By Stelios Orphanides
Bank of Cyprus said that it generated last year an after-tax loss of €554.3m compared to a net profit of €67.2m in 2016 mainly on increased provisions for loan impairments in line with its August profit warning.
Last year’s results also suffered from a reduction of turnover to below €1.2bn from over €1.2bn in 2016, the bank said in a statement on its website on Tuesday. Net interest income fell to €582.7m from €686.2m.
The bank could still contain its expenses to €358.3m last year from €495.2m in 2016, partly on reduced staff costs which fell to €228.2m from €287.2m respectively, the largest Cypriot lender said. The bank also increased its provisions to €952.9m last year from €433.6m in 2016, partly offset by the derecognition of losses which rose to €173.4m from €63.3m respectively.
The bank generated an operating profit of €485m last year compared to €566m in 2016, it said.
Its non-performing loans fell in December to €8.8bn or to 46.9 per cent of the total, from €9.2bn or 47.6 per cent in September, it said. Compared to December 2016, delinquent loans dropped by €2.2bn or one fifth. The net coverage ratio rose to 51 per cent.
The bank’s core equity tier 1 ratio fell to 12.7 per cent –or to 12.2 per cent fully loaded– in December 2017 from 14.5 per cent a year before, it said. The total capital ratio was 14.2 per cent.
Bank of Cyprus, which last year fully repaid the central bank emergency funding it inherited from Cyprus Popular Bank in 2013 and had its share listed on the London Stock Exchange, said that its deposits rose last December by €1.3bn or 8 per cent to €17.8bn compared to December 2016. Its loans and advancements to customers dropped to €14.6bn from €15.6bn respectively. On the other hand, the value of real estate assets in its possession rose €1.6bn from €1.4bn.
“Our results this quarter and for the full year reflect continued delivery against our core objective of balance sheet repair,” said the bank’s chief executive John Hourican. “In 2018 we expect a normalised cost of risk that should result in a return to profitability and allow an organic rebuild of capital”.
The lender which pioneered the reduction of non-performing loans by setting up a specialised unit as early as in 2013, months after it was recapitalised with customer deposits, maintained the “good momentum” in reducing bad loans organically, Hourican said and added that €1.6bn of the bank’s non-performing loans are “performing with zero arrears” after the underwent restructuring.
“The remaining core non-performing exposure balance of €7.2bn carries a 54 per cen provision coverage and represents 38 per cent of our loan balances,” he added.
“We remain confident of continuing the positive progress in reducing our non-performing exposure stock during the coming quarters,” the Irish banker who is leading the bank for more than four years now. “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”.