Hellenic bank yesterday announced losses of €46.1 million in the first half of 2013 – a reversal from profits of €14.9m in the same period last year – but retains a strong capital base and liquidity.
Provisions for bad debts rose by 121% to €94.6m, while non-performing loans were up by €287m over December 2012 to €887.4m, reflecting a downturn in the economic climate.
The percentage of NPLs to total loans rose to 20.4% from 13.3% in December 2012.
Hellenic also booked losses of €10.3m from the sale of its branches in Greece as part of Cyprus’ bailout agreement.
But the island’s second largest bank retains a strong liquidity and has not been obliged to seek funds from the emergency liquidity assistance.
Its capital adequacy ratio on June 30 was 14.59% compared to 13.6% in December 2012.
Announcing its half year results, it outlined measures underway to boost its capital base by September and urged a gradual relaxation of restrictions on financial transactions.
This would boost the credibility of the island’s banking system and the bank’s prospects for growth.
Revenue fell 16% to €132.4m from €157.6m, with revenue from interest down16% to €85.5m while non-interest revenue slumped 17% to €46.9m.
The interest margin narrowed to 2.31% from 2.47% at the end of December 2012.
Total expenditure rose 3% to €69.5m, pushing the cost-to-revenue index to 52.5% from 42.8% in the same period last year,
Personnel costs represent 69.3% of the total, down from 72.8% in June 2012.
At the end of June 2013 staff numbers were down to 1558 from 1962 last year.
An early retirement scheme – the €10m cost of which will be booked in the results of the next quarter – had led to an 11% reduction in the number of employees and a 14% saving in the payroll.
Total loans were down 19% over December 2012 to €4.5 billion while deposits slumped 26% to €5.7b.
Looking ahead, Hellenic said it would continue to focus on the effective management of credit risk and a further strengthening of its capital adequacy, ensuring healthy liquidity and careful, prudent growth aimed at profitability.
It anticipates challenges for the Cyprus economy will continue in 2013 as the recession drags on, consumption falls and unemployment rises.
The fiscal consolidation measures are expected in the short term to put further pressure on economic activity, but in the medium term will lead to improved profitability and a return to growth.