financial results for the period ended 30 september 2011 · 2017-12-18 · presentation to...

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)

2

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


3

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


4

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


5

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


6

on the interbank

market or the ECB

Capital Position


7

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


4 – 8


Agenda


9





Income Statement HighlightsConsolidated Income Statement Highlights for the period ended

30 September 2011:


10For the detailed Income Statement please refer to section “Appendices”.

Net Interest Margin

Net Interest Margin -Group


Net Interest Margin -Cyprus Net Interest Margin -Greece

11

Net Income

» Net loss on disposal and revaluation of foreign currencies and

© Hellenic Bank Public Co Ltd, 2011 - All rights reserved (2011_Q3_English)12

» 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


13

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


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


15

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%


16

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%


17

Cyprus – 83%

Non performing loans

NPL/Gross Loans (net of suspended income)


18

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%


Cyprus -€’mln Greece -€’mln

19

+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


20

+20%

12/10->9/11

+640mln

Investments

Prudent sovereign risk

management

» Manageable exposure to Greek Government Bonds. 50% impairment.


21

Quality of debt

securities:

Investments – Sovereign ExposureInvestments breakdown-€mln: Government-€mln:


22

» 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


4 – 8


Agenda


23





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


4 – 8


Agenda


25





Income StatementConsolidated Income Statement for the period ended 30 September 2011:


26

Balance Sheet as at 30 September 2011


27

Greece (Segmental reporting)


28

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


4 – 8


Agenda


29





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


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.


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

31

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.


32

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


• 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

33

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.


34

2013 the proceeds will be directed to a bank stability fund.

End of month system deposits -€mln

Topic Pages


4 – 8


Agenda


35





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


wide range of banking and financial services, including hire purchase, leasing, investment and insurance services, as well as trustee and factoring services.

36

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


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.

37

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


2003 - Adoption of the Corporate Governance Code.

38

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


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


40

• 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


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


42

Organisational Structure


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


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.

44

Elena NeophytouInvestor Relations Tel: +357 22 [email protected]

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