Indicative Results/Preliminary Results for the year ended 31st … · 2017. 12. 18. · Announcement dated 27th February 2015 is attached. Attachments: 1. Letter 2. ... raising €201

0003/00010719/en

Indicative Results

HELLENIC BANK PUBLIC COMPANY LTD

HB

Indicative Results/Preliminary Results for the year ended 31st

December 2014 Announcement dated 27th February 2015 is attached. Attachments: 1. Letter 2. Preliminary/Indicative Results 3. Press Release 4. Presentation to Investors

Regulated

Publication Date: 27/02/2015

27 February 2015

PROFIT/LOSS INDICATION

PRELIMINARY GROUP RESULTS AND COMMENTARY For the year ended 31 December 2014

HELLENIC BANK GROUP

Page 2 of 19

TABLE OF CONTENTS Page

1. Summary of results 3 - 6

2. Income Statement - Analysis 7 - 9

3. Statement of Financial Position - Analysis 10 - 15

4. Capital Adequacy 16

5. Results of the European Central Bank’s Comprehensive Assessment Exercise (Stress Tests)

16

6. 2014 Rights Issue

16-17

7. Recent Developments

17

A. Appendices 18-19

Note: The Group Preliminary Results have not been audited by the external auditors of the Group.

HELLENIC BANK GROUP

Page 3 of 19

1. SUMMARY OF RESULTS

Income Statement

2014 2013 Change

€'000 €'000 %

Total net income 299.003 279.288 7%

Net interest income 204.138 187.156 9%

Non-interest income 94.865 92.132 3%

Total expenses 141.129 149.780 (6%)

Staff costs 75.319 89.419 (16%)

Depreciation and amortisation 5.260 5.383 (2%)

Administrative and other expenses 60.550 54.978 10%

Profit from ordinary operations before provisions 157.874 129.508 22%

Impairment losses and provisions to cover credit risk 304.397 310.810 (2%)

Loss before taxation (146.523) (181.302) (19%)

Taxation 28.118 22.898 23%

Profit/(loss) from discontinued operations after taxation 822 (31.505) (103%)

Loss attributable to owners of the parent company (118.591) (190.900) (38%)

Statement of Financial Position

Dec-14 Dec-13 Change

€'000 €'000 %

Total assets 7.551.561 6.383.946 18%

Loans and advances to customers 3.221.055 3.563.949 (10%)

Gross loans 4.405.082 4.394.166 0%

Impairment losses (including interest suspended) (1.184.027) (830.217) 43%

Deposits 6.345.948 5.513.272 15%

Total equity attributable to owners of the parent company 589.987 394.488 50%

HELLENIC BANK GROUP

Page 4 of 19

1. SUMMARY OF RESULTS (continued) Key Performance Indicators

Dec-14 Dec-13

Net interest margin 3,17% 2,75%

Cost to income ratio 47,2% 53,6%

Cost of risk 6,4% 7,1%

Coverage ratio 47,5% 41,4%

Net Loans/ Deposits 50,8% 64,6%

Common Equity Tier 1 ratio (CET 1) 13,5% N/A

1.1 Income Statement The Group’s profit from ordinary operations before provisions for the year ended 31 December 2014 amounts to €157,9 million, increased by 22% compared to €129,5 million for the corresponding last year due to the increase in net income as well as the decrease of expenses. The Group’s loss after impairment losses and provisions to cover credit risk and taxation for the year ended 31 December 2014 amounts to €118,4 million compared to loss of €158,4 million for the corresponding last year.

� The net interest income of the Group for the year ended 31 December 2014, amounts to €204,1 million compared to €187,2 million for the year ended 31 December 2013 increasing by 9%, due to the significant decrease of 35% in interest expense, despite the decrease of 9% in interest income.

� The increase in non-interest income by 3% is due to the increase in net

fee and commission income by 4% and to the increase in net gain on disposal and revaluation of foreign currencies and financial instruments by 6%, despite the decrease of other income by 2%.

� The total expenses decreased by 6% compared to the corresponding period of 2013 and this is mainly due to the decrease of staff costs by 16%.

� Impairment losses and provisions to cover credit risk in the Income Statement for the year ended 31 December 2014 which amounted to €304,4 million and decreased by €6,4 million from the corresponding amount of 2013, include a charge of €22,5 million which refers to provisions to cover credit risk relating to contractual commitments and guarantees.

Loss attributable to owners of the parent company for the year ended 31 December 2014 amounts to €118,6 million, compared to €190,9 million loss for 2013 which includes a loss from discontinued operations following the sale of the Branch Network in Greece (BNG) of €28,8 million.

HELLENIC BANK GROUP

Page 5 of 19

1. SUMMARY OF RESULTS (continued) 1.2 Statement of Financial Position The total assets of the Group amounted to €7,5 billion, increased by 18% compared to December 2013.

� Customer deposits increased by 15% compared to December 2013, reaching the amount of €6,3 billion (December 2013: €5,5 billion).

� The total of the Group‘s cash and placements with banks increased by 71% and amounted to €3,3 billion at 31 December 2014 (December 2013: €1,9 billion) further strengthening the comfortable liquidity of the Group.

� The total gross customer loans and advances remained at the same

levels compared to December 2013, reaching the amount of €4,4 billion.

� The ratio of non-performing loans to gross loans and advances including suspended interest not recognized in the Income Statement was 56,6% (December 2013: 45,7%). At the same time, the ratio of total impairment losses on loans and advances including suspended interest to total non-performing loans (including suspended interest) was 47,5% (December 2013: 41,4%).

� Accumulated impairment losses on loans and advances including

suspended interest not recognized in the Income Statement, amounted to €1.184,0 million as at 31 December 2014 (December 2013: €830,2 million) and represent 26,9% of total gross loans and advances (December 2013: 18,9%).

1.3 Results of the European Central Bank’s Comprehensive Assessment Exercise (Stress Tests) Based on the results of the Asset Quality Review (“AQR”) and the Stress Tests (together the “Comprehensive Assessment”) that were released by the European Central Bank (“ECB”) and the European Banking Authority (“EBA”) the capital requirement for Hellenic Bank based on the “Adverse Scenario” totals to €105 million which more than covered through the rights issue. From November 2014, Hellenic Bank is included among the significant European banks that are supervised directly by the European Central Bank.

HELLENIC BANK GROUP

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1. SUMMARY OF RESULTS (continued) 1.4 2014 Rights Issue On 12 December 2014, the Bank completed the first phase of its share capital increase, raising €201 million and on the 28th of January 2015 the Bank raised an additional amount of €3 million through the shares allotment that corresponded to the unexercised Rights not allotted through the Presubscription phase. The capital raised more than covers the capital need of €105 million and further enhances the capital base of the Bank in order to take advantage of the growth opportunities in a recovering Cypriot economy. 1.5 Strategic targets and outlook Based on the conditions prevailing in the financial environment, the strategic targets of the Group are the effective management of non-performing loans and the growth of its loan portfolio, while safeguarding its capital adequacy ratios and preserving its sound liquidity. The Group, recapitalised and strengthened, is now in a position to assume a more active role in the economic activities of the local market. Using its ample liquidity, Hellenic Bank intends to finance with new credit facilities sound businesses and households, within the recently implemented framework of the Central Bank lending regulations. Regarding the economy’s prospects for recovery, a number of challenges lie ahead in 2015. However, the prospects for recovery are visible with the successful continuation of the Economic Adjustment Programme, which will improve the country's competitiveness and allow its return to the international markets for independent financing.

HELLENIC BANK GROUP

Page 7 of 19

2. INCOME STATEMENT

Net interest income

2014 2013 Change

€'000 €'000 %

Interest income 288.029 316.558 (9%)

Interest expense (83.891) (129.402) (35%)

204.138 187.156 9%

The net interest income of the Group for the year ended 31 December 2014, amounts to €204,1 million compared to €187,2 million for the year ended 31 December 2013 increasing by 9%, due to the significant decrease of 35% in the interest expense, despite the decrease of 9% in interest income. Specifically, the decrease in interest income is primarily the result of the increase of Non-Performing Loans. The decrease in interest expense is mainly the result of the decrease in the interest rates on deposit products, as well as the reduced interest payable on Loan Capital. The Group’s net interest rate margin for the year 31 December 2014 is 3,17% (December 2013: 2,75%).

Non-interest income

2014 2013 Change

€'000 €'000 %

Net fee and commission income 58.724 56.562 4%

Net gain on disposal and revaluation of foreign

currencies and financial instruments 17.938 16.903 6%

Other income 18.203 18.667 (2%)

94.865 92.132 3%

Total non-interest income increased by 3%, reaching the amount of €94,9 million compared to €92,1 million in 2013. The increase in non-interest income is due to the increase in net fee and commission income by 4% from banking operations and to the increase in net gain on disposal and revaluation of foreign currencies and financial instruments by 6%, despite the decrease by 2% of other income.

HELLENIC BANK GROUP

Page 8 of 19

2. INCOME STATEMENT (continued)

Expenses

2014 2013 Change

€'000 €'000 %

Staff costs 75.319 89.419 (16%)

Depreciation and amortisation 5.260 5.383 (2%)

Administrative and other expenses 60.550 54.978 10%

Total expenses 141.129 149.780 (6%)

The total expenses of the Group for the year ended 31 December 2014, recorded a decrease of 6% compared to the corresponding period of 2013 mainly due to the decrease of staff costs by 16%. Staff costs Staff costs represent 53,4% of the Group’s total expenses (2013: 59,7%) and have decreased by 16% (€14,1 million) compared to the corresponding amount for the year ended 31 December 2013, as a result of the 2013 Voluntary Early Retirement Scheme (“Scheme”) and the salary reductions of the personnel, based on an agreement made before the Department of Labor Relations between the Cyprus Bankers Employers’ Association and the Cyprus Union of Bank Employees, concerning the three year period from 2014 to 2016, signed on 17 March 2014, effective as of 1st March 2014. Based on the Scheme, 165 employees retired during the months of June to September 2013. On 31 December 2014 the number of staff employed by the Group was 1.423 (December 2013: 1.396 employees) and by the Bank was 1.314 (December 2013: 1.255 employees). The number of staff employed by the Group on 31 December 2013 included 34 employees who were employed by the former subsidiary company of the Group Limited Liability Company Commercial Bank “Hellenic Bank”. Administrative and other expenses The administrative and other expenses of the Group for the year ended 31 December 2014 increased by 10% compared to the corresponding amount for the year ended 31 December 2013, which included an amount of €9,6 million in relation to the cost of the 2013 Voluntary Early Retirement Scheme. The increase in administrative and other expenses is mainly due to an impairment of assets charge of €9,3 million as well as advisory services cost of €9,8 million which includes an amount of €1,5 million for the “Asset Quality Review (AQR)” exercise.

HELLENIC BANK GROUP

Page 9 of 19

2. INCOME STATEMENT (continued) The cost to income ratio was at 47,2% compared to 53,6% for the corresponding period of 2013, excluding the cost of the 2013 Voluntary Early Retirement Scheme of €9,6 million. The improved ratio is mainly due to the increase in net interest income.

Impairment losses and provisions to cover credit risk

2014 2013 Change

€'000 €'000 %

Impairment losses on loans and advances 281.934 310.810 (9%)

Provisions to cover credit risk relating to contractual

commitments and guarantees 22.463 - 100%

304.397 310.810 (2%)

The Group focuses on improving the quality of the loan portfolio. Impairment losses and provisions to cover credit risk in the Income Statement for the year ended 31 December 2014 amounted to €304,4 million and decreased by €6,4 million from the corresponding amount of 2013. The ratio of the annual cost of impairment losses to loans (cost of risk) is 6,4% (December 2013: 7,1%). Accumulated impairment losses on loans and advances, which also include suspended interest that is not recognized in the Income Statement of €244,0 million (December 2013:€164,8 million), amounted to €1.184,0 million as at 31 December 2014 (December 2013: €830,2 million) and represent 26,9% of total gross loans and advances (December 2013: 18,9%). A charge of €22,5 million in the Income Statement refers to provisions to cover credit risk relating to contractual commitments and guarantees.

Note: According to the provisions of the International Financial Reporting Standard 5, “Non-current Assets Held for Sale and Discontinued Operations”, the results for the year ended 31 December 2014 refer to the comparative figures of the annual results of the Group for the year ended 31 December 2014 which have been restated to reflect the reclassification of the operations of the BNG from continuing to discontinued operations (on 26 of March 2013 (transfer date), as well as the disposal of the Group’s subsidiary company in Russia Limited Liability Company Commercial Bank “Hellenic Bank” on the 5

th

of June 2014 and the disposal of the Group’s subsidiary Borenham Holding Limited on the 6th of February 2015.

HELLENIC BANK GROUP

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3. STATEMENT OF FINANCIAL POSITION

Statement of Financial Position highlights


€'mln €'mln %

Total assets 7.552 6.384 18%

Loans and advances to customers 3.221 3.564 (10%)

Deposits 6.346 5.513 15%

Group’s total assets amounted, as at 31 December 2014 to €7,5 billion, increasing by 18% compared to December 2013, mainly due to the increase of the Group’s customer deposits by 15% and the capital raised through the 2014 Rights Issue. 3.1 Loans and advances to customers (Net Loans) Loans and advances to customers decreased by 10% compared to December 2013, reaching the amount of €3,2 billion, mainly as a result of the increase in the accumulated provisions for impairment. At 31 December 2014 and 31 December 2013, the composition of the Loans and advances to customers was as follows:

HELLENIC BANK GROUP

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3. STATEMENT OF FINANCIAL POSITION (continued) 3.1.1 Non-performing Loans


€mln €mln %

Non- Performimg Loans (NPLs) as per CBC definition 2.494 2.007 24%

% %

NPLs [%] of gross loans (as per CBC definition) 56,6 45,7

Coverage ratio 47,5 41,4

On 31 December 2014, the gross non-performing loans and advances in accordance with the Directive of the Central Bank of Cyprus to Credit Institutions on the Definitions of Non-performing and Restructured Credit facilities, which applies as from 1st July 2013, amounted to €2.494 million (December 2013: €2.007 million). According to the Directive, customer loans and advances are considered non-performing when:

- they present past due balances or are in excess for a period of more than ninety days,

- they have been restructured and at the time of restructuring were classified as non-performing or presented arrears for a period of more than 60 days (with the exception of loans and advances which on 15th March 2013 were performing, were restructured between 18th March 2013 and 30th September 2013 and the restructuring did not provide for a lump sum payment of 20% or higher of the loan or for a grace period over 12 months for interest and over 24 months for capital),

- they have been restructured twice or more times in an 18 month period (with the exception of loans and advances fully secured with cash).

The ratio of non-performing loans to gross loans and advances including suspended interest not recognized in the Income Statement was 56,6% (December 2013: 45,7%). The ratio of non-performing loans to gross loans and advances excluding suspended interest was 54,1% (December 2013: 43,6%). At the same time, the ratio of total impairment losses on loans and advances including suspended interest to total non-performing loans (including suspended interest) was 47,5% (December 2013: 41,4%). The ratio of total impairment losses on loans and advances excluding suspended interest to total non-performing loans (excluding suspended interest) was 41,8% (December 2013: 36,1%).

HELLENIC BANK GROUP

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3. STATEMENT OF FINANCIAL POSITION (continued) 3.2 Deposits Customer deposits increased by 15% compared to December 2013, reaching the amount of €6,3 billion (December 2013: €5,5 billion) and consist of €4,6 billion deposits in Euro (December 2013: €4,2 billion) and €1,7 billion deposits in foreign currencies (December 2013: €1,3 billion).

At 31 December 2014 and 31 December 2013, the composition of the customer deposits portfolio in Cyprus by deposit category was as follows:

46%

7%

3%

44%40%

6%

4%

50%

0%

10%

20%

30%

40%

50%

60%

Demand Savings Notice Fixed

Composition of customer deposits portfolio

31-Dec-14

31-Dec-13

HELLENIC BANK GROUP

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3. STATEMENT OF FINANCIAL POSITION (continued) At 31 December 2014 and 31 December 2013, the composition of the customer deposits portfolio in Cyprus based on the customer’s country of origin was as follows:

50%

13%

26%

6% 5%

53%

14%

23%

4% 6%

0%

10%

20%

30%

40%

50%

60%

Cyprus Other countriesof European

Union

Russia Other Europeancountries

Other countries

Deposits by depositors' country of origin

31-Dec-14

31-Dec-13

The composition of the customer deposits portfolio in Cyprus by currency at 31 December 2014 and 31 December 2013 was as follows:

23%

2%

74%

1% 0%

20%

2%

76%

1% 1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

US Dollars GBP Euro Ruble Other Currencies

Deposits by currency31-Dec-14

31-Dec-13

HELLENIC BANK GROUP

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3. STATEMENT OF FINANCIAL POSITION (continued) In December 2014 the ratio of gross loans to deposits was 69,4% while the ratio of net loans to deposits was 50,8%. The corresponding ratios at 31 December 2013 were 79,7% and 64,6% respectively. 3.3 Cash and balances with Central Banks and placements with banks The total of the Group‘s cash and placements with banks and Central Banks which include a placement of € 2,1 billion with the ECB, amounted to €3,3 billion at 31 December 2014 (December 2013: €1,9 billion) further strengthening the comfortable liquidity of the Group. 3.4 Investments The Group’s total investments amount to €0,8 billion (December 2013: €0,7 billion), which represents 10,5% of the total assets (December 2013: 10,2%) comprising mainly of international bank debt securities and Cyprus Government debt securities. At 31 December 2014, the carrying amount of investments in bonds is analysed as follows based on their issuer:

327

163

309 11 6

1Cyprus - 327

USA - 163

GB - 30

Bulgaria - 9

Belgium - 11

Israel - 6

Croatia - 1

Government

547

Banks

215

Other

18

HELLENIC BANK GROUP

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3. STATEMENT OF FINANCIAL POSITION (continued) The Cyprus Government bonds held by the Group at 31 December 2014 based on their maturity are as follows:

At 31 December 2014, the analysis of bonds by external credit rating is as follows:

0%

45%

4%

0%

3%

1%

0%

0%

46%

0%

1%

0%

0%

0% 10% 20% 30% 40% 50%

P1 (CPs)

Aaa

Aa1

Aa2

Aa3

A1

A2

A3

Baa1 to B3

Ca & C

Caa1 & Caa2

Caa3

unrated

Quality of Bonds Portfolio

HELLENIC BANK GROUP

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4. CAPITAL ADEQUACY The Capital Adequacy Ratio of the Group as at 31 December 2014 is 18,4% (Bank: 18,4%), the Tier 1 Ratio is 16,3% (Bank: 16,4%) and the Common Equity Tier 1 Ratio is 13,5% (Bank: 13,5%) according to the new legislation and directive of the EU concerning the minimum requirements for credit institutions (Capital Requirement Regulation (“CRR”)/Capital Requirement Directive (“CRD IV”)) dated 26 June 2013, which came into effect at 1 January 2014, and according to the relevant circulars of the Central Bank of Cyprus (the “Central Bank”), under Pillar 1. As at 31 December 2014, the Group’s risk weighed assets amounted to €3.999 million. 5. RESULTS OF THE EUROPEAN CENTRAL BANK’S COMPREHENSIVE ASSESSMENT EXERCISE (STRESS TESTS) The European Central Bank (“ECB”) and the European Banking Authority (“EBA”) on 26th of October 2014 published the results of the Asset Quality Review (“AQR”) and the Stress Tests (together the “Comprehensive Assessment”) for 130 banks across the Eurozone, including Hellenic Bank (“the Bank” or “the Group”). The results of the “Baseline Scenario” of the stress test confirmed the business model of Hellenic Bank while the "Adverse Scenario" quantified the capital that Hellenic Bank should have raised in order to be sufficiently capitalised in the event of unexpected future losses. For Hellenic Bank, the €277 million result from the "Adverse Scenario" was reduced by mitigating factors to €105 million which was covered through the Capital Enhancement of the Bank with the Exercise of Rights Issue. By the end of January 2015 the Bank successfully completed the share capital increase that commenced in November 2014, raising €204 million. As from November 2014, Hellenic Bank is included among the significant European banks that are supervised directly by the European Central Bank. 6. 2014 RIGHTS ISSUE According to the provisions of the prospectus issued by the Bank on the 14th of November 2014, for the share capital increase through subscription rights issue, the rights were issued and allotted to all existing shareholders at the ratio of one (1) Subscription Right to every one (1) Ordinary Share held on the Record Date. Every two (2) Subscription Rights exercised were converted to three (3) new Ordinary Shares of the Bank of nominal value of €0,01 at an Exercise Price of €0,0375 per New Share. On 12 December 2014, the Bank completed the first phase of its share capital increase, by issuing 5.364.374.709 shares raising an amount of €201 million. Pursuant to the provisions of the Prospectus issued on 14th of November 2014, the Bank had the right, at any time within 30 working days from the Last Date of Exercise of Subscription Rights and the exercise of the Presubscription Right to issue all or part of the

HELLENIC BANK GROUP

Page 17 of 19

6. 2014 RIGHTS ISSUE (continued) New Shares which correspond to the unexercised Subscription Rights that had not been covered during the exercise of the Presubscription Right, and the Board of Directors of the Bank to allot, at its discretion, such New Shares, in Cyprus and abroad, through a procedure that the Board of Directors will decide, at a price at least equal to the Exercise Price. Based on the above provision, the Bank raised an additional amount of €3 million that corresponds to the unexercised Rights not allotted through the Presubscription phase. Under both phases the Bank managed to raise €204 million not only covering the capital need of €105 million but also further enhancing its capital base in order to take advantage of growth opportunities in a recovering Cypriot economy. As a result of the above, the issued and fully paid share capital of the Bank became 9.388.395.900 Ordinary Shares of nominal value €0,01 each that are listed on the Cyprus Stock Exchange. 7. RECENT DEVELOPMENTS Extraordinary General Meeting An Extraordinary General Meeting of the Bank has been called on the 27th of February 2015 amongst others, to submit a proposal for the consolidation (reverse split) of its share capital with a ratio of 50:1, a proposal for the issue of shares to the Chief Executive Officer of the Bank as part of his variable remuneration package and a proposal authorizing the Board of Directors to issue and allot to such person or persons as the board of directors may, in its sole and unfettered discretion, determine, up to 18.776.000 ordinary shares (post the effect of the reverse split) in order to take advantage of any capital raising opportunities that may arise within a period of 12 months. The issue price of such shares shall be not less than €1,875.

HELLENIC BANK GROUP

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A. APPENDICES

GROUP INCOME STATEMENT 2014 2013 y-on-y Q1-2014 Q2-2014 Q3-2014 Q4-2014 q-on-q

€mln €mln % €mln €mln €mln €mln %

Interest income 288,0 316,6 (9%) 74,6 72,2 72,0 69,2 (4%)

Interest expense (83,9) (129,4) (35%) (20,6) (20,3) (21,2) (21,9) 3%

Net interest income 204,1 187,2 9% 54,0 51,9 50,8 47,4 (7%)

Fee and commission income 63,7 61,7 3% 14,7 15,5 15,8 17,6 12%

Fee and commission expense (4,9) (5,1) (3%) (1,4) (1,1) (1,1) (1,3) 19%

Net fee and commission income 58,7 56,6 4% 13,3 14,4 14,7 16,3 11%

Net gains on disposal and revaluation of

foreign currencies and financial instruments 17,9 16,9 6% 4,4 4,0 4,3 5,3 23%

Other income 18,2 18,7 (2%) 5,8 4,3 3,8 4,4 15%

Total net income 299,0 279,3 7% 77,5 74,6 73,6 73,3 (0%)

Staff costs (75,3) (89,4) (16%) (19,2) (18,4) (19,0) (18,7) (1%)

Depreciation and amortisation (5,3) (5,4) (2%) (1,4) (1,4) (1,3) (1,2) (8%)

Administrative and other expenses (60,6) (55,0) 10% (11,6) (10,9) (21,2) (16,9) (21%)

Total expenses (141,1) (149,8) (6%) (32,2) (30,6) (41,5) (36,8) (11%)

Profit from ordinary operations before

provisions 157,9 129,5 22% 45,4 43,9 32,1 36,5 14%

Impairment losses and provisions to cover

credit risk (304,4) (310,8) (2%) (70,9) (123,2) (65,0) (45,3) (30%)

Loss before taxation (146,5) (181,3) (19%) (25,5) (79,2) (33,0) (8,8) (73%)

Taxation 28,1 22,9 23% (0,2) 9,3 3,8 15,2 302%

Loss for the year from continuing operations (118,4) (158,4) (25%) (25,7) (69,9) (29,2) 6,4 (122%)

Profit/(Loss) from discontinued operations

after tax 0,8 (31,5) (103%) (0,3) 1,0 0,0 0,1 5011%

(Loss)/profit for the year/period (117,6) (189,9) (38%) (26,0) (69,0) (29,2) 6,5 (122%)

HELLENIC BANK GROUP

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A. APPENDICES (continued)

GROUP STATEMENT OF FINANCIAL POSITION 2014 2013 change

€mln €mln %

Cash and balances with Central Banks 2.176 1.003 117%

Placements with other banks 1.122 922 22%

Loans and advances to customers 3.221 3.564 (10%)

Debt securities 780 645 21%

Equity securities 9 8 12%

Property, plant and equipment 98 124 (21%)

Intangible assets 20 19 4%

Deferred tax asset 52 25 112%

Other assets 74 74 (0%)

Total assets 7.552 6.384 18%

Deposits by banks 71 47 49%

Amounts due to Central Banks 236 - 100%

Customer deposits and other customer accounts 6.346 5.513 15%

Tax payable 5 5 (0%)

Deferred tax liability 1 4 (69%)

Other liabilities 118 111 7%

Loan capital 181 305 (40%)

Share capital 93 27 246%

Reserves 497 368 35%

Non-controlling interest 4 4 1%

Total liabilities and equity 7.552 6.384 18%

1

With strong capital and comfortable liquidity, Hellenic Bank

aims for growth

Operating profit for 2014, before provisions, totalled € 158 million. An

increase of 22% from 2013

Profitability in fourth quarter with NPLs stable at 56.6% - Losses for the

year of € 119 million.

47.5% provisions coverage of non-performing loans.

With strong capital and comfortable liquidity, Hellenic Bank is positioned to develop and

achieve sustained profitability.

According to the preliminary results announced by the Group today, as at end of 2014 Core Tier I ratio stood at 13.5% and deposits increased by 15%, facts that demonstrate the great

trust enjoyed by the Bank from shareholders and depositors alike.

The operating profits of the Bank before provisions amounted to € 158 million noting, an increase of 22% on 2013. Of note was the performance in the fourth quarter of 2014 which

ended with a net profit.

NPLs remained stable and stood at 56.6%, while provisions covering non-performing loans reached 47.5%. The year ended with losses of € 119 million.

The primary objectives of the Bank for 2015 are the effective management of NPLs and the

expansion of - its loan portfolio. With comfortable liquidity on hand, Hellenic Bank intends

to play a leading role in the recovery of the real economy by funding -viable businesses and households with new credit facilities.

February 27, 2015

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Investor Presentation 2014 Full Year Preliminary Results

27 February 2015

2

© Hellenic Bank Public Co Ltd, 2015 - All rights reserved (2014 FY English)

Disclaimer

Certain 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 such forward - 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 related risks 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/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 securities or to engage in any other transaction. This presentation should not be taken or transmitted directly or indirectly to any country or jurisdiction where to do so would be prohibited. Any failure to comply with this restriction may constitute a violation of applicable law. The distribution of this presentation 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.

3


Contents

Recent developments - Economic environment 1

Quarterly performance - highlights 2

2014 Full year preliminary results 3

Additional information 4

4

12

19

27

Page

4


Recent developments

Hellenic Bank Group has successfully completed the share capital increase launched in November 2014, raising €204 million and covering 92% of the target set in an adverse and challenging economic environment. Specifically, - €201 million raised in phase 1 of the capital increase (through the Subscription and the Presubscription phase), and - €3 million raised through the shares allotment that corresponded to unexercised Rights not allotted through the Presubscription phase.

Successful completion of the 2014 Rights Issue

Extraordinary General Meeting

(27 February 2015)

Rationale

Funding of Cypriot companies in collaboration with the European Investment Bank - €70 million project The Bank in cooperation with European Investment Bank (“EIB”) will finance eligible investment projects located in Cyprus in the sectors of industry, tourism and other services to be undertaken by Cypriot SMEs and Mid-Caps with favorable interest rates. Part of the total amount of €70 million will be used for supporting the employers which promote youth employment, in the context of the EIB’s "Jobs for Youth" initiative.

Growth opportunities

Resolutions for: - Share consolidation (reverse split) at the ratio of 50 to 1. - Part of the variable remuneration package of the Company’s Chief Executive Officer to be in shares - Authorising the Board of Directors to issue and allot to such person or persons as the Board of Directors may, in its

sole and unfettered discretion, determine, up to 18.776.000 ordinary shares (post the effect of the reverse split) in order to take advantage of any capital raising opportunities that may arise within a period of 12 months.

The issue price of such shares will be not less than €1,875.

5


€204 mln capital raised through the successful completion of the 2014 Rights Issue result in Q4 2014 CET1 ratio of 13,5% Capital ratios 31/12/2014

• A robust capital position, allows Hellenic Bank to withstand financial stresses and take advantage of growth opportunities

• RWA as of Q4 2014: EUR3.999 million

• CCS1 and CCS2 constitute additional loss absorbing buffer

• CCS1 and CCS2 are convertible into ordinary shares when the Bank and/or the Group has a Common Equity Tier 1 ratio of less than 8,0%

• CCS2 is converted only when all CCS1 are converted

• All shares resulting from the mandatory and irrecoverable conversion are listed on CSE

• CCS1 and CCS2 do not accrue cash interest

1) Central Bank of Cyprus requirement 2) Source: Basel regulation, CRR / CRD IV, Hellenic Bank, Central Bank of Cyprus

8% regulatory requirement1)

CCS1 and CCS2 buffer (EUR129,7 million)

Supplementary own funds

13,5%

16,3% 18,4%

6


Key investment highlights

New management structure and new key management personnel 2

Recovering Cypriot economy provides opportunity to grow the business 3

Strong funding and liquidity position and reputation for stability provide competitive advantage to grow customer numbers and loan book significantly above market 4

Significant potential to improve banking income through loan growth, margin expansion and fee income recovery 5

Efficient and scalable operating platform provides additional leverage to increase profitability 6

Significant potential for improved profitability in the medium-term

New shareholder and board structure focused on value creation, new CEO appointed 1

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New shareholder and board structure focused on value creation New CEO appointed

Shareholder structure1) Change of Board and strategic objective

1) Post issuance of shares allotted in Jan. 2015 and before the reverse split Source: Hellenic Bank

Investment by new major

Board of Directors reconstituted

Mandate for management to pursue ...

...growth opportunities… ...decisive arrears management…

Number of issued shares1): 9.388.395.900 Pro-forma Number of issued shares following the reverse split1): 187.767.918

New CEO appointed

8


Latest macroeconomic data points to a faster than expected economic recovery in Cyprus

Unemployment [%]

Cyprus Government bond - 2020 [yields %]

Real GDP growth [%]

Inflation [%]

9


Cyprus is an attractive tourist destination and business centre while a recovery of the real estate sector provides significant upside potential

Real estate prices [EUR / sqm] Tourism revenues and arrivals [%]

Number of new business registrations [‘000]

-36%

-40%

-30%

Number of Sales of Property Contracts

Source: Cypriot Ministry of Energy, Commerce, Industry and Tourism

Source: RICS

-48%

-37% 600

1,306

1,204

1,737

3,059

952

1,865

1,994

2,699

5,900

Warehouse

Houses

Apartments

Offices

Shops

Q4 2009 Q4 2014

9.4 9.4 8.5 9.1 11.6 14.5

20.3

29.0 24.5

16.1 19.3 19.5 18.0

10.8 11.1

0.05.0

10.015.020.025.030.035.0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

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The Cypriot Republic is actively addressing its regulatory shortfalls with appropriate reforms

New foreclosure law 9 September 2014

Reform of Credit Registry System with standardised and more frequent data collection implemented, active since

beginning of October

Expected to accelerate foreclosures (suspended until 19/03/2015)

Defines minimum practices to be followed by banks during the process of assessing /

granting / reviewing credit facilities

Increased system transparency leading to more informed lending and

systemic control

New Central Bank of Cyprus Directive on loan origination practices in force since

4 December 2013

Source: Hellenic Bank

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Quarterly performance - highlights

Profitable 4th quarter for the Group

Comfortable liquidity

Strong capital position

• Good business performance in challenging economic conditions.

• Marginally profitable quarter.

• Emphasis on loan quality

• Comfortable liquidity with no dependence on the interbank market and official sector financing.

• Solid Balance Sheet.

• Despite an environment that remains uncertain and volatile, the Group is entering 2015 with confidence.

13


Strong funding position and reputation for stability provide Hellenic Bank with a competitive advantage

3

Recent awards Funding surplus [EURm]

Strong reputation

Source: Global Finance Magazine

• Safest bank in Cyprus 20141)

• Best Consumer Internet Bank in Cyprus 2014

• Best Corporate/Institutional Internet Bank in Cyprus 2014

No exposure to ECB1)/ ELA funding No dependence on inter bank market for funding No government bail-out / no EC restructuring plan

No depositor bail-in

1) Based on the annual evaluation of the long-term credit ratings of S&P, Moody’s and Fitch by Global Finance Magazine

Funding surplus

Source: Hellenic Bank (31/12/2014)

Number of customers [#]

+38.807 +12%

1) No ECB other than EURO236million (TLTROs)

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Significant potential to improve banking income – new lending and attractive margins replace low-yielding liquid assets

Overview of liquid assets [EURm] Yield on loan book1) [%]

0,5%

0,0%

-0,2%

0,0%

4

Cash and balances with Central Banks

Placements with other banks

Securities

Weighted average income rate2) [%]

2) Based on Central Bank of Cyprus definition of liquid asset categories 3) Thereof EUR780m debt securities part of which are pledged for TLTROs purposes (EURO236million liquidity obtained) and EUR9m equity securities Source: Hellenic Bank


Group NIM (cumulative) [%]

1) Performing accounts weighted average effective interest rates, EUR accounts only Source: Hellenic Bank

3)

4.087

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Banking income growth further supported by potential to decrease deposit rates and growing fee income

Deposit split by size3) [EURbn]

Net fee income growth [EURm]

Marginal cost of deposits1) [%]

Volume and average cost by product3) [EURm]

0,1% 0,4% 2,6%

4

1,1%

3) Differences from published accounts arise from inclusion of subsidiaries and credit institutions with customer subtypes and exclusion of accrued interest, customer general ledger lines and any reclassification adjustments

4) Portfolio average (new and existing business) of EUR deposits (excludes foreign currencies) Source: Hellenic Bank (Dec-14)

1) Fixed and notice accounts; EUR customer deposits (excludes foreign currencies) irrespective of country of origin of depositor and type of customer

2) New business average term and notice accounts deposit rates to households and non-financial corporations for Aug-14 as reported by ECB

Source: Hellenic Bank, ECB


Note: EUR and foreign currency accounts Numbers may not add up due to rounding; Source: Hellenic Bank

Total Q4-14: EUR16,3m

Country averages2)

Greece 2,1% Italy 1,4% Portugal 1,3% Eurozone 1,1% Spain 1,0% Ireland 0,6%

Average deposit rates4)

16


Growth of deposit market share and efficient and scalable operating platform provides additional leverage to increase profitability

5

Source: Hellenic Bank Source: Hellenic Bank (Dec-14)

Branch network Nicosia

• 20 branches

• 1 Business Center • 1 Corporate Center • 2 International Business

Centers

Famagusta

• 6 branches

Cyprus

• 56 branches

• 4 Business Centers • 2 Corporate Center • 1 Shipping Business

Center • 4 International Business

Centers

• In addition, Representative Offices in Johannesburg (South Africa), Kiev (Ukraine), Moscow and St. Petersburg (Russia)

Limassol

• 13 branches • 2 Business Centers • 1 Corporate Center • 1 Shipping Business

Center • 1 International Business

Center

Paphos

• 9 branches

Larnaca

• 8 branches • 1 Business Center • 1 International Business

Center

Deposit and loan market shares [%]

Deposit market share development [%]

Source: Central Bank of Cyprus

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Asset quality trends stabilising – increasing coverage ratio

NPL formation and coverage [EURm]

45,7% 48,9% 53,0% 56,1% 41,4% 42,5% 45,3% 46,3%

x% NPL ratio

x% Coverage ratio

6


56,6% 47,5%

EURm Q-on-Q NPL formation

NPLs as per CBC definition Accumulated provisions including suspended income

+21 +141 +178 +147

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Improving underlying business performance impacted by higher provisioning, NIM up by 42bps Y-on-Y and CIR reduced to 47,2%

Total net income [EURm] Total expenses [EURm]

Pre-provision income [EURm] Provisions for impairments [EURm]

Key P&L highlights

2,75% NIM1) 3,35% 3,17% 3.60% 3,44% 53,6% CIR 56,5% 47,2% 41,5% 41,1%

7,1% CoR1) 5,9% 6,4% 6,4% 11,2% 29,6% PPI/ Equity1) 34,3% 32,1%2) 42,8% 41,9%

1) Annualised over average equity 2) Equity increased by EUR201m following the completion of the first phase of the 2014 Rights Issue

41% Coverage 46% 48% 43% 45%


+7%

3,17% 50,2%

30,6%2) 2,1%

48%

-6%

-11%

-65%

-9%

+14%

+22%

1) Annualised

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Balance sheet growth between Q3 and Q4 2014 driven by expansion of deposit base and the Rights Issue

• Hellenic Bank has increased its balance sheet by 10% since Q3 2014

• Quarterly growth in deposits of 4%, leading to further strengthening of liquidity

• Group's investments amount to EUR789m that comprise mainly of Cypriot Government bonds of EUR327m, EUR215m international bank debt and EUR220m of other government bonds

• EUR2.2bn cash and balances with Central Banks and EUR1.1bn cash and placements with other banks

Balance sheet

Balance sheet structure as at 31-Dec-14 [EURm]


Other1) Equity

Loan capital

Customer deposits

7.552

Other

Debt and equity securities

Cash and placements with other banks

Net customer loans

7.552

Cash and balances with Central Banks

Healthy net loans

to deposits ratio 51%

1) TLTROs EURO236million

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Hellenic Bank continues to gain deposits market share through prudent pricing and a reputation for stability

Customer deposits [EURm] % Quarter on Quarter

Deposit market share1)

15%

Net L/D ratio

Gross loan market share1)

0,0% 0,2% 6,0% 4,7%

13,4% 12,6% 11,8% 12,0%

53% 57% 65% 63%

7,2% 7,1% 6,9% 6,9%

• Decrease in net loan to deposit ratio driven by both a decrease in net loans (mainly due to provisions and repayments) and a simultaneous increase in deposits

• Deposit volumes have been increasing, driven by Hellenic Bank's reputation for safety and stability in Cyprus

% Quarter on Quarter

-10% -5,2% -2,2% -3,9% -2,4%

Y-on-Y

Net loans [EURm]

1) Based on Central Bank of Cyprus total market data

Net loans and deposits

Y-on-Y


7,1%

-1,4%

3,6%

13,8%

51%

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The Bank's positive image and market trust is reflected by 15% increase in deposits Y-on-Y

• The majority of deposits are sourced domestically, while Russian deposits account for 26%

• The majority of deposits is Euro-denominated with a substantial part in US dollars

• Despite recent economic developments, Hellenic Bank still has increasing deposits (+15% Y-on-Y)

Deposits

Deposits by country of customer Deposits by currency

Deposits by category

EUR6.346m EUR6.346m

EUR6.346m


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Hellenic Bank's liquidity position has continued to grow Q-on-Q and Y-on-Y

Loans & other assets Liquid assets

• Hellenic Bank has further strengthened its liquidity position in Q4

• No ECB1) / ELA funding

Liquidity development

• Depositors’ confidence in the bank has further boosted the already strong deposit base (+15% Y-on-Y)

• Recent ‘Safest bank in Cyprus 2014’ award2) further improves depositors’ perception of the Bank

1) No ECB other than EURO236million (TLTROs) 2) Based on the annual evaluation of the long-term credit ratings of S&P, Moody’s and Fitch by Global Finance Magazine

Liquidity and balance sheet development [EURm]


24


Most liquid assets placed at the European Central Bank

40% 41% 46% 54%

• Cash at the ECB constitutes the majority of cash and balances with Central Banks

• USD placements in P1 rated banks

• As at 30 September 2014, approximately 42% of the debt securities held by the Group consisted of Cyprus Government Bonds (amounting in total to EUR327m)

• Thereof, only c. 4% mature within 1 year, whereas c. 52% have a maturity of between 1 and 5 years and 44% between 5 and 10 years

Cash and balances with Central Banks Placements with other banks Securities

Breakdown of liquid assets for the period [EURm]

Breakdown of liquid assets

Liquid assets over total assets x%


49%

4.087

25


Gross loans volume stable Y-on-Y, NPLs continue to increase albeit at a slower rate Q-on-Q

+24%

Quarterly growth NPL

4% 7% 8% 1%

Coverage ratio NPL1)

Quarterly provisions for impairment

311 71 123 23

Gross loans NPL ratio 1)

• Gross loans balances have remained stable over the period

• NPLs continue to increase albeit at a slower rate in Q4 2014

• The coverage ratio has steadily increased following substantial provisioning in Q2 2014

1) Based on CBC new definition;

Gross loans – Group [EURm]

Gross loans and NPLs


6%

65

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Overview of consolidated balance sheet

Consolidated balance sheet

• The total assets of the Group amounted to EUR7.5bn increasing by 18% compared to December 2013, driven by the increasing deposits and the capital raised through the 2014 Rights Issue

Note: Numbers may not add up due to rounding; Source: Hellenic Bank

28


Overview of consolidated income statement

• Total net income increased due to higher net interest income, reflecting lower funding cost

• The decrease in expenses is mainly attributed to a drop in staff costs

Consolidated income statement

Note: Numbers may not add up due to rounding Source: Hellenic Bank

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Breakdown of net income

Overview of total net income

Net interest income


Total net interest income (cum.) +9%

Net interest margin


Total net fees and commissions (cum.) +4%

Relative to total net income

Net fee and commiss-ion income


Total other income (cum.) +2%

Relative share to total net income

Other income

∑ Total net income +7%

2,75% 3,60% 3,44% 3,35%

+11%

20% 17% 18% 19%

+19%

13% 13% 12% 12%

279.288 77.541 152.097 225.698

• Sustained lower funding cost (lower deposit rates) resulted in a 9% higher net interest income Y-on-Y

• Net fees and commissions rose 4% Y-on-Y

• Feb. 2015 - Deposits rates further reduced. - Hellenic Bank reduced credit cards and loans base rates by 1% in order to pass some benefit to its customers (both of new and old loans).

Y-on-Y FY-2013 3M-2014 6M-2014 9M-2014

Breakdown of net income for the period [EUR '000]


FY-2014

3,17%

20%

12%

299.003

-7%

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Overview of cost base

Staff costs Depreciation and amortisation, administrative and other expenses

6% drop of total expenses driven by 16% decrease in staff costs following the successful implementation of the Voluntary Early Retirement Scheme (165 employees in September 2013) and the salary reductions for staff after collective agreement has been reached with the Union of Cypriot bank employees for 2014-2016.

Cost / income ratio 46,2% 41,3% 53,6% 41,5%

-6%

Y-on-Y

Total expenses [EUR ‘000]

Expenses

-16%

9%


47,2%

Q4-2014 • EUR0,4m impairment of assets • EUR6,4 advisory services

Q3-2014

• EUR6,8m impairments of land and buildings of own use

• EUR3,4m remuneration and other expenses of the various external consultants

Q1-2014 • EUR2,1m impairment of assets held

for sale

One-off administrative and other expenses

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Detailed breakdown of investments in debt securities


Total debt securities by external credit rating

Cyprus Government bonds by maturity

Total debt securities by issuer

Government bonds by country

Total 31-Dec-14: EUR780m

Total 31-Dec-14: EUR547m Total 31-Dec-14: EUR327m

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• Data Exchange Mechanism’ formed by Artemis (Credit Register for commercial banks) and Aiantas (Credit Register for Cooperatives) for the purpose of credit appraisal of customers.

• Data Collection by Artemis / Aiantas - active since October 2014. • Demographic information about bank

customers/guarantors/related persons. • Information on all types of credit facilities. • Status of each account provided: Performing, Non-

Performing, Terminated. • Legal Actions / Court Decisions.

• In force since September 9, 2014, suspended until 19/03/2015. • Banks can proceed with the sale of the mortgaged property

without the lengthy procedures of the Land Registry. • Expected to accelerate foreclosures from 10-15 years to around

2,5-3 years. • Establishes procedures for valuing and auctioning properties. • Encourage banks to try to restructure loans before seeking.

repossession. • Pending the issuance by the Council of Ministers issues the

relevant Regulations that will govern specific procedural issues.

CBC directive on loan originations

Overview of regulatory reforms in Cyprus

• Defines minimum practices to be followed by the banks during the process of assessing/granting/reviewing credit facilities.

• Collateral can only serve as a secondary source of repayment and shall be assessed as such.

• Specifies minimum documentation that banks must obtain in the process of assessing/granting/reviewing credit facilities.

Artemis / Aiantas Credit Registry reform Foreclosures Law


Financial Ombudsman

As of Tuesday, February 17 consumers are able to submit complaints, to the Financial Ombudsman against financial institutions. This will be an extra-judicial mediation that aim to give households and small businesses a less time consuming and inexpensive alternative while at the same time can be beneficial for the financial institutions since it will contribute to the better operation of the market and will help in restoring trust. May be appointed for providing assistance for restructurings.

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Organisational structure and key persons

Board of Directors

Irena A. Georgiadou

Chairwoman

Bert Pijls

New Chief Executive Officer

George Karageorgis

Head of Retail

Kiki Papadopoulou1)

Head of Business Division

Marinos Athanassiades

Head of Group Global Markets &

International Banking

Clive Gresham1)

Group Arrears Management and Debt

Recovery

Human Resources Legal Services Group Operations Credit Administration Risk Management Compliance Audit

Business functions Other functions

• International management career with extensive banking experience across numerous countries

• More than 20 years in banking

• Strong expertise in turnaround management

• Track record for delivery

• Previous senior management/executive positions at British Gas/Centrica, Citigroup and American Express

Georgios Fereos1)

Group Corporate Development

Antonis Rouvas

Chief Financial Officer

1) Pending regulatory approval Source: Hellenic Bank

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Other information – contact details


Credit Ratings Investor Relations Contacts

Antonis Rouvas Group Chief Financial Officer Tel: +357 22 500760 [email protected] Elena Neophytou Investor Relations Tel: +357 22 500794 [email protected] Hellenic Bank Public Company Ltd Corner Limassol Ave. & Athalassa Ave.200, 2025 Strovolos, Nicosia, Cyprus www.hellenicbank.com

Moody’s – 12 June 2014 Bank Deposits: Caa3 Commercial Paper: Not Prime Bank Financial Strength: E Stable outlook Fitch – 4 July 2014 Long term rating: CCC Short term rating: C Viability rating: ccc Stable outlook

mailto:[email protected]

mailto:[email protected]

http://www.hellenicbank.com/

Documents

Indicative Results/Preliminary Results for the year ended 31st … · 2017. 12. 18. · Announcement dated 27th February 2015 is attached. Attachments: 1. Letter 2. ... raising €201