Bank of Cyprus, the island’s largest lender, announced net profits amounting to €20 million in the first nine months of 2021, compared with a loss €122 million in the respective period last year, reducing its non-performing loan rate to single digits for the first time since the 2013 financial crisis in Cyprus.
Earlier in November, the bank announced the completion of project Helix 3 involving the sale of an NPL portfolio amounting to €0.6 billion, achieving the bank’s medium term target over a single-digit NPL rate.
Panicos Nicolaou, the bank’s Chief Executive Officer described the sale as a milestone agreement that achieved the bank’s target one year earlier than expected. “Overall, since the peak in 2014, we have now reduced the stock of NPEs by €14.1 bn or 94% to less than €1 bn and the NPE ratio by 54 percentage points, from 63% to less than 9% on a pro forma basis,” he said.
The bank’s Common Equity Tier 1 capital in end-September 2020 (transitional) amounted to 15.3% adjusting for the NPL sale (Helix 3) while total adequacy ratio amounted to €20.4% adjusting for Helix 3.
Total interest income in the nine months of 2021 amounted to €223 million compared with €250 million in the respective period of last year, down by an annual 11% reflecting the low interest rates environment and the continued loan book deleveraging.
The bank’s Net Interest Margin for the nine months of 2021 amounted to 1.49% compared with 1.87% in the respective period of last year.
Non-interest income rose by 16% year on year reaching €204 million, reflecting increased net income from fees and commission, increased real estate disposals and reduced losses on real estate re-evaluation.
Net fee and commission income for 9M2021 amounted to €128 mn, compared to €106 mn for 9M2020, up by 20% year on year, mainly resulting from the introduction of liquidity fees to a broader group of corporate clients and a new price list for charges and fees, both implemented as of 1 February 2021.
According to the bank, total expenses for 9M2021 were €284 mn (compared to €273 mn for 9M2020, up by 4% yoy), 53% of which related to staff costs (€152 mn), 38% to other operating expenses (€108 mn) and 9% (€24 mn) to special levy on deposits and other levies/contributions. Total expenses for 3Q2021 were €98 mn compared to €95 mn for 2Q2021, up by 4% qoq.
The cost to income ratio excluding special levy on deposits and other levies/contributions for 9M2021 was 61%, compared to 59% for 9M2020.
Customer deposits totalled €17,128 mn at 30 September 2021 (compared to €16,801 mn at 30 June 2021 and €16,533 mn at 31 December 2020) and increased by 2% in the third quarter and by 4% since the year end. The net Loans to Deposits (L/D) ratio stood at 58% as at 30 September 2021 compared with 63% as at 31 December 2020.
In end-September 2021, the bank’s Liquidity Coverage Ratio (LCR) stood at 294% (compared to 303% at 30 June 2021 and 254% at 31 December 2020), above the minimum regulatory requirement of 100% with the liquidity surplus amounting to €6 billion.
The bank’s gross loans in end-September 2021 totalled €10,864 mn, compared to €10,893 mn at 30 June 2021 and €12,261 mn at 31 December 2020, reduced by 11% since the year end following the completion of Project Helix 2.
New lending granted in Cyprus totalled €1.3 billion in the nine months of 2021 up by 35% year on year.
Furthermore, the bank’s NPEs dropped to €881 million adjusting for the NPE sale of €568 of project Helix 3 compared with €3.08 billion in end-2020. Pro forma Helix 3 the NPE ratio stood at 8.6%.
The NPE coverage ratio amounted to 59% in the end of September 2021 from 60% in June 2021 and 62% in end-2020. Provisions for loan impairments in the nine months of 2021 amounted to €76 million compared with €158 million in the respective period of 2021.
In the end of September 2021 the bank’s stock of real estate amounted to €1.26 billion compared with €1.47 billion in end-2020, with real estates amounting to €29 million on boarded and disposals amounting to €107 million.