Hellenic Bank posts €189 million net profit as Eurobank gears up to take over

Hellenic Bank, Cyprus’ second largest lender, posted €189 million net profit in the first half of 2024, up by 18% year on year, due to a 30% increase in interest revenue, driven by the steep rise in ECB interest rates.

According to the bank's financial results published on Friday for the first half of 2024, Hellenic (as it had no approval for dividend distribution), marked a significant increase in capital with the adjusted CET1 ratio of 29% and capital adequacy ratio at 32%. Furthermore, the bank’s non-performing loans ratio stood at 2.4% while liquidity amounted to €5.3 billion with the Liquidity Coverage Ratio amounting to 517%.

Its annual general meeting on September 18 will mark a new era for the bank, as Greek Eurobank, which is the majority stake holder, with 55.9%, will propose a new Board of Directors with Eurobank Cyprus CEO Michalis Louis poised as the CEO as he has been proposed as executive board member of Hellenic Bank.

“The decision of Eurobank, one of the largest financial organizations in Greece to invest in Hellenic Bank, constitutes a vote of confidence in our business model and franchise and as a result in our country’s economy,” Hellenic Bank’s interim CEO Antonis Rouvas said in a statement.

For the first half of 2024 the bank’s Net Interest Income (NII) amounted to €304,4 million, up by 29% compared to €235.4 million in the respective period of last year.

“The increase in NII was mainly driven by the increase in interest income from placements with Central Banks and debt securities, following the ongoing increases in the ECB key interest rates throughout 2023,” the bank said in its results.

Furthermore, total expenses for the first half of 2024 amounted to €145.2 million, up by 15% compared to €126.1 million in the respective period of last year, mainly driven by higher administrative and other expenses and staff costs, which amounted to €65.4 million, up by 8% year on year and accounted for 45% of the Group’s total expenses.

The cost to income ratio in the first half of 2024 was 40.1% compared to 43.0% for first half of last year.

According to the bank, customer deposits amounted to €15 billion as at 30 June 2024, from €15.3 billion in the end of 2023, with a deposits market share of 28.2% compared with 29.4% in the end of 2023.

The net loans to deposits ratio was 39.8% as at 30 June 2024, compared to 40.3% as at 31 March 2024 and 39,4% as at 31 December 2023, the bank added.

As of funding from Central Banks, the bank said it had reduced its funding to zero as it repaid its €2.4 billion funding from the ECB via the Targeted Long Term Refinancing Operations (TLTRO III) in June.

In the end of June 2024 the bank’s deposits held with Central Banks amounted to €5.3 billion with its Liquidity Coverage Ratio amounting to 517%.

In end June 2024, the bank’s loans amounted to €6.09 billion, compared to €6.16 billion in the end of 2023.

Total new lending in the first half of 2024 declined by 27% year on year to €472 million from €647 million in the first half of last year.

The bank’s gross non-performing loans (NPLs) in end-June 2024 amounted to €411 million, compared to €450 million as at 31 March 2024 and €464 million as at 31 December 2023, whereas excluding the loans covered by an Asset Protection Scheme (offered by the state when Hellenic acquired the performing part of the Cooperative Cyprus Bank in 2018) total NPLs amounted to €0.1 billion

The group’s NPL ratio in the first half of 2024 amounted to 6.7% from 7.5% in the end of 2023, while, excluding the loans covered by the APS, it stood at 2.4%.