Bank of Cyprus Q1 prof­its at € 29 mln

Financial Mirror (Cyprus) - - FRONT PAGE -

Bank of Cyprus an­nounced EUR 29 mln in first quar­ter af­ter-tax prof­its, a turn­around com­pared to a loss of EUR 337 mln in the last quar­ter 2014.

The Com­mon Eq­uity Tier 1 cap­i­tal (CET 1) ra­tio (tran­si­tional ba­sis) dropped marginally to 13.9%, com­pared to 14.0% at end-2014, while the fully loaded CET 1 ra­tio re­mained un­changed at 13.4%.

The bank said in an an­nounce­ment that gross loans and cus­tomer de­posits to­talled EUR 24.1 bln and 13.6 bln, re­spec­tively, with the loans-to-de­posits ra­tio im­prov­ing to 138%, com­pared to 141% at Q4 2014 and a high of 151% on 31 March 2014.

The emer­gency liq­uid­ity as­sis­tance (ELA) was re­duced by EUR 500 mln to EUR 6.9 bln, while post-re­sults, ELA was fur­ther re­duced by EUR 500 mln to EUR 6.4 bln, near­ing the half mark from the EUR 11.4 bln in April 2013.

Non-per­form­ing loans (in ar­rears for more than 90 days) to­talled EUR 12.79 bln and ac­counted for 53% of gross loans.

The bank said it re­mains “ap­pro­pri­ately cap­i­talised”, with the CET1 ra­tio (tran­si­tional ba­sis) at 13.9% at 31 March 2015 (com­pared to 14.0% at 31 De­cem­ber 2014). Ad­just­ing for de­ferred tax as­sets, the CET1 ra­tio on a fully-loaded ba­sis to­talled 13.4% on March 31.

Net in­ter­est in­come (NII) for 1Q2015 to­talled EUR 225 mln in line with the pre­vi­ous quar­ter.

To­tal ex­penses reached EUR 102 mln, down 11% from EUR 114 mln in 4Q2014, mainly due to in­creased non- re­cur­ring and other op­er­at­ing ex­penses. Hence, the cost to in­come ra­tio im­proved to 38% from 41% in 4Q2014.

Profit be­fore pro­vi­sions and im­pair­ments, re­struc­tur­ing costs and dis­con­tin­ued op­er­a­tions for 1Q2015 was EUR 170 mln, com­pared to EUR 167 mln for 4Q2014. Pro­vi­sions for im­pair­ment of cus­tomer loans (con­tin­u­ing op­er­a­tions) for 1Q2015 amounted to EUR 148 mln, com­pared to the el­e­vated pro­vi­sions of EUR 248 mln for 4Q2014.

Profit af­ter tax from con­tin­u­ing op­er­a­tions (ex­clud­ing re­struc­tur­ing costs, dis­con­tin­ued op­er­a­tions and net loss on dis­posal of non-core as­sets) in the first quar­ter to­talled EUR 57 mln, com­pared to a loss of EUR 107 mln for 4Q2014.

Group cus­tomer de­posits were up nearly 450 mln to EUR 13.611 bln, com­pared to EUR 13.169 bln on 31 De­cem­ber 2014. Group gross loans to­talled EUR 24.1 bln, com­pared to EUR 23.8 bln on 31 De­cem­ber 2014.

CEO John Pa­trick Houri­can said that the bank re­duced ELA by EUR 500 mn and con­tin­ues to sta­bilise its de­posit base while main­tain­ing its cap­i­tal po­si­tion.

“The loan to de­posits ra­tio im­proved to 138%, partly be­cause of the con­tin­u­a­tion of pos­i­tive cus­tomer flows. Fur­ther­more, the im­prove­ment in the bank’s core re­sults con­tin­ued, with profit af­ter tax from con­tin­u­ing op­er­a­tions to­talling EUR 57 mln, com­pared to a loss of EUR 107 mln for 4Q2014,” he said.

He added that the bank’s sig­nif­i­cantly strength­ened cap­i­tal po­si­tion and over­all im­prove­ment in its fi­nan­cial po­si­tion en­hance its fund­ing op­tions and will fa­cil­i­tate ac­cess to the cap­i­tal mar­kets, es­pe­cially fol­low­ing the re­cent suc­cess­ful debt rais­ing by the Repub­lic of Cyprus.

He said that depend­ing on mar­ket con­di­tions and in­vestor ap­petite, the bank will as­sess the pos­si­bil­ity of rais­ing whole­sale fund­ing, with the pro­ceeds of such fund­ing used to re­duce ELA.

Houri­can also pointed out that the adop­tion of the fore­clo­sure leg­is­la­tion and in­sol­vency frame­work is a sig­nif­i­cant step in en­abling the bank to tackle its delin­quent loans and im­prove as­set qual­ity.

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