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HB 9m profit at €6,1 mn

25/11/2015 13:30
The Hellenic Bank announced profit of €6,1 mn for the first nine months of 2015 against losses of €124,8 mn in the corresponding period of 2014.

Profit is mainly attributable to the sharp reduction of provisions. Impairment losses and provisions to cover credit risk decreased to €59,1 mn from € 259,1 mn.

The Bank says that if the Bank decides to adopt ECB’s pre-draft comments and recommendations from their on-site inspection on credit quality, the increase in provisions is not expected to exceed €70 mn. This would reduce the capital adequacy ratio which is currently at 13.8% by 152 basis points.

The Bank recorded profit of € 6 mn in the third quarter of 2015 against losses of € 11,9 mn in the second quarter.

Income

The total net income of the group decreased by 22% to € 176,2 mn from € 225,7 mn last year.

Net interest income was reduced by 31%, amounting to € 108,2 mn in the first nine months of 2015 from € 156,8 mn in the corresponding period of 2014. The decrease in net interest income is mainly due to the interest rate cuts while it is also partly attributable to the increase in non-performing loans and to the increase in liquid assets.

The net interest margin of the Group stood at 2% in the first nine months of 2015, as it was in June from 3.2% in December 2014.

Non-interest income amounted to €68 mn during first nine months of 2015, recording a marginal decrease compared to last year.

Expenses

Total expenses of the Group increased to € 114,2 mn from € 104,3 mn in the first nine months of 2014. Staff expenses amounted to € 59,6 mn recording an increase of 5% compared to last year.

Administration and other expenses show an increase of 17% compared to the period ended on September 30, 2014, reaching €51 mn. The increase is mainly attributable to the cost of advisory services by international companies which amounts to €10,1 mn and to provisions for pending litigation or differences under arbitration amounting to €4,1 mn. Also an amount of € 2,4 mn. includes tax on deposits.

The cost to income ratio for the period ended September 30, 2015 stood at 64.8% compared to 46.2% for the corresponding period of 2014.

Provisions

Impairment losses and provisions to cover credit risk decreased to €59,1 mn compared to €259,1 mn last year, according to the financial statement for the nine months of 2015.

The bank reports that the Supervisory Review and Evaluation Process (SREP) conducted by the European Central Bank (ECB) is currently in progress along with the on-site inspection. These processes are expected to be completed over the next few months.

"However, the Group’s capital adequacy is at a level which, should the Bank decide to adopt ECB’s pre-draft comments and recommendations from their on-site inspection on credit quality, which are not expected to exceed €70 million, the Group currently has the capital capacity to absorb such and be in compliance with both its Pillar I and revised draft Pillar II add-on capital requirements», the bank stresses.

The ratio of non-performing loans to the total of gross loans, based on the European Banking Authority’s (EBA) reference standards amounted to 61.2%.

Financial position

As regards the group's financial position, total gross loans to customers amounted to €4384 mn against €4405 mn in December 2014.

Customer deposits recorded a slight reduction of 1% compared to December 2014, falling at €6,3 bn. (December 2014: € 6,35 bn.).

As regards capital ratios, following the investment of the European Bank for Reconstruction and Development (EBRD) in Hellenic Bank’s share capital, the Group’s Capital Adequacy Ratio is at 18,2%, the Tier I Capital Ratio at 16,7% and the Common Equity Tier 1 (CET1) Ratio at 13,8%.

Major priorities

The management of the high levels of NPEs is a leading priority for Hellenic Bank. The bank’s management is implementing a specific road map for dealing with the Non Performing Exposures.

As at the date of the third-quarter results of the Bank, the Board of Directors emphasised that the Bank’s three key priorities are profitability and growth whilst maintaining its healthy liquidity and capital adequacy ratios.

The CEO of Hellenic Bank, Bert Pijls, in a statement about the results noted that Hellenic Bank continues its pivotal role in the recovery of the Cypriot economy supporting Cypriot businesses and households with a comprehensive range of quality banking services. He noted that the improvement in the macro environment of Cyprus is a clear indication of the recovery of the Cypriot economy, and he encouraged borrowers with non-performing loans to actively engage with the Bank in a transparent manner in order to progress with sensible and equitable restructurings.

Mr Pijls also said that the Bank is making progress in the area of Non Performing Loans, which is indicated by the stabilization of the NPLs ratio, which in turn enabled the Bank to have a profitable quarter.