Hellenic Bank profits plunge in 1Q, net losses of €2.2 mln

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Hellenic Bank, the island’s second-biggest lender that absorbed the ‘good bank’ operations of the troubled Cyprus Co-operative Bank, announced a first-quarter after-tax loss of €2.2 mln, with its pre-tax profits at €600,000.

This was a significant turnaround from the €14.9 mln after-tax profits reported in the same quarter last year.

Releasing its results, the bank said the deterioration was due to an 8% year-on-year drop in net interest income to €69.1 mln or a 7% drop from the last quarter of 2019.

“Mainly driven by the lower-income on performing loans (lending base rates reduction) and lower-income from debt securities (maturity of €750 mln Cyprus Government Bonds in December 2019), which was partly covered by the ongoing reductions in the average cost of deposits”.

However, the bank’s CEO Yannis Matsis said he was confident of a quick turnaround, despite the impact on the economy from the coronavirus pandemic.

“Our country’s success, to date, in dealing with this health crisis accompanied by the implementation of the robust fiscal package allows us to emerge from the widespread lockdown with growing confidence,” Matsis said.

He added that “with excess liquidity (Liquidity Coverage Ratio of 538%) and robust capital adequacy of 21.71%, one of the highest amongst European banks, we are extremely well-positioned to support those businesses and households that we assess to be viable, and seize any other opportunities that could potentially be presented.”

Total assets as at March 31, 2020, amounted to €15.8 bln, down 3% from 31 December 2019, mainly due to the decrease in investment assets.

Total new lending approved in the first quarter of 2020 reached €203.4 mln, while the net loans to deposits ratio stood at 42%, “enabling further business expansion,” the bank said.

At the end of 1Q, customer deposits amounted to €14.1 bln, down 3% from the end of 4Q 2019, “due to the deposit outflows driven by the negative deposit rates applied in March on non-households.

The bank’s deposits market share stood at 29.7%, marginally down from 30.1% at 31 December 2019.

The impact from the COVID19 crisis on Hellenic Bank was milder than at Bank of Cyprus, which reported results a month ago, with a 1Q loss of €26 mln, down from a profit of €95 mln in the same quarter a year ago, but less than the hefty €186 mln loss it announced in the previous quarter.

Bank of Cyprus, dogged with high staffing costs and a flat-line in net interest income (NII) and net fee and commission income, managed to somewhat reduce its exposure to non-performing loans and credit facilities (NPEs) by €142 mln for a total NPE portfolio of €3.7 bln.

BoC said that it has also concluded the sale in May of €133 mln worth of NPEs to debt recovery company B2Kapital as part of the ‘Velocity 2’ programme, but further offloading of NPEs would be delayed.

BoC said, “against the backdrop of market volatility arising out of the COVID-19 pandemic, the Group continues to work with its advisers towards the sale of a portfolio of NPEs in the future.”