The significant deterioration observed in the conditions prevailing in the international financial environment had a negative impact on the results of the Hellenic Bank Group and as a result net after tax in the first nine months of 2008 fell 44% Year-on-Year to EUR 58.60 mln from EUR 103.91 mln in the same period in 2007.
Hellenic Bank Management said that after evaluating the local and international financial environment, it had no other choice but to revise downwards the financial targets and ratios included in the Three-Year Strategic Plan for the year 2008.
“It is estimated that profit before taxation for the year 2008 will show a decrease in the region of 50% compared to the target announced last August,” the Bank said.
According to the previous forecast made by Management of Hellenic Bank, the profit of the Bank for 2008 would amount to EUR 107 mln. After the 50% down adjustment, HB is now forecast to report EUR 53-58 mln in 2008 profit compared to EUR 133 mln reported for 2007.
Income declines
Total net income decreased by 15%, mainly due to the decrease in non interest
income, reaching the amount of EUR 207.5 mln compared to EUR 243.7 mln in the
corresponding 2007 period. At the same time, total expenses increased by 2%
compared to the corresponding last year period. As a result, the cost to income
ratio is 56,9% and is higher than the level of 47,7% for the corresponding last year
period. It is expected that this ratio will approximate 62% for the year 2008
compared to the revised target of 52%.
Net gains/losses on disposal and revaluation of foreign currencies and financial
instruments, included in total net income, decreased from gains of EUR 29.4 mln for
the nine month period of 2007 to losses of EUR 0.9 mln for the corresponding nine
month period of 2008.
These mainly include losses from the negative impact on the value of financial instruments, arising from the crisis in international financial markets and the significant drop in the Cyprus Stock Exchange (CSE) price index.
Provisions for impairment of loans and advances in the Income Statement amounted to EUR 22.8 mln and increased by EUR 12 mln from the corresponding 2007 amount.
Total customer advances increased by 25% reaching the amount of EUR 4.8 bln
compared to EUR 3.9 bln in September 2007, while customer deposits increased by
2% reaching the amount of EUR 6.2 bln compared to €6 bln in September
2007.
Losses in Greece increase
In Greece, despite the increase in customer advances by 25% since September
2007, the pressure on interest rate margins and the crisis in international financial
markets had a negative impact on the profitability of the nine month period.
The operations in Greece shows a loss before taxation for the nine month period of EUR 11.3 mln, compared to a loss of EUR 1.4 mln for the corresponding last year period. The Group continues with the reorganisation and expansion of the Branch Network in Greece,
as one of its major strategic targets.
Τhe process for the acquisition of a banking license is at its final phase while the organic expansion of the Group’s operations in Russia has reached an advanced stage. The parameterisation of the banking software system and the staffing of the subsidiary bank under establishment are progressing. The products that will be offered by the subsidiary bank in Russia, as well as the procedures that will govern its operations have been defined.
The Bank maintains comfortable liquidity, benefiting from its high stable deposit base. More specifically, the ratio of gross loans to deposits remains at the highly satisfactory level of 78.3% in September 2008 (December 2007: 69.8%, September 2007: 64.3%).
Book value stable
Equity attributable to the shareholders of the Bank reached the amount of EUR 495.6
mln at 30 September 2008, compared to EUR 525 mln in December 2007.
Amounts of EUR 32 mln and EUR 14.8 mln relating to the final dividend for 2007
and the interim dividend for 2008 respectively, were deducted from equity at 30
September 2008. The return on equity of the Group, based on the results of the
nine month period on an annualised basis, was 15% (December 2007: 30%).
The return on equity of the Group for the year 2008 is estimated at the level of 11%
approximately, compared to the revised target of 20%.
At 30 September 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 11% (31 December 2007: 13.7%), while the
requirement of the Supervising Authority is 8%.
