CYPRUS: Laiki Bank losses at 1.7 bln, hurt by Greece; cost cutting continues

Laiki Popular Bank reported nine-month losses of 1.67 bln euros, compared to a loss of 292 mln in the same period last year, due mainly to a 350% increase in provisions to nearly 1.3 bln euros in Cyprus and Greece, and the continued burden from the writedown of Greek sovereign bonds.
Despite the recent approval of a direct bailout for four Greek banks by the Troika of international lenders, it is unclear if Laiki, currently semi-nationalised by the state after a 1.79 bln euro, will be able to ring-fence its loss-making operations and loan portfolio in Greece in order to save the Cyprus banking segment.
However, Laiki said that operational profits were halved in Jan-Sep from 367 mln euros to 189 mln.
The bank said that the coverage ratio of non-performing loans stood at a “satisfactory level” of 45%.
The Group’s net loan portfolio decreased by 13% on an annual basis and by 3% on a quarterly basis to 22.4 bln euros due to deleveraging and increased provisions mainly in Greece. The Cypriot net loan book stood at 10.4 bln euros, just 2% lower on a yearly and quarterly basis.
The bank said that deposits remained stable on a quarterly basis amounting to 18 bln euros.
Laiki Group noted that “the successful implementation of the cost containment program continues to deliver significant benefits.” Total operating expenses were cut by 5% to 449 mln euros, from 472 mln in the nine months of 2011. The state-approved restructuring plan saw the closure of 16 branches in Greece and 11 in Cyprus, while staff numbers have also been going down as a result of early retirements and resignations in combination with the recruitment freeze.