Hellenic Bank on Wednesday announced its financial results for the first half of 2023, reporting profits driven by rising interest rates and debt securities, as well as lower expenses.
According to the data presented, in the six-month period that ended on June 30, 2023, the Bank recorded an after-tax profit of €160.2 million attributed to higher income from Central Bank placements and debt securities.
Moreover, the Bank reported a net interest income of €235.4 million, which represents a 77% year-on-year rise, boosted by increasing interest rates and Central Bank placements.
Lending also increased by 17% year-on-year, as the bank reported new lending amounting to €647 million.
Commenting on the Group’s financial results Antonis Rouvas, the Group’s Interim Chief Executive Officer, stated:
Hellenic Bank’s performance for the first half of 2023 was solid. Profit after tax totalled €160 million, mainly driven by higher interest income from Central Bank placements and debt securities as interest rates rise, as well as lower expenses. This performance demonstrates the resilience of our business model and our efforts to continue to unlock value.
The Bank’s capital position is strong with a Capital Adequacy Ratio of 26,5%. Liquidity remains ample with a Liquidity Coverage Ratio of 499%, allowing us to continue supporting our customers by providing competitive, tailor-made credit and insurance products. New lending during the first half of 2023 reached €647 million (up by 16% YoY).
Following the successful Voluntary Early Exit Scheme (VEES) of 2022, the adjusted cost-to-income ratio for the first half of 2023 was 38%, in line with the Bank’s medium-term targets.
However, the economic and operating environment remains challenging, with rising interest rates and inflation above the long-term average, as well as the ongoing Russia/Ukraine crisis, which could affect the Bank’s financial performance in the coming quarters.
During the first half of 2023 we successfully issued €200 million Tier 2 Subordinated Notes under our EMTN Programme. The total orderbook was almost 4,5 times oversubscribed re-affirming the market’s confidence for the Bank. Nevertheless, the Bank’s funding from capital markets remains costly reflecting the Bank’s current non-investment grade credit rating. By demonstrating sustainable financial performance and by operating in an environment that will remain supportive, we will work towards obtaining an investment grade credit rating to further facilitate the Bank’s access to the capital markets at more competitive rates.
In March 2023, we completed Project Starlight, significantly de-risking the Bank’s balance sheet and reducing the non-performing exposures ratio, excluding the non-performing exposures under the Asset Protection Scheme, to 3,3% at 30th June 2023. Despite the shift of the problem loans outside the banking sector, the level of problem loans in Cyprus remains one of the highest in Europe. Therefore, we consider it imperative that the country has a stable and functional foreclosure framework for addressing strategic defaulters, to enhance the country’s appeal for attracting foreign direct investments and to facilitate the access of domestic debt issuers to the international capital markets. We reiterate our commitment to support our vulnerable customers and to work closely with the authorities for any proposed measures that will address the long-standing issue of NPEs.
Our ESG Impact Report for 2022 was released in June, based on our new ESG Strategy. It reiterates our commitment to lead a sustainable transition of the economy and sets ambitious goals to become a climate-neutral Bank, increase our green lending (€107 million during the first half of 2023), improve our ESG rating and support customers and investors in their green transition.
Highlights:
- 1H23 profit of €160,2 million mainly driven by higher income from Central Bank placements and debt securities
- Solid Capital Position: CET1 ratio of 20,8% and Capital adequacy ratio of 26,5%, significantly above minimum regulatory requirements
- De-risked balance sheet: NPE ratio of 8,9% (3,3% excluding the NPEs covered by the APS agreement)
- New lending momentum, with 1H23 new lending of €647 million, up 16% y-o-y
- 1H23 Net interest income of €235,4 million, up by 77% y-o-y, benefiting from interest rates and our balance sheet structure, mainly driven by Central Bank placements
- Cost to income ratio of 38% driven by higher NII and lower staff costs due to December 2022 Voluntary Early Exit Scheme
- 99,6% of new lending exposures post-2018 are performing
- NPEs provision coverage ratio (excluding NPEs covered by the APS agreement) at 51% as at 30 June 2023
- Ample liquidity, with an LCR of 499% and with €6,0 billion placed at the ECB (excluding TLTRO of €2,3 billion)
- MREL TREA position at 29,1%, above the Dec-25 final MREL requirement
- Transforming and addressing structural challenges on track, focusing on digitalisation and efficiency improvements
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