Hellenic Bank forecasts lower profits for 2008

Hellenic Bank Pcl (HB) is set to add to the negative mood currently affecting banking shares after it revealed a 15% decline in its projected 2008 pre-tax profit forecast to EUR 131 mln compared to EUR 153 mln for 2007.

On Thursday, the CSE went into a free-fall shedding 9.8% after Bank of Cyprus was downgraded by analysts for forecasting a modest 11% increase in its forecasted 2008 profit to EUR 540 mln. Bank of Cyprus shares fell 12% on Thursday to EUR 8.26, while Hellenic Bank shares were marked 8% lower to EUR 3.56.

“I expect the down-pressure to continue and see banking shares lower following the very disappointing 2008 forecast made by Hellenic Bank,” a fund manager told the Financial Mirror.

In its 3-year Strategic Growth plan, Hellenic Bank is forecasting 2009 pre-tax profit returning to EUR 154 mln (same as those in 2007) and climbing 27% from there to EUR 196 mln by 2010. The Return on Equity (ROE), which end of 2007 was 30% including exceptional gains is seen declining to 20% in 2008 and remaining flat by 2010.

The cost to income ratio, which in 2007 fell to 49% including exceptional gains is seen worsening to 51% in 2008, and then to 49% in 2009 and 45% in 2010.