Bank of Cyprus reports €508m profit and proposed distribution rate of 50% in 2024

Bank of Cyprus has reported after-tax profits of €508 million for the year ended 31 December, 2024, up 4% compared to 2023, and exceeding all financial targets set for 2024, accelerating the creation of value for its shareholders.

Presenting the results, Bank of Cyprus CEO Panicos Nicolaou announced the proposal for a payout ratio to shareholders of 50%, which is the upper limit of the bank's distribution policy for 2024.

The percentage (50%) consists of a cash dividend of €211 million and a share buyback of €30 million.

As Nicolaou pointed out, overall, the distribution for 2024 is equivalent to a double-digit dividend yield, higher than the average of the Eurozone banking system for 2024.

The total distribution to shareholders from the 2022-2024 profitability amounts to €400 million, equivalent to 24% of the bank's capitalisation, exceeding the target set in June 2023 during the investor briefing, both in size and time frame.

It is noted that Panicos Nicolaou pointed out that recognising the importance of continuing to generate strong returns for its shareholders, in addition to upgrading its distribution policy, Bank of Cyprus will consider the introduction of interim dividends.

The bank's announcement also underlined the following key points from its end of year results:

Strong economic growth continues

• Economic growth of 3.4% in FY2024; expected to continue to grow by c.3.3%1 in 2025 outpacing Euro area average
• Record new lending of €2.4 bn in 2024, up 20% yoy
• Gross performing loan book at €10.2 bn, up 4% yoy

Delivered ROTE of >20% for two consecutive years

• NII at €822 mn up 4% yoy; 4Q2024 NII down 3% qoq to €198 mn, mainly reflecting the decline in interest rates
• Total operating expenses2 up 8% yoy to €367 mn, due to higher staff costs, IT, marketing and professional fees
• Cost to income ratio2 remains low at 34%; 4Q2024 cost to income ratio2 at 38% largely due to quarterly seasonally higher expenses
• Profit after tax of €508 mn up 4% yoy, of which €107 mn in 4Q2024
• Basic earnings per share of €1.14 for FY2024, up 5% yoy

High liquidity and healthy asset quality

• NPE ratio reduced to 1.9%3
• NPE coverage at 111%3 ; cost of risk at 30 bps
• Retail funded deposit base at €20.5 bn, up 6% yoy and 3% qoq
• Highly liquid balance sheet with €7.6 bn placed at the ECB

Robust capital and shareholder remuneration

• Regulatory CET1 ratio and Total Capital ratio at 19.2% and 24.0% respectively
• CET1 generation4 of 400 bps in FY2024
• Tangible book value per share of €5.77 5 as at 31 December 2024 up 17% yoy
• Proposed distribution at 50% payout ratio: €211 mn6 cash dividend and €30 mn share buyback

Nicolaou's full statement can be read below:

“We entered 2025 from a position of strength, achieving operational excellence in 2024 with ROTE exceeding 20% for the second consecutive year. This performance is testament to our robust capital and liquidity position, our strong asset quality and our diversified business model.

As a result, we generated a profit after tax of €508 mn, 4% higher than 2023 and surpassed all our key financial targets for 2024, accelerating shareholder value creation. In line with our ongoing, unwavering commitment of providing sustainable shareholder returns, we delivered on our promises and today we are pleased to propose a distribution based on a 50% payout ratio, at the topend of our 2024 distribution policy.

This comprises a €211 mn1 cash dividend and a €30 mn share buyback, a significant increase in both payout ratio and total quantum compared to the previous year. In total it represents a double-digit yield2 , which is above the 2024 Eurozone banking sector average.

Overall, we delivered €400 mn of cumulative distributions out of 2022-2024 earnings, representing 24% of our market capitalisation and exceeding the target we set at the Investor Update event in June 2023 in both size and timing.

Strong capital generation drove our CET1 ratio and Total capital ratio to 19.2% and 24.0% respectively, net of the distribution at the 50% payout ratio. Our asset quality remains healthy demonstrated by an NPE ratio below 2%3 whilst NPEs are fully covered.

During 2024, we extended a record of €2.4 bn in new loans, an increase of 20% on the prior year, whilst maintaining strict lending criteria. Our gross performing loan portfolio grew 4% to €10.2 bn. Looking ahead, as the interest rate environment normalises towards c.2%, we reiterate our 2025 target of delivering high-teens ROTE on 15% CET1 ratio or mid-teens ROTE on reported equity.

Our priorities going forward will centre on prudent capital management, driving new growth initiatives focused on loan book growth, non interest income diversification, maintaining cost discipline whilst re-investing in the business and protecting the fundamentals of our asset quality.

We recognise the importance of continuing to deliver attractive shareholder returns and hence we are also upgrading our Distribution Policy today by increasing the payout ratio range to 50-70%. We will also consider the introduction of interim dividends.

As we enter 2025, we are fully equipped to continue succeeding in the future, leveraging on our key strengths to ensure we are a well-capitalised and highly profitable organisation, with an unparalleled focus on supporting our customers and the broader economy.”