Hellenic Bank’s profit after tax for the first half of 2023 is €160.2 million, up by 203%, compared to the same period of 2022, with net interest income showing an increase of 77%, the bank announced on Wednesday.

In statements about the Group’s financial results for the six-month period which ended on 30 June 2023, Antonis Rouvas, the Group’s Interim Chief Executive Officer noted that the increase is mainly driven by higher interest income from Central Bank placements and debt securities as interest rates rise, as well as lower expenses.

Profit for the period was at €160.2 million, up from €52.9 million the first half of 2022. Net interest income (NII) amounted to €235.4 million, up by 77% y-o-y, benefiting from interest rates and balance sheet structure, mainly driven by Central Bank placements.

On a quarterly basis, profit for Q2, 2023 was at €90.5, up from €69.7 million the previous quarter, while NII showed an increase of 18%, at 127.3 million.

Rouvas noted that 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%, with €6 billion placed at the ECB (excluding TLTRO of €2.3 billion). According to the CEO, this allows the Bank "to continue supporting our customers by providing competitive, tailor-made credit and insurance products."

During the first half of 2023 HB 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". CET1 ratio is at 20.8% and MREL TREA position is at 29.1%, above the final MREL requirement for December 2025.

"Nevertheless, the Bank’s funding from capital markets remains costly reflecting the Bank’s current non-investment grade credit rating", Rouvas noted, commenting also on foreclosures framework in Cyprus, describing it as "sufficient".

"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," he noted.

In March 2023, HB completed Project Starlight, 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. Total NPE ratio fell to 8.9%. NPEs provision coverage ratio (excluding NPEs covered by the APS agreement) at 51% as at 30 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," Rouvas noted.

He reiterated the Bank's commitment to support vulnerable customers, urging them to come forward to find a mutually acceptable solution. He added that the Bank is also working closely with the authorities for any proposed measures that will address the long-standing issue of NPEs.

Rouvas also noted a new lending momentum, with new lending for the first half of 2023 amounting to €647 million, up 16% y-o-y. He noted that 99.6% of new lending exposures post 2018 are performing.

The adjusted cost-to-income ratio for the first half of 2023 was 38%, in line with the Bank’s medium-term targets, following a Voluntary Early Exit Scheme (VEES) in 2022, that led to a €30 million reduction of labour cost.

"This performance demonstrates the resilience of our business model and our efforts to continue to unlock value", Rouvas noted, adding, however that 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. 

Regarding the Bank's ESG Strategy, Rouvas said that it reiterates HB's 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".

Finally, the interim CEO said that he is very thankful and proud of his colleagues "who remain focused on supporting customers and executing our transformation plan. We will continue working towards creating value for our stakeholders by continuing to finance the growth of the Cyprus economy," he concluded.