BOCH profits slide to
Bank of Cyprus Holdings, listed on the London Stock Exchange earlier this year as it continued on its recovery path, reported a net profit of EUR 2 mln in the first quarter of the year, down from 50 mln in the same quarter last year.
However, despite this setback, the island’s main lender said that its asset quality was improving and recorded eight consecutive quarters of problem loan reductions.
Having achieved a full repayment of EUR 11.4 bln of emergency liquidity assistance (ELA) to the European Central Bank and the European bailout lenders, BOCH managed to reduce its 90-day overdue loans by EUR 298 mln or 4% since the end of 2016, istelf down by 37% since year-end 2014. Nonperforming exposures were down by EUR 662 mln or 6% since end-2016 and it maintained a strong capital position, with its total capital ratio at 15.6% and CET1 ratio at 14.4% on a transitional basis and 14.0% on a fully loaded basis.
Operating profits were EUR 126 mln in the first quarter with its market shares in loans and deposits maintained at 39% and 31%, respectively.
With new lending reaching EUR 690 mln in the first quarter, the bank’s profits were hit by a EUR 18 mln fine by the Competition Watchdog as well as increased provisions for loan impairments.
CEO John Hourican continues to make good journey back to strength.
“Our results this quarter reflect our strategy of continued attention to balance sheet de-risking and, consequently, we continued to direct substantially all our operating profitability to increased coverage levels on delinquent exposures. Despite this, and despite accommodating the EUR18 mln non-recurring Competition Commission fine which we intend to contest vigorously, the Bank posted a modest positive result in the quarter.
“Momentum in risk reduction continued. This is the eighth consecutive quarter we delivered a further material reduction in non-performing loans. In 1Q2017 we reduced NPEs by a further EUR 662 mln and we reduced 90+ DPD by EUR 298 mln. We expect the reduction in non-performing loans to continue and we are actively exploring a number of avenues to accelerate this reduction. When taking into account tangible collateral at fair value, both 90+ DPD and NPEs are fully covered. said the progress bank in its
We were pleased to start the year with the complete repayment of Emergency Liquidity Assistance (ELA), a successful return to the debt capital markets and the listing of shares on the London Stock Exchange.”
Hourican added that the bank’s deposit base is now adequate to fund loan balances.
“Our loan to deposit ratio stands at 95% and deposit balances are stable. During the quarter our Liquidity Coverage Ratio reached European Central Bank compliance levels. The bank’s capital position was improved by the issuance of EUR 50 mln of Tier 2 capital in January 2017. As at 31 March 2017, our Total Capital Ratio stood at 15.6% and our fully loaded CET 1 ratio stood at 14.0%.
“We are pleased to see the Cypriot economy continuing to recover and to note that we continue to maintain strong market shares in lending and deposit-taking in Cyprus. We continue to lend into the Cyprus economy. New lending in the quarter was EUR 690 mln, up by 89% on the FY2016 quarterly average of EUR 365 mln.” The bank said in its quarter report that its NPEs continued on a downward trajectory.
Non-performing exposures (according to stricter the EBA definition) declined by EUR0.6 billion to EUR 10.37 bln from EUR 11.03 bln in the previous quarter.
NPEs amount to 51.8% of the bank’s loan portfolio.
According to the bank, provisions for loan impairments declined to EUR 64 mln in the first quarter of 2017 from EUR 103 mln in end-2016 and EUR 62 mln in the respective period of 2016. However, the bank posted increased provisions for other financial and non-financial assets amounting to EUR 32 mln of which EUR 23 mln concern legacy exposures.
Deposits remained largely stable in the first quarter of the year at EUR 15.53 bln marking a marginal increase of EUR 27 mln from end-2016.
The loan to deposits ratio also remained stable to 95%.
On the end of March, the bank held realestate amounting to EUR 1.43 bln. The bank acquired assets as part of a debt to asset swaps, a tool used by the bank to accelerate loan reduction.
Total loans in the first quarter of 2017 declined to EUR 20.01 bln from EUR 20.13 bln in the fourth quarter of 2016, with loan in Cyprus amounting to EUR 18.06 bln.
The bank’s total cost reached EUR 107 mln from EUR 98 mln in the fourth quarter of 2016, with staff costs amounting to EUR 54 mln.