Day: November 30, 2021

Euro area annual inflation is expected to be 4.9% in November 2021, up from 4.1% in October, according to a flash estimate from Eurostat, the statistical office of the European Union.

In Cyprus, annual inflation is estimated to be 4.7% in November, up from 4.4% in October.

Energy is expected to have be the biggest component of the eurozone’s annual inflation rate in November (27.4%, compared with 23.7% in October), followed by services (2.7%, compared with 2.1%), non-energy industrial goods (2.4%, compared with 2.0%) and food, alcohol & tobacco (2.2%, compared with 1.9%).

It is estimated that the highest annual inflation rate in November will be recorded in Lithuania (9.3%), Estonia (8.4%), Latvia (7.4%) and Belgium (7.1%).

The lowest annual inflation rate is expected to be recorded in Malta (2.3%), followed by Portugal (2.7%) and France and Finland (3.4% in both countries).

Source: Cyprus News Agency

The EU will stand with Cyprus in matters pertaining to migration, European Commission Vice President Margaritis Schinas pledged on Tuesday. He also expressed the view that Turkey will not make a move outside a framework, formed by a set of incentives and sanctions, ether in the Eastern Mediterranean or in Varosha, the fenced off area of Turkish-occupied

Famagusta.

Addressing in Brussels a group of journalists from Cyprus, Schinas said that Cyprus is under pressure due to migrant flows from Lebanon and the Green Line, and said that “we want to help as much as we can.”

In a question about a recent letter by President of Cyprus, Nicos Anastasiades, to the President of the European Commission, asking for immediate support towards Cyprus to cope with this “emergency situation”, Schinas replied that conditions in the Pournara reception center needed improvement. He also referred to activating an agreement with Lebanon to enable returns, saying that authorities there seemed receptive. “The EU will stand with Cyprus on these matters” he added.

Asked about the buffer zone, dividing the free areas of the Republic of Cyprus from the Turkish-occupied northern part of the island, Schinas said that the Green Line cannot be considered an external border, thus Frontex cannot have a presence there. This, however, does not mean that the Republic of Cyprus cannot control migrant flows, in a way that is compatible with the characteristics of the Green Line, he added.

He said that the EU could help the Republic of Cyprus setting up monitoring equipment and spoke about providing financial assistance. The Commission Vice President said he was not aware about an agreement for an Israeli system to monitor the Green Line.

“There is no doubt here in Brussels that there are increased needs in Cyprus” with regards to migration and that the country deserves more assistance, he underlined.

The Commission Vice President also said that it was time to proceed with a legal definition of the instrumentalization of migrant flows, through a proposal for a revised Schengen Border Code.

This addition to EU law will also facilitate taking certain measures, he added.

He said however that there is a difference between instrumentalization and facing increased pressure, saying that the latter is part of the new Pact on Migration and Asylum, the Commission is proposing. He also expressed hope that Cyprus will play a leading role in adopting this pact.

Speaking about EU-Turkey relations, Schinas said that there is a sense that we are past the low point reached in the summer last year, adding that since then a lot of systematic work has been done by EU capitals, EU institutions, Berlin and the Biden administration resulting in a “mix of incentives and sanctions.”

This led to easing the tension, while making it clear to Turkey that “games in the Eastern Mediterranean are not without costs” he said. He also expressed the view that “Turkey is particularly reluctant to move outside this framework” without risking putting in motion the process of sanctions.

This mix of incentives and sanctions applies more to the Eastern Mediterranean, Shinas said in reply to a question by CNA, adding that “Varosha are also part of the incentives-sanctions framework.”

Cyprus has been divided since 1974, when Turkish troops invaded and occupied 37% of its territory. Numerous rounds of talks under the UN aegis to reunite the island under a federal roof failed to yield results.

UN Security Council resolution 550 (1984) considers any attempts to settle any part of Varosha by people other than its inhabitants as inadmissible and calls for the transfer of this area to the administration of the UN. Resolution 789 (1992) also urges that with a view to the implementation of resolution 550 (1984), the area at present under the control of the United Nations Peace-keeping Force in Cyprus be extended to include Varosha.

Turkish Cypriot leader, Ersin Tatar, announced in July 2021 a partial lifting of the military status in Varosha.

On October 8, 2020, the Turkish side opened part of the fenced area of Varosha, following an announcement made in Ankara on October 6. Both the UN Secretary-General and the EU expressed concern, while the UN Security Council called for the reversal of this course of action.

Source: Cyprus News Agency

General Government deficit decreased by €458.4 million in the first ten months of 2021, reaching €261.9 million compared to a deficit of €720.3 million in the same period of 2020. The reduction is attributed to the increased state revenues from taxes and social contributions.

The preliminary General Government fiscal results, which are prepared by the Statistical Service of Cyprus (CyStat) indicate a deficit of €261.9 mn (1.1% of GDP) for the period of January-October 2021, as compared to a deficit of €720.3 mn (3.3% of GDP) that was recorded during the period of January-October 2020.

EXPENDITURE

During the period of January-October 2021, total expenditure increased by €646.3 mn (+ 8.7%) and amounted to €8,040.8 mn, compared to €7,394.5 mn in the corresponding period of 2020. It is noted, that the increase in specific expenditure categories is due to the support measures taken to address the effects of the Covid-19 pandemic. Specifically, social benefits increased by €313.1 mn (+ 11.4%) and amounted to €3,052.9 mn, compared to €2,739.8 mn in 2020.

Compensation of employees, including imputed social contributions and pensions of civil servants, increased by €101.0 mn (+ 4.6%) and amounted to €2,311.3 mn, compared to €2,210.3 mn in 2020. Subsidies increased by €48.0 mn (+ 9.4%) and amounted to €557.0 mn, compared to €509.0 mn in 2020. The increase in the specific category is mainly attributed to additional support measures to enterprises due to the continuance of the Covid-19 pandemic. Current transfers increased by €69.2 mn (+ 16.5%) and amounted to €488.6 mn, compared to €419.4 mn in 2020.

Intermediate consumption increased by €76.1 mn (+ 11.5%) ) and amounted to €740.2 mn, compared to €664.1 mn in 2020. Interest payable increased by €46.3 mn (+ 12.2%) and amounted to €424.6 mn, compared to €378,3 mn in 2020. The capital account decreased by €7.5 mn (-1.6%) to €466.2 mn, from €473.7 mn in 2020. In detail, gross capital formation increased by €11.2 mn (+3, 1%) and amounted to €372.0 mn, compared to €360.9 mn in 2020 and other capital expenditure decreased by €18.6 mn (-16.5%) to €94.2 mn, from €112, 8 mn in 2020.

REVENUE

During the period of January-October 2021, total revenue increased by €1,104.7 mn (+ 16.6%) and amounted to €7,778.9 mn, compared to € 6,674.2 mn in the corresponding period 2020. In detail, taxes on production and imports increased by €383.8 mn (+ 15.9%) and amounted to €2,802.4, compared to €2,418.6 mn in 2020, of which net VAT revenue increased by €291.7 mn (+ 19.1%) and amounted to €1,821.5 mn, compared to €1,529.8 mn in 2020.

Revenue from taxes on income and wealth increased by €197.6 mn (+ 12.8%) and amounted to €1,741.3 mn, compared to €1,543.7 mn in 2020. Social contributions increased by €267.2 mn (+ 14.0%) and amounted to €2,172.5 mn, compared to €1,905.3 mn in 2020. Capital transfers increased by €198.8 mn and amounted to €267.9 mn, compared to €69.1 mn in 2020. Current transfers increased by €12.6 mn (+ 7.8%) and amounted to €174.8 mn, compared to €162.2 mn in 2020.

Revenue from the sale of goods and services increased by €30.2 mn (+ 6.3%) and amounted to €512.6 mn, compared to €482.5 mn in 2020. Property income increased by €14.6 mn (+ 15.7%) and amounted to €107.4 mn, compared to €92.8 mn in 2020.

Source: Cyprus News Agency

Hellenic Bank, Cyprus’ second largest lender announced net profits amounting to €21 million in the first nine months of 2021, compared with net profit of €40 million in the respective period of last year, with profitability affected by the continued pressure in lending rates and the reduced portfolio of Cypriot government bonds.

Oliver Gatzke, the bank’s CEO, said the banks is focusing on a non-performing loan sale that would reduce its NPL ration to single digits.

“Our Project Starlight is on track and with its conclusion, we will expedite the clean-up of our balance sheet to mid-single digit percentage of NPEs,” he said, noting that the vast majority of the borrowers that joined the loan moratorium scheme are performing well.

The German banker also said that “another priority for us is to accelerate our transformation journey, to unlock our potential and achieve long term sustainable profitability. We reiterate our commitment to transform the Bank into a customer friendly organisation by improving our customer experience through digital onboarding, streamlining of our procedures and enhanced product scope.”

The bank maintained its strong capital indices with total adequacy ratio at 22.3% and Common Equity Tier 1 Capital ratio at 19,99% in end-September 2021.

According to the financial results, the bank’s net interest income for 9M2021 amounted to €192.8 million, down by 9% compared to €212.2 million in the respective period of 2020, with the decline mainly attributed to the lower income on performing loans and lower income from Cyprus Government Bonds with nominal value of €750 million matured in December 2020).

The bank’s annualised net interest margin (NIM) for 9M2021 amounted to 1.55% compared with 1.88% in fully year 2020 and 1.86% in the 9M of 2020.

Net fee and commission income for 9M2021 amounted to €39.2 million, up by 1% compared to €38.6 million in 9M2020, with the rise driven by higher banking fees and commissions in 9M2021 following the release of a revised Table of Commissions and Charges effective from February 2021, and the increase of electronic transactions which have offset the reduction in other banking related fees impacted by the COVID-19 pandemic.

Furthermore the bank’s total expenses for 9M2021 amounted to €200.2 million and compared to €189.6 million for 9M2020 increased by 6% mainly due to higher staff costs, while staff costs amounted to €105.5 million and accounted for 53% of the Group’s total expenses

The cost to income ratio for 9M2021 was 75.0%, compared to 66.7% for 9M2020 (reflecting the increase in total expenses compared to the decrease in total net income), the bank said.

Furthermore, the bank’s customer deposits amounted to €14.6 billion at end-September 2021 from €14.2 billion in the end of 2020, with the liquidity surplus amounting to €6.1 billion.

Gross loans as at 30 September 2021 amounted to €6.7 billion, recording a decrease of 1% compared to €6.8 billion in end 2020.

Total new lending implemented during 9M2021 reached €628 million (6M2021: €388 million, compared with €712 million in the respective period of 2020 and €1,04 billion in full year of 2020.

The net loans to deposits ratio stood at 41.1% as at 30 September 2021, while the bank’s loan market share at the end of September amounted to 22.4%.

Non-performing exposures (NPEs) amounted to €1,428 million as at 30 September 2021 compared to €1,503 million as at 31 December 2020, recording a decrease of 5%, while NPEs excluding NPEs covered by the APS agreement amounted to €1 billion as at 30 September 2021.

The NPEs to gross loans ratio as at 30 September 2021 was 21.3% compared to 22,1% as at 31 December 2020, while the NPE ratio excluding the NPEs covered by the APS agreement as at 30 September 2021 was 14.5%, with the NPEs provision coverage ratio amounting to 49.3% as at 30 September 2021 .

The bank is working with its advisors over a significant sale of NPE portfolio, called project “Starlight”, involving NPEs amounting to circa €700 aiming to accelerate the Bank’s balance sheet clean-up. The transaction is expected to complete in early 2022.

“Post completion of the transaction the Bank is expected to reach its medium-term target of mid-single digit NPE ratio (excl. APS-NPEs),” he bank said.

Source: Cyprus News Agency

Industrial output prices increased by 13% in October 2021 year -over – year while they increased by 1% compared to the previous month.

According to Statistical Service of Cyprus, the Index of Industrial Output Prices for October 2021 reached 111.6 units (base 2015=100), recording an increase of 1% compared to September 2021. Compared to the corresponding month of the previous year, the index recorded an increase of 13%. For the period January-October 2021, the index showed an increase of 5.3% compared to the corresponding period of 2020.

In October 2021 compared to September 2021, the index remained stable in the sector of electricity supply, while it showed a rise in the sectors of mining and quarrying by 2.7%, water supply and materials recovery by 2,1% and manufacturing by 1.2%.

Compared to the corresponding month of the previous year, an increase was recorded in all sectors, as follows: electricity supply 36.3%, water supply and materials recovery 32.4%, manufacturing 6.6% and mining and quarrying 3.9%.

By division of economic activity in manufacturing, in October 2021 compared to the corresponding month of the previous year, increases were recorded in all economic activities. The most significant were observed in the manufacture of wood and products of wood and cork, except furniture (27.5%), the manufacture of basic metals and fabricated metal products (24.2%), the manufacture of rubber and plastic products (8.7%), the manufacture of other non-metallic mineral products (4.9%) and the manufacture of machinery and equipment, motor vehicles and other transport equipment (4.4%).

Source: Cyprus News Agency

Accommodation and food services increased significantly by 84.1% in the third quarter of 2021, according to a press release by the Statistical Service of Cyprus.

The Turnover Value Index during the third quarter of 2021 recorded increases in the sectors of accommodation and food service activities (84.1%), of administrative and support service activities (34.9%), of information and communication (16.2%) and of professional, scientific and technical activities (5.6%) compared to the corresponding quarter of 2020.

During the period January-September 2021, increases relative to the corresponding period of 2020 were observed in the index of accommodation and food service activities (54.6%), of administrative and support service activities (12.6%), of information and communication (9.1%) and of professional, scientific and technical activities (3.1%).

Source: Cyprus News Agency

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.

Source: Cyprus News Agency