BOC posts a €554m after-tax loss in 2017

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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”.

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Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • almostbroke

    And the bank unions will probably ‘demand ‘ a rise in pay !!!!!

    • Disenchanted

      The losses are because of increased provisions, which I suspect are required by the regulator, otherwise the bank’s operating profits are positive. The staff are dealing with the legacy of bad lending practices of the past.

      • Muffin the Mule

        And debts that remain doubtful.

      • Bob Ellis

        Most of the staff are responsible for those bad practices.

        • Disenchanted

          I wouldn’t blame the staff for bad practices, they are the responsibility of senior management and boards.

        • Neroli

          I agree and then you have the Co Op Bank whose own employees don’t even pay their loans!!

  • Alex

    At this rate, my great great grandchildren will have to wait to get my money back…

  • Bob Ellis

    Just cut to the chase. Close the bank, lock up the thieves, grab the assets, create an open and regulated banking world that might encourgae real sustainable foreign investment. The BoC has just scrubbed out a friends €800k of loans and mortagages in return for 4 fields with a ‘real’ value of about €300k. How long can trhis carry on ? How much damage will be done by delaying the inevitable ?

    • Kevin Ingham

      The RBS in the UK was a bit of a basket case and to an extent still is.They have an NPL ratio of about 2.9% !!!

      The NPL figures for the Cyprus banks are ludicrous and are not sustainable in any “real world” context, particularly given the assets secured against the NPL’s are still deflating.

      If there are no more financial crises on the horizon, it will take at least 20 years for the Cypriot banks to get themselves “healthy” and you only have a healthy economy if you have have healthy banks (it’s a symbiotic relationship )

      In the meantime Cyprus is relying entirely on foreign investment, creating unsympathetic buildings sold with a free passport thrown in and creating low paid jobs for the locals in tourism and gambling (the latest cash cow bandwagon)

      Net result is that Cyprus is being asset stripped and it’s population becoming second class citizens in their own country (and that invariably leads to further problems further down the line)

    • Neroli

      They’ve done the same with Aristodemou!

  • alexander reutersward

    The Share price keeps on falling, the management seems to be the only ones who believe the bank is in a positive trend.