A tal base
tional Financial Reporting Standard in 2018 requiring increased levels of provisioning, known as IFRS 9, will represent another claim on available resources.
At the same time the Board will continue to implement the growth strategy already in place, with a particular focus on new products and services such as home loans and investment funds, to create a broader income base needed to meet higher operating costs and to add shareholder value. This will be accompanied by more investment in systems and human resources to deal with the challenge posed by the rapid pace of change in financial technology. Emphasis will also continue to be placed on the bank’s plan to reduce non-performing loans, which is well on track to achieve the set targets.
During the past year the Board made repeated efforts to resolve the issue surrounding the 49% shareholding owned by Cyprus Popular Bank Public Co. Ltd. These included our offer to buy back these shares, which initiative, however, was not supported by CPB itself at the last Annual General Meeting. This would have resulted in a greater participation by small shareholders in the bank’s capital, thus ensuring that no single shareholder would be in a position to influence the direction of the bank to his own advantage.
Furthermore, it would have also opened up the possibility for the Board to reactivate its beneficial share ownership scheme for all the staff.
Failure to identify a suitable investor was therefore prolonged until very recently when the National Development and Social Fund stepped in to purchase the shares, an event which is now in the public domain. It is to be hoped that this development will lead to a wider public participation in the share capital of the bank.
Once again, therefore, I am able to report that the bank’s simple yet time-tested business model delivered satisfactory financial results in 2017, and this in spite of the difficult operating environment and the fact that it cannot benefit from the economies of scale available to larger credit institutions. The Board thus feels justified in reaffirming its prudent approach to business: by limiting relations to those customers who meet the bank’s demanding standards, not only in its lending operations but also in its international banking business; by prioritising capital protection over short-term financial gain in our treasury activity and by avoiding sectors and activities which have proved to be inherently risky. These policy guidelines are a necessary underpinning of good corporate governance.
The year’s positive outcome would not have been possible without the professional competence, commitment and integrity of the staff and the management team ably led by the chief Executive officer, Joseph Said. I would like to thank them and my fellow directors, as well as you the bank’s shareholders and all our customers for their support and continued loyalty.