Hellenic Bank posts €160 mln H1 net profit

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Hellenic Bank’s annual profit after tax for the first half of 2023 is €160.2 mln, up by 203%, with net interest income increasing by 77%.

In statements about the financial results for the six months ending June 30, Antonis Rouvas, the Group’s Interim Chief Executive Officer, said the increase is driven by higher interest income from Central Bank placements and debt securities as interest rates rise and lower expenses.

Profit for the period was €160.2 mln, up from €52.9 mln in the first half of 2022.

Net interest income (NII) amounted to €235.4 mln, up by 77% y-o-y, benefiting from interest rates and balance sheet structure, mainly driven by Central Bank placements.

Quarterly profit for Q2, 2023 was at €90.5 mln, up from €69.7 mln the previous quarter, while NII showed an increase of 18%, at €127.3 mln.

Rouvas said Helelnic’s capital position is strong, with a Capital Adequacy Ratio of 26.5%.

Liquidity remains ample with a Liquidity Coverage Ratio of 499%, with €6 bln placed at the ECB (excluding TLTRO of €2.3 bln).

According to the CEO, this allows the bank “to continue supporting our customers by providing competitive, tailor-made credit and insurance products.”

During the first half of 2023, Hellenic issued €200 mln Tier 2 Subordinated Notes under the EMTN Programme.

“The total order book was almost 4.5 times oversubscribed, re-affirming the market’s confidence for the Bank”.

CET1 ratio is at 20.8%, and the MREL TREA position is 29.1%, above the final MREL requirement for December 2025.

“Nevertheless, the bank’s funding from capital markets remains costly, reflecting the bank’s current non-investment grade credit rating”, Rouvas noted.

“By demonstrating sustainable financial performance and operating in an environment that will remain supportive, we will work towards obtaining an investment grade credit rating to further facilitate the bank’s access to the capital markets at more competitive rates.”

Balance sheet

In March, Hellenic completed Project Starlight, de-risking the bank’s balance sheet and reducing the non-performing exposures ratio, excluding the non-performing exposures under the Asset Protection Scheme, to 3.3% on June 30.

Total NPE ratio fell to 8.9%, and the NPEs provision coverage ratio (excluding NPEs covered by the APS agreement) was 51%.

“Despite the shift of the problem loans outside the banking sector, the level of problem loans in Cyprus remains one of the highest in Europe.

“Therefore, we consider it imperative that the country has a stable and functional foreclosure framework for addressing strategic defaulters, to enhance the country’s appeal for attracting foreign direct investments and to facilitate the access of domestic debt issuers to the international capital markets,” Rouvas said.

He reiterated Hellenic’s commitment to support vulnerable customers, urging them to come forward to find a mutually acceptable solution.

Rouvas said there is a new lending momentum, with new lending for the first half of 2023 amounting to €647 mln, up 16% y-o-y.

And 99.6% of new lending exposures post-2018 are performing.

The adjusted cost-to-income ratio for the first half of 2023 was 38%, in line with the bank’s medium-term targets, following a Voluntary Early Exit Scheme (VEES) in 2022 that led to a €30 mln reduction of labour costs.

“This performance demonstrates the resilience of our business model and our efforts to continue to unlock value.”

“The economic and operating environment remains challenging, with rising interest rates and inflation above the long-term average, and the ongoing Russia/Ukraine crisis, which could affect the bank’s financial performance in the coming quarters.”

Regarding the Bank’s ESG Strategy, Rouvas said there is a commitment to lead a sustainable transition of the economy with “ambitious goals to become a climate neutral bank, increase our green lending (€107 mln during H1), improve our ESG rating and support customers and investors in their green transition”.