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Banking and Finance Business

Hellenic Bank shows small loss in Q1; analysts say outlook is stable for year

Hellenic Bank and Bank of Cyprus get a boost from Moody's.


With the announcement of first quarter results on Friday, Hellenic Bank revealed the initial effects of the novel coronavirus crisis, showing a slight loss of €2,2 million.

 Analysts expected flat results from the bank, given the lockdown and crisis, and saw no unexpected developments in the bank’s report. This is in spite of the downturn from Q1 in 2019, when profit was at €14.3 million. They expect a stable outlook throughout the year, with an upturn in the coming year.

CEO Yannis Matsis noted that the bank would continue to reduce the number of its branches, while building digital interface with clients.

““There were no surprises in the Q1 results of HB. Profit and loss met expectations. The bank’s capital position is solid, and the ratio of NPEs is improved, ” commented Jonas Floriani, an analyst with the Axia Ventures Group.

Net interest income saw a small loss of 8 per cent to €69.1 million, from €75.3 million last year.

Total non-interest income was also flat, dropping 2 per cent to €23.8 million, down 2 per cent from €24.2 million.

“Hellenic Bank Q1 results were within broad expectation by the market, confirming a gradually improving NPE position despite the temporary hit from COVID-19. Revenues could not offset Hellenic Bank’s losses associated with high exposure to key corporate accounts suffering from the crisis. However, a gradual normalisation of economic and financial conditions in Europe and Cyprus by Q1-2021 will set the foundation for a solid recovery in the latter half of 2021 and onwards,” comments Athanasia Kokkinogeni, a banking analyst at researcher Ducker Frontier.

The Bank’s investment in Visa was one exceptional factor that pulled results lower. Visa suffered a sharp decline in the number of transactions during the crisis, but analysts show that the company recovered substantially in late April and May with revenue up 5 per cent. This should boost the value of bank’s investment and help improve results, even in a quarter that will be dominated by the effects of the crisis.

There was a marked increase in charges for impairment, up to €29.1 million, an increase of 45 per cent compared with €20.1 million for the same period in the previous year. This, too, did not surprise analysts as it was an inevitable effect of the crisis.

There was also little change in non-performing loans, and the NPEs ratio is at 25 per cent.

Masis commented:

“Hellenic Bank is well prepared and ready to tackle the crisis from an advantageous position. With excess liquidity (Liquidity Coverage Ratio of 538%) and robust capital adequacy of 21,71%, one of the highest amongst European Banks, we are extremely well positioned to support those businesses and households that we assesses to be viable, and seize any other opportunities that could potentially be presented, whilst always seeking to protect the Bank’s Balance Sheet, safeguard our depositors, and create value to our shareholders.”

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