May 29 (Bloomberg) -- Cyprus Popular Bank Pcl, the island’s second-biggest bank, posted a 23 percent decline in first-quarter net income after provisions for bad loans climbed and Greece’s debt crisis worsened.
Profit fell to 54.8 million euros ($69 million) from 71 million euros in the same period a year earlier, the Nicosia-based bank said in an e-mailed statement today. The decline was limited by an 84.7 million-euro tax gain, the company added.
Provisions for bad loans jumped more than 51 percent to 119 million euros as the economies of Cyprus and Greece, its two main markets, deteriorated. In Greece, the proportion of the bank’s non-performing loans climbed to 22.8 percent, up 330 basis points from the fourth quarter of 2011, the lender said.
Net interest income, the difference between what a bank earns from lending and what it pays on deposits, fell 2.3 percent as funding costs rose and competition for deposits forced it to offer customers higher interest rates.
Cyprus Popular said its core Tier capital 1 ratio, a measure of financial strength, will reach 9.2 percent once it completes a capital raising plan to comply with rules set by the European Banking Authority. The bank is preparing a 1.8 billion-euro rights offering, fully underwritten by the Cypriot government, as well as a voluntary exchange of 1.2 billion euros of debt capital securities to bolster capital.
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