Bank of Cyprus reports profits of €401m for first nine months of 2024

The Bank of Cyprus has reported profit after tax of €401m, up 15% year-on-year, of which €131m was generated in the third quarter of 2024.

These are profits corresponding to basic earnings per share of €0.90 and Return on Tangible Equity (ROTE) of 22.9%, reflecting a strong increase in tangible book value per share, significantly exceeding the 2024 targets.

The quality of Bank of Cyprus' loan portfolio remains healthy, which is evidenced by the NPL-to-loan ratio of 2.4%, as well as the NPL coverage ratio, which exceeds 95%.

New lending stood at €1.7 billion for the six months ending 30 September 2024, up 9% compared to the corresponding period last year, which led to Bank of Cyprus' NPL portfolio growing by 3% year-to-date, to €10.0 billion.

In a statement, the Bank's CEO Panicos Nicolaou emphasised that the group continues to achieve strong financial and operational results, and remains well positioned to generate stable profitability in the transition to a lower interest rate environment.

At the same time, he expressed satisfaction with the fact that based on the preliminary decision of the European Central Bank's Supervisory Reviewand Evaluation Process (SREP), the existing requirement for supervisory approval for the payment of a dividend is expected to be lifted in January 2025.

Detailed results of the Bank of Cyprus for the six months ended September 30, 2024:

Strong economic growth continues

• The growth rate is expected to rise to around 3.7% in 2024, surpassing the eurozone average.
• Strong new lending of €1.7 billion, up 9% year-on-year.
• Serviced loan portfolio of €10.0 billion, increased by 3% from December 2023.

Return on Tangible Equity (ROTE) of 22.9%

• Net interest income of €624 million, up 9% year-on-year.
• Net interest income for Q3 2024 remains strong at €204m, about the same as Q2 2024, despite a 25bp cut in interest rates.
• Total operating expenses of €266 million, up 7% year-on-year, affected by inflation.
• The cost-to-income ratio remains low at 32%. Cost-to-income ratio for Q3 2024 at 35%, and includes costs related to a small-scale Voluntary Retirement Plan.
• Profit after tax of €401m, up 15% year-on-year, of which €131m in the third quarter of 2024.
• Basic earnings per share of €0.90 for the nine months ended September 30, 2024 (compared to €0.78 for the corresponding nine months of 2023).

Liquidity and balance sheet resilience

• The ratio of NPLs to loans decreased to 2.4% (0.1%3 after credit losses).
• NED coverage rate of 96%.

Credit loss charge on loans amounting to 29 m.p.

• Deposit base, mostly retail, of €20.0 billion, increased by 4% on an annual basis and 1% on a quarterly basis.
• High liquidity on the balance sheet with €7.5 billion placed in the ECB.

Strong capital position and focus on creating shareholder value

• Common Equity Tier 1 (CET1) and Total Capital Adequacy Ratio (calculated for supervisory purposes) of 18.6% and 23.7% respectively.
• Including earnings for Q3 2024, reduced for a related provision for distribution of 50%, the Common Equity Tier 1 (CET1) Ratio increases to 19.1% and the Total Capital Adequacy Ratio to 24.3%.
• Capital generation (CET1)4 amounting to 355 bp. during the nine months ended September 30, 2024, of which approximately 140 m.v. during the third quarter of 2024.
• Target for a distribution rate of 50%5 for 2024, at the upper limit of the Group's Distribution Policy (30%-50%).
• Tangible book value per share of €5,566 on September 30, 2024, increased by 20% on an annual basis.

Listing on the Athens Stock Exchange and delisting from the London Stock Exchange in September 2024, with the aim of enhancing the trading liquidity of the Group's ordinary shares and strengthening the Group's presence in the markets.

• Below is the statement by CEO Panicos Nicolaou:

“We continue to deliver strong financial and operational results, and remain well-positioned to generate solid profitability as we transition into a lower interest rate environment.

The resilience of net interest income, our diversified business model, high liquidity and strong loan portfolio quality were key factors in achieving strong profitability.

For the seventh consecutive quarter, we posted a Return on Tangible Equity (ROTE) higher than 20%, despite the rapid growth of our capital base.

Overall, in the nine months ended 30 September 2024 we recorded profit after tax of €401 million, which corresponds to basic earnings per share of €0.90 and a Return on Tangible Equity (ROTE) of 22.9%, and reflects a strong increase in of tangible book value per share, significantly exceeding the 2024 targets.

We have achieved organic capital generation of 355 bp. for the nine months ended September 30, 2024, exceeding our 2024 capital generation target of more than 300 bp.

Common Equity Tier 1 (CET1) and Total Capital Adequacy Ratio remain strong, at 19.1% and 24.3% respectively, after forecasting a 50% distribution of 20241 earnings, in line with our target.

We are particularly pleased that based on the preliminary decision of the IAEA, the existing requirement for supervisory approval for the payment of the dividend is expected to be lifted in January 2025.

The quality of our loan portfolio remains healthy, evidenced by a NPL-to-loan ratio of 2.4%, as well as a NPL coverage ratio exceeding 95%.

The Cypriot economy continues to remain strong and resilient, despite geopolitical developments. The growth rate is expected to increase by around 3.7% in 2024, significantly outstripping the eurozone average.

We continue to support the domestic economy, granting new lending of €1.7bn for the nine months ended 30 September 2024, up 9% compared to the corresponding period last year.

This has led to an increase in our NPL portfolio by 3% since the beginning of the year, to €10.0 billion.

During Q3 2024, we successfully implemented our plan to list our shares on the Athens Stock Exchange ('ATH'), in conjunction with delisting from the London Stock Exchange.

We expect that our listing on the ATHEX will strengthen the trading liquidity of the shares, as well as the presence of the Bank in the markets.

We expect to continue to make progress in the areas under our control. The target for a high-teens Return on Equity (ROTE) calculated on Common Equity Tier 1 (CET1) of 15% remains for 2025, despite market expectations for lower interest rates than those of August 2024.

With the financial results of 2024, we will update all our financial targets and review our distribution policy, in the context of the current market conditions.

Given our strong capital generation, diversified business model and supportive macroeconomic environment, we remain committed to supporting our customers and the wider economy, reinvesting in the business and generating strong returns for our shareholders."

(Source: InBusinessNews)