Hellenic Bank announced profits for the third quarter in a row, with earnings more than double from last year at EUR 5 mln, the level of non-performing loans reduced significantly and liquidity ratios improved.
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The bank said profits from ‘continuing operations’ rose to EUR 5.0 mln, compared to EUR 1.9 mln for 9M 2015.
It said in an announcement that it “is supporting the recovery of Cyprus economy and approved EUR 240 mln of new lending during the first nine months of 2016. During the same period, the bank also completed further restructurings of EUR 490 mln. Overall, the bank said it is on the right track, and this is proven by the strong capital adequacy ratio of 17.66%.
CEO Bert Pijls said the bank “made further progress executing our strategic priorities in the third quarter of 2016. We reduced NPEs for a fourth consecutive quarter to their lowest level post December 2014. We completed almost half a billion of restructurings during the first three quarters of 2016 and the loan restructuring momentum remains strong, with an increased number of restructuring agreements in the pipeline. We continue to explore all available options in an effort to decisively address problematic loans, using a tool case of sustainable solutions such as debt to asset swaps, balance reductions, maturity extensions, grace periods, instalment reductions and servicing support.”
“We bolstered the Group’s CET1 ratio by 45 basis points to 14.37% due to lower risk weighted assets and organic capital generation,” Pijls said, adding that the Group’s capital ratios are comfortably above the minimum regulatory requirements.
He added that the bank recorded profits for a third consecutive quarter in 2016, with profit after tax for 3Q2016 of EUR 3.9 mln.
“A very low loans to deposits ratio enables our lending expansion and about EUR 240 mln loans were approved since the beginning of the year, supporting creditworthy households and businesses,” Pijls said.
The level of NPEs has been reduced for a fourth consecutive quarter to EUR 2.395 million at September 30, down by 4% compared to June 30 and by 8% compared to December 31, 2015. The ratio of NPEs to gross loans as at September 30 was reduced to 57.1% (30 June 2016: 57.7%, 31 December 2015: 59.2%, 30 September 2016: 61.2%).
The announcement further said that the Group maintains robust capital adequacy ratios, above the minimum required by the relevant regulatory authorities. As at September 30, the Common Equity Tier 1 (CET 1) ratio stood at 14.37%, compared to the minimum CET 1 ratio of 10.50% set by the ECB (as per draft SREP). At September 30, the Group’s Capital Adequacy Ratio was 17.66% and the Tier 1 ratio was 17.42%.
During the first nine months of 2016 the Group maintained its strong liquidity position. The net loan to deposits ratio stood at 50% as at September 30. On September 30, total deposits amounted to EUR 6.0 bln while total gross loans reached EUR 4.2 bln.
The total expenses for the nine-month period amounted to EUR 107.8 mln, down by 6% compared to the EUR 114.2 mln of the respective nine-month period in 2015, mainly due to decreases in administrative and other expenses. The cost to income ratio for the nine-month period ended September 30 was 57.9%, compared to 64.8% for the nine-month period ended September 30, 2015.
The bank said in its announcement that “the management’s focus remains on the handling of the still high level of NPEs, the growth of the loan portfolio and proceed with advancements in technology and enhancement of the customer service, as well as simplification of procedures and processes.
“The Group is focusing on restructuring loans in a sustainable manner and on mutually beneficial terms using a toolset of sustainable solutions. The economic recovery is expected to accelerate the pace of tackling NPEs
“As part of implementing its strategic targets, the Group is focused on supporting the economy’s recovery and contributing towards sustainable economic growth. The bank maintains sufficient liquidity to exploit opportunities while maintaining its focus on organic growth.”
