articles | 01 June 2016

Bank of Cyprus announces net profit of €50 million for Q1 2016

Bank of Cyprus, the island's largest lender recorded net profit of €50 million in the first quarter of 2016, owing to its profitability and the momentum in non-performing loan restructuring which exceeded €1 billion in the quarter than ended on March 31 2016.

Announcing its financial results, the bank said that the improvement in its funding base enabled the bank to reduce its exposure to the ECB emergency liquidity funding (ELA) to €2.8 bn repaying a total of €1 billion since the beginning of the year.

“We continue to drive loan restructuring momentum from the previous quarter by completing €1.5 bn of restructurings during the quarter. We made very good progress in reducing the stock of loans with arrears past 90 days by €1.0 bn or 9% during the quarter and we expect to drive further reduction during the coming quarters of 2016,” the group’s CEO John Patric Hourican said in a statement.

Noting the bank’s funding position continues to improve, Hourican stressed “we intend to fully repay ELA as soon as we can. “It was pleasing that we were able to make meaningful progress towards this ambition in the year to date. ELA now stands at €2.8 bn, €1 bn lower since the beginning of the year” he added.

Speaking during the financial results presentation, the group’s CFO Eliza Livadotiou said the bank hadanother “successful quarter,” adding that bank’s profitability is at the highest level of the last quarters.

Profit before provisions and impairments, gains/(losses) on de-recognition and changes in expected cash flows, restructuring costs and discontinued operations in the Q1 amounted to €145 million marking an increase of 9% compared to Q4 2015, despite the €13 million decline in net interest income. Provisions for impairment of loans in Q1 2016 amounted to €62 million.

The bank said it provided new lending amounting to €223 million.

Total loans on March 31 2016 amounted to €21.85 billion compared with €22.59 billion on December 31 2015. Loans in Cyprus amounted to €19.98 billion representing 91% of the bank’s total loans.

According to the bank, loans in arrears part 90 days declined to €10.29 billion or 47.1% of the total loan book, compared with €11.33 bln on December 31 2015.

The reduction is mainly due to the increasing activity in restructurings including agreements for debt to property swaps, the bank said.

According to a presentation, total restructuring in the last six months from Q4 of 2015 up to the march 31 2016 reached €2.8 billion.

Non performing exposures on the basis of the European Banking Authority directive declined by €641 million to €13.2 billion from €13,96 billion in December 2015 with the coverage ratio at 38% from 39% in December 2015.

The bank said that a total of €1 billion amounting to 8% of restructured and performing total loans will be removed from the bank’s NPL stock, as the probation period provided in the EBA directive expired.

The bank’s Common Equity Tier 1 Capital rose by 30 basis points to 14.3% from 14.0% in December 2013.

Total deposits on March 31 2016 amounted €14.2 billion compared with €14.2 billion on December 2015.

The bank’s main targets is to significantly reduce its problem loan book, to normalise its funding structure and to fully repay ELA and to focus on core banking activities in Cyprus and the UK.

Bank of Cyprus announced it intends to pursue a premium listing on the London Stock Exchange.

Source: Famagusta Gazette

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