Hel­lenic Bank re­turns to profit in 3Q

Financial Mirror (Cyprus) - - FRONT PAGE -

Hel­lenic Bank, the is­land’s third big­gest lender that avoided a state bailout, posted a profit of EUR 6.2 mln in the third quar­ter, com­pared to a sec­ond-quar­ter loss of EUR 11.8 mln and a EUR 29.2 mln loss in the year-ear­lier quar­ter, based on ad­e­quate cap­i­tal and in­creased in­come from “pru­dent in­vest­ments in bonds.”

Ac­cord­ing to the fi­nan­cial state­ments ap­proved by the board, net in­ter­est in­come in­creased by 25% from the pre­vi­ous quar­ter to EUR 35 mln, with to­tal net in­come up 4% from the sec­ond quar­ter to EUR 57 mln.

Ex­penses rose 5% to EUR 37.3 mln due to a charge of the fourth quar­ter de­posits spe­cial levy in­stal­ment, while im­pair­ment losses were down by al­most two thirds to EUR 12.1 mln from EUR 33.9 mln in sec­ond quar­ter.

Liq­uid­ity also im­proved with the Group’s as­sets as at Septem­ber 30 amount­ing to EUR 7.5 bln, and de­posits ris­ing by 1% to EUR 6.3 bln.

The bank said in a state­ment that its liq­uid­ity “re­mained com­fort­able” as its to­tal cash and place­ments with banks amounted to EUR 3 bln, while gross loans reached EUR 4.4 bln with the net loans to de­posits ra­tio at 50%.

It added that its non per­form­ing ex­po­sures had in­creased marginally to EUR 2.68 bln from EUR 2.56 bln at the end of 2014, with the ra­tio un­changed at 61%. The NPEs’ cov­er­age ra­tio in­creased to 46%, and loan im­pair­ment pro­vi­sions amounted to EUR 1.24 bln.

CEO Bert Pi­jls said that the im­prove­ment in the macro en­vi­ron­ment of Cyprus is a clear in­di­ca­tion of the re­cov­ery of the econ­omy, and he en­cour­aged bor­row­ers with non­per­form­ing loans to “ac­tively en­gage with the bank in a trans­par­ent man­ner in or­der to progress with sen­si­ble and eq­ui­table re­struc­tur­ings.”

Pi­jls said that the bank is making progress in the area of NPLs, which is in­di­cated by the sta­bil­i­sa­tion of the NPL ra­tio, which in turn en­abled the bank to have a prof­itable quar­ter.

Fol­low­ing the in­vest­ment of the Euro­pean Bank for Re­con­struc­tion and De­vel­op­ment (EBRD) in Hel­lenic Bank’s share cap­i­tal, the Group’s cap­i­tal ad­e­quacy ra­tio is at 18.2%, the tier 1 cap­i­tal ra­tio at 16.7% and the com­mon eq­uity tier 1 (CET1) ra­tio at 13.8%.

On­line gam­ing gi­ant Wargam­ing.net, one of the banks three ma­jor share­hold­ers, trimmed its stake in the lender from 26.2% to 24.8%, ac­cord­ing to a stock ex­change fil­ing in Oc­to­ber.

The an­nounce­ment said that Wargam­ing sold 49,213,490 or­di­nary shares to an un­spec­i­fied buyer, but re­mains the sec­ond big­gest in­vestor af­ter New York-based fund Third Point. Lo­cal in­vest­ment fund Deme­tra is the third largest, while the EBRD ac­quired a 5.38% stake by pur­chas­ing Hel­lenic’s out­stand­ing stock for EUR 20 mln.

The EBRD is al­ready a 5% in­vestor in big­gest lender Bank of Cyprus hav­ing pumped in EUR 120 mln last year.

Hel­lenic Bank said that the Su­per­vi­sory Re­view and Eval­u­a­tion Process (SREP) con­ducted by the Euro­pean Cen­tral Bank s cur­rently in progress along with the on-site in­spec­tion.

“Th­ese pro­cesses are ex­pected to be com­pleted over the next few months; how­ever, the Group’s cap­i­tal ad­e­quacy is at a level which, should the bank de­cide to adopt ECB’s pre-draft com­ments and rec­om­men­da­tions from their on-site in­spec­tion on credit qual­ity, which are not ex­pected to ex­ceed EUR 70 mln, the Group cur­rently has the cap­i­tal ca­pac­ity to ab­sorb such and be in com­pli­ance with both its Pil­lar I and re­vised draft Pil­lar II add-on cap­i­tal re­quire­ments.”

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