BOCY losses re­vised up by Any buy­ers for Uni­as­trum? € 5 mln

Financial Mirror (Cyprus) - - FRONT PAGE -

The Bank of Cyprus re­leased its au­dited re­sults for 2014 show­ing that its losses for the year were re­vised up by 5 mln eu­ros to EUR 261 mln, with its Rus­sian sub­sidiary Uni­as­trum, now ap­pear­ing in its books as “dis­con­tin­ued op­er­a­tions” and headed for dis­posal.

The to­tal loss of dis­con­tin­ued op­er­a­tions for the year amounted to EUR 303 mln, of which a loss of EUR 299 mln re­lates to the Rus­sian op­er­a­tions, EUR36 mln to the Ukrainian op­er­a­tions dis­posed in the sec­ond quar­ter of 2014 and a profit of EUR36 mln from the Greek op­er­a­tions due to the re­ver­sal of a pro­vi­sion recog­nised ini­tially in 2013, fol­low­ing a re­cent devel­op­ment in court pro­ce­dures.

How­ever, the bank has raised its pro­vi­sions for im­pair­ment of cus­tomer loans in Rus­sia by EUR 30 mln “due to fur­ther in­for­ma­tion which be­came avail­able.”

Other fig­ures re­mained gen­er­ally un­changed, with the bench­mark Com­mon Eq­uity Tier 1 cap­i­tal (CET1) ra­tio at 14% at De­cem­ber 31, 2014, com­pared to 15.4% at the end of the third quar­ter.

Gross loans and de­posits stood at EUR 23.8 bln and EUR 13.2 bln, re­spec­tively, with the net loans to de­posits ra­tio im­prov­ing to 141% from 148% at Septem­ber 30, 2014. Dur­ing the fourth quar­ter of 2014, de­posits in Cyprus in­creased by EUR 71 mln, the first quar­terly in­crease fol­low­ing the events of March 2013.

To­tal as­sets were re­duced by 12% from EUR 30.3 at the end of 2013 to 26.8 bln at the end of 2014.

Emer­gency Liq­uid­ity As­sis­tance (ELA) has been re­duced to EUR 7.4 bln, com­pared to 9.6 bln at the end of 2013 and a high of 11.4 bln in April 2013, a month af­ter the bailin de­ci­sion and the forced merger with nowde­funct Laiki Popular. ECB fund­ing was re­duced to EUR 880 mln on De­cem­ber 31, 2014 from 920 mln at Septem­ber 30. As at March 31, 2015, ELA and ECB fund­ing were fur­ther re­duced to EUR 6.9 bln and EUR 800 mln, re­spec­tively.

Loans in ar­rears for more than 90 days de­creased by 3% dur­ing the fourth quar­ter of 2014 and to­talled EUR 12.65 bln at De­cem­ber 31, 2014, rep­re­sent­ing 53% of gross loans. The bank said its pro­vi­sion cov­er­age ra­tio of 90+ DPD im­proved to 41% (com­pared to 38% at Septem­ber 30, 2014), while tak­ing into ac­count tan­gi­ble col­lat­eral at fair value, the 90+ DPD are fully cov­ered.

Net in­ter­est in­come (NII) for the year was EUR 967 mln, while the net in­ter­est mar­gin (NIM) was 3.94%. NII for the fourth quar­ter of 2014 de­clined to EUR 225 mln, com­pared to EUR 231 mln for the third quar­ter of 2014, mainly due to delever­ag­ing. The NIM for the fourth quar­ter of 2014 was 3.81% com­pared to 3.82% for the third quar­ter of 2014.

To­tal in­come for the year was EUR 1.17 bln. To­tal in­come for the fourth quar­ter of 2014 was EUR 281 mln, com­pared to EUR 263 mln for the third quar­ter of 2014.

To­tal ex­penses for the year were EUR 426 mln and the cost to in­come ra­tio was 36%. To­tal ex­penses for the fourth quar­ter of 2014 in­creased to EUR 114 mln (com­pared to EUR 103 mln for the third quar­ter of 2014), mainly due to ad­ver­tis­ing, reg­u­la­tory and ECB Com­pre­hen­sive As­sess­ment re­lated costs, list­ing costs and other ad­vi­sory fees. The cost to in­come ra­tio for the fourth quar­ter of 2014 was 41% (com­pared to 39% in the third quar­ter of 2014).

Profit af­ter tax ex­clud­ing re­struc­tur­ing costs, dis­con­tin­ued op­er­a­tions and net gain on dis­posal of non-core as­sets for the year to­talled EUR 31 mln, down from 42 mln in the pre­lim­i­nary re­sults an­nounced in Fe­bru­ary.

Loss af­ter tax ex­clud­ing re­struc­tur­ing costs, dis­con­tin­ued op­er­a­tions and net gain on dis­posal of non-core as­sets for the fourth quar­ter of 2014 to­talled EUR 107 mln, com­pared to a profit of EUR 44 mln for the third quar­ter of 2014.

Re­struc­tur­ing costs for the year ended 31 De­cem­ber 2014 to­talled EUR 36 mln, while the bank also recorded a net gain of EUR 47 mln from the dis­posal of non-core as­sets.

“The re­sults of the fourth quar­ter were neg­a­tively af­fected by in­creased pro­vi­sions and im­pair­ments in Rus­sia, as well as the clas­si­fi­ca­tion of the Rus­sian op­er­a­tions as held for sale,” CEO John Houri­can had said in a state­ment on Fe­bru­ary 25.

Houri­can’s two main ob­jec­tives had been to shrink the bank back to its core ac­tiv­i­ties by sell­ing off un­prof­itable as­sets and to re­duce the bank’s high risk ex­po­sure to non- per­form­ing loans, cur­rently run­ning na­tional av­er­age of 50% of all loans.

In state­ments re­leased to the me­dia, the bank said it has delever­aged its bal­ance sheet by EUR3.5 bln, dis­pos­ing of its Ukra­nian op­er­a­tions, its in­vest­ment in the Ro­ma­nian Banca Tran­sil­va­nia, its loans in Ser­bia, as­sets in Ro­ma­nia and the UK loan port­fo­lio ac­quired from Laiki Bank.

“The bank is run­ning a process to dis­pose of its op­er­a­tions in Rus­sia,” the state­ment added, sug­gest­ing that Uni­as­trum, it­self at the heart of a strug­gle by con­trol by its for­mer own­ers, will no longer bur­den the Group with a de­te­ri­o­ra­tion of its loan­book and de­posits.



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