AstroBank: The top choice for investment services

Having attained a central role in the country’s financial scene, AstroBank has evolved into a key pillar of the banking sector, now aiming to establish itself as the third largest bank in Cyprus, according to the Head of Private Banking, Treasury & ESG, Ms Charis Kynigou Landas.

In Private Banking, AstroBank has developed an extensive client base, given its size and market share.

It is therefore no coincidence that, last June, AstroBank was named as the Best Private Bank – Cyprus at the Global Private Banking Innovation Awards 2023.

A distinction that serves as testament to the professionalism and high-quality services offered by the Bank through innovative ideas and products.

Through its Private Banking division, AstroBank offers a wide range of investment solutions, such as reception and transmission of orders (RTO) services, investment advice, portfolio management, specialised low-risk investment products and capital protection products (mainly during periods of major market downturns), alternative investments, sustainable & impact investments, as well as hedge funds.

The Bank also offers custody and foreign exchange services as well as loans backed by investment products (Lombard loans).

AstroBank’s main advantage when it comes to Private Banking services, is that due to its size, the Bank is more flexible and able to adapt to a client’s requests. By focusing on their individual needs and expectations, the Bank can offer clients the bespoke solutions they seek.

The extensive and international experience of its officers, along with emphasis on continuous communication, support, and adjustment to the needs of clients, make AstroBank a top choice for investment services.

With a focus on personal relationships

“Our reliability, focus on personal contact, as well as our unwavering steadfastness on building long-term relationships of mutual trust with our clients, are all vital elements of our operation”, Ms Kynigou points out.

Although the profile of Private Banking clients has changed in recent years, with average age dropping and the means of communication increasing because of digital transformation, interpersonal relationships remain just as important.

Emphasis on personal contact and quality relationships are an integral part of the Bank’s core values, not just the philosophy of Private Banking.

By offering customers the opportunity to be directly in touch with the Bank’s officers combined with its digital channels, we make their lives easier.

AstroBank’s objective is to continuously improve the quality of its services and streamline its processes, as it strives to offer efficient customer service, attractive prices, support, personal attention, and flexibility.

In the past three years, the Bank’s business plan has led to significant operational improvements, which achieved better quality customer service, while seeing consistent profitability and robust capital adequacy.

In 2023, the Bank successfully issued Senior Preferred Bonds of around €33m, significantly strengthening its Minimum Requirement for own funds and Eligible Liabilities (MREL) ratio. The success reflects the confidence investors have in the Bank.

It also raised deposit rates in response to the needs of its customers and the economy, offering a fixed return on savings to both existing and new clients, from their very first euro.

Another important development was the bank’s decision to freeze the Euribor base rate at 2.75% for primary residence mortgages of up to €350,000, for borrowers who did not have any arrears.

It should also be noted that the Bank is currently working on introducing a new product addressed to individuals who are looking for something better than a term deposit.

Climate Change and ESG

Recognising climate change as the most important challenge facing humanity today, AstroBank has developed an action plan to integrate ESG criteria into its operations and to prepare itself and its customers for the transition to green and sustainable development.

It has also established an ESG Unit and an ESG Steering Committee, whose remit is to monitor and implement all ESG-related issues.

The Bank has integrated ESG criteria into its risk management framework and developed an action plan to measure and manage greenhouse emissions, including financed emissions, while it is in the process of integrating ESG criteria into its clients’ creditworthiness assessments.

AstroBank continues to engage in CSR activities through its long-standing active support of organisations that aim to foster a social environment of equality, growth, and progress; its 14-year-long support of Europa Donna Cyprus being a prime example of these actions.

Interest rate cuts: The challenge for 2024

By Charis Kynigou Landas

There is a very interesting ongoing debate on whether the shares and bonds markets will continue to rally in 2024, as they did in 2023, marking a very good year for investors.

The main question in relation to how 2024 will turn out, however, is whether Europe and the US will be facing a recession. In the US, it appears growth will be higher than what is expected from the European economy.

The European economy is expected to grow by 0.5% in the first half of 2024, while the forecast for the US is for the economy to grow by at least 1.5%. Both economies should expect a slowdown in the second half of the year, a development that will force Central Banks to take drastic steps in a bid to prevent the unpleasant effects of a recession.

The reduction in interest rates remains an issue of the utmost importance. Markets predict three or four rate reductions of 25 basis points each in the US, starting in the second half of 2024, while in Europe, the rate cuts may start earlier, right after the first quarter.

Big yield curve changes have already been seen over the past few weeks. At the same time, inflation has subsided from the historically high levels it had reached, but we are still far from the 2% target.

Markets view positively the potential reduction in interest rates as well as the expected support measures by the Central Banks in, provided economic growth goes into reverse. Already, key stock market indicators have been on an upward trend of around 20-25%.

No huge fluctuations are expected in the upcoming period and only when Central Banks cut interest rates will we see a new rally, which however, is not expected to reach very high levels.

Special mention must also be made of the boost to shares and growth given by AI (artificial intelligence) companies. Provided this trend continues, we will see shares move much higher, especially those of companies that benefit from technology.

Among the downbeat messages of the new year, is the fact that both the US and Europe continue to face serious fundamental problems.

In Europe, populists and far-right parties are becoming increasingly influential due to the widening rift created in the West because of globalisation, new technologies, high prices, the large increase in migrant flows, the reduction in social benefits, and the fall of living standards.

The rise of real estate prices as well as the rise of shares/bonds have contributed significantly to worsen this rift. Meanwhile, in the US, former president Donald Trump’s re-election is a possibility. At the same time, however, opposing tendencies have also been recorded.

De-globalisation, the rise in energy prices, high fiscal deficits, and a higher cost of living – which translates to more working hours to cover needs – may eventually lead to a return to high inflation. In my opinion, however, this scenario is not very likely.

What is certain is that investors need to shape their portfolios according to their investment profile and the risk they are willing to take on, as well as their goals.

Over the past months, high interest rates have offset risk-taking. However, in recent weeks, bonds became an outlet for investors to build a portfolio with significant returns for the next 3 to 5 years.

In terms of currencies, specifically the euro-dollar exchange rate, and provided our forecasts materialise and growth rates in Europe and the US reach 0.5% and 1.5% respectively, we could perhaps see the exchange rate drop to the low levels seen in the past, i.e. around €1.05.

If the conditions allow it, however, and there is a significant decrease in salaries and inflation, and the European Central Bank acts faster than the Fed when it comes to interest rates, then the exchange rate may climb to €1.10 – €1.12.

However, if our forecasts for the second half of 2024 are confirmed and the US economy does slow down, the exchange rate will rise, reaching €1.15-1.20. Lately, we have been seeing an increase in gold purchases, as investors expect Central Banks will reduce interest rates. If this happens, then it is very likely that we will see a significant upward trend in this direction.

The important thing is for investors to look for investment options in the markets. It should be noted that the average stock market return in the US in the past 20 years has been over 10%. Time can tame fluctuations! This is why investors need to invest in diverse portfolios with low-correlation assets.

From left to right:

Andria Demosthenous Supervisor Client Service and Operations Unit, Rachel Koen Manager Private Banking, Charis Kynigou Landas Head Private Banking, Treasury and ESG, Smaragda Demetriou Relationship Manager, Private Banking, Margarita Hadjiandreou ESG Coordinator, Antonios Yemenaris Senior Officer Client Services & Operations, Private Banking, Evi Pavlidou Xipsiti Client Services & Operations Unit Officer.