articles | 26 February 2016

Bank of Cyprus announces losses for 2015

The Bank of Cyprus has reported €438 million losses for 2015, according to the Group's preliminary financial results for the year.

At the same time the Group`s CEO John Patrick Hourican pointed out that during the fourth quarter, the Group’s operating performance was strong. As he said in a written statement, the group continues to make good progress towards its strategic objectives.

"During the fourth quarter, the Group’s operating performance was strong. We made very good progress in reducing the stock of loans with arrears greater than 90 days by €668 million or 6% during the quarter and we expect to continue this progress in 2016”, he said.

He also said that the funding position of the bank continues to improve, with customer deposits in Cyprus growing by €533 million in the fourth quarter and the bank’s ELA reliance reduced to a current €3,5 billion, almost €8 billion lower than the peak of €11,4 billion in April 2013.

Hourican also said that in the fourth quarter they made certain changes to the Bank’s provisioning methodology that increased the level of provisions against delinquent exposures and brought coverage levels against the stock of 90+ DPD exposures to near 50%.

"Due to the elevated provisions for the quarter, the Group reported a loss after tax of €438 m for the year. Nevertheless, the Group continues to have a strong capital position. The CET1 ratio was 14,0% on 31 December 2015. The Group does not expect to need to raise capital to complete its journey back to strength,” said the Bank’s CEO.

According to the bank’s results, during 2015 there was good progress in tackling delinquent loans and loans with arrears greater than 90 days were reduced by €1,3 billion or 10%, due to restructuring activity and deleveraging. 90+ DPD provision coverage boosted by 7 percentage points in 4Q 2015 to 48% as on 31 December 2015, due to elevated provision charges following assumption changes in the Bank’s provisioning methodology, taking into account the on-going dialogue with the ECB in the context of SREP

Customer deposits increased by €1,6 billion or 12% during 2015. The loans to deposits ratio (L/D) declined by 11 percentage points in 4Q 2015 to 121% as at 31 December 2015.

Profit before provisions of €624 million was announced for 2015. Loss after tax from continuing operations and loss after tax for 2015 were €394 million and €438 million respectively.

At the same time, the bank continues to review the appropriateness of its current stock exchange listings and to assess other appropriate listing venues.

The Bank aims to list its securities on a major, liquid, index-driven European stock exchange in order to improve over time the liquidity and attractiveness of the stock. The review is ongoing and no specific decision has yet been taken.

Additionally, according to sources, the bank has completed the establishment of a Real Estate Management Unit (REMU) and has already begun its work in order to manage the properties that come to its control, in order to maximize its benefit while not adversely affect the real estate market. However, the staffing of the Unit has not been fully completed.

The aim of the Unit is to speed up loan restructuring, offering the option to exchange the loan with property. The Unit will mostly have to do with large units, tourist and commercial real estate and land development companies.

Source: Famagusta Gazette

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