Presentation to Institutional
Financial Results for the period ended 30 September 2011
HELLENIC BANK PUBLIC COMPANY LIMITED
Presentation to Institutional Investors
29 November 2011
DisclaimerCertain statements in this presentation/announcement including any accompanying slides and subsequent discussions with respect to the business strategy and plans of the Hellenic Bank Group (term which includes the Hellenic Bank Public Co Ltd and its subsidiary and associate companies), its current goals and expectations, its projections, beliefs, possibilities relating to its future financial condition and performance are forward - looking.
By their nature, forward - looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. Therefore these risks and uncertainties could adversely affect the outcome and financial effect of what is described herein and the reader or the audience are cautioned not to place undue reliance on suchforward - looking statements.
When relying on forward - looking statements to make decisions, investors should carefully consider that there are several factors that influence same such as, but not limited to, domestic and global economic and business conditions, market relatedrisks such as interest or exchange rate risk, unexpected changes to regulation, competition, technological conditions and other.
The forward - looking statements contained in this presentation/announcement are made as at the date of this presentation /
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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The forward - looking statements contained in this presentation/announcement are made as at the date of this presentation / announcement and the Hellenic Bank Group undertakes no obligation to update or revise any of same unless otherwise required by applicable law.
Nothing in this presentation/announcement constitutes an offer to sell, or the solicitation of an offer to buy, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
This presentation/announcement or any copy thereof should not be taken or transmitted directly or indirectly to any country or jurisdiction where there are restrictions such as the United States of America, Australia, Canada or Japan. Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian or Japanese securities law. The distribution of this presentation/announcement in other jurisdictions may be restricted by law and persons into whose possession this presentation comes should inform themselves about and observe, any such restrictions.
The securities issued by Hellenic Bank Group have not been and will not be registered under the applicable securities laws ofUSA, Australia, Canada or Japan.
Topic Pages
1.Quarter Highlights – Recent developments
4 – 8
2. 9M/2011 Financial Results 10 – 22
Agenda
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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3. Strategic Targets and Prospects 24
4. Appendices 26 – 28
5. Economic Environment 30 – 34
6. Other Information 36 - 44
Quarter Highlights – Recent developments
aaaaRobust capital base – Capital Adequacy Ratio: 13%
aaaaStrong Balance SheetaaaaStable funding base - Healthy Net Loans toDeposits Ratio of 68%
aaaaAmple liquidity - No dependency on the
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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aaaaAmple liquidity - No dependency on theinterbank market or the ECB
aaaaPrudent management
Confirm the strength of the Group business model in a challenging environment
Liquidity
Strong Liquidity - Healthy Loans to Deposits Ratio
Ample liquidity
Stable funding
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Stable funding base
Steady and Strong Net Loans to Deposits Ratio
Liquidity
Liquid Assets as a percentage of Total Assets
aaaa Strong deposit franchise
aaaa No dependency on the interbank
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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on the interbank
market or the ECB
Capital Position
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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aaaa Selective growth on loans.
aaaa Prudent management of market risk.
aaaa Highly disciplined capital management.
aaaa Prudent management of Greek Government Bonds.
Credit Ratings
11 August 2011:22 November 2011:
Fitch
Long term rating: BBB-
Short term rating: F3
Individual rating: C/D
Moody’s
Bank Deposits: Ba2
Commercial Paper: Not Prime
Bank Financial Strength: D-
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English) 8
Individual rating:
Viability rating:
C/D
bb
Outlook: Negative
Bank Financial Strength: D-
Outlook: Under
review
Both firms recognize Hellenic Bank’s strong domestic franchise, sound regulatory capital adequacy and good liquidity and funding profiles, helped by a large customer deposit base.
Topic Pages
1.Quarter Highlights – Recent developments
4 – 8
2. 9M/2011 Financial Results 10 – 22
Agenda
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3. Strategic Targets and Prospects 24
4. Appendices 26 – 28
5. Economic Environment 30 – 34
6. Other Information 36 - 44
Income Statement HighlightsConsolidated Income Statement Highlights for the period ended
30 September 2011:
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
10For the detailed Income Statement please refer to section “Appendices”.
Net Interest Margin
Net Interest Margin -Group
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Net Interest Margin -Cyprus Net Interest Margin -Greece
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Net Income
» Net loss on disposal and revaluation of foreign currencies and
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» Net loss on disposal and revaluation of foreign currencies and financial instruments, (y-o-y) impacted by €55mln of Greek
Government Bonds impairments and the decrease in shares and
bonds’ prices.
» Profit from ordinary operations before GGBs impairement and provisions increased by 50% (y-o-y).
» Total net interest income before GGBs impairement increased by 13% (y-o-y).
» Net fees and commission income increased by 4% (y-o-y).
» Other income increased by 25% (y-o-y).
Expenses and Cost to Income Ratio
Expenses Structure
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Number of Employees
*: increased due to the GGB impairment.
Q3-2011: 58% before the GGB impairment.
Cost to Income Ratio
*
Balance Sheet Highlights
Balance Sheet Highlights as at 30 September 2011
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
14For the detailed Balance Sheet please refer to section “Appendices”.
Balance Sheet Structure
Customer
loans and
deposits
Robust Balance Sheet Structure
Customer
deposits
Customer
loans
Customer
loans and
deposits
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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Liabilities €8,6bln Assets €8,6bln
Other 357
Deposits by
banks
deposits
Debt and Equity
Securities
Cash and
placements with
other banks
Loan capitalEquity
270 Other
Group -€’mln
Group Gross Loans and Advances
12/10->9/11
+234mln
+6%
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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Cyprus -€’mln Greece -€’mln
-2%12/10 ->9/11
+259mln
12/10 ->9/11-25mln+8%
Group Gross Loans and Advances
Group Gross Loans by Sector
Gross Loans by Geographic Market
Total: €5.657
Greece – 17%
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Cyprus – 83%
Non performing loans
NPL/Gross Loans (net of suspended income)
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Non performing loans -€mln(net of suspended income)
» P&L provisions/Gross
loans: 2,39%
» BS Provisions/Non
performing loans (net of
suspended income): 69%
The remaining amount is
secured by tangible
collaterals.
+42mln+8%
+89mln+16%
+31mln+5%
Group -€’mln
Customers Deposits
Group Deposits per Category
12/10->9/11
+517mln
+14%
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
Cyprus -€’mln Greece -€’mln
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+20%-23%
12/10->9/11
+640mln
12/10->9/11
-123mln
Customer deposits in Cyprus (€6,8 bln)
By Country of Customer By Currency
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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+20%
12/10->9/11
+640mln
Investments
Prudent sovereign risk
management
» Manageable exposure to Greek Government Bonds. 50% impairment.
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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Quality of debt
securities:
Investments – Sovereign ExposureInvestments breakdown-€mln: Government-€mln:
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» Zero exposure to government bonds of Ireland, Italy, Spain and Portugal.
» Manageable exposure to Greek Government Bonds - exposure is shown after the 50% impairment.
» The 78% of banks’ bonds owned by the Group mature within the next 12 months. 97% consists of senior bonds.
Maturity of Cyprus and Greek
Government Bonds-€mln:
Topic Pages
1.Quarter Highlights – Recent developments
4 – 8
2. 9M/2011 Financial Results 10 – 22
Agenda
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3. Strategic Targets and Prospects 24
4. Appendices 26 – 28
5. Economic Environment 30 – 34
6. Other Information 36 - 44
Strategic Targets
Based on the conditions prevailing in the financial environment, the strategic targets of the Group continue to focus on:
P PE RR OM FA IN T
Maintenance and improvement of the quality of the loan
portfolio
Safeguarding and enhancement of the capital adequacy ratios
Safeguarding of the sound liquidity
Cautious and rational growth
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English) 24
Group Management closely monitors and evaluates developments in the market of its operations and
takes all necessary measures to deal with the adverse
economic conditions and the consequences of the financial crisis.
The Group’s healthy liquidity and its sound capital
adequacy allow for the selective financing of new
projects in developing sectors of the economy.
A IN TE AN BE IN LT I
TY
Cautious and rational growth
Group Management closely monitors and evaluates developments in the markets of its operations and takes all necessary measures to deal with the adverse economic conditions and the consequences of the financial crisis.
The Group takes all necessary measures and addresses the challenges of the negative economic environment. Meanwhile, the Group’s strong indicators allow for the rational development of business with selective financing of new projects in Cyprus and Greece, as well as in Russia, where the subsidiary company Limited Liability Company Commercial Bank “Hellenic Bank” commenced operations in January 2011.
Topic Pages
1.Quarter Highlights – Recent developments
4 – 8
2. 9M/2011 Financial Results 10 – 22
Agenda
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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3. Strategic Targets and Prospects 24
4. Appendices 26 – 28
5. Economic Environment 30 – 34
6. Other Information 36 - 44
Income StatementConsolidated Income Statement for the period ended 30 September 2011:
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Balance Sheet as at 30 September 2011
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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Greece (Segmental reporting)
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The challenges of the negative economic environment in Greece have further aggravated the
quality of the loan portfolio of the branch network in Greece.
Topic Pages
1.Quarter Highlights – Recent developments
4 – 8
2. 9M/2011 Financial Results 10 – 22
Agenda
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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3. Strategic Targets and Prospects 24
4. Appendices 26 – 28
5. Economic Environment 30 – 34
6. Other Information 36 - 44
Business Environment - Cyprus
Deposits
September 2011 31,5% 19,8% 10,8% 4,9% 22,3% 10,7%
December 2010 31,4% 20,8% 9,7% 5,6% 21,4% 11,1%
December 2009 28,1% 20,9% 10,6% 6,2% 24,4% 9,8%
Loans
September 2011 28,0% 19,0% 7,9% 7,9% 22,2% 15,0%
December 2010 27,5% 19,2% 8,1% 8,6% 23,0% 13,6%
December 2009 27,5% 18,6% 8,0% 9,0% 22,4% 14,5%
Alpha Coops OtherMARKET SHARE Bank of
Cyprus
Marfin Pop.
Bank
Hellenic
Bank
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
Source: Central Bank of Cyprus 30
December 2009 27,5% 18,6% 8,0% 9,0% 22,4% 14,5%
Market share: Loans to Residents and Non Residents
Economic Environment - Cyprus• Negative growth during Q3 -2011 (Q3 : -0,7% q-o-q, Q2-2011: +0,2%). Annual rate of -0,6%. Mari blast effect.
• Q2 sectors: Positive: tourism, banking, services.
Negative: construction, industry, electricity, trade, transport.
• Unemployment at 7,8% in Aug 2011– eyeing 8%.
• Inflation moderated to 3,0% in Oct 2011. Higher electricity prices having effect. Possible VAT hike may boost further.
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
prices having effect. Possible VAT hike may boost further.
• Credit expansion: high at +13,9% (Sep. 2011).
• Key point: significant economic headwinds in addition to Mari blast effect. Fiscal consolidation, effect of Eurozone debt crisis/slowdown on financial sector and confidence.
CYPRUS
2010 2011 2012
% % %
GDP Growth 1,00 (0,50) (1,00)
Inflation 2,60 3,50 2,50
Unemployment 6,50 7,60 7,90Source: Hellenic Bank Economic Research Department
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Economic Environment - Cyprus
KEY DEVELOPMENTS:
• Moody’s has downgraded Cyprus by two notches to Baa3 (lowest investment grade) due to risks stemming from the banking sector’s Greek exposure.
• EBA/ Central Bank of Cyprus has instructed the two largest Cypriot banks to recapitalize following the 26th October EU accord.
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October EU accord.
• Cyprus concluded bilateral agreement with Russia in order to secure €2,5 bln loan. Will be given in three tranches from January to April 2012.
• Beginning of natural gas preliminary exploration process in sea area South of the island –outcome uncertain.
• IMF mission: Cyprus needs to take urgent action.
Economic Environment - Greece• Pace of downturn slowing- Q3 contraction reached 5,2% y-o-y (from a revised 7,4% contraction in Q2). Economy expected to contract by 5,5% in 2011. Tourism positive but domestic weakness due to austerity measures as pensions and wages cut and taxes rise.
• Aug. unemployment hit a new record of 18,4%. Oct. inflationmoderated to 3,0% because of weak domestic demand.
• Awaiting the approval of 6th tranche of IMF/EU support
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• Awaiting the approval of 6th tranche of IMF/EU support package depending on broad political support for the new set of measures to be put into place from 2012.
• Voluntary haircut of 50% for Greek government bond holders.
• Total credit expansion turned negative in August (-0,1%).
GREECE
2010 2011 2012
GDP Growth (4,5%) (5,5%) (2,5%)
Inflation 4,70 2,9% 1%
Unemployment 12,6% 16,5% 18,5%Source: Hellenic Bank Economic Research Department
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Economic Environment - CyprusSpecial tax on banks
Cyprus's parliament on the 14th of April 2011 passed a legislation imposing 0.095% tax on deposits (domestic and foreign) of banking institutions. The tax will be calculated on the deposits at 31 December of the immediately preceding year and will not exceed 20% of the total taxable profits of the year.
The measure is expected to bring in €120 million ($175 million) in the next two years. 60 percent of the amount, or €70 million, will go to the state and the remainder will be directed to a bank stability fund to be created by the Cypriot Central Bank. Following 2013 the proceeds will be directed to a bank stability fund.
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2013 the proceeds will be directed to a bank stability fund.
End of month system deposits -€mln
Topic Pages
1.Quarter Highlights – Recent developments
4 – 8
2. 9M/2011 Financial Results 10 – 22
Agenda
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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3. Strategic Targets and Prospects 24
4. Appendices 26 – 28
5. Economic Environment 30 – 34
6. Other Information 36 - 44
Hellenic Bank Public Company Ltd was incorporated in Cyprus and is a public company in accordance with the provisions of the Companies Law Cap. 113, the Cyprus Stock Exchange Laws and Regulations and the Income Tax Laws.
The principal activity of the Group is the provision of a wide range of banking and financial services, including
Incorporation and principal activity
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
wide range of banking and financial services, including hire purchase, leasing, investment and insurance services, as well as trustee and factoring services.
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1974 - Hellenic Bank was registered with promoters the Bank of America and the Hellenic Mining Company, each holding 20% of share capital. The remaining 60% was offered to the public -IPO.
1976 - The Bank begins operations with a branch in Nicosia and 33 employees.
Group Milestones
1985 - The subsidiary company, Hellenic Bank (Finance) Ltd, is founded, providing asset finance.
1986 - The subsidiary company, Hellenic Bank (Investments) Ltd, is
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
1986 - The subsidiary company, Hellenic Bank (Investments) Ltd, is founded, providing investment services.
1990 - The Insurance Services Department is founded, representing a number of insurance companies offering a wide choice of insurance products.
1996 - The Group dynamically expands its operations by acquiring the onshore facilities of Barclays Bank PLC in Cyprus.
1997 - The Limassol International Business Centre obtains the ISO 9002 international certificate of service quality - the only centre of its kind in Cyprus to do so.
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1998 - The first branch of Hellenic Bank opens in Greece, in the Kolonaki area of central Athens.
Opening of Representative Offices in Sandton, South Africa and Moscow, Russia.
1999 - Acquisition of the Ledra and Pancyprian insurance companies.
2000 - A new insurance company is launched -Hellenic Alico Life Insurance Company Ltd for the provision of bancassurance products.
Group Milestones
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
2003 - Adoption of the Corporate Governance Code.
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2007 - Opening of Representative Offices in Ukraine-Kiev and St Petersburg.
Acquisition of 78% of “Athena Cyprus Public Company Ltd”.
Organic growth: Russia-signed protocol with the Central Bank of Russia (Nov.07).
Group Milestones2008 - Application submitted to the Russian Central Bank for the acquisition of permission to execute bank operations in Russia- 31 July 2008.
The Bank acquired Borenham Holdings Limited which acquired Format Invest Limited, (owner of the building facilities in Moscow where the Bank’s head office and first branch in Russia will be based).
2009 - License to carry out bank operations in Russia through the wholly owned subsidiary Limited Liability Company Commercial Bank “Hellenic Bank″ obtained.Acquisition of 100% of ‘Athena Cyprus Public
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
Representative offices: Moscow, South Africa, St Petersburg, Kiev.Branch network: Cyprus 68
Greece 20 39
Acquisition of 100% of ‘Athena Cyprus Public Company Ltd’.
2010 - Via the Reorganisation and Merger Plan,the Bank took over the activities of its wholly-owned subsidiaries, Hellenic Bank (Finance) Ltd –beginning of 2010 and Athena Cyprus Company Ltd in June 2010.In June 2010, the Bank has announced its decision to commence full banking operations in Russia as from January 2011.
Hellenic Bank Today• A strong franchise within Cyprus.
• Hellenic Bank is a universal bank serving all customer segmentsthrough a wide range of products and financial services.
• Banking services, offered to the local community as well as international businesses, include deposits, retail and corporate loans, hire purchase, investment services, custodian services insurance andbrokerage.
• Corporate Governance
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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• Corporate Governance
- Adoption of the Code of Corporate Governance since January 2003.
- Implementation of the Central Bank of Cyprus directive for Basel II
• Board Composition
(12 members)– Non Executive Chairman (1)– Independent Non Executives (8)– Non Executives (1)
– Executives (2)
• Board Committees:– Audit Committee– Risk Management Committee
– Remuneration Committee– Nominations and Internal Governance Committee
Shareholders analysis -As at 30 Sep. 2011
Shareholders by type Main Shareholders by name
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
Authorised Share Capital: 600 million shares €0,43 each
Number of issued shares: 308.019.635
Number of shareholders: 25.761
CSE Code: HB41
Corporate Structure
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
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Organisational Structure
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
43September 2011
Investor Relations Contacts
Hellenic Bank Public Company LtdCorner Limassol Ave. & AthalassaAve.200, 2025 Strovolos, NicosiaCyprus
Internet: www.hellenicbank.com
Antonis RouvasGroup Chief Financial OfficerTel: +357 22 [email protected]
Elena Neophytou
© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)
Internet: www.hellenicbank.com
© Hellenic Bank Public Company Limited 2011. All right reserved. Any use of the materials, in whole or in part (including without limitation reproduction, sale, rent, distribution, lending, publication, broadcasting, presentation to the public, translation, permanent storage and incorporation into other materials or web pages) is prohibited without the prior written consent of Hellenic Bank Public Company Limited.
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Elena NeophytouInvestor Relations Tel: +357 22 [email protected]