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Hellenic Bank, Cyprus’ second-largest lender, has had a strong start to 2024, reporting a net profit of €189 million in the first half of the year—a solid 18% increase from last year. This boost in profit is mainly due to a 30% rise in interest income, driven by higher European Central Bank (ECB) interest rates.
The bank’s financial health has improved significantly. It now has a stronger capital base, with its CET1 ratio (a measure of a bank's capital strength) at 29% and its overall capital adequacy ratio at 32%. Additionally, the bank’s non-performing loans (NPLs) are down to 2.4%, and it has a robust liquidity position of €5.3 billion.
For the first half of 2024, Hellenic Bank’s Net Interest Income (NII)—essentially the profit the bank makes from loans and deposits—rose to €304.4 million, a 29% increase compared to last year.
A significant change is on the horizon for Hellenic Bank. At the upcoming annual general meeting on September 18, the bank’s majority shareholder, Greek Eurobank (which owns 55.9% of Hellenic), will propose a new Board of Directors. Eurobank Cyprus CEO Michalis Louis is set to become the new CEO of Hellenic Bank, marking a new era for the institution.
For the first half of 2024, Hellenic Bank’s Net Interest Income (NII)—essentially the profit the bank makes from loans and deposits—rose to €304.4 million, a 29% increase compared to last year. This increase was largely due to higher interest rates set by the ECB.
On the flip side, the bank’s expenses also went up, totaling €145.2 million, a 15% increase from the previous year. This rise was mainly due to higher administrative costs and staff salaries, which now account for 45% of the bank’s total expenses. However, the bank managed to reduce its cost-to-income ratio (a measure of efficiency) to 40.1%, down from 43.0% last year.
Customer deposits slightly decreased to €15 billion by the end of June 2024, down from €15.3 billion at the end of 2023. The bank’s loans also saw a small decrease to €6.09 billion, down from €6.16 billion at the end of last year. Notably, new lending dropped by 27% compared to the same period last year, totaling €472 million.
Hellenic Bank has also been reducing its reliance on central bank funding. It paid back €2.4 billion in loans from the ECB, meaning it now has zero funding from central banks.
Regarding non-performing loans, Hellenic Bank has been making progress. By the end of June 2024, its gross NPLs were down to €411 million, a decrease from earlier in the year. When excluding loans covered by a state-provided Asset Protection Scheme (from when Hellenic acquired part of the Cooperative Cyprus Bank in 2018), total NPLs are just €0.1 billion. The bank’s overall NPL ratio is now 6.7%, down from 7.5% at the end of 2023, with a much lower 2.4% ratio when excluding APS-covered loans.
For customers and investors, this means Hellenic Bank is in a strong financial position, but it’s also tightening its lending. While the bank’s profits are up, the broader economic impact may include stricter loan conditions and a cautious approach to new lending. The upcoming leadership change could also bring new strategies and directions for the bank.
[Information from CNA]
