01 Nov 2020
International credit rating agency Capital Intelligence has affirmed the long term and short-term ratings of Hellenic Bank at ‘BB-’ and ‘B’, respectively.
CI points out that the main challenges for Hellenic are the still high NPE ratio and only moderate NPE coverage ratio, the consequent continued impairment of the capital base and the high level of real estate exposure reflecting its large book of residential mortgage loans.
“Improving the still comparatively weak profitability ratios is an additional challenge given high operating costs and the low interest rate environment.”
It is also noted that HB’s business model has improved significantly following the absorption of CCB’s extensive customer base. This has also strengthened HB’s position as the leading retail and SME bank in Cyprus.
It is added that the assets acquired contributed to more than doubling the size of the bank as well as increasing its market share in both loans and deposits.
The balance sheet composition remains conservative with a moderate level of net loans, a large portfolio of debt securities (mainly Cyprus government bonds), and a good level of liquid assets.
“Due to the large residential mortgage book and loans to the construction and real estate sectors, the Bank’s exposure to the real estate sector is high,” said CI.
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