TIDMBOCH
RNS Number : 2257T
Bank of Cyprus Holdings PLC
13 November 2023
Announcement
Group Financial Results for the nine months ended 30 September
2023
Nicosia, 13 November 2023
Key Highlights for the nine months ended 30 September 2023
Resilient economic outlook
-- Continued strong economic growth; Cyprus' GDP expanded by
2.3%(1) in 2Q2023, outperforming the Eurozone average
-- New lending of c.EUR1.6 bn, despite the rising interest rate environment
-- Gross performing loan book at EUR9.9 bn broadly flat year on
year as repayments continue to offset new lending
Another strong quarterly performance
-- NII of EUR572 mn up 144% year on year; up 9% in 3Q2023 compared to prior quarter
-- Non-NII of EUR224 mn up 5% year on year, covering 90% of total operating expenses(2)
-- Total operating expenses(2) up 3% year on year with savings
partly offsetting inflationary pressures; cost to income ratio(2)
reduced to 31%, down from 54% in prior year
-- Profit after tax of EUR349 mn (vs loss of EUR19 mn in
9M2022); 3Q2023 profit after tax of EUR129 mn up 3% on prior
quarter
-- Earnings per share of EUR0.78 for 9M2023, of which EUR0.29 in 3Q2023
-- ROTE of 24.6% in 9M2023 and 25.6% in 3Q2023
Liquid and resilient balance sheet
-- Asset quality in line with target; NPE ratio at 3.5% (0.8% on
net basis) down 6 p.p. year on year
-- NPE Coverage at 77%; Cost of risk at 58 bps
-- Sticky, retail funded deposit base at EUR19.3 bn, up 3% year
on year and broadly flat quarter on quarter
-- Highly liquid balance sheet with EUR9.6 bn placed at the ECB
Robust capital and shareholder focus
-- Regulatory CET1 ratio and Total Capital ratio of 15.2%(3) and 20.4%(3) respectively
-- Including 3Q2023 profits net of dividend accrual, CET1 ratio
at 15.8%(4) and Total Capital ratio at 21.0%(4)
-- Organic capital generation of c.345 bps in 9M2023, of which c.125 bps in 3Q2023
Long Term Deposit rating upgraded to Investment grade by Moody's
in October 2023
1. Source: Cyprus' Ministry of Finance
2. Excluding special levy on deposits and other levies/contributions
3. Includes reviewed profits for 1H2023 and a dividend accrual
thereon as per the top end of the Group's dividend policy. Any
recommendation for a dividend is subject to regulatory approval
4. Includes unaudited/unreviewed profits for 3Q2023 and a
dividend accrual thereon as per the top end of the Group's dividend
policy. Any recommendation for a dividend is subject to regulatory
approval
*On 1 January 2023, the Group adopted IFRS 17 'Insurance
contracts which replaced IFRS 4 'Insurance contracts'. 2022
comparative information presented throughout are on a restated
basis unless otherwise stated. Further information on IFRS 17 is
provided under the sections "Commentary on Underlying Basis' and to
Section F.9 of this announcement.
Group Chief Executive Statement
"We have delivered another quarter of strong profitability,
achieving an ROTE of over 20% for the third consecutive quarter,
demonstrating the Group's continuing ability to generate
sustainable profitability and shareholder value creation. During
the nine months of 2023, we recorded a profit after tax of EUR 349
mn, corresponding to a ROTE of 24.6%, facilitated by strong
revenues.
Total income amounted to EUR796 mn, of which EUR572 mn related
to net interest income, more than double last year's level, a
reflection of the higher interest rate environment and a
well-managed deposit pass-through level. Non-interest income
represents a significant and sustainable contributor to the Group's
profitability and covers c.90% of total operating expenses. Our
cost to income ratio improved further to 31%, driven by higher
income, whilst our cost base remains under control, with savings
partly offsetting inflationary pressures.
Against the backdrop of geopolitical developments and heightened
uncertainty, the Cypriot economy is once again proving resilient
with strong economic growth of 2.3% in 2Q2023, outpacing the
Eurozone average. As the largest financial group in Cyprus, we
continue to support the economy by extending c. EUR 1.6 bn new
loans in 9M2023, whilst maintaining prudent underwriting
standards.
Our balance sheet is characterised by ample liquidity as well as
strong asset quality and a robust capital position. Over one third
of our assets are cash balances with central banks, benefitting
significantly from higher rates while our deposit base continued to
grow. Our NPE ratio stood at 3.5%, in line with our target and our
coverage stood at 77%. Our cost of risk at 58 bps remains within
our 2023 target range.
In October 2023 Moody's upgraded the Bank's long term deposit
rating to investment grade for the first time in 12 years,
confirming this new chapter of becoming a strong, diversified
well-capitalised and sustainably profitable organisation. With
another strong set of results in 3Q2023, the Group's performance is
well ahead of 2023 targets and notwithstanding typical 4Q2023
seasonality, we expect to comfortably exceed our 2023 ROTE target
of over 17%. We continue to execute strategy, with a clear focus on
supporting our customers, delivering shareholder value and
assisting the development of the Cypriot economy."
Panicos Nicolaou
A. Group Financial Results - Underlying Basis
Unaudited Interim Condensed Consolidated Income Statement
--------------------------------------------------------------------- --------------
9M2022
IFRS 17
EUR mn 9M2023 (1) 3Q2023 2Q2023 qoq +% yoy +%
------------------------------------ ------ -------- ------ ------ ------ ------
Net interest income 572 234 214 196 9% 144%
Net fee and commission
income 135 142 45 46 -1% -5%
Net foreign exchange gains
and net gains/(losses)
on financial instruments 29 14 8 8 -13% 110%
Net insurance result 38 34 13 15 -12% 12%
Net gains/(losses) from
revaluation and disposal
of investment properties
and on disposal of stock
of properties 7 11 2 3 -25% -34%
Other income 15 12 3 9 -68% 27%
------------------------------------ ------ -------- ------ ------ ------ ------
Total income 796 447 285 277 3% 78%
------------------------------------ ------ -------- ------ ------ ------ ------
Staff costs (141) (139) (48) (47) 2% 2%
Other operating expenses (107) (102) (38) (35) 10% 4%
Special levy on deposits
and other levies/contributions (30) (27) (12) (7) 61% 12%
Total expenses (278) (268) (98) (89) 10% 3%
------ -------- ------ ------ ------
Operating profit 518 179 187 188 -1% 190%
------------------------------------ ------ -------- ------ ------ ------ ------
Loan credit losses (44) (36) (20) (13) 49% 24%
Impairments of other financial
and non-financial assets (38) (20) (8) (19) -57% 88%
Provisions for pending
litigations, regulatory
and other provisions (net
of reversals) (20) (3) (6) (8) -18% -
------------------------------------ ------ -------- ------ ------ ------ ------
Total loan credit losses,
impairments and provisions (102) (59) (34) (40) -14% 73%
------------------------------------ ------ -------- ------ ------ ------ ------
Profit before tax and
non-recurring items 416 120 153 148 3% 247%
------------------------------------ ------ -------- ------ ------ ------ ------
Tax (63) (19) (23) (22) 5% 238%
Profit attributable to
non-controlling interests (2) (2) (1) 0 123% -9%
Profit after tax and before
non-recurring items (attributable
to the owners of the Company) 351 99 129 126 2% 253%
------ -------- ------ ------ ------
Advisory and other transformation
costs - organic (2) (10) - (1) -100% -77%
------------------------------------ ------ -------- ------ ------ ------ ------
Profit after tax - organic
(attributable to the owners
of the Company) 349 89 129 125 3% 290%
------------------------------------ ------ -------- ------ ------ ------ ------
Provisions/net profit/(loss)
relating to NPE sales - (1) - - - -100%
Restructuring and other
costs relating to NPE sales - (3) - - - -100%
Restructuring costs - Voluntary
Staff Exit Plan (VEP) - (104) - - - -100%
Profit/ (loss) after tax
(attributable to the owners
of the Company) 349 (19) 129 125 3% -
------ -------- ------ ------ ------
A. Group Financial Results - Underlying Basis (continued)
Unaudited Interim Condensed Consolidated Income Statement- Key
performance Ratios
9M2022
IFRS
Key Performance Ratios 9M2023 17 (1) 3Q2023 2Q2023 qoq+% yoy+%
-------------------------------- ------ ------- ------ ------ --------- ---------
Net Interest Margin
(annualised) 3.32% 1.39% 3.63% 3.43% 20 bps 193 bps
-------------------------------- ------ ------- ------ ------ --------- ---------
Cost to income ratio 35% 60% 34% 32% 2 p.p. -25 p.p.
-------------------------------- ------ ------- ------ ------ --------- ---------
Cost to income ratio
excluding special levy
on deposits and other
levies/contributions 31% 54% 30% 29% 1 p.p. -23 p.p.
-------------------------------- ------ ------- ------ ------ --------- ---------
Operating profit return
on average assets (annualised) 2.7% 0.9% 2.9% 3.0% -0.1 p.p. 1.8 p.p.
-------------------------------- ------ ------- ------ ------ --------- ---------
Basic earnings per share
attributable to the
owners of the Company
(EUR)(2) 0.78 (0.04) 0.29 0.28 0.01 0.82
-------------------------------- ------ ------- ------ ------ --------- ---------
Return on tangible equity
(ROTE) 24.6% (1.4%) 25.6% 26.6% -1.0 p.p. 26.0 p.p.
-------------------------------- ------ ------- ------ ------ --------- ---------
Tangible book value
per share (EUR ) 4.63 3.81 4.63 4.34 0.29 0.82
-------------------------------- ------ ------- ------ ------ --------- ---------
1. On 1 January 2023, the Group adopted IFRS 17 'Insurance contracts
which replaced IFRS 4 'Insurance contracts'. 2022 comparative information
presented throughout are on a restated basis unless otherwise stated.
For further details, please refer to Section F.9 of this announcement.
2. The diluted earnings per share attributable to the owners of
the Company for 3Q2023 amounted to 28.9 cents and 78.2 cents for
9M2023
p.p. = percentage points, bps = basis points, 100 basis points
(bps) = 1 percentage point
Commentary on Underlying Basis
The financial information presented in this Section provides an
overview of the Group financial results for the nine months ended
30 September 2023 on the 'underlying basis' which management
believes best fits the true measurement of the performance and
position of the Group, as this presents separately any
non-recurring items and also includes certain reclassifications of
items, other than non-recurring items, which are done for
presentational purposes under the underlying basis for aligning the
presentation with items of a similar nature.
Reconciliations between the statutory basis and the underlying
basis to facilitate the comparability of the underlying basis to
the statutory information, are included in Section F.1
'Reconciliation of Interim Income statement for the nine months
ended 30 September 2023 between statutory basis and underlying
basis' and Section H under 'Alternative Performance Measures' and
Section I under 'Definitions & Explanations'.
Throughout this announcement, financial information in relation
to FY2022 and quarterly 2022 financial information has been
restated for the effects of transition to IFRS 17 which was adopted
on 1 January 2023 and applied retrospectively. As a result, 2022
financial information, ratios and metrics are presented on a
restated basis unless otherwise stated. Further information on the
impact of IFRS 17 transition is provided below and in Section F.9
of this announcement.
Throughout this announcement, the capital ratios as at 31
December 2022 have been restated in order to take into
consideration the 2022 dividend declaration. This refers to the
proposal by the Board of Directors to the shareholders of a final
dividend in respect of the FY2022 earnings following the approval
by the European Central Bank ('ECB'). The proposed final dividend
was declared at the Annual General Meeting ('AGM') which was held
on 26 May 2023. This dividend amounted to EUR22.3 mn in total and
had a negative impact of 22 bps on the Group's CET1 ratio and Total
Capital ratio as at 31 December 2022. As a result, the 31 December
2022 capital ratios are presented as restated for the 2022 dividend
unless otherwise stated. Additionally, throughout this
announcement, the capital ratios as at 30 June 2023 are presented
including 1H2023 reviewed profits and a dividend accrual thereon at
the top end of the payout range of the Group's approved dividend
policy in compliance with the Capital Requirements Regulation and
in line with the ECB Decision EU (2015/656) on the recognition of
interim profits in CET1 capital. Further details are provided in
Section 'A.1.1 Capital Base'.
Capital ratios including retained earnings are referred to the
CET1 ratio and Total capital ratios as at 30 September 2023 which
include unaudited/unreviewed profits for the quarter ended 30
September 2023 and a dividend accrual thereon at the top end of the
Group's dividend policy.
Transition to IFRS 17
On 1 January 2023 the Group adopted IFRS 17 'Insurance
Contracts' ('IFRS 17') which replaced IFRS 4 'Insurance contracts.
IFRS 17 is an accounting standard that was implemented on 1 January
2023, with retrospective application and establishes principles for
the recognition, measurement, presentation and disclosure of
insurance contracts issued, investment contracts with discretionary
participation features issued and reinsurance contracts held. In
substance, IFRS 17 impacts the phasing of profit recognition for
insurance contracts as profitability is spread over the lifetime of
the contract compared to being recognised substantially up-front
under IFRS 4. This new accounting standard does not change the
economics of the insurance contracts but decreases the volatility
of the Group's insurance companies profitability.
Commentary on Underlying Basis (continued)
Transition to IFRS 17 (continued)
The Group's total equity as at 31 December 2022 as restated for
IFRS 17 compared to IFRS 4, was reduced by overall EUR 52 mn
(predominantly relating to the life insurance business of the
Group) from the below changes:
-- The removal of the present value of in-force life insurance
contracts ('PVIF') asset including the associated deferred tax
liability, resulting in a reduction of c.EUR 101 mn in the Group's
total equity.
-- The remeasurement of insurance assets and liabilities
(including the impact of the contractual service margin('CSM'))
resulting in an increase in the Group's equity by EUR49 mn.
The estimated future profit of insurance contracts is included
in the measurement of the insurance contract liabilities as the
contractual service margin ('CSM') and this will be gradually
recognised in revenue, as services are provided over the duration
of the insurance contract. A contractual service margin liability
of c.EUR 42 mn was recognised as at 31 December 2022 (reflected in
the impact from the remeasurement of insurance liabilities
mentioned above).
With regards to the Group's income statement for the year ended
31 December 2022, as restated for IFRS 17, the profit after tax
(attributable to the owners of the Company) was reduced by EUR14 mn
to EUR57 mn (vs EUR71 mn under IFRS 4) reflecting mainly :
-- Profit is deferred and held as CSM liability as mentioned
above to be recognised in the income statement over the contract
service period.
-- The impact of assumption changes relating to the future
service is also deferred through CSM liability and is recognised in
the income statement over the contract service period.
-- There is increased use of current market values in the
measurement of insurance assets and liabilities (for unit-linked
business) and market volatility on unit-linked business is deferred
to the CSM, thereby reducing the volatility in the income
statement.
The transition to IFRS 17 had no impact on the Group's
regulatory capital. However, as a result of the benefit arising
from the remeasurement of the insurance assets and liabilities, the
life insurance subsidiary distributed EUR 50 mn as dividend to the
Bank in February 2023, which benefited Group regulatory capital by
an equivalent amount on the same date, enhancing CET1 ratio by c.50
bps. Going forward, meaningful dividend generation from the
insurance business is expected to continue.
A. Group Financial Results- Underlying Basis (continued)
Unaudited Interim Condensed Consolidated Balance Sheet
=================================================================================
EUR mn 30.09.2023 31.12.2022 + %
IFRS 17
(1)
============================================== =========== ============ =====
Cash and balances with central
banks 9,565 9,567 0%
Loans and advances to banks 410 205 100%
Debt securities, treasury bills
and equity investments 3,636 2,704 34%
Net loans and advances to customers 9,910 9,953 0%
Stock of property 922 1,041 -11%
Investment properties 71 85 -16%
Other assets 1,838 1,734 6%
Total assets 26,352 25,289 4%
=========== ============
Deposits by banks 443 508 -13%
Funding from central banks 2,023 1,977 2%
Customer deposits 19,267 18,998 1%
Debt securities in issue 644 298 116%
Subordinated liabilities 315 302 4%
Other liabilities 1,294 1,157 12%
=============================================== =========== ============ =====
Total liabilities 23,986 23,240 3%
=============================================== =========== ============ =====
Shareholders' equity 2,114 1,807 17%
=============================================== =========== ============ =====
Other equity instruments 228 220 4%
=============================================== =========== ============ =====
Total equity excluding non-controlling
interests 2,342 2,027 16%
=============================================== =========== ============ =====
Non-controlling interests 24 22 8%
=============================================== =========== ============ =====
Total equity 2,366 2,049 15%
=============================================== =========== ============ =====
Total liabilities and equity 26,352 25,289 4%
----------------------------------------------- ----------- ------------ -----
Key Balance Sheet figures 30.09.2023 31.12.2022 +
and ratios (1)
============== ============= ============
Gross loans (EUR mn) 10,167 10,217 0%
==================================== ============== ============= ============ ========
Allowance for expected
loan credit losses (EUR
mn) 275 282 -3%
==================================== ============== ============= ============ ========
Customer deposits (EUR
mn) 19,267 18,998 1%
==================================== ============== ============= ============ ========
Loans to deposits ratio
(net) 51% 52% -1 p.p.
==================================== ============== ============= ============ ========
NPE ratio 3.5% 4.0% -50 bps
==================================== ============== ============= ============ ========
NPE coverage ratio 77% 69% +8 p.p.
==================================== ============== ============= ============ ========
Leverage ratio 8.7% 7.8% +90 bps
==================================== ============== ============= ============ ========
Capital ratios and risk 30.09.2023 30.09.2023 31.12.2022 +
weighted assets (2)
(Basel III) (including
Retained
Earnings
(3) )
==================================== ============== ============= ============ ========
Common Equity Tier 1 (CET1)
ratio (transitional) 15.2% 15.8% 15.2% 60 bps
==================================== ============== ============= ============ ========
Total capital ratio (transitional) 20.4% 21.0% 20.4% 60 bps
==================================== ============== ============= ============ ========
Risk weighted assets (EUR
mn) 10,264 10,264 10,114 1%
==================================== ============== ============= ============ ========
1. On 1 January 2023, the Group adopted IFRS 17 'Insurance contracts
which replaced IFRS 4 'Insurance contracts'. 2022 comparative information
presented throughout are on a restated basis unless otherwise stated.
Please refer to Section F.9 of this announcement.
2. The capital ratios have been restated to take into consideration
the dividend in respect of FY2022 earnings. For further details please
refer to section A.1.1.
3. Includes unaudited/unreviewed profits for 3Q2023 net of dividend
accrual (refer to section A.1.1 'Capital Base'). Any recommendation
for a dividend is subject to regulatory approval. p.p. = percentage
points, bps = basis points, 100 basis points (bps) = 1 p.p.
A. Group Financial Results - Underlying Basis (continued)
A.1. Balance Sheet Analysis
A.1.1 Capital Base
Total equity excluding non-controlling interests totalled
EUR2,342 mn as at 30 September 2023 compared to EUR2,220 mn as at
30 June 2023 and to EUR2,027 mn as at 31 December 2022. S
hareholders' equity totalled to EUR2,114 mn as at 30 September 2023
compared to EUR1,984 mn as at 30 June 2023 and to EUR1,807 mn as at
31 December 2022 .
The regulatory Common Equity Tier 1 capital (CET1) ratio on a
transitional basis stood at 15.2% as at 30 September 2023, compared
to 15.6% as at 30 June 2023 and 15.2% as at 31 December 2022, as
restated. Throughout this announcement, the capital ratios as at 30
September 2023 include reviewed profits for the six months ended 30
June 2023 in line with the ECB Decision (EU) (2015/656) on the
recognition of interim or year-end profits in CET1 capital in
accordance with Article 26(2) of the CRR and an accrual thereon of
dividend at the top end of the Group's approved dividend policy in
line with the principles of Commission Delegated Regulation EU
No241/2014 (such ratios are referred as regulatory or Basel III and
do not include 3Q2023 profits). As per the latest SREP decision,
any dividend distribution is subject to regulatory approval. Such
dividend accrual does not constitute a binding commitment for a
dividend payment nor does it constitute a warranty or
representation that such a payment will be made. Including the
profits for 3Q2023 of c.125 bps, net of dividend accrual at the top
end of the Group's approved dividend policy of c.60 bps, the CET1
ratio on a transitional basis (including retained earnings)
increases to 15.8% as at 30 September 2023. From 3Q2023, the amount
corresponding to the Pillar II add-on requirement relating to ECB's
prudential provisioning expectations of 33 bps is deducted from
CET1 capital and therefore it is expected to be eliminated from the
Pillar II SREP capital requirements as of 1 January 2024.
The Group had elected to apply the EU transitional arrangements
for regulatory capital purposes (EU Regulation 2017/2395) where the
impact on the impairment amount from the initial application of
IFRS 9 on the capital ratios was phased-in gradually, with the
impact being fully phased-in (100%) by 1 January 2023. The final
phasing-in of the impact of the impairment amount from the initial
application of IFRS 9 was c.65 bps on the CET1 ratio on 1 January
2023. In addition, a prudential charge in relation to the onsite
inspection on the value of the Group's foreclosed assets is being
deducted from own funds since June 2021, the impact of which is 14
bps on Group's CET1 ratio as at 30 September 2023.
The regulatory Total Capital ratio on a transitional basis stood
at 20.4% as at 30 September 2023, compared to 20.7% as at 30 June
2023 and to 20.4% as at 31 December 2022, as restated. Including
the profits for 3Q2023 of c.125 bps, net of dividend accrual at the
top end of the Group's approved dividend policy of c.60 bps, the
total capital ratio (including retained earnings) increases to
21.0%.
The Group's capital ratios are above the Supervisory Review and
Evaluation Process (SREP) requirements.
In the context of the annual SREP performed by the ECB in 2022
and based on the final SREP decision received in December 2022,
effective from 1 January 2023, the Pillar II requirement has been
revised to 3.08%, compared to the previous level of 3.26%. The
Pillar II requirement includes a revised Pillar II requirement
add-on of 0.33% relating to ECB's prudential provisioning
expectations. When disregarding the Pillar II add-on relating to
ECB's prudential provisioning expectations, the Pillar 2
requirement has been reduced from 3.00% to 2.75%. From 30 September
2023, the Pillar II add-on of 0.33% relating to ECB's prudential
provisioning expectations is being deducted from capital and
therefore the Pillar 2 requirement is expected to decrease to 2.75%
as of 1 January 2024.
The Bank has been designated as an Other Systemically Important
Institution (O-SII) by the Central Bank of Cyprus (CBC) in
accordance with the provisions of the Macroprudential Oversight of
Institutions Law of 2015 and currently it stands at 1.50%. In
October 2023, the CBC concluded its reassessment for the
designation of credit institutions that meet the definition of
O-SII institutions and the setting of O-SII buffer to be observed.
The Group's O-SII buffer has been revised to 2.25% (from 1.50%), to
be phased in annually by 37.5 bps, to 1.875% on 1 January 2024 and
to 2.25% on 1 January 2025.
The Group's minimum phased-in CET1 capital ratio requirement as
at 30 September 2023 is set at 10.27%, comprising a 4.50% Pillar I
requirement, a 1.73% Pillar II requirement, the Capital
Conservation Buffer of 2.50%, the O-SII Buffer of 1.50% and the
CcyB of c.0.04%. The Group's minimum phased-in Total Capital ratio
requirement is set at 15.12%, comprising an 8.00% Pillar I
requirement, of which up to 1.50% can be in the form of AT1 capital
and up to 2.00% in the form of T2 capital, a 3.08% Pillar II
requirement, the Capital Conservation Buffer of 2.50%, the O-SII
Buffer of 1.50% and the CcyB of c. 0.04%. The ECB has also
maintained the non-public guidance for an additional Pillar II CET1
buffer (P2G) unchanged compared to the previous year.
Own funds held for the purposes of P2G cannot be used to meet
any other capital requirements (Pillar I, Pillar II requirements or
the combined buffer requirement), and therefore cannot be used
twice.
A. Group Financial Results - Underlying Basis (continued)
A.1. Balance Sheet Analysis (continued)
A.1.1 Capital Base (continued)
On 30 November 2022, the CBC, following the revised methodology
described in its macroprudential policy, decided to increase the
CcyB from 0.00% to 0.50% of the total risk exposure amounts in
Cyprus of each licensed credit institution incorporated in Cyprus.
The new rate of 0.50% must be observed as from 30 November 2023.
Further, in June 2023, the CBC announced an additional increase of
0.50% in the CcyB of the total risk exposure amounts in Cyprus of
each licensed credit institution incorporated in Cyprus to be
observed from June 2024, increasing the CcyB to 1.00%.
Following the annual SREP performed by the ECB in 2023, and
based on the draft SREP decision received in October 2023,
effective from 1 January 2024 (subject to ECB final confirmation),
the Group's minimum phased-in CET1 capital ratio and Total Capital
ratio requirements are expected to decrease, when disregarding the
phasing in of the O-SII buffer and CcyB mentioned above, reflecting
the elimination of the Pillar II add-on relating to ECB's
prudential provisioning expectations, following the Group's
decision to directly deduct from own funds such amount. On 1
January 2024 the Group's minimum phased-in CET1 capital ratio is
expected to be set at c.10.92%, comprising a 4.50% Pillar I
requirement, a 1.55% Pillar II requirement, the Capital
Conservation Buffer of 2.50%, the O-SII Buffer of 1.875% and CcyB
of c.0.50%. On 1 January 2024, the Group's minimum phased-in Total
Capital ratio requirement is expected to be set at c.15.63%,
comprising an 8.00% Pillar I requirement, of which up to 1.50% can
be in the form of AT1 capital and up to 2.00% in the form of T2
capital, a 2.75% Pillar II requirement, the Capital Conservation
Buffer of 2.50%, the O-SII Buffer of 1.875% and the CcyB of 0.50%.
The ECB has also provided revised lower non-public guidance for an
additional Pillar II CET1 buffer (P2G). From 2 June 2024 both CET1
capital and Total Capital requirements are expected to increase by
c.0.50% as a result of the increase in the CcyB described
above.
The Group participated in the ECB Stress Test of 2023, the
results of which were published by the ECB on 28 July 2023. For
further information please refer to the 'Risk and Capital
Management Report' of the 'Interim Financial Report 2023.
Resumption of dividend payments
Following the 2022 SREP decision, the equity dividend
distribution prohibition was lifted for both the Company and the
Bank, with any dividend distribution being subject to regulatory
approval.
In April 2023, the Company obtained the approval of the European
Central Bank to pay a dividend. Following this approval, the Board
of Directors of the Company recommended to the shareholders a final
dividend of EUR0.05 per ordinary share in respect of earnings for
the year ended 31 December 2022 ('Dividend'). The proposed final
dividend was declared at the Annual General Meeting ('AGM') which
was held on 26 May 2023. The Dividend amounted to EUR22.3 mn in
total and was equivalent to a payout ratio of 14% of the FY2022
Group's adjusted recurring profitability or 31% based on FY2022
profit after tax (as reported in the 2022 Annual Financial Report).
The Dividend was paid in cash on 16 June 2023.
The Dividend resulted in a negative capital impact of 22 bps on
the Group's CET1 ratio and Total Capital ratio as at 31 December
2022.
The resumption of dividend payments after 12 years underpins the
Group's position as a strong and well-diversified organisation,
capable of delivering sustainable shareholder returns.
Dividend policy
In April 2023 the Board of Directors approved the Group' s
dividend policy. The Group aims to provide a sustainable return to
shareholders. Dividend payments are expected to build prudently and
progressively over time, towards a payout ratio in the range of
30-50% of the Group's adjusted recurring profitability. Group
adjusted recurring profitability is defined as the Group's profit
after tax before non-recurring items (attributable to the owners of
the Company) taking into account distributions under other equity
instruments such as the annual AT1 coupon. The dividend policy
takes into consideration market conditions as well as the outcome
of capital and liquidity planning.
Other equity instruments
At 30 September 2023, the Group's other equity instruments
relate to Additional Tier 1 Capital Securities (the "AT1
securities") and amounted to EUR228 mn, compared to EUR236 mn as at
30 June 2023, down 3% on prior quarter, reflecting the repurchase
of c. EUR 7 mn Existing Capital Securities in the open market by
the Company in July 2023 .
In June 2023, the Company successfully launched and priced an
issue of EUR220 mn Fixed Rate Reset Perpetual Additional Tier 1
Capital Securities (the 'New Capital Securities').
A. Group Financial Results - Underlying Basis (continued)
A.1. Balance Sheet Analysis (continued)
A.1.1 Capital Base (continued)
Other equity instruments (continued)
The New Capital Securities constitute unsecured and subordinated
obligations of the Company, are perpetual and are issued at par.
They carry an initial coupon of 11.875% per annum, payable
semi-annually and resettable on 21 December 2028 and every 5 years
thereafter. The Company will have the option to redeem the New
Capital Securities from, and including, 21 June 2028 to, and
including, 21 December 2028 and on each interest payment date
thereafter, subject to applicable regulatory consents and the
relevant conditions to redemption.
The issue was met with exceptional demand, attracting interest
from c.240 institutional investors, with the final order book over
12 times over-subscribed and final pricing 62.5 bps tighter than
the initial pricing indication. The pricing also reflects
significant improvement in the credit spread to c.910 bps compared
to c.1,260 bps for the previous AT1 issue in 2018 ('Existing
Capital Securities').
The net proceeds of the issue of the New Capital Securities were
on-lent by the Company to the Bank to be used for general corporate
purposes. The on-loan qualifies as Additional Tier 1 capital for
the Bank.
The issue of the New Capital Securities maintains the Group's
optimised capital structure and contributed to the Group's Total
Capital Ratio by c.215 bps at the time of issuance.
At the same time, the Company invited the holders of its
outstanding EUR220 mn Fixed Rate Reset Perpetual Additional Tier 1
Capital Securities callable in December 2023 to tender their
Existing Capital Securities at a purchase price of 103% of the
principal amount. The Company received valid tenders of c.EUR204 mn
in aggregate principal amount, or c.93% of the outstanding Existing
Capital Securities, all of which were accepted by the Company.
As a result, a cost of c.EUR7 mn was recorded directly in the
Company's equity in 2Q2023, forfeiting the relevant future coupon
payments. Transaction costs of EUR3.5 mn in relation to the
transactions were recorded directly in equity in June 2023.
Existing Capital Securities of c.EUR 8 mn in aggregate principal
amount remained outstanding as at 30 September 2023.
Legislative amendments for the conversion of DTA to DTC
Legislative amendments allowing for the conversion of specific
deferred tax assets (DTA) into deferred tax credits (DTC) became
effective in March 2019. The legislative amendments cover the
utilisation of income tax losses transferred from Laiki Bank to the
Bank in March 2013. The introduction of the Capital Requirements
Regulation (CRR) and Capital Requirements Directive (CRD) IV in
January 2014 and its subsequent phasing-in led to a more
capital-intensive treatment of this DTA for the Bank. With this
legislation, institutions are allowed to treat such DTAs as 'not
relying on profitability', according to CRR/CRD IV and as a result
not deducted from CET1, hence improving a credit institution's
capital position. The Law provides for a guarantee fee on annual
tax credit is payable annually by the credit institution to the
Government.
Following certain modifications to the Law in May 2022, the
annual guarantee fee is to be determined by the Cyprus Government
on an annual basis, providing however that such fee to be charged
is set at a minimum fee of 1.5% of the annual instalment and can
range up to a maximum amount of EUR10 mn per year, and also
allowing for a higher amount to be charged in the year the
amendments are effective (i.e. in 2022).
The Group estimates that such fees could range up to c.EUR5 mn
per year (for each tax year in scope i.e. since 2018) although the
Group understands that such fee may fluctuate annually as to be
determined by the Ministry of Finance.
A. Group Financial Results - Underlying Basis (continued)
A.1. Balance Sheet Analysis (continued)
A.1.2 Regulations and Directives
A.1.2.1 The 2021 Banking Package (CRR III and CRD VI and
BRRD)
In October 2021, the European Commission adopted legislative
proposals for further amendments to the Capital Requirements
Regulation (CRR), CRD IV and the BRRD (the "2021 Banking Package").
Amongst other things, the 2021 Banking Package would implement
certain elements of Basel III that have not yet been transposed
into EU law. The 2021 Banking Package is subject to amendment in
the course of the EU's legislative process; and its scope and terms
may change prior to its implementation. In addition, in the case of
the proposed amendments to CRD IV and the BRRD, their terms and
effect will depend, in part, on how they are transposed in each
member state. The European Council's proposal on CRR and CRD was
published on 8 November 2022. During February 2023, the European
Parliament's ECON Committee voted to adopt Parliament's proposed
amendments to the Commission's proposal, and the 2021 Banking
Package is currently in the final stage of the EU legislative
process. In June 2023, negotiators from the Council presidency and
the European Parliament reached a provisional agreement on
amendments to the Capital Requirements Regulation and the Capital
Requirements Directive. It is expected that the 2021 Banking
Package will enter into force on 1 January 2025; and certain
measures are expected to be subject to transitional arrangements or
to be phased in over time.
A.1.2.2 Bank Recovery and Resolution Directive (BRRD)
Minimum Requirement for Own Funds and Eligible Liabilities
(MREL)
The Bank Recovery and Resolution Directive (BRRD) requires that
from January 2016, EU member states shall apply the BRRD's
provisions requiring EU credit institutions and certain investment
firms to maintain a minimum requirement for own funds and eligible
liabilities (MREL), subject to the provisions of the Commission
Delegated Regulation (EU) 2016/1450. On 27 June 2019, as part of
the reform package for strengthening the resilience and
resolvability of European banks, the BRRD came into effect and was
required to be transposed into national law. BRRD II was transposed
and implemented in Cyprus law in early May 2021. In addition,
certain provisions on MREL have been introduced in CRR which also
came into force on 27 June 2019 as part of the reform package and
took immediate effect.
In February 2023, the Bank received notification from the Single
Resolution Board (SRB) of the decision for the binding minimum
requirement for own funds and eligible liabilities (MREL) for the
Bank, determined as the preferred resolution point of entry. As per
the 2023 MREL decision, the MREL requirement was set at 24.35% of
risk weighted assets and 5.91% of Leverage Ratio Exposure (LRE) (as
defined in the CRR) and must be met by 31 December 2025.
In November 2023, the Bank received draft notification from the
SRB regarding the 2024 MREL decision, by which the final MREL
requirement is now set at 25.00% of risk weighted assets and must
be met by 31 December 2024, one year earlier than the previous
decision, in light of the Group's progress over the years of
becoming a strong, well-capitalised with sustainable profitability
organisation. The revised MREL requirements remain subject to SRB
and CBC final confirmation.
Furthermore, the binding interim requirement of 1 January 2022
set at 14.94% of risk weighted assets and 5.91% of LRE must
continue to be met. The own funds used by the Bank to meet the
Combined Buffer Requirement (CBR) are not eligible to meet its MREL
requirements expressed in terms of risk-weighted assets. The Bank
must comply with the MREL requirement at the consolidated level,
comprising the Bank and its subsidiaries.
The regulatory MREL ratio as at 30 September 2023, calculated
according to the SRB's eligibility criteria currently in effect and
based on internal estimate, stood at 24.1% of risk weighted assets
(RWA) and at 11.0% of LRE. The MREL ratio expressed as a percentage
of risk weighted assets does not include capital used to meet the
CBR requirement, which stood at 4.04% on 30 September 2023
(compared to 3.77% as at 31 December 2022), expected to increase on
30 November 2023 following increase in CcyB from 0.00% to 0.50% of
the total risk exposure amounts in Cyprus and to 1.00% from June
2024 as announced by CBC. Additionally, the CBR requirement is
expected to increase further on 1 January 2024 following an
increase in O-SII buffer from 1.50% to 1.875% and subsequently to
2.25% from 1 January 2025, as announced by CBC.
Throughout this announcement, the MREL ratios as at 30 September
2023 include reviewed profits for the six months ended 30 June 2023
in line with the ECB Decision (EU) (2015/656) on the recognition of
interim or year-end profits in CET1 capital in accordance with
Article 26(2) of the CRR and an accrual of dividend at the top end
of the Group's approved dividend policy in line with the principles
of Commission Delegated Regulation EU No241/2014 . The MREL ratio
expressed as a percentage of RWA and the MREL ratio expressed as a
percentage of LRE as at 30 September 2023 stand at 24.6% and 11.2%
respectively when including the profits for 3Q2023 net of a
dividend accrual at the top end of the Group's approved dividend
policy.
The Bank continues to evaluate opportunities to optimise the
build-up of its MREL.
A. Group Financial Results - Underlying Basis (continued)
A.1. Balance Sheet Analysis (continued)
A.1.3 Funding and Liquidity
Funding
Funding from Central Banks
At 30 September 2023, the Bank's funding from central banks
amounted to EUR 2,023 mn , which relates to ECB funding, comprising
solely of funding through the Targeted Longer-Term Refinancing
Operations (TLTRO) III, compared to EUR 2,004 mn at 30 June 2023
and to EUR 1,977 mn at 31 December 2022.
The Bank borrowed an overall amount of EUR3 bn under TLTRO III
by June 2021, despite its comfortable liquidity position, given the
favourable borrowing terms, in combination with the relaxation of
collateral requirements.
Following the changes in the terms of the TLTRO III announced by
the ECB in October 2022, and given the Bank's strong liquidity
position, the Bank proceeded with the repayment of EUR 1 bn TLTRO
III funding in December 2022. The maturity date of the Bank's
funding of EUR 1.7 bn under the seventh TLTRO III operation is in
March 2024, whilst the EUR 300 mn under the eighth TLTRO III
operation is in June 2024.
Deposits
Customer deposits totalled EUR19,267 mn at 30 September 2023
(compared to EUR19,166 mn at 30 June 2023 and to EUR18,998 mn at 31
December 2022) broadly flat in the third quarter. Customer deposits
are mainly retail-funded and 58% of deposits are protected under
the deposit guarantee scheme as at 30 September 2023.
The Bank's deposit market share in Cyprus reached 37.7% as at 30
September 2023, compared to 37.4% as at 30 June 2023 and to 37.2%
as at 31 December 202 2 . Customer deposits accounted for 73% of
total assets and 80 % of total liabilities at 30 September 2023
(compared to 75% of total assets and 82% of total liabilities as at
31 December 2022).
The net loans to deposits (L/D) ratio stood at 51% as at 30
September 2023 (compared to 52% as at 30 June 2023 and 31 December
2022 on the same basis), down 1 p.p. in the third quarter.
Subordinated liabilities
At 30 September 2023, the carrying amount of the Group's
subordinated liabilities amounted to EUR315 mn (compared to EUR309
mn at 30 June 2023 and to EUR302 mn at 31 December 2022) and relate
to unsecured subordinated Tier 2 Capital Notes ('T2 Notes').
The T2 Notes were priced at par with a fixed coupon of 6.625%
per annum, payable annually in arrears and resettable on 23 October
2026. The maturity date of the T2 Notes is 23 October 2031. The
Company will have the option to redeem the T2 Notes early on any
day during the six-month period from 23 April 2026 to 23 October
2026, subject to applicable regulatory approvals.
Debt securities in issue
At 30 September 2023, the carrying value of the Group's debt
securities in issue amounted to EUR644 mn (compared to EUR292 mn at
30 June 2023 and to EUR298 mn at 31 December 2022) and relate to
senior preferred notes. The increase of 116% since the beginning of
the year, relates to the issuance of EUR350 mn senior preferred
notes in 3Q2023.
In July 2023, the Bank has successfully launched and priced an
issuance of EUR350 mn of senior preferred notes (the "Notes"). The
Notes were priced at par with a fixed coupon of 7.375% per annum,
payable annually in arrear, until the Optional Redemption Date i.e.
25 July 2027. The maturity date of the Notes is 25 July 2028;
however, the Bank may, at its discretion, redeem the Notes on the
Optional Redemption Date subject to meeting certain conditions
(including applicable regulatory consents) as specified in the
Terms and Conditions. If the Notes are not redeemed by the Bank,
the coupon payable from the Optional Redemption Date until the
Maturity Date will convert from a fixed rate to a floating rate and
will be equal to 3-month Euribor + 409.5 bps, payable quarterly in
arrear. The issuance was met with strong demand, attracting
interest from more than 90 institutional investors, with a peak
orderbook of EUR950 mn and final pricing 37.5 bps tighter than the
initial pricing indication. The Notes comply with the criteria for
the Minimum Requirement for Own Funds and Eligible Liabilities
("MREL") and contribute towards the Bank's MREL requirements.
A. Group Financial Results - Underlying Basis (continued)
A.1. Balance Sheet Analysis (continued)
Debt securities in issue (continued)
In June 2021, the Bank executed its inaugural MREL transaction
issuing EUR300 mn of senior preferred notes (the "SP Notes"). The
SP Notes were priced at par with a fixed coupon of 2.50% per annum,
payable annually in arrears and resettable on 24 June 2026. The
maturity date of the SP Notes is 24 June 2027 and the Bank may, at
its discretion, redeem the SP Notes on 24 June 2026, subject to
meeting certain conditions as specified in the Terms and
Conditions, including applicable regulatory consents. The SP Notes
comply with the criteria for MREL and contribute towards the Bank's
MREL requirements.
Liquidity
At 30 September 2023, the Group Liquidity Coverage Ratio (LCR)
stood at 350% (compared to 316% at 30 June 2023 and to 291% at 31
December 2022), well above the minimum regulatory requirement of
100%. The LCR surplus as at 30 September 2023 amounted to EUR8.6 bn
(compared to EUR7.7 bn at 30 June 2023 and to EUR7.2 bn at 31
December 2022). The increase in liquidity surplus in 3Q2023
reflects primarily the issuance of EUR350 mn of senior preferred
notes in July 2023 and the increase in deposits . When disregarding
the TLTRO III, the Group's liquidity position remains strong with
an LCR of 292% and liquidity surplus of EUR6.6 bn.
At 30 September 2023, the Group Net Stable Funding Ratio (NSFR)
stood at 162% (compared to 165% at 30 June 2023 and to 168% at 31
December 2022), well above the minimum regulatory requirement of
100%.
A.1.4 Loans
Group gross loans totalled EUR10,167 mn at 30 September 2023 ,
compared to EUR10,277 mn at 30 June 2023 and to EUR10,217 mn at 31
December 2022, broadly flat yoy as repayments continue to offset
new lending.
New lending granted in Cyprus reached EUR445 mn for 3Q2023
(compared to EUR494 mn for 2Q2023 and to EUR624 mn for 1Q2023) down
by 10% qoq. New lending in 3Q2023 comprised EUR190 mn of corporate
loans, EUR167 mn of retail loans (of which EUR103 mn were housing
loans), EUR45 mn of SME loans and EUR43 mn of shipping and
international loans. New lending for 9M2023 stood at EUR 1,563 mn,
despite the rising interest rate environment, driven mainly by
corporate demand.
At 30 September 2023, the Group net loans and advances to
customers totalled EUR9,910 mn (compared to EUR10,008 mn at 30 June
2023 and to EUR9,953 mn at 31 December 2022), flat since the
beginning of the year.
The Bank is the largest credit provider in Cyprus with a market
share of 42.3% at 30 September 2023, compared to 42.4% at 30 June
2023 and to 40.9% at 31 December 2022.
A.1.5 Loan portfolio quality
The Group has continued to make steady progress across all asset
quality metrics. Today, t he Group's priorities focus mainly on
maintaining high quality new lending with strict underwriting
standards and preventing asset quality deterioration following the
ongoing macroeconomic uncertainty.
The loan credit losses for 3Q2023 totalled EUR20 mn, compared to
EUR13 mn for 2Q2023, and totalled to EUR44 mn for 9M2023, compared
to EUR36 mn for 9M2022. Further details regarding loan credit
losses are provided in Section A.2.3 'Profit before tax and
non-recurring items'.
In 3Q2023 an amount of EUR 37 mn were classified as unlikely to
pay exposures (UTPs), following a deep dive assessment of the
Group's portfolio. With the conclusion of this assessment, expected
in 4Q2023, another similar UTP amount will potentially be
recognised. These UTPs are customer specific with idiosyncratic
characteristics and are not linked with the current macroeconomic
environment; they adhere their payment schedule and present no
arrears. The elevated inflation combined with the rising interest
rate environment are expected to weigh on customer behaviour.
Despite the higher interest rates, there are no material signs of
asset quality deterioration to date. While defaults have been
limited, the additional monitoring and provisioning for sectors and
individuals vulnerable to the deteriorated macroeconomic
environment remain in place to ensure that potential difficulties
in the repayment ability are identified at an early stage, and
appropriate solutions are provided to viable customers.
Non-performing exposures
Non-performing exposures (NPEs) as defined by the European
Banking Authority (EBA) were reduced by EUR13 mn, or 3% in 3Q2023,
compared to a net organic reduction of EUR18 mn in 2Q2023, to
EUR358 mn at 30 September 2023 (compared to EUR371 mn at 30 June
2023 and EUR 411 mn at 31 December 2022 ).
A. Group Financial Results - Underlying Basis (continued)
A.1. Balance Sheet Analysis (continued)
A.1.5 Loan portfolio quality (continued)
Non-performing exposures (continued)
As a result, the NPEs account for 3.5% of gross loans as at 30
September 2023, compared to 3.6% at 30 June 2023 and to 4.0% at 31
December 2022.
The NPE coverage ratio stands at 77% at 30 September 2023,
compared to 78% at 30 June 2023 and to 69% as at 31 December 2022.
When taking into account tangible collateral at fair value, NPEs
are fully covered.
Overall, since the peak in 2014, the stock of NPEs has been
reduced by EUR14.6 bn or 98% to below EUR0.4 bn and the NPE ratio
by 59 percentage points, from 63% to below 4%.
Mortgage-To-Rent Scheme ("MTR " )
In July 2023, the Mortgage-to-Rent Scheme ('MTR') was approved
by the Council of Ministers and aims for the reduction of NPEs
backed by primary residence and simultaneously protect the primary
residence of vulnerable borrowers. The eligible criteria
include:
-- Borrowers that were non-performing as at 31 December 2021 and
remained non-performing as at 31 December 2022 with facilities
backed by primary residence with open market value up to EUR250 k
;
-- Borrowers that that had a fully completed application to
Estia Scheme and were assessed as eligible but not viable with a
primary residence of up to EUR350k Open Market Value; and
-- all applicants that were approved under Estia Scheme but their inclusion was terminated.
The eligible applicants will be able to reside in their primary
residence as tenants and are e xempted from their mortgage loan, as
the state will be covering fully the required rent on their behalf.
The eligible applicants will be able to acquire the primary
residence after 5 years at a favourable price, below the Open
Market Value.
The scheme has not been launched yet; it is expected to act as
another tool to address NPEs in the Retail sector.
A.1.6 Fixed income portfolio
Fixed income portfolio amounts to EUR3,489 mn as at 30 September
2023, compared to EUR3,178 mn as at 30 June 2023 and to EUR2,500 mn
as at 31 December 2022, increased by 10% on the prior quarter. As
at 30 September 2023, the portfolio represents 14% of total assets
(net of TLTRO III) and comprises EUR3,074 mn (88%) measured at
amortised cost and EUR415 mn (12%) at fair value through other
comprehensive income ('FVOCI').
The fixed income portfolio measured at amortised cost is held to
maturity and therefore no fair value gains/losses are recognised in
the Group's income statement or equity. This fixed income portfolio
has high average rating at Aa3 or at Aa2 when Cyprus government
bonds are excluded. The fair value of the amortised cost fixed
income portfolio as at 30 September 2023 amounts to EUR2,983 mn,
reflecting an unrealised fair value loss of EUR91 mn, equivalent to
c.90 bps of CET1 ratio.
A.1.7 Real Estate Management Unit (REMU)
The Real Estate Management Unit (REMU) is focused on the
disposal of on-boarded properties resulting from debt for asset
swaps. Cumulative sales since the beginning of 2019 amount to
EUR0.9 bn and exceed properties on-boarded in the same period of
EUR0.5 bn.
During the nine months ended 30 September 2023, the Group
completed disposals of EUR101 mn (compared to EUR 125 mn in 9M2022
), resulting in a profit on disposal of c.EUR8 mn for 9M2023
(compared to a profit of c.EUR 12 mn for 9M2022). Asset disposals
are across all property classes, with 40% gross sale value in
9M2023 relating to land.
During the nine months ended 30 September 2023, the Group
executed sale-purchase agreements (SPAs) for disposals of 399
properties with contract value of EUR111 mn, compared to SPAs for
disposals of 512 properties with contract value of EUR142 mn for
9M2022.
In addition, the Group had a strong pipeline of EUR64 mn by
contract value as at 30 September 2023, of which EUR49 mn related
to SPAs signed (compared to a pipeline of EUR82 mn as at 30
September 2022, of which EUR44 mn related to SPAs signed).
REMU on-boarded EUR18 mn of assets in 9M2023 (compared to
additions of EUR84 mn in 9M2022), via the execution of debt for
asset swaps and repossessed properties.
A. Group Financial Results - Underlying Basis (continued)
A.1. Balance Sheet Analysis (continued)
A.1.7 Real Estate Management Unit (REMU) (continued)
As at 30 September 2023, assets held by REMU had a carrying
value of EUR983 mn, of which EUR 947 mn are repossessed properties
(comprising properties of EUR922 mn classified as 'Stock of
property' and EUR61 mn as 'Investment properties'), compared to
EUR1,116 mn as at 31 December 2022 (comprising properties of
EUR1,041 mn classified as 'Stock of property' and EUR75 mn as
'Investment properties').
Assets held by REMU
Assets held by REMU (Group)
EUR mn 9M2023 9M2022 3Q2023 2Q2023 qoq +% yoy +%
------ ------ ------ ------ ------
Opening balance 1,116 1,215 1,010 1,050 -4% -8%
--------------------------------- ------ ------ ------ ------ ------ ------
On-boarded assets 18 84 12 4 172% -77%
--------------------------------- ------ ------ ------ ------ ------ ------
Sales (101) (125) (30) (30) 2% -19%
--------------------------------- ------ ------ ------ ------ ------ ------
Net impairment loss (32) (13) (9) (15) -43% 139%
--------------------------------- ------ ------ ------ ------ ------ ------
Transfer to/from own properties (18) - - 1 -100% -
--------------------------------- ------ ------ ------ ------ ------ ------
Closing balance 983 1,161 983 1,010 -3% -15%
--------------------------------- ------ ------ ------ ------ ------ ------
Analysis by type and country Cyprus Greece Total
30 September 2023 (EUR mn)
----------------------------------------- ------- ------- ------
Residential properties 54 20 74
Offices and other commercial properties 136 14 150
Manufacturing and industrial properties 47 16 63
Hotels 19 0 19
Land (fields and plots) 453 4 457
Golf courses and golf-related property 220 0 220
Total 929 54 983
------- -------
Cyprus Greece Total
31 December 2022 (EUR mn)
----------------------------------------- ------- ------- ------
Residential properties 69 21 90
Offices and other commercial properties 180 14 194
Manufacturing and industrial properties 48 19 67
Hotels 24 0 24
Land (fields and plots) 502 4 506
Golf courses and golf-related property 235 0 235
Total 1,058 58 1,116
------- -------
A. Group Financial Results - Underlying Basis (continued)
A.2. Income Statement Analysis
A.2.1 Total income
9M2022
IFRS 17
EUR mn 9M2023 (1) 3Q2023 2Q2023 qoq +% yoy +%
------- --------- ------- ------ ------
Net interest income 572 234 214 196 9% 144%
------------------------------------- ------- --------- ------- ------ ------ -------
Net fee and commission
income 135 142 45 46 -1% -5%
Net foreign exchange
gains and net gains/(losses)
on financial instruments 29 14 8 8 -13% 110%
Net insurance result 38 34 13 15 -12% 12%
Net gains/(losses) from
revaluation and disposal
of investment properties
and on disposal of stock
of properties 7 11 2 3 -25% -34%
Other income 15 12 3 9 -68% 27%
------------------------------------- ------- --------- ------- ------ ------ -------
Non-interest income 224 213 71 81 -13% 5%
------------------------------------- ------- --------- ------- ------ ------ -------
Total income 796 447 285 277 3% 78%
------------------------------------- ------- --------- ------- ------ ------ -------
Net Interest Margin (annualised) 3.32% 1.39% 3.63% 3.43% 20 bps 193 bps
------------------------------------- ------- --------- ------- ------ ------ -------
Average interest earning
assets
(EUR mn) 23,011 22,470 23,383 22,903 2% 2%
------------------------------------- ------- --------- ------- ------ ------ -------
1. On 1 January 2023, the Group adopted IFRS 17 'Insurance contracts which
replaced IFRS 4 'Insurance contracts'. 2022 comparative information presented
throughout are on a restated basis unless otherwise stated. For further
details, please refer to Section F.9 of this announcement.
p.p. = percentage points, bps = basis points, 100 basis points (bps) =
1 percentage point
Net interest income (NII) for 9M2023 amounted to EUR572 mn
compared to EUR234 mn for 9M2022, up 144% yoy, benefitting from
higher interest rates, growth of fixed income portfolio and
well-managed deposit pass-through, notwithstanding the foregone NII
on the NPE sale Helix 3 portfolio (c.EUR12 mn in 9M2022) and end of
TLTRO III favourable terms (c.EUR10 mn in 9M2022).
Net interest income (NII) for 3Q2023 amounted to EUR214 mn
compared to EUR196 mn for 2Q2023, up 9% qoq, attributable to higher
interest rates and the continued low deposit pass-through,
partially offset by increased funding costs.
Quarterly average interest earning assets (AIEA) for 9M2023
amounted to EUR23,011 mn, up 2% yoy driven by the increase in
liquid assets mainly as a result of the increase in deposits by
c.EUR0.48 bn yoy and the issuance of senior preferred notes of EUR
0.35 bn . Quarterly average interest earning assets for 3Q2023 was
also up by 2% qoq reflecting the increase in liquid assets and the
issuance of senior preferred notes of EUR 0.35 bn in July 2023
.
Net interest margin (NIM) for 9M2023 amounted to 3.32% (compared
to 1.39% for 9M2022), up 193 bps yoy driven by the continuing
interest rate rises. Net interest margin (NIM) for 3Q2023 stood at
3.63% (compared to 3.43% for 2Q2023) up 20 bps qoq.
Non-interest income for 9M2023 amounted to EUR224 mn (compared
to EUR213 mn for 9M2022, up 5% yoy) comprising net fee and
commission income of EUR135 mn, net foreign exchange gains and net
gains/(losses) on financial instruments of EUR29 mn, net insurance
result of EUR38 mn, net gains/(losses) from revaluation and
disposal of investment properties and on disposal of stock of
properties of EUR7 mn and other income of EUR15 mn. The yoy
increase relates to higher net foreign exchange gains and net
gains/(losses) on financial instruments, partly offset by lower net
fee and commission income.
Non-interest income for 3Q2023 amounted to EUR71 mn (compared to
EUR81 mn for 2Q2023, down 13% qoq) comprising net fee and
commission income of EUR45 mn, net foreign exchange gains and net
gains/(losses) on financial instruments of EUR8 mn, net insurance
result of EUR13 mn, net gains/(losses) from revaluation and
disposal of investment properties and on disposal of stock of
properties of EUR2 mn and other income of EUR3 mn. The qoq
reduction relates mainly to a non-recurring insurance receivable of
c.EUR5 mn included in other income and recognised in the previous
quarter. Non-interest income excluding the non-recurring insurance
receivable of c.EUR 5 mn, was down by 7% compared to the previous
quarter, mainly due to higher insurance claims.
Net fee and commission income for 9M2023 amounted to EUR135 mn
(compared to EUR142 mn for 9M2022, down 5% yoy); when disregarding
the impact of the liquidity fees and NPE sale-related servicing
fee, net fee and commission income was up 7% yoy, reflecting the
introduction of a revised price list in February 2022 and higher
net credit card commissions and transactional fees.
Net fee and commission income for 3Q2023 amounted to EUR45 mn,
broadly flat qoq.
A. Group Financial Results - Underlying Basis (continued)
A.2. Income Statement Analysis (continued)
A.2.1 Total income (continued)
Net foreign exchange gains and net gains/(losses) on financial
instruments of EUR29 mn for 9M2023 (comprising net foreign exchange
gains of EUR23 mn and net gains on financial instruments of EUR6
mn), compared to EUR14 mn for 9M2022 up 110% yoy, due to higher net
gains on financial instruments .
Net foreign exchange gains and net gains/(losses) on financial
instruments amounted to EUR8 mn for 3Q2023, broadly flat qoq . Net
foreign exchange gains and net gains/(losses) on financial
instruments are considered volatile profit contributors.
Net insurance result amounted to EUR38 mn for 9M2023, compared
to EUR 34 mn for 9M2022, up 12% yoy, driven mainly by healthy
growth of new business.
Net insurance result amounted to EUR13 mn for 3Q2023, compared
to EUR 15 mn for 2Q2023, down 12% qoq, impacted by higher insurance
claims.
Net gains/(losses) from revaluation and disposal of investment
properties and on disposal of stock of properties for 9M2023
amounted to EUR7 mn (comprising net gains on disposal of stock of
properties of EUR6 mn, net gains on disposal of investment
properties of EUR1 .5 mn and net loss from revaluation of
investment properties of EUR0.5 mn) , compared to EUR11 mn for
9M2022. REMU profit remains volatile.
Net gains/(losses) from revaluation and disposal of investment
properties and on disposal of stock of properties for 3Q2023
amounted to EUR2 mn (comprising net gains on disposal of stock of
properties of EUR2 mn, net gains on disposal of investment
properties of EUR 0.6 mn and net loss from revaluation of
investment properties of EUR0.4 mn) , compared to EUR3 mn for
2Q2023.
Total income amounted to EUR796 mn for 9M2023 (compared to
EUR447 mn for 9M2022 , up 78% yoy), and to EUR285 mn for 3Q2023
(compared to EUR277 mn for 2Q2023 , up 3% qoq), driven by strong
growth in net interest income, as explained above .
A. Group Financial Results - Underlying Basis (continued)
A.2. Income Statement Analysis (continued)
A .2.2 Total expenses
9M2022
IFRS 17
EUR mn 9M2023 (1) 3Q2023 2Q2023 qoq +% yoy +%
------- ---------- ------- ------ ------
Staff costs (141) (139) (48) (47) 2% 2%
Other operating
expenses (107) (102) (38) (35) 10% 4%
------------------------------------- ------- ---------- ------- ------ ------ ---------
Total operating
expenses (248) (241) (86) (82) 5% 3%
------------------------------------- ------- ---------- ------- ------ ------ ---------
Special levy on
deposits and other
levies/contributions (30) (27) (12) (7) 61% 12%
Total expenses (278) (268) (98) (89) 10% 3%
------- ---------- ------- ------ ------
Cost to income ratio 35% 60% 34% 32% 2 p.p. -25 p.p.
------------------------------------- ------- ---------- ------- ------ ------ ---------
Cost to income ratio
excluding special
levy on deposits
and other levies/contributions 31% 54% 30% 29% 1 p.p. -23 p.p.
------------------------------------- ------- ---------- ------- ------ ------ ---------
1. On 1 January 2023, the Group adopted IFRS 17 'Insurance contracts which
replaced IFRS 4 'Insurance contracts'. 2022 comparative information presented
throughout are on a restated basis unless otherwise stated. For further details,
please refer to Section F.9 of this announcement.
p.p. = percentage points, bps = basis points, 100 basis points (bps) = 1
percentage point
Total expenses for 9M2023 were EUR278 mn (compared to EUR268 mn
for 9M2022, moderately up 3% yoy), 51% of which related to staff
costs (EUR141 mn), 38% to other operating expenses (EUR107 mn) and
11% to special levy on deposits and other levies/contributions
(EUR30 mn). Total expenses for 3Q2023 were EUR98 mn compared to
EUR89 mn for 2Q2023, up 10% qoq. The yoy and qoq increase relates
to higher other operating expenses and special levy on deposits and
other levies/contributions.
Total operating expenses amounted to EUR248 mn for 9M2023
(compared to EUR241 mn for 9M2022, up 3% yoy), with savings partly
offsetting inflationary pressures. Total operating expenses
amounted to EUR86 mn for 3Q2023 (compared to EUR82 mn for 2Q2023,
up 5% qoq), attributed mainly to higher expenses due to the Reward
Programme launched to reward performer borrowers through Antamivi
Reward Scheme.
Staff costs for 9M2023 were EUR141 mn (compared to EUR139 mn for
9M2022, up 2% yoy) due to the accrual of termination benefit cost
of c.EUR 4.5 mn and the performance related pay accrual of c. EUR 7
mn, partly offset by the savings of the Voluntary Staff Exit Plan
that took place in 3Q2022. The performance-related pay accrual
relates to the Short-Term Incentive Plan and the Long-Term
Incentive Plan. The Short-Term Incentive Plan involves variable
remuneration to selected employees and will be driven by both,
delivery of the Group's strategy as well as individual performance.
Staff costs for 3Q2023 were EUR48 mn, up 2% qoq due to higher
performance-related pay accrual compared to prior quarter.
During December 2022 the Group has granted to eligible employees
share awards under a long-term incentive plan ("2022 LTIP" or the
"2022 Plan"). The 2022 Plan involves the granting of share awards
and is driven by scorecard achievement, with measures and targets
set to align pay outcomes with the delivery of the Group's
strategy. The employees eligible for the 2022 LTIP are the members
of the Extended EXCO. The 2022 LTIP stipulates that performance
will be measured over a 3 year period and financial and
non-financial objectives to be achieved (driven by both delivery of
the Group's strategy as well as individual performance). At the end
of the performance period, the performance outcome will be used to
assess the percentage of the awards that will vest. In October
2023, the Group has granted to eligible employees share awards
under a long-term incentive plan, the '2023 LTIP'. The 2023 LTIP is
granted under the same terms as the 2022 LTIP (group of eligible
participants and vesting terms and period are the same) however,
the performance period relates to the period 2023-2025 with updated
scorecard targets for the said period.
These shares will then normally vest in six tranches, with the
first tranche vesting after the end of the performance period and
the last tranche vesting on the fifth anniversary of the first
vesting date.
In July 2022 the Group completed a VEP which led to the
reduction of the Group's full-time employees by 16%, at a total
cost of EUR101 mn, recorded in the consolidated income statement in
3Q2022. The gross annual savings were estimated at c.EUR37 mn or
19% of staff costs with a payback period of 2.7 years. The
estimated savings of the VEP are expected to be partially offset by
the renewal of the collective agreement in 2023 and the increased
cost of living adjustment (COLA).
As at 30 September 2023, the Group employed 2,913 persons
compared to 2,902 persons as at 30 June 2023 and to 2,889 persons
as at 31 December 2022.
Other operating expenses for 3Q2023 amounted to EUR38 mn, up 10%
qoq and totaled EUR107 mn for 9M2023, compared to EUR 102 mn for
9M2022. The qoq and yoy increase relate mostly to higher expenses
due to the Reward Programme launched to reward Antamivi Reward
Scheme performing borrowers.
A. Group Financial Results - Underlying Basis (continued)
A.2. Income Statement Analysis (continued)
A.2.2 Total expenses (continued)
Special levy on deposits and other levies/contributions for
9M2023 amounted to EUR30 mn compared to EUR27 mn for 9M2022, up 12%
yoy, driven mainly by the increase of deposits of EUR0.48 bn yoy.
Special levy on deposits and other levies/contributions for 3Q2023
amounted to EUR12 mn up by 61% qoq, due to the c.EUR4 mn
contribution of the Bank to the Deposit Guarantee Fund (DGF)
relating to 2H2023 which was recorded in 3Q2023 (in line with
IFRSs).
The cost to income ratio excluding special levy on deposits and
other levies/contributions for 9M2023 was 31% compared to 54% for
9M2022, down 23 p.p. yoy. The yoy decrease is driven by the higher
total income. The cost to income ratio excluding special levy on
deposits and other levies/contributions for 3Q2023 was 30% broadly
flat qoq.
A. Group Financial Results - Underlying Basis (continued)
A.2. Income Statement Analysis (continued)
A.2.3 Profit before tax and non-recurring items
9M2022
IFRS
EUR mn 9M2023 17 (1) 3Q2023 2Q2023 qoq+% yoy +%
------- -------- ------- ------ ------
Operating profit 518 179 187 188 -1% 190%
--------------------------------------- ------- -------- ------- ------ ------ ------
Loan credit losses (44) (36) (20) (13) 49% 24%
Impairments of other financial
and non-financial assets (38) (20) (8) (19) -57% 88%
Provisions for pending litigations,
regulatory and other provisions
(net of reversals) (20) (3) (6) (8) -18% -
--------------------------------------- ------- -------- ------- ------ ------ ------
Total loan credit losses,
impairments and provisions (102) (59) (34) (40) -14% 73%
--------------------------------------- ------- -------- ------- ------ ------ ------
Profit before tax and non-recurring
items 416 120 153 148 3% 247%
--------------------------------------- ------- -------- ------- ------ ------ ------
Cost of risk 0.58% 0.44% 0.76% 0.51% 25 bps 14 bps
--------------------------------------- ------- -------- ------- ------ ------ ------
1. On 1 January 2023, the Group adopted IFRS 17 'Insurance contracts which
replaced IFRS 4 'Insurance contracts'. 2022 comparative information presented
throughout are on a restated basis unless otherwise stated. For further
details, please refer to Section F.9 of this announcement.
p.p. = percentage points, bps = basis points, 100 basis points (bps) =
1 percentage point
Operating profit for 9M2023 amounted to EUR518 mn, compared to
EUR179 mn for 9M2022 (up 190% yoy). The yoy increase is driven by
the significant increase in net interest income. Operating profit
for 3Q2023 amounted to EUR 187 mn, broadly flat qoq.
Loan credit losses for 9M2023 were EUR44 mn, compared to EUR36
mn for 9M2022 (up 24% yoy). Loan credit losses for 3Q2023 were
EUR20 mn, compared to EUR13 mn for 2Q2023, up 49% on prior
quarter.
Cost of risk for 9M2023 was 58 bps, compared to a cost of risk
of 44 bps for 9M2022 (up 14 bps), reflecting higher loan credit
losses on specific customers with idiosyncratic characteristics
assessed as 'Unlikely to pay' ('UTPs) exposures, even though they
adhere their repayment schedule and present no arrears . Cost of
risk for 3Q2023 was 76 bps, compared to a cost of risk of 51 bps
for 2Q2023, up 25 bps qoq, and includes 43 bps (c. EUR 11 mn) on
UTPs and 15 bps (c. EUR4 mn) management overlays on Stage 1 and
Stage 2 exposures to capture conservative assumptions.
At 30 September 2023, the allowance for expected loan credit
losses, including residual fair value adjustment on initial
recognition and credit losses on off-balance sheet exposures
(please refer to Section I. 'Definitions and Explanations' for
definition) totalled EUR275 mn (compared to EUR288 mn at 30 June
2023 and to EUR282 mn at 31 December 2022) and accounted for 2.7%
of gross loans (compared to 2.8% of gross loans for 30 June 2023
and 31 December 2022).
Impairments of other financial and non-financial assets for
9M2023 amounted to EUR38 mn, compared to EUR20 mn for 9M2022, up
88% yoy, driven mainly by higher impairments on specific, large,
illiquid REMU stock properties. Impairments of other financial and
non-financial assets for 3Q2023 amounted to EUR8 mn compared to
EUR19 mn for 2Q2023, down 57% qoq.
Provisions for pending litigations, regulatory and other
provisions (net of reversals) for 9M2023 amounted to EUR20 mn,
compared to EUR3 mn for 9M2022. The yoy increase is driven mainly
by the revised approach on pending litigation fees and provisions
relating to other matters in relation to the run-down and disposal
of legacy and non-core operations of the Group. Provisions for
pending litigations, regulatory and other provisions (net of
reversals) for 3Q2023 amounted to EUR6 mn compared to EUR8 mn for
2Q2023.
Profit before tax and non-recurring items for 9M2023 totalled to
EUR416 mn, compared to EUR120 mn for 9M2022. Profit before tax and
non-recurring items for 3Q2023 amounted to EUR153 mn compared to
EUR148 mn for 2Q2023 (up 3% qoq).
A. Group Financial Results - Underlying Basis (continued)
A.2. Income Statement Analysis (continued)
A.2. 4 Profit after tax (attributable to the owners of the
Company)
9M2022
IFRS 17
EUR mn 9M2023 (1) 3Q2023 2Q2023 qoq +% yoy +%
-------------------------------------- ------- --------- ------- ------ ------ ------
Profit before tax and
non-recurring items 416 120 153 148 3% 247%
-------------------------------------- ------- --------- ------- ------ ------ ------
Tax (63) (19) (23) (22) 5% 238%
Profit attributable to
non-controlling interests (2) (2) (1) 0 123% -9%
Profit after tax and
before non-recurring items
(attributable to the owners
of the Company) 351 99 129 126 2% 253%
------- --------- ------- ------ ------
Advisory and other transformation
costs - organic (2) (10) - (1) -100% -77%
-------------------------------------- ------- --------- ------- ------ ------ ------
Profit after tax - organic
(attributable to the owners
of the Company) 349 89 129 125 3% 290%
-------------------------------------- ------- --------- ------- ------ ------ ------
Provisions/net profit/(loss)
relating to NPE sales - (1) - - - -100%
Restructuring and other
costs relating to NPE
sales - (3) - - - -100%
Restructuring costs -
Voluntary Staff Exit Plan
(VEP) - (104) - - - -100%
Profit/(loss) after tax
(attributable to the owners
of the Company) 349 (19) 129 125 3% -
------- --------- ------- ------ ------
1. On 1 January 2023, the Group adopted IFRS 17 'Insurance contracts which
replaced IFRS 4 'Insurance contracts'. 2022 comparative information presented
throughout are on a restated basis unless otherwise stated. For further
details, please refer to Section F.9 of this announcement.
p.p. = percentage points, bps = basis points, 100 basis points (bps) =
1 percentage point
The tax charge for 3Q2023 is EUR23 mn broadly flat qoq, and
totalled to EUR63 mn for 9M2023, compared to EUR19 mn for
9M2022.
Profit after tax and before non-recurring items (attributable to
the owners of the Company) for 9M2023 is EUR351 mn, compared to
EUR99 mn for 9M2022. Profit after tax and before non-recurring
items (attributable to the owners of the Company) for 3Q2023 is
EUR129 mn, compared to EUR126 mn for 2Q2023.
Advisory and other transformation costs - organic for 9M2023 are
EUR2 mn, compared to EUR10 mn for 9M2022, down 77% yoy. Advisory
and other transformation costs - organic for 3Q2023 are nil
compared to EUR 1 mn in 2Q2023 .
Profit after tax arising from the organic operations
(attributable to the owners of the Company) for 9M2023 amounted to
EUR349 mn, compared to EUR89 mn for 9M2022. Profit after tax
arising from the organic operations (attributable to the owners of
the Company) amounted to EUR129 mn for 3Q2023, compared to EUR 125
mn for 2Q2023 (up 3% qoq).
Following completion of Helix 3 project, there are no amounts
recognised for provisions/net profit/(loss) relating to NPE sales
for 9M2023.
Restructuring and other costs relating to NPE sales for 9M 2023
was nil compared to EUR3 mn for 9M2022 ( relating to the agreements
for the sale of portfolios of NPEs). Restructuring and other costs
relating to NPE sales for 3Q2023 was nil, flat qoq.
Restructuring costs relating to the Voluntary Staff Exit Plan
(VEP) of EUR104 mn in 9M2022 mainly related to the Voluntary Staff
Exit Plan (VEP) that took place in 3Q2022. For more details, please
refer to the section A.2.2 'Total expenses'.
Profit/(loss) after tax attributable to the owners of the
Company for 9M2023 amounts to a profit of EUR349 mn, corresponding
to a ROTE of 24.6%, compared to a loss after tax of EUR19 mn for
9M2022. Profit/(loss) after tax attributable to the owners of the
Company for 3Q2023 amounts to a profit of EUR129 mn, compared to a
profit of EUR125 mn for 2Q2023 (up 3% qoq). ROTE stands at 25.6%
for 3Q2023, compared to 26.6% for 2Q2023.
B. Operating Environment
Geopolitical tensions remain high as the war in Ukraine
continues and the latest military conflict in the Middle East rages
on, adding considerable uncertainty to the outlook for the global
economy. The wider impact will depend on how these conflicts evolve
in the future.
However, the International Monetary Fund's World Economic
Outlook for Autumn 2023 presents a cautiously optimistic baseline
scenario. According to the outlook, no recession is expected in the
advanced world until at least 2024, but there are downside risks.
In the baseline scenario, world growth slows from 3.5% in 2022 to
3.0% in 2023 and 2.9% in 2024. Average growth in 2023-2028 will be
below historical averages, but on a par with, and slightly better
than, the previous period 2015-2022.
Headline inflation continues to decline and core inflation,
excluding food and energy prices, is also projected to fall, but
more gradually. Most countries are not expected to return to the 2%
inflation target until 2025-2026.
Growth in the Cypriot economy slowed to 2.8% in the first half
of 2023 (3.3% in the first quarter of 2023 and 2.3% in the second
quarter of 2023), compared with 5.1% growth in 2022. According to
the IMF's Autumn World Economic Outlook, growth will average 2.2%
in the year and accelerate to 2.7% in 2024 (while the Ministry of
Finance projects growth of around 2.4% in 2023 and almost 3.0% in
2024).
Employment growth remains strong in 2021-2022, averaging 1.2%
and 2.8% respectively, following a 1% decline in 2020. Productivity
growth was particularly strong in the period immediately following
the Covid recession and has slowed in recent quarters. The
unemployment rate after rising in 2020 and the first half of 2021,
has been declining in the period since, dropping to 6.5% in the
first quarter of 2023 and 6.1% in the second quarter of 2023 . For
the euro area as a whole, the seasonally adjusted unemployment rate
was 6.6% in the first quarter of 2023 and 6.5% in the second
quarter of 2023.
Inflation, as measured by the Harmonised Index of Consumer
Prices, averaged 8.1% in 2022, compared with 8.4% in the euro area.
Inflation peaked at 10.6% in July 2022 and has been decelerating
since, reaching 2.4% in July 2023, before rising to 4.3% in
September 2023 . Overall, inflation averaged 4.4% in the year to
September 2023. The decline in headline inflation has been driven
by the non-core components of energy and food, while core
inflation, defined as total minus energy and food, has been more
volatile. In Cyprus, core inflation fell to 3.8% in August 2023 and
to 3.5% in September 2023. In the euro area, core inflation was
5.5% in August 2023 and 5.4% in September 2023, close to peak
levels. Harmonised inflation is expected to continue to moderate,
but only gradually. Headline inflation in Cyprus is projected to be
around 3.5% in 2023, or 4.1% according to the Ministry of
Finance.
Following a strong performance in 2022, tourism activity
continued to recover in the first nine months of the year. Arrivals
in January-September 2023 were up 23.4% on the same period of last
year, reaching 96% of arrivals in the same period in 2019.
Similarly, receipts in January-August 2023, were EUR2.03 bn , an
increase of 25% year-on-year. Arrivals for the year are expected to
be close to 2019 levels, while receipts are expected to exceed 2019
levels.
Cyprus received a first payment from the Recovery and Resilience
Facility of EUR157 mn in September 2021, following the approval of
the National Recovery Plan in July 2020. This was pre-financing for
13% of the total disbursements for the period 2021-2026. Cyprus
received its first disbursement of EUR85 mn in December 2022,
following the adoption of conditional legislation in Parliament and
approval by the European Commission. The release of the funds is
conditional on the strict implementation of the reforms agreed in
the National Recovery Plan. The funds will be used, among other
things, to increase investment in the digital and green transition,
to improve the efficiency of public and local administrations, and
to improve the efficiency of the judicial system.
In the area of public finances, there have been significant
improvements in debt dynamics and debt affordability indicators.
The recovery in 2021 was underpinned by a significant increase in
general government revenue and a relative decrease in government
expenditure. The result was a reduction in the budget deficit to
1.9% of GDP, from a deficit of 5.7% of GDP in 2020. In 2022, public
finances improved further. The budget deficit turned into a surplus
of 2.4% of GDP and gross debt dropped from 99.3% of GDP in 2021 to
85.6%. In 2023, according to the Ministry of Finance, the budget
surplus will be 2.5% of GDP and gross debt will fall to 78% of GDP.
Debt affordability metrics are favourable and are expected to
remain solid in 2023-2024, as gross financing needs are moderate,
and the cash buffer gives the government a high degree of financing
flexibility.
The ECB left its interest rates unchanged at the Governing
Council meeting in October 2023, after raising them by 25 b ps in
September 2023. The minimum refinancing operations rate is now
4.5%, compared with zero at the start of the tightening cycle in
July 2021, while the ECB deposit facility rate is 4.0%, compared
with -50 bps in July 2021.
B. Operating environment (continued)
The banking sector has undergone significant restructuring since
the financial crisis in 2013. Total NPEs at the end of June 2023,
amounted to EUR2.1 bn, or 8.7% of gross loans. The NPE ratio in the
non-financial corporations segment was 7.3% at end-June 2023, and
that of households was 11.2%. About 45.0% of total NPEs are
restructured facilities and the coverage ratio was 55.6%. In
November 2023, the Cyprus Banking Association, following
discussions with the Cypriot government and parliament, agreed to
suspend the foreclosure process for primary residences with an open
market value of up to EUR350,000 until 31 December 2023.
Sovereign ratings
The sovereign risk ratings of the Cypriot government have
improved significantly in recent years, reflecting reduced banking
sector risks, improved economic resilience and consistent fiscal
outperformance. Cyprus has demonstrated policy commitment to
correcting fiscal imbalances through reform and restructuring of
its banking system. Public debt remains high as a share of GDP, but
large-scale asset purchases by the ECB ensure favourable funding
costs for Cyprus and ample liquidity in the government bond
market.
In September 2023, Moody's Investors Service upgraded the
long-term issuer and senior unsecured ratings of the Government of
Cyprus to Baa2 from Ba1. The outlook was revised to stable from
positive. This is a two-notch upgrade of Cyprus' ratings,
reflecting broad-based and sustained improvements in the country's
credit profile as a result of past and ongoing economic, fiscal and
banking reforms. Economic resilience has improved and medium-term
growth prospects remain strong. Fiscal strength has also improved
significantly, with a positive debt trend and sound debt
affordability metrics. The stable outlook balances the positive
credit trends with remaining challenges.
In addition, S&P Global Ratings revised its outlook on
Cyprus to positive from stable in September 2023 and affirmed
Cyprus' long-term local and foreign currency sovereign ratings at
BBB. The positive outlook reflects the ongoing macroeconomic
normalisation since the country's financial crisis in 2012-2013,
with the government on track to achieve steady fiscal surpluses and
a declining debt-to-GDP ratio in the coming years. The positive
outlook also reflects the significant progress made in the banking
sector.
Also in September 2023, DBRS Ratings GmbH (DBRS Morningstar)
upgraded the long-term foreign and local currency issuer ratings of
the Republic of Cyprus from BBB to BBB (high). The rating action is
stable. The upgrade is driven by the recent decline in government
debt and the expectation that public debt metrics will continue to
improve over the next few years, while economic growth is expected
to remain among the strongest in the euro area. The stable outlook
balances the recent favourable fiscal dynamics with downside risks
to the economic outlook.
Fitch Ratings has affirmed Cyprus' long-term foreign currency
issuer default rating at 'BBB' with a stable outlook in June 2023,
following the upgrade in March last year. The upgrade and
affirmation reflect the improvement in public finances and
government debt, as well as strong GDP growth, the resilience of
the Cypriot economy to external shocks, and the improvement in the
banking sector's asset quality
C. Business Overview
Credit ratings
The Group's financial performance is highly correlated to the
economic and operating conditions in Cyprus. In November 2023,
Fitch Ratings upgraded long-term issuer default rating to BB from
B+, whilst maintaining the positive outlook. The two notch upgrade
reflects a combination of Fitch's improved assessment of the
Cypriot operating environment and continued improvement in the
Bank's credit profile, strengthened capitalisation, reduced stock
of legacy problem assets and structurally improved profitability.
In October 2023 Moody's Investors Service upgraded the Bank's
long-term deposit rating to the investment grade Baa3 from Ba1,
while the outlook remained positive. The main drivers for this
upgrade are the continued resilience of the Cypriot economy and
credit conditions and the continued improvements in Bank's solvency
profile, with further gradual improvements in asset quality and
capital metrics, and a significant strengthening in the Bank's core
profitability. In April 2023, S&P Global Ratings affirmed the
long-term issuer credit rating of the Bank at BB- and revised the
outlook to positive from stable. The revised outlook reflects the
likelihood of further progress in Cyprus' operating environment, in
particular materially easing funding risks.
Financial performance
The Group is a leading, financial and technology hub in Cyprus.
During the quarter ended 30 September 2023, the Group delivered
another strong set of financial results, generating a ROTE of
25.6%, the third consecutive quarter with a ROTE over 20%. Overall,
the Group generated EUR 349 mn profit after tax, corresponding to a
ROTE of 24.6%, supported by strong net interest income growth and a
well-managed deposit pass-through, whilst non-interest income
remained a significant contributor to the Group's profitability and
diversified model, covering around 90% of total operating expenses.
The Group's efficiency ratio was significantly improved on prior
year reflecting continued revenue growth and disciplined cost
management amidst persistent inflationary pressures. Overall, the
strong performance is feeding through the Group's tangible book
value growth trajectory, that increased by 22% on prior year to
EUR4.63 per share. With such strong set of financial results, the
Group is paving the way for delivering a ROTE for 2023 well above
the Group's 2023 target (of over 17%), albeit 4Q2023 ROTE is
expected to modestly decline compared to the 9M2023 levels, partly
due to typical seasonality in 4Q2023 and the fact that strong
profitability builds into equity.
Favourable interest rate environment
The structure of the Group's balance sheet is geared towards
higher interest rates. As at 30 September 2023, cash balances with
ECB (excluding TLTRO III of c.EUR2.0 bn ) amounted to c.EUR7.6 bn,
reflecting immediate benefit from interest rate rises. The
repricing of the reference rates gradually benefits the interest
income on loans, as over 95% of the Group's loan portfolio is
variable rate as at 30 September 2023. The net interest income for
9M2023 stood at EUR572 mn, more than double compared to 9M2022.
This increase is underpinned by faster and steeper than expected
interest rate rises as well as a resilient low deposit
pass-through.
Net interest income is expected to remain strong on the back of
the improved interest rate environment and well-managed deposit
pass-through and hence net interest income for 4Q2023 is expected
to be at similar levels to 3Q2023. At the same time, the Group is
undertaking pro-active solutions to enhance the resilience of the
net interest income to future reduction of interest rates. These
solutions include the increase in investment in fixed rate bonds
with longer duration and high credit, the initiation of use of
reverse repos, the offering of fixed rate lending and the entering
into fixed rate receiver swaps.
Growing revenues in a more capital efficient way
The Group remains focused on growing revenues in a more capital
efficient way through growth of high-quality new lending and the
growth in niche areas, such as insurance and digital products that
provide further market penetration and diversify through
non-banking operations.
The Group has continued to provide high quality new lending in
9M2023 via prudent underwriting standards. Growth in new lending in
Cyprus has been focused on selected industries in line with the
Bank's target risk profile . During 9M2023, new lending amounted to
EUR1,563 mn, despite the rising interest rate environment. Gross
performing loan book remained broadly flat yoy as repayments
continue to offset new lending. Performing loan book is expected to
remain broadly flat in 2023.
Fixed income portfolio continued to grow in the third quarter of
2023 to EUR 3,489 mn, and currently represents 14% of total assets
(net of TLTRO III). This portfolio is mostly measured at amortised
cost and is characterised with high average rating at Aa3 (or Aa2
when Cyprus government bonds are excluded). The mark-to market
impact of this amortised cost fixed income portfolio is EUR 91 mn
as at 30 September 2023, corresponding to c.90 bps of CET1
ratio.
Separately, the Group focuses to continue improving revenues
through multiple less capital-intensive initiatives, with a focus
on fees and commissions, insurance and non-banking opportunities,
leveraging on the Group's digital capabilities. During the first
nine months of 2023, non-interest income (excluding an ad-hoc
insurance receivable of c.EUR5 mn) amounted to EUR219 mn, remaining
an important contributor to the Group's profitability, and
contributing to 90% of the Group's total operating expenses. Going
forward, non-interest income is expected to continue covering c.80%
of the Group's total operating expenses.
C. Business Overview (continued)
Growing revenues in a more capital efficient way (continued)
In 2023, net fee and commission income is negatively affected by
the termination of liquidity fees in December 2022 and an NPE
sale-related servicing fee in mid-February 2023. When disregarding
the aforementioned impact of the liquidity fees and NPE
sale-related servicing fee, net fee and commission income increased
by 7% on prior year, reflecting the introduction of a revised price
list in February 2022 and higher net credit card commissions and
transactional fees.
Net fee and commission income is enhanced by transaction fees
from the Group's subsidiary, JCC Payment Systems Ltd (JCC), a
leading player in the card processing business and payment
solutions, 75% owned by the Bank. JCC's net fee and commission
income contributed 9% of total non-interest income and amounted to
EUR21 mn in 9M2023, up 8% yoy, backed by strong transaction
volume.
The Group's insurance companies, EuroLife and GI are
respectively leading players in the life and general insurance
business in Cyprus, and have been providing recurring and improving
income, further diversifying the Group's income streams. The net
insurance result for 9M2023 contributed 17% of non-interest income
and amounted to EUR38 mn, up 12% yoy, reflecting healthy new
business growth; insurance companies remain valuable and
sustainable contributors to the Group's profitability . On 1
January 2023, the Group adopted IFRS 17, retrospectively, which
impacts the profit recognition for insurance contracts by phasing
of profit over their lifetime compared to recognising profit
substantially up-front under IFRS 4. The new accounting standard
does not change the economics of the insurance business and
decreases the volatility of the Group's insurance companies
profitability. For further details please refer to Section F.9 of
this announcement.
Finally, the Group through the Digital Economy Platform (Jinius)
('the Platform') aims to support the national digital economy by
optimising processes in a cost-efficient way, allow the Bank to
strengthen its client relationships, create cross-selling
opportunities as well as to generate new revenue sources over the
medium term, leveraging on the Bank's market position, knowledge
and digital infrastructure. The first Business-to-Business services
are already in use by clients and include electronic invoicing,
remittance management, tenders management and ecosystem management.
The next key milestone is the launch of the first
Business-to-Consumer service, a product marketplace, driving
opportunities in lifestyle banking and beyond. Currently, over
1,800 companies are registered in the platform.
Lean operating model
Striving for a lean operating model is a key strategic pillar
for the Group in order to deliver shareholder value, without
constraining funding its digital transformation and investing in
the business.
The efficiency actions of the Group in 2022 to maintain
operating expenses under control in an inflationary environment
included further branch footprint optimisation and substantial
streamline of workforce. In 2022 the Group successfully completed a
Voluntary Staff Exit Plan (VEP) through which 16% of the Group's
full-time employees were approved to leave at a total cost of
EUR101 mn. Following the completion of the VEP, the gross annual
savings were estimated at c. EUR 37 mn or 19% of staff costs with a
payback period of 2.7 years. Additionally, in January 2022, one of
the Bank's subsidiaries completed a small-scale targeted VEP,
through which a small number of full-time employees were approved
to leave at a total cost of EUR3 mn. In relation to branch
restructuring, during 2022 the Group reduced the number of branches
by 20 to 60, a reduction of 25%.
The Group's total operating expenses for 9M2023 amounted to
EUR248 mn, moderately up by 3% yoy with savings partly offsetting
inflationary pressures. The cost to income ratio excluding special
levy on deposits and other levies/contributions for 9M2023 was
reduced further to 31%, 23 p.p. down compared to 9M2022, driven
mainly by the higher total income. Overall, the cost to income
ratio excluding special levy on deposits and other
levies/contributions for 2023 is expected to be considerably below
2023 target of <40%, reflecting stronger than expected income,
despite seasonally higher other operating expenses expected in
4Q2023.
During 2022 the Group has established a share awards scheme
under a long-term incentive plan ("the "LTIP Plan"). The LTIP Plan
involves the granting of share awards and is driven by scorecard
achievement, with measures and targets set to align pay outcomes
with the delivery of the Group's strategy. The LTIP stipulates that
performance will be measured over a 3 year period and financial and
non-financial objectives to be achieved (driven by both delivery of
the Group's strategy as well as individual performance). At the end
of the performance period, the performance outcome will be used to
assess the percentage of the awards that will vest. The Group
proceeded in December 2022 to grant to eligible employees share
awards under the established LTIP Plan; this is the 2022 LTIP and
refers to the performance period 2022-2024. Further in October
2023, the Group has granted a new award, the 2023 LTIP, under the
same LTIP Plan, which refers to the performance period 2023-2025.
The employees eligible for both the 2022 LTIP and 2023 LTIP are the
members of the Extended EXCO. A performance scorecard is set for
each annual LTIP award granted.
These shares will then normally vest in six tranches, with the
first tranche vesting after the end of the performance period and
the last tranche vesting on the fifth anniversary of the first
vesting date.
C. Business Overview (continued)
Lean operating model (continued)
In addition, staff costs for 9M2023 include c. EUR7 mn staff
cost rewards, namely the Short-term Incentive Plan. The Short-term
Incentive Plan involves variable remuneration to selected employees
and will be driven by both, delivery of the Group's strategy as
well as individual performance.
Transformation plan
The Group's focus continues on deepening the relationship with
its customers as a customer centric organisation. A transformation
plan is already in progress and aims to enable the shift to modern
banking by digitally transforming customer service, as well as
internal operations. The holistic transformation aims to (i) shift
to a more customer-centric operating model by defining customer
segment strategies, (ii) redefine distribution model across
existing and new channels, (iii) digitally transform the way the
Group serves its customers and operates internally, and (iv)
improve employee engagement through a robust set of organisational
health initiatives.
Digital transformation
The Bank's digital transformation continues to focus on
developing digital services and products that improve the customer
experience, streamlining internal processes, and introducing new
ways for improving the workplace environment. Furthermore, the
Bank's Digital strategy also embraces the advancement of digital
sales, reinforcing our commitment to delivering exceptional value
to our customers.
During 3Q2023, the Bank continued to enrich and improve its
digital portfolio with new innovative services to its customers.
The innovative QuickLoan products have been further enhanced with
the integration of Short-Lived digital signature Certificate (SLC).
As a result, BoC customers are offered an end-to-end digital
experience when applying for the new lending products, with the
capability to digitally sign the required documents, related to the
quick loans, conveniently from anywhere at any time via the BoC
mobile app/Internet Banking and not having to visit a BoC branch
for this purpose.
The adoption of digital products and services continued to grow
and gained momentum in the third quarter of 2023. As at 30
September 2023, 95.0% of the number of transactions involving
deposits, cash withdrawals and internal/external transfers were
performed through digital channels (up by 11.2 p.p. from 83.8% in
June 2020). In addition, 83.5% of individual customers were
digitally engaged (up by 11.1 p.p. from 72.4% in June 2020),
choosing digital channels over branches to perform their
transactions.
As at 30 September 2023, active mobile banking users and active
QuickPay users have grown by 15.1% and 22.4% respectively over the
last 12 months. The highest number of QuickPay users to date was
recorded in September 2023 with 195.2 thousand active users and 584
thousand transactions (up 28.4% yoy).
Digital offerings via digital channels continued to enhance
Group's sales further in the third quarter of 2023. During 3Q2023,
new lending via Quickloans amounted to EUR29 mn (compared to new
lending of EUR 26 mn in 2Q2023 and EUR18 mn for 1Q2023) and
totalled EUR73 mn for 9M2023. Deposits in accounts opened digitally
have also shown an increase of 26.3% yoy, reaching EUR227 mn at 30
September 2023. 9M2023 digital insurance sales, with two new
products in mobile app (Motor & Home Insurance), have more than
tripled compared to FY2022 sales (EUR276k in 9M2023 compared to
EUR68k in FY2022).
Asset quality
Balance sheet de-risking was largely completed in 2022, marked
by the completion of Project Helix 3 in November 2022 which refers
to the sale of non-performing exposures with gross book value of
c.EUR 550 mn as at the date of completion. Project Helix 3
represented a further milestone in the delivery of one of the
Group's strategic priorities of improving asset quality through the
reduction of NPEs and delivering NPE ratio at 4% by end-2022. As at
30 September 2023, the Group's NPE ratio stood at 3.5%. T he
Group's priorities remain intact, maintaining high quality new
lending with strict underwriting standards and preventing asset
quality deterioration in this uncertain outlook.
Against the backdrop of ongoing macroeconomic uncertainty, the
cost of risk range target of 50-80 bps remains unchanged. The Group
expects to end the year below the NPE ratio target of 4%.
C. Business Overview (continued)
Capital market presence
In June 2023, the Company successfully launched and priced an
issue of EUR220 mn Fixed Rate Reset Perpetual Additional Tier 1
Capital Securities (the 'New Capital Securities').
The issue was met with exceptional demand, attracting interest
from c.240 institutional investors, with the final order book over
12 times over-subscribed and final pricing 62.5 bps tighter than
the initial pricing indication. This also reflects significant
improvement in the credit spread to c.910 bps compared to c.1,260
bps for the previous AT1 issue in 2018 ('Existing Capital
Securities').
In July 2023, the Bank has successfully launched and priced an
issuance of EUR350 mn of senior preferred notes (the "Notes"). The
Notes were priced at par with a fixed coupon of 7.375% per annum,
payable annually in arrear, until the Optional Redemption Date i.e.
25 July 2027. The issuance was met with strong demand, attracting
interest from more than 90 institutional investors, with a peak
orderbook of EUR950 mn and final pricing 37.5 bps than the initial
pricing indication.
Dividend policy and shareholder value
In April 2023, the Company obtained the approval of the European
Central Bank to pay a dividend out of FY2022 profitability.
Following this approval, the Board of Directors of the Company
recommended to the shareholders for approval at the AGM a final
Dividend of EUR0.05 per ordinary share in respect of earnings for
the year ended 31 December 2022. The Dividend which was declared at
the AGM on 26 May 2023, amounted to EUR22.3 mn in total and was
equivalent to a payout ratio of 14% of the FY2022 adjusted
recurring profitability or 31% based on FY2022 profit after tax (as
reported in 2022 Annual Financial Report). The dividend was paid in
cash on 16 June 2023 and was the first dividend payment after 12
years, a significant milestone for the Group, as it represents a
new chapter for the Group.
Additionally, the Board of Directors approved the Group's
dividend policy in April 2023. The Group aims to provide a
sustainable return to shareholders. Dividend payments are expected
to build prudently and progressively over time, towards a payout
ratio in the range of 30-50% of the Group's profitability after
tax, before non-recurring items, adjusted for AT1 distributions
(referred to as "adjusted recurring profitability"). The dividend
policy takes into consideration market conditions as well as the
outcome of capital and liquidity planning.
Enhancing organisational resilience and ESG (Environmental,
Social and Governance) agenda
Climate change and transition to a sustainable economy is one of
the greatest challenges. As part of its vision to be the leading
financial hub in Cyprus, the Group is determined to lead the
transition of Cyprus to a sustainable future. The Group
continuously evolves towards its ESG agenda and continues to
progress towards building a forward-looking organisation embracing
ESG in all aspects of business as usual. In 2022, the Company
received a rating of AA (on a scale of AAA-CCC) in the MSCI ESG
Ratings assessment.
The ESG strategy formulated in 2021 is continuously expanding.
The Group is maintaining its leading role in the Social and
Governance pillars and focus on increasing the Group's positive
impacts on the Environment by transforming not only its own
operations, but also the operations of its customers.
The Group has committed to the following primary ESG targets,
which reflect the pivotal role of ESG in the Group's strategy:
-- Become carbon neutral by 2030
-- Become Net Zero by 2050
-- Steadily increase Green Asset Ratio
-- Steadily increase Green Mortgage Ratio
-- >=30% women in Group's management bodies (defined as the
Executive Committee (EXCO) and the Extended EXCO) by 2030
For the Group to articulate the delivery of its primary ESG
targets and address regulatory expectations, a comprehensive ESG
working plan has been established in 2022. The ESG working plan is
closely monitored by the Sustainability Committee, the Executive
Committee and the Board of Directors at frequent intervals.
C. Business Overview (continued)
Enhancing organisational resilience and ESG (Environmental,
Social and Governance) agenda (continued)
Environmental Pillar
The Group has estimated the Scope 1 and Scope 2 greenhouse gas
('GHG') emissions of 2021 relating to own operations in order to
set the baseline for carbon neutrality target. The Bank being the
main contributor of GHG emissions of the Group, designed in 2022
the strategy to meet the carbon neutrality target by 2030 and
progress towards Net Zero target of 2050. For the Group to become
carbon neutral by 2030, Scope 1 and Scope 2 emissions should be
reduced by 42% by 2030. The Bank plans to invest in energy
efficient installations and actions as well as replace fuel
intensive machineries and vehicles from 2023 to 2025, which would
lead to c.5-10% reduction in Scope 1 and Scope 2 emissions by 2025
compared to 2021. The Bank expects that the Scope 2 emissions will
be reduced further when the energy market in Cyprus shifts further
towards renewable energy. The Bank achieved a reduction of 18% in
Scope 1 -Mobile and Stationary Combustion GHG emissions and 7% in
Scope 2 - Purchased electricity GHG emissions in 9M2023 compared to
9M2022 due to new solar panels connected to energy network in 2022
and early 2023 as well as the reduction of number of branches as
part of the digitalisation journey. The Bank achieved an increase
by 61% in renewable energy production, from 129,840 Kwh to 208,651
Kwh, in 9M2023 compared to 9M2022.
The Bank is the first bank in Cyprus to join the Partnership for
Carbon Accounting Financials (PCAF) in October 2022 and is
following the recommended methodology for the estimation of the
Financed Scope 3 emissions. The Group has estimated Financed Scope
3 GHG emissions relating to the loan portfolio based on PCAF
standard and proxies. Following the estimation of Financed Scope 3
GHG emissions derived from its loan portfolio and in conjunction
with the materiality assessment's results on climate and
environmental risks the Bank identified the carbon-concentrated
areas so as to take the necessary actions to minimise the
environmental and climate impact associated with its loan portfolio
by offering targeted climate friendly products and engaging with
its customers. In 2023, following the identification of
carbon-concentrated sectors and asset classes, the Group is in the
process to set decarbonisation targets aligned with climate
scenario (Science based targets) which will assist in the
formulation of the Group's strategy going forward.
The Bank in 2022 launched a low emission vehicle loan product
(either hybrid or electric) and is working to expand its range of
environmentally friendly products further in 2023. The gross amount
of environmentally friendly loans as at 30 September 2023 was
EUR21.6 mn compared to EUR20.9 mn as at 31 December 2022 .
Moreover, the Bank is making substantial progress in further
integrating climate risk considerations into its risk management
approach, as it tries to integrate climate related risk into its
risk culture. The Bank, within the context of underwriting
processes, is currently in the process of incorporating the
assessment of ESG and climate matters and amending its Policies and
Procedures in such a way that potential impact from ESG and climate
is reflected in the fundamental elements of the creditworthiness
assessment. The Bank designed ESG questionnaires for key selected
sectors which will then be leveraged for deriving an ESG
classification. In addition, the Bank is in the process to enhance
its risk quantification methodology to assess how the portfolio is
affected by Climate and Environmental (C&E) risks and will be
incorporating the above elements into the stress testing
infrastructure.
During 2023, in order to enhance the awareness and skillset
towards the ESG, the Group performed trainings to the Board of
Directors and Senior Management.
Social Pillar
At the centre of the Group's leading social role lie its
investments in the Bank of Cyprus Oncology Centre (with an overall
investment of c.EUR70 mn since 1998, whilst 60% of diagnosed cancer
cases in Cyprus are being treated at the Centre), the immediate and
efficient response of Bank of Cyprus' SupportCY network consisting
of companies and organisations, to various needs of the society and
in cases of crises and emergencies, through the activation of
programs, specialied equipment and a highly trained Volunteers
Corps, the contribution of the Bank of Cyprus Cultural Centre in
promoting the cultural heritage of the island, and the work of IDEA
Innovation Centre. During 2023, SupportCY among other initiatives
responded to more than 30 fire incidents in Cyprus and Greece, the
deadly floods in Greece and sent support to the earthquake victims
in Syria. The Cultural Centre undertook a number of innovative
projects such as 'AISTHISEIS' - Multi sensory museum experience for
people with disabilities as well as the ReInHerit program
facilitating innovation and research cooperation between European
museums and heritage continuing also into 2023, with 30,456 people
participating in events at the Cultural Foundation between January
to September 2023. The IDEA Innovation Centre, invested c.EUR4 mn
in start-up business creation since its incorporation, supported
creation of 89 new companies to date, and provided support to 210+
entrepreneurs through its Startup program since incorporation.
Staff have continued to engage in voluntary initiatives to support
charities, foundations, people in need and initiatives to protect
the environment.
C. Business Overview (continued)
Enhancing organisational resilience and ESG (Environmental,
Social and Governance) agenda (continued)
The Group has continued to upgrade its staff's skillset by
providing training and development opportunities to all staff and
capitalising on modern delivery methods. In 2023, the Bank's
employees attended 53,435 hours of trainings. In addition, in 2023
the Group launched the BoC Academy to offer up-skilling short
courses for employees with 20 members of staff enrolling on the
Academy's programs to date. In addition, 4 full MBA scholarships
were offered to selected members of staff. Moreover, the Group
continues its emphasis on staff wellness into 2023 by offering
webinars, team building activities and family events with sole
purpose to enhance mental, physical, financial and social
health.
Governance Pillar
The Group continues to operate successfully within a complex
regulatory framework of a holding company which is registered in
Ireland, listed on two Stock Exchanges and run in compliance with a
number of rules and regulations. Its governance and management
structures enable it to achieve present and future economic
prosperity, environmental integrity and social equity across its
value chain. The Group operates within a framework of prudent and
effective controls, which enable risk assessment and risk
management based on the relevant policies under the leadership of
the Board of Directors. The Group has set up a robust Governance
Structure to oversee its ESG agenda. Progress on the implementation
and evolution of the Group's ESG strategy is monitored by the
Sustainability Committee and the Board of Directors. The
Sustainability Committee is a dedicated executive committee set up
in early 2021 to oversee the ESG agenda of the Group, review the
evolution of the Group's ESG strategy, monitor the development and
implementation of the Group's ESG objectives and the embedding of
ESG priorities in the Group's business targets. The Group's ESG
Governance structure continues to evolve, so as to better address
the Group's evolving ESG needs. The Group's regulatory compliance
continues to be an undisputed priority.
The Board composition of the Company and the Bank is diverse,
with 50% of the Board members being female as at 30 September 2023.
The Board displays a strong skillset stemming from broad
international experience. Moreover, the Group aspires to achieve a
representation of at least 30% women in Group's management bodies
(Defined as the EXCO and the Extended EXCO) by 2030. As at 30
September 2023, there is a 29% representation of women in Group's
management bodies and a 41% representation of women at key
positions below the Extended EXCO level (defined as positions
between Assistant Manager and Manager).
D. Strategy and Outlook
The vision of the Group is to create a lifelong partnership with
its customers, guiding and supporting them in an evolving
world.
The strategic pillars of the Group are:
-- Grow revenues in a more capital efficient way; by enhancing
revenue generation via growth in high quality new lending,
diversification to less capital intensive banking and other
financial services (such as insurance and the digital economy) as
well as prudent management of the Group's liquidity
-- Achieve a lean operating model; by ongoing focus on
efficiency through further automations facilitated by
digitisation
-- Maintain robust asset quality; by maintaining high quality
new lending via strict underwriting criteria, normalising cost of
risk and reducing other impairments
-- Enhance organisational resilience and ESG (Environmental,
Social and Governance) agenda; by leading the transition of Cyprus
to a sustainable future and building a forward-looking organisation
embracing ESG in all aspects.
The Group's targets for 2023 are set out below:
Key metrics 9M2023 FY2023 targets FY2023 Expectations
(June 2023)
Net interest income EUR 572 mn > EUR 650 NII will remain strong with
mn 4Q2023 at similar levels
to 3Q2023
------------ --------------- ------------------------------
Cost to income 31% Sub 40% Reflecting stronger income,
ratio(1) cost to income ratio(1)
will be considerably <40%
------------ --------------- ------------------------------
Return on tangible 24.6% >17% FY2023 ROTE to well exceed
equity 2023 target, albeit 4Q2023
expected to decline from
year to date level
------------ --------------- ------------------------------
NPE ratio 3.5% <4% NPE ratio on track to end
the year <4%
------------ --------------- ------------------------------
Cost of risk 58 bps 50-80 bps Cost of risk outlook remains
unchanged
------------ --------------- ------------------------------
Dividend Building prudently and progressively to 30-50% payout(2)
-------------------------------------------------------------
1. Excluding special levy on deposits and other levies/contributions
2. Payout ratio calculated on adjusted recurring profitability which
refers to profit after tax before non-recurring items (attributable
to the owners of the Company) taking into consideration the distributions
from other equity instruments such as AT1 coupon. Any recommendation
for a dividend is subject to regulatory approval.
The 2024 targets are expected to be updated with FY2023
publication of financial results.
E . Financial Results - Statutory Basis
Unaudited Interim Consolidated Income Statement
The following financial information for the nine months of 2023
and 2022 within Section E corresponds to the condensed consolidated
financial statements prepared in accordance with the International
Financial Reporting Standards as adopted by the European Union. As
a result of the implementation from 1 January 2023 of IFRS 17, 2022
comparative information has been restated to reflect the impact of
IFRS 17 adoption.
Nine months ended
3 0 September
2023 2022
(restated)(1)
---------- ---------------
EUR000 EUR000
---------- ---------------
630,32
Turnover 1,022,794 6
========== ===============
Interest income 654,637 280,505
---------- ---------------
Income similar to interest income 43,294 14,692
---------- ---------------
Interest expense (97,983) (49,779)
---------- ---------------
Expense similar to interest expense (27,784) (11,037)
---------- ---------------
Net interest income 572,164 234,381
---------- ---------------
Fee and commission income 139,854 149,341
---------- ---------------
Fee and commission expense (5,336) (7,241)
---------- ---------------
Net foreign exchange gains 22,506 21,464
---------- ---------------
Net gains/(losses) on financial instruments 6,346 (1,836)
---------- ---------------
Net gains on derecognition of financial assets
measured at amortised cost 6,265 2,179
---------- ---------------
Net insurance finance income/(expense) and net
reinsurance finance income/(expense) 1,281 3,536
---------- ---------------
Net insurance service result 51,445 44,256
---------- ---------------
Net reinsurance service result (14,961) (13,929)
---------- ---------------
Net gains/(losses) from revaluation and disposal
of investment properties 1,031 (583)
---------- ---------------
Net gains on disposal of stock of property 5,997 11,175
---------- ---------------
Other income 15,147 11,945
---------- ---------------
Total operating income 801,739 454,688
---------- ---------------
Staff costs (141,462) (243,171)
---------- ---------------
Special levy on deposits and other levies/ contributions (29,754) (26,616)
---------- ---------------
Provisions for pending litigations, regulatory
and other provisions (net of reversals) (20,595) (3,402)
---------- ---------------
Other operating expenses (107,973) (114,568)
---------- ---------------
Operating profit before credit losses and impairment 501,955 66,931
---------- ---------------
Credit losses on financial assets (56,584) (47,525)
========== ===============
Impairment net of reversals on non-financial
assets (31,408) (17,474)
---------- ---------------
Profit before tax 413,963 1,932
---------- ---------------
Income tax (62,911) (18,605)
---------- ---------------
Profit/(loss) after tax for the period 351,052 (16,673)
========== ===============
Attributable to:
---------- ---------------
Owners of the Company 349,363 (18,532)
---------- ---------------
Non-controlling interests 1,689 1,859
---------- ---------------
Profit/(loss) for the period 351,052 (16,673)
========== ===============
Basic profit/(loss) per share attributable to
the owners of the Company (EUR cent) 78.3 (4.2)
========== ===============
Diluted profit/(loss) per share attributable
to the owners of the Company
(EUR cent) 78.2 (4.2)
========== ===============
(1.) 2022 comparative information has been restated to reflect
the impact of IFRS 17. Refer to Section F9.
E . Financial Results - Statutory Basis (continued)
Unaudited Interim Consolidated Statement of Comprehensive
Income
Nine months ended
30 September
2023 2022 (restated)(1)
-------- -------------------
EUR000 EUR000
-------- -------------------
Profit/(loss) for the period 351,052 (16,673)
-------- -------------------
Other comprehensive income (OCI)
-------- -------------------
OCI that may be reclassified in the consolidated
income statement in subsequent periods 1,903 (13,471)
-------- -------------------
Fair value reserve (debt instruments) 2,002 (11,214)
-------- -------------------
Net gains/(losses) on investments in debt instruments
measured at fair value through OCI (FVOCI) 2,334 (9,983)
-------- -------------------
Transfer to the consolidated income statement
on disposal (332) (1,231)
-------- -------------------
Foreign currency translation reserve (99) (2,257)
-------- -------------------
(Loss)/profit on translation of net investment
in foreign subsidiaries (85) 1,822
------------------------------------------------------- -------- -------------------
Loss on hedging of net investments in foreign
subsidiaries (14) (4,079)
-------- -------------------
OCI not to be reclassified in the consolidated
income statement in subsequent periods 1,448 (878)
-------- -------------------
Fair value reserve (equity instruments) (592) (2,421)
-------- -------------------
Net losses on investments in equity instruments
designated at FVOCI (592) (2,421)
-------- -------------------
Property revaluation reserve 824 -
-------- -------------------
Fair value gains before tax 798 -
-------- -------------------
Deferred tax 26 -
-------- -------------------
Actuarial gains on the defined benefit plans 1,216 1,543
-------- -------------------
Remeasurement gains on defined benefit plans 1,216 1,543
-------- -------------------
Other comprehensive income/(loss) for the period
net of taxation 3,351 (14,349)
-------- -------------------
Total comprehensive income/(loss) for the period 354,403 (31,022)
======== ===================
Attributable to:
-------- -------------------
Owners of the Company 352,708 (32,881)
-------- -------------------
Non-controlling interests 1,695 1,859
-------- -------------------
Total comprehensive income/(loss) for the period 354,403 (31,022)
======== ===================
(1.) 2022 comparative information has been restated to reflect
the impact of IFRS 17. Refer to Section F9.
E . Financial Results - Statutory Basis (continued)
Unaudited Interim Consolidated Balance Sheet
30 September 31 December 1 January
2023 2022 2022 (restated)(1)
(restated)(1)
Assets EUR000 EUR000
-------------- --------------- --------------------
Cash and balances with central banks 9,565,413 9,567,258 9,230,883
-------------- --------------- --------------------
Loans and advances to banks 409,903 204,811 291,632
-------------- --------------- --------------------
Derivative financial assets 56,383 48,153 6,653
-------------- --------------- --------------------
Investments at FVPL 135,138 190,209 199,194
-------------- --------------- --------------------
Investments at FVOCI 427,467 467,375 748,695
-------------- --------------- --------------------
Investments at amortised cost 3,073,787 2,046,119 1,191,274
-------------- --------------- --------------------
Loans and advances to customers 9,910,455 9,953,252 9,836,405
-------------- --------------- --------------------
Life insurance business assets attributable
to policyholders 610,720 542,321 551,797
-------------- --------------- --------------------
Prepayments, accrued income and other
assets 620,718 609,054 583,777
-------------- --------------- --------------------
Stock of property 922,280 1,041,032 1,111,604
-------------- --------------- --------------------
Investment properties 71,205 85,099 117,745
-------------- --------------- --------------------
Deferred tax assets 227,953 227,934 265,942
-------------- --------------- --------------------
Property and equipment 274,319 253,378 252,130
-------------- --------------- --------------------
Intangible assets 45,899 52,546 54,144
-------------- --------------- --------------------
Non-current assets and disposal groups
held for sale - - 358,951
-------------- --------------- --------------------
Total assets 26,351,640 25,288,541 24,800,826
============== =============== ====================
Liabilities
-------------- --------------- --------------------
Deposits by banks 442,754 507,658 457,039
-------------- --------------- --------------------
Funding from central banks 2,023,424 1,976,674 2,969,600
-------------- --------------- --------------------
Derivative financial liabilities 13,875 16,169 32,452
-------------- --------------- --------------------
Customer deposits 19,267,145 18,998,319 17,530,883
-------------- --------------- --------------------
Insurance liabilities 640,048 599,992 623,791
-------------- --------------- --------------------
Accruals, deferred income, other liabilities
and other provisions 474,368 379,182 356,697
-------------- --------------- --------------------
Provisions for pending litigation, claims,
regulatory and other matters 130,873 127,607 104,108
-------------- --------------- --------------------
Debt securities in issue 644,281 297,636 302,555
-------------- --------------- --------------------
Subordinated liabilities 314,989 302,104 340,220
-------------- --------------- --------------------
Deferred tax liabilities 34,618 34,634 39,817
-------------- --------------- --------------------
Total liabilities 23,986,375 23,239,975 22,757,162
-------------- --------------- --------------------
Equity
-------------- --------------- --------------------
Share capital 44,620 44,620 44,620
-------------- --------------- --------------------
Share premium 594,358 594,358 594,358
-------------- --------------- --------------------
Revaluation and other reserves 79,524 76,939 99,541
-------------- --------------- --------------------
Retained earnings 1,394,518 1,090,349 1,062,711
-------------- --------------- --------------------
Equity attributable to the owners of
the Company 2,113,020 1,806,266 1,801,230
-------------- --------------- --------------------
Other equity instruments 228,250 220,000 220,000
-------------- --------------- --------------------
Non--controlling interests 23,995 22,300 22,434
-------------- --------------- --------------------
Total equity 2,365,265 2,048,566 2,043,664
-------------- --------------- --------------------
Total liabilities and equity 26,351,640 25,288,541 24,800,826
============== =============== ====================
(1.) 2022 comparative information has been restated to reflect
the impact of IFRS 17. Refer to Section F9.
E . Financial Results - Statutory Basis (continued)
Unaudited Interim Consolidated Statement of Changes in
Equity
Attributable to the owners of the Company Other Non- Total
equity controlling equity
instruments interests
Share Share Treasury Other Retained Property Financial Life Foreign Total
capital premium shares capital earnings revaluation instruments insurance currency
reserves reserve fair in-force translation
value business reserve
reserve reserve
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ----------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
31 December
2022 44,620 594,358 (21,463) 322 1,041,152 74,170 7,142 101,301 16,768 1,858,370 220,000 22,300 2,100,670
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Impact of
retrospective
application
of
IFRS 17
adoption - - - - 49,197 - - (101,301) - (52,104) - - (52,104)
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
31 December
2022
(restated) /
1
January 2023 44,620 594,358 (21,463) 322 1,090,349 74,170 7,142 - 16,768 1,806,266 220,000 22,300 2,048,566
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Profit for the
period - - - - 349,363 - - - - 349,363 - 1,689 351,052
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Other
comprehensive
income/(loss)
after
tax for the
period - - - - 1,216 818 1,410 - (99) 3,345 - 6 3,351
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Total
comprehensive
income/(loss)
after
tax for the
period - - - - 350,579 818 1,410 - (99) 352,708 - 1,695 354,403
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Dividends - - - - (22,310) - - - - (22,310) - - (22,310)
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Share-based
benefits-cost - - - 456 - - - - - 456 - - 456
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Payment of
coupon
to AT1
holders - - - - (13,750) - - - - (13,750) - - (13,750)
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Issue of other
equity
instruments - - - - (3,530) - - - - (3,530) 220,000 - 216,470
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Repurchase of
other
equity
instruments - - - - (6,820) - - - - (6,820) (211,750) - (218,570)
-------- -------- --------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
30 September
2023 44,620 594,358 (21,463) 778 1,394,518 74,988 8,552 - 16,669 2,113,020 228,250 23,995 2,365,265
======== ======== ========= ========= ========== ============ ============ ========== ============ ========== ============ ============ ==========
E . Financial Results - Statutory Basis (continued)
Unaudited Interim Consolidated Statement of Changes in Equity
(continued)
Attributable to the owners of the Company Other Non- Total
equity controlling equity
instruments interests
Share Share Treasury Retained Property Financial Life Foreign Total
capital premium shares earnings revaluation instruments insurance currency
reserve fair in-force translation
value business reserve
reserve reserve
-------- -------- --------- ---------- ------------ ------------ ---------- ------------ ----------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
-------- -------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
1 January 2022 44,620 594,358 (21,463) 986,623 80,060 23,285 113,651 17,659 1,838,793 220,000 22,434 2,081,227
-------- -------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Impact of
retrospective
application
of IFRS
17 adoption - - - 76,088 - - (113,651) - (37,563) - - (37,563)
-------- -------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Restated
balance
at 1 January
2022 44,620 594,358 (21,463) 1,062,711 80,060 23,285 - 17,659 1,801,230 220,000 22,434 2,043,664
-------- -------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
(Loss)/profit
for
the period - - - (18,532) - - - - (18,532) - 1,859 (16,673)
-------- -------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Other
comprehensive
income/(loss)
after
tax for the
period - - - 1,543 - (13,635) - (2,257) (14,349) - - (14,349)
-------- -------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Total
comprehensive
(loss)/income
after
tax for the
period - - - (16,989) - (13,635) - (2,257) (32,881) - 1,859 (31,022)
-------- -------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Defence
contribution - - - (4,983) - - - - (4,983) - - (4,983)
-------- -------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Payment of
coupon
to AT1
holders - - - (13,750) - - - - (13,750) - - (13,750)
-------- -------- --------- ---------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
30 September
2022 44,620 594,358 (21,463) 1,026,989 80,060 9,650 - 15,402 1,749,616 220,000 24,293 1,993,909
======== ======== ========= ========== ============ ============ ========== ============ ========== ============ ============ ==========
F. Notes
F.1 Reconciliation of Interim Income Statement for the nine
months ended 30 September 2023 between the statutory and underlying
basis
EUR million Underlying Other Statutory
basis basis
Net interest income 572 - 572
=========== ====== ==========
Net fee and commission income 135 - 135
=========== ====== ==========
Net foreign exchange gains and net gains
on financial instruments 29 - 29
=========== ====== ==========
Net gains on derecognition of financial
assets measured at amortised cost - 6 6
=========== ====== ==========
Net insurance result* 38 - 38
=========== ====== ==========
Net gains from revaluation and disposal
of investment properties and on disposal
of stock of properties 7 - 7
=========== ====== ==========
Other income 15 - 15
----------- ------ ----------
Total income 796 6 802
=========== ====== ==========
(27 8 (2 2 ( 300
Total expenses ) ) )
----------- ------ ----------
Operating profit 5 18 (16) 50 2
=========== ====== ==========
Loan credit losses (44) 44 -
=========== ====== ==========
Impairment of other financial and non-financial
assets (38) 38 -
=========== ====== ==========
Provisions for litigation, claims, regulatory
and other matters (net of reversals) (20) 20 -
=========== ====== ==========
Credit losses on financial assets and impairment
net of reversals of non-financial assets - (88) (88)
=========== ====== ==========
Profit before tax and non-recurring items 41 6 (2) 41 4
=========== ====== ==========
Tax (63) - (63)
=========== ====== ==========
Profit attributable to non-controlling interests (2) - (2)
=========== ====== ==========
Profit after tax and before non-recurring
items (attributable to the owners of the
Company) 35 1 (2) 3 49
=========== ====== ==========
Advisory and other transformation costs
- organic (2) 2 -
----------- ------ ----------
Profit after tax (attributable to the owners
of the Company) 3 49 - 3 49
=========== ====== ==========
* Net insurance result per underlying basis comprises the
aggregate of captions 'Net insurance finance income/( expense) and
net reinsurance finance income/(expense)', 'Net insurance service
result' and 'Net reinsurance service result' per the statutory
basis.
The reclassification differences between the statutory basis and
the underlying basis are explained below:
-- Net gains on loans and advances to customers at FVPL (30
September 2023: nil) included in 'Loan credit losses' under the
underlying basis are included in 'Net gains/(losses) on financial
instruments' under the statutory basis. Their classification under
the underlying basis is done to align their presentation with the
loan credit losses on loans and advances to customers at amortised
cost.
-- ' Net gains on derecognition of financial assets measured at
amortised cost ' of approximately EUR6 million under the statutory
basis comprise net gains on derecognition of loans and advances to
customers included in 'Loan credit losses' under the underlying
basis as to align their presentation with the loan credit losses on
loans and advances to customers.
-- Provisions for litigation, claims, regulatory and other
matters amounting to EUR20 million presented within 'Operating
profit before credit losses and impairment' under the statutory
basis, are presented under the underlying basis in conjunction with
loan credit losses and impairments.
-- Advisory and other restructuring costs of approximately EUR2
million included in 'Other operating expenses' under the statutory
basis are separately presented under the underlying basis since
they comprise mainly fees to external advisors in relation to the
transformation programme and other strategic projects of the
Group.
-- 'Credit losses on financial assets' and 'Impairment net of
reversals on non-financial assets' under the statutory basis
include: i) credit losses to cover credit risk on loans and
advances to customers of EUR51 million, which are included in 'Loan
credit losses' under the underlying basis, and ii) credit losses of
other financial assets of EUR6 million and impairment net of
reversals of non-financial assets of EUR31 million, which are
included in 'Impairment of other financial and non-financial
assets' under the underlying basis, as to be presented separately
from loan credit losses.
F. Notes (continued)
F.2 Customer deposits
The analysis of customer deposits is presented below:
30 September 31 December
2023 2022
------------- ------------
By type of deposit EUR000 EUR000
------------- ------------
10,3 76
Demand , 781 10,561,724
------------- ------------
Savings 2,933,744 2,840,346
------------- ------------
5,9 56
Time or notice , 620 5,596,249
------------- ------------
19,267,145 18,998,319
============= ============
By geographical area
------------- ------------
Cyprus 13,439,298 13,019,109
------------- ------------
Greece 1,841,915 1,933,771
------------- ------------
United Kingdom 678,061 706,233
------------- ------------
United States 170,306 178,962
------------- ------------
Germany 127,612 168,785
------------- ------------
Romania 62,856 69,514
------------- ------------
Russia 606,593 700,465
------------- ------------
Ukraine 297,038 290,050
------------- ------------
Belarus 75,568 83,299
------------- ------------
Other countries 1,967,898 1,848,131
------------- ------------
19,267,145 18,998,319
============= ============
Deposits by geographical area are based on the country of
passport of the Ultimate Beneficial Owner.
30 September 31 December
2023 2022
By currency EUR000 EUR000
------------- ------------
Euro 17,354,605 17,067,299
------------- ------------
US Dollar 1,529,637 1,529,548
------------- ------------
British Pound 318,810 333,458
------------- ------------
Russian Rouble 1,470 3,466
------------- ------------
Swiss Franc 7,986 11,796
------------- ------------
Other currencies 54,637 52,752
------------- ------------
19,267,145 18,998,319
By customer sector
------------- ------------
Corporate and Large corporate 1,984,991 1,915,300
------------- ------------
International corporate 138,589 139,898
------------- ------------
SMEs 1,006,880 1,007,555
------------- ------------
Retail 11,670,190 11,333,783
------------- ------------
Restructuring
------------- ------------
- Corporate 14,700 16,017
------------- ------------
- SMEs 6,993 6,375
------------- ------------
- Retail other 11,866 10,152
------------- ------------
Recoveries
------------- ------------
- Corporate 1,060 1,262
------------- ------------
International business unit 3,861,918 3,957,050
------------- ------------
Wealth management 569,958 610,927
------------- ------------
19,267,145 18,998,319
============= ============
F. Notes (continued)
F.3 Loans and advances to customers
30 September 31 December
2023 2022
EUR000 EUR000
------------- ------------
Gross loans and advances to customers at amortised
cost 9,894,927 9,917,335
------------- ------------
Allowance for ECL of loans and advances to customers (190,234) (178,442)
------------- ------------
9,704,693 9,738,893
------------- ------------
Loans and advances to customers measured at
FVPL 205,762 214,359
------------- ------------
9,910,455 9,953,252
============= ============
F.4 Credit risk concentration of loans and advances to customers
The credit risk concentration, which is based on industry
(economic activity) and business line, as well as the geographical
concentration, is presented below.
The geographical concentration, for credit risk concentration
purposes, is based on the Group's Country Risk Policy, which is
followed for monitoring the Group's exposures, in accordance with
which exposures are analysed by country of risk based on the
country of residency for individuals and the country of
registration for companies.
30 September Cyprus Greece United Russia Other Gross
2023 Kingdom countries loans at
amortised
cost
By economic
activity EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
---------- -------- --------- ------- ----------- -----------
Trade 919,670 322 39 - 15,212 935,243
---------- -------- --------- ------- ----------- -----------
Manufacturing 296,285 44,022 94 - 23,508 363,909
---------- -------- --------- ------- ----------- -----------
Hotels and catering 934,001 26,954 36,864 - 39,865 1,037,684
---------- -------- --------- ------- ----------- -----------
Construction 511,802 8 , 831 14 - 348 520,995
---------- -------- --------- ------- ----------- -----------
Real estate 918,931 101,234 1,939 - 51,749 1,073,853
---------- -------- --------- ------- ----------- -----------
Private individuals 4,535,036 10,384 59,856 13,399 49,679 4,668,354
---------- -------- --------- ------- ----------- -----------
Professional
and other services 503,535 550 5,241 312 41,950 551,588
---------- -------- --------- ------- ----------- -----------
Shipping 22,410 3 - - 226,465 248,878
---------- -------- --------- ------- ----------- -----------
Other sectors 466,865 1 - 2 27,555 494,423
---------- -------- --------- ------- ----------- -----------
9,108,535 192,301 104,047 13,713 476,331 9,894,927
========== ======== ========= ======= ===========
F. Notes (continued)
F.4 Credit risk concentration of loans and advances to customers (continued)
30 September Cyprus Greece United Russia Other Gross
2023 Kingdom countries loans
at amortised
cost
By business
line EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
---------- -------- --------- ------- ----------- --------------
Corporate and
Large corporate 3,361,298 28,076 97 311 184 3,389,966
---------- -------- --------- ------- ----------- --------------
International
corporate 120,718 157,522 43,632 - 420,945 742,817
---------- -------- --------- ------- ----------- --------------
SMEs 962,748 517 1,196 - 2,344 966,805
---------- -------- --------- ------- ----------- --------------
Retail
---------- -------- --------- ------- ----------- --------------
- housing 3,324,919 2,397 29,623 87 17,672 3,374,698
---------- -------- --------- ------- ----------- --------------
- consumer, credit
cards and other 943,249 766 507 - 786 945,308
---------- -------- --------- ------- ----------- --------------
Restructuring
---------- -------- --------- ------- ----------- --------------
- corporate 51,716 - 627 - - 52,343
---------- -------- --------- ------- ----------- --------------
- SMEs 35,136 - 494 71 - 35,701
---------- -------- --------- ------- ----------- --------------
- retail housing 56,959 - 2,659 157 100 59,875
---------- -------- --------- ------- ----------- --------------
- retail other 19,889 25 3 - 22 19,939
---------- -------- --------- ------- ----------- --------------
Recoveries
---------- -------- --------- ------- ----------- --------------
- corporate 7,163 - 172 169 975 8,479
---------- -------- --------- ------- ----------- --------------
- SMEs 14,759 1 919 2,056 1,163 18,898
---------- -------- --------- ------- ----------- --------------
- retail housing 54,552 202 15,847 2,498 7,184 80,283
---------- -------- --------- ------- ----------- --------------
- retail other 28,811 7 1,173 227 255 30,473
---------- -------- --------- ------- ----------- --------------
International
business unit 87,701 1,630 7,005 8,137 19,383 123,856
---------- -------- --------- ------- ----------- --------------
Wealth management 38,917 1,158 93 - 5,318 45,486
---------- -------- --------- ------- ----------- --------------
9,108,535 192,301 104,047 13,713 476,331 9,894,927
========== ======== ========= ======= =========== ==============
31 December Cyprus Greece United Russia Other Gross
20 22 Kingdom countries loans
at amortised
cost
By economic
activity EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
---------- -------- --------- ------- ----------- --------------
Trade 922,093 384 37 - 35 922,549
---------- -------- --------- ------- ----------- --------------
Manufacturing 323,074 44,978 - - 27,943 395,995
---------- -------- --------- ------- ----------- --------------
Hotels and catering 928,346 16,565 35,614 - 40,086 1,020,611
---------- -------- --------- ------- ----------- --------------
Construction 545,421 8,955 23 1 1,985 556,385
---------- -------- --------- ------- ----------- --------------
Real estate 978,708 94,823 1,866 - 51,617 1,127,014
---------- -------- --------- ------- ----------- --------------
Private individuals 4,496,081 11,146 73,120 19,103 54,985 4,654,435
---------- -------- --------- ------- ----------- --------------
Professional
and other services 551,269 980 5,311 313 37,830 595,703
---------- -------- --------- ------- ----------- --------------
Shipping 13,338 - - - 173,830 187,168
---------- -------- --------- ------- ----------- --------------
Other sectors 427,535 2 - 3 29,935 457,475
---------- -------- --------- ------- ----------- --------------
9,185,865 177,833 115,971 19,420 418,246 9,917,335
========== ======== ========= ======= =========== ==============
F. Notes (continued)
F.4 Credit risk concentration of loans and advances to customers (continued)
31 December Cyprus Greece United Russia Other Gross
2022 Kingdom countries loans
at amortised
cost
By business
line EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
---------- -------- --------- ------- ----------- --------------
Corporate and
Large corporate 3,380,542 17,781 50 312 102 3,398,787
---------- -------- --------- ------- ----------- --------------
International
corporate 139,813 152,143 42,327 - 351,025 685,308
---------- -------- --------- ------- ----------- --------------
SMEs 1,021,950 1,036 1,451 - 4,174 1,028,611
---------- -------- --------- ------- ----------- --------------
Retail
---------- -------- --------- ------- ----------- --------------
- housing 3,272,253 2,450 36,839 186 18, 906 3,330,634
---------- -------- --------- ------- ----------- --------------
- consumer, credit
cards and other 885,558 856 576 1 90 5 887,896
---------- -------- --------- ------- ----------- --------------
Restructuring
---------- -------- --------- ------- ----------- --------------
- corporate 66,151 - 869 - 932 67,952
---------- -------- --------- ------- ----------- --------------
- SMEs 48,027 - 432 158 384 49,001
---------- -------- --------- ------- ----------- --------------
- retail housing 70,283 104 1,841 291 114 72,633
---------- -------- --------- ------- ----------- --------------
- retail other 24,093 16 21 192 21 24,343
---------- -------- --------- ------- ----------- --------------
Recoveries
---------- -------- --------- ------- ----------- --------------
- corporate 19,063 - 452 172 32 19,719
---------- -------- --------- ------- ----------- --------------
- SMEs 26,150 - 1,117 2,664 1,774 31,705
---------- -------- --------- ------- ----------- --------------
- retail housing 69,790 260 19,778 3,431 9, 736 102,995
---------- -------- --------- ------- ----------- --------------
- retail other 31,967 12 1,265 49 337 33,630
---------- -------- --------- ------- ----------- --------------
International
business unit 90,652 1,722 8,953 11,964 24, 583 137,874
---------- -------- --------- ------- ----------- --------------
Wealth management 39,573 1,453 - - 5,221 46,247
---------- -------- --------- ------- ----------- --------------
9,185,865 177,833 115,971 19,420 418,246 9,917,335
========== ======== ========= ======= =========== ==============
The loans and advances to customers include lending exposures in
Cyprus with collaterals in Greece with a carrying value as at 30
September 2023 of EUR 132,553 thousand (31 December 2022:
EUR106,701 thousand).
The loans and advances to customers reported within 'Other
countries' as at 30 September 2023 include exposures of EUR1 . 8
million in Ukraine (31 December 2022: EUR2 . 6 million).
F. Notes (continued)
F.5 Analysis of loans and advances to customers by stage
The following tables present the Group's gross loans and
advances to customers at amortised cost by staging and by
geographical analysis (based on the country in which the loans are
managed).
30 September 2023 Stage Stage Stage POCI Total
1 2 3
EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------- -------- -------- ----------
Gross loans at amortised cost
before residual fair value adjustment
on initial recognition 8,140,690 1,387,591 324,192 112,014 9,964,487
---------- ---------- -------- -------- ----------
Residual fair value adjustment
on initial recognition (60,284) (7,827) (59) (1,390) (69,560)
---------- ---------- -------- -------- ----------
Gross loans at amortised cost 8,080,406 1,379,764 324,133 110,624 9,894,927
========== ========== ======== ======== ==========
Cyprus 8,080,222 1,379,764 323,626 110,624 9,894,236
---------- ---------- -------- -------- ----------
Other countries 184 - 507 - 691
---------- ---------- -------- -------- ----------
8,080,406 1,379,764 324,133 110,624 9,894,927
========== ========== ======== ======== ==========
31 December 2022 Stage Stage Stage POCI Total
1 2 3
EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------- -------- -------- -----------
Gross loans at amortised cost
before residual fair value adjustment
on initial recognition 7,931,511 1,586,488 372,821 115,544 10,006,364
---------- ---------- -------- -------- -----------
Residual fair value adjustment
on initial recognition (64,255) (20,885) (1,803) (2,086) (89,029)
---------- ---------- -------- -------- -----------
Gross loans at amortised cost 7,867,256 1,565,603 371,018 113,458 9,917,335
========== ========== ======== ======== ===========
Cyprus 7,867,037 1,565,603 368,922 113,458 9,915,020
---------- ---------- -------- -------- -----------
Other countries 219 - 2,096 - 2,315
---------- ---------- -------- -------- -----------
7,867,256 1,565,603 371,018 113,458 9,917,335
========== ========== ======== ======== ===========
F. Notes (continued)
F.5 Analysis of loans and advances to customers by stage (continued)
The following tables present the Group's gross loans and
advances to customers at amortised cost by stage and by business
line concentration:
30 September 2023 Stage Stage Stage POCI Total
1 2 3
By business line EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------- -------- -------- ----------
Corporate and Large corporate 2,597,281 669,211 82,170 41,304 3,389,966
---------- ---------- -------- -------- ----------
International corporate 735,542 7,216 39 20 742,817
---------- ---------- -------- -------- ----------
SMEs 836,601 117,865 3,873 8,466 966,805
---------- ---------- -------- -------- ----------
Retail
---------- ---------- -------- -------- ----------
- housing 2,957,665 381,284 24,658 11,091 3,374,698
---------- ---------- -------- -------- ----------
- consumer, credit cards and
other 792,916 127,547 10,712 14,133 945,308
---------- ---------- -------- -------- ----------
Restructuring
---------- ---------- -------- -------- ----------
- corporate 3,800 19,439 19,062 10,042 52,343
---------- ---------- -------- -------- ----------
- SMEs 9,167 10,997 13,063 2,474 35,701
---------- ---------- -------- -------- ----------
- retail housing 4,444 16,172 37,208 2,051 59,875
---------- ---------- -------- -------- ----------
- retail other 2,362 3,079 13,733 765 19,939
---------- ---------- -------- -------- ----------
Recoveries
---------- ---------- -------- -------- ----------
- corporate - - 7,330 1,149 8,479
---------- ---------- -------- -------- ----------
- SMEs - - 17,270 1,628 18,898
---------- ---------- -------- -------- ----------
- retail housing - - 69,225 11,058 80,283
---------- ---------- -------- -------- ----------
- retail other 71 - 24,659 5,743 30,473
---------- ---------- -------- -------- ----------
International business unit 99,005 23,564 1,125 162 123,856
---------- ---------- -------- -------- ----------
Wealth management 41,552 3,390 6 538 45,486
---------- ---------- -------- -------- ----------
8,080,406 1,379,764 324,133 110,624 9,894,927
========== ========== ======== ======== ==========
31 December 2022 Stage Stage Stage POCI Total
1 2 3
By business line EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------- -------- -------- ----------
Corporate and Large corporate 2,502,630 807,282 54,259 34,616 3,398,787
---------- ---------- -------- -------- ----------
International corporate 685,099 150 35 24 685,308
---------- ---------- -------- -------- ----------
SMEs 825,123 189,825 3,299 10,364 1,028,611
---------- ---------- -------- -------- ----------
Retail
---------- ---------- -------- -------- ----------
- housing 2,982,436 305,714 30,071 12,413 3,330,634
---------- ---------- -------- -------- ----------
- consumer, credit cards and
other 704,959 152,815 14,376 15,746 887,896
---------- ---------- -------- -------- ----------
Restructuring
---------- ---------- -------- -------- ----------
- corporate 2,842 34,246 20,689 10,175 67,952
---------- ---------- -------- -------- ----------
- SMEs 12,643 10,603 23,374 2,381 49,001
---------- ---------- -------- -------- ----------
- retail housing 5,168 22,018 42,155 3,292 72,633
---------- ---------- -------- -------- ----------
- retail other 1,713 5,364 16,237 1,029 24,343
---------- ---------- -------- -------- ----------
Recoveries
---------- ---------- -------- -------- ----------
- corporate - - 18,403 1,316 19,719
---------- ---------- -------- -------- ----------
- SMEs - - 29,339 2,366 31,705
---------- ---------- -------- -------- ----------
- retail housing - - 88,956 14,039 102,995
---------- ---------- -------- -------- ----------
- retail other 108 - 28,569 4,953 33,630
---------- ---------- -------- -------- ----------
International business unit 104,539 31,934 1,254 147 137,874
---------- ---------- -------- -------- ----------
Wealth management 39,996 5,652 2 597 46,247
---------- ---------- -------- -------- ----------
7,867,256 1,565,603 371,018 113,458 9,917,335
========== ========== ======== ======== ==========
F. Notes (continued)
F.6 Credit losses to cover credit risk on loans and advances to customers
Nine months ended
30 September
2023 2022
---------- --------
EUR000 EUR000
---------- --------
Impairment loss net of reversals on loans and
advances to customers 62,374 49,101
---------- --------
Recoveries of loans and advances to customers
previously written off (10,310) (9,392)
---------- --------
Changes in expected cash flows (2,272) 6,221
---------- --------
Financial guarantees and commitments 540 (998)
---------- --------
50,332 44,932
========== ========
The movement in ECL of loans and advances to customers, (30
September 2022: including ECL for the loans and advances to
customers held for sale), and the analysis of the balance by stage
is as follows:
Nine months ended
30 September
2023 2022
--------- ----------
EUR000 EUR000
--------- ----------
1 January 178,442 591,417
--------- ----------
Foreign exchange and other adjustments 35 3,718
--------- ----------
Write offs (54,260) (180,187)
--------- ----------
Interest (provided) not recognised in the income
statement 3,643 14,466
--------- ----------
Disposal of Sinope portfolio - (5,191)
--------- ----------
Charge for the period 62,374 49,101
--------- ----------
30 September 190,234 473,324
========= ==========
Stage 1 24,473 17,871
--------- ----------
Stage 2 35,462 26,826
--------- ----------
Stage 3 110,966 370,194
--------- ----------
POCI 19,333 58,433
--------- ----------
30 September 190,234 473,324
========= ==========
As at 30 September 2022 the allowance for ECL, included above,
for loans and advances to customers held for sale amounted
EUR300,731 thousand. There were no loans and advances to customers
classified as held for sale as at 30 September 2023.
The charge for the period on loans and advances to customers ,
(30 September 2022: including charge for the loans and advances to
customers held for sale), by stage is presented in the table
below:
Nine months ended
30 September
2023 2022
--------- ---------
EUR000 EUR000
--------- ---------
Stage 1 (5,242) (4,183)
--------- ---------
Stage 2 16,485 1,200
--------- ---------
Stage 3 51,131 52,084
--------- ---------
62,374 49,101
========= =========
During the nine months ended 30 September 2023 the total
non--contractual write--offs recorded by the Group amounted to
EUR39,663 thousand ( nine months ended 30 September 2022:
EUR128,264 thousand). The contractual amount outstanding on
financial assets that were written off during the nine months ended
30 September 2023 and that are still subject to enforcement
activity is EUR491,976 thousand (31 December 2022: EUR972,621
thousand).
F. Notes (continued)
F.6 Credit losses to cover credit risk on loans and advances to customers (continued)
Assumptions have been made about the future changes in property
values, as well as the timing for the realisation of collateral,
taxes and expenses on the repossession and subsequent sale of the
collateral as well as any other applicable haircuts. Indexation has
been used as the basis to estimate updated market values of
properties, supplemented by management judgement where necessary,
given the difficulty in differentiating between short-term impacts
and long-term structural changes and the shortage of market
evidence for comparison purposes. Assumptions were made on the
basis of a macroeconomic scenario for future changes in property
prices and qualitative adjustments or overlays were applied to the
projected future property value increases to restrict the level of
future property price growth to 0% for all scenarios for loans and
advances to customers which are secured by property
collaterals.
At 30 September 2023 the weighted average haircut (including
liquidity haircut and selling expenses) used in the collectively
assessed provision calculation for loans and advances to customers
is approximately 32% under the baseline scenario (31 December 2022:
approximately 32%).
The timing of recovery from real estate collaterals used in the
collectively assessed provision calculation for loans and advances
to customers has been estimated to be on average seven years under
the baseline scenario (31 December 2022: average seven years).
For the calculation of individually assessed provisions, the
timing of recovery of collaterals as well as the haircuts used are
based on the specific facts and circumstances of each case. For
specific cases judgement may also be exercised over staging during
the individual assessment.
The above assumptions are also influenced by the ongoing
regulatory dialogue the Group maintains with its lead regulator,
the ECB, and other regulatory guidance and interpretations issued
by various regulatory and industry bodies such as the ECB and the
EBA, which provide guidance and expectations as to relevant
definitions and the treatment/classification of certain
parameters/assumptions used in the estimation of provisions.
Any changes in these assumptions or differences between
assumptions made and actual results could result in significant
changes in the estimated amount of expected credit losses of loans
and advances to customers.
Overlays in the context of current economic conditions
The two overlays introduced in 2022 in response to uncertainties
from the consequences of the Ukrainian crisis, in the collectively
assessed population for exposures that were considered to be the
most vulnerable to the implications of the crisis, continued to be
in effect during the nine months ended 30 September 2023. These
were introduced to address the increased uncertainties from the
geopolitical instability, trade restrictions, disruptions in the
global supply chains, increases in the energy prices, the
continuously rising interest rates environment and their potential
negative impact on the domestic cost of living. The impact on the
ECL from the application of these overlays was approximately EUR3.5
million release for the nine months ended 30 September 2023
(following an update of the assessment of the sectors classified as
High Risk and/or Early Warning) and a net transfer of EUR25 million
loans from Stage 1 to Stage 2 as at 30 September 2023.
Specifically, the first overlay relates to private individuals
that are expected to be affected by the increased cost of living in
order to reflect the future vulnerabilities to inflation, where a
scenario with higher percentage increase is applied for the cost of
living. A one-notch downgrade is applied to the identified
portfolio, reflecting the expected impact of inflation to their
credit quality. The second overlay relates to sectors that have
been classified as High Risk or Early Warning to reflect the
expected Gross Value Added (GVA) outlook of these sectors, where
this has deteriorated. Specifically, the sector risk classification
is carried out by comparing the projected GVA outlook of each
sector with its past performance (intrinsic) and its performance
vis-a-vis other sectors (systemic). In cases where both systemic
and intrinsic indicators are found to have deteriorated, the
relevant sector is classified as 'High Risk', whereas if only one
of the two has deteriorated, then the sector is classified as
'Early Warning'. A one-notch downgrade is applied to 'Early
Warning' sectors whereas for 'High Risk' sectors a more severe
downgrade is applied accordingly.
F. Notes (continued)
F.6 Credit losses to cover credit risk on loans and advances to customers (continued)
In addition, the overlay on the probability of default (PD),
introduced in the fourth quarter of 2022 to address specifically
the high inflation environment affecting the economy, continued to
be in effect during the nine months ended 30 September 2023. With
this overlay the PDs were floored to the maximum of 2018/2019 level
on the basis that these years are considered as closer to a
business-as-usual environment in terms of default rates. The impact
on the ECL from the application of this overlay was EUR7.2 million
charge for the nine months ended 30 September 2023, as a result of
multiple components including updated ratings, macro variable
inputs, PD and thresholds calibrations and stage migrations.
In addition, in the nine months ended 30 September 2023, for the
LGD parameter, the overlay has been integrated through reduced
curability period for Stage 2 and Stage 3 exposures (i.e., the
maximum curability period considered for a customer has been
reduced). The impact on the ECL was EUR8.7 million charge for the
nine months ended 30 September 2023.
The Group has exercised critical judgement on a best effort
basis, to consider all reasonable and supportable information
available at the time of the assessment of the ECL allowance as at
30 September 2023. The Group will continue to evaluate the ECL
allowance and the related economic outlook each quarter, so that
any changes arising from the uncertainty on the macroeconomic
outlook and geopolitical developments, are timely captured.
Portfolio segmentation
The individual assessment is performed not only for individually
significant assets but also for other exposures meeting specific
criteria determined by management. The selection criteria for the
individually assessed exposures are based on management judgement
and are reviewed on a quarterly basis by the Risk Management
Division and are adjusted or enhanced, if deemed necessary. The
selection criteria were further enhanced in 2022 to include
significant exposures to customers with passport of origin or
residency in Russia, Ukraine or Belarus and/or business activity
within these countries.
F.7 Rescheduled loans and advances to customers
The below table presents the Group's forborne loans and advances
to customers by staging.
30 September 31 December
2023 2022
EUR000 EUR000
------------- ------------
Stage 1 - -
------------- ------------
Stage 2 443,265 857,356
------------- ------------
Stage 3 177,587 215,730
------------- ------------
POCI 22,815 33,212
------------- ------------
643,667 1,106,298
============= ============
F.8 Pending litigation, claims, regulatory and other matters
The Group, in the ordinary course of business, is involved in various
disputes and legal proceedings and is subject to enquiries and examinations,
requests for information, audits, investigations, legal and other
proceedings by regulators, governmental and other public bodies,
actual and threatened, relating to the suitability and adequacy of
advice given to clients or the absence of advice, lending and pricing
practices, selling practices and disclosure requirements, record
keeping, filings and a variety of other matters. In addition, as
a result of the deterioration of the Cypriot economy and banking
sector in 2012 and the subsequent restructuring of BOC PCL in 2013
as a result of the bail-in Decrees, BOC PCL is subject to a large
number of proceedings and investigations that either precede or result
from the events that occurred during the period of the bail--in Decrees.
There are also situations where the Group may enter into a settlement
agreement. This may occur only if such settlement is in BOC PCL's
interest (such settlement does not constitute an admission of wrongdoing)
and only takes place after obtaining legal advice and all approvals
by the appropriate bodies of management.
Provisions have been recognised for those cases where the Group is
able to estimate probable losses. Any provision recognised does not
constitute an admission of wrongdoing or legal liability. While the
outcome of these matters is inherently uncertain, management believes
that, based on the information available to it, appropriate provisions
have been made in respect of legal proceedings, regulatory and other
matters as at 30 September 2023 and hence it is not believed that
such matters, when concluded, will have a material impact upon the
financial position of the Group. Details on the material ongoing
cases are disclosed within the 2023 Interim Financial Report.
F. Notes (continued)
F.9 IFRS 17 'Insurance Contracts'
Overview
On 1 January 2023 the Group adopted IFRS 17 'Insurance
Contracts' (IFRS 17) and as required by the standard, the Group
applied the requirements retrospectively with comparative
information restated from the transition date, 1 January 2022 as
further explained in the 'Transition application' section
below.
IFRS 17 is a comprehensive new accounting standard for insurance
contracts which replaces IFRS 4 Insurance Contracts. In contrast to
the requirements in IFRS 4, IFRS 17 provides a comprehensive model
(the general measurement model or 'GMM') for insurance contracts,
supplemented by the variable fee approach ('VFA') for contracts
with direct participation features that are substantially
investment-related service contracts, and the premium allocation
approach ('PAA') mainly for short duration insurance contracts. The
main features of the new accounting standard for insurance
contracts are the following:
i. The measurement of the present value of future cash flows,
incorporating an explicit risk adjustment, remeasured every
reporting period (the fulfilment cash flows)
ii. A Contractual Service Margin (CSM) that is equal and
opposite to any day one gain in the fulfilment cash flows of a
group of contracts. The CSM represents the unearned profitability
of the insurance contracts and is recognised in profit or loss over
the service period (i.e., the coverage period)
iii. Certain changes in the expected present value of future
cash flows are adjusted against the CSM and thereby recognised in
profit or loss over the remaining contractual service period
iv. The recognition of insurance revenue and insurance service
expenses in the consolidated income statement is based on the
concept of services provided during the period
v. Insurance service result (earned revenue less incurred
claims) is presented separately from the insurance finance income
or expense
vi. Extensive disclosures to provide information on the
recognised amounts from insurance contracts and the nature and
extent of the risks arising from these contracts.
Transition application
The standard is applied retrospectively using a fully
retrospective approach ('FRA') as if it had always been applied,
unless it is impracticable to so, in which case either a modified
retrospective approach ('MRA') or a fair value approach ('FVA') can
be selected. Impracticability assessments were performed based on
the requirements of IFRS 17 and considered the availability of data
and systems and the requirement not to apply hindsight within the
measurement. Following the completion of impracticability
assessments, the Group applied the following approaches:
-- The FRA for all non-life groups of insurance contracts and
non-individual life groups of insurance contracts, irrespective of
issue date.
-- The MRA for groups of life insurance contracts issued between 2016 and 2021.
-- The FVA for groups of life insurance contracts issued prior to 2016.
F.9.1 Transition impact
On transition on 1 January 2022, consistent with the disclosures
in the 2022 Annual Financial Report, the Group's Total Equity and
Equity attributable to the owners of the Company were reduced by
EUR37,563 thousand, reflecting the aggregate impact of the
elimination of the present value of in-force life insurance
business asset (PVIF) and the remeasurement of insurance assets and
liabilities, both net of associated tax impact. Similarly,
adjusting for the impact of IFRS 17 on the profit for the year
ended 31 December 2022, the Group's Total Equity and Equity
attributable to the owners of the Company at 31 December 2022 as
reported under IFRS 4 were reduced by EUR52,104 thousand, as
analysed below.
At 1 January At 31 December
2022 2022
EUR000 EUR000
------------- ---------------
IFRS 4 Total Equity 2,081,227 2,100,670
------------- ---------------
IFRS 4 Equity attributable to the owners of the Company 1,838,793 1,858,370
------------- ---------------
Removal of PVIF asset (129,890) (115,776)
------------- ---------------
Contractual service margin (43,731) (41,863)
------------- ---------------
Removal of IFRS 4 assets and liabilities and recording of IFRS 17 fulfilment cash
flows and
risk adjustment 129,255 97,028
------------- ---------------
Tax effect (including the PVIF tax effect) 7,079 9,601
------------- ---------------
Other (276) (1,094)
------------- ---------------
Total impact of IFRS 17 restatements (37,563) (52,104)
------------- ---------------
IFRS 17 Equity attributable to the owners of the Company 1,801,230 1,806,266
------------- ---------------
IFRS 17 Total Equity 2,043,664 2,048,566
============= ===============
F. Notes (continued)
F.9 IFRS 17 'Insurance Contracts' (continued)
F.9.1 Transition impact (continued)
The reduction of the Group's equity by EUR52,104 thousand as at
31 December 2022 comprises the elimination of the in-force life
insurance business asset (PVIF) and the associated deferred tax
liability, resulting in a net decrease of EUR101,301 thousand and
the remeasurement of insurance assets and liabilities (including
the impact of the contractual service margin) resulting in a net
increase in equity by EUR49,197 thousand.
On transition on 1 January 2022, the Group's Tangible Equity
attributable to the owners of the Company was increased by
EUR92,327 thousand. Adjusting for the impact of IFRS 17 on the
profit for the year ended 31 December 2022, the Group's Tangible
Equity attributable to the owners of the Company as at 31 December
2022 as restated under IFRS 17 was increased by EUR63,672 thousand
as analysed below.
At 1 January At 31 December 2022
2022
EUR000 EUR000
------------- --------------------
IFRS 4 Group's Tangible Equity attributable to the owners of the Company 1,654,759 1,690,048
------------- --------------------
Contractual service margin (43,731) (41,863)
------------- --------------------
Removal of IFRS 4 assets and liabilities and recording of IFRS 17 fulfilment
cash flows and
risk adjustment 129,255 97,028
------------- --------------------
Tax effect (including the PVIF tax effect) 7,079 9,601
------------- --------------------
Other (276) (1,094)
------------- --------------------
Total impact of IFRS 17 restatements 92,327 63,672
------------- --------------------
IFRS 17 Group's Tangible Equity attributable to the owners of the Company 1,747,086 1,753,720
============= ====================
F. Notes (continued)
F.9 IFRS 17 'Insurance Contracts' (continued)
F.9.1 Transition impact (continued)
Consolidated Income Statement for the year ended 31 December
2022 under the statutory basis as restated for IFRS 17 and as
previously reported under IFRS 4 is presented below.
Year ended
31 December 2022
IFRS 17 IFRS 4
(restated) (as previously presented)
------------- ---------------------------
EUR000 EUR000
------------- ---------------------------
Interest income 428,849 428,849
------------- ---------------------------
Income similar to interest income 22,119 22,119
------------- ---------------------------
Interest expense (65,721) (65,821)
------------- ---------------------------
Expense similar to interest expense (14,840) (14,840)
------------- ---------------------------
Net interest income 370,407 370,307
------------- ---------------------------
Fee and commission income 202,583 202,583
------------- ---------------------------
Fee and commission expense (10,299) (10,299)
------------- ---------------------------
Net foreign exchange gains 31,291 31,291
------------- ---------------------------
Net (losses)/ gains on financial instruments (614) 10,052
------------- ---------------------------
Net gains on derecognition of financial assets measured at amortised cost 5,235 5,235
------------- ---------------------------
Net insurance finance income/(expense) and net reinsurance finance 4,075 -
income/(expense)
------------- ---------------------------
Net insurance service result 60,530 -
------------- ---------------------------
Net reinsurance service result (20,039) -
------------- ---------------------------
Income from assets under insurance and reinsurance contracts - 114,681
------------- ---------------------------
Expenses from liabilities under insurance and reinsurance contracts - (43,542)
------------- ---------------------------
Net losses from revaluation and disposal of investment properties (999) (999)
------------- ---------------------------
Net gains on disposal of stock of property 13,970 13,970
------------- ---------------------------
Other income 16,681 16,681
------------- ---------------------------
Total operating income 672,821 709,960
------------- ---------------------------
Staff costs (285,154) (294,361)
------------- ---------------------------
Special levy on deposits and other levies/ contributions (38,492) (38,492)
------------- ---------------------------
Provisions for pending litigations, regulatory and other provisions (net
of reversals) (11,880) (11,880)
------------- ---------------------------
Other operating expenses (157,916) (166,365)
------------- ---------------------------
Operating profit before credit losses and impairment 179,379 198,862
------------- ---------------------------
Credit losses on financial assets (59,087) (59,529)
------------- ---------------------------
Impairment net of reversals on non-financial assets (29,549) (29,549)
------------- ---------------------------
Profit before tax 90,743 109,784
------------- ---------------------------
Income tax (31,312) (35,812)
------------- ---------------------------
Profit after tax for the year 59,431 73,972
============= ===========================
Attributable to:
------------- ---------------------------
Owners of the Company 56,565 71,106
------------- ---------------------------
Non-controlling interests 2,866 2,866
------------- ---------------------------
Profit for the year 59,431 73,972
============= ===========================
Basic and diluted profit per share attributable to the owners of the
Company (EUR cent) 12.7 15.9
-------------------------------------------------------------------------- ============= ===========================
F. Notes (continued)
F.9 IFRS 17 'Insurance Contracts' (continued)
F.9.1 Transition impact (continued)
Consolidated Balance Sheet at transition date and at 31 December
2022 as restated under IFRS 17 and as previously reported under
IFRS 4 is presented below.
IFRS 17 IFRS 4
(restated) (as previously presented)
31 December 1 January 31 December 2022 1 January 2022
2022 2022
--------------- ----------- ----------------- ---------------
Assets EUR000 EUR000 EUR000 EUR000
--------------- ----------- ----------------- ---------------
Cash and balances with central banks 9,567,258 9,230,883 9,567,258 9,230,883
--------------- ----------- ----------------- ---------------
Loans and advances to banks 204,811 291,632 204,811 291,632
--------------- ----------- ----------------- ---------------
Derivative financial assets 48,153 6,653 48,153 6,653
--------------- ----------- ----------------- ---------------
Investments at FVPL 190,209 199,194 190,209 199,194
--------------- ----------- ----------------- ---------------
Investments at FVOCI 467,375 748,695 467,375 748,695
--------------- ----------- ----------------- ---------------
Investments at amortised cost 2,046,119 1,191,274 2,046,119 1,191,274
--------------- ----------- ----------------- ---------------
Loans and advances to customers 9,953,252 9,836,405 9,953,252 9,836,405
--------------- ----------- ----------------- ---------------
Life insurance business assets attributable to
policyholders 542,321 551,797 542,321 551,797
--------------- ----------- ----------------- ---------------
Prepayments, accrued income and other assets 609,054 583,777 639,765 616,219
--------------- ----------- ----------------- ---------------
Stock of property 1,041,032 1,111,604 1,041,032 1,111,604
--------------- ----------- ----------------- ---------------
Investment properties 85,099 117,745 85,099 117,745
--------------- ----------- ----------------- ---------------
Deferred tax assets 227,934 265,942 227,521 265,481
--------------- ----------- ----------------- ---------------
Property and equipment 253,378 252,130 253,378 252,130
--------------- ----------- ----------------- ---------------
Intangible assets 52,546 54,144 168,322 184,034
--------------- ----------- ----------------- ---------------
Non-current assets and disposal groups held for
sale - 358,951 - 358,951
--------------- ----------- ----------------- ---------------
Total assets 25,288,541 24,800,826 25,434,615 24,962,697
=============== =========== ================= ===============
Liabilities
--------------- ----------- ----------------- ---------------
Deposits by banks 507,658 457,039 507,658 457,039
--------------- ----------- ----------------- ---------------
Funding from central banks 1,976,674 2,969,600 1,976,674 2,969,600
--------------- ----------- ----------------- ---------------
Derivative financial liabilities 16,169 32,452 16,169 32,452
--------------- ----------- ----------------- ---------------
Customer deposits 18,998,319 17,530,883 18,998,319 17,530,883
--------------- ----------- ----------------- ---------------
Insurance liabilities 599,992 623,791 679,952 736,201
--------------- ----------- ----------------- ---------------
Accruals, deferred income, other liabilities and
other provisions 379,182 356,697 384,004 361,977
--------------- ----------- ----------------- ---------------
Provisions for pending litigation, claims,
regulatory and other matters 127,607 104,108 127,607 104,108
--------------- ----------- ----------------- ---------------
Debt securities in issue 297,636 302,555 297,636 302,555
--------------- ----------- ----------------- ---------------
Subordinated liabilities 302,104 340,220 302,104 340,220
--------------- ----------- ----------------- ---------------
Deferred tax liabilities 34,634 39,817 43,822 46,435
--------------- ----------- ----------------- ---------------
Total liabilities 23,239,975 22,757,162 23,333,945 22,881,470
--------------- ----------- ----------------- ---------------
Equity
--------------- ----------- ----------------- ---------------
Share capital 44,620 44,620 44,620 44,620
--------------- ----------- ----------------- ---------------
Share premium 594,358 594,358 594,358 594,358
--------------- ----------- ----------------- ---------------
Revaluation and other reserves 76,939 99,541 178,240 213,192
--------------- ----------- ----------------- ---------------
Retained earnings 1,090,349 1,062,711 1,041,152 986,623
--------------- ----------- ----------------- ---------------
Equity attributable to the owners of the Company 1,806,266 1,801,230 1,858,370 1,838,793
--------------- ----------- ----------------- ---------------
Other equity instruments 220,000 220,000 220,000 220,000
--------------- ----------- ----------------- ---------------
Non--controlling interests 22,300 22,434 22,300 22,434
--------------- ----------- ----------------- ---------------
Total equity 2,048,566 2,043,664 2,100,670 2,081,227
--------------- ----------- ----------------- ---------------
Total liabilities and equity 25,288,541 24,800,826 25,434,615 24,962,697
=============== =========== ================= ===============
F. Notes (continued)
F.9 IFRS 17 'Insurance Contracts' (continued)
F.9.1 Transition impact (continued)
The Consolidated Income Statement for the nine months ended 30
September 2022 under the statutory basis, as restated for IFRS 17
and as reported under IFRS 4 is presented below:
Nine months ended
30 September 2022
IFRS 4 IFRS 17 IFRS 17
(as previously adjustments (restated)
presented)
---------------- ------------- -------------
EUR000 EUR000 EUR000
---------------- ------------- -------------
Turnover 630,326 - 630,326
================ ============= =============
Interest income 280,505 - 280,505
---------------- ------------- -------------
Income similar to interest income 14,692 - 14,692
---------------- ------------- -------------
Interest expense (49,826) 47 (49,779)
---------------- ------------- -------------
Expense similar to interest expense (11,037) - (11,037)
---------------- ------------- -------------
Net interest income 234,334 47 234,381
---------------- ------------- -------------
Fee and commission income 149,341 - 149,341
---------------- ------------- -------------
Fee and commission expense (7,241) - (7,241)
---------------- ------------- -------------
Net foreign exchange gains 21,464 - 21,464
---------------- ------------- -------------
Net gains/(losses) on financial instruments 8,529 (10,365) (1,836)
---------------- ------------- -------------
Net gains on derecognition of financial
assets measured at amortised cost 2,179 - 2,179
---------------- ------------- -------------
Net insurance finance income/(expense)
and net reinsurance finance income/(expense) - 3,536 3,536
---------------- ------------- -------------
Net insurance service result - 44,256 44,256
---------------- ------------- -------------
Net reinsurance service result - (13,929) (13,929)
---------------- ------------- -------------
Income from assets under insurance and
reinsurance contracts 61,030 (61,030) -
---------------- ------------- -------------
Expenses from liabilities under insurance
and reinsurance contracts (13,061) 13,061 -
---------------- ------------- -------------
Net losses from revaluation and disposal
of investment properties (583) - (583)
---------------- ------------- -------------
Net gains on disposal of stock of property 11,175 - 11,175
---------------- ------------- -------------
Other income 11,945 - 11,945
---------------- ------------- -------------
Total operating income 479,112 (24,424) 454,688
---------------- ------------- -------------
Staff costs (250,532) 7,361 (243,171)
---------------- ------------- -------------
Special levy on deposits and other levies/
contributions (26,616) - (26,616)
---------------- ------------- -------------
Provisions for pending litigations, regulatory
and other provisions (net of reversals) (3,402) - (3,402)
---------------- ------------- -------------
Other operating expenses (120,764) 6,196 (114,568)
---------------- ------------- -------------
Operating profit before credit losses
and impairment 77,798 (10,867) 66,931
---------------- ------------- -------------
Credit losses on financial assets (47,764) 239 (47,525)
================ ============= =============
Impairment net of reversals on non-financial
assets (17,474) - (17,474)
---------------- ------------- -------------
Profit before tax 12,560 (10,628) 1,932
---------------- ------------- -------------
(19, 819
Income tax ) 1,214 (18,605)
---------------- ------------- -------------
Profit after tax for the period (7,259) (9,414) (16,673)
================ ============= =============
Attributable to:
---------------- ------------- -------------
Owners of the Company (9,118) (9,414) (18,532)
---------------- ------------- -------------
Non-controlling interests 1,859 - 1,859
---------------- ------------- -------------
Profit for the period (7,259) (9,414) (16,673)
================ ============= =============
Basic profit per share attributable to
the owners of the Company (EUR cent) (2.0) (2.2) (4.2)
================ ============= =============
Diluted profit per share attributable
to the owners of the Company (EUR cent) (2.0) (2.2) (4.2)
================ ============= =============
F. Notes (continued)
F.9 IFRS 17 'Insurance Contracts' (continued)
F.9.1 Transition impact (continued)
Details on the accounting policies and judgements and further
analysis on the quantitative impact of transition to IFRS 17 are
disclosed within the 2023 Interim Financial Report in Note 3.3.1 of
the Consolidated Interim Financial Statements.
G. Additional Risk and Capital Management disclosures
G.1 Additional Credit risk disclosures
The tables below present the analysis of loans and advances to
customers in accordance with the EBA standards.
30 September Gross loans and advances to customers Accumulated impairment, accumulated negative
2023 changes in fair value due to credit risk
and provisions
Group Of Of which exposures Accumulated Of Of which exposures
gross which with forbearance impairment, which: with forbearance
customer : NPEs measures accumulated NPEs measures
loans negative
and changes
advances(1,2) in fair
value
due to
credit
risk and
provisions
-------------- -------- ------------------------ -------- ------------------------
Total Of which: Total Of which:
exposures NPEs exposures NPEs
with with
forbearance forbearance
measures measures
-------------- -------- ------------ ---------- -------- ------------ ----------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
-------------- -------- ------------ ---------- -------- ------------ ----------
Loans and
advances
to customers
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
General
governments 42,713 - - - 8 - - -
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Other financial
corporations 224,913 1,062 16,614 695 4,276 478 408 404
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Non-financial
corporations 5,054,068 142,125 413,657 90,941 105,298 72,386 54,682 50,095
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Of which: Small
and
Medium sized
Enterprises(3)
(SMEs) 3,114,416 83,427 170,658 32,531 50,733 31,155 12,094 9,148
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Of which:
Commercial
real estate(3) 3,796,121 120,465 379,362 84,708 82,977 63,337 51,977 48,621
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Non-financial
corporations
by sector
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Construction 511,360 4,602 8,917
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Wholesale and
retail
trade 921,394 28,686 20,473
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Accommodation
and food
service
activities 1,175,864 15,098 8,186
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Real estate
activities 1,060,237 29,954 21,770
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Manufacturing 361,165 5,997 4,398
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Other sectors 1,024,048 57,788 41,554
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Households 4,778,995 214,646 213,396 104,942 80,652 51,515 29,884 23,583
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Of which:
Residential
mortgage
loans(3) 3,745,519 176,666 188,388 91,366 47,285 32,579 23,870 18,598
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Of which:
Credit for
consumption(3) 591,728 31,542 23,697 14,282 23,672 13,439 5,344 4,462
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Total
on-balance
sheet 10,100,689 357,833 643,667 196,578 190,234 124,379 84,974 74,082
============== ======== ============ ========== ============ ======== ============ ==========
(1.) Excluding loans and advances to central banks and credit institutions.
2 (.) The residual fair value adjustment on initial recognition (which relates mainly to loans acquired
from Laiki Bank and is calculated as the difference between the outstanding contractual amount and
the fair value of loans acquired and bears a negative balance) is considered as part of the gross
loans, therefore decreases the gross balance of loans and advances to customers.
3 The analysis shown in lines 'non-financial corporations' and 'households' is non-additive across
categories as certain customers could be in both categories.
G. Additional Risk and Capital Management disclosures (continued)
G.1 Additional Credit risk disclosures (continued)
Gross loans and advances to customers Accumulated impairment, accumulated negative
changes in fair value due to credit risk
and provisions
Group Of Of which exposures Accumulated Of Of which exposures
gross which: with forbearance impairment, which: with forbearance
customer NPEs measures accumulated NPEs measures
loans negative
and changes in
advances(1,2) fair value
due to
credit
risk and
provisions
-------------- -------- ------------------------ ------------ -------- ------------------------
Total Of which: Total Of which:
exposures NPEs exposures NPEs
with with
31 December forbearance forbearance
2022 measures measures
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Loans and
advances
to customers
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
General
governments 39,766 - - - 25 - - -
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Other financial
corporations 186,281 3,202 11,665 2,825 6,008 2,332 2,453 2,250
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Non-financial
corporations 5,134,784 144,522 950,499 91,100 100,265 69,212 53,940 44,957
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Of which: Small
and
Medium sized
Enterprises(3)
(SMEs) 3,492,414 84,493 449,891 33,140 53,939 33,882 17,643 11,683
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Of which:
Commercial
real estate(3) 3,975,290 120,445 895,971 80,980 76,385 58,414 47,047 41,152
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Non-financial
corporations
by sector
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Construction 549,921 11,949 13,319
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Wholesale and
retail
trade 909,438 20,783 15,907
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Accommodation
and food
service
activities 1,164,979 20,824 9,543
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Real estate
activities 1,108,581 20,281 19,738
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Manufacturing 392,843 9,429 4,033
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Other sectors 1,009,022 61,256 37,725
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Households 4,770,863 260,629 290,556 143,140 72,144 54,643 37,362 32,087
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Of which:
Residential
mortgage
loans(3) 3,785,834 220,354 253,794 125,994 45,805 37,616 29,759 25,751
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Of which:
Credit for
consumption(3) 547,490 37,622 42,719 21,235 20,355 14,628 8,543 7,486
-------------- -------- ------------ ---------- ------------ -------- ------------ ----------
Total
on-balance
sheet 10,131,694 408,353 1,252,720 237,065 178,442 126,187 93,755 79,294
============== ======== ============ ========== ============ ======== ============ ==========
(1) (.) Excluding loans and advances to central banks and credit institutions.
2 (.) The residual fair value adjustment on initial recognition (which relates mainly to loans acquired
from Laiki Bank and is calculated as the difference between the outstanding contractual amount and
the fair value of loans acquired and bears a negative balance) is considered as part of the gross loans,
therefore decreases the gross balance of loans and advances to customers.
3 (.) The analysis shown in lines 'non-financial corporations' and 'households' is non-additive across
categories as certain customers could be in both categories.
G. Additional Risk and Capital Management disclosures (continued)
G.2 Capital management
The primary objective of the Group's capital management is to
ensure compliance with the relevant regulatory capital requirements
and to maintain healthy capital adequacy ratios to cover the risks
of its business and support its strategy and maximise shareholders'
value.
The capital adequacy framework, as in force, was incorporated
through the Capital Requirements Regulation (CRR) and Capital
Requirements Directive (CRD) which came into effect on 1 January
2014 with certain specified provisions implemented gradually. The
CRR and CRD transposed the new capital, liquidity and leverage
standards of Basel III into the European Union's legal framework.
CRR establishes the prudential requirements for capital, liquidity
and leverage for credit institutions. It is directly applicable in
all EU member states. CRD governs access to deposit-taking
activities and internal governance arrangements including
remuneration, board composition and transparency. Unlike the CRR,
member states were required to transpose the CRD into national law
and national regulators were allowed to impose additional capital
buffer requirements.
On 27 June 2019, the revised rules on capital and liquidity
(Regulation (EU) 2019/876 (CRR II) and Directive (EU) 2019/878 (CRD
V)) came into force. As an amending regulation, the existing
provisions of CRR apply, unless they are amended by CRR II. Certain
provisions took immediate effect (primarily relating to Minimum
Requirement for Own Funds and Eligible Liabilities (MREL)), but
most changes became effective as of June 2021. The key changes
introduced consist of, among others, changes to qualifying criteria
for Common Equity Tier 1 (CET1), Additional Tier 1 (AT1) and Tier 2
(T2) instruments, introduction of requirements for MREL and a
binding Leverage Ratio requirement (as defined in the CRR) and a
Net Stable Funding Ratio (NSFR).
The amendments that came into effect on 28 June 2021 are in
addition to those introduced in June 2020 through Regulation (EU)
2020/873, which among others, brought forward certain CRR II
changes in light of the COVID-19 pandemic. The main adjustments of
Regulation (EU) 2020/873 that had an impact on the Group's capital
ratio relate to the acceleration of the implementation of the new
SME discount factor (lower RWAs), extending the IFRS 9 transitional
arrangements and introducing further relief measures to CET1
allowing to fully add back to CET1 any increase in ECL recognised
in 2020 and 2021 for non-credit impaired financial assets and
phasing in this starting from 2022 (phasing in at 25% in 2022 and
50% in 2023) and advancing the application of prudential treatment
of software assets as amended by CRR II (which came into force in
December 2020). In addition, Regulation (EU) 2020/873 introduced a
temporary treatment of unrealized gains and losses on exposures to
central governments, to regional governments or to local
authorities measured at fair value through other comprehensive
income which the Group elected to apply and implemented from the
third quarter of 2020. This temporary treatment was in effect until
31 December 2022.
In October 2021, the European Commission adopted legislative
proposals for further amendments to the CRR, CRD and the BRRD (the
'2021 Banking Package'). Amongst other things, the 2021 Banking
Package would implement certain elements of Basel III that have not
yet been transposed into EU law. The 2021 Banking Package
includes:
-- a proposal for a Regulation (sometimes known as 'CRR III') to
make amendments to CRR with regard to (amongst other things)
requirements on credit risk, credit valuation adjustment risk,
operational risk, market risk and the output floor;
-- a proposal for a Directive (sometimes known as 'CRD VI') to
make amendments to CRD with regard to (amongst other things)
requirements on supervisory powers, sanctions, third-country
branches and ESG risks; and
-- a proposal for a Regulation to make amendments to CRR and the
BRRD with regard to (amongst other things) requirements on the
prudential treatment of G-SII groups with a multiple point of entry
resolution strategy and a methodology for the indirect subscription
of instruments eligible for meeting the MREL requirements.
The 2021 Banking Package is subject to amendment in the course
of the EU's legislative process; and its scope and terms may change
prior to its implementation. In addition, in the case of the
proposed amendments to CRD and the BRRD, their terms and effect
will depend, in part, on how they are transposed in each member
state.
The European Council's proposal on CRR and CRD was published on
8 November 2022. During February 2023, the European Parliament's
ECON Committee voted to adopt Parliament's proposed amendments to
the Commission's proposal, and the 2021 Banking Package is
currently in the final stage of the EU legislative process. In June
2023, negotiators from the Council presidency and the European
Parliament reached a provisional agreement on amendments to the
Capital Requirements Regulation and the Capital Requirements
Directive. It is expected that the 2021 Banking Package will come
into force on 1 January 2025; and certain measures are expected to
be subject to transitional arrangements or to be phased in over
time.
G. Additional Risk and Capital Management disclosures (continued)
G.2 Capital management (continued)
The Regulatory CET1 ratio of the Group as at 30 September 2023
stands at 15.2% and the Total Capital ratio at 20.4% on a
transitional basis. Including unreviewed profits for the quarter
ended 30 September 2023 and an accrual for an estimated final
dividend at a payout ratio of 50% of the Group Adjusted Profit
after tax for the period, which represents the high-end range of
the Group's approved dividend policy in line with the principles of
Commission Delegated Regulation (EU) (241/2014) for foreseeable
dividends and charges, the CET1 ratio and Total Capital ratio of
the Group stand at 15.8% and 21.0% respectively. As per the latest
SREP decision, any dividend distribution is subject to regulatory
approval. Such dividend accrual does not constitute a binding
commitment for a dividend payment nor does it constitute a warranty
or representation that such a payment will be made. Group Adjusted
Profit after tax is defined as the Group's profit after tax before
non-recurring items (attributable to the owners of the Company)
taking into account distributions under other equity instruments,
such as the annual AT1 coupon.
30 September
Minimum CET1 Regulatory Capital Requirements 202 3 202 2
Pillar I - CET1 Requirement 4.50% 4.50%
------------- -------
Pillar II - CET1 Requirement 1.73% 1.83%
------------- -------
Capital Conservation Buffer (CCB)* 2.50% 2.50%
------------- -------
Other Systematically Important Institutions
(O-SII) Buffer** 1.50% 1.25%
------------- -------
Countercyclical Buffer (CcyB) 0.04% 0.02%
------------- -------
Minimum CET1 Regulatory Requirements 10.27% 10.10%
============= =======
* Fully phased in as of 1 January 2019
** Increasing by 0.375%. every year thereafter, until being
fully implemented on 1 January 2025 at 2.25%.
30 September
Minimum Total Capital Regulatory Requirements 202 3 202 2
Pillar I - Total Capital Requirement 8.00% 8.00%
------------- -------
Pillar II - Total Capital Requirement 3.08% 3.26%
------------- -------
Capital Conservation Buffer (CCB) * 2.50% 2.50%
------------- -------
Other Systematically Important Institutions
(O-SII) Buffer ** 1.50% 1.25%
------------- -------
Countercyclical Buffer (CcyB) 0.04% 0.02%
------------- -------
Minimum Total Capital Regulatory Requirements 15.12% 15.03%
============= =======
* Fully phased in as of 1 January 2019
** Increasing by 0.375%. every year thereafter, until being
fully implemented on 1 January 2025 at 2.25%.
The minimum Pillar I total capital requirement ratio of 8.00%
may be met, in addition to the 4.50% CET1 requirement, with up to
1.50% by AT1 capital and with up to 2.00% by T2 capital.
The Group is also subject to additional capital requirements for
risks which are not covered by the Pillar I capital requirements
(Pillar II add-ons). Applicable Regulation allows a part of the
said Pillar II Requirements (P2R) to be met also with AT1 and T2
capital and does not require solely the use of CET1.
The capital position of the Group and BOC PCL as at 30 September
2023 exceeds both their Pillar I and their Pillar II add-on capital
requirements. However, the Pillar II add-on capital requirements
are a point-in-time assessment and therefore are subject to change
over time.
In the context of the annual SREP conducted by the ECB in 2022
and based on the final SREP decision received in December 2022
effective from 1 January 2023, the P2R has been revised to 3.08%,
compared to the previous level of 3.26%. The revised P2R includes a
revised P2R add-on of 0.33%, compared to the previous level of
0.26%, relating to ECB's prudential provisioning expectations. The
P2R add-on is dynamic and can vary on the basis of in-scope NPEs
and level of provisioning. When disregarding the P2R add-on
relating to ECB's prudential provisioning expectations, the P2R is
reduced from 3.00% to 2.75%. As a result, the Group's minimum
phased in CET1 capital ratio and Total Capital ratio requirements
were reduced when disregarding the phasing in of the O-SII Buffer.
The ECB has also maintained the P2G unchanged.
As of 30 September 2023, the amount corresponding to the
abovementioned Pillar II add-on of 0.33% relating to ECB's
prudential provisioning expectations is being deducted from CET1
capital and therefore the Pillar II requirement is expected to
decrease to 2.75% as of 1 January 2024. As at 30 September 2023,
the capital deduction taken corresponds to 33 bps.
G. Additional Risk and Capital Management disclosures (continued)
G.2 Capital management (continued)
The CBC, in accordance with the Macroprudential Oversight of
Institutions Law of 2015, sets, on a quarterly basis, the CcyB
rates in accordance with the methodology described in this law. The
CcyB for the Group as at 30 September 2023 has been calculated at
approximately 0.04%.
On 30 November 2022, the CBC, following the revised methodology
described in its macroprudential policy, decided to increase the
CcyB rate from 0.00% to 0.50% of the total risk exposure amount in
Cyprus of each licensed credit institution incorporated in Cyprus.
The new rate of 0.50% must be observed as from 30 November 2023.
Moreover, on 2 June 2023, the CBC, announced its decision to raise
the CcyB rate to 1.00% of the total risk exposure amount in Cyprus
of each authorised credit institution incorporated in Cyprus. The
said increase of the CcyB is effective as from 2 June 2024. Based
on the above, the CcyB for the Group is expected to increase
further.
In accordance with the provisions of this law, the CBC is also
the responsible authority for the designation of banks that are
Other Systemically Important Institutions (O-SIIs) and for the
setting of the O-SII Buffer requirement for these systemically
important banks. BOC PCL has been designated as an O-SII and since
November 2021 the O-SII Buffer had been set to 1.50%. This buffer
was phased in gradually, having started from 1 January 2019 at
0.50%. The O-SII Buffer as at 31 December 2022 stood at 1.25% and
was fully phased in on 1 January 2023 and currently stands at
1.50%. In October 2023, the CBC concluded its reassessment for the
designation of credit institutions that meet the definition of
O-SII institutions and the setting of O-SII buffer to be observed .
The Group's O-SII buffer has been revised to 2.25% to be phased in
annually by 37.5 bps to 1.875% on 1 January 2024 and by another
37.5 bps to 2.25% on 1 January 2025.
The Group's minimum phased in CET1 capital ratio requirement as
at 30 September is set at 10.27%, comprising a 4.50% Pillar I
requirement, a P2R of 1.73%, the CCB of 2.50%, the O-SII Buffer of
1.50% (to be fully phased in at 2.25% on 1 January 2025, as
aforementioned) and the CcyB of 0.04%. The Group's minimum phased
in Total Capital requirement was set at 15.12%, comprising an 8.00%
Pillar I requirement, of which up to 1.50% can be in the form of
AT1 capital and up to 2.00% in the form of T2 capital, a P2R of
3.08%, the CCB of 2.50%, the O-SII Buffer of 1.50% and the CcyB of
0.04%.
The Group is subject to a 3% Pillar I Leverage Ratio
requirement.
The above minimum ratios apply for both BOC PCL and the
Group.
Following the annual SREP performed by the ECB in 2023, and
based on the draft SREP decision received in October 2023,
effective from 1 January 2024, (subject to ECB final confirmation),
the Group's minimum phased-in CET1 capital ratio and Total Capital
ratio requirements effective from 1 January 2024 are expected to
decrease, when disregarding the phasing in of the O-SII buffer and
CcyB, mentioned above, reflecting the elimination of the Pillar II
add-on relating to ECB's prudential provisioning expectations
following the Group's decision to directly deduct from own funds
such amount. On 1 January 2024, the Group's minimum phased-in CET1
capital ratio requirement is expected to be set at approximately
10.92%, comprising a 4.50% Pillar I requirement, a 1.55% Pillar II
requirement, the Capital Conservation Buffer of 2.50%, the O-SII
Buffer of 1.88% and CcyB of approximately 0.50%. On 1 January 2024,
the Group's minimum phased-in Total Capital ratio requirement is
expected to be set at approximately 15.63%, comprising an 8.00%
Pillar I requirement, of which up to 1.50% can
be in the form of AT1 capital and up to 2.00% in the form of T2
capital, a 2.75% Pillar II requirement, the Capital Conservation
Buffer of 2.50%, the O-SII Buffer of 1.88% and the CcyB of
approximately 0.50%. The ECB has also provided revised lower
non-public guidance for an additional Pillar II CET1 buffer (P2G).
From 2 June 2024 both CET1 capital and Total Capital requirements
are expected to increase by approximately 0.50% as a result of the
increase in the CcyB described above.
The EBA final guidelines on SREP and supervisory stress testing
and the Single Supervisory Mechanism's (SSM) 2018 SREP methodology
provide that the own funds held for the purposes of Pillar II
Guidance (P2G) cannot be used to meet any other capital
requirements (Pillar I requirement, P2R or the Combined Buffer
Requirement (CBR)), and therefore cannot be used twice.
G. Additional Risk and Capital Management (continued)
G.2 Capital management (continued)
The capital position of the Group and BOC PCL as at the
reporting date (after applying the transitional arrangements) is
presented below:
Regulatory capital Group BOC PCL
30 September 31 December 30 September 31 December
2023 (1) 2022 2023 (1) 2022 (restated)(2)
(restated)(2)
-------------- --------------- -------------- --------------------
EUR000 EUR000 EUR000 EUR000
-------------- --------------- -------------- --------------------
Transitional Common Equity
Tier 1 (CET1 )(3) 1,564,886 1,540,292 1,527,825 1,509,056
-------------- --------------- -------------- --------------------
Transitional Additional
Tier 1 capital (AT1) 228,250 220,000 228,250 220,000
-------------- --------------- -------------- --------------------
Tier 2 capital (T2) 300,000 300,000 300,000 300,000
-------------- --------------- -------------- --------------------
Transitional total regulatory
capital 2,093,136 2,060,292 2,056,075 2,029,056
============== =============== ============== ====================
Risk weighted assets -
credit risk(4) 9,252,780 9,103,330 9,240,080 9,150,831
-------------- --------------- -------------- --------------------
Risk weighted assets - - - - -
market risk
-------------- --------------- -------------- --------------------
Risk weighted assets -
operational risk 1,010,885 1,010,885 997,720 997,720
-------------- --------------- -------------- --------------------
Total risk weighted assets 10,263,665 10,114,215 10,237,800 10,148,551
============== =============== ============== ====================
Transitional % % % %
-------------- --------------- -------------- --------------------
Common Equity Tier 1 ratio 15.2 15.2 14.9 14.9
-------------- --------------- -------------- --------------------
Total capital ratio 20.4 20.4 20.1 20.0
-------------- --------------- -------------- --------------------
Leverage ratio 6.9 7.0 6.7 6.9
-------------- --------------- -------------- --------------------
(1.) Includes reviewed profits for the six months ended 30 June
2023 in line with the ECB Decision (EU) (2015/656) on the recognition
of interim or year-end profits in CET1 capital in accordance with
Article 26(2) of the CRR and an accrual for an estimated final
dividend at a payout ratio of 50% of the Group Adjusted Profit
after tax for the period, which represents the high-end range
of the Group's approved dividend policy, in line with the principles
of Commission Delegated Regulation (EU) (241/2014) for foreseeable
dividends and charges. As per the latest SREP decision, any dividend
distribution is subject to regulatory approval. Such dividend
accrual does not constitute a binding commitment for a dividend
payment nor does it constitute a warranty or representation that
such a payment will be made. The CET1 ratio, the Total Capital
ratio and the Leverage ratio as at 30 September 2023 stand at
15.8%, 21.0% and 7.1% respectively for the Group and 15.5%, 20.7%
and 7.0% respectively for BOC PCL, when including the profits
for the quarter ended 30 September 2023 and an accrual for an
estimated final dividend at a payout ratio of 50% of the Group
Adjusted Profit after tax for the nine months ended 30 September
2023.
(2.) The 2022 capital ratios as previously reported in the 2022
Annual Financial Report and 2022 Pillar III Disclosures have been
restated following the approval by the ECB for the payment of
a dividend in April 2023 and recommendation by the Board of Directors
to the shareholders for approval at the Annual General Meeting
on 26 May 2023, of a final dividend in respect of earnings for
the year ended 31 December 2022 which amounts to an aggregate
distribution of EUR22,310 thousand.
(3.) CET1 includes regulatory deductions, comprising, amongst
others, intangible assets amounting to EUR26,910 thousand for
the Group and EUR17,786 thousand for BOC PCL as at 30 September
2023 (31 December 2022: EUR30,421 thousand for the Group and EUR25,445
thousand for BOC PCL). As at 30 September 2023 an amount of EUR10,645
thousand, relating to intangible assets, is considered prudently
valued for CRR purposes and is not deducted from CET1 (31 December
2022: EUR12,934 thousand).
(4.) Includes Credit Valuation Adjustments (CVA).
The capital ratios of the Group and BOC PCL as at the reporting
date on a fully loaded basis are presented below:
Fully loaded Group BOC PCL
30 September 31 December 30 September 31 December
2023(1,2) 2023(1,2)
2022(3,4) 2022(3,4)
(restated) (restated)
-------------- ------------ -------------- ------------
% % % %
-------------- ------------ -------------- ------------
Common Equity Tier 1 ratio 15.2 14.5 14.8 14.1
-------------- ------------ -------------- ------------
Total capital ratio 20.3 19.6 20.0 19.3
-------------- ------------ -------------- ------------
Leverage ratio 6.8 6.7 6.7 6.5
-------------- ------------ -------------- ------------
(1) Includes reviewed profits for the six months ended 30 June
2023 in line with the ECB Decision (EU) (2015/656) on the recognition
of interim or year-end profits in CET1 capital in accordance with
Article 26(2) of the CRR and an accrual for an estimated final
dividend at a payout ratio of 50% of the Group Adjusted Profit
after tax for the period, which represents the high-end range
of the Group's approved dividend policy, in line with the principles
of Commission Delegated Regulation (EU) (241/2014) for foreseeable
dividends and charges. As per the latest SREP decision, any dividend
distribution is subject to regulatory approval. Such dividend
accrual does not constitute a binding commitment for a dividend
payment nor does it constitute a warranty or representation that
such a payment will be made. The CET1 ratio, the Total Capital
ratio and the Leverage ratio as at 30 September 2023 stand at
15.7%, 20.9% and 7.0% respectively for the Group and at 15.5%,
20.6% and 6.9% respectively for BOC PCL, when including the profits
for the quarter ended 30 September 2023 and an accrual for an
estimated final dividend at a payout ratio of 50% of the Group
Adjusted Profit after tax for the nine months ended 30 September
2023.
(2) IFRS 9 fully loaded as applicable.
(3) IFRS 9 and application of the temporary treatment of certain
FVOCI instruments in accordance with Article 468 of CRR fully
loaded as applicable.
(4) The 2022 capital ratios as previously reported in the 2022
Annual Financial Report and 2022 Pillar III Disclosures have been
restated following the approval by the ECB for the payment of
a dividend in April 2023 and recommendation by the Board of Directors
to the shareholders for approval at the Annual General Meeting
on 26 May 2023, of a final dividend in respect of earnings for
the year ended 31 December 2022 which amounts to an aggregate
distribution of EUR22,310 thousand.
G. Additional Risk and Capital Management disclosures (continued)
G.2 Capital management (continued)
During the nine months ended 30 September 2023, CET1 ratio was
negatively affected mainly by the phasing in of IFRS 9 and other
transitional adjustments on 1 January 2023, provisions and
impairments, the payment of AT1 coupon, AT1 refinancing costs, the
Capital deduction of 0.33% in relation to the ECB prudential
expectations for NPEs, other movements and the increase in
risk-weighted assets and was positively affected by pre-provision
income as well as the EUR50 million dividend distributed to BOC PCL
in February 2023 by the life insurance subsidiary. As a result, the
CET1 ratio including unreviewed profits for the nine months ended
30 September 2023, the CET1 ratio (on a transitional basis) has
increased by c.60 bps during the nine months ended 30 September
2023, whereas on a fully loaded basis the ratio has increased by
c.130 bps.
In addition, a prudential charge in relation to the onsite
inspection on the value of the Group's foreclosed assets is being
deducted from own funds since June 2021, the impact of which is 14
bps on the Group's CET1 ratio as at 30 September 2023, decreased
from 26bps on 31 December 2022 mainly due to impairment recognised
during the period.
In June 2023, the Company successfully launched and priced an
issue of EUR220 million Fixed Rate Reset Perpetual Additional Tier
1 Capital Securities (the 'New Capital Securities').
The proceeds of the issue of the New Capital Securities were
on-lent by the Company to BOC PCL to be used for general corporate
purposes. The on-loan qualifies as Additional Tier 1 capital for
BOC PCL.
At the same time, the Company invited the holders of its
outstanding EUR220 million Fixed Rate Reset Perpetual Additional
Tier 1 Capital Securities callable in December 2023 to tender the
previous AT1 issue in 2018 ('Existing Capital Securities') at a
purchase price of 103% of the principal amount. As at 30 September
2023 Existing Capital Securities of a nominal amount of
approximately EUR8 million remaining outstanding, are included in
Tier 1 and Total Capital, the impact of which is c.8 bps on the
Group's Total Capital Ratio as at 30 September 2023.
Capital requirements of subsidiaries
The insurance subsidiaries of the Group, the General Insurance
of Cyprus Ltd and Eurolife Ltd, comply with the requirements of the
Superintendent of Insurance including the minimum solvency ratio.
The regulated investment firm (CIF) of the Group, The Cyprus
Investment and Securities Corporation Ltd (CISCO), complies with
the minimum capital adequacy ratio requirements. From 2021 the new
prudential regime for Investment Firms ('IFs') as per the
Investment Firm Regulation (EU) 2019/2033 ('IFR') on the prudential
requirements of IFs and the Investment Firm Directive (EU)
2019/2034 ('IFD') on the prudential supervision of IFs came into
effect. Under the new regime CISCO has been classified as
Non-Systemic 'Class 2' company and is subject to the new IFR/IFD
regime in full. In February 2023, the activities of the regulated
UCITS management company of the Group, BOC Asset Management Ltd,
were absorbed by CISCO and BOC Asset Management Ltd was dissolved
without liquidation. The payment services subsidiary of the Group,
JCC Payment Services Ltd, complies with the regulatory capital
requirements.
Minimum Requirement for Own Funds and Eligible Liabilities
(MREL)
The Bank Recovery and Resolution Directive (BRRD) requires that
from January 2016 EU member states shall apply the BRRD's
provisions requiring EU credit institutions and certain investment
firms to maintain a minimum requirement for own funds and eligible
liabilities (MREL), subject to the provisions of the Commission
Delegated Regulation (EU) 2016/1450. On 27 June 2019, as part of
the reform package for strengthening the resilience and
resolvability of European banks, the BRRD came into effect and was
required to be transposed into national law. BRRD II was transposed
and implemented in Cyprus law in May 2021. In addition, certain
provisions on MREL have been introduced in CRR which also came into
force on 27 June 2019 as part of the reform package and took
immediate effect.
In February 2023, BOC PCL received notification from the Single
Resolution Board (SRB) of the final decision for the binding MREL
for BOC PCL, determined as the preferred resolution point of entry.
As per the 2023 MREL decision, the final MREL requirement was set
at 24.35% of risk weighted assets and 5.91% of Leverage Ratio
Exposure (LRE) (as defined in the CRR) and must be met by 31
December 2025. Furthermore, the binding interim requirement of 1
January 2022 set at 14.94% of risk weighted assets and 5.91% of LRE
must continue to be met. The own funds used by BOC PCL to meet the
CBR are not eligible to meet its MREL requirements expressed in
terms of risk-weighted assets. BOC PCL must comply with the MREL
requirement at the consolidated level, comprising BOC PCL and its
subsidiaries.
In November 2023, BOC PCL received draft notification from the
SRB regarding the 2024 MREL decision, by which the final MREL
requirement is now set at 25.00% of risk weighted assets and must
be met by 31 December 2024, one year earlier than the previous
decision. The revised MREL requirements remain subject to SRB and
CBC final confirmation.
In July 2023, BOC PCL proceeded with an issue of EUR350 million
senior preferred notes (the 'Notes'). The Notes comply with the
MREL criteria and contribute towards BOC PCL's MREL
requirements.
G. Additional Risk and Capital Management disclosures (continued)
G.2 Capital management (continued)
Minimum Requirement for Own Funds and Eligible Liabilities
(MREL) (continued)
The MREL ratio as at 30 September 2023, calculated according to
the SRB's eligibility criteria currently in effect and based on
internal estimate, stood at 24.1% of RWAs and at 11.0% of LRE
(based on the regulatory Total Capital as at 30 September 2023).
The MREL ratio as at 30 September 2023, includes an amount of
approximately EUR8 million that remained following the tender offer
and open market purchases of the Existing Capital Securities. The
impact of this amount is contributing approximately 8 basis points
to the MREL ratio expressed as a percentage of RWA and
approximately 3 basis points to the MREL ratio expressed as a
percentage of LRE. The MREL ratio expressed as a percentage of risk
weighted assets does not include capital used to meet the CBR
requirement, which stood at 4.04% on 30 September 2023 (compared to
3.77% as at 31 December 2022), expected to increase further on 30
November 2023 following increase in CcyB from 0.00% to 0.50% of the
total risk exposure amounts in Cyprus and to 1.00% from June 2024
as announced by CBC and the phasing in of the O-SII buffer by
0.375% on 1 January 2024 and a further 0.375% on 1 January
2025.
The MREL ratio expressed as a percentage of RWA and the MREL
ratio expressed as a percentage of LRE as at 30 September 2023
stand at 24.6% and 11.2% respectively when including the profits
for the quarter ended 30 September 2023 and an accrual for an
estimated final dividend at a payout ratio of 50% of the Group
Adjusted Profit after tax for the nine months ended 30 September
2023.
BOC PCL continues to evaluate opportunities to optimise the
build-up of its MREL.
G.3 Internal Capital Adequacy Assessment Process (ICAAP),
Internal Liquidity Adequacy Assessment Process (ILAAP) and Pillar
II Supervisory Review and Evaluation Process (SREP)
The Group prepares annual ICAAP and ILAAP packages. Both reports
for 2022 have been completed and submitted to the ECB at the end of
March 2023 following approval by the Board of Directors. The 2022
ICAAP indicated that the Group has sufficient capital and available
mitigants to support its risk profile and its business and to
enable it to meet its regulatory requirements, both under baseline
and stressed conditions scenarios. The 2022 ILAAP indicated that
the Group maintains liquidity resources which are adequate to
ensure its ability to meet obligations as they fall due under
ordinary and stressed conditions scenarios scenarios.
The Group undertakes quarterly reviews of its ICAAP results as
well as on an ad-hoc basis if needed, which are submitted to the
ALCO and the Risk Committee of the Board of Directors, considering
the latest actual and forecasted information. During the quarterly
review, the Group's risk profile is reviewed and any material
changes/developments since the annual ICAAP exercise are assessed
in terms of capital adequacy.
The Group undertakes quarterly reviews of its ILAAP through
quarterly liquidity stress tests which are submitted to the ALCO
and the Risk Committee of the Board of Directors. In these reviews
actual and forecasted information is considered. Any material
changes since the year-end are assessed in terms of liquidity and
funding. The quarterly review assessment identifies whether the
Group has an adequate liquidity buffer to cover the stress
outflows.
The ECB, as part of its supervisory role, has been conducting
the SREP and other inspections (onsite/ off-site/ targeted reviews/
deep-dives) on the Group. SREP is a holistic assessment of, amongst
other things, the Group's business model, internal governance and
institution-wide control arrangements, risks to capital and
adequacy of capital to cover these risks and risks to liquidity and
adequacy of liquidity resources to cover these risks. The objective
of the SREP is for the ECB to form an up-to-date supervisory view
of the Group's risks and viability and to form the basis for
supervisory measures and dialogue with the Group. As a result of
these supervisory processes, additional capital and other
requirements could be imposed on the Group, including a revision of
the level of Pillar II add-ons, as the Pillar II add-on capital
requirements are a point-in-time assessment and therefore subject
to change over time.
The Group participated in the 2023 SSM Stress Test as one of the
'Other Systematically Important Institutions (O-SII)'. The exercise
assesses EU banks' resilience to an adverse economic shock and
informs the 2023 SREP. The stress test results are used to update
each bank's Pillar 2 Guidance in the context of the SREP.
Qualitative findings on weaknesses in the Group's stress testing
practices could also affect Pillar 2 Requirements and inform other
supervisory activities. The ECB published on 28 July 2023 the
results of the stress test. As per the relevant ECB press release
'Capital depletion at the end of the three-year horizon was lower
than in previous stress tests. This was mainly due to banks overall
being in better shape going into the exercise, with higher-quality
assets and stronger profitability'. The results for the Group, as
published by the ECB, are presented in the Interim Financial Report
2023.
G. Additional Risk and Capital Management disclosures (continued)
G.4 Liquidity regulation
The Group has to comply with provisions on the Liquidity
Coverage Ratio (LCR) under CRD IV/CRR (as supplemented by Delegated
Regulations (EU) 2015/61), with the limit set at 100% . The Group
has to also comply with the Net Stable Funding Ratio (NSFR)
calculated as per the CRR II, with the limit set at 100%.
The LCR is designed to promote the short-term resilience of a
Group's liquidity risk profile by ensuring that it has sufficient
high-quality liquid resources to survive an acute stress scenario
lasting for 30 days. The NSFR has been developed to promote a
sustainable maturity structure of assets and liabilities.
As at 30 September 2023, the Group was in compliance with all
regulatory liquidity requirements. As at 30 September 2023, the
Group's LCR stood at 350% (compared to 291% as at 31 December
2022). As at 30 September 2023 the Group's NSFR was 162% (compared
to 168% as at 31 December 2022).
G.5 Liquidity reserves
The below table sets out the Group's liquidity reserves:
Composition of 30 September 2023 31 December 2022
the liquidity
reserves
Internal Liquidity reserves Internal Liquidity reserves
Liquidity as per LCR Delegated Liquidity as per LCR Delegated
Reserves Regulation (EU) Reserves Regulation (EU)
2015/61 LCR eligible 2015/61 LCR eligible
----------- ------------------------ ----------- ------------------------
Level Level Level Level
1 2A & 1 2A &
2B 2B
----------- ------------- --------- ----------- ------------- ---------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
----------- ------------- --------- ----------- ------------- ---------
Cash and balances
with central banks 9,380,315 9,380,315 - 9,379,888 9,379,888 -
----------- ------------- --------- ----------- ------------- ---------
Placements with
banks 265,339 - - 55,825 - -
----------- ------------- --------- ----------- ------------- ---------
Liquid investments 2,742,689 2,218,784 377,154 1,827,698 1,344,032 214,800
----------- ------------- --------- ----------- ------------- ---------
Available ECB
Buffer 65,087 - - 147,844 - -
----------- ------------- --------- ----------- ------------- ---------
Total 12,453,429 11,599,099 377,154 11,411,255 10,723,920 214,800
=========== ============= ========= =========== ============= =========
Internal Liquidity Reserves present the total liquid assets as
defined in the Liquidity Policy. Liquidity reserves as per LCR
Delegated Regulation (EU) 2015/61 present the liquid assets as per
the definition of the aforementioned regulation i.e., High-Quality
Liquid Assets (HQLA).
Balances in Nostro accounts and placements with banks are not
included in Liquidity reserves as per LCR, as they are not
considered HQLA (they are part of the LCR Inflows).
Liquid investments under the Liquidity reserves as per LCR are
shown at market values reduced by standard weights as prescribed by
the LCR regulation. Liquid investments under Internal Liquidity
Reserves include additional unencumbered liquid bonds which are
shown at market values net of haircuts based on the ECB haircut
methodology for the ECB eligible bonds, while for the ECB
non-eligible bonds, a more conservative internally developed
haircut methodology is applied.
Current available ECB buffer is not part of the Liquidity
reserves as per LCR.
In March 2022, the ECB announced the steps for the gradual
phasing out of the temporary pandemic collateral easing measures
implemented during the COVID-19 breakout. The gradual phasing out
is scheduled to be concluded in three steps having started from
July 2022 and will be completed by March 2024 and gives banks time
to adapt to the adjustments to the collateral framework. In the
first step in July 2022, the ECB halved the temporary reduction in
collateral valuation haircuts across all assets from the previous
20% adjustment to 10%. In the second step, in June 2023, the ECB
implemented a new valuation haircut schedule based on its
pre-pandemic risk tolerance level for credit operations, phasing
out the temporary reduction in collateral valuation haircuts
completely. In the third and final step, in March 2024, the ECB
will, in principle, phase out the remaining pandemic collateral
easing measures.
H. Alternative Performance Measures
Reconciliations
Reconciliation between the Interim Consolidated Income Statement
under the statutory basis in Section E and the underlying basis in
Section A is included in Section 'F.1 Reconciliation of Interim
Income Statement for the nine months ended 30 September 2023
between the statutory and underlying basis' .
Reconciliations between the non-IFRS performance measures and
the most directly comparable IFRS measures which allow for the
comparability of the underlying basis to statutory basis are
disclosed below.
On 1 January 2023, the Group adopted IFRS 17 'Insurance
Contracts'. As required by the standard, the Group applied the
requirements retrospectively with comparative information
previously published under IFRS 4 'Insurance Contracts' restated
from 1 January 2022, the transition date, and therefore
reconciliations of alternative performance measures have also been
restated where applicable.
1. Reconciliation of Gross loans and advances to customers
30 September 31 December
2023 2022
EUR000 EUR000
============= ============
Gross loans and advances to customers as
per the underlying basis (as defined in Section
I) 10,167,022 10,217,453
============= ============
Reconciling items:
============= ============
Residual fair value adjustment on initial
recognition (Section F.5) (69,560) (89,029)
============= ============
Loans and advances to customers measured
at FVPL (Section F.3) (205,762) (214,359)
============= ============
Aggregate fair value adjustment on loans
and advances to customers measured at FVPL 3,227 3,270
------------- ------------
Gross loans and advances to customers at
amortised cost as per Section F.3 9,894,927 9,917,335
============= ============
2. Reconciliation of Allowance for expected credit losses on
loans and advances to customers (ECL)
30 September 31 December
2023 2022
EUR000 EUR000
============= ============
Allowance for expected credit losses on loans
and advances to customers (ECL) as per the
underlying basis (as defined in Section I) 274,536 281,630
============= ============
Reconciling items:
============= ============
Residual fair value adjustment on initial
recognition (Section F.5) (69,560) (89,029)
============= ============
Aggregate fair value adjustment on loans
and advances to customers measured at FVPL 3,227 3,270
============= ============
Provisions for financial guarantees and commitments (17,969) (17,429)
------------- ------------
Allowance for ECL of loans and advances
to customers as per Section F.3 190,234 178,442
============= ============
H. Alternative Performance Measures (continued)
Reconciliations (continued)
3. Reconciliation of NPEs
30 September 31 December
2023 2022
EUR000 EUR000
============= ============
NPEs as per the underlying basis (as defined
in Section I) 358,386 410,563
============= ============
Reconciling items:
============= ============
POCI (NPEs) (Note 1 below) (34,194) (37,742)
============= ============
Residual fair value adjustment on initial
recognition on loans and advances to customers
(NPEs) classified as Stage 3 (Section F.5) (59) (1,803)
------------- ------------
Stage 3 gross loans and advances to customers
at amortised cost as per Section F.5 324,133 371,018
============= ============
NPE ratio
============= ============
NPEs (as per table above) (EUR000) 358,386 410,563
============= ============
Gross loans and advances to customers (as
per table above) (EUR000) 10,167,022 10,217,453
============= ============
Ratio of NPE/Gross loans (%) 3.5% 4.0%
============= ============
Note 1 : Gross loans and advances to customers at amortised cost
before residual fair value adjustment on initial recognition
include an amount of EUR34,194 thousand POCI - NPEs (out of a total
of EUR112,014 thousand POCI loans) (31 December 2022: EUR37,742
thousand POCI - NPEs (out of a total of EUR115,544 thousand POCI
loans)) as disclosed in Section F.5.
4. Reconciliation of Loan credit losses
Nine months ended
30 September
2023 2022
========= =========
EUR000 EUR000
========= =========
Loan credit losses as per the underlying
basis 44,069 35,559
========= =========
Reconciling items:
========= =========
Loan credit losses relating to NPE sales,
disclosed under non-recurring items within
'Provisions/net loss relating to NPE sales'
under the underlying basis - 1,314
========= =========
44,069 36,873
========= =========
Loan credit losses (as defined) are reconciled
to the statutory basis as follows:
========= =========
Credit losses to cover credit risk on loans
and advances to customers (Section F.6) 50,332 44,932
========= =========
Net gains on derecognition of financial
assets measured at amortised cost - loans
and advances to customers (see further below) (6,306) (3,372)
========= =========
Net losses /( gains) on loans and advances
to customers at FVPL 43 (4,687)
--------- ---------
44,069 36,873
========= =========
Net gains on derecognition of financial assets measured at
amortised cost in the Unaudited Interim Consolidated Income
Statement amount to EUR6,265 thousand (30 September 2022: EUR2,179
thousand) and comprise EUR6,306 thousand (30 September 2022:
EUR3,372 thousand) net gains on derecognition of loans and advances
to customers and EUR41 thousand (30 September 2022: EUR1,193
thousand) net losses on derecognition of debt securities measured
at amortised cost.
H. Alternative Performance Measures (continued)
Key Performance Ratios Information
1. Net Interest Margin (NIM)
The various components for the calculation of net interest
margin are provided below:
Nine months ended
30 September
2023 2022
( restated)
======== =============
a. Net interest income used in the calculation
of NIM EUR000 EUR000
======== =============
Net interest income as per the underlying basis/statutory
basis 572,164 234,381
-------- -------------
Net interest income used in the calculation
of NIM (annualised) 764,981 313,367
======== =============
1.2. Interest earning assets 30 September 30 June 31 March 31 December
2023 2023 2023 2022
EUR000 EUR000 EUR000 EUR000
============= =========== =========== ============
Cash and balances with central
banks 9,565,413 9,127,429 9,247,705 9,567,258
============= =========== =========== ============
Loans and advances to banks 409,903 431,812 415,832 204,811
============= =========== =========== ============
Loans and advances to customers 9,910,455 10,007,819 10,013,108 9,953,252
============= =========== =========== ============
Prepayments, accrued income and
other assets - Deferred consideration
receivable ('DPP') 325,990 320,655 315,755 311,523
============= =========== =========== ============
Investments
============= =========== =========== ============
Debt securities 3,488,862 3,178,127 2,746,790 2,499,894
============= =========== =========== ============
Total interest earning assets 23,700,623 23,065,842 22,739,190 22,536,738
============= =========== =========== ============
1.3. Quarterly average interest
earning assets (EUR000)
============= =========== =========== ============
* as at 30 September 2023 23,010,598
============= =========== =========== ============
* as at 30 September 2022 22,470,102
============= =========== =========== ============
1.2.
1.4. Net Interest Margin (NIM) Nine months ended
30 September
2023 2022
(restated)
=========== ============
Net interest income (annualised) (as per table
1.1. above) (EUR000) 764,981 313,367
=========== ============
Quarterly average interest earning assets (as
per table 1.3. above) (EUR000) 23,010,598 22,470,102
=========== ============
NIM (%) 3.32% 1.39%
=========== ============
H. Alternative Performance Measures (continued)
Key Performance Ratios Information (continued)
2. Cost to income ratio
2.1 Reconciliation of the various components of total expenses
used in the cost to income ratio calculation from the underlying
basis to the statutory basis is provided below:
2.1.1.
2.1.1.
2.1.1 Reconciliation of Staff costs Nine months ended
30 September
=========================
2023 2022
(restated)
======= ================
EUR000 EUR000
======= ================
14 1 ,
Staff costs as per the underlying basis 462 138,937
======= ================
Reclassifications for:
======= ================
Restructuring costs - voluntary exit plan and
other termination benefits, separately presented
under the underlying basis n/a 104,234
------- ----------------
14 1 ,
Staff costs as per the statutory basis 462 243,171
======= ================
2.1.2 Reconciliation of Other operating expenses Nine months ended
30 September
2023 2022 (restated)
======= ================
EUR000 EUR000
======= ================
Other operating expenses as per the underlying 10 5 ,
basis 723 102,058
======= ================
Reclassifications for:
======= ================
Operating expenses and restructuring costs relating
to NPE sales, presented within 'Restructuring
and other costs relating to NPE sales' under
the underlying basis n/a 2,650
======= ================
Advisory and other transformation costs - organic,
separately presented under the underlying basis 2,250 9,860
------- ================
Other operating expenses as per the statutory 10 7 ,
basis 973 114,568
======= ================
Reconciliation of the various components of total income used in
the cost to income ratio calculation from the underlying basis to
the statutory basis is provided below :
2.2 Total Income as per the underlying basis Nine months ended
30 September
2023 2022 (restated)
======== ================
EUR000 EUR000
======== ================
Net interest income as per the underlying basis/statutory
basis (as per table 1.1 above) 572,164 234,381
======== ================
Net fee and commission income as per the underlying
basis/statutory basis 134,518 142,100
======== ================
Net foreign exchange gains, Net gains/(losses)
on financial instruments and Net gains on derecognition
of financial assets measured at amortised cost
as per the underlying basis (as per table 2.3
below) 28,854 13,74 8
======== ================
Net insurance result* 37,765 33,863
======== ================
Net gains/(losses) from revaluation and disposal
of investment properties and Net gains on disposal
of stock of properties (as per the statutory
basis) 7,028 10,592
======== ================
Other income (as per the statutory basis) 15,147 11,945
======== ================
Total Income as per the underlying basis 795,476 446,629
======== ================
*Net insurance result comprises the aggregate of captions 'Net
insurance finance income/(expense) and net reinsurance finance
income/(expense)', 'Net insurance service result' and 'Net
reinsurance service result' per the statutory basis.
H. Alternative Performance Measures (continued)
Key Performance Ratios Information (continued)
2. Cost to income ratio (continued)
2.2.2.
2.3 Reconciliation of Net foreign exchange gains, Nine months ended
Net gains/ (losses) on financial instruments 30 September
and Net gains on derecognition of financial assets
measured at amortised cost between the statutory
basis and the underlying basis
20 2 3 20 22 (restated)
======= =================
EUR000 EUR000
======= =================
Net foreign exchange gains, Net gains/(losses)
on financial instruments and Net gains on derecognition
of financial assets measured at amortised cost
as per the underlying basis 28,854 13,748
======= =================
Reclassifications for:
======= =================
Net (losses)/gains on loans and advances to customers
FVPL disclosed within 'Loan credit losses' per
the underlying basis (as per table 4 in Section
'Reconciliations' above) (43) 4,687
======= =================
Net gains on derecognition of financial assets
measured at amortised cost - loans and advances
to customers, disclosed within 'Loan credit losses'
per the underlying basis (as per table 4 in Section
'Reconciliations' above) 6,306 3,372
======= =================
Net foreign exchange gains, et gains/(losses)
on financial instruments and Net gains on derecognition
of financial assets measured at amortised cost
as per the statutory basis (see below) 35,117 21,807
======= =================
Net foreign exchange gains, Net gains/(losses)
on financial instruments and Net gains on derecognition
of financial assets measured at amortised cost
(as per table above) are reconciled to the statutory
basis as follows:
======= =================
Net foreign exchange gains 22,506 21,464
======= =================
Net gains/(losses) on financial instruments 6,346 (1,836)
======= =================
Net gains on derecognition of financial assets
measured at amortised cost 6,265 2,179
------- -----------------
35,117 21,807
======= =================
2.4 Total Expenses as per the underlying basis Nine months ended
30 September
2023 2022 (restated)
======== ================
EUR000 EUR000
======== ================
Staff costs as per the underlying basis (as per 14 1 ,
table 2.1.1 above) 462 138,937
======== ================
Special levy on deposits and other levies/contributions
as per the underlying basis/statutory basis 29,754 26,616
======== ================
Other operating expenses as per the underlying 10 5 ,
basis (as per table 2.1.2 above) 723 102,058
======== ================
27 6 ,
Total Expenses as per the underlying basis 939 267,611
======== ================
Cost to income ratio
======== ================
27 6 ,
Total expenses (as per table 2.4 above) (EUR000) 939 267,611
======== ================
Total income (as per table 2.2 above) (EUR000) 795,476 446,629
======== ================
Total expenses/Total income (%) 3 5 % 60%
======== ================
H. Alternative Performance Measures (continued)
Key Performance Ratios Information (continued)
3. Operating profit return on average assets
The various components used in the determination of the
operating profit return on average assets are provided below:
30 September 30 June 31 March 31 December
2023
2023 2023 2022
(restated)
EUR000 EUR000 EUR000 EUR000
============== ========== =========== ============
Total assets used in the computation
of the operating profit return
on average assets per the statutory
basis (Section E Unaudited Interim 25,706,63
Consolidated Balance Sheet) 26,351,640 7 25,386,804 25,288,541
============== ========== =========== ============
Quarterly average total assets
(EUR000)
============== ========== =========== ============
* as at 30 September 2023 25,683,406
============== ========== =========== ============
* as at 30 September 2022 (restated) 25,372,928
============== ========== =========== ============
2023 2022
(restated)
Annualised total income for the nine months ended
30 September (as per table 2.2 above) (EUR000) 1,063,548 597,141
=========== ============
(3 70
Annualised total expenses for the nine months , 266
ended 30 September (as per table 2.4 above) (EUR000) ) (357,795)
----------- ------------
Annualised operating profit for the nine months 69 3
ended 30 September (EUR000) , 282 239,346
=========== ============
Quarterly average total assets as at 30 September
(as per table above) (EUR000) 25,683,406 25,372,928
=========== ============
Operating profit return on average assets (annualised)
(%) 2.7% 0.9%
=========== ============
4. Cost of Risk
Nine months ended
30 September
2023 2022
=========== ===========
EUR000 EUR000
=========== ===========
Annualised loan credit losses (as per table 4
in Section 'Reconciliation' above) 58,920 47,542
=========== ===========
Average gross loans (as defined) (as per table
1 in Section 'Reconciliation above) 10,192,238 10,885,015
=========== ===========
Cost of Risk (CoR) % 0.58% 0.44%
=========== ===========
5. Basic earnings/(losses) per share attributable to the owners of the Company
The various components used in the determination of the 'Basic
earnings/(losses) per share attributable to the owners of the
Company (EUR cent)' are provided below:
2023 2022
(restated)
Profit/(loss) after tax (attributable to the owners
of the Company) per the underlying basis / statutory
basis for the nine months ended 30 September (EUR000) 349,363 (18,532)
======== ============
Weighted average number of shares in issue during
the period, excluding treasury shares (thousand) 446,058 446,058
======== ============
Basic earnings/(losses) per share attributable
to the owners of the Company for the nine months
ended 30 September (EUR cent) 7 8 .3 (4.2)
======== ============
H. Alternative Performance Measures (continued)
Key Performance Ratios Information (continued)
6. Return on tangible equity (ROTE)
The various components used in the determination of 'Return on
tangible equity (ROTE) are provided below:
2023 2022
(restated)
Annualised profit/(loss) after tax (attributable
to the owners of the Company) per the underlying
basis/statutory basis (EUR000) 467,097 (24,777)
======== ============
Quarterly average tangible total equity as at 1,90 1
30 September (as per table 6.2 below) (EUR000) , 882 1,738,899
======== ============
ROTE after tax (annualised) (%) 24.6% (1.4%)
======== ============
6.1 Tangible shareholder's equity 30 September 30 June 31 March 31 December
2023 2022
2023 2023 (restated)
EUR000 EUR000 EUR000 EUR000
=============== ========== ========== ============
Equity attributable to the owners
of the Company (as per the statutory 2,11 3
basis) , 020 1,984,459 1,899,202 1,806,266
=============== ========== ========== ============
Less: Intangible assets (as per
the statutory basis) (45,899) (47,546) (49,430) (52,546)
=============== ========== ========== ============
Total tangible shareholder's 2,06 7
equity , 121 1,936,913 1,849,772 1,753,720
=============== ========== ========== ============
6.2 Quarterly average tangible
shareholder's equity (EUR000
)
=============== ========== ========== ============
1,90 1
* as at 30 September 2023 , 882
=============== ========== ========== ============
* as at 30 September 2022 (restated) 1,738,899
=============== ========== ========== ============
7. Leverage ratio
30 September 31 December
2023 2022
(restated)
Tangible total equity (including Other equity 2,29 5
instruments) (as per table 7.1 below) (EUR000) , 371 1,973,720
============== ============
Total assets (EUR000) 26,351,640 25,288,541
============== ============
Leverage ratio 8.7% 7.8%
============== ============
7.1 Tangible total equity 30 September 31 December
2023
2022
(restated)
EUR000 EUR000
============== ============
Equity attributable to the owners of the Company 2,11 3
(as per the statutory basis) , 020 1,806,266
============== ============
Other equity instruments 228,250 220,000
============== ============
Less: Intangible assets (as per the statutory
basis) (45,899) (52,546)
-------------- ------------
2,29 5
Tangible total equity , 371 1,973,720
============== ============
8. Tangible book value per share
30 September 30 September
2023
2022
(restated)
EUR000 EUR000
============== =============
Tangible shareholder's equity (as per table 6.1
above) (EUR000) 2,067,121 1,699,992
============== =============
Weighted average number of shares in issue during
the period, excluding treasury shares (as per
table 5 above) (thousand) 446,058 446,058
============== =============
Tangible book value per share (EUR) 4.63 3.81
============== =============
I. Definitions and Explanations
Adjusted recurring The Group's profit after tax before non-recurring
profitability items (attributable to the owners of the Company)
taking into account distributions under other equity
instruments such as the annual AT1 coupon.
Advisory and Comprise mainly of fees of external advisors in relation
other transformation to: (i) the transformation program and other strategic
costs projects of the Group and (ii) customer loan restructuring
activities, where applicable.
Allowance for Comprises (i) allowance for expected credit losses
expected loan (ECL) on loans and advances to customers (including
credit losses allowance for expected credit losses on loans and
(previously advances to customers held for sale where applicable),
'Accumulated (ii) the residual fair value adjustment on initial
provisions') recognition of loans and advances to customers (including
residual fair value adjustment on initial recognition
on loans and advances to customers classified as
held for sale where applicable), (iii) allowance
for expected credit losses for off-balance sheet
exposures (financial guarantees and commitments)
disclosed on the balance sheet within other liabilities,
and (iv) the aggregate fair value adjustment on loans
and advances to customers classified and measured
at FVPL.
AT1 AT1 (Additional Tier 1) is defined in accordance
with the Capital Requirements Regulation (EU) No
575/2013, as amended by CRR II applicable as at the
reporting date.
Basic earnings Basic earnings after tax per share (attributable
per share (attributable to the owners of the Company) is the Profit/(loss)
to the owners after tax (attributable to the owners of the Company)
of the Company) divided by the weighted average number of shares
in issue during the period, excluding treasury shares.
Carbon neutral The reduction and balancing (through a combination
of offsetting investments or emission credits) of
greenhouse gas emissions from own operations.
CET1 capital CET1 capital ratio (transitional basis) is defined
ratio (transitional in accordance with the Capital Requirements Regulation
basis) (EU) No 575/2013, as amended by CRR II applicable
as at the reporting date.
CET1 Fully loaded The CET1 fully loaded (FL) ratio is defined in accordance
(FL) with the Capital Requirements Regulation (EU) No
575/2013, as amended by CRR II applicable as at the
reporting date.
Cost to Income Cost-to-income ratio comprises total expenses (as
ratio defined) divided by total income (as defined).
Data from the The latest data from the Statistical Service of the
Statistical Republic of Cyprus, Cyprus Statistical Service, was
Service published on 3 November 2023.
Digital transactions This is the ratio of the number of digital transactions
ratio performed by individuals and legal entity customers
to the total number of transactions. Transactions
include deposits, withdrawals, internal and external
transfers. Digital channels include mobile, browser
and ATMs.
Digitally engaged This is the ratio of digitally engaged individual
customers ratio customers to the total number of individual customers.
Digitally engaged customers are the individuals who
use the digital channels of the Bank (mobile banking
app, browser and ATMs) to perform banking transactions,
as well as digital enablers such as a bank-issued
card to perform online card purchases, based on an
internally developed scorecard.
Diluted earnings Diluted earnings per share is the Profit/(loss) after
per share tax (attributable to the owners of the Company) divided
by the weighted average number of ordinary shares
in issue adjusted for the ordinary shares that may
arise in respect of share awards granted to executive
directors and senior management of the Group under
the Long-Term Incentive Plan (2022 LTIP).
ECB European Central Bank
I. Definitions and Explanations (continued)
Green Asset The proportion of the share of a credit institution's
ratio assets financing and invested in EU Taxonomy-aligned
economic activities as a share of total covered assets.
Green Mortgage The proportion of the share of a credit institution's
ratio assets financing EU Taxonomy-aligned mortgages (acquisition,
construction or renovation of buildings) as a share
of total mortgages assets.
Gross loans Gross loans comprise: (i) gross loans and advances
to customers measured at amortised cost before the
residual fair value adjustment on initial recognition
(including loans and advances to customers classified
as non-current assets held for sale where applicable)
and (ii) loans and advances to customers classified
and measured at FVPL adjusted for the aggregate fair
value adjustment.
Gross loans are reported before the residual fair
value adjustment on initial recognition relating
mainly to loans acquired from Laiki Bank (calculated
as the difference between the outstanding contractual
amount and the fair value of loans acquired) amounting
to EUR 69 mn as at 30 September 2023 (compared to
EUR72 mn as at 30 June 2023, EUR78 mn as at 31 March
2023 and to EUR86 mn as at 31 December 2022).
Additionally, gross loans include loans and advances
to customers classified and measured at fair value
through profit or loss adjusted for the aggregate
fair value adjustment of EUR 203 mn at 30 September
2023 (compared to EUR207 mn as at 30 June 2023, EUR208
mn as at 31 March 2023 and to EUR211 mn as at 31
December 2022).
Group The Group consists f Bank of Cyprus Holdings Public
Limited Company, "BOC Holdings" or the "Company",
its subsidiary Bank of Cyprus Public Company Limited,
the "Bank" and the Bank's subsidiaries.
Legacy exposures Legacy exposures are exposures relating to (i) Restructuring
and Recoveries Division (RRD), (ii) Real Estate Management
Unit (REMU), and (iii) non-core overseas exposures.
Leverage ratio The leverage ratio is the ratio of tangible total
equity to total assets as presented on the balance
sheet. Tangible total equity comprises of equity
attributable to the owners of the Company and Other
equity instruments minus intangible assets.
Leverage Ratio Leverage Ratio Exposure (LRE) is defined in accordance
Exposure (LRE) with the Capital Requirements Regulation (EU) No
575/2013, as amended.
Loan credit Loan credit losses comprise: (i) credit losses to
losses (PL) cover credit risk on loans and advances to customers,
(previously (ii) net gains on derecognition of financial assets
'Provision charge') measured at amortised cost relating to loans and
advances to customers and (iii) net gains on loans
and advances to customers at FVPL, for the reporting
period/year.
Loan credit Loan credit losses charge (cost of risk) (year-to-date)
losses charge is calculated as the annualised 'loan credit losses'
(previously (as defined) divided by average gross loans. The
'Provisioning average gross loans are calculated as the average
charge') (cost of the opening balance and the closing balance of
of risk) Gross loans (as defined), for the reporting period/year.
Market Shares Both deposit and loan market shares are based on
data from the CBC. The Bank is the single largest
credit provider in Cyprus with a market share of
42.3% as at 30 September 2023 compared to 42.4% as
at 30 June 2023 and 31 March 2023 and to 40.9% as
at 31 December 2022. The Bank's deposit market share
in Cyprus reached 37.7% as at 30 September 2023 compared
to 37.4% in 30 June 2023, to 37.3% as at 31 March
2023 and to 37.2% as at 31 December 2022.
MSCI ESG Rating The use by the Company and the Bank of any MSCI ESG
Research LLC or its affiliates ('MSCI') data, and
the use of MSCI Logos, trademarks, service marks
or index names herein, do not constitute a sponsorship,
endorsement, recommendation or promotion of the Company
or the Bank by MSCI. MSCI Services and data are the
property of MSCI or its information providers and
are provided "as-is" and without warranty. MSCI Names
and logos are trademarks or service marks of MSCI.
I. Definitions and Explanations (continued)
Net Interest Net interest margin is calculated as the net interest
Margin income (annualised) divided by the 'quarterly average
interest earning assets' (as defined).
Net loans and Net loans and advances to customers comprise gross
advances to loans (as defined) net of allowance for expected
customers loan credit losses (as defined, but excluding allowance
for expected credit losses on off-balance sheet exposures
disclosed on the balance sheet within other liabilities).
Net loans to Net loans to deposits ratio is calculated as gross
deposits ratio loans (as defined) net of allowance for expected
loan credit losses (as defined) divided by customer
deposits.
Net performing Net performing loan book is the total net loans and
loan book advances to customers (as defined) excluding net
loans included in the legacy exposures (as defined).
Net Stable Funding The NSFR is calculated as the amount of "available
Ratio (NSFR) stable funding" (ASF) relative to the amount of "required
stable funding" (RSF). The regulatory limit, enforced
in June 2021, has been set at 100% as per the CRR
II.
Net zero emissions The reduction of greenhouse gas emissions to net
zero through a combination of reduction activities
and offsetting investments
New lending New lending includes the disbursed amounts of the
new and existing non-revolving facilities (excluding
forborne or re-negotiated accounts) as well as the
average year-to-date change (if positive) of the
current accounts and overdraft facilities between
the balance at the beginning of the period and the
end of the period. Recoveries are excluded from this
calculation since their overdraft movement relates
mostly to accrued interest and not to new lending.
Non-interest Non-interest income comprises Net fee and commission
income income, Net foreign exchange gains/(losses) and net
gains/(losses) on financial instruments and (excluding
net gains on loans and advances to customers at FVPL),
Net insurance result, Net gains/(losses) from revaluation
and disposal of investment properties and on disposal
of stock of properties, and Other income.
Non-performing As per the European Banking Authorities (EBA) standards
exposures (NPEs) and European Central Bank's (ECB) Guidance to Banks
on Non-Performing Loans (which was published in March
2017), non-performing exposures (NPEs) are defined
as those exposures that satisfy one of the following
conditions:
(i) The borrower is assessed as unlikely to pay its
credit obligations in full without the realisation
of the collateral, regardless of the existence of
any past due amount or of the number of days past
due.
(ii) Defaulted or impaired exposures as per the approach
provided in the Capital Requirement Regulation (CRR),
which would also trigger a default under specific
credit adjustment, diminished financial obligation
and obligor bankruptcy.
(iii) Material exposures as set by the CBC, which
are more than 90 days past due.
(iv) Performing forborne exposures under probation
for which additional forbearance measures are extended.
(v) Performing forborne exposures previously classified
as NPEs that present more than 30 days past due within
the probation period.
From 1 January 2021 two regulatory guidelines came
into force that affect NPE classification and Days-Past-Due
calculation. More specifically, these are the RTS
on the Materiality Threshold of Credit Obligations
Past - Due (EBA/RTS/2016/06 ), and the Guideline
on the Application of the Definition of Default under
article 178 (EBA/RTS/2016/07).
The Days- Past -Due (DPD) counter begins counting
DPD as soon as the arrears or excesses of an exposure
reach the materiality threshold (rather than as of
the first day of presenting any amount of arrears
or excesses). Similarly, the counter will be set
to zero when the arrears or excesses drop below the
materiality threshold. Payments towards the exposure
that do not reduce the arrears/excesses below the
materiality threshold, will not impact the counter.
For retail debtors, when a specific part of the exposures
of a customer that fulfils the NPE criteria set out
above is greater than 20% of the gross carrying amount
of all on balance sheet exposures of that customer,
then the total customer exposure is classified as
non performing; otherwise only the specific part
of the exposure is classified as non performing.
For non retail debtors, when an exposure fulfils
the NPE criteria set out above, then the total customer
exposure is classified as non performing.
I. Definitions and Explanations (continued)
Material arrears/excesses are defined as follows:
(a) Retail exposures: Total arrears/excess amount
greater than EUR100, (b) Exposures other than retail:
Total arrears/excess amount greater than EUR500 and
the amount in arrears/excess in relation to the customer's
total exposure is at least 1%.
The NPEs are reported before the deduction of allowance
for expected loan credit losses (as defined).
Non-recurring Non-recurring items as presented in the 'Unaudited
items Interim Condensed Consolidated Income Statement -
Underlying basis' relate to 'Advisory and other transformation
costs - organic'. 2022 Non-recurring items relate
to: (i) Advisory and Other transformation costs -
ongoing (ii) Provisions/net loss relating to NPE
sales, (iii) Restructuring and other costs relating
to NPE sales, and (iv) Restructuring costs - Voluntary
Staff Exit Plan (VEP).
NPE coverage The NPE coverage ratio is calculated as the allowance
ratio (previously for expected loan credit losses (as defined) over
'NPE Provisioning NPEs (as defined).
coverage ratio')
NPE ratio NPEs ratio is calculated as the NPEs as per EBA (as
defined) divided by gross loans (as defined).
Operating profit Operating profit comprises profit before loan credit
losses (as defined), impairments of other financial
and non-financial assets, Provisions for pending
litigations, regulatory and other provisions (net
of reversals), tax, profit attributable to non-controlling
interests and non-recurring items (as defined).
Operating profit Operating profit return on average assets is calculated
return on average as the annualised operating profit (as defined) divided
assets by the quarterly average of total assets for the
relevant period. Average total assets exclude total
assets of discontinued operations at each quarter
end, if applicable.
Phased-in Capital In accordance with the legislation in Cyprus which
Conservation has been set for all credit institutions, the applicable
Buffer (CCB) rate of the CCB is 1.25% for 2017, 1.875% for 2018
and 2.5% for 2019 (fully phased-in).
Profit after This refers to the profit after tax (attributable
tax and before to the owners of the Company) , excluding any 'non-recurring
non-recurring items' (as defined).
items (attributable
to the owners
of the Company)
Profit/(loss) This refers to the profit or loss after tax (attributable
after tax - to the owners of the Company) , excluding any 'non-recurring
organic (attributable items' (as defined , except for the ' advisory and
to the owners other transformation costs - organic') .
of the Company)
Project Helix Project Helix 3 refers to the agreement the Group
3 reached in November 2021 for the sale of a portfolio
of NPEs with gross book value of EUR551 mn, as well
as real estate properties with book value of c.EUR88
mn as at 30 September 2022. Project Helix 3 was completed
in November 2022.
I. Definitions and Explanations (continued)
Project Sinope Project Sinope refers to the agreement the Group
reached in December 2021 for the sale of a portfolio
of NPEs with gross book value of EUR12 mn as at 31
December 2021, as well as properties in Romania with
carrying value EUR0.6 mn as at 31 December 2021.
Project Sinope was completed in August 2022.
Quarterly average This relates to the average of 'interest earning
interest earning assets' as at the beginning and end of the relevant
assets quarter. Interest earning assets include: cash and
balances with central banks (including cash and balances
with central banks classified as non-current assets
held for sale), plus loans and advances to banks,
plus net loans and advances to customers (including
loans and advances to customers classified as non-current
assets held for sale), plus 'deferred consideration
receivable' included within 'other assets', plus
investments (excluding equities, mutual funds and
other non interest bearing investments).
Qoq Quarter on quarter change
Return on Tangible Return on Tangible Equity (ROTE) is calculated as
equity (ROTE) Profit/(loss) after tax (attributable to the owners
of the Company) (as defined) (annualised - (based
on year - to - date days)), divided by the quarterly
average of Shareholders' equity minus intangible
assets at each quarter end.
Shareholders' Shareholders' equity comprise total equity adjusted
equity for non-controlling interest and other equity instruments.
Special levy Relates to the special levy on deposits of credit
on deposits institutions in Cyprus, contributions to the Single
and other levies/contributions Resolution Fund (SRF), contributions to the Deposit
Guarantee Fund (DGF), as well as the DTC levy, where
applicable.
Time deposit Calculated as a percentage of the cost (interest
pass-through expense) of Time and Notice deposits over the average
6-month Euribor rate of the period.
Total Capital Total capital ratio is defined in accordance with
ratio the Capital Requirements Regulation (EU) No 575/2013
, as amended by CRR II applicable as at the reporting
date.
Total expenses Total expenses comprise staff costs, other operating
expenses and the special levy on deposits and other
levies/contributions. It does not include (i) 'advisory
and other transformation costs-organic', (ii) restructuring
and other costs relating to NPE sales, or (iii) restructuring
costs relating to the Voluntary Staff Exit Plan,
where applicable. (i) 'Advisory and other transformation
costs-organic' amounted to nil for 3Q2023 (compared
to EUR1 mn for 2Q2023, EUR1 mn for 1Q2023 and to
EUR1 mn for 4Q2022), (ii) Restructuring costs relating
to NPE sales for 3Q2023 amounted to nil (compared
to a gain of EUR0.2 mn for 2Q2023, a loss of EUR0.2
mn for 1Q2023 and to a loss of EUR0.3 mn for 4Q2022),
and (iii) Restructuring costs relating to the Voluntary
Staff Exit Plan (VEP) for 3Q2023 was nil (compared
to nil for 2Q2023, 1Q2023 and 4Q2022).
Total income Total income comprises net interest income and non-interest
income (as defined).
Total loan credit Total loan credit losses, impairments and provisions
losses, impairments comprise loan credit losses (as defined), plus impairments
and provisions of other financial and non-financial assets, plus
provisions for pending litigations, regulatory and
other provisions net of reversals).
Underlying basis This refers to the statutory basis after being adjusted
for reclassification of certain items as explained
in the Basis of Presentation.
Write offs Loans together with the associated loan credit losses
are written off when there is no realistic prospect
of recovery. Partial write-offs, including non-contractual
write-offs, may occur when it is considered that
there is no realistic prospect for the recovery of
the contractual cash flows. In addition, write-offs
may reflect restructuring activity with customers
and are part of the terms of the agreement and subject
to satisfactory performance.
Yoy Year on year change
Basis of Presentation
This announcement covers the results of Bank of Cyprus Holdings
Public Limited Company, "BOC Holdings" or "the Company", its
subsidiary Bank of Cyprus Public Company Limited, the "Bank" or
"BOC PCL", and together with the Bank's subsidiaries, the "Group",
for the nine months ended 30 September 2023.
At 31 December 2016, the Bank was listed on the Cyprus Stock
Exchange (CSE) and the Athens Exchange. On 18 January 2017, BOC
Holdings, incorporated in Ireland, was introduced in the Group
structure as the new holding company of the Bank. On 19 January
2017, the total issued share capital of BOC Holdings was admitted
to listing and trading on the LSE and the CSE.
Financial information presented in this announcement is being
published for the purposes of providing an overview of the Group
financial results for the nine months ended 30 September 2023.
The financial information in this announcement is not audited
and does not constitute statutory financial statements of BOC
Holdings within the meaning of section 340 of the Companies Act
2014. The Group statutory financial statements for the year ended
31 December 2022, upon which the auditors have given an unqualified
opinion, were published on 31 March 2023 and are expected to be
delivered to the Registrar of Companies of Ireland within 56 days
of 30 September 2023. The Board of Directors approved the Group
statutory financial statements for the nine months ended 30
September 2023 on 10 November 2023.
Statutory basis: Statutory information is set out on pages
31-35. However, a number of factors have had a significant effect
on the comparability of the Group's financial position and
performance. Accordingly, the results are also presented on an
underlying basis.
Underlying basis: The financial information presented under the
underlying basis provides an overview of the Group financial
results for the nine months ended 30 September 2023, which the
management believes best fits the true measurement of the financial
performance and position of the Group. For further information,
please refer to 'Commentary on Underlying Basis' on pages 5 and 6.
The statutory results are adjusted for certain items (as described
on page 36) to allow a comparison of the Group's underlying
financial position and performance, as set out on pages 4 and
7.
The financial information included in this announcement is
neither reviewed nor audited by the Group's external auditors.
This announcement and the presentation for the Group Financial
Results for the nine months ended 30 September 2023 have been
posted on the Group's website www.bankofcyprus.com (Group/Investor
Relations/Financial Results).
Definitions: The Group uses definitions in the discussion of its
business performance and financial position which are set out in
section I, together with explanations.
The Group Financial Results for the nine months ended 30
September 2023 are presented in Euro (EUR) and all amounts are
rounded as indicated. A comma is used to separate thousands and a
dot is used to separate decimals.
Forward Looking Statements
This document contains certain forward-looking statements which
can usually be identified by terms used such as "expect", "should
be", "will be" and similar expressions or variations thereof or
their negative variations, but their absence does not mean that a
statement is not forward-looking. Examples of forward-looking
statements include, but are not limited to, statements relating to
the Group's near term, medium term and longer term future capital
requirements and ratios, intentions, beliefs or current
expectations and projections about the Group's future results of
operations, financial condition, expected impairment charges, the
level of the Group's assets, liquidity, performance, prospects,
anticipated growth, provisions, impairments, business strategies
and opportunities. By their nature, forward-looking statements
involve risk and uncertainty because they relate to events, and
depend upon circumstances, that will or may occur in the future.
Factors that could cause actual business, strategy and/or results
to differ materially from the plans, objectives, expectations,
estimates and intentions expressed in such forward-looking
statements made by the Group include, but are not limited to:
general economic and political conditions in Cyprus and other
European Union (EU) Member States, interest rate and foreign
exchange fluctuations, legislative, fiscal and regulatory
developments, information technology, litigation and other
operational risks, adverse market conditions, the impact of
outbreaks, epidemics or pandemics, such as the COVID-19 pandemic.
The Russian invasion of Ukraine has led to heightened volatility
across global markets and to the coordinated implementation of
sanctions on Russia, Russian entities and nationals. The Russian
invasion of Ukraine has caused significant population displacement,
and as the conflict continues, the disruption will likely increase.
The scale of the conflict and the extent of sanctions, as well as
the uncertainty as to how the situation will develop, may have
significant adverse effects on the market and macroeconomic
conditions, including in ways that cannot be anticipated. This
creates significantly greater uncertainty about forward-looking
statements. Should any one or more of these or other factors
materialise, or should any underlying assumptions prove to be
incorrect, the actual results or events could differ materially
from those currently being anticipated as reflected in such
forward-looking statements. The forward-looking statements made in
this document are only applicable as at the date of publication of
this document. Except as required by any applicable law or
regulation, the Group expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statement contained in this document to reflect any
change in the Group's expectations or any change in events,
conditions or circumstances on which any statement is based.
Changes in our reporting frameworks and accounting standards,
including the recently announced reporting changes and the
implementation of IFRS 17 'Insurance Contracts', which may have a
material impact on the way we prepare our financial statements and
(with respect to IFRS 17) may negatively affect the profitability
of Group's insurance business.
Contacts
For further information please contact:
Investor Relations
+ 357 22 122239
investors@bankofcyprus.com
The Bank of Cyprus Group is the leading banking and financial
services group in Cyprus, providing a wide range of financial
products and services which include retail and commercial banking,
finance, factoring, investment banking, brokerage, fund management,
private banking, life and general insurance. At 30 September 2023,
the Bank of Cyprus Group operated through a total of 64 branches in
Cyprus, of which 4 operated as cash offices. The Bank of Cyprus
Group employed 2,913 staff worldwide. At 30 September 2023, the
Group's Total Assets amounted to EUR26.4 bn and Total Equity was
EUR2.4 bn. The Bank of Cyprus Group comprises Bank of Cyprus
Holdings Public Limited Company, its subsidiary Bank of Cyprus
Public Company Limited and its subsidiaries.
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END
QRTBJBFTMTIBMJJ
(END) Dow Jones Newswires
November 13, 2023 02:00 ET (07:00 GMT)
Bank Of Cyprus Holdings ... (LSE:BOCH)
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