THE Popular Bank, Cyprus’ second-biggest lender, which was nationalised earlier this year, said yesterday its nine-month net loss widened to €1.09 billion on higher provisions as the Bank of Cyprus (BoC) also posted a loss of €211 million for the same reason.
Popular said that including a goodwill and other intangible asset impairments of €580 million, losses attributable to shareholders totalled €1.67 billion.
The bank posted a net loss of €292 million in the same nine-month period of 2011.
Rescued by the state in June after its regulatory capital took a heavy hit from its heavy exposure to Greek sovereign debt, Popular said it had increased its provisions by 354 per cent in the first nine months, or €1.3 billion, compared with €283 million in the same period last year.
“Provisions for the Cyprus portfolio amounted to € 306 million whereas for the Greek portfolio they reached € 967 million,” the lender said. “The resulting coverage ratio of non-performing loans stood at a satisfactory level of 45 per cent for the Group.”
The state now owns an estimated 84 percent of Popular.
BoC, the island’s biggest lender, which is also heavily exposed to Greek sovereign debt and the neighbouring country’s economy, posted a €211 million loss for the first nine months, on account of provisions for impairment of loans amounting €822 million -- a 179 per cent rise compared with the same period of 2011.
The bank posted a net loss of €793 million in the nine month period of 2011 on its Greek bond exposure.
BoC is also in the process of receiving state assistance.
“Based on the Group’s capital position as of 30 September 2012, the capital deficit as defined by the European Banking Authority is estimated at €722 million,” BoC said.
The banking crisis was instrumental in Cyprus seeking a bailout from the IMF and its EU partners, collectively known as the troika, in June.
BoC said it will submit a recapitalisation and restructuring plan to be approved by the Cypriot Authorities and the troika, which will determine the way and timing of repayment of the state aid the group will receive.
Before provisions, BoC said it made a €517 million profit, down 15 per cent compared with the same period last year.
The ongoing economic crisis in the main markets the group operates in resulted in a significant deterioration of its loan portfolio, the bank said.
The non-performing loans ratio reached 17.1 per cent at the end of September, compared with 14.2 per cent at the end of June.
At the end of September total provisions for impaired loans and the overall coverage ratio of non-performing loans with tangible collateral at forced sale values and provisions amounted to €2.2 billion and 103 per cent, respectively.
Cyprus and international lenders last week struck a preliminary agreement on the terms of a bailout programme but several more steps are necessary before any cash is released.
The terms of the deal can only be finalised once the interim results of the due-diligence into the banks’ loan portfolios are known and after agreement by the Eurogroup.
The due diligence results are expected in early December.
Beyond the austerity measures designed to reign in government spending, the bailout agreement includes terms regarding the banking system.
The highlight was the agreement to raise Core Tier 1 capital from 8 per cent to 9 per cent by the end of 2013, instead of 10 per cent as the troika initially proposed.
The two sides also agreed that supervision of co-operative banks would be shifted to the central co-operative bank from the trade and industry ministry.
The Central Bank will also have a role in the supervision.
The Bank of Cyprus posted a loss of €211 million