Hellenic Bank recorded an after-tax profit of €25.1 million in the first quarter of 2022 and announced that it has already embarked on a 3-year transformation journey to unleash its potential and deploy its strategy to achieve sustainable profitability.
According to a press release by the bank, commenting on the group’s financial results for the three-month period that ended 31 March 2022, Oliver Gatzke, the group’s CEO, said that despite the slowdown in economic activity, the bank’s first quarter results demonstrate the resilience and robustness of its business model.
“In the first quarter of 2022, we reported an after-tax profit of €25.1 million, mainly due to the release of provisions related to COVID-19,” Gatzke said.
“With a strong capital adequacy ratio of 20.53%, well above the regulatory requirements, and ample liquidity (Liquidity Coverage Ratio of 433%), we are well positioned and remain, as always, committed to supporting not only our retail customers, during this challenging period, but also our business ones, by providing financing to sectors that increase, in parallel, the competitiveness and productivity of the economy,” Gatzke said.
During the first quarter of 2022 €269 million of new loans were granted, much higher than the respective period in 2021 where new lending was €166 million, he noted.
At the same time, he said that the bank has been consistently and intensively working on improving the quality of its portfolio.
He referred to the Project Starlight agreement for the sale of a €0.7 billion gross non-performing loan portfolio and the agreement with RCB to acquire a performing loan portfolio saying that it significantly reduced the bank’s pro-forma NPE ratio to c.3.6%, one of the lowest, among peers.
“The transaction with RCB increases the bank’s client base in business lending, provides cross selling opportunities, and improves operating income through higher interest income.”
According to Hellenic Bank’s CEO, the bank is in the process of transforming into a customer centric organisation, by improving customers’ experience through digitalisation, streamlining procedures and by offering simple and competitive products. “At the same time, we are enhancing the profile of our loan book through healthy growth with a strong focus on environmental, social and governance issues (ESG),” he said.
He noted that main driver for this transformation journey is cost reduction, following restructuring and rightsizing of the bank. “The reduction of the high cost to income ratio of the bank, an important element of which is the staff cost which accounts for approximately 50% of the total expenses, remains pivotal in the success of the whole transformation effort,” he added.
Moreover, he stressed irrevocable commitment for the signing of a new collective agreement reflecting the need to reduce costs, the gradual implementation of meritocratic, performance related remuneration, according to international best practices, and harmonisation of salaries of ex-CCI/CCB colleagues.
In May, the bank employees’ union Etyk announced a 24-hour warning strike in protest at the bank’s intention to make 350 staff redundant, rather than following the standard practice of offering a voluntary exit scheme, which is very costly. A voluntary exit scheme can lead to compensation of as much as €200,000, something Hellenic Bank was not prepared to offer.
Another one of the union’s complaints was that the bank had not restored the wages of the workers who were transferred to it from the Co-op Bank to pre-crisis levels, despite a labour ministry missive saying it was legally obliged to do so.
“I truly hope that the leadership of the union will rise to the occasion and demonstrate a constructive and positive approach, for the benefit of our employees, safeguarding simultaneously a healthy and robust organisation for the future” Gatzke concluded.