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ECONOMY

Oliver Gatzke: Ongoing Resilient Performance In A Challenging Period

Oliver Gatzke: Ongoing Resilient Performance In A Challenging Period
  • 6M2022 Profit for the period of €55,4 million
  • Solid Capital Position: Pro forma CET1 ratio ofc.19,6%and Capital adequacy ratio of c.21,9%, significantly above minimum regulatory requirements
  • De-risked balance sheet: Pro forma NPE ratio was 10,2% while excluding the NPEs covered by the APS agreement was at 3,6%
  • Project Starlight: Agreement to sale c. €0,7 billion NPEs and the APS Debt Servicer
  • 2022-2024 Strategic Plan to transform and address structural challenges, with increased focus on digitalization and cost control
  • Launch of ESG related products for car and housing financing

 

Commenting on the Group’s financial results for the three-month period ended 30 June 2022, Mr. Oliver Gatzke, the Group’s Chief Executive Officer, stated: The second quarter of 2022 continued to be dominated by the war in Ukraine leading to very high inflation rates, lower consumer confidence and weaker global economic outlook. Despite the weak outlook, Cyprus economy has grown by 6,1% during the first six months of the year. The positive GDP growth rate is mainly attributed to the good performance of industries such as trade, transport, hospitality, and other leisure related industries.

The interest rate environment has changed significantly with the ECB increasing interest rates for the first time in 11 years to 0% in July 2022. Very recently interest rates were further increased to 0.75%.  At the same time long-term interest rates have hiked throughout Europe – Cyprus 10-year sovereign bond reached a maximum yield of 3,5% mid of the year primarily resulting from credit spread widening, reflecting the uncertain capital market environment.

Despite this challenging environment, Hellenic Bank performed well above expectations, making solid progress towards its strategic goals. We delivered an after-tax profit of €55,4m proving the resilience and robustness of our business model.

During the first six months of 2022, €556m of new loans with healthy risk-return profile were granted, recording an increase of 43% compared to new lending of €388m for the same period last year. We maintain a strong capital adequacy ratio of c.21,9%, (pro-forma) well above the regulatory requirements, and ample liquidity with a Liquidity Coverage Ratio of 473%.

We are well positioned and committed to support our viable retail and business customers. Despite the progress, we remain watchful and particularly wary about the challenges that lie ahead, that is why we have been consistent and hence intensively working on improving the quality of our portfolio. The Project Starlight related to the sale of a €0,7billion of gross non-performing loan portfolio and the agreement with RCB to acquire a performing loan portfolio, significantly reduced our pro-forma NPE ratio to c.3,6%, one of the lowest, among peers.

Positive Prospects ahead

Hellenic Bank 3-year transformation journey is on track. We aim to enhance customer experience, increase revenues, whereas at the same time drive efficiency. We are in the process of transforming into a customer centric organisation, by improving customers’ experience, through digitalization, streamlining of our processes and offering simple and competitive products.

At the same time, we are enhancing the profile of our loan book through healthy growth with a strong focus on Environmental, Social and Governance issues (ESG).

Furthermore, the rising interest rate environment is expected to support our main indicators in the mid-term. At the same time, we are focusing on healthy new lending with a sufficient return profile, both in Cyprus and internationally, and improving the profitability of our investment book.

Active cost management remains core of our strategy. On the labor issues, I once again stress our irrevocable commitment for the signing of a new collective agreement and the formulation of an exit scheme in order to improve the cost-to-income ratio of the Bank. The discussions with the Union are in progress and I trust that we will soon have a successful outcome, mainly for the benefit of our employees, safeguarding a healthy and robust Organization for the future. 

Finally, I wish to extend my appreciation to all my colleagues for their strong commitment and effort. I would like to thank all our clients for placing their trust in us, assuring that we will continue supporting them during the challenging times ahead.

  • Other key highlights:
  • 6M 2022 Net interest income of €133 million
  • 6M 2022 Impairment losses reversal of €11,2 million
  • Total new lending approved during 6M2022 reached €556 million
  • NPEs provision coverage ratio at 53% as at 30 June 2022
  • 6M 2022 cost to income ratio of 76%
  • Robust liquidity position, with a Liquidity Coverage Ratio of 473% and a liquidity surplus in LCR of €6,4 billion
  • Net loans to deposits ratio of 41%, enabling further business expansion.
  • Solid, stable, primarily retail deposit base.

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