Bank of Cyprus posts Euros 552 million loss in 2017

Bank of Cyprus Holdings announced Tuesday Euros 552 million loss after tax for the financial year 2017 due to total provisions and impairments of Euros 942 million, compared to Euros 64 million profit in 2016.

According to the Preliminary Group Financial Results for the year ended 31 December 2017, operating profit was Euros 485 million, while cost to income ratio was 47%.

The Group has reduced the Stock of non-performing exposures (NPEs) for the eleventh consecutive quarter. NPEs as defined by the European Banking Authority (EBA) were reduced by Euros 2.2 bn or 20% during FY2017 to Euros 8,804 mn at 31 December 2017, accounting for 47% of gross loans, compared to 48% at 30 September 2017 and 55% at 31 December 2016. The provisioning coverage ratio of NPEs stood at 48% at 31 December 2017, compared to 49% at 30 September 2017 and 41% at 31 December 2016. The 31 December 2017 NPE provisioning coverage ratio increases from 48% to 51%.

Loans in arrears for more than 90 days (90+ DPD) were reduced by Euros 1.4 bn or 17% in FY2017. The decrease was the result of restructuring activity, debt for asset swaps and write offs.

The capital levels as at 31 December 2017 remain adequate. The Common Equity Tier 1 capital (CET1) ratio (transitional basis) improved to 12.7% at 31 December 2017, compared to 12.4% at 30 September 2017 and 14.5% at 31 December 2016. The CET1 ratio on a fully-loaded basis totalled 12.2% at 31 December 2017, compared to 11.9% at 30 September 2017 and 13.9% at 31 December 2016. As at 31 December 2017, the Total Capital ratio stood at 14.2%, compared to 13.8% at 30 September 2017.

Group customer deposits totalled Euros 17,850 mn at 31 December 2017, compared to Euros 17,315 mn at 30 September 2017 and Euros 16,510 mn at 31 December 2016. Deposits increased Euros 1.3 billion or 8% year on year. Group customer deposits increased by Euros 535 mn or 3% during the quarter, with customer deposits in Cyprus increasing by Euros 393 mn or 3%. Cyprus deposits stood at Euros 15,983 mn at 31 December 2017, accounting for 90% of Group customer deposits. The Loan to Deposit ratio (L/D) stood at 82% at 31 December 2017, down from 85% at 30 September 2017, compared to a high of 151% at 31 March 2014.

New lending in the year to 31 December 2017 was Euros 2.2 bn, exceeding new lending in 2016 by 53%.

At 31 December 2017 the Group Liquidity Coverage Ratio (LCR) stood at 190% (compared to 141% at 30 September 2017, and 49% at 31 December 2016) and was in compliance with the minimum regulatory requirement of 80% (which increased to 100% on 1 January 2018).

Group gross loans totalled Euros 18,755 mn at 31 December 2017, compared to Euros 19,253 mn at 30 September 2017 and Euros 20,130 mn at 31 December 2016. Gross loans in Cyprus totalled Euros 16,814 mn at 31 December 2017 and accounted for 90% of Group gross loans. The Bank’s market share was 39.2% at 31 December 2017.

The Real Estate Management Unit (REMU) on-boarded Euros 164 mn of assets, via the execution of debt for asset swaps, in 4Q2017 (up by 30% qoq) and Euros 520 mn of assets in FY2017. The Group completed disposals of Euros 54 mn in 4Q2017, compared to Euros 64 mn in 3Q2017 and disposals of Euros 258 mn in FY2017. In addition, in 2Q2017 the Group disposed of a property with carrying value Euros 10 mn, previously classified as investment property. In January 2018, the Group completed additional disposals of Euros 8 mn. During the year 2017 and January 2018, the Group executed sale-purchase agreements (SPAs) with contract value of Euros 335 mn and in addition signed SPAs for disposals of assets with contract value of Euros 58 mn.

Our results this quarter and for the full year reflect continued delivery against our core objective of balance sheet repair. In 2018 we expect a normalised cost of risk that should result in a return to profitability and allow an organic rebuild of capita says in a written statement the Group’s CEO John Patrick Hourican.

Hourican also says that the Group remain confident of continuing the positive progress in reducing the NPE stock during the coming quarters.

At the same time, we continue to actively explore certain structured solutions to further accelerate reduction and return the Bank to a more normal position, he added.

Pointing out that momentum in the business is good, Hourican says the bank’s expectations for 2018 are unchanged and, at this stage, they maintain the guidance of a return to profitability and earnings per share of 40 cents.

The key pillars of the Group’s strategy are to materially reduce the level of delinquent loans, further improve the funding structure, maintain an appropriate capital position by internally generating capital, focus on the core Cyprus market and the UK operations, achieve a lean operating model and deliver value to shareholders and other stakeholders.

Source: Cyprus News Agency