Hellenic Bank reported interim post-tax losses of 46.1 mln euros for the first half of the year, a negative turnaround from the 14.9 mln in profits in the same period last year, due mainly to the severe impact of austerity measures and bail-ins imposed on the Cyprus banking system as part of wider rescue package.
The losses include a cost of 10.28 mln euros from the forced sales of its Greece banking network, part of a deal concocted by the Eurogroup in March to ring-fence the banking sector from further losses due to toxic Greek government bonds that brought peers Bank of Cyprus to its knees and Laiki Popular Bank to closure.
However, Hellenic Bank, whose major shareholder, the Church of Cyprus, has pledged to support through a capital increase, maintains a satisfactory cushion of sufficient liquidity and no reliance on the European Liquidity Assistance for further European funds, ensuring that it has a healthy 67.8% loans to deposits ratio.
On the other hand, non performing loans rose from 600.5 mln euros at the end of December 2012 to 887.4 mln for the first half of 2013, due mainly to the worsening situation of the Cyprus economy and consumers’ need to liquidate assets and withdraw savings for fear of a bail-in affecting Hellenic.
Operational revenues rose 16% to 132.4 mln in 1H 2013 with costs rising only 3% to 69.5 mln. In the second half of 2013, Hellenic Bank will also see a lower payroll due to the voluntary retirement packages taken up by about 170 staff.
The bank’s Core Tier 1 capital ratio stands at 8.05%, which is expected to rise further to safer margins once a capital increase of about 294 mln euros is concluded.
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