* Minimal impact from Greece *
Hellenic Bank, the third largest lender in Cyprus where the Church has a significant stake, reported 8 mln euros in net profits for the first quarter, nearly tenfold its profits in the same quarter last year of just under a million.
The bank, widely considered a conservative institution with minimal exposure to Greek sovereign debt, said on Wednesday it reported an increase in recurring operational profits, boosted income and maintained cost levels to end the quarter with a pre-tax profit of 12.7 mln euros, more than double the first quarter 2011 figure of 5.7 mln euros.
During the first quarter, the bank said it proceeded with an additional impairment of 7.3 mln euros based on the recalculation of the voluntary participation of private plan (PSI +) on March 12. The total impairment accounted for 77.3% of their nominal value, with the bank saying last year that its exposure to Greek government bonds was 110 mln euros, the bulk of which was written off in the 2011 results.
Group income, excluding the impairment cost of GGBs, increased by 21%, while total expenses decreased by 8%, of which some 4 mln euros in staff savings, generating a cost to income ratio, excluding the impairment cost, of 44% which is far lower and more manageable than the 57.9% ratio in the first quarter last year.
Hellenic said advances amounted to 5.6 bln and remained at the same level as in December 2011 and a mere 1% up on the first quarter of 2011. Deposits were up 4% from the previous quarter at 7.4 bln and 7% higher than the first quarter last year resulting in a “satisfactory” net loans to deposits ratio of 67.3%.
“The Group maintains comfortable liquidity, benefiting from its high stable deposit base,” the bank said in an announcement, adding that “the absence of financing by the European Central Bank and the non dependence on the interbank market is indicative of the comfortable liquidity of the Group.”
The bank said that “in Greece, due to the continuing financial crisis and its negative impact on the real economy and consequently on the quality of the loan portfolio of the branch network,” the loss before taxation was 7.4 mln euros compared to a loss of 15.4 mln in the first quarter. The reduction of the loss is mainly due to reduction in provisions for impairment of loans and advances.
The Group net non performing loans increased by 12% from 720 mln euros in the previous quarter to 804 mln euros in the first quarter of 2012, a figure that is 44% higher from 559 mln euros in the first quarter of last year.
Meanwhile, the bank also announced that it is proceeding with a rights issue in order to raise 66 mln euros, offering shareholders one right for every existing share which can be exercised at a rate of two rights per share at a price of 43c each from June 15 to July 6. Shareholders will also receive three bonus shares for every two new shares arising from the exercise. The current stock price is trading at 19c a share.
The bank said that after it raises fresh funds, its capital adequacy ratio, tier 1 ratio and the core tier 1 ratio will be 13.9%, 11.2% and 8.3%, respectively, “and as a result the Group exceeds all capital adequacy ratio minimum requirements.”
