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Hellenic Bank posted record profits amounting to €295.9 million for the period that ended on 30 September after acquiring the performing part of the Cooperative Cyprus Bank (CCB).

In late June 2018 the Bank acquired the performing operations of the ailing state-owned CCB absorbing a balance sheet of €10.3 billion, propelling the bank’s assets to €16 billion from €6.7 billion in end-March 2018.

The bank’s record profits were generated by the negative goodwill (the difference between assets and liabilities) of the acquired balance sheet. Hellenic paid the CCB €74 million and acquired assets and liabilities with a fair value of €372 million.

According to the financial results, the bank’s non-performing exposures dropped sharply to 31% from 51.6% in second quarter, including the NPEs guaranteed by an asset protection scheme (APS) granted by the government, while excluding the APS-guaranteed NPEs, the ratio declines further to 25.6% of total loans.

In absolute terms, the bank’s NPEs increased to €2.52 billion compared with €2.12 in the previous quarter, with the majority of the new NPEs that emerged after the acquisition, amounting to €433 ml, guaranteed the APS.

The NPE’s provision coverage in end-September amounted to 54.1%, the bank said.

Furthermore, Hellenic Bank’s Common Equity Tier 1 capital ratio amounted to 18.2% accounting for the €150 million capital raise expected to take place by end March 2019, while the total capital adequacy amounted to 20.9% accounting for the expected capital raise.

The bank’s operating profit for the third quarter of 2018 reached €18.3 million, compared with €3.7 million the previous quarter with Q3 including the results of the acquired entity for only one month.

“The acquisition of ex CCB strengthens our business model and propels the Bank into consistent, healthy profitability,” Hellenic Bank’s CEO Ioannis Matsis said in a statement, adding “this enables us to focus on our mission, which is to provide an excellent service to our enlarged customer base and to continue financing the growth of the real economy.”

The bank’s net interest income for the nine months that ended on September 30 reached €103.8 million recording an increase of 5% in the nine months of 2017, mainly due to the acquisition of the CCB, while Q3 net interest income rose by 63% compared with the previous quarter.

Total expenses for the period of January – September 2018 amounted to €133.6 million, marking an increase of 16% year on year mainly due to administrative and other expenses, the bank said.

Source: Stockwatch