articles | 24 November 2015

Bank of Cyprus announces profits for 2015

Cyprus' biggest lender, Bank of Cyprus recently announced profits after tax of €73 million for the nine months ended 30 September 2015.

Profit after tax from continuing operations were €115 million. The bank has managed to reduce its loans in arrears for more than 90 days (90+ DPD) by €649 mn or 5% in the third quarter of 2015, with about half of the reduction reflecting the disposal of the majority of the Russian operations.

The bank’s NPLs totalled €11.998 mn at 30 September 2015, accounting for 52% of gross loans.

The 90+ DPD provisioning coverage ratio was 41% at 30 September 2015, while taking into account the unrecognised interest income on contractual customer balances, the provisioning coverage rises to 52%.

Customer deposits in Cyprus increased by €527 mn or 5% in third quarter of 2015, the loans to deposits ratio (L/D) improved to 132% and customer deposits increased to 56% of total assets, compared to 54% at 30 June 2015.

During 3Q2015, Emergency Liquidity Assistance (ELA) was reduced by €1 bn to €4,9 bn at 30 September 2015. Post quarter-end, ELA was reduced further by €600 mn to a current level of €4,3 bn.

Common Equity Tier 1 capital (CET1) ratio (transitional) increased by 70 basis points in 3Q 2015 to 15,6% The Group that is engaged on a regulatory dialogue with the European Central Bank (ECB) regarding the Supervisory Review and Evaluation Process (SREP), is contesting certain of the assumptions used by ECB for the calculation of the provisions for the credit risk inspection. If the impact of the provision-related adjustment calculated by the ECB and which, in the view of the Group, has not been recognised to date amounting to around €600 million was to be considered, there would be a decrease of 2,4% on CET1 ratio (pre-tax). Taking into account the Group’s CET1 ratio of 15,6% as at 30 September 2015 and the expectations for the outcome of the SREP process, even after adjusting for potential additional capital requirements, the Group does not expect to be required to raise any capital.

The new loans to households and business in Cyprus during 2015 where €0,5 billion.

Bank of Cyprus Group CEO John Patrick Hourican, in a written statement referred to the sale of the majority of the bank`s Russian operations, including the banking subsidiary Uniastrum.

“With this sale, we have completed the disposal of the overseas banking subsidiaries earmarked for sale. At the same time, we have eliminated future potential risks relating to the Russian operations, released risk weighted assets of €550 mn and strengthened our regulatory capital position by 30 basis points”, he said.

He also said that the credit risk management efforts are intensifying.

“Loan restructuring activity remains high and we are close to finalising the restructuring of many of our large borrowers. The changes in the legislative framework, coupled with the improving economic fundamentals, are supporting our efforts to tackle delinquent loans and to address the asset quality problem”, he said.

He added that the Bank, in order to further support the recovery of the domestic economy, is providing credit to creditworthy individuals and companies, creating the conditions to boost domestic economic activity.

According to representatives of the Bank the process of replacing Hourican who has quit from his position in the bank since last April continues, in order to find the candidate who will lead the Bank from the period of Troika and the restructuring to the period of long-term growth, while Hourican is considered to have set the bar high.

Source: Famagusta Gazette

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