Oliver Gatzke: In 2022 we managed to present very good financial results
Hellenic Bank presented a profit of 24.2 million euros compared to a loss of 11.7 million for the year 2021. The profit before tax for the year 2022 amounted to 42.2 million compared to a loss of 7 million in the year 2021. The main drivers were an increase in total net income, lower impairment losses, partially offset by increased personnel and restructuring costs incurred in the year 2022. More specifically, pre-tax losses for the 4th quarter of 2022 amounted to €46.8m and mainly due to restructuring costs incurred in Q4 2022 compared to €27.0m profit in Q3 2022. The loss attributable to equity holders of the parent company for Q4 2022 2022 was €52.2m compared to a profit of €21.0m in 3Q 2022. Return on tangible equity (ROTE) was 2.3% in 2022 compared to -1.1 % in the year 2021.
The restructuring costs represent the Voluntary Early Exit Scheme (VEES) and other related costs of €70.9 million for the year 2022. On November 29, 2022, the Bank announced the successful completion of the Voluntary Early Exit Scheme, in line with with the Bank's strategy to reduce its operating costs and achieve sustainable profitability. The Scheme was offered to the staff of the Bank and its subsidiaries for voluntary departure from the Group in exchange for an amount of compensation. The total number of Group employees approved to participate in the Scheme was 446 (approximately 16% of the Group's staff) of which 394 employees terminated their employment during the 4th quarter of 2022 while the rest will terminate their employment contracts during the 1st quarter of 2023. The annual payroll cost of these employees is approximately €30m, with the corresponding savings starting in 2023, despite any pay increases for the staff that remained.
< strong>Capitals CET1 at 19.1%
Regarding the Common Equity Tier 1 (CET1) Capital Index, it rose at 19.1% and the Capital Adequacy Ratio 21.4%, exceeding the minimum regulatory requirements.
The minimum Capital Adequacy Ratios, Common Equity Tier 1 (CET 1) and Tier 1 Capital of the Group, in a phased application, effective from January 1, 2023, have been set at 14.95% (2022: 14.825%), 9.94% (2022: 9.815%) and 12.09% (2022: 11.965%) respectively.
NPR at 3.6%
Gross loans and advances to customers at 31 December 2022 amounted to €6,222 million, an increase of 5% compared to €5,952 million at 31 December 2021, mainly due to the acquisition of part of the portfolio of serviced loans (Part A/Tranche A and Part B/Tranche B) from RCB Bank. The portfolio of performing loans increased by 6% while the non-performing portfolio decreased by 6%, compared to 31 December 2021.
The Bank's loan market share1 on 31 December 2022 was 27.7% ( December 31, 2021: 22.5%) and consists of 34.7% for loans to Households (December 31, 2021: 31.1%).
Adjusted the MDI Index was 9.8% in 2022 and the adjusted NPL Index excluding NPLs covered by the Asset Protection Program, at approximately 3.6%.
Cost to income at 68%
The cost to income ratio for the year 2022 stood at 68%, compared to 73% for in the year 2021, reflecting the increase in total net income despite the increase in total expenses, while for the 4th quarter of 2022 the expense to income ratio stood at 53% compared to 70% in the 3rd quarter of 2022. The quarterly decrease is mainly due to higher net income.
Personnel expenses for the year 2022 amounted to €147.2 million and represented 53% of the Group's total expenses (2021: 51%). Compared to €133.7 million in the year 2021, staff costs for the year 2022 increased by 10%.
With effect from January 2022, the wage increases and indexation allowance (ITA) applicable to each employee under the expired Collective Agreement were paid by the Group. In the year 2022, a payment was made in respect of the restoration of the salaries of the employees of the former Credit Unions (formerly CPI) to 2013 levels, effective January 1, 2019.
In 15.9 billion deposits
At 31 December 2022, customer deposits amounted to €15.9 billion (31 December 2021: €14.9 billion) and increased by 7% from year-end 2021. They consisted of Euro deposits of €14, 7 billion (31 December 2021: €13.7 billion) and deposits in foreign currencies amounting to €1.2 billion (31 December 2021: €1.2 billion) mainly in US Dollars.
< p>The Bank's market share of deposits on 31 December 2022 was 30.7% compared to 29.2% on 31 December 2021. The market share of deposits on 31 December 2022 consists of 38.4% deposits from households (31 December 2021: 37.9%) 21.1% deposits from non-financial corporations (31 December 2021: 19.8%) and 12.9% for other financial intermediaries (31 December 2021: 10.6%).
New loans 1.17 billion
Total new lending in Q4 2022 was €367 million, compared to €257 million in Q3 2022 (Q2 2022: €287m and Q1 2022: €269m) and a total of €1,179m in 2022, an increase of 30% year-on-year compared to new borrowing of €908m for in the year 2021.
The sale of Starlight
is completedOn April 11, 2022, the Bank announced that it had agreed to the sale of a portfolio of REOs and the sale of APS Cyprus, the subsidiary involved in the management of REOs and Real Estate Owned Properties (REOs) (“Project Starlight”) of the Bank. The perimeter includes legacy NPLs with a total gross book value of approximately €0.7 billion. Following the completion of the transaction, the Bank is expected to achieve its medium-term target of a mid-single-digit NPL ratio (excluding NPLs covered by the PPS). Significant progress has been made regarding the legal steps, operation and completion of “Project Starlight”. In February 2023, the Plan of Arrangement was approved by the Court and the Bank proceeded to transfer the “Project Starlight” portfolio to the Credit Acquisition Company on February 22, 2023. The parties are working together to complete “Project Starlight” and it is expected to be completed in early of 2023 pursuant to the addendum signed in December 2022 and therefore the divestiture group was classified as held for sale and as discontinued operations at 31 December 2022.
Commenting on the Group's results, Mr. Oliver Gatzke, CEO of the Group, said:
Despite the challenges due to the crisis in Ukraine and inflationary pressures, in 2022 we managed to present very good financial results, presenting profits of € 24.2 million (against losses of €11.7 million in 2021). This result exceeded our expectations confirming the progress being made in realizing our transformation into a customer-centric bank, which places a strong emphasis on technology. Adjusted for the one-off costs of the Voluntary Early Redemption Plan, earnings came to €95.0 million, reflecting our strong business model in a positive interest rate environment following the recent rate hikes by the European Central Bank.