Hellenic Bank in € 12 mln profit turnaround

Hellenic Bank, one of four systemic banks that underwent stringent capital tests last October and raised about 200 mln in fresh funds, reported a profit of EUR 12 mln in the first quarter this year, compared to a EUR 26 mln loss in the same quarter of 2014.

“During a period where the economic environment remains fragile and the banking sector continues to face challenges, the return to profitability for a second consecutive quarter indicates that the Hellenic Bank Group is on the right track to achieving its goals while at the same time shows signs of stability,” the bank said in a statement.

Deposits were slightly up in the first quarter, increasing 4% to EUR 6.6 bln, thus enhancing the Group’s comfortable liquidity, as well as prospects for growth and profitability.

However, the bank’s leadership, including CEO Bert Pijls, has stated that Hellenic will not, for now, seek overseas expansion and will look to organic growth at the local level.

The Group’s profit from ordinary operations before impairment losses and provisions amounted to EUR 22 mln, totalling EUR 12 mln after provisions. The first quarter impairment losses and provisions to cover credit risk amounted to EUR 13 mln.

The sale of Borenham Holdings Limited, the bank’s single-branch subsidiary in Russia, resulted in a profit of EUR 5 mln. It now operates representative offices in Moscow and St Petersburg.

The ratio of non-performing loans to the total gross loans, calculated in accordance with the new methodology of the European Banking Authority, stands at 60%, of which 47% is covered by provisions for i mpairment and the remainder by tangible collateral.

Recognising that the management of NPLs is the biggest challenge of the banking system, Hellenic said it is proceeding with a specific plan for their management which aims to result in fair and viable restructurings.

“In spite of the overall uncertainty that was caused by the Eurogroup’s decisions in March 2013, over the past two years the Hellenic Bank Group has managed to increase its deposits significantly. The positive deposits trend continued during the first quarter of 2015, resulting in a 4% increase in deposits compared to December 2014 (EUR 6.3 bln) which reached EUR 6.6 bln with a net loans to deposits ratio of 49%,” the bank’s statement added.

“Having a strong capital position, Hellenic Bank can withstand the pressures and is ready to take advantage of the opportunities for growth.”

The Group’s capital adequacy ratio at March 31 was 17.9%, the Tier 1 capital ratio 16.2% and the common equity tier 1 (CET 1) Ratio 13.3%.