Hellenic Bank, Cyprus' second largest lender announced profit after tax amounting to €365.4 million in its highest-ever profitability mainly driven by high interest rates and its ample liquidity held with Central Banks, the bank said.

The bank’s net profit surpassed its 2018 profits, which emerged after the negative goodwill generated by the acquisition of the former Cyprus Cooperative Bank. The bank is subject to a take over by Greece's Eurobank which has so far acquired 55.3% of its capital and following regulatory approvals is expected to submit a public offer to acquire Hellenic’s remaining share capital.

The bank said that its net interest income for 2023 grew by 78% year on year to €563.3 million, driven by high interest rates. It also announced high capital ratio with adjusted capital adequacy at 28.4% and CET1 ratio at 22.8% whereas its Return on Tangible Equity ratio spiked to 27%.

“We managed to deliver an enviable set of financial results with a profit for the year of €365 million mainly due to higher interest income arising primarily from Central Bank placements and debt securities,” the group's CEO Antonis Rouvas said in a statement, adding that the resilience of our business model was also acknowledged by international rating agencies, with both Moody's and Fitch upgrading the Bank's long-term deposit ratings to Baa3 and BBB-, respectively, placing it at investment grade for the first time since the 2013 crisis.

Dividend on hold due to takeover

Furthermore, despite high earning, the bank said it cannot proceed with the declaration of dividend for full year 2023 “due to regulatory restriction.”

“At this moment the restriction is in place due to a series of reasons. We at this transitional phase amid a takeover which the regulators have deemed that capital should remain with the organization instead of being distributed as a dividend,” Rouvas said.

On his part, Petros Christodoulou Chairman of the board said benefits for share holders do not only emerge from dividend destibuton but also from the wealth generated by the bank, whose share from €1.10 in end-2022 have risen to approximately €2.30.

Both Rouvas and Christodoulou highlighted that Eurobank’s investment in Hellenic constitutes “a vote of confidence” for the bank as well as the Cypriot economy.

According to the bank, customer deposits amounted to €15.3 billion at 31 December 2023, compared to €15.9 billion at 31 December 2022, decreasing by 4% in end-2022, with net loans to deposits ratio at 39.4% in end-2023 compared to 39.1% in end-2022.

The bank's Liquitidy Coverage Ratio (LCR) stood at 542% in end-2022 well above the minimum regulatory limit of 100%, with the liquidity surplus amounting to €7.4 billion.

In end-2023, the bank’s gross loans amounted to €6.16 billion, compared to €6.96 million in end-2022, reflecting the sale of an NPL package titled “Project Starlight.”

In 2023, the bank has granted €1.2 billion in new loans, recording an increase of 2% compared with €1.18 billion in 2022.

Furthermore, the bank’s non-performing exposures (NPEs) as defined by the European Banking Authority (EBA) amounted to €464 million as at 31 December 2023, from €1.33 million in 2022 down by 65%, reflecting he sale of NPE sale.