Bank of Cyprus records €220m profit in H1

Bank of Cyprus (BoC) has reported a €220m profit after tax for the first half of 2023, €125m of which was acquired in the second quarter alone.

The group’s performance improved significantly compared with last year’s €43m first-half profit.

The bank’s operational costs were down 2% year over year, reflecting the measures that were taken in 2022 to boost the bank’s performance.

Its CET1 ratio was at 16.0% and Total Capital ratio at 21.1%.

Announcing its financial results for the six months ending 30 June, BoC said the bank was helped along by strong economic growth that saw Cyprus’ GDP expand by 3.4% in the first quarter of the year, which was the second highest in the Eurozone.

It said new lending remained stable at €1.1b, despite the European Central Bank’s (ECB) repeated interest rate hikes, while its gross performing loan book remained flat q-o-q and y-o-y at €9.9b, as ongoing repayments offset new lending.

Strong profitability continuing to benefit from tailwinds

BoC said its Net Interest Income (NII) of €358m was up 146% y-o-y, underpinned by rising interest rates and continued low deposit passthrough.

Total operating expenses were down 2% y-o-y, while the cost to income ratio was reduced to 32%.

The bank’s Return on Tangible Equity (ROTE) reached 24.0% (vs 4.9% in 1H2022), supported by strong NII growth

Liquid and resilient balance sheet

Its asset quality was in line with the targets, with an NPE ratio of 3.6% (0.8% on net basis), down 7 percentage points y-o-y. Coverage increased to 78%, while the cost of risk was at 48 bps.

Its sticky, retail funded deposit base was at €19.2b, up 4% y-o-y and broadly flat q-o-q, while the bank boasts a highly liquid balance sheet with €9.1b parked at the ECB.

BoC said its 2025 MREL requirement has already achieved, with the successful issuance of €350m senior preferred notes in July 2023.

Robust capital and shareholder focus

Meanwhile, BoC said it had organic capital generation of c.220 bps in the first half of the year, of which c.120 bps was in the second quarter, while it successfully refinanced €220m of AT1 Capital Securities.

It also paid a dividend in June 2023 with a payout ratio of 14% out of 2022 earnings