Hellenic Bank posts €24.2 mln annual profit

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Cyprus’ second-largest lender, Hellenic Bank, posted 2022 full-year net profits of €24.2 mln, a rise of 307% year-on-year.

“Despite the challenges caused by the war in Ukraine and the inflationary pressures, we managed to deliver a good set of financial results with a profit of €24.2 mln for 2022, compared to losses of €11.7 mln for 2021,” said the Group’s CEO Oliver Gatzke.

HB’s CEO noted that the results exceeded the bank’s expectations and confirmed the progress in implementing its transformation towards a client-centric and technology-driven organisation.

Adjusted for the extraordinary cost of the Voluntary Early Exit Scheme (VEES), it achieved profits of €95 mln, reflecting the business model’s strength in a positive interest rate environment following the latest rate increases by the European Central Bank.

The bank posted a net interest income of €300.8 mln while continuing its new lending momentum reaching €1.2 bln, marking an increase of 30% year-on-year.

“Financing sectors such as health, education, energy, ICT, hospitality, transportation, and shipping remain a high priority, contributing to the competitiveness and productivity of the economy,” said Gatzke.

Balance sheet

Hellenic managed to de-risk its balance sheet further, achieving a non-performing exposures (NPE) ratio of 9.8%. Its NPE ratio dropped to approximately 3.6% when excluding NPEs covered by the APS agreement.

Highlights also included the completion of Project Starlight, with the agreement to sell a portfolio of non-performing exposures worth approximately €0.7 bln, while the sale of debt servicing company APS is expected to be completed in early 2023.

The bank recorded a capital adequacy ratio of 21.4% and a CET1 ratio of 19.1%, significantly above minimum capital requirements.

New lending in 2022 reached €1.2 bln, up 30% YoY, marking another record year for Hellenic Bank.

Net interest income was €300.8 mln, up 17% YoY, while non-interest income amounted to €113.4 mln, a 10% increase compared to 2021.

Its net loans-to-deposits ratio stood at 39% at the end of 2022, enabling the organisation to expand its business operations further.

Hellenic’s CEO reminded the acquisition of approximately €346 mln of performing loans from RCB significantly improved its corporate lending franchise.

He said the bank has progressed with its strategic plan to transform and address structural challenges, including the early retirement scheme.

The last exit scheme reduced the total headcount by approximately 600 employees.

Gatzke noted that Hellenic Bank has an ambitious strategic plan to generate over €200 mln in pre-tax profits in 2023, driven by changes in interest rates and lower operating costs.

“Our transformation journey remains on track to address structural challenges, unleash hidden potential, and underpin the deployment of our strategy on sustainable profitability,” Gatzke said.

He noted that the bank is enhancing the profile of its loan book through healthy growth with a strong focus on Environmental Social Governance (ESG).

Key ESG goals include becoming an energy-efficient bank and climate neutral by 2050, improving diversity, inclusion and employee well-being.