A loss of 11.7 million euros, mainly related to the Starlight project forecast, was presented for 2021 by Hellenic Bank, which has however made significant progress in reducing risks on its balance sheet and is now within breath of its average budget. term objective of reducing non-performing loans (NPLs) to 3% of its loan portfolio.
The non-performing loan (NPL) ratio, adjusted for the sale of loans with a gross value of €720 million and the acquisition of a portfolio of non-performing loans by RCB Bank, fell to 3.6%, while the collection of the second tranche of RCB loans, it will fall to 3.4% against 53% at the end of 2017.
Hellenic Bank is now turning its attention to the transformation plan, with the bank’s CEO, Oliver Gatzke, pointing to reducing the high cost-return ratio as key. “We are focused on both increasing interest income through new loans and generating miscellaneous income, as well as keeping all administrative expenses under control,” he said.
He stresses, however, that “the most effective way to reduce the cost-income ratio is to reduce overall labor costs through necessary staff reductions and more rational salary increases in the future”.
“And the plan for this year is basically to reduce the number of employees to between 300 and 350 people and we plan to do that through layoffs,” Gatzke said.
He noted that “we are doing our best, to agree a mutually beneficial collective agreement for our staff and at the same time to keep the Bank on a solid and sustainable path”, expressing the hope that “the leadership of the Union will rise to the occasion and demonstrate a constructive attitude, to the benefit of our employees.”
Hellenic Bank reached an agreement with Pimco for the “Starlight” project, which involved the sale of a €0.72 billion NPL package and the APS Debt Servicer, with a positive impact of around 20 points based on its capital. This transaction reduced non-performing loans to €650 million, corresponding to 10.9% of total loans, while excluding loans covered by the asset protection program and adjusted with the purchase of loans by RCB, the NPL ratio falls to 3.4%.
The bank’s capital ratios at the end of 2021 remained at high levels, with the capital adequacy ratio and the ordinary equity class 1 (CET 1) ratio at 21.67% and 19.30 % respectively, while new borrowings in 2021 amounted to €908 million compared to €1.04 billion in 2020. In addition, the liquidity coverage ratio at the end of 2021 further increased to 499, 5% compared to 477% at the end of 2020, the liquidity surplus in 2021 amounting to 6.4 billion euros.
Net interest income for 2021 amounted to €256 million, down 10% compared to €285.5 million for 2020, mainly reflecting lower income from loans served (lower key rates ) and lower Cypriot government bond income, reductions which were partially offset by continued reductions in the average cost of deposits.
The Group’s net interest margin for 2021 decreased to 1.52%, compared to 1.88% in 2020.
A slight decrease, at a rate of 3%, was observed on an annual basis in total non-interest income in 2021, which amounted to 103 million euros compared to 105.8 million euros in 2020, while net fee and commission income for 2021 amounted to €58.2 million, up 1% compared to €57.6 million in 2020, an increase mainly due to the increase in banking fees and commissions in 2021, following the announcement of the revised list of fees and charges effective from February 2021, and the increase in electronic transactions.
Impairment losses in 2021 amounted to 108.4 million euros, which are related to the Starlight project.
According to the results, the group’s expenses in 2021 remained unchanged, amounting to 263.5 million euros and compared to 264.0 million euros in 2020. The personnel expenses for 2021 amounted to 133.7 million euros and represented 51% of the Group’s total expenses (50% in 2020). Compared to €131.1 million in 2020, personnel expenses for 2021 increased by 2%.
The expense-to-income ratio for 2021 was 73%, compared to 67% for 2020, pushed up by lower total net income.
At the end of 2021, the Group’s balance sheet total amounted to €18.8 billion, and increased by 19% compared to €15.9 billion as of December 31, 2020, mainly due to the increase cash and deposits with central banks, mainly due to new lending to the ECB’s targeted long-term refinancing operations (SPL/TLTRO).
Gross outstanding customer loans as of December 31, 2021 amounted to €5,952 billion, down 12% compared to €6.8 billion as of December 31, 2020, with a net financing rate down to 38.4% as of December 31, 2021, compared to 43% as of December 31, 2020.
In addition, the bank’s real estate assets at the end of 2021, which mainly resulted from the settlement of customer debts, amounted to €69.4 million at December 31, 2021, compared to €208.4 million at the end of 2021. allocations amounted to €18.7 million and sales to €44.2 million, in published data.
Total investments in securities amounted to €4,463 million as of December 31, 2021 (December 31, 2020: €5,024 million), down 11% and represented 24% of total assets (December 31, 2020 : 32%). The Cypriot bonds and government bonds that the Group held as of December 31, 2021 decreased to €1,485 million, a decrease of 39%, compared to €2,443 million as of December 31, 2020.