Hellenic Bank, Cyprus’ second largest lender, posted a net profit amounting to €50.5 million for the year 2020, despite the pandemic and the consequent elevated provisions for credit risk amounting to €67 million, of which €43 ml associated with the coronavirus pandemic.
According to the bank’s financial results the CET1 capital amounted to 20.1% in end-2020 broadly stable compared with end-2019, while total capital adequacy amounted to 22.3% in end-2020 compared with 22.56% the previous year.
The bank’s capital said its non-performing exposures ratio dropped to 15.7% of total loans or €1.1 billion (excluding the loans covered by the state’s asset protection scheme) while Net NPEs (after provisions) amounted to 2,8% of total loans.
Furthermore, the bank posted a new record of loan initiations, with new lending in 2020 amounting to €1.05 billion compared with €812 in 2019.
Commenting on the results, the Phivos Stasopoulos, the bank’s interim Chief Financial Officer said “Hellenic Bank has demonstrated exemplary resilience and strength, during an extraordinary year due to the pandemic”, noting that 2020 “was a real-time stress test for just about every corporation in almost every industry in the world.”
“Our 2020 financial results demonstrate the robustness and resilience of our business model and financial position, in the face of significant and persisting uncertainty. With a solid capital adequacy ratio of 22,34% and excess liquidity (Liquidity Coverage Ratio of 477%), we are very well positioned to support our viable customers and finance the recovery of the country’s economy”, he added.
According to the results, customer deposits amounted to €14.2 billion at 31 December2020 compared with €14.6 billion in end-2019, marking a reduction of 3% mainly due to the deposit outflows driven by the negative deposit rates applied in March 2020 on non-households, the bank said.
Gross loans at 31 December 2020 amounted to €6.802 million, down by 6% year on year, while the performing loan portfolio increased by 7% while the non-performing portfolio decreased by 34% compared to 31 December 2019.
The NPE ratio to gross loans amounted to 22.1% in end-2020 compared to 31.4% the year before, while adjusting or the NPEs covered by the APS the NPE ratio stood at 15.7%, compared with 25% in end-2019, while the NPEs provision coverage ratio stood at 46.9% at 31 December 2020.
Responding to a question whether a sale of loans remains in the bank’s priorities, Stasopoulos said that further de-risking is considered as one of the top priorities of the bank, noting that “there will be developments in 2021 on this matter.”
Furthermore, the bank said there are tentative encouraging signs following the termination of a loan payment holiday in the end of 2020, covering €2.8 billion loans, which accounted for 49% of the bank’s total performing loans.
“The payment holiday of all these loans expired on 31 December 2020, and loans of €1.4 billion have at least one loan installment payment due by March 2021”, the bank said.
According to the bank, net interest income for 2020 amounted to €28 million, down by 5% year on year reflecting the lower income on performing loans (lending base rates reduction) and lower income from maturing Cyprus Government Bonds. The bank’s net interest margin (NIM) for 2020 dropped to 1.88% from 1.92% in 2019.
Total expenses for 2020 amounted to €265.66 million compared to €273 million for 2019 marking a reduction of 3% mainly due to lower administrative and other expenses.
Staff costs for 2020 amounted to €132 million and accounted for 50% of the bank’s total expenses (FY2019: 46%), the bank said, while its cost-to-income ratio amounted to 67.9 % in 2020, compared to 67.5% the year before.