29/09/2017 16:11
Hellenic Bank, Cyprus' second biggest commercial Bank, announced on Friday a loss after tax of €13 million for the second quarter and a total loss of €22,9 million for the first half of 2017, due to the elevated provisions to cover the high amount of its Non Performing Exposures (NPE).
With an NPE provision coverage at 60%, total capital adequacy ratio of 17,55% and the operation of the first platform for NPE management in Cyprus, the Bank maintains that it is in a position to fulfil its strategic priorities.
Profit before provisions was €51,8 million, compared to €58,8 million in the six months of 2016. In June 2017, the Bank created the first debt servicing platform in Cyprus, through the sale of the non-performing loan and real estate management business to APS Cyprus which resulted in a net accounting gain of €19 million.
Despite the current period losses primarily due to provisions, the Group maintains robust capital adequacy ratios. As at 30 June 2017, the Common Equity Tier 1 (CET 1) ratio stood at 13,88%, compared to the minimum required CET 1 ratio of 9,25% and the Capital Adequacy Ratio was 17,55%, compared to a minimum required of 12,75%.
The level of NPEs has been reduced for a seventh consecutive quarter to €2.354 million at 30th June 2017, down by 6% compared to the €2.504 million at 31st December 2016. The NPEs to gross loans ratio was reduced to 56%, down from 58,2% at 31st December 2016.
NPEs provision coverage ratio stood at 60% as at 30th June 2017 up from 55% at the end of 2016, while the overall coverage, taking into account tangible collaterals totaling 115%.
An amount of €296 million relating to total customers’ exposures, was restructured during the six months of 2017, while an amount of €82 million was written off as part of the whole restructuring process.
About €185 million new loans were approved during the first half of 2017, while €296 million of restructurings were completed.
The net loan to deposits ratio was 48% as at 30 June 2017. At 30 June 2017, total deposits amounted to €5,8 billion while total gross loans reached €4,2 billion. The Bank’s loan market share as at 30 June 2017 was 7,7% and its deposits market share was 12,1%.
Net interest income for 6M2017 was €66,3 million, down by 11% compared to €74,7 million in 6M2016. The main factors that contributed to the decrease of net interest income were the decreasing lending rates in 2017 compared to early 2016 primarily affecting the performing loan portfolio and the decreased carrying amount of the impaired6 loan portfolio. Second quarter’s net interest income amounted to €32,6 million and was down by 4% compared to €33,8 million in 1Q2017, with the reduction being mainly driven by the decreased carrying amount of the impaired loan portfolio.
Total expenses for the six months of 2017 amounted to €76,7 million, increased by 6% compared to the €72,3 million for 6M2016, primarily due to higher staff costs. Total expenses for 2Q2017 of €37,6 million were down by 4% compared to the €39 million for 1Q2017, mainly due to the decrease in administrative and other expenses.
Bank follows a “fix” and “build” strategy
According to the Bank, its strategy focuses on two aspects: “Fix” and “Build”. The “Fix” aspect predominantly relates to the resolution of NPEs, whilst the “Build” aspect relates to focused growth through the expansion of the Bank’s franchise.
In statements the Bank’s Chief Executive Officer Yannis Matsis said that resolving the issue of problem loans is paramount and the Bank continues to explore all available options to decisively reduce them. He explained that through the creation of the first debt servicing platform in Cyprus, through the sale of the non-performing loan and real estate management business to APS Cyprus, the Bank will be able to effectively tackle the NPEs in an accelerated way and with higher recoveries, leveraging on the knowhow, proven expertise and technical experience of APS Holding.
He also sent the message that the Bank can have profits after provisions, if the real estate market stabilizes or after resolving the problem of NPEs.
The Bank`s policy to increase lending over the past year, he added, led the Bank to give more loans than its market share.
As he said, the Bank`s strategy, is to channel liquidity to the market in order to be much more profitable before provisions. After achieving this goal, he added they will proceed with the issue of expanding the Bank, either by attracting more deposits or by giving more lending, or even by a possible merger.
At the same time, Matsis clarified that the Bank will show zero tolerance to those who can pay and do not do so, saying that this is an obligation both towards depositors and towards those who are consistent. He noted, however, that the Bank would be sensitive to the lower classes of society.
With an NPE provision coverage at 60%, total capital adequacy ratio of 17,55% and the operation of the first platform for NPE management in Cyprus, the Bank maintains that it is in a position to fulfil its strategic priorities.
Profit before provisions was €51,8 million, compared to €58,8 million in the six months of 2016. In June 2017, the Bank created the first debt servicing platform in Cyprus, through the sale of the non-performing loan and real estate management business to APS Cyprus which resulted in a net accounting gain of €19 million.
Despite the current period losses primarily due to provisions, the Group maintains robust capital adequacy ratios. As at 30 June 2017, the Common Equity Tier 1 (CET 1) ratio stood at 13,88%, compared to the minimum required CET 1 ratio of 9,25% and the Capital Adequacy Ratio was 17,55%, compared to a minimum required of 12,75%.
The level of NPEs has been reduced for a seventh consecutive quarter to €2.354 million at 30th June 2017, down by 6% compared to the €2.504 million at 31st December 2016. The NPEs to gross loans ratio was reduced to 56%, down from 58,2% at 31st December 2016.
NPEs provision coverage ratio stood at 60% as at 30th June 2017 up from 55% at the end of 2016, while the overall coverage, taking into account tangible collaterals totaling 115%.
An amount of €296 million relating to total customers’ exposures, was restructured during the six months of 2017, while an amount of €82 million was written off as part of the whole restructuring process.
About €185 million new loans were approved during the first half of 2017, while €296 million of restructurings were completed.
The net loan to deposits ratio was 48% as at 30 June 2017. At 30 June 2017, total deposits amounted to €5,8 billion while total gross loans reached €4,2 billion. The Bank’s loan market share as at 30 June 2017 was 7,7% and its deposits market share was 12,1%.
Net interest income for 6M2017 was €66,3 million, down by 11% compared to €74,7 million in 6M2016. The main factors that contributed to the decrease of net interest income were the decreasing lending rates in 2017 compared to early 2016 primarily affecting the performing loan portfolio and the decreased carrying amount of the impaired6 loan portfolio. Second quarter’s net interest income amounted to €32,6 million and was down by 4% compared to €33,8 million in 1Q2017, with the reduction being mainly driven by the decreased carrying amount of the impaired loan portfolio.
Total expenses for the six months of 2017 amounted to €76,7 million, increased by 6% compared to the €72,3 million for 6M2016, primarily due to higher staff costs. Total expenses for 2Q2017 of €37,6 million were down by 4% compared to the €39 million for 1Q2017, mainly due to the decrease in administrative and other expenses.
Bank follows a “fix” and “build” strategy
According to the Bank, its strategy focuses on two aspects: “Fix” and “Build”. The “Fix” aspect predominantly relates to the resolution of NPEs, whilst the “Build” aspect relates to focused growth through the expansion of the Bank’s franchise.
In statements the Bank’s Chief Executive Officer Yannis Matsis said that resolving the issue of problem loans is paramount and the Bank continues to explore all available options to decisively reduce them. He explained that through the creation of the first debt servicing platform in Cyprus, through the sale of the non-performing loan and real estate management business to APS Cyprus, the Bank will be able to effectively tackle the NPEs in an accelerated way and with higher recoveries, leveraging on the knowhow, proven expertise and technical experience of APS Holding.
He also sent the message that the Bank can have profits after provisions, if the real estate market stabilizes or after resolving the problem of NPEs.
The Bank`s policy to increase lending over the past year, he added, led the Bank to give more loans than its market share.
As he said, the Bank`s strategy, is to channel liquidity to the market in order to be much more profitable before provisions. After achieving this goal, he added they will proceed with the issue of expanding the Bank, either by attracting more deposits or by giving more lending, or even by a possible merger.
At the same time, Matsis clarified that the Bank will show zero tolerance to those who can pay and do not do so, saying that this is an obligation both towards depositors and towards those who are consistent. He noted, however, that the Bank would be sensitive to the lower classes of society.
Related Articles
