Solid Capital and gradual return to normal growth path
- FY 2021 Loss of €11,7 million mainly reflecting Project Starlight impairment losses
- Solid Capital Position: CET1 ratio of 19,3%[1] and Capital adequacy ratio of 21,7%1, significantly above minimum regulatory requirements
- De-risked balance sheet: NPE ratio excluding the NPEs covered by the APS agreement was 14,4%, with pro forma NPE ratio2 at 3,4% (excl. APS-NPEs)
- Project Starlight: Sale of a €0,7 billion of non-performing loan portfolio
- 2022-2024 Strategic Plan to transform and address structural challenges, with increased focus on digitalisation
- Climate & Environmental Action Plan initiated in 2021 with clear targets and Dedicated ESG Department
Commenting on the Group’s financial results for the year ended 31 December 2021, Mr. Oliver Gatzke, the Group’s Chief Executive Officer, stated:
In 2021, despite the challenges relating to the pandemic and its side effects, we have seen a strong economic rebound underpinned by the government support package. At Hellenic Bank we managed to demonstrate resilience and agility, during these extraordinary times, and I am proud of my colleagues, who have rose to the occasion and adapted to the new situation as it evolved.
We have been actively engaging with our customers since the beginning of the pandemic, working together to provide financing solutions in this demanding environment. The Bank stands by its customers at these very difficult times and during 2021 supported the recovery of the economy with €908 million of new loans, generating Group net interest income of €256 million and Group non-interest income of €103 million for 2021.
Our loss for the year 2021 amounted to €11,7 million which was mainly attributed to extraordinary impairment losses in relation to Project Starlight, the envisaged sale of a €0,7 billion of gross non-performing loan portfolio. The sale of this portfolio will lead to a drastic improvement of our asset quality with pro-forma NPE ratio of less than 5%, excluding the NPEs covered by the APS agreement.
With a robust capital adequacy ratio of 21, 7% and liquidity coverage ratio of 499% at the end of 2021, we remain committed to supporting our customers and provide financing to sectors that increase the competitiveness and productivity of the economy, such as health, education, energy, ICT, hospitality, transportation and shipping. This is underlined by the recently announced agreement to acquire a €556 million well collateralised, performing, corporate loan portfolio from RCB Bank, which is fully aligned with our growth strategy to enhance our client base and the income from our performing portfolio.
We also remain cognisant and wary of the negative impact relating to the war in Ukraine, the possible inflationary pressures due to higher prices in energy, raw materials and agri-food products and also of the uncertainty that the ongoing pandemic continues to cause.
Transformation Plan – Way Forward
In 2021, under a new leadership and a more lean and effective management structure in place, we embarked on our transformation journey, accelerating our efforts to unleash the potential and deploy our strategy with the aim to achieve sustainable profitability. We are in the process of transforming the Bank into a customer centric organisation, putting the customer at the epicentre of our attention, by improving customers’ experience through digitalisation, streamlining of our procedures and by offering simple and competitive products. We want to enhance the profile of our loan book through healthy growth with a strong focus on ESG (Environmental, Social and Governance).
Cost reduction, restructuring and rightsizing of the Bank are some of the main components of our 3-year transformation plan. Especially the reduction of the high cost to income ratio of our Bank, remains pivotal and is something that must be, decisively addressed. We are focusing our efforts on both increasing interest income through new lending and generation of miscellaneous income, as well as containing all administrative expenses. However, the most effective way to reduce cost to income ratio is the overall reduction of the payroll cost through necessary headcount reductions and more rational salary increases in the future. We are doing our best, to agree on a mutually beneficial collective agreement for our staff and at the same time to maintain the Bank on a solid and sustainable path. I really hope that the leadership of the Union will rise to the occasion and demonstrate a constructive stance, for the benefit of our employees.
Closing, I would like to thank our shareholders for their continuous support and confidence shown to us, and assure them, that the whole team at Hellenic Bank remains fully committed to achieve its goals and strategic objectives. Most importantly, I extend my appreciation to our people for their hard work and commitment during these strenuous times.
Other key highlights:
- FY2021 Net interest income of €256,0 million
- FY2021 Impairment losses of €108,4 million
- Total new lending approved during FY2021 reached €908 million
- NPEs provision coverage ratio at 53% as at 31 December 2021 while excluding the NPEs covered by the APS agreement, the ratio is adjusted to 70%
- FY2021 cost to income ratio of 73%
- Robust liquidity position, with a Liquidity Coverage Ratio of 499% and a liquidity surplus of €6,4 billion
- Net loans to deposits ratio of 38,4%, enabling further business expansion.
- Solid, stable, primarily retail deposit base.
[1] On IFRS 9 transitional basis
2 Pro forma for exposures classified as HFS
