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Hellenic Bank, the island’s third biggest lender that avoided a state bailout, posted a profit of €6.2 mln in the third quarter, compared to a second-quarter loss of €11.8 mln and a €29.2 mln loss in the year-earlier quarter, based on adequate capital and increased income from “prudent investments in bonds.”
According to the financial statements approved by the board on Wednesday, net interest income increased by 25% from the previous quarter to €35 mln, with total net income up 4% from the second quarter to €57 mln.
Expenses rose 5% to €37.3 mln due to a charge of the fourth quarter deposits special levy instalment, while impairment losses were down by almost two thirds to €12.1 mln from €33.9 mln in second quarter.
Liquidity also improved with the Group’s assets as at September 30 amounting to €7.5 bln, and deposits rising by 1% to €6.3 bln.
The bank said in a statement that its liquidity “remained comfortable” as its total cash and placements with banks amounted to €3 bln, while gross loans reached €4.4 bln with the net loans to deposits ratio at 50%.
It added that its non performing exposures had increased marginally to €2.68 bln from €2.56 bln at the end of 2014, with the ratio unchanged at 61%. The NPEs’ coverage ratio increased to 46%, and loan impairment provisions amounted to €1.24 bln.
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CEO Bert Pijls said that the improvement in the macro environment of Cyprus is a clear indication of the recovery of the economy, and he encouraged borrowers with non-performing loans to “actively engage with the bank in a transparent manner in order to progress with sensible and equitable restructurings.”
Pijls said that the bank is making progress in the area of NPLs, which is indicated by the stabilisation of the NPL ratio, which in turn enabled the bank to have a profitable quarter.
Following the investment of the European Bank for Reconstruction and Development (EBRD) in Hellenic Bank’s share capital, the Group’s capital adequacy ratio is at 18.2%, the tier 1 capital ratio at 16.7% and the common equity tier 1 (CET1) ratio at 13.8%.
Online gaming giant Wargaming.net, one of the banks three major shareholders, trimmed its stake in the lender from 26.2% to 24.8%, according to a stock exchange filing in October.
The announcement said that Wargaming sold 49,213,490 ordinary shares to an unspecified buyer, but remains the second biggest investor after New York-based fund Third Point. Local investment fund Demetra is the third largest, while the EBRD acquired a 5.38% stake by purchasing Hellenic’s outstanding stock for €20 mln.
The EBRD is already a 5% investor in biggest lender Bank of Cyprus having pumped in €120 mln last year.
Hellenic Bank said that the Supervisory Review and Evaluation Process (SREP) conducted by the European Central Bank s currently in progress along with the on-site inspection.
“These processes are expected to be completed over the next few months; however, the Group’s capital adequacy is at a level which, should the bank decide to adopt ECB’s pre-draft comments and recommendations from their on-site inspection on credit quality, which are not expected to exceed €70 mln, the Group currently has the capital capacity to absorb such and be in compliance with both its Pillar I and revised draft Pillar II add-on capital requirements.”
