Insider Economy Hellenic Bank posts net loss of €2.2 million following increased provisions due...

Hellenic Bank posts net loss of €2.2 million following increased provisions due to Covid-19

The Hellenic Bank posted €2.2 million loss after tax for the first quarter of 2020, with the bank affected negatively by increased provisions due to the Covid-19.

Τhe bank announced it booked €33 million in provisions to cover credit risk due to the coronavirus pandemic.

In the first quarter the bank’s CET1 ratio amounted to 19.22% while its capital adequacy ratio amounted to 22.71%.

“In the past three months, we have experienced an unprecedented crisis on a global scale as a result of the Covid-19 pandemic with lockdown measures imposed progressively, on all the countries.  Cyprus was of course no exception,” Ioannis Matsis, Hellenic Bank’s CEO said in a statement.

He added that the “Hellenic Bank is well prepared and ready to tackle the crisis from an advantageous position,” noting “with excess liquidity and robust capital adequacy of 21,71%, one of the highest amongst European Banks, we are extremely well positioned to support those businesses and households that we  assess to be viable, and seize any other opportunities that could potentially be presented, whilst always seeking to protect the Bank’s Balance Sheet, safeguard our depositors, and create value to our shareholders.”

In the first quarter of 2020 the bank’s net interest income amounted to €69.1 million, down by 8% compared to €75.3 million for 1Q2019, due to the lower income on performing loans (lending base rates reduction) and lower income from debt securities(maturity of €750 million Cyprus Government Bonds(CGBs)in December2019), which was partly covered by the ongoing reductions in the average cost  of deposits, the bank said.

Total expenses for 1Q2020 amounted to €63.3 million, remaining broadly stable compared with the first quarter of 2019. Compared with the previous quarter total expenses marked a reduction of 14%, mainly driven by the lower administrative and other expenses.

Staff costs in first quarter of 2020 amounted to €31.5 million, marking an increase of year on year, affected by salary increases reflected from3Q2019 onwards and the lower seasonal staff costs in 1Q2019. Compared with the last quarter of 2019, staff costs were down by 4% due to lower overtime  and seasonal staff costs, following  the completion of the integration process that related to ex-CCB’s operations, systems and staff.

The cost to income ratio for the first quarter of 2020 amounted to 68,1%, compared to 63,9% for1Q2019 and 70.6% in 2019.

Furthermore, customer deposits amounted to €14.1 billion as at 31March2020 compared with €14,6 billion in the first quarter of 2019.

Total new lending approved during 1Q2020 reached €203.4million (FY2019:  €812.3million), the bank said, noting that Gross loans as at 31 March2020 amounted to €7,256 million, marking a slight increase compared with €7,244 million in the previous quarter.

According to the bank, the net loans to deposits ratios stood at 42.0%, compared to 40.9% in the previous quarter.

The bank’s gross non-performing loans increased by 1% compared to 31 December 2019, reflecting increases loans in default and interest accrual, the bank said.

NPEs amounted to €2,293 million in the end of the first quarter of 2020 from €2,276 million as at 31 December 2019. Excluding an asset protection scheme (APS) offered to the bank as part of the acquisition of the performing part of the former state-owned Cyprus Cooperative Bank amounted to €1.815 million.

The NPEs to gross loans ratio as at 31 March 2020 amounted to 31.6% compared to 31,4% in the previous quarter, while excluding the NPEs covered by the APS was 25.0%.

According to the Bank, the NPEs provision coverage ratio stood  at 57.7% as at 31 March 2020, while  excluding the NPEs covered by the APS  jumps to 70,0%.

Furthermore, the bank announced that in the second quarter of 2020 it proceeded with circa €508 million non-contractual write offs on the gross carrying amount of a portfolio of NPEs which will reduce the NPE ratio to 26.5% and 19.4% while excluding the APS.

“The portfolio affected consisted of NPEs which exhibited high arrears, and which had been in default for a number of years,” the Bank said, noting that no significant impact is expected on the Bank’s income statement as a result of this initiative.


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