Hellenic Bank Posts Strong First Half Profits Amid Challenging Environment

Hellenic Bank, a prominent financial institution in Cyprus, has announced a robust profit of €160.2 million for the first half of 2023. This impressive financial outcome underscores the bank's resilience in the face of a challenging operational environment.

The bank attributes its profitability to increased income derived from Central Bank placements and debt securities. Despite ongoing economic uncertainties, Hellenic Bank has maintained a solid capital position. Its Common Equity Tier 1 (CET1) ratio stands at a remarkable 20.8 percent, accompanied by a Capital Adequacy Ratio of 26.5 percent. Both of these ratios comfortably exceed the minimum regulatory requirements, indicating the bank's financial strength.

Efforts to reduce risk have also yielded positive results, with a Non-Performing Exposures (NPE) ratio of 8.9 percent. This ratio drops to 3.3 percent when NPEs covered by the APS agreement are excluded. The bank's commitment to addressing structural challenges and transformation remains on track, with a strong focus on digitalization and efficiency enhancements.

One notable highlight in the bank's performance during the first half of 2023 is the significant surge in new lending activities. The bank's new lending amounted to €647 million, marking an impressive 16 percent year-on-year increase. This growth is particularly noteworthy considering the ongoing economic and operational challenges.

Antonis Rouvas, the Interim Chief Executive Officer of Hellenic Bank, expressed satisfaction with the bank's solid performance. He attributed the robust profit to higher interest income from Central Bank placements and debt securities, coupled with lower expenses. Rouvas highlighted the resilience of the bank's business model and its commitment to unlocking value.

Rouvas also addressed the bank's efforts to enhance cost efficiency. He mentioned that the adjusted cost-to-income ratio for the first half of 2023 was 38 percent, in line with the bank's medium-term targets. Despite the positive performance, he acknowledged the challenging economic and operating environment. Rising interest rates, above-average inflation, and geopolitical tensions, such as the Russia-Ukraine crisis, pose potential risks to the bank's financial performance in the upcoming quarters.

The bank's strategic financial moves have also been well-received in the market. During the first half of 2023, Hellenic Bank successfully issued €200 million Tier 2 Subordinated Notes under its EMTN Programme. The strong demand for these notes, with the total order book being almost 4.5 times oversubscribed, reflects market confidence in the bank's financial stability.

Despite these positive developments, Rouvas highlighted the bank's need for an improved credit rating to optimize funding from capital markets. He expressed a commitment to demonstrating sustainable financial performance and operating in a supportive environment to achieve this goal.

Hellenic Bank's net interest income for the first half of 2023 stood at an impressive €235.4 million, reflecting a remarkable 77 percent year-on-year increase. This growth can be attributed to favorable interest rates and the bank's strategic balance sheet structure.

The bank's focus on responsible lending is evidenced by the fact that 99.6 percent of new lending exposures since 2018 are performing as expected. Moreover, Hellenic Bank successfully completed Project Starlight in March 2023, contributing to the de-risking of its balance sheet and reducing the non-performing exposures ratio.

In light of the high level of problem loans in Cyprus, Rouvas emphasized the importance of a stable and functional foreclosure framework. He believes such a framework is necessary to attract foreign direct investments and facilitate access to international capital markets.

Rouvas concluded by highlighting the bank's commitment to sustainable finance. Hellenic Bank's ESG Impact Report for 2022 reflects its dedication to a sustainable transition and outlines ambitious goals to become a climate-neutral institution. Rouvas expressed pride in his colleagues and their dedication to supporting customers and executing the bank's transformation plan to create value for stakeholders.

The bank's performance in the first half of 2023 not only demonstrates its financial strength but also its commitment to responsible banking and sustainable growth in Cyprus.

By fLEXI tEAM