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COVID19: Hellenic Bank well-placed to tackle coronavirus outbreak

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Hellenic Bank, Cyprus’ second-largest lender, posted net profits of €108 mln for 2019 with its CEO, Ioannis Matsis, stating it is in a stronger position to tackle challenges like the COVID-19 pandemic.

The bank’s CET 1 capital ratio was 19.98% while its capital adequacy ratio amounted to 22.5% with a non-performing loan coverage ratio of 55.6%.

Its NPL ratio excluding loans covered by the Asset Protection Scheme, granted by the government in 2018 as part of the Co-op Bank acquisition, amounted to 25%, and a liquidity coverage ratio of 512%, placing the banks among the top 5 banks in the EU.

Matsis said, “the coronavirus outbreak has emerged as an unprecedented health crisis around the world and it is mutating into a significant economic shock to the global economy, Cyprus included”.

“Hellenic Bank is on a solid footing and, importantly, during the last two years has become more robust and better equipped to withstand the challenges we face, such as the current crisis.

Hellenic Bank stands ready to support its viable clients, households and businesses, affected by the Covid-19 crisis.”

However, speaking to a teleconference, Matsis noted that banks will face an increasing mix of risks in 2020 due to the coronavirus pandemic.

He referred to increased provisions and increased inflow of new NPLs, while a programmed NPL sale has been postponed due to the pandemic.

“Investors have left the table for the time being, while the organic NPL reduction (such as early repayments and debt to asset swaps) will be hampered due to borrowers reduced capacity to settle their loans.”

But Matsis said the bank’s position as the island’s biggest retail bank renders the institution less vulnerable compared to peers with increased exposure to corporate loans.

According to the bank, net interest income for 2019 amounted to €301.3 mln, up by 64% compared to €184.2 mln in 2018 reflecting the impact of the Co-op acquisition on the interest income from loans, advances to customers and on the interest income from debt securities.

Customer deposits reached €14.6 bln as at 31 December 2019 compared with €14.7 bln in 2018.

Total new lending approved in 2019 reached €812.3 mln (FY2018: €594.4 mln), while gross lending amounted to €7.244 bln, down by 5% compared to €7.636 bln in 2018.

The performing loans portfolio marked a reduction of 4% while the non-performing loans decreased by 8% compared to 2018.

The net loans to deposits ratio stood at 40.9% as at 31 December 2019 (from 42.7%).

Staff costs for FY2019 amounted to €126.7 mln and accounted for 46% (FY2018: 43%) of the Group’s total expenses.

Compared to €87.6 mln in FY2018, the FY2019 staff costs recorded an increase of 45%, with the main driver being the impact of the Co-op acquisition.

The bank’s cost to income ratio declined to 67.5% from 69.6% in 2018.