AXIA financial services consultants anticipate a significant increase in the share price of Hellenic Bank share in the coming years – to 1.5 euros from around 0.7 euros today.
In a report, AXIA said that as from 2020 (based on the financial results of 2019) and thereafter the bank is expected to pay dividends to its shareholders, while in the meantime it is expected that the return on equity will exceed 11%. The main reason for the positive prediction is the reduction in the cost of financing and lower risk due to the Asset Protection Plan.
In addition, the company reports that a number of indicators such as the CET 1 and non-performing loans ratios are significantly reduced by the addition of the good assets of the Co-operative Bank of Cyprus which was recently absorbed by Hellenic. In particular, with the lender’s imminent €150 million share capital increase, CET 1 will reach 20% by the end of 2019. And this, together with the reduced non-performing loans exposure of the credit institution, will significantly upgrade its capital ratios.
AXIA estimates that after the capital increase of 150 million euros the Group’s CET1 ratio will reach 19.4% in the first quarter of 2019, and the total capital ratio to 22.1% against a capital requirement of 14.075%. “Given the higher capital base in the coming years, we are forecasting dividend distribution from 2020 (based on the 2019 results) with a 50% payment which represents €0.17 of our target price,” the AXIA report also said.
The take-over of the Cyprus Co-op by Hellenic has transformed the bank as well as the banking sector of Cyprus, added the report. This acquisition has positioned Hellenic as the second largest bank in Cyprus. AXIA also believe that Hellenic Bank will benefit significantly from the transaction as well as from revenue prospects as the proportion of lending will be increasing with time.