Bank of Cyprus announced profit after tax amounting to €50 million for the first half of 2022, setting its sights on dividend distribution in 2023, for the first time since 2011, depending on market conditions and regulatory approvals.
In the aftermath of the rejection of an unsolicited and non-binding offer by Lone Star equity investment fund, the bank’s chief executive officer (CEO), Panicos Nicolaou commented that “our progress is being noticed.”
The bank’s board of directors turned down three non-binding offers by Lone Star with the third providing for a price of €1.51 per share stating that “it fundamentally undervalues the Company and its future prospects and was not in the best interests of the Company.” By September 30 Lone Star must either announce a firm intention to make an offer to Bank of Cyprus or not to do so.
Speaking during a press conference for the presentation of the financial results for the first half of 2022, Nicolaou refrained from commenting on the possible offer, citing limitations by the Irish takeover law and the Cypriot Securities and Exchange Commission’s rules.
Nicolaou said the bank has further upgraded its medium-term target over a 10% return on tangible equity (ROTE) by 2023, from the 7.3% in the second half of 2022.
“This lays the foundations for a meaningful return to dividend distributions which we expect from 2023 onwards, subject to regulatory approvals and market conditions,” he said.
On her part Eliza Livadiotou, Chief Financial Officer, said the bank is in regulatory discussions with the European Central Bank to end the dividend distribution prohibition in 2023. “We are confident that in 2023 we will be allowed to pay dividends and this is based on the expected good results,” she said and referred to a “meaningful” as opposed to a “token” dividend.
Furthermore, Nicolaou said the banks has achieved its targets for cost rationalisation, following the finalisation of a voluntary retirement scheme reducing its headcount by 550 persons with a one-off cost of €99 million which is expected to reduce its annual personnel cost by €37 million, while the branch network has shrunk to 60 marking a reduction of 25% year to date.
In the end of the first half of 2022, the bank reported a CET1 ratio of 14.2% and Total Capital ratio of 19.3% adjusting for the projects Helix 3 and Sinope. The bank’s non-performing loans ratio declined to 5.7% of total loans in the end of June 2022, from 6.5% in the end of March with coverage ratio at 59%.
In the first half of 2022 the bank provided new loans amounting to €1.2 billion, marking an increase of 30% year on year. Total loans amounted to €10.14 billion in the end of June 2022 from €9.84 billion in the respective period of last year.
Customer deposits in the end of June 2022 rose to €18.45 billion from €17.5 the year before with the net loans to deposits ratio at 56%.
In the end of June, the banks profit after tax and before non-recurring items rose by 20% to €59 million by higher revenue and lower impairments, the bank said.