating expenses.
Net profit from operations in Greece totalled 2 million euros, despite the +41 percent increase in provisions for delinquencies, which topped 307 million (compared with 219 million in 2010). Core earnings in Greece (before tax, provisions and trading income) grew by +3 percent from last year, reflecting the resilience of the Bank’s sources of profitability. Continuing its positive trajectory, the net profit of Finansbank amounted to 151 million euros (TL326 million) in the January-March period, up +28 percent from last year. This performance was in part due to lower provisions -- reflecting the high quality of Finansbank’s loan book -- and the rapid pace of credit expansion on the wave of strong growth in the Turkish economy.

The Group’s SE European units remained in positive territory in the first quarter, posting net profits of 6 million euros, down -81 percent from 2010. Profits before tax and provisions stood at 49 million, down -42 percent. The deterioration in core profitability reflects primarily the contraction of the loan book by -4 percent and the decline in interest income, which was burdened by the increase in the volume and cost of deposits in the context of the Group’s strategy for independent financing of all its subsidiaries. A significant development was the 685 million euros reduction in funding from the parent company to the Group’s SE European units compared with 2010.

National Bank said the aforesaid positive performance was achieved within a particularly adverse economic environment in Greece, impacting negatively the country’s banking sector and the quality of banks’ loan books.

Net profit from the Group’s operations in Greece in the first quarter stood at 2 million, compared with losses of 133 million a year earlier, mainly thanks to a -8 percent reduction in operating expenses, and despite the +41 percent growth in provisions. The Group’s cost-cutting efforts have generated very strong results. Operating expenses decreased drastically by -8 percent from last year. Specifically, personnel costs and general expenses decreased by -7 percent and -13 percent, respectively