Cyprus Hellenic Bank reports EUR 2 mln 1H09 profit

Cypriot Hellenic Bank posted a 96% drop in first-half net profit to EUR 2.06 mln compared to profits of EUR 50.89 mln a year ago in the same period but well above analyst forecasts, who in a Financial Mirror poll were expecting breakeven or profits of EUR 1 mln only.
Despite the above expectation profit, HB said the business climate was likely to remain difficult this year.
"In spite of some recent stability noted of late, economic conditions in the Cypriot and Greek economies remain difficult for the near future," the bank said.
"As a result the year is expected to pose challenges, particularly in the quality of its loan portfolio and the development of its operations."
Cyprus's third largest lender said January-June net interest income declined 7.7% to EUR 92.56 mln with the net interest margin down at 2.35% from 2.80%, while total income was down 16.2% to EUR125 mln. The bank said interest margins fell because of competition among banks.
The bank said the second quarter of 2009 was better than the first when it made a pretax loss of EUR11.8 mln euros.
Hellenic has operations in Cyprus and Greece, and representative offices in South Africa, Russia and Ukraine. The island's Greek Orthodox Church is a large shareholder.
Total expenses increased by 11% to EUR 86.62 mln. As a result, the cost to income ratio is 69.1% and is higher than the level of 52.4% for the corresponding last year period.
Net gains/losses on disposal and revaluation of foreign currencies and financial instruments, included in total net income, decreased from gains of EUR12.4 mln for the
first six month period of 2008 to losses of EUR3.9 mln for 2009.
Provisions for impairment of loans and advances for the period ended 30 June 2009 were increased by 101% to EUR29.8 mln. Accumulated provisions for impairment of loans and advances at 30 June 2009 reached EUR439.4 mln and represent 8.7% of total loans.
Total customer advances increased by 8% reaching EUR5 bln while customer deposits increased by 7% to EUR6.7 bln.
In Greece, the pressure on interest rate margins and the global financial crisis had a
negative impact on the results of the period, which show a loss before taxation of EUR34,4 mln, compared to a loss of EUR3.7 mln for 2008.
During the first six month period of 2009, Hellenic Bank has obtained a license for conducting banking operations in Russia from the Central Bank of Russia. The date of commencement of full banking operations through the subsidiary company will be determined following the completion of the necessary preliminary actions and after evaluating the financial conditions and the developments in the global financial crisis.
On 21 May 2009 Hellenic Bank announced its final decision to submit a public offer to the shareholders of Athena Cyprus Public Company Ltd for the acquisition of up to 100% of its share capital.
Equity attributable to the owners of the Bank reached the amount of EUR458.6 mln at 30
June 2009, compared to EUR440.4 mln in December 2008. The return on equity of the
Group on an annualised basis was 0.9% (December 2008: 7%).
At 30 June 2009, 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 13% (31 December 2008: 11%), while the requirement of the Supervising Authority is 8%.