HB breaks even with € 0.5m profit in 1H, € 12m loss in 2Q
Hellenic Bank reported a net profit of EUR 543,000 in the first half of the year, a major turnaround from the EUR 95 mln loss in the first six months of 2014, while the second quarter was hit by a higher provisioning for non-performing loans, resulting in a net loss during the period of ?12 mln.
Profits from ordinary operations reached EUR 20 mln in the second quarter and EUR 42 mln for the first half. Net interest income (NII) decreased by 31% to EUR 73 mln for the half, compared to EUR 106 mln in the same period last year due to the lowering of interest rates and the simultaneous increase in non-performing exposures.
“The hit from the loans interest rates reduction is immediate whereas the benefit from the decrease in deposit interest rates will materialise gradually upon deposits renewal,” the bank said in an announcement.
Non-interest income amounted to EUR 46 mln for the first six months of 2015 and improved by 50% on a quarter to quarter basis.
Thus, Group total net income at June 30 reached EUR 119 mln and total expenses EUR 77 mln, of which personnel costs were EUR 39 mln and administrative and other expenses EUR 35 mln.
“Conditions remain fragile and the non-performing exposures (NPEs) remain at unprecedented levels, reaching 61% as at the end of June,” said CEO Bert Pijls.
“During the second quarter of 2015 we continued our efforts in managing our Non-Performing Loans, and in this respect we have built further provisions achieving a coverage ratio of 46%. I expect that it will take a few more quarters of GDP growth for NPLs to stabilise and subsequently improve and reduce. Until then, some volatility may remain.”
CEO Pijls said he was encouraged by developments in the real estate sector.
“The number of transactions are up versus last year and prices are more stable. In fact, according to the RICS index, residential real estate prices increased during the first quarter by 0.6%. This is good news because moderate house price inflation will aid the real estate recovery, which in turn will fuel further GDP growth and create jobs. In this context, I very much welcome the recent tax incentives announced and implemented by the government. As a result of those initiatives we have already received a number of initial expressions of interest from potential investors.”
“Residential mortgage lending is currently at
levels not seen since 2010. There is pent-up demand, mortgage rates and real estate prices are attractive and many clients believe that now is a good time to get back into the market, especially given the tax incentives.”
At June 30, total assets were marginally down at EUR 7.4 bln (2014: EUR 7.6 bln), while the net loans to deposits ratio remained stable at 51%.
On a year to date basis, deposits dropped by 2% to EUR 6.2 bln, compared to EUR 6.3 bln in December 2014.
The bank said that liquidity remains strong as its total cash and deposits with banks were maintained at EUR 3.2 bln and it is the only systemic bank in Cyprus which has no dependence whatsoever on the ECB’s Emergency Liquidity Assistance (ELA) programme.
The total gross loans amounted to EUR 4.4 bln. Thus, the Group’s capital adequacy exceeds the ECB’s minimum requirements, with the Common Equity Tier 1 (CET 1) Ratio at 13.5% on June 30, the same time the Group’s capital adequacy ratio was 18.1%.