Insider Business Hellenic well-placed to tackle the coronavirus outbreak, CEO says

Hellenic well-placed to tackle the coronavirus outbreak, CEO says

Hellenic Bank, Cyprus second largest lender, announced net profits of €108 million for 2019 with its Chief Executive Officer, Ioannis Matsis, stating that the bank is “on solid foundations and after the work done in the last two years became stronger to tackle significant challenges” such the Covid-19 pandemic.

The bank’s CET 1 capital ratio amounted in end-2019 to 19.98% while its capital adequacy ratio amounted to 22.5%, with a non-performing loan coverage ratio of 55.6%.

Its NPL ratio excluding loans covered by the Asset Protection Scheme, granted by the government in 2018 as part of the acquisition of the Cooperative Cyprus Bank performing balance sheet, amounted to 25%, and a liquidity coverage ratio of 512%, placing the banks among the top 5 banks in the EU, concerning liquidity, the bank said.

In a comment, Matsis said “the coronavirus outbreak has emerged as an unprecedented health crisis around the world and is mutating into a significant economic shock to global economy, Cyprus inclusive,” assuring however that “Hellenic Bank is on a solid footing and, importantly, during the last two years has become more robust and better equipped to withstand the challenges we face, such as the current crisis. Hellenic Bank stands ready to support its viable clients, households and businesses, affected by the Covid-19 crisis.”

However, speaking to a teleconference, Matsis noted that banks will face in increase mix of risks in 2020 due to the coronavirus pandemic.

He referred to increased provisions and increased inflow of new NPLs, while a programmed NPL sale has been postponed due to the pandemic. “Investors have left the table for the time being, while the organic NPL reduction (such as early repayments and debt to asset swaps) will be hampered due to borrowers reduced capacity to settle their loans.”

But Matsis noted that the bank’s position as the island’s biggest retail bank render the institution less vulnerable compared to peers with increased exposure on corporate loans.

According to the bank, net interest income for 2019 amounted to €301.3 million, up by 64% compared to €184.2 million in 2018 reflecting the impact of the CCB acquisition on interest income from loans and advances to customers and on interest income from debt securities.

Customer deposits amounted to €14.6 billion as at 31 December 2019 compared with €14.7 billion in end-2018.

Total new lending approved in 2019 reached €812.3 million (FY2018: €594,4 million), while gross at 31 December 2019 amounted to €7,244 million, down by 5% compared to €7,636 million at 31 December 2018.

The performing loan portfolio marked a reduction of 4% while the non-performing loan portfolio decreased by 8% compared to 31 December 2018, the bank said, with net loans to deposits ratio stood at 40,9% as at 31 December 2019 (31 December 2018: 42,7%).

Staff costs for FY2019 amounted to €126.7 million and accounted for 46% (FY2018: 43%) of the Group’s total expenses. Compared to €87,6 million in FY2018, the FY2019 staff costs recorded an increase of 45%, with the main driver being the impact of the acquisition, the bank added.

The bank’s cost to income ratio for 2019 declined to 67.5%, compared to 69.6% in 2018.


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