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“Not enough to curb unemployment” —
Hellenic Bank chairman Andreas Panayiotou told the annual shareholders meeting of the island’s third largest lender that the prospects for the Cyprus economy are somewhat positive, with a growth expected at around 1.5%.
“This positive rate will not be enough to drastically reduce unemployment or the consequences on the real economy,” Dr Panayiotou said, adding that “urgent measures are needed for a comprehensive solution of the economic problems that have accumulated due to the world financial crisis.”
“As it seems, 2011 will be a year of continued challenges and difficulties for the banking sector with the downgrades of the economy and the banks in Cyprus and Greece, in addition to the measures taken by the government to revive the economy.”
Chairman Panayiotou said that the Group’s confidence is based on the proper assessment of the market conditions, the effective management of risk and the dedication and professionalism of the staff.
He added that the two most positive elements in the Group’s prospects are the reduction of losses at the Greek operations and the start of operations of the Russian subsidiary in January this year.
The bank’s CEO, Makis Keravnos, said that the difficulties faced by the banking sector in 2011 are due to low rate of credit expansion and the increase in non-performing loans (NPL). However, he told the shareholders’ meeting that he was confident of the recovery of the European and Russian economies.
Keravnos appealed to the government to reduce its public spending, maintain the stability and good reputation of the Cyprus banking sector and boost growth and development in order to combat unemployment, especially among young people.
Profit before taxation for the year ended 31 December 2010 dropped to EUR 15.3 mln from a pre-tax profit level of 36.1 mln in 2009.
The bank said that “based on the conditions prevailing in the financial environment, the strategic targets of the Group during 2011 are focused on the maintenance and improvement of the quality of the loan portfolio, safeguarding the sound liquidity, of the capital adequacy ratios and cautious and rational growth, with the permanent target of profitability.”
Total net income remained at the same levels as last year reaching EUR 268.7 mln compared to 269.6 mln in 2009, while at the same time total expenses rose marginally by 5% reaching to 178.7 mln. As a result, the cost to income ratio increased to 66.5% from 63.1% for the previous year.
The bank increased its provisions for impairment of loans and advances by EUR 11.5 mln to 74.7 mln with total gross customer advances increasing further by 8% to EUR 5.4 bln compared to 5.0 bln in December 2009, while customer deposits increased by 4%, reaching 6.9 bln compared to 6.6 bln in December 2009.
In Greece, the bank reduced its losses to EUR 45.6 mln last year compared to a loss of 61.8 mln in 2009. The improvement of the financial results is mainly due to a decrease in provisions for impairment of loans and advances and said it will “continue with the reorganisation of the branch network in Greece, applying the Cyprus operational model and focusing exclusively on core banking operations.”
