Hellenic Bank (HB.CY) beat market forecasts delivering EUR 50.89 mln in first half 2008 profit compared to forecasts of EUR 48.9 mln, but down from EUR 70.16 mln a year ago.
Profit before taxation for the first six months of 2008 amounted to EUR 56,5 mln compared to EUR 81,1 mln for the first six months of 2007 and is slightly lower
than the expected amount based on the target set for the year 2008 in the Three-Year Strategic Plan 2008-2010.
Profit before taxation for the year 2008 is expected to amount to approximately EUR 119 mln, compared to EUR 131 mln announced last February.
Total net income showed a decrease of 8% reaching the amount of EUR 149,7 mln compared to EUR 163,1 mln in the corresponding 2007 period. At the same time, total expenses increased by 1% compared to the corresponding last year period. As a result, the cost to income ratio increased to 52,4% from 47,6% for the corresponding last year period. It is expected that this ratio will approximate 52% for the year 2008 compared to the target of 51% set in the Three-Year Strategic Plan 2008-2010.
Net gains on disposal and revaluation of foreign currencies and financial instruments, included in total net income, decreased from EUR 25,8 mln for the first six months of 2007 to EUR 12,4 mln for the first six months of 2008. These mainly include losses from the negative impact on the value of financial instruments, arising from the continuing crisis in international financial markets and the significant drop in the Cyprus Stock Exchange (CSE) price index, as well as gains on disposal of debt securities.
The total negative contribution of Athena (as a subsidiary of Hellenic Bank, with a percentage of 77,84%) to the Group’s profits of the first six months of 2008, amounted to a loss of EUR 6,8 mln.
Provisions for impairment of loans and advances in the Income Statement amounted to EUR 14,8 mln and increased by EUR 8,9 mln from the corresponding 2007 amount.
Total customer advances increased by 24% reaching the amount of EUR 4,7 bln
compared to EUR 3,8 bln in June 2007, while customer deposits increased by 9% reaching the amount of EUR 6,3 bln compared to EUR 5,7 bln in June 2007.
In Greece, despite the increase in customer advances by 20% since June 2007, the pressure on interest rate margins due to competition as well as the continuing crisis in international financial markets had a negative impact on the profitability of the first six months of the year.
Greece shows a loss before taxation for the period of EUR 3,7 mln compared to a profit of EUR 1,4 mln for the corresponding last year period. The Group is effecting the development of an expanded Branch Network in Greece, as one of its major strategic targets.
The expansion of the Group’s operations in Russia is progressing. The process for the acquisition of a banking license is at its final stages. Agreements were signed for the acquisition of building facilities in Moscow, where the Bank’s head office and first branch in Russia will be based, as well as with a supplier of banking software systems. The parameterization of the system and the staffing of the subsidiary bank under establishment have already started.
Equity attributable to the shareholders of the Bank reached the amount of EUR 500,7 mln at 30 June 2008, compared to EUR 525,0 mln in December 2007. An amount of EUR 32,0 mln relating to the final dividend for 2007 was deducted from equity at 30 June 2008. The return on equity of the Group, based on the results ofn the first six months on an annualised basis, was 18,9% (December 2007: 30,0%, June 2007: 32,8%). The return on equity of the Group for the year 2008 is estimated at the level of 20% approximately, according to the target set in the Three-Year Strategic Plan 2008-2010.
At 30 June 2008 the Group’s Capital Adequacy Ratio, based on the relevant Central Bank of Cyprus Directive for the calculation of the capital requirements and large exposures (Basel II), was: Pillar 1: 11,5% (31 December 2007: 13,7%) and Pillar 1 & Pillar 2: 10% (31 December 2007: 11,9%). According to the relevant Directive of the Central Bank of Cyprus, the calculation of the Capital
Adequacy Ratio of the Group does not include the profits for the six month period ended 30 June 2008, as these have not been audited by the Group’s external auditors.
