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Bank of Cyprus posted €116 million profit

27/11/2019 09:57

The Bank of Cyprus announced net profits amounting to €116 million for the nine months of 2019, that ended in September, compared to a net loss of €37 million in the respective period of last year, with the bank’s CEO Panicos Nicolaou noting the bank’s results reflect “continuing progress against our core objective of balance sheet repair and normalization.”
 
 “The bank is returning to strength, through a disciplined approach to balance sheet repair, the disposal of non-core businesses and cost rationalisation through digital transformation. Good progress has been made throughout the year, however there remains more to do and we are focused on delivering balance sheet de-risking at pace and further efficiency gains across our cost base. Our strategy of making the Bank stronger, safer and future-focused is unchanged,” he said in a comment with regard to the bank’s financial results for the nine months that ended in September 2019.
 
According to a press release, the bank’s total capital adequacy ration amounted to 17.9% in end-September 2018, down by 0.2% compared with the previous quarter, adjusted for the sale of the bank’s position in CNP insurance and the Voluntary Retirement Plan, that reduced the bank’s staff by 470 persons with a cost of €79 million. The bank’s CET1 in September 2019 amounted to 14.9% from 15.2% in June reflecting the sale of the bank’s sale in CNP and VRS.
 
The bank said it made further progress in addressing its high non-performing exposures, as defined by the EBA down by €227 million to €4,085 mn, compared to €4,312 mn at 30 June 2019 and €7,419 mn at 31 December 2018.
 
Consequently, the bank’s NPE ratio stood at 31% of gross loans as at 30 September 2019, compared to 33% as at 30 June 2019, 46% as at 31 March 2019.
 
In 2018 the bank sold NPEs amounting to 2.7 billion (project Helix) and a smaller amount of €30 million (project Velocity).
 
Furthermore, the bank said that organic NPE reduction remains ahead of our organic target of c.€800 mn for 2019, with organic NPE reduction in the third quarter of the year amounting to €227 mn, bringing the total organic reduction in the nine months of 2019 to €684 mn.
 
“This represents the eighteenth consecutive quarter of organic NPE reductions,” the bank said, adding since the peak in 2014, we have now reduced the stock of NPEs by 73% or €10.9 bn.
 
The bank announced is exploring a new NPE sale in the region of €2.0 billion, expected by the end of the first half of 2020.
 
According to the results. customer deposits totalled €16,473 mn at 30 September 2019, compared to €16,377 mn at 30 June 2019 and €16,844 mn at 31 December 2018 with the bank recording a market share in Cyprus reached 34.6% as at 30 September 2019, compared to 34.7% as at 30 June 2019. Customer deposits accounted for 78% of total assets at 30 September 2019.
 
The Loan to Deposit ratio (L/D) stood at 66% as at 30 September 2019, compared to 67% as at 30 June 2019 and to a peak of 151% as at 31 March 2014.
 
At 30 September 2019 the Group Liquidity Coverage Ratio (LCR) stood at 218%, compared to 253% at 30 June 2019 and 231% at 31 December 2018, well above the minimum regulatory requirement of 100%.
 
Furthermore, the bank said the liquidity surplus at 30 September 2019 decreased to €3.0 bn, from €3.8 bn at 30 June 2019, following the repayment of ECB funding amounting to €830 mn. At 30 June 2019, the liquidity surplus had increased to €3.8 bn, from €2.7 bn at 31 March 2019, reflecting a €1.2 bn increase in liquidity on Helix completion.
 
Group gross loans totalled €13,035 mn at 30 September 2019, compared to €13,072 mn at 30 June 2019, €15,882 mn at 31 March 2019 and €15,900 mn at 31 December 2018. The bank added it is the single largest credit provider in Cyprus with a market share of 40.8% at 30 September 2019, compared to 41.3% at 30 June 2019.             
 
The reduction in gross loans by 18% since the beginning of the year is attributed mainly to the completion of Project Helix (sale of €2.8 bn of gross loans of which €2.7 bn related to non-performing loans) and to a lesser extent to the completion of Project Velocity (sale of €30 mn gross loans as at the date of disposal, relating wholly to non-performing loans) in 2Q2019.
 
New loans granted in 3Q2019 reached €491 mn, bringing the new loans granted in 9M2019 to €1,602 mn, exceeding new lending in Cyprus in 9M2018.