HB breaks even with € 0.5m profit in 1H, € 12m loss in 2Q

Financial Mirror (Cyprus) - - FRONT PAGE -

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%.

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