March 31, 2017 / 3:16 PM / 5 months ago

UPDATE 1-Greece's Piraeus Bank sinks to Q4 loss, bad debt charges rise

* Piraeus posts 18 mln euro loss in Q4

* Full-year 2016 loss shrinks to 4 mln from 1.85 bln in 2015

* Non-performing loans drop to 37.5 pct of book (Adds deputy CEO comment, details)

By George Georgiopoulos

ATHENS, March 31 (Reuters) - Piraeus Bank, Greece's largest lender by assets, tumbled to a fourth-quarter loss after booking higher bad debt provisions, the only one of the country's big four banks that was not profitable in the last three months of 2016.

Piraeus, which is 26.2 percent owned by the country's bank rescue fund HFSF, reported a net loss of 18 million euros ($19 million) after net profit of 31 million euros in the third quarter.

For 2016 as a whole, Piraeus lost 4.0 million euros after a loss of 1.85 billion in 2015.

Greek banks are struggling with problem loan portfolios after a deep, protracted recession pushed unemployment to record highs, making it hard for borrowers to service their debts.

Banks entered the 2008 global financial crisis with bad loans, or non-performing exposures (NPEs), of 14.5 billion euros, about 5.5 percent of their loan books. NPEs rose to 106.9 billion euros, or 51 percent, last year.

Banks have agreed with regulators on ambitious bad debt reduction targets over three years. They aim to cut their NPEs to 66.7 billion euros by 2019 from 106.9 billion in September, to bring their ratio to 34 percent from 51 percent.

"Despite the negative headwinds in the first months of 2017, similar to those experienced in early 2016, Piraeus is cautiously optimistic on delivering against 2017 targets - enhance asset quality, liquidity and achieve profitability," Deputy CEO George Poulopoulos said in a statement.

The group, with a current market value of 1.53 billion euros, said bad debt provisions rose to 310 million euros in October-December from 242 million in the third quarter.

Non-performing loans (NPLs) dropped to 37.5 percent of its book at the end of December from 38.8 percent in the previous quarter and by 2.5 billion euros year-on-year to 24.4 billion.

Cash coverage of these loans, in arrears for more than 90 days, improved by two percentage points to 69.5 percent. A wider measure, non-performing exposures (NPEs), which includes NPLs and restructured loans likely to turn bad, stood at 52 percent of its total loans at end-December.

On the liquidity front, Piraeus reduced its central bank borrowing by 16.4 billion euros last year to 20.9 billion euros.

Funding from the domestic central bank's emergency liquidity assistance (ELA) window came down by 5 billion euros to 11.9 billion at the end of last year. (Reporting by George Georgiopoulos and Lefteris Papadimas; Editing by Mark Potter)

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