Hellenic Bank has achieved impressive financial success in 2023, with after-tax profits reaching €240.7 million in the first nine months of the year. Key factors contributing to this success include higher interest income, a decrease in total expenses, strong capital ratios, a low non-performing exposure ratio, credit rating upgrades, robust lending growth, and effective balance sheet management.
What are the key factors contributing to Hellenic Bank’s financial success in 2023?
- Hellenic Bank’s financial success in 2023 is due to:
- Higher interest income from placements with Central Banks and securities.
- A decrease in total expenses enabled by the 2022 Voluntary Exit Scheme.
- Strong capital ratios, overshadowing regulatory requirements.
- Strategic management leading to a low NPE ratio.
- Significant credit rating upgrades from agencies.
- An 84% increase in net interest income and robust lending growth.
A Sturdy Financial Performance
In a recent announcement, Hellenic Bank disclosed exceptionally strong financial results for the initial nine months of the year. The institution’s after-tax profits soared to a remarkable €240.7 million. This substantial figure owes much to the increased interest income sourced from placements with Central Banks and other financial entities, along with income from debt securities.
Antonis Rouvas, the interim Chief Executive Officer of the group, highlighted the bank’s enduring strength during the third quarter. With a profit after tax totaling €240.7 million, the bank’s earnings are a testament to an effective business model. Key drivers of this performance are the higher interest income, spurred by rising ECB interest rates, and a decrease in total expenses due in part to the 2022 Voluntary Exit Scheme.
Robust Capital and NPE Ratios
The bank’s fiscal resilience is further underlined by its solid capital position. A CET1 ratio of 21.7% and a total capital ratio of 27.4% comfortably surpass regulatory requirements. Hellenic Bank has displayed strategic acumen in balance sheet management, showcasing an NPE ratio of 2.7%, excluding non-performing exposures covered by the Asset Protection Scheme (APS). This prudent approach reflects the bank’s commitment to minimizing financial risk.
Commitment to Transformation and Recognition
Despite facing economic and operational challenges, the institution is unwavering in its transformation journey. Strides in digitalization and efficiency improvements are ongoing, even as the bank navigates a complex fiscal landscape characterized by rising interest rates and geopolitical tensions.
The bank’s robust fundamentals have not gone unnoticed; major credit rating agencies have acknowledged its stability. In a significant milestone, the bank’s long-term deposit rating was upgraded to Baa3 by Moody’s Investor Service. Fitch Ratings followed suit, elevating the bank’s issuer default rating by two notches to BB+.
Strong Lending and Interest Income Growth
The bank’s lending activities have also seen remarkable growth, with a year-on-year increase of 11%, totaling €900 million in new lending. This aligns with the bank’s target of €1.2 billion in annual lending. An outstanding year-on-year surge of 84% in net interest income, now at €379.7 million, showcases the bank’s capacity to capitalize on the increasing interest rates and manage its liquidity effectively.
A Forward-Looking Stance
CEO Rouvas has articulated the need for a stable foreclosure framework within the country to tackle strategic defaulters and curb moral hazard. He pointed out that despite a bulk of non-performing loans being shifted outside of the banking sector, the level of problem loans in Cyprus is still one of the highest in Europe, an issue that impacts sovereign credit ratings negatively.
The bank reaffirms its pledge to assist customers in vulnerable situations and to cooperate with authorities on measures to address non-performing exposures. Rouvas also expressed a desire for constructive dialogue and resolution regarding labor issues, emphasizing the importance of collaborative effort with the Ministry of Labour and Social Insurance.
Sound Liquidity and Proactive Measures
Hellenic Bank reports a liquidity coverage ratio of 506% and an MREL to TREA ratio of 29.8%. With €6 billion placed at the ECB, the bank is well on its way to meeting the final MREL requirement by the 2025 deadline, demonstrating preparedness and fiscal prudence.
In essence, the first nine months of 2023 have painted a picture of a banking institution that not only withstands economic fluctuations but also prospers amidst them. With a strategic focus on both fiscal responsibility and innovative growth, Hellenic Bank is setting a benchmark for stability and prosperity in the banking sector.
Quick Recap
- Hellenic Bank achieved impressive financial success in 2023, with after-tax profits reaching €240.7 million in the first nine months of the year.
- Key factors contributing to this success include higher interest income, a decrease in total expenses, strong capital ratios, a low non-performing exposure ratio, credit rating upgrades, robust lending growth, and effective balance sheet management.
- The bank’s financial success is due to higher interest income from placements with Central Banks and securities, a decrease in total expenses enabled by the 2022 Voluntary Exit Scheme, strong capital ratios overshadowing regulatory requirements, strategic management leading to a low NPE ratio, significant credit rating upgrades from agencies, and an 84% increase in net interest income and robust lending growth.
- The bank has a solid capital position, with CET1 and total capital ratios surpassing regulatory requirements, and has showcased strategic acumen in balance sheet management with a low NPE ratio.
- The bank’s robust fundamentals have been recognized by major credit rating agencies, with upgrades in deposit and issuer default ratings.
- The bank has seen strong lending growth, with a year-on-year increase of 11% and an outstanding surge of 84% in net interest income.
