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Hellenic Bank posted €21 million net profit in first half of 2021

24/09/2021 15:46

Hellenic Bank, Cyprus` second largest lender posted profit after tax amounting to €21 million in the first half of 2021, while announcing it is pushing for the first significant NPL portfolio transaction called "Starlight", in a bid to achieve its medium-term objective of slicing NPL rate to single digits.

Furthermore, the bank’s new CEO Oliver Gatzke said the bank is currently exploring to introduce a liquidity charge to high retail deposits over €100,000 in a bid to offset liquidity charges imposed by the European Central Bank’s negative interest policy, as well as exploring way to contain its cost base including through reduction in personnel.

The bank said its non-performing loans amounted to €1.47 billion in the end of the fist half of 2021 corresponding to 15.1% of total loans (excluding the loans guaranteed by the Asset Protection Sheme) while coverage ratio amounted to 46.5%

The bank maintained capital ratios above the EU average with Core Tier 1 capital at 19.68% and Total Capital ratio of 22.2%.

New lending in the fist half of 2021 amounted to €388 million, of which €222 originated in the second quarter of this ear. Moreover, the bank said 95% of the loans that exited a loan payment holiday in the end of 2020 are performing.
Furthermore, the bank said it is pursuing an NPL sale amounting to €0.7 billion expected to be signed in the end of 2021, with Gatzke stressing that the transaction would assist the bank to achieve its medium term target of reducing NPL rate to single digits.
Moreover, the bank’s Chief Economic Officer Antonis Rouvas said that it is not enough to reduce NPLs organically (via restructurings, debt to asset swaps and write offs) but a transaction is necessary.
Furthermore, the bank’s new CEO said that the bank is exploring introducing a liquidity charge to high retail deposits over €100,00 as part of managing costs due to negative interest rates imposed by the ECB.
Recalling that the bank has introduced negative interest rates on corporate clients in 2020, Gatzke said we are currently considering to introduce liquidity charges to household clients but there is no decision yet.”
Responding to questions, he said clarified that liquidity charges will be imposed to retail deposits over €100,000 which correspond to 2% of the bank’s deposit base.
As part of negative interest policy introduced by the ECB banks pay to deposit their liquidity to the Eurosystem’s Central Banks a measures launched to stimulate lending to the real economy.

“We need to manage our very strong liquidity in a way that we are not facing profitability issues because of very high negative interest rates,” Gatzke, who took the helm of the bank recently, said.
Moreover he said that as an alternative, the customers could explore other options for their deposits, such as investment products or insurance-link investment products to be offered by the bank.

Furthermore, replying to a question on what is the bank considering to do to lower its high cost to income ratio, which in the first half amounted to 71.5%, the German banker said “we have to look at the cost situation.”

“We do have to be active in cost management, including personnel,” he said, noting that a discussion will take place with all stake holders including trade unions.

Of the bank’s total cost in the first half of 2021 amounting to €131 million over 50% were in staff costs, the bank said in its financial results.