21.04.2022
A loss of €11.7 million, mainly attributable to the Starlight project forecasts, was presented for 2021 by Hellenic Bank, which, however, has made significant progress in reducing the risks to its balance sheet and is now within arm’s reach of its average long-term target to reduce overdue loans (NPL) to 3% of the loan portfolio.
The share of non-performing loans, adjusted for the sale of loans with a total value of 720 million euros and the acquisition of a portfolio of non-performing loans from RCB Bank, decreased to 3.6%, while with the inflow of the second tranche of loans from RZB, it will decrease to 3.4% from 53 % at the end of 2017.
Hellenic Bank is now turning its attention to its transformation plan, with the bank’s CEO Oliver Gatzke stressing that lowering the high cost-benefit ratio is key. “We have focused our efforts both on increasing interest income through new lending and on generating miscellaneous income, as well as on containing all administrative costs,” he says.
However, he emphasizes that “the most effective way to reduce the cost-to-income ratio is to reduce overall payroll costs through the necessary reduction in headcount and more rational wage increases going forward.”
“The plan for this year is basically to reduce the number of employees from 300 to 350 people, and we plan to do this through layoffs,” Gatzke said. He noted that “we are doing our best to negotiate a mutually beneficial collective agreement for our employees and at the same time keep the bank on a solid and sustainable path”, expressing the hope that “the management of the Union will rise to the occasion and demonstrate a constructive stance for the benefit of our employees.”
Hellenic Bank entered into an agreement with Pimco on the Starlight project, which involved the sale of a €0.72 billion NPL package and APS debt service, which positively affected its capital by about 20 basis points. The deal reduced non-performing loans to €650 million, representing 10.9% of total loans, while excluding loans covered by the Asset Protection Program and adjusted for the purchase of RCB loans, the NPL ratio drops to 3.4%.
The bank’s capital ratio at the end of 2021 was maintained at a high level, with capital adequacy ratio and class 1 common stock ratio (CET 1) at 21.67% and 19.30% respectively, while new borrowing for 2021 amounted to EUR 908 . million compared to 1.04 billion euros in 2020. In addition, the liquidity coverage ratio at the end of 2021 increased to 499.5% compared to 477% at the end of 2020, with a liquidity surplus in 2021 of EUR 6.4 billion.Net interest income for 2021 was EUR 256 million, down 10% from EUR 285.5 million in 2020, mainly reflecting lower income from serviced loans (lower key lending rates) and lower income from Cypriot government bonds, the decline of which was partially offset by the continued decline in the average value of deposits.
The Group’s net interest margin for 2021 decreased to 1.52% compared to 1.88% in 2020.
A slight decrease of 3% year-on-year was noted for total non-interest income in 2021 of €103m compared to €105.8m in 2020, while net fee and commission income for 2021 was amounted to 58.2 million euros, up 1% from 57.6 million euros in 2020, an increase mainly due to an increase in banking rights and fees in 2021 following the announcement of the revised Schedule of Rights and Fees effective from February 2021, and an increase in the number of electronic transactions.
Impairment losses in 2021 amounted to €108.4 million and relate to the Starlight project.
As a result, group expenses in 2021 remained unchanged at €263.5 million compared to €264.0 million in 2020. in 2020). Compared to €131.1 million in 2020, personnel costs increased by 2% in 2021.
The cost-to-income ratio in 2021 was 73% compared to 67% in 2020, driven by a decline in overall net income.
At the end of 2021, the Group’s total assets amounted to EUR 18.8 billion, up 19% from EUR 15.9 billion as at 31 December 2020, mainly due to an increase in cash and deposits with central banks, mainly as a result of a new lending to targeted long-term refinancing operations (SPL / TLTRO) of the ECB.
Gross customer lending as at 31 December 2021 was €5,952 billion, down 12% from €6.8 billion at 31 December 2020, with the net lending ratio down to 38.4% by 31 December 2021compared to 43% as of December 31, 2020 .
In addition, the bank’s real estate at the end of 2021, which mainly arose from the repayment of customer debts, amounted to 69.4 million euros at 31 December 2021, compared to 208.4 million euros at the end of 2021. Revenues were 18.7 million euros and sales up to 44.2 million euros were reported.
Total investments in securities amounted to EUR 4,463 million as at 31 December 2021 (31 December 2020: EUR 5,024 million), down 11% to 24% of total assets (31 December 2020) : 32%. Cypriot government bonds and bonds held by the Group as at 31 December 2021 decreased to EUR 1,485 million, which is 39% less than EUR 2,443 million as at 31 December 2020.
