Panicos Nicolaou: “We are well on track to achieve our 2023 targets”

Bank of Cyprus (BoC) is well on track to achieve its 2023 targets, delivering a strong financial and operational performance on the back of continuing interest rate rises, the banks CEO Panicos Nicolaou said in a statement following the announcement of the bank’s first half results.

“In the first half of 2023 we delivered a strong financial and operational performance, on the back of continuing interest rate rises, improving efficiency and a broadly stable cost of risk, generating a profit after tax of €220m, equivalent to a ROTE (return on tangible equity) of 24.0%,” said Nicolaou.

“This performance demonstrates that we are well on track to achieve our 2023 targets presented during our inaugural investor update event in June 2023,” he added.

BoC’s total income amounted to €511m, of which €358m relates to net interest income, more than double last year’s level, a reflection of the higher interest rate environment supported by continued low deposit pass-through levels, said Nicolaou.

“Our tight cost management is proving successful despite persistent inflationary pressures with total operating expenses reduced by 2% y-o-y and our cost to income ratio (excluding levies and contributions) at 32%,” he continued. “Our cost of risk remained broadly stable y-o-y at 48 bps, underpinned by a low NPE ratio of 3.6% and an improved level of coverage of 78% as at 30 June 2023. We have a highly liquid balance sheet and are therefore benefitting significantly from higher rates; over one third of our assets are cash balances with central banks while our deposit base grew modestly by 4% y-o-y to €19.2b.”

Despite uncertainty in the global and European economic outlook, the Cypriot economy remains robust with strong economic growth of 3.4% in 1Q2023, the second highest in the Eurozone. As the largest financial group in Cyprus, BoC continued to support the economy by extending €1.1b of new loans in the first half of the year, while maintaining strict lending criteria, Nicolaou said.

“Our performing loan book remained broadly flat q-o-q and y-o-y at €9.9b, as ongoing repayments offset new lending,” he said. “Our capital position remains robust and comfortably in excess of our regulatory requirements, with approximately 220 bps of organically generated capital in 1H2023. We ended the first half with a CET1 ratio of 16.0% and a Total Capital ratio of 21.1%.”

Recently the Group made a successful return to capital markets with the refinancing of the €220m AT1 Capital securities in June 2023 and the issuance of €350m MREL-eligible senior preferred notes in July 2023.

“In this respect, the Group is now already in full compliance with its 2025 MREL requirements,” Nicolaou said.

Finally, the bank’s CEO reiterated how in June 2023, BoC made its first dividend payment for 12 years, “marking the Group’s transformation into a strong, diversified, well-capitalised and sustainably profitable banking and financial services organisation”.

The Group’s strong financial performance is progressing well, he said, in line with its targets, and lays the foundations for shareholder value creation and sustainable returns.