Coop Bank Q1 profits at € 37 mln

The Cooperative Central Bank reported net profits of EUR 37.1 mln in the first quarter of the year, down from EUR 41.2 mln in the fourth quarter of 2014, mainly due to a drop in interest income as well as an increase in provisions by EUR 22 mln to EUR 3.04 bln.

“This profitability was achieved within a quarter that was marked by a courageous reduction of interest rates. Our aim is to continue to converge Cyprus rates with the European average in order to help the economy regain its competitiveness,” said board Chairman Nicolas Hadjiyiannis.

“The Cooperative Bank that we are planning ahead will be even stronger and innovative so as to serve our thousands of members and customers,” he added.

However, despite lowering interest rates in order to help its cooperative clients, operational costs were reduced in the first quarter, while the bank has maintained its level of non-performing loans at 44.1% of its loanbook, far below the national level of above 50%.

The bank’s balance sheet increased by about EUR 260 mln from the previous quarter to EUR 14.2 bln that includes EUR 1.29 bln in own funds, with the Core Tier 1 capital adequacy ration dropping marginally from 13.6% to 13.3%. The government bailed out the bank with a EUR 1.5 bln capital injection last year and it is now nationalised, having merged all local Cooperative Credit Societies under one roof, but the group is not statecontrolled and aims to consolidate the Cooperative sector further by selling off non-core assets and reducing its operational expenses.

With net interest income (NII) dropping to a quarter, from EUR 378.9 mln to EUR 89.5 mln, operating profits reached EUR 59.9 mln due to a continued reduction of costs that helped cut the cost-to-income ratio marginally to 37.2%.

The bank currently employs 2,670 people, 33 less than the previous quarter, and aims to reduce this number further to 2,580 by the end of 2017.

Total loans and other facilities reached EUR 10.03 bln, down 100 mln from the previous quarter, due to a fall in demand and continue deleveraging by retail and corporate customers.

NPLs increased by EUR 200 mln to EUR 6.9 bln, while deposits also rose by EUR 242 mln to EUR 12.6 bln.