The Bank of Cyprus reported on Wednesday profits of €81 mn for the first half of 2014.
In its interim financial results for the six months ended 30 June 2014, the Bank said that the core tier 1 capital ratio was improved by 70 basis points to 11,3% at 30 June 2014, compared to 10,6% at 31 March 2014. Taking into account the intended €1 bn capital increase, 1 the pro-forma CET1 ratio (fully loaded basis) rises to 15,1%, which according to the Bank is significantly ahead of most of its European peers.
Gross loans and deposits were €25,3 bn and €13,8 bn respectively, with the net loans to deposits ratio totalling 148% (compared to 151% at 31 March 2014 and to 145% at 31 December 2013).
Emergency Liquidity Assistance (ELA) has been reduced by €720 mn to €8,78 bn at 30 June 2014, down from €9,51 bn at 31 March 2014 and €9,56 bn at 31 December 2013. ECB funding remained at €1,4 bn at 30 June 2014. Post 30 June 2014, ECB funding was reduced by €450 mn and ELA was reduced by a further €100 mn.
Loans in arrears for more than 90 days (90+ DPD)1 declined by 1,3% during the second quarter of 2014, totalling €12.591 mn at 30 June 2014 (compared to €12.756 mn at 31 March 2014 and €13.003 mn at 31 December 2013) and representing 49,8% of gross loans (90+ DPD ratio). But as the Bank clarifies, adjusting for the disposal of the Ukrainian operations and the loans in Serbia, there was an increase of €0,4 bn in 90+ DPD “reflecting the recessionary environment in the Group’s home market of Cyprus and the lack of relevant legislative tools to enable the Bank to engage effectively with borrowers”. The provision coverage ratio of 90+ DPD totalled 39%, while taking into account tangible collateral at fair value, the 90+ DPD are fully covered.
Bank of Cyprus Group’s CEO John Patrick Hourican noted that the Bank has made “good progress in the implementation of its restructuring during the second quarter of 2014”, and that it continues to deliver against its strategic objectives.
Hourican indicated that despite the full abolition of internal restrictive measures as of 30 May 2014, the Bank`s deposit base is showing stabilising signs. “Our improving liquidity position allowed us to release the last tranche of blocked decree deposits on 31 July 2014” he said.
Hourican pointed out that the ex-Laiki integration has been completed with the successful IT systems migration in June 2014, ensuring uniform service for all customers.
He also referred to tomorrow`s shareholders` Extraordinary General Meeting (EGM). “We look forward to the approval by existing shareholders at tomorrow’s EGM for the capital increase of €1 bn which will represent a `page turning` moment for the Bank,” he said, noting that this capital increase will boost the Bank’s CET1 ratio (fully loaded basis) to 15,1%, positioning the Bank at the upper end of the capital league table for European Banks.
According to Hourican, the success of the private placement among institutional investors from Europe, North America and Russia demonstrates their confidence in the Bank’s turnaround and the economic recovery in Cyprus. “This deliberate strengthening of our capital position will allow us to accelerate the implementation of our restructuring, to regain the trust and confidence of depositors and other stakeholders and will provide us with improved funding options in order to normalise the Bank’s funding structure” he added, pointing out that the €1 bn capital increase will also allow the Bank to support the Cypriot economic recovery, through serving its customers and delivering value for its shareholders.”