Bank of Cyprus: Group Financial Results for the six months ended 30 June 2015
Key Highlights
• Improving funding structure; loans to deposits ratio (L/D) declined to 136% (138% at 31 March 2015) and customer deposits accounting for 54% of total assets (51% at 31 March 2015)
• ELA reduced by €1 bn during 2Q2015 to €5,9 bn and by a further €500 mn post quarter-end to a current level of €5,4 bn; overall, ELA funding has been reduced by €6,0 bn from its peak of €11,4 bn in April 2013
• Strengthened capital position; Common Equity Tier 1 capital (CET1) ratio (transitional) increased by 100 basis points during 2Q2015 to 14,9% due to RWA reduction and organic capital generation
• Profit after tax from continuing operations and Profit after tax of €73 mn and €60 mn for 1H2015, respectively
Bank of Cyprus Group CEO John Patrick Hourican, Group Chief Executive Officer Statement:
The second quarter results demonstrate that we are continuing to make good progress against our strategic objectives and we are progressively improving our key financial metrics.
We have strengthened our capital position, with the CET1 ratio increasing by 100 basis points to 14,9%, on the back of reduced risk weighted assets (RWAs) reflecting our on-going efforts for improving credit risk management and optimising RWAs management, deleveraging and the reduction of problem loans. Our funding structure has improved, with the loan-todeposits ratio declining to 136%. The continuation of positive customer flows and the deleveraging allowed us to repay €1 bn of ELA during the second quarter and another €500 mn post quarter-end, reducing ELA to a current level of €5,4 bn. Addressing the Group’s asset quality problem remains the key priority. Loan quality shows further signs of stabilisation, with the level of problem loans decreasing and the provisioning coverage gradually increasing. Finally, profit before provisions and impairments and profit after tax for the second quarter were €169 mn and €31 mn, respectively.
The Bank’s strengthened capital position and overall improvement in its financial position enhance its funding options and will facilitate access to the capital markets for wholesale funding, subject to market conditions and investor appetite, allowing the Bank to further normalise its funding structure. The adoption of the foreclosure legislation and insolvency framework, coupled with the improved fundamentals of the Cypriot economy, are significant steps in enabling the Bank to tackle its delinquent loans and to improve its asset quality.
Post quarter-end, we have reached an agreement for the sale of the majority of our Russian operations. The sale allows the further de-risking of the balance sheet, the elimination of future potential risks relating to the Russian operations, the release of risk weighted assets and, therefore, the improvement of the Group’s regulatory capital position.
The Cyprus economy is showing further signs of stabilisation amidst a relatively unfavourable external environment. In order to support the recovery of the Cypriot economy, the Bank has introduced new lending schemes and other initiatives to support local businesses, creating the conditions to help boost domestic economic activity. Through specific, deliberate and well-timed actions we are delivering a stronger, more focused institution capable of supporting the recovery of the Cypriot economy. As the leading financial institution in Cyprus, the Bank’s financial performance is highly correlated to the economic and operating conditions in Cyprus and will benefit significantly from the economic recovery.
Source: Bank of Cyprus
