Bank of Cyprus posts €50m in Q1 net profit (Update-1)

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(Adds additional background in third paragraph and CEO comment in seventh paragraph)

By Stelios Orphanides

Bank of Cyprus, Cyprus’s largest lender, said that it generated an after tax profit of €50m in the first quarter of the year, compared to a €29m after tax profit in January to March 2015, and a net loss of €512m in the last quarter of 2015.

The rise in profitability was mainly on reduced provisions for loan impairments, which fell to €62m in the first quarter of the year, from €110m and €630m in the first and last quarter of 2015 respectively, Bank of Cyprus said. Profit before provisions in the first quarter was €145m, down 15 per cent, compared to the first quarter of 2015.

Net interest income fell in the first quarter an annual 19 per cent, to €185m, while overall revenue fell 11 per cent to €244. Overall expenses fell 3 per cent to €99m, mainly on a 6 per cent drop in other operating expenses, which dropped to €40m.

Earnings per share were €0.56 in the first quarter of the year compared to €0.32 in the respective quarter of 2015.

Outstanding emergency liquidity assistance fell to €2.8bn, Bank of Cyprus said. The net interest margin fell to 3.63 per cent in January to March, from 3.69 the previous quarter, and 3.94 per cent in the first quarter of 2015. The cost to income ratio fell to 40 per cent in the first quarter after rising to 47 per cent in October to December from 37 per cent in January to March 2015.

Its non-performing loan portfolio dropped to €13.3bn, 61 per cent of its loan portfolio, at the end of March, from €14bn, or 61.8 per cent in December, the bank said. Loans with 90 days or more in arrears fell to €10.3bn, or 47.1 per cent, of its loan portfolio in March from, €11.3bn at the end of 2015.

CEO John Patrick Hourican said that the bank is “satisfied” with the progress achieved during the first three months of 2016, after posting a loss of €438m last year.

“We continue to drive loan restructuring momentum from the previous quarter by completing €1.5bn of restructurings during the quarter,” he added. “We made very good progress in reducing the stock of loans with arrears greater than 90 days by €1bn, or 9 per cent, during the quarter and we expect to drive further reduction during the coming quarters of 2016”.

Hourican said the bank, which saw its deposits remain virtually unchanged at €14.1bn in the first quarter, will continue to improve its funding position, adding that the lender intends to “fully repay the outstanding emergency liquidity assistance as soon as we can”.

“It was pleasing that we were able to make meaningful progress towards this ambition in the year to date” by reducing the outstanding emergency central bank funding by €1bn, the Irish banker said. The bank’s core equity tier 1 capital rose to 14.3 per cent in March, from 14 per cent in December “due to organic capital generation and decrease of risk weighted assets”.

FINANCE
0 Second highest debt to GDP ratio

Cyprus had the second-highest private debt to GDP ratio among European Union countries in 2013, according to the latest data released by Eurostat.

Private sector debt, consolidated (including non-financial corporations, households, non-profit institutions serving

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