National Bank, Greece's largest lender, said it completed a 1.5 billion euro issue of covered bonds as part of a 10 billion euro plan approved Nov. 2008. The bonds covered by mortgage loans, have a duration of eight years and pay a floating rate based on the benchmark ECB rate plus a spread of 190 basis points. The tranche is rated Aaa by Moody's and AA by Fitch.
Provisions hurt profits
Higher provisions, slower loan growth and a one-off tax took 40 percent off profits for National Bank of Greece last year, with the country's largest lender braced for a tough 2010 as the country grapples with its economic crisis.
National said it made a net profit of 923 million euros in 2009, below the average market forecast of 1.12 billion euros according to a Reuters poll.
The recession, with the country's economic activity contracting by 2 percent last year, hit earnings as credit growth weakened and loan impairments rose.
The group said Turkish Finansbank, its biggest subsidiary outside Greece, contributed 46 percent of group profits last year, its earnings rising 14 percent to 425 million euros.
"The resilience of the group to the crisis is reflected by the stability of its core earnings in 2009 and a return on equity (ROE) that stands among the highest in any European financial institution this year," Chief Executive Apostolos Tamvakakis said in a statement.
"2010 will be a difficult year. Nevertheless, NBG enters this period with high liquidity buffers, robust capital ratios and strong business potential," he said.
NBG said core income sources excluding trading grew 6 percent, mainly due to a 10 percent increase in net interest income. Net interest margin remained above 4 percent.
The group increased lending by 5.5 billion euros or 8 percent last year. At home, net loan growth was 10 percent, with mortgages and small business demand being the key drivers.
Looking at asset quality, NBG said it made loan-loss provisions of over 1 billion euros last year. Accumulated provisions are now close to 2.5 billion euros, amounting to 3.4 percent of its loan book and covering 64 percent of delinquent debt.
Greece's four largest banks were downgraded by Fitch Ratings last month on expectations that the government's moves on tax and spending would weigh on the economy and loan demand, weakening asset quality and profitability.
NBG said its Tier 1 capital adequacy ratio of 11.3 percent ranked it among the top European banks in terms of capital adequacy.
NBG's share price, last at 14.70 euros is down 13.7 percent since the start of the year, while the main Greek market index is down 4.9 percent.
The shares trade on about eight times estimated 2010 earnings, which compares with a multiple of 15 for European peers, according to Thomson Reuters data.
