TIDMBOCH
RNS Number : 7165R
Bank of Cyprus Holdings PLC
04 March 2019
Announcement
Preliminary Group Financial Results for the year ended 31
December 2018
Nicosia, 4 March 2019
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014.
Key Highlights for the year ended 31 December 2018
Capital Strength into 2019
* CET1 ratio of 15.4% pro forma for DTC and Helix
(12.1% as reported)
* Total Capital ratio of 18.3% pro forma for DTC and
Helix (14.9% as reported)
* SREP 2019 ratios: CET1 of 10.5% and Total Capital of
14.0%, reflecting phasing-in of CCB and O-SII Buffer
* Legislative amendments to convert DTA to DTC approved
on 1 March 2019 result in a more capital efficient
tax asset, releasing EUR285 mn of capital (FL for DTA,
as of 1 Jan 2019)
* DTC conversion to add c.170 bps of capital, Helix to
add c.160 bps of capital (pro forma as at 31 Dec
2018)
Real progress on Balance Sheet repair
* Fifteen consecutive quarters of organic NPE reduction
* NPEs reduced by EUR4.0 bn yoy to EUR4.8 bn, pro forma
for Helix, 68% down since December 2014
* NPE ratio at 36% and coverage at 47% pro forma for
Helix
* Government ESTIA scheme for the resolution of NPEs
backed by primary residence expected to be launched
in 1Q2019. This will positively impact c.EUR900 mn of
NPEs
* Continue to actively explore a number of alternatives
to accelerate de-risking, including further disposals
of NPEs and other non-core assets
Corporate actions unlocking value for shareholders
* Agreement to sell EUR2.7 bn of NPEs (Project Helix);
completion is scheduled around end 1Q / beginning 2Q
2019
* Sale of UK subsidiary, adding 70 bps to capital,
focus now on Cyprus
* Issuance of EUR220 mn AT1 Capital Securities, adding
140 bps to Total Capital ratio
Strong liquidity position
* Significant liquidity surplus of EUR4.4 bn, pro forma
for Helix
* Loan to deposit ratio of 65% pro forma for Helix
* Cyprus deposits stable qoq at EUR16.8 bn
Performance reflects continued derisking
* Total Income of EUR781 mn, Operating profit of EUR381
mn, Underlying profit of EUR140 mn for FY2018
* Loss relating to Helix of EUR150 mn, declining to
c.EUR105 mn by completion as the time value of money
unwinds
* The rapid de-risking of the Bank also resulted in a
4Q2018 impairment of the DTA of EUR79 mn, expected to
be reversed in 1Q2019, following the
recharacterisation of the tax asset to DTC
* The combination of all the above result in a loss
after tax of EUR104 mn for FY2018
Group Chief Executive Statement
"This has been an important year in the transformation of the
Bank and one in which we have made significant progress on a number
of fronts against our objective of balance sheet de-risking and
refocusing the business in supporting the growing Cypriot
economy.
Balance sheet repair was accelerated through the agreement for
the sale of c.EUR2.7 bn non-performing loans in Project Helix. We
have made good progress towards completion, including syndicating
down the Bank's participation in the senior debt to EUR50 mn from
the initial level of EUR450 mn and in so doing, significantly
de-risking the Bank's residual exposure to the portfolio sold. We
expect completion around the end of the first quarter / beginning
of the second quarter of 2019, upon receipt of the required
regulatory approvals from the ECB. We expect these approvals to be
forthcoming.
This portfolio sale complements our organic non-performing
exposure (NPE) reduction, which amounted to EUR1.3 bn for the full
year. During the fourth quarter, we reduced NPEs by EUR217 mn,
broadly in line with the guidance, marking our fifteenth
consecutive quarter of organic reductions in NPEs.
Since the peak in 2014, and including the sale of the Helix
portfolio, we have now reduced the stock of NPEs by 68% to EUR4.8
bn pro forma for Helix, covered by 47% provisioning, above the EU
average. We remain committed to making further material progress in
2019 and to continue supporting a growing Cyprus economy.
We have a clear strategy for continuing the improvement in the
asset quality position of the Bank and to further deal with the
residual c.EUR4.8 bn of non-performing loans. This includes Estia,
a government scheme for the resolution of NPEs backed by primary
residence, expected to be launched around the end of the first
quarter 2019 that will positively impact
c.EUR900 mn of NPEs.
In November, we completed the sale of our UK subsidiary, adding
c.70 bps to our capital ratios. In addition, in December, we issued
EUR220 mn of Additional Tier 1 Capital Securities (AT1), further
strengthening our Total Capital ratio at the year-end by 140
bps.
During the fourth quarter, our deposits in Cyprus remained
broadly stable and we have significant surplus liquidity of EUR3.1
bn as at 31 December 2018, expected to increase to EUR4.4 bn pro
forma for Helix. New lending in Cyprus was EUR1.9 bn in 2018,
exceeding new lending in Cyprus in 2017. We are pleased to have
maintained our leading market position in a strengthening Cypriot
economy, which expanded by 3.9% in 2018. Our loan to deposit ratio
at the year-end stood at 65% pro forma for Helix.
The Bank is well capitalised. As at 31 December 2018 the CET1
ratio (transitional) was 15.4% and the Total Capital ratio was
18.3%, both pro forma for DTC and Helix (12.1% and 14.9% as
reported, respectively).
Following the Supervisory Review and Evaluation Process (SREP)
performed by the ECB in 2018, based on the pre-notifications
received, we expect the SREP requirements to remain unchanged, when
ignoring the phasing-in of the Capital Conservation Buffer and the
Other Systemically Important Institution Buffer.
On 1 March 2019 the Cyprus Parliament adopted legislative
amendments allowing for the conversion of deferred tax assets (DTA)
into deferred tax credits (DTC). These amendments, when they enter
into force, will result in a more efficient capital treatment of
the DTC, under CRD IV, resulting in a CET1 uplift of c.170 bps,
based on 31 December 2018 results.
In 2018, we generated total income of EUR781 mn and a positive
operating result of EUR381 mn. The underlying result for the year
is a profit of EUR140 mn. The impact of Project Helix amounted to a
loss of EUR150 mn in FY2018, expected to decline to c.EUR105 mn by
completion as the time value of money unwinds. The rapid de-risking
of the Bank has also resulted in a partial impairment of the
deferred tax asset of c.EUR80 mn recorded in the fourth quarter,
resulting in a net loss of EUR67 mn, which is expected to be
reversed in the first quarter 2019, post legislative amendments
recharacterising the DTA into DTC. The combination of the above
actions resulted in a loss after tax for the year of EUR104 mn.
Going forward and post the execution of further NPE reduction,
there is an on-going requirement to manage costs.
We are proud of the significant progress we have made this year
against our strategic objectives. We recognise, however, that there
is still much to do, and we remain as focused as ever on continuing
to seek solutions, both organic and inorganic, to make the Bank a
stronger, safer, Cyprus-focused institution, capable of supporting
the local economy."
John Patrick Hourican
A. Preliminary Financial Results - Statutory Basis
Unaudited Consolidated Income Statement for the year ended 31
December 2018
2018 2017 (represented)
EUR000 EUR000
---------- -------------------
Turnover 984,698 1,102,049
========== ===================
Interest income 557,065 723,268
---------- -------------------
Interest similar to interest income 52,054 31,878
---------- -------------------
Interest expense (144,024) (167,223)
---------- -------------------
Expense similar to interest expense (46,042) (44,014)
---------- -------------------
Net interest income 419,053 543,909
---------- -------------------
Fee and commission income 178,907 183,752
---------- -------------------
Fee and commission expense (23,636) (10,211)
---------- -------------------
Net foreign exchange gains 37,688 45,062
---------- -------------------
Net gains on financial instrument transactions
and loss on disposal/dissolution of subsidiaries
and associates 45,235 3,008
---------- -------------------
Insurance income net of claims and commissions 52,912 50,401
---------- -------------------
Net losses from revaluation and disposal of investment
properties (13,275) (4,061)
---------- -------------------
Net gains on disposal of stock of property 31,867 30,447
---------- -------------------
Other income 25,604 19,042
---------- -------------------
754,355 861,349
---------- -------------------
Staff costs (216,740) (205,888)
---------- -------------------
Special levy on deposits on credit institutions
in Cyprus and contribution to Single Resolution
Fund (25,095) (22,846)
---------- -------------------
Other operating expenses (234,891) (275,318)
---------- -------------------
277,629 357,297
---------- -------------------
Net gains on derecognition of financial assets
measured at amortised cost 39,624 173,443
---------- -------------------
Credit losses to cover credit risk on loans and
advances to customers (340,882) (953,498)
========== ===================
Credit losses of other financial instruments (1,610) (6,459)
========== ===================
Impairment of non-financial instruments (18,651) (58,972)
========== ===================
Loss before share of profit from associates (43,890) (488,189)
---------- -------------------
Share of profit from associates 9,095 8,957
---------- -------------------
Loss before tax from continuing operations (34,795) (479,232)
---------- -------------------
Income tax (75,916) (75,573)
---------- -------------------
Loss after tax from continuing operations (110,711) (554,805)
---------- -------------------
Discontinued operations
---------- -------------------
Profit after tax from discontinued operations 7,243 480
---------- -------------------
Loss for the year (103,468) (554,325)
========== ===================
Attributable to:
---------- -------------------
Owners of the Company - continuing operations (110,764) (552,332)
---------- -------------------
Owners of the Company - discontinued operations 7,243 480
---------- -------------------
Total loss attributable to the owners of the
Company (103,521) (551,852)
---------- -------------------
Non-controlling interests - continuing operations 53 (2,473)
---------- -------------------
Loss for the year (103,468) (554,325)
-------------------------------------------------------- ========== ===================
Basic and diluted losses per share attributable
to the owners of the Company
(EUR cent) - continuing operations (24.8) (123.8)
========== ===================
Basic and diluted losses per share attributable
to the owners of the Company
(EUR cent) (23.2) (123.7)
========== ===================
Unaudited Consolidated Balance Sheet as at 31 December 2018
2018 2017
Assets EUR000 EUR000
----------- -----------
Cash and balances with central banks 4,610,491 3,393,934
----------- -----------
Loans and advances to banks 472,532 1,192,633
----------- -----------
Derivative financial assets 24,754 18,027
----------- -----------
Investments 777,232 830,483
----------- -----------
Investments pledged as collateral 737,459 290,129
----------- -----------
Loans and advances to customers 10,921,786 14,602,454
----------- -----------
Life insurance business assets attributable
to policyholders 402,565 429,890
----------- -----------
Prepayments, accrued income and other assets 256,001 226,105
----------- -----------
Stock of property 1,530,389 1,641,422
----------- -----------
Investment properties 24,475 19,646
----------- -----------
Property and equipment 260,723 279,814
----------- -----------
Intangible assets 170,411 165,952
----------- -----------
Investments in associates and joint ventures 114,637 118,113
----------- -----------
Deferred tax assets 301,778 383,498
----------- -----------
Non-current assets and disposal group classified
as held for sale 1,470,038 6,500
----------- -----------
Total assets 22,075,271 23,598,600
=========== ===========
Liabilities
----------- -----------
Deposits by banks 431,942 495,308
----------- -----------
Funding from central banks 830,000 930,000
----------- -----------
Repurchase agreements 248,945 257,322
----------- -----------
Derivative financial liabilities 38,983 50,892
----------- -----------
Customer deposits 16,843,558 17,849,919
----------- -----------
Insurance liabilities 591,057 605,448
----------- -----------
Accruals, deferred income and other liabilities 263,146 306,227
----------- -----------
Pending litigation, claims, regulatory and other
matters 116,951 138,375
----------- -----------
Subordinated loan stock 270,930 302,288
----------- -----------
Deferred tax liabilities 44,282 46,113
----------- -----------
Non-current liabilities and disposal group held 5,812 -
for sale
----------- -----------
Total liabilities 19,685,606 20,981,892
----------- -----------
Equity
----------- -----------
Share capital 44,620 44,620
----------- -----------
Share premium 1,294,358 2,794,358
----------- -----------
Revaluation and other reserves 190,411 273,708
----------- -----------
Retained earnings/(accumulated losses) 591,941 (527,128)
----------- -----------
Equity attributable to the owners of the Company 2,121,330 2,585,558
----------- -----------
Other equity instruments 220,000 -
----------- -----------
Total equity excluding non-controlling interests 2,341,330 2,585,558
----------- -----------
Non-controlling interests 48,335 31,150
----------- -----------
Total equity 2,389,665 2,616,708
----------- -----------
Total liabilities and equity 22,075,271 23,598,600
=========== ===========
B. Preliminary Financial Results - Underlying Basis
Unaudited Consolidated Income Statement
----------------------------------------------------------------------------------------------------------------------
(FY)
FY2017 2Q2018 1Q2018 (4q vs Yoy(2)
EUR mn FY2018 represented(2) 4Q2018 3Q2018 represented(2) represented(2) 3q) +% +%
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Net interest income 452 544 112 113 114 113 -2% -17%
Net fee and commission
income 166 174 43 43 41 39 3% -4%
Net foreign exchange
gains and net gains
on financial
instrument
transactions and loss
on
disposal/dissolution
of subsidiaries and
associates 66 48 14 10 13 29 28% 37%
Insurance income net
of claims and
commissions 53 50 15 13 13 12 22% 5%
Net gains/(losses)
from revaluation and
disposal of investment
properties and on
disposal of stock
of properties 18 26 3 (6) 2 19 - -30%
Other income 26 19 9 6 5 6 37% 34%
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Total income 781 861 196 179 188 218 9% -9%
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Staff costs (217) (205) (59) (53) (53) (52) 10% 6%
Other operating
expenses (158) (154) (44) (34) (43) (37) 26% 3%
Special levy and
contribution
to Single Resolution
Fund (25) (23) (7) (6) (5) (7) 10% 10%
Total expenses (400) (382) (110) (93) (101) (96) 16% 5%
-------- -------------- ------- ------ --------------- --------------- -------
Operating profit 381 479 86 86 87 122 1% -21%
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Provision charge (168) (780) (40) (29) (41) (58) 37% -78%
(Impairments)/reversal
of impairments of
other financial and
non-financial assets (20) (65) (7) 1 (6) (8) - -69%
(Provisions)/reversal
of provisions for
litigation, regulatory
and other matters (23) (93) (13) (15) 7 (2) -4% -75%
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Total provisions and
impairments (211) (938) (60) (43) (40) (68) 45% -78%
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Share of profit from
associates 9 9 0 4 3 2 -67% 2%
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Profit/(loss) before
tax and non-recurring
items 179 (450) 26 47 50 56 -44% -
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Tax 3 (14) 7 0 (0) (4) - -
(Profit)/loss
attributable
to non-controlling
interests (0) 3 (3) 1 0 2 - -
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Profit/(loss) after
tax and before
non-recurring
items 182 (461) 30 48 50 54 -36% -
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Advisory and other
restructuring costs
- excluding
discontinued
operations and NPE
sale (Helix) (42) (29) (16) (11) (7) (8) 56% 43%
Profit/(loss) after
tax - Organic 140 (490) 14 37 43 46 -62% -
-------- -------------- ------- ------ --------------- --------------- -------
Profit/(loss) from
discontinued
operations
(UK) 3 0 (1) (0) 1 3 8% -
Restructuring costs
relating to NPE sale
(Helix) (18) - (1) (5) (6) (6) -66% -
Loss relating to NPE
sale (Helix) (150) - - (15) (135) - - -
Impairment of DTA (79) (62) (79) - - - - 27%
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
(Loss)/profit after
tax (104) (552) (67) 17 (97) 43 - -81%
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
B. Preliminary Financial Results - Underlying Basis
Unaudited Consolidated Income Statement - Key Performance Ratios
----------------------------------------------------------------------------------------------------------------------
(FY)
FY2017 2Q2018 1Q2018 (4q vs Yoy(2)
Key Performance Ratios FY2018 represented(2) 4Q2018 3Q2018 represented(2) represented(2) 3q) + +
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Net Interest Margin
(annualised)(1) 2.48% 3.10% 2.39% 2.47% 2.54% 2.56% -8 bps -62 bps
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Cost to income ratio 51% 44% 56% 52% 54% 44% +4 p.p. +7 p.p.
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Cost to income ratio
excluding special
levy and contribution
to Single Resolution
Fund 48% 42% 52% 49% 51% 41% +3 p.p. +6 p.p.
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Operating profit return
on average assets -0.5
(annualised)(1) 1.8% 2.3% 1.6% 1.6% 1.6% 2.3% - p.p.
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Basic earnings/(losses)
per share attributable
to the owners of the
Company - Organic
(EUR cent) 31.45 (109.93) 3.12 8.27 9.59 10.48 (5.15) 141.38
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
Basic (losses)/earnings
per share attributable
to the owners of the
Company (EUR cent) (23.21) (123.72) (14.93) 3.84 (21.79) 9.67 (18.77) 100.51
----------------------- -------- -------------- ------- ------ --------------- --------------- ------- -------
1. Ignoring the classification of the Helix portfolio of EUR1,148 mn (NBV)
and of the Velocity portfolio of EUR6 mn (NBV) as disposal groups held for
sale. 2. Represented for the disposal of the UK subsidiary
p.p. = percentage points, bps = basis points, 100 basis points (bps) = 1
percentage point
Commentary on Underlying Basis
Reclassifications to comparative information were made to
conform to current year presentation. Provisions for pending
litigation, claims, regulatory and other matters were reclassified
from other 'Accruals deferred income and other liabilities' to the
face of the consolidated balance sheet. In addition, investments
previously classified in 'Life insurance business assets
attributable to policyholders' totalling EUR91 mn were reclassified
to 'Investments' and an amount of EUR2 mn was reclassified from
'Prepayments, accrued income and other assets' to 'Life insurance
assets attributable to policyholders'. Furthermore, the results of
the discontinued operations in the UK were represented as
discontinued operations. The reclassifications and representation
did not have an impact on the results for the year or the equity of
the Group.
Unaudited Consolidated Balance Sheet
========================================================================================================
EUR mn 31.12.2018 31.12.2017 +%
================================================== ============== =========== =========== ==========
Cash and balances with central banks 4,610 3,394 36%
Loans and advances to banks 473 1,193 -60%
Debt securities, treasury bills and equity
investments 1,515 1,121 35%
Net loans and advances to customers 10,922 14,602 -25%
Stock of property 1,530 1,641 -7%
Other assets 1,555 1,641 -5%
Non-current assets and disposal group
classified as held for sale 1,470 7 -
================================================== ============== =========== =========== ==========
Total assets 22,075 23,599 -6%
================================================== ============== =========== =========== ==========
Deposits by banks 432 495 -13%
Funding from central banks 830 930 -11%
Repurchase agreements 249 257 -3%
Customer deposits 16,844 17,850 -6%
Subordinated loan stock 271 302 -10%
Other liabilities 1,060 1,148 -8%
================================================== ============== =========== =========== ==========
Total liabilities 19,686 20,982 -6%
================================================== ============== =========== =========== ==========
Shareholders' equity 2,341 2,586 -9%
================================================== ============== =========== =========== ==========
Non-controlling interests 48 31 55%
================================================== ============== =========== =========== ==========
Total equity 2,389 2,617 -9%
================================================== ============== =========== =========== ==========
Total liabilities and equity 22,075 23,599 -6%
================================================== ============== =========== =========== ==========
31.12.2018
Key Balance Sheet figures and ratios before(1) 31.12.2018 31.12.2017 +(1)
================================================== ============== =========== =========== ==========
Gross loans (EUR mn) 15,900 13,148 18,755 -15%
================================================== ============== =========== =========== ==========
Accumulated provisions (EUR mn) 3,852 2,254 4,204 -8%
================================================== ============== =========== =========== ==========
Customer deposits (EUR mn) 16,844 16,844 17,850 -6%
================================================== ============== =========== =========== ==========
Loans to deposits ratio (net) 72% 65% 82% -10 p.p.
================================================== ============== =========== =========== ==========
NPE ratio 47% 36% 47% 0 p.p.
================================================== ============== =========== =========== ==========
NPE provisioning coverage ratio 52% 47% 48% +4 p.p.
================================================== ============== =========== =========== ==========
Leverage ratio 10.1% 10.1% 10.4% -0.3 p.p.
================================================== ============== =========== =========== ==========
Capital ratios and risk weighted assets 31.12.2018 31.12.2018 31.12.2017 +
pro forma(2)
================================================== ============== =========== =========== ==========
Common Equity Tier 1 (CET1) ratio (transitional) 15.4% 12.1% 12.7% -60 bps
================================================== ============== =========== =========== ==========
CET1 FL (allowing for IFRS 9 transitional
arrangements)(3) 15.4% 11.9% 12.2% -30 bps
================================================== ============== =========== =========== ==========
Total capital ratio 18.3% 14.9% 14.2% +70 bps
================================================== ============== =========== =========== ==========
Risk weighted assets (EUR mn) 14,015 15,372 17,260 -11%
================================================== ============== =========== =========== ==========
p.p. = percentage points, bps = basis points, 100 basis points (bps) =
1 percentage point; 1. Ignoring the classification of the Helix portfolio
of EUR1,148 mn (NBV) and of the Velocity portfolio of EUR6 mn (NBV) as
disposal groups held for sale. 2. Pro forma for DTC and Helix. 3. The
CET1 FL ratio for 31 December 2018, including the full impact of IFRS
9, amounts to 10.1% and 13.5% pro forma for DTC and Helix.
B.1. Unaudited reconciliation of the Income Statement for the
year ended 31 December 2018 between statutory and underlying
bases
EUR mn Underlying Reclassification Statutory
Basis Basis
Net interest income 452 (33) 419
=========== ================= ==========
Net fee and commission
income 166 (11) 155
=========== ================= ==========
Net foreign exchange
gains and net gains
on financial instrument
transactions and loss
on disposal/dissolution
of subsidiaries and
associates 66 17 83
=========== ================= ==========
Insurance income net
of claims and commissions 53 - 53
=========== ================= ==========
Net gains from revaluation
and disposal of investment
properties and on disposal
of stock of properties 18 - 18
=========== ================= ==========
Other income 26 - 26
----------- ----------------- ----------
Total income 781 (27) 754
=========== ================= ==========
Staff costs (217) - (217)
=========== ================= ==========
Other operating expenses (158) (77) (235)
=========== ================= ==========
Special levy and contribution
to Single Resolution
Fund (25) - (25)
----------- ----------------- ----------
Total expenses (400) (77) (477)
----------- ----------------- ----------
Operating profit 381 (104) 277
=========== ================= ==========
Provision charge (168) (133) (301)
=========== ================= ==========
Impairments of other
financial and non-financial
assets (20) - (20)
=========== ================= ==========
Provisions for litigation,
regulatory and other
matters (23) 23 -
----------- ----------------- ----------
Total provisions and
impairments (211) (110) (321)
=========== ================= ==========
Share of profit from
associates 9 - 9
----------- ----------------- ----------
Profit/(loss) before
tax and non-recurring
items 179 (214) (35)
=========== ================= ==========
Tax 3 (79) (76)
=========== ================= ==========
(Profit)/loss attributable - - -
to non-controlling interests
----------- ----------------- ----------
Profit/(loss) after
tax and before non-recurring
items 182 (293) (111)
=========== ================= ==========
Advisory and other restructuring
costs - excluding discontinued
operations and NPE sale
(Helix) (42) 42 -
----------- ----------------- ----------
Profit/(loss) after
tax - Organic 140 (251) (111)
=========== ================= ==========
Profit from discontinued
operations (UK) 3 4 7
=========== ================= ==========
Restructuring costs
relating to NPE sale
(Helix) (18) 18 -
=========== ================= ==========
Loss relating to NPE
sale (Helix) (150) 150 -
=========== ================= ==========
Impairment of DTA (79) 79 -
----------- ----------------- ----------
Loss after tax (104) - (104)
----------- ----------------- ----------
The reclassification differences between the statutory and
underlying bases mainly relate to the impact from the
'non-recurring items', that is the NPE sale (Helix) and related
restructuring costs and items associated with the classification of
the UK as discontinued operations, as well as the impairment of the
deferred tax asset. In detail:
-- Net interest income includes EUR32.5 mn unrecognised interest
on previously credit impaired loans which have cured during the
year. For statutory reporting purposes, this amount is presented
within "Credit losses to cover credit risk on loans and advances to
customers".
-- EUR11.2 mn fee and commission expense on the amounts
deposited in regards to the AT1 issue disclosed within 'Advisory
and other restructuring costs - excluding NPE sale (Helix)' under
the underlying basis.
-- 'Net foreign exchange gains and net gains on financial instrument transactions and loss on disposal/dissolution of subsidiaries and associates' under the statutory basis include an amount of EUR16.1 mn relating to net gains on loans and advances to customers measured at fair value through profit or loss (FVPL) disclosed within 'Provisions charge' under the underlying basis. Additionally, it includes EUR3.8 mn relating to the UK disclosed within discontinued operations in the underlying basis.
-- 'Restructuring costs relating to NPE sale (Helix)' of EUR18.4
mn, 'Provisions for litigation, regulatory and other matters' of
EUR22.8 mn and 'Advisory and other restructuring costs-excluding
the NPE sale (Helix)' of EUR32.2 mn disclosed as expenses under the
statutory basis are shown separately under the underlying basis
(from the total of EUR32.2 mn around EUR1.3 mn relates to
restructuring costs on the disposal of the UK group therefore is
classified as discontinued operations in the underlying basis).
-- Additionally EUR3.6 mn for UK regulatory matters included
within expenses in the statutory basis, are disclosed within
discontinued operations in the underlying basis.
-- The loss of disposal of Helix of EUR149.8 mn disclosed within
'Provisions charge' under the statutory basis is separately
disclosed under the underlying basis.
-- Impairments of other financial instruments relating to UK of
EUR2.7 mn is classified as a cost on discontinued operations per
the underlying basis.
-- Finally, the impairment of deferred tax asset of EUR79 mn
included within Tax in the statutory basis is classified as a
non-recurring item and disclosed within 'Impairment of DTA' under
the underlying basis.
B.2. Balance Sheet Analysis
B.2.1 Capital Base
Shareholders' equity totalled EUR2,341 mn at 31 December 2018,
compared to EUR2,206 mn at 30 September 2018 and to EUR2,586 mn at
31 December 2017. The Common Equity Tier 1 capital (CET1) ratio
(transitional basis) stood at 12.1% at 31 December 2018, compared
to 11.9% at 30 September 2018 and 12.7% at 31 December 2017. During
4Q2018 the CET1 ratio was positively affected by the reduction in
risk-weighted assets. Adjusting for Deferred Tax Assets, the CET1
ratio on a fully-loaded basis (IFRS 9 transitional) totalled 11.9%
at 31 December 2018, compared to 11.6% at 30 September 2018 and
12.2% at 31 December 2017.
The Group has 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 is phased-in gradually. The amount
added each year decreases based on a weighting factor until the
impact of IFRS 9 is fully absorbed at the end of the five years.
For the year 2018 the impact on the capital ratios is 5% of the
impact on the impairment amounts from the initial application of
IFRS 9, increasing to 15% (cumulative) for the year 2019. The CET1
ratio on a fully-loaded basis (including the full impact of IFRS 9)
amounts to 10.1% at 31 December 2018 (and 13.5% pro forma for DTC
and Helix), compared to 9.7% at 30 September 2018 (and 10.9% pro
forma for Helix). On a transitional basis and on a fully phased-in
basis after the five year period of transition is complete, the
impact of IFRS 9 is expected to be manageable and within the
Group's capital plans.
As at 31 December 2018, the Total Capital ratio stood at 14.9%,
compared to 13.4% at 30 September 2018 and 14.2% at 31 December
2017.
The Group's capital ratios are above the minimum CET1 regulatory
capital ratio of 9.375%, comprising a 4.50% Pillar I requirement, a
3.00% Pillar II requirement and a phased-in CCB of 1.875% and the
overall Total Capital Ratio requirement of 12.875%, comprising a
Pillar I requirement of 8.00% (of which up to 1.5% can be in the
form of Additional Tier 1 capital and up to 2.0% in the form of
Tier 2 capital), a Pillar II requirement of 3.00% (in the form of
CET1), as well as a phased-in CCB of 1.875%.
In accordance with the provisions of the Macroprudential
Oversight of Institutions Law of 2015, 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. The Group has been designated as an O-SII and the O-SII
buffer currently set by the CBC for the Group is 2%. This buffer
will be phased-in gradually, starting from 1 January 2019 at 0.5%
and increasing by 0.5% every year thereafter, until being fully
implemented (2.0%) on 1 January 2022.
Following the Annual Supervisory Review and Evaluation Process
(SREP) performed by the ECB in 2018 and based on the
pre-notification received in February 2019, the Group's minimum
phased-in CET1 capital ratio and Total Capital ratio remain
unchanged, when ignoring the phasing-in of the Capital
Conservations Buffer and the Other Systemically Important
Institution Buffer. The Group's phased-in CET1 capital ratio is
expected to be 10.5%, comprising a 4.5% Pillar I requirement, a
3.0% Pillar II requirement, the Capital Conservation Buffer of 2.5%
and the Other Systemically Important Institution Buffer of 0.5%.
The Group's Total Capital requirement is expected to be 14.0%,
comprising an 8.0% Pillar I requirement, a 3.0% Pillar II
requirement, the Capital Conservation Buffer of 2.5% and the Other
Systemically Important Institution Buffer of 0.5%. The new SREP
requirements are expected to be effective from March 2019 and
remain subject to ECB final confirmation. The Group CET1 ratio
remains above these requirements.
The EBA final guidelines on Supervisory Review and Evaluation
Process (SREP) and supervisory stress testing in July 2018 and the
Single Supervisory Mechanism's (SSM) 2018 SREP methodology provide
that CET1 held for the purposes of Pillar II add-ons cannot be used
to meet any other capital requirements (Pillar 1, P2R or the
combined buffer requirements), and therefore cannot be used twice.
Such restrictions are, however, only expected to apply with effect
from the 2019 SREP cycle. Pillar II add-ons derive from the Group's
individual capital guidance, which is a point in time assessment
made in the context of the SREP process and, accordingly, they may
vary over time.
Sale of Bank of Cyprus UK Limited (BOC UK)
In November 2018, the Company completed the sale of its wholly
owned subsidiary bank in the UK, Bank of Cyprus UK Limited ('BOC
UK') and its subsidiary Bank of Cyprus Financial Services Limited
('BOC FS', and together the 'UK Group'), following receipt of the
necessary regulatory approvals from the Prudential Regulation
Authority and the European Central Bank. The transaction has had an
overall positive impact on the Group capital ratios of c.70
bps.
Additional Tier 1
In December 2018, the Company proceeded with the issuance and
settlement of EUR220 mn of Additional Tier 1 Capital Securities
(the 'Capital Securities'), which had been priced in August 2018,
after obtaining the consent of the ECB for the reduction of capital
and the approval of the Irish Court for the reclassification of the
share premium to distributable reserves, pursuant to section 85(1)
of the Companies Act 2014 of Ireland. This reclassification had
been approved at the Company's Annual General Meeting in August
2018. The reduction of capital did not have any impact on
regulatory capital or the total equity position of the Company, the
Bank or the Group.
The distributable reserves created provide the basis for the
calculation of distributable items under the Capital Requirements
Regulation (EU) No. 575/2013 ('CRR'), which provides that coupons
on AT1 capital instruments may only be funded from distributable
items. Distributable items for the purposes of the CRR are
determined, in part, by reference to distributable reserves. The
Company is currently subject to a prohibition on dividend
distributions. However, such prohibition does not apply to the
payment of coupons on any AT1 capital instruments issued by the
Company.
The proceeds of the issue have been on-lent by the Company to
the Bank. The on-loan constitutes Additional Tier 1 capital for the
Bank. The issuance has increased the Total Capital Ratio by c.140
bps to 14.9% as at 31 December 2018.
Subsequent to the issuance, the Capital Securities were admitted
to the official list of the Luxembourg Stock Exchange (LuxSE) and
to trading on the Euro MTF market of the LuxSE.
Project Helix
In August 2018, the Company reached an agreement for the sale of
a portfolio (the 'Portfolio') of loans with a gross book value of
EUR2.8 bn as at 30 June 2018 (of which EUR2.7 bn related to
non-performing exposures (NPEs)) secured by real estate collateral
(known as 'Project Helix', or the 'Transaction'). The gross book
value of EUR2.8 bn included properties of EUR39 mn as at 30 June
2018 that will also be transferred to the buyer. The Portfolio will
be transferred to a licensed Cypriot Credit Acquiring Company (the
'CyCAC') by the Bank. As at 31 December 2018, the Helix portfolio
included loans with gross book value of EUR2.7 bn (of which EUR2.6
bn related to NPEs) secured by real estate collateral, and
properties of
EUR74 mn (compared to properties of EUR60 mn as at 30 September
2018).
At completion, the Bank will receive gross cash consideration of
c.EUR1.4 bn. Subject to regulatory approval, the Bank's
participation in the senior debt in relation to such financing has
been syndicated down to EUR50 mn, from the initial level of EUR450
mn, significantly de-risking the Bank's residual exposure to the
portfolio sold.
The completion of the Transaction remains subject to a number of
conditions precedent, including mainly regulatory and other
approvals, including the ECB agreeing to a Significant Risk
Transfer ('SRT') benefit from the Transaction. Completion is
expected around the end of 1Q2019 / early 2Q2019.
The impact from this Transaction on the CET1 ratio is a decrease
of c.80 bps relating to the accounting loss (including transaction
costs) of c.EUR150 mn for FY2018, declining to c.EUR105 mn as the
time value of money of c.EUR45 mn unwinds to completion. On
completion, the derecognition of the Helix portfolio is expected to
have a positive impact on the CET1 ratio of 160 bps, resulting from
the release of risk weighted assets.
All relevant figures and pro forma calculations are based on 31
December 2018 financial results, unless otherwise stated.
Calculations on a pro forma basis assume completion of the
Transaction and SRT benefit from Helix, which as at the date of
this announcement has not been approved by the ECB.
Legislative amendments for the conversion of DTA to DTC
A conversion of DTA to DTC was adopted by Parliament on 1 March
2019. The law amendment covers the losses transferred from Laiki
Bank to the Bank in March 2013. The introduction of CRD IV in
January 2014 and its subsequent phasing-in led to a more capital
intensive treatment of this DTA for the Bank.
The law amendment, when it enters into force, will result in
improved regulatory capital treatment, under CRD IV, of the
deferred tax asset amounting to EUR250 mn or a CET1 uplift of 170
bps (transitional basis) as at 31 December 2018. The improvement in
the regulatory capital ratios as of 1 January 2019 amounts to
EUR285 mn or a CET1 uplift of 190 bps (fully loaded basis). This
improvement includes the impact from a reversal of impairment of
the related DTA of EUR108 mn recorded in prior periods.
Pro forma capital ratios
The CET1 ratio (transitional basis) of 12.1% as at 31 December
2018 improves to 15.4% pro forma for DTC and Helix. The Total
Capital ratio of 14.9% as at 31 December 2018 improves to 18.3% pro
forma for DTC and Helix.
B.2.2 Funding and Liquidity
Funding
Funding from Central Banks
At 31 December 2018, the Bank's funding from central banks
amounted to EUR830 mn, which relates to ECB funding, (compared to
ECB funding of EUR830 mn at 30 September 2018 and EUR930 mn at 31
December 2017), comprising solely of funding through the Targeted
Longer-Term Refinancing Operations (TLTRO II).
The Bank fully repaid ELA in January 2017.
Deposits
Group customer deposits totalled EUR16,844 mn at 31 December
2018, compared to EUR16,850 mn at 30 September 2018 and EUR17,850
mn at 31 December 2017. Group customer deposits decreased by 6%
yoy, reflecting the disposal of the UK subsidiary.
Cyprus deposits remained broadly flat qoq and increased by 5%
yoy to EUR16,844 mn at 31 December 2018 (compared to EUR15,983 mn
at 31 December 2017) accounting for 100% of Group customer
deposits, after the disposal of the UK subsidiary at the end of
3Q2018. The 11% increase in local deposits in FY2018 offsets the
11% reduction in deposits of International Business Units (IBUs) in
the same period.
The Bank's deposit market share in Cyprus reached 36.0% at 31
December 2018 (compared to 36.3% at 30 September 2018, on the same
basis). Customer deposits accounted for 76% of total assets at 31
December 2018.
The Loan to Deposit ratio (L/D) stood at 72% at 31 December 2018
when ignoring the classification of the Helix portfolio as a
disposal group held for sale, at the same levels as at 30 September
2018 and 82% at 31 December 2017, compared to a high of 151% at 31
March 2014. Post NPEs sales (Helix and Velocity), the L/D ratio is
reduced by a further 7 p.p to 65%.
Subordinated Loan Stock
At 31 December 2018 the Bank's subordinated loan stock
(including accrued interest) amounted to EUR271 mn (compared to
EUR264 mn as at 30 September 2018 and EUR302 mn as at 31 December
2017) and relates to unsecured subordinated Tier 2 Capital Notes of
nominal value EUR250 mn, issued by the Bank in January 2017.
The Bank's subordinated loan stock as at 31 December 2017 of
EUR302 mn included an unsecured and subordinated Tier 2 Capital
Loan of nominal value GBP30 mn issued in December 2017 by the
Bank's subsidiary in the UK.
B.2.2 Funding and Liquidity
Liquidity
At 31 December 2018 the Group Liquidity Coverage Ratio (LCR)
stood at 231% (compared to 220% at 30 September 2018, and 190% at
31 December 2017) and was in compliance with the minimum regulatory
requirement of 100%.
The Net Stable Funding Ratio (NSFR ratio) was not introduced on
1 January 2018, as opposed to what was expected. It will become a
regulatory indicator when CRR2 is enforced with the limit set at
100%. At 31 December 2018, the Group's NSFR, on the basis of Basel
standards, stood at 119% (compared to 117% at 30 September 2018 and
111% at 31 December 2017).
In accordance with the Capital Requirements Regulation (CRR),
the local regulatory liquidity requirements set by the Central Bank
of Cyprus (CBC) were abolished on 1 January 2018. The CBC
introduced a macro-prudential measure in the form of a liquidity
add-on imposed on top of the LCR requirement of the Bank, which
became effective on 1 January 2018 until 31 December 2018. The
objective of the measure was to ensure that there was going to be a
gradual release of the excess liquidity in the Cyprus market
arising from the lower liquidity requirements under the LCR
compared to the ones under the local regulatory liquidity
requirements previously in place. The add-on applied stricter
outflow and inflow rates on some of the parameters used in the
calculation of the LCR, as well as additional liquidity
requirements in the form of outflow rates on items that are not
subject to outflow rates under the LCR. The measure was implemented
in two stages, the first stage was applicable from 1 January 2018
until 30 June 2018 and the second stage from 1 July 2018 until 31
December 2018, with a reduction of 50% of the add-on rates from 1
July 2018. The LCR add-on was fully abolished on 1 January 2019. As
at 31 December 2018, the Bank was in compliance with the LCR
including the add-on, which stood at 171%.
B.2.3 Loans
Group gross loans totalled EUR15,900 mn at 31 December 2018,
compared to EUR16,201 mn at 30 September 2018 and EUR18,755 mn at
31 December 2017. Gross loans in Cyprus totalled EUR15,702 mn at 31
December 2018 and accounted for 99% of Group gross loans.
The remaining UK operations as at 31 December 2018 included
gross loans in the UK amounting to EUR11 mn, compared to EUR1,621
mn at 31 December 2017. The exposures remaining post the sale of
BOC UK are expected to be run down over time and have been
categorised as non-core overseas exposures as of 30 September
2018.
New loan originations for the Group reached EUR2,231 mn for
FY2018, at the same levels as new lending in FY2017. New loans
granted in Cyprus reached EUR1,870 mn for FY2018, exceeding new
lending in Cyprus for FY2017.
At 31 December 2018, the Group net loans and advances to
customers totalled EUR10,922 mn (compared to EUR14,602 mn at 31
December 2017).
In addition, at 31 December 2018, net loans and advances to
customers of EUR1,148 mn were classified as a disposal group held
for sale in line with IFRS 5 and relate to Helix, compared to
EUR1,184 mn at 30 September 2018, EUR1,239 mn at 30 June 2018 and
EURNil at 31 December 2017. Moreover, at 31 December 2018, net
loans and advances to customers of EUR6 mn were classified as a
disposal group held for sale in line with IFRS 5 and relate to
Project Velocity.
The Bank is the single largest credit provider in Cyprus with a
market share of 45.4% at 31 December 2018, at the same levels as at
30 September 2018 and 38.6% as at 30 June 2018. The market share on
loans was affected as at 30 September 2018 following a decrease in
total loans in the banking sector, mainly attributed to EUR6 bn
non-performing loans of Cyprus Cooperative Bank (CyCB) which
remained to SEDIPES as a result of the agreement between CyCB and
Hellenic Bank.
B.2.4 Loan portfolio quality
Tackling the Group's loan portfolio quality remains the top
priority for management. The Group continues to make steady
progress across all asset quality metrics and the loan
restructuring activity continues. The Group has been successful in
engineering restructuring solutions across the spectrum of its loan
portfolio.
Non-performing exposures (NPEs) as defined by the European
Banking Authority (EBA) were reduced by EUR203 mn or 3% during
4Q2018 to EUR7,419 mn at 31 December 2018, accounting for 47% of
gross loans (ignoring the classification of the Helix (and
Velocity) portfolio as a disposal group held for sale), compared to
47% at 30 September 2018 on the same basis, and compared to 43% at
30 June 2018 and 47% at 31 December 2017, on the same basis with
respect to Helix (and Velocity), but before the disposal of the UK
operations. The organic reduction of NPEs in 4Q2018 on the residual
portfolio was EUR217 mn, in line with the guidance. This included
an amount of EUR99 mn, which relates to a reclassification between
gross loans and accumulated provisions on loans and advances to
customers classified as a disposal group held for sale.
The provisioning coverage ratio of NPEs stood at 52% at 31
December 2018 (ignoring the classification of the Helix (and
Velocity) portfolio as a disposal group held for sale), compared to
52% at 30 September 2018 on the same basis, and compared to 52% at
30 June 2018 and 48% at 31 December 2017, on the same basis with
respect to Helix (and Velocity), but before the disposal of the UK
operations.
When taking into account tangible collateral at fair value, NPEs
are fully covered.
30.09.2018(1)
31.12.2018(1)
% of gross % of gross
EUR mn loans EUR mn loans
==================================== ====== ========== ====== ==========
NPEs as per EBA definition 7,419 46.7% 7,622 47.0%
Of which, in pipeline to exit:
- NPEs with forbearance measures,
no arrears(2) 1,211 7.6% 1,283 7.9%
1. Ignoring the classification of the Helix portfolio of EUR1,148
mn (NBV) and of the Velocity portfolio of EUR6 mn (NBV) as
disposal groups held for sale. 2. The analysis is performed
on a customer basis.
Overall, the Group has recorded significant organic NPE
reductions for fifteen consecutive quarters and expects the organic
reduction of residual NPEs (post Helix) to continue during the
coming quarters at a pace of c.EUR200 mn per quarter, as portfolio
size and business line mix is expected to change radically.
Project Helix
During 2018, in addition to the organic reduction of NPEs, the
Group accelerated balance sheet de-risking through reaching an
agreement in August 2018 for the sale of a portfolio of loans (the
'Portfolio') with a gross book value of EUR2.8 bn (of which EUR2.7
bn relate to non-performing loans as at 30 June 2018), secured by
real estate collateral ('NPLs') (known as 'Project Helix', or the
'Transaction'). The Portfolio had a contractual balance of c.EUR5.7
bn as at 31 March 2018.
The Transaction is the first NPL disposal by the Bank and
represents a significant milestone in the delivery of the Bank's
strategy of improving asset quality through the reduction of
NPEs.
Following the completion of Project Helix, the Bank's gross NPEs
will be 68% lower than its peak in 2014.
Project Helix reduces the NPE ratio by c.11 p.p. to 36% as at 31
December 2018. Ignoring the classification of the Helix (and
Velocity) portfolios as disposal groups held for sale, the NPE
ratio is 47%, including the impact from the UK sale (+5 p.p.).
The NPE provision coverage as at 31 December 2018 is 47%,
compared to 49% as at 30 September 2018. The drop of 2 p.p. is
mainly due to increased NPE inflows in 4Q2018 due to the 'unlikely
to pay' (UTP) criteria, as well as the settlement and agreement for
sale of high coverage exposures. Ignoring the classification of the
Helix (and Velocity) portfolios as disposal groups held for sale,
the NPE provision coverage is 52%.
The completion of the Transaction remains subject to a number of
conditions precedent, including mainly regulatory and other
approvals, including the ECB agreeing to a SRT benefit from the
Transaction.
All relevant figures and pro forma calculations are based on 31
December 2018 financial results, unless otherwise stated.
Calculations on a pro forma basis assume completion of the
Transaction and SRT benefit from Helix, which as at the date of
this announcement has not been approved by the ECB.
ESTIA
In July 2018, the Government announced a scheme aimed at
addressing NPEs backed by primary residence, known as ESTIA. This
Scheme is expected to positively impact c.EUR0.9 bn of retail core
NPEs, subject to eligibility criteria and participation rate. This
Estia eligible portfolio refers to the potentially eligible
portfolio based on the Bank's available data. Eligibility criteria
relate primarily to the Open Market Value (OMV) of the residence,
total income and net wealth of the household. These will act as a
clear definition of socially protected borrowers, acting as an
enabler against strategic defaulters. In accordance with the
Scheme, the eligible loans are to be restructured to the lower of
contractual and OMV, and the Government to subsidise one third of
the instalment. The terms of the Scheme are subject to finalisation
and the Scheme is expected to be launched around the end of
1Q2019.
Project Velocity
In December 2018, the Bank entered into an agreement with APS
Delta s.r.o, to sell a non-performing loan portfolio of primarily
retail unsecured exposures, with a contractual balance of EUR245 mn
and a gross book value of EUR34 mn as at 30 September 2018 (known
as "Project Velocity" or the "Sale"). This portfolio comprises of
9,700 heavily delinquent borrowers, including 8,800 private
individuals and 900 small-to-medium-sized enterprises. The gross
book value of this portfolio as at 31 December 2018 was EUR33
mn.
The Sale is expected to be neutral to both the profit and loss
account and to capital. The Sale is subject to the necessary
approvals and is expected to be completed within 2Q2019.
The Group continues to actively explore a number of alternatives
to accelerate the de-risking of its balance sheet, including
further disposals of NPEs and other non-core assets.
B.2.5. Real Estate Management Unit (REMU)
The Real Estate Management Unit (REMU) on-boarded EUR117 mn of
assets (including construction cost) in 4Q2018 (up by 29% qoq) and
EUR428 mn of assets in FY2018, via the execution of debt for asset
swaps and repossessed properties. The focus for REMU is
increasingly shifting from on-boarding of assets resulting from
debt for asset swaps towards the disposal of these assets. The
Group completed disposals of EUR42 mn in 4Q2018 (compared to EUR28
mn in 3Q2018) and disposals of EUR196 mn in FY2018, resulting in a
profit on disposal of EUR33 mn for the year. During FY2018, the
Group executed sale-purchase agreements (SPAs) with contract value
of EUR238 mn (656 properties). In addition, the Group signed SPAs
for disposals of assets with contract value of EUR106 mn.
Following the incorporation of Cyreit Variable Capital
Investment Company PLC, properties of carrying value EUR166 mn were
reclassified from the stock of properties (measured at the lower of
cost and net realisable value under IAS 2) to investment properties
(measured at fair value under IAS 40). In November 2018, the Bank
signed an agreement for the disposal of its entire holding in the
investment shares of the Cyreit Fund, resulting in a valuation loss
of EUR14 mn recorded in 3Q2018, relating to both properties and
other receivables. The completion of the disposal is subject to
regulatory approvals and expected in early 2Q2019.
As at 31 December 2018, assets held by REMU had a carrying value
of EUR1.5 bn, in addition to assets reclassified to investment
properties of EUR166 mn, which were subsequently classified as a
disposal group held for sale. As at 31 December 2018, properties
with carrying value of EUR74 mn were included in the portfolio for
the NPE sale (Helix), compared to EUR60 mn as at 30 September 2018
and EUR39 mn as at 30 June 2018.
Assets held by REMU (Group) qoq
EUR mn FY2018 FY2017 4Q2018 3Q2018 +% yoy +%
------ ------ ------ ------ ----
Opening balance 1,641 1,427 1,558 1,524 2% 15%
----------------------------------------------------------------- ------ ------ ------ ------ ---- ------
On-boarded assets (including construction cost) 428 520 117 91 29% -18%
----------------------------------------------------------------- ------ ------ ------ ------ ---- ------
Sales (196) (258) (42) (28) 56% -24%
----------------------------------------------------------------- ------ ------ ------ ------ ---- ------
Transfer to investment properties (166) - - - - -
----------------------------------------------------------------- ------ ------ ------ ------ ---- ------
Transfer to non-current assets and disposal groups held for sale (162) - (102) (21) 384% -
----------------------------------------------------------------- ------ ------ ------ ------ ---- ------
Closing balance 1,530 1,641 1,530 1,558 -2% -7%
----------------------------------------------------------------- ------ ------ ------ ------ ---- ------
Analysis by type and country Cyprus Greece Romania Total
31 December 2018 (EUR mn)
------------------------------- ------- ------- -------- ------
Residential properties 164 25 0 189
Offices and other commercial
properties 228 44 7 279
Manufacturing and industrial
properties 80 38 0 118
Hotels 35 0 - 35
Land (fields and plots) 896 8 4 908
Properties under construction 1 - - 1
------------------------------- ------- ------- -------- ------
Total 1,404 115 11 1,530
------------------------------- ------- ------- -------- ------
Cyprus Greece Romania Total
31 December 2017 (EUR mn)
------------------------------- ------- ------- -------- ------
Residential properties 146 29 0 175
Offices and other commercial
properties 288 39 9 336
Manufacturing and industrial
properties 113 34 0 147
Hotels 78 0 - 78
Land (fields and plots) 837 6 5 848
Properties under construction 57 - - 57
------------------------------- ------- ------- -------- ------
Total 1,519 108 14 1,641
------------------------------- ------- ------- -------- ------
B.2.6 Non-core overseas exposures
The remaining non-core overseas net exposures (including both
on-balance sheet and off-balance sheet exposures) at 31 December
2018 are as follows:
EUR mn 31 December 2018 31 December 2017
-----------------
Greece 162 193
Romania 35 79
Serbia 7 9
Russia 23 31
UK 11 -
--------- ----------------- -----------------
The Group continues its efforts for further deleveraging and
disposal of non-essential assets and operations.
In addition, further to the disposal of the UK operations,
residual exposures of EUR11 mn remain in the UK as at 31 December
2018, compared to EUR23 mn as at 30 September 2018, relating to
legacy exposures. These exposures are expected to be run down over
time and are now categorised as non-core overseas exposures.
In addition to the above, at 31 December 2018 there were
overseas exposures of EUR144 mn in Greece (compared to exposures of
EUR156 mn at 30 September 2018 and EUR168 mn as at 31 December
2017), not identified as non-core exposures, since they are
considered by management as exposures arising in the normal course
of business.
In accordance with the Group's strategy to exit from overseas
non-core operations, the operations of the branch in Romania were
terminated in January 2019, following the completion of
deregistration formalities with respective authorities.
B.3. Income Statement Analysis
B.3.1 Total income
FY2017 2Q2018 1Q2018 (4q vs 3q) (FY)
EUR mn FY2018 represented(2) 4Q2018 3Q2018 represented(2) represented(2) +% Yoy(2) +%
-------- -------------- ------ ------ -------------- -------------- ----------
Net interest income 452 544 112 113 114 113 -2% -17%
--------------------- -------- -------------- ------ ------ -------------- -------------- ---------- ---------
Net fee and
commission
income 166 174 43 43 41 39 3% -4%
Net foreign exchange
gains
and net gains on
financial
instrument
transactions
and loss on
disposal/dissolution
of subsidiaries and
associates 66 48 14 10 13 29 28% 37%
Insurance income net
of
claims and
commissions 53 50 15 13 13 12 22% 5%
Net gains/(losses)
from
revaluation and
disposal
of investment
properties
and on disposal of
stock
of properties 18 26 3 (6) 2 19 - -30%
Other income 26 19 9 6 5 6 37% 34%
--------------------- -------- -------------- ------ ------ -------------- -------------- ---------- ---------
Non-interest income 329 317 84 66 74 105 28% 4%
--------------------- -------- -------------- ------ ------ -------------- -------------- ---------- ---------
Total income 781 861 196 179 188 218 9% -9%
--------------------- -------- -------------- ------ ------ -------------- -------------- ---------- ---------
Net Interest Margin
(annualised)(1) 2.48% 3.10% 2.39% 2.47% 2.54% 2.56% -8 bps -62 bps
--------------------- -------- -------------- ------ ------ -------------- -------------- ---------- ---------
Average interest
earning
assets (EUR mn)(1) 18,190 17,553 18,468 18,237 17,951 17,981 1% 4%
--------------------- -------- -------------- ------ ------ -------------- -------------- ---------- ---------
1. Ignoring the classification of the Helix portfolio of EUR1,148 mn (NBV)
and of the Velocity portfolio of EUR6 mn (NBV) as disposal groups held for
sale.
2. Represented for the disposal of the UK subsidiary.
p.p. = percentage points, bps = basis points, 100 basis points (bps) = 1
percentage point
Net interest income (NII) and net interest margin (NIM) for
FY2018 amounted to EUR452 mn and 2.48% respectively, when ignoring
the classification of the Helix portfolio as a disposal group held
for sale. NII was down by 17% compared to EUR544 mn a year earlier,
and the yoy decline in NIM of 62 bps reflects the lower volume on
loans, pressure on lending rates and the cost of liquidity
compliance. The NII for 4Q2018 amounted to EUR112 mn, compared to
EUR113 mn in 3Q2018 and the NIM for 4Q2018 was 2.39%, down by 8 bps
from 2.47% for 3Q2018, on the same basis, reflecting continued
pressure on lending rates.
The NII presented under the underlying basis includes
unrecognised interest on previously credit impaired loans which
have cured during 4Q2018, amounting to EUR8 mn (EUR33 mn for
FY2018). For statutory reporting purposes, for the year ended 31
December 2018, this amount is presented within "Credit losses to
cover credit risk on loans and advances to customers" in line with
an IFRIC discussion, which has taken place in November 2018
(Presentation of unrecognised interest following the curing of a
credit-impaired financial asset (IFRS 9)). Accordingly, the ratios
calculated based on the underlying basis, are disclosed without
taking into account such reclassification.
Average interest earning assets for FY2018 amounted to EUR18,190
mn, ignoring the classification of the Helix portfolio as a
disposal group held for sale, up by 4% yoy. Quarterly average
interest earning assets for 4Q2018 amounted to EUR18,468 mn on the
same basis, compared to EUR18,237 mn for 3Q2018.
Non-interest income for FY2018 amounted to EUR329 mn, up 4% yoy,
mainly comprising net fee and commission income of EUR166 mn, net
foreign exchange gains and net gains on financial instrument
transactions and loss on disposal/dissolution of subsidiaries and
associates of EUR66 mn, net insurance income of EUR53 mn and net
gains from revaluation and disposal of investment properties and on
disposal of stock of properties of EUR18 mn.
Net fee and commission income for 4Q2018 amounted to EUR43 mn,
at the same levels as for 3Q2018. Net fee and commission income for
FY2018 amounted to EUR166 mn, compared to EUR174 mn a year earlier,
on the same basis, down by 4% yoy, mainly due to the implementation
of IFRS 9 under which certain commission income types are not
recognised on Stage 3 loans.
Net foreign exchange gains and net gains on financial instrument
transactions and loss on disposal/dissolution of subsidiaries and
associates of EUR66 mn for FY2018, increased by 37% yoy, mainly due
to the gains on disposal of bonds during the 1Q2018 of EUR19
mn.
Net gains from revaluation and disposal of investment properties
and on disposal of stock of properties for FY2018 amounted to EUR18
mn, which included a net profit from the disposal of stock of
properties of EUR33 mn (REMU gains) and a valuation loss of the
Cyreit assets of EUR14 mn. The FY2017 gain was EUR26 mn, of which
EUR30 mn related to a net profit from the disposal of stock of
properties (REMU gains).
Net gains from revaluation and disposal of investment properties
and on disposal of stock of properties for 4Q2018 amounted to EUR3
mn, including net gains from the revaluation of investment
properties of EUR2 mn and a net profit from the disposal of stock
of properties (REMU gains) of EUR1 mn, compared to net losses of
EUR6 mn for 3Q2018, comprising REMU gains of EUR8 mn and a loss on
disposal of the Cyreit of EUR14 mn.
Total income for FY2018 amounted to EUR781 mn, compared to
EUR861 mn for FY2017, down by 9% yoy, with the reduction reflecting
the yoy reduction in NII. Total income for 4Q2018 amounted to
EUR196 mn, compared to EUR179 mn for 3Q2018, up by 9% qoq.
B. Preliminary Group Financial Results - Underlying Basis
(continued)
B.3. Income Statement Analysis (continued)
B.3.2 Total expenses
FY2017 2Q2018 1Q2018 (FY)
EUR mn FY2018 represented(2) 4Q2018 3Q2018 represented(2) represented(2) (4q vs 3q) + Yoy(2) +
-------- --------------- ------ ------ --------------- --------------- ------------
Staff costs (217) (205) (59) (53) (53) (52) 10% 6%
Other operating
expenses (158) (154) (44) (34) (43) (37) 26% 3%
---------------- -------- --------------- ------ ------ --------------- --------------- ------------ ---------
Total operating
expenses (375) (359) (103) (87) (96) (89) 17% 4%
---------------- -------- --------------- ------ ------ --------------- --------------- ------------ ---------
Special levy and
contribution
to Single
Resolution
Fund (SRF) (25) (23) (7) (6) (5) (7) 10% 10%
Total expenses (400) (382) (110) (93) (101) (96) 16% 5%
-------- --------------- ------ ------ --------------- --------------- ------------
Cost to income
ratio(1) 51% 44% 56% 52% 54% 44% 4 p.p. 7 p.p.
---------------- -------- --------------- ------ ------ --------------- --------------- ------------ ---------
Cost to income
ratio
excluding
special levy
and
contribution to
Single
Resolution
Fund(1) 48% 42% 52% 49% 51% 41% 3 p.p. 6 p.p.
---------------- -------- --------------- ------ ------ --------------- --------------- ------------ ---------
11. Ignoring the classification of the Helix portfolio of EUR1,148 mn (NBV)
and of the Velocity portfolio of EUR6 mn (NBV) as disposal groups held for
sale.
2. Represented for the disposal of the UK subsidiary.
p.p. = percentage points, bps = basis points, 100 basis points (bps) =
1 percentage point
Total expenses for FY2018 were EUR400 mn (compared to EUR382 mn
for FY2017), 54% of which related to staff costs
(EUR217 mn), 40% to other operating expenses (EUR158 mn) and 6%
(EUR25 mn) to special levy and contribution to Single Resolution
Fund (SRF). Total expenses for 4Q2018 were EUR110 mn, compared to
EUR93 mn in 3Q2018 (up by 16% qoq).
Total operating expenses for FY2018 were EUR375 mn, increased by
4% yoy, compared to EUR359 mn for FY2017. Total operating expenses
for 4Q2018 were EUR103 mn, increased by 17% qoq, compared to EUR87
mn in 3Q2018.
Staff costs of EUR217 mn for FY2018 increased by 6% yoy
(compared to EUR205 mn in FY2017), mainly due to the effect of the
renewal of the 2017 annual collective agreement with the employees'
union. Staff costs for 4Q2018 amounted to EUR59 mn, compared to
EUR53 mn in 3Q2018, mainly due to the annual increment granted
wholly in the quarter. An amount of EUR4 mn recorded in 4Q2018
relates to previous quarters and one-off transactional staff costs.
The renewal of the collective agreement for 2018 remains under
discussion.
Other operating expenses for FY2018 were EUR158 mn, increased by
3% yoy. Other operating expenses for 4Q2018 were EUR44 mn, compared
to EUR34 mn for 3Q2018, mainly due to the completion of projects
ahead of the year-end relating to the Digital Transformation
Programme and other professional services.
The cost to income ratio excluding special levy and contribution
to Single Resolution Fund for 4Q2018 was 52%, (compared to 49% for
3Q2018), principally reflecting the increase in other operating
expenses. Management remain focused on cost reduction.
B. Preliminary Group Financial Results - Underlying Basis
(continued)
B.3. Income Statement Analysis (continued)
B.3.3 Profit/(loss) before tax and non-recurring items
(FY)
FY2017 2Q2018 1Q2018 (4q vs 3q) Yoy(1)
EUR mn FY2018 represented(1) 4Q2018 3Q2018 represented(1) represented(1) +% +%
-------- -------------- ------ ------ -------------- -------------- ----------
Operating profit 381 479 86 86 87 122 1% -21%
----------------------- -------- -------------- ------ ------ -------------- -------------- ---------- -------
Provision charge (168) (780) (40) (29) (41) (58) 37% -78%
(Impairments)/reversal
of impairments of
other
financial and
non-financial
assets (20) (65) (7) 1 (6) (8) - -69%
(Provisions)/reversal
of provisions for
litigation,
regulatory and other
matters (23) (93) (13) (15) 7 (2) -4% -75%
----------------------- -------- -------------- ------ ------ -------------- -------------- ---------- -------
Total provisions and
impairments (211) (938) (60) (43) (40) (68) 45% -78%
----------------------- -------- -------------- ------ ------ -------------- -------------- ---------- -------
Share of profit from
associates 9 9 0 4 3 2 -67% 2%
----------------------- -------- -------------- ------ ------ -------------- -------------- ---------- -------
Profit/(loss) before
tax and non-recurring
items 179 (450) 26 47 50 56 -44% -
----------------------- -------- -------------- ------ ------ -------------- -------------- ---------- -------
11. Represented for the disposal of the UK subsidiary.
Operating profit for FY2018 was EUR381 mn, compared to EUR479 mn
for FY2017, down by 21% yoy, mainly due to the lower volume on
loans and pressure on lending rates. Operating profit for 4Q2018
was EUR86 mn, at the same level as for 3Q2018.
The provision charge for FY2018 totalled EUR168 mn, compared to
EUR780 mn for FY2017 (down by -78% yoy), as the previous year was
affected by the additional provisions of c.EUR500 mn taken in
2Q2017. The provision charge for 4Q2018 totalled EUR40 mn, compared
to EUR29 mn for 3Q2018 (up by 37% qoq) and at similar levels to
2Q2018.
The provisioning charge for FY2018, ignoring the classification
of the Helix portfolio as a disposal group held for sale, accounted
for 1.0% of gross loans, compared to an annualised provisioning
charge of 1.0% for 9M2018, on the same basis and to 4.3% for
FY2017. An amount of c.EUR500 mn reflecting the one-off effect of
the change in the provisioning assumptions was included in the cost
of risk for FY2017, but was not annualised. The annualised
provisioning charge for 4Q2018, ignoring the classification of the
Helix portfolio as a disposal group held for sale, accounted for
1.0% of gross loans, compared to 0.7% for 3Q2018 on the same
basis.
At 31 December 2018, accumulated provisions, including fair
value adjustment on initial recognition and provisions for
off-balance sheet exposures and ignoring the classification of the
Helix portfolio as a disposal group held for sale, totalled
EUR3,852 mn (compared to EUR3,993 mn at 30 September 2018 and to
EUR4,204 mn at 31 December 2017) and accounted for 24.2% of gross
loans on the same basis (compared to 24.7% at 30 September 2018 and
to 22.4% at 31 December 2017). Ignoring the classification of the
Helix portfolio as a disposal group held for sale, the decrease in
accumulated provisions in 4Q2018 amounted to EUR141 mn, whilst the
decrease in accumulated provisions in the previous quarter amounted
to EUR107 mn.
Impairments of other financial and non-financial assets for
FY2018 totalled EUR20 mn, compared to EUR65 mn for FY2017 (down by
69% yoy). Impairments of other financial and non-financial assets
for 4Q2018 were EUR7 mn, mainly relating to Greek tax receivables
(the carrying value of the remaining receivable was c.EUR12 mn),
compared to a net reversal for 3Q2018 of EUR1 mn (which included a
valuation loss on properties of EUR7 mn and a reversal of
previously recognised expected credit losses relating to balances
with central banks of EUR8 mn).
Provisions for litigation, regulatory and other matters for
FY2018 amounted to EUR23 mn, compared to EUR93 mn for FY2017. The
charge for the FY2017 related mainly to redress provisions for the
UK operations, a fine imposed by the Cyprus Commission for the
Protection of Competition and the increase in provision for
litigation for securities issued by BOC PCL between 2007 and
2011.
Provisions for litigation, regulatory and other matters for
4Q2018 amounted to EUR13 mn (compared to EUR15 mn for 3Q2018 (down
by 4% qoq)), primarily relating to litigation for securities issued
by the BOC PCL between 2007 and 2011 and other provisions for
regulatory matters.
B. Preliminary Group Financial Results - Underlying Basis
(continued)
B.3. Income Statement Analysis (continued)
B.3.4 (Loss)/profit after tax
(FY)
FY2017 2Q2018 1Q2018 (4q vs Yoy(1)
EUR mn FY2018 represented(1) 4Q2018 3Q2018 represented(1) represented(1) 3q) +% +%
-------- --------------- ------ ------ --------------- --------------- -------
Profit/(loss) before
tax and
non-recurring items 179 (450) 26 47 50 56 -41% -
----------------------- -------- --------------- ------ ------ --------------- --------------- ------- -------
Tax 3 (14) 7 0 (0) (4) - -
(Profit)/ loss
attributable
to non-controlling
interests (0) 3 (3) 1 0 2 - -
----------------------- -------- --------------- ------ ------ --------------- --------------- ------- -------
Profit/(loss) after tax
and
before non-recurring
items 182 (461) 30 48 50 54 -36% -
----------------------- -------- --------------- ------ ------ --------------- --------------- ------- -------
Advisory and other
restructuring
costs - excluding
discontinued
operations and NPE
sale (Helix) (42) (29) (16) (11) (7) (8) 56% 43%
Profit/(loss) after tax
-
Organic 140 (490) 14 37 43 46 -62% -
-------- --------------- ------ ------ --------------- --------------- -------
Profit/(loss) from
discontinued
operations (UK) 3 0 (1) (0) 1 3 8% -
Restructuring costs
relating
to NPE sale (Helix) (18) - (1) (5) (6) (6) -66% -
Loss relating to NPE
sale
(Helix) (150) - - (15) (135) - - -
Impairment of DTA (79) (62) (79) - - - - -
----------------------- -------- --------------- ------ ------ --------------- --------------- ------- -------
(Loss)/profit after tax (104) (552) (67) 17 (97) 43 - -81%
----------------------- -------- --------------- ------ ------ --------------- --------------- ------- -------
1. Represented for the disposal of the UK subsidiary.
The tax credit for 4Q2018 totalled EUR7 mn (compared to EURNil
in 3Q2018) comprising mainly reversals of tax provisions relating
to prior years. The tax credit for FY2018 totalled EUR3 mn,
compared to a tax charge of EUR14 mn for FY2017.
Profit after tax and before non-recurring items for FY2018 was
EUR182 mn, compared to a loss of EUR461 mn for FY2017, reflecting
the additional provisions of c.EUR500 mn taken in 2Q2017. Profit
after tax and before non-recurring items for 4Q2018 was EUR30 mn,
compared to a profit of EUR48 mn for 3Q2018.
Advisory and other restructuring costs - excluding discontinued
operations and NPE sale (Helix) for FY2018 amounted to EUR42 mn,
compared to EUR29 mn a year earlier. Advisory and other
restructuring costs excluding discontinued operations and NPE sale
(Helix) for 4Q2018 amounted to EUR16 mn, compared to EUR11 mn for
3Q2018.
Profit after tax arising from the organic operations of the
Group for FY2018 amounted to EUR140 mn, compared to a loss of
EUR490 mn a year earlier, reflecting the additional provisions of
c.EUR500 mn taken in 2Q2017. Profit after tax arising from the
organic operations of the Group for 4Q2018 amounted to EUR14 mn
(compared to EUR37 mn for 3Q2018).
Profit from discontinued operations for FY2018 amounted to EUR3
mn (compared to EURNil for FY2017) and relate to the UK operations
sold during the year.
Restructuring costs relating to NPE sale (Helix) for 4Q2018 were
EUR1 mn, compared to EUR5 mn for 3Q2018, comprising mainly advisory
costs and legal fees. Restructuring costs relating to NPE sale
(Helix) for FY2018 amounted to EUR18 mn.
Loss relating to NPE sale (Helix) including transactions costs
for FY2018 amounted to EUR150 mn, comprising a loss of EUR15 mn
recorded in 3Q2018 and a loss of EUR135 mn recorded in 2Q2018. The
loss of EUR15 mn for 3Q2018 related mainly to the effect of
discounting following extension of the expected completion date.
The loss arising from Helix is expected to decline to c.EUR105 mn,
as the time value of money of c.EUR45 mn unwinds to completion.
The impairment of DTA for FY2018 and for 4Q2018 was EUR79 mn
(compared to EUR62 mn for FY2017), resulting from the on-going
review of the recoverability of the deferred tax asset (DTA). This
amount, together with related impairments recorded in prior periods
totalling EUR108 mn, is expected to be reversed in 1Q2019,
following amendments to the Income Tax legislation in Cyprus.
Loss after tax attributable to the owners of the Company for
FY2018 was EUR104 mn, compared to EUR552 mn for FY2017. Loss after
tax attributable to the owners of the Company for 4Q2018 was EUR67
mn, compared to a profit of EUR17 mn for 3Q2018.
C. Operating Environment
Economic recovery became firmly entrenched with real GDP rising
by 3,9% in 2018 following increases of 4.2% and 4.8% in the
preceding two years (Cyprus Statistical Service). GDP growth in
2018 was underpinned by robust expansion in private consumption and
services exports particularly tourism. Fixed investments
particularly building activity also made an important contribution.
On a sectoral basis growth was mainly driven by tourism, trade and
transport, construction and professional and business services. The
outlook for 2019-2020 remains positive with real GDP expected to
rise by 3.3% and 2.7% respectively according to the European
Commission (European Economic Forecast, Winter 2019, Interim).
Employment increased by 5.8% yoy, in the first three quarters
not-seasonally adjusted, compared with an increase of 3.1% in 2017
(Cyprus Statistical Service). As a result the unemployment rate
dropped to an average of 8.6% in the first three quarters from 11%
in 2017 and contributed to strong private consumption growth
(Eurostat).
Exports of goods and services continued to grow robustly in 2018
rising by 6.4% in real terms, in the first three quarters (Cyprus
Statistical Service). Exports are expected to continue to underpin
the recovery. Cyprus might also be impacted negatively by Brexit.
Cyprus has close trade and investment links with the UK, which
means that its economic recovery is vulnerable to any negative
impact on the UK economy caused by Brexit.
Regarding prices, consumer inflation accelerated modestly in
2018 to 1.4% from 0.5% in 2017 (Cyprus Statistical Service). This
was owed in large to higher global energy prices. Inflation is
expected to accelerate further in the medium term as tighter labour
market conditions gradually lead to higher wages, but will remain
relatively modest by historical standards.
The budget turned to a surplus of 1.8% of GDP in 2017. The
budget surplus is estimated at 2.8% of GDP in 2018, according to
the European Commission (Post-Programme Surveillance Report Cyprus,
Autumn 2018), excluding the impact of banking support measures
related to the Cyprus Cooperative Bank (CyCB). The budget surplus
will also remain sizable in 2019-2020 according to the European
Commission. The budget surplus is driven by buoyant revenue growth
underpinned by strong economic activity. Expenditure increases will
be driven mainly by public sector pay rises and social transfers,
but are expected to lag revenue growth. The budget cost of the
ESTIA Scheme - a State-supported scheme to aid the loan repayment
of vulnerable groups with non-performing exposures (NPEs) backed by
primary residences - will be relatively low and its impact on the
budget balance will be marginal.
Gross Government debt is estimated at 105% of GDP in 2018
according to the European Commission, up from 96% in 2017. This
followed the placement of EUR3.2 bn Government bonds in the CyCB to
facilitate the sale of the good assets of the bank. However, its
underlying dynamics remain stable and it is expected to decline
significantly in coming years. The debt ratio will decline to 98.4%
in 2019 and to 91% in 2020 according to the European Commission
(Post-Programme Surveillance Report Cyprus, Autumn 2018).
In the banking sector, the stock of NPEs declined significantly.
In the year to October NPEs dropped by 46% or by EUR9.6 bn to
EUR11.3 bn, after CyCB transaction and the sale of a package of
non-performing loans by the biggest lender, i.e. the Bank (Central
Bank of Cyprus). The ratio of NPEs to gross loans dropped to 32.1%
at the end of October from 42.5% at the end of December 2017. The
ratio of total impairments to total NPEs was 52.2% at the end of
October 2018.
In July 2018, the Cyprus government has taken additional steps
to address regulatory issues relating to NPEs. Parliament voted on
Cyprus government legislative proposals for strengthening the
foreclosure and insolvency framework and facilitating the
securitisation of NPEs and the sale of loans. Taken together, these
measures, along with ESTIA, will support further reductions in the
remaining stock of NPEs.
The sovereign risk ratings of the Cyprus government improved
considerably. In October 2018 Fitch Ratings upgraded its Long-Term
Issuer Default ratings for Cyprus to investment grade (BBB-) with a
stable outlook. In September 2018, S&P Global Ratings also
upgraded Cyprus to investment grade (BBB-) with stable outlook. In
July 2018 Moody's Investors Service upgraded Cyprus' sovereign
rating to Ba2 from Ba3. The improvement in the ratings since the
crisis in 2013 reflects the government's fiscal consolidation
efforts, the generation of primary fiscal surpluses, a gradual
stabilisation in the banking sector and the successful
implementation of the economic adjustment programme.
D. Business Overview
As the Cypriot operations account for 99% of gross loans and
100% of customer deposits, after the disposal of the UK operations,
the Group's financial performance is highly correlated to the
economic and operating conditions in Cyprus and will consequently
benefit from the country's recovery. Most recently, in January
2019, Moody's Investors Service upgraded the Bank's long-term
deposit rating to B3 from Caa1, with a positive outlook. The
positive outlook reflects expectations of further improvements in
the banks' financial fundamentals, mainly asset quality over the
next 12-18 months, in the context of an improved operating
environment in Cyprus. In September 2018, Fitch Ratings affirmed
their long-term issuer default rating of B- and revised the outlook
to positive from stable. At the end of August 2018, Standard and
Poor's upgraded their long-term issuer credit rating on the Bank to
'B+' from 'B' and changed the outlook to stable from positive. The
key drivers for the ratings were the improvement in the Bank's
financial fundamentals, mainly in asset quality, and its funding
position.
Tackling the Bank's loan portfolio quality is of utmost
importance for the Group. The Group has been successful in
engineering restructuring solutions across the spectrum of its loan
portfolio, and expects the reduction of residual NPEs (post the NPE
sale (Helix)) to continue at a revised pace of c.EUR200 mn per
quarter, as portfolio size and business line mix is expected to
change radically post execution of Helix. In parallel, the Group
continues to actively explore a number of alternatives to
accelerate the de-risking of its balance sheet, including further
disposals of NPEs and other non-core assets.
Project Helix
In August 2018, the Company reached an agreement for the sale of
a Portfolio of loans with a gross book value of
EUR2.8 bn as at 30 June 2018 (of which EUR2.7 bn relate to
non-performing loans) secured by real estate collateral. The
Portfolio will be transferred to a licensed Cypriot Credit
Acquiring Company (the "CyCAC") by the Bank. The shares of the
CyCAC will then be acquired by certain funds affiliated with Apollo
Global Management LLC (NYSE:APO) (together with its consolidated
subsidiaries "Apollo"), the purchaser of the Portfolio. Funds
managed by Apollo will provide equity capital in relation to the
financing of the purchase of the Portfolio. The purchaser was
selected following a competitive sale process. Following a
transitional period where servicing is retained by the Bank, it is
intended that the servicing of the Portfolio will be carried out by
a long-term servicer. Arrangements in relation to the migration of
servicing from the Bank to the long-term servicer, including the
timing of the migration, remain under discussion between the
parties.
The transaction is the first NPL disposal by the Bank and
represents a significant milestone in the delivery of the Bank's
strategy of improving asset quality through the reduction of NPEs.
Following the completion of Project Helix, the Bank's gross NPEs
will be 68% lower than its peak in 2014.
The completion of the transaction remains subject to a number of
conditions precedent, including mainly regulatory and other
approvals, including the ECB agreeing to a SRT benefit from the
transaction. All relevant figures and pro forma calculations are
based on 31 December 2018 financial results, unless otherwise
stated.
Project Velocity
In December 2018, the Bank entered into an agreement with APS
Delta s.r.o, to sell a non-performing loan portfolio of primarily
retail unsecured exposures, with a contractual balance of EUR245 mn
and gross book value of EUR34 mn as at 30 September 2018 (known as
"Project Velocity" or the "Sale"). This portfolio comprises of
9,700 heavily delinquent borrowers, including 8,800 private
individuals and 900 small-to-medium-sized enterprises. The gross
book value of this portfolio as at 31 December 2018 was EUR33
mn.
APS Delta s.r.o is a wholly owned subsidiary of APS Capital
Group s.r.o., a company registered in Czech Republic which
specialises in the investment, management and recovery of loan
portfolios across Central and South-Eastern Europe.
The Sale is part of the Bank's strategy to reduce its stock of
non-performing loans and has been conducted at arm's length.
Furthermore, the Sale is consistent with ECB guidelines regarding
the management of non-performing loans.
The Sale is expected to be neutral to both the profit and loss
account and to capital. The Sale is subject to the necessary
approvals and is expected to be completed within 2Q2019.
ESTIA
In July 2018, the Government announced ESTIA, a scheme aimed at
addressing NPEs backed by primary residence. This Scheme is
expected to positively impact c.EUR0.9 bn of retail core NPEs,
subject to eligibility criteria and participation rate. This
Estia-eligible portfolio refers to the potentially eligible
portfolio based on the Bank's available data. Eligibility criteria
relate primarily to the OMV of the residence, total income and net
wealth of the household. These will act as a clear definition of
socially protected borrowers, acting as an enabler against
strategic defaulters. In accordance with the Scheme, the eligible
loans are to be restructured to the lower of contractual and OMV,
and the Government to subsidise one third of the instalment. The
terms of the Scheme are subject to finalisation and the Scheme is
expected to be launched around the end of 1Q2019.
Sale of Bank of Cyprus UK Limited (BOC UK)
In November 2018, the Company completed the sale of its wholly
owned subsidiary bank in the UK, Bank of Cyprus UK Limited ('BOC
UK') and its subsidiary Bank of Cyprus Financial Services Ltd ('BOC
FS', and together the 'UK Group'), to Cynergy Capital Limited
('Cynergy'), following receipt of the necessary regulatory
approvals from the Prudential Regulation Authority (PRA) and the
European Central Bank.
The sale consideration amounted to GBP107 mn (c.EUR120 mn)
comprising of GBP103 mn base consideration plus a purchase price
adjustment of GBP4 mn. Half of the base consideration together with
the purchase price adjustment was received upon completion and the
remaining half is deferred over 24 months, without any performance
conditions attached.
The Group lost control over the UK Group and as a result, it did
not consolidate it on and as from 30 September 2018. The sale of
the UK Group was completed on 23 November 2018. Comparatives have
been represented for the results of the UK Group, from continuing
operations to discontinued operations. The representation did not
have an impact on the financial performance of the Group.
The sale has an overall positive impact on the Group capital
ratios of c.70 bps and is broadly neutral to the profit and loss
account, including the recycling to the Income Statement of a
foreign currency gain of EUR18 mn previously recorded in the
foreign currency translation reserve.
The decision to sell the UK Group was in line with the Group's
strategy of delivering value for shareholders and focusing
principally on supporting the growing Cypriot economy. In addition,
the Group and BOC UK signed an agreement for cooperation in a
number of key areas going forward, including continuity of
servicing for existing customers. Following completion, BOC UK has
been rebranded to 'Cynergy Bank', a name chosen to reflect the
bank's Cypriot heritage, combined with a modern and energetic
focus.
Other
The strategic focus of the Group is to reshape its business
model to grow in the core Cypriot market through prudent new
lending. As at 31 December 2018, the Bank's capital position is
adequate and is strengthened pro forma for DTC and Helix. The Group
expects to continue to be able to support the recovery of the
Cyprus economy through the provision of new lending. Growth in new
lending in Cyprus is focused on selected industries that are more
in line with the Bank's target risk profile, such as tourism,
trade, professional services, information/communication
technologies, energy, education and green projects.
Aiming at supporting investments by SMEs and mid-caps to boost
the Cypriot economy, and create new jobs for young people, the Bank
continues to provide joint financed schemes. To this end, the Bank
continues its partnership with the European Investment Bank (EIB),
the European Investment Fund (EIF), the European Bank for
Reconstruction and Development (EBRD) and the Cyprus
Government.
Management is also placing emphasis on diversifying income
streams by optimising fee income from international transaction
services, wealth management and insurance. The Group's insurance
companies, EuroLife Ltd and General Insurance of Cyprus Ltd
operating in the sectors of life and general insurance
respectively, are leading players in the insurance business in
Cyprus, with such businesses providing a recurring income, further
diversifying the Group's income streams. The insurance income net
of insurance claims for FY2018 amounted to EUR53 mn, compared to
EUR50 mn for FY2017, contributing to 16% of non-interest
income.
In order to further optimise its funding structure, the Bank
continues to focus on the shape and cost of deposit franchise,
taking advantage of the increased customer confidence towards the
Bank, as well as improving macroeconomic conditions.
Post the execution of further NPE reduction, the Bank is
focusing on the need to manage costs.
The Bank continues its Digital Transformation Programme in
collaboration with IBM, the Bank's Strategic Digital Transformation
Partner, which focuses on three strategic pillars: developing
digital services and products that enhance customer experience,
streamlining internal processes and introducing new ways of working
to improve the workplace environment. The Bank has spent the last
year establishing the foundations to support the delivery of
change. Various new products and features were introduced such as
the launch of the new mobile app, the introduction of the 1Bank B2B
(business to business) APIs (Application Programming Interface)
which are interfaces that enable businesses to enjoy access to
1Bank functionality directly through their own systems without the
need to access the 1Bank website. Moreover, the Bank is leading the
way in Cyprus in establishing an open banking ecosystem, by being
the first bank in Cyprus to launch its PSD2 APIs (Payment Service
Directive2, Application Programming Interface) and also by
integrating with eight UK banks allowing customers to view their
account balances and transactions from the integrated banks
together with their Bank of Cyprus accounts through 1Bank.
Furthermore, several initiatives are in progress, including
enhancing digital channels to improve customer experience,
automating internal end to end processes using a BPM (Business
Process Management) platform and introducing collaboration and
knowledge sharing tools across the organisation.
E. Strategy and Outlook
The Group remains on track for implementing its strategic
objectives aiming to become a stronger, safer and a more focused
institution capable of supporting the recovery of the Cypriot
economy and delivering appropriate shareholder returns in the
medium term.
The key pillars of the Group's strategy are to:
-- Materially reduce the level of delinquent loans
-- Further optimise the funding structure
-- Maintain an appropriate capital position by internally generating capital
-- Focus on the core Cyprus market
-- Achieve a lean operating model
-- Deliver value to shareholders and other stakeholders
KEY PILLARS PLAN OF ACTION
1. Materially reduce the level of delinquent
loans * Sustain momentum in restructuring and continue
reduction of NPEs
* Focus on terminated portfolios (in Recovery Unit) -
"accelerated consensual foreclosures"
* Real estate management via REMU
* Continue to explore alternative measures for
accelerating NPE reduction, such as NPE sales,
securitisations etc.
--------------------------------------------------------------
2. Further optimise the funding structure * Focus on shape and cost of deposit franchise
--------------------------------------------------------------
3. Maintain an appropriate capital position * Internally generating capital
--------------------------------------------------------------
4. Focus on core Cyprus market
* Targeted lending in Cyprus into growing sectors to
fund recovery
* New loan origination, while maintaining lending
yields
* Revenue diversification via fee income from
international business, wealth, and insurance
--------------------------------------------------------------
5. Achieve a lean operating model
* Implementation of digital transformation program
underway, aimed at enhancing productivity through
alternative distribution channels and reducing
operating costs over time
* Post the execution of further NPE reduction, the Bank
is focusing on the need to manage costs
--------------------------------------------------------------
6. Deliver value
* Deliver appropriate medium term risk-adjusted returns
--------------------------------------------------------------
Project Helix and the sale of the UK Group meaningfully change
the shape of the Group going forward. Good progress has been
achieved towards the completion of Project Helix which is largely
dependent on regulatory approvals. Completion is currently expected
around the end of 1Q2019 / early 2Q2019. These actions collectively
are expected to result in a stronger, safer, more Cyprus focused
Bank.
The organic reduction of residual NPEs (post Helix) is expected
to continue in the coming quarters at a pace of c.EUR200 mn per
quarter, as portfolio size and business line mix is expected to
change radically. Furthermore, with the completion of these
transactions, the Group's capital ratios are expected to be
strengthened.
Please refer to the investors' presentation for the results of
the year ended 31 December 2018 pro forma for DTC and Helix.
F. Definitions & Explanations
Accelerated Following the Regulation (EU) 2016/445 of the ECB
phase-in period of 14 March 2016 on the exercise of options and discretions
available in Union law (ECB/2016/4), the DTA phase-in
period was reduced from 10 to 5 years, with effect
as from the reporting of 31 December 2016. The applicable
rate of the DTA phase-in is 60% for 2017, 80% for
2018 and 100% for 2019 (fully phased-in).
Accumulated Comprise (i) provisions for impairment of customer
provisions loans and advances, (ii) the fair value adjustment
on initial recognition of loans acquired from Laiki
Bank and on loans classified at FVPL, and (iii) provisions
for off-balance sheet exposures disclosed on the balance
sheet within other liabilities.
Advisory and Comprise mainly: fees of external advisors in relation
other restructuring to: (i) disposal of operations and non-core assets,
costs (ii) customer loan restructuring activities which
are not part of the effective interest rate and (iii)
the listing on the London Stock Exchange
AT1 AT1 (Additional Tier 1) is defined in accordance with
Articles 51 and 52 of the Capital Requirements Regulation
(EU) No 575/2013.
CET1 capital CET1 capital ratio (transitional basis) is defined
ratio (transitional in accordance with the Capital Requirements Regulation
basis) (EU) No 575/2013.
CET1 fully loaded The CET1 fully loaded (FL) ratio is defined in accordance
(FL) with the Capital Requirements Regulation (EU) No 575/2013.
Contribution Relates to the contribution made to the Single Resolution
to SRF Fund.
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 was published on 14 February 2019.
Statistical
Service of the
Republic of
Cyprus
Deferred Tax The DTA adjustments relate to Deferred Tax Assets
Asset (DTA) totalling EUR302 mn and recognised on tax losses totalling
adjustments EUR2.42 bn and can be set off against future profits
of the Bank until 2028 at a tax rate of 12.5%. There
are tax losses of c.EUR7 bn for which no deferred
tax asset has been recognised. The recognition of
deferred tax assets is supported by the Bank's business
forecasts and takes into account the recoverability
of the deferred tax assets within their expiry period.
ECB European Central Bank
ELA Emergency Liquidity Assistance
Gross loans Gross loans are reported before the fair value adjustment
on initial recognition relating to loans acquired
from Laiki Bank (calculated as the difference between
the outstanding contractual amount and the fair value
of loans acquired) amounting to EUR462 mn at 31 December
2018 (compared to EUR480 mn at 30 September 2018,
EUR514 mn at 30 June 2018, EUR566 mn at 31 March 2018
and to EUR668 mn at 31 December 2017).
Additionally, gross loans (i) include loans and advances
to customers measured at fair value through profit
and loss of EUR456 mn and (ii) are reported after
the reclassification between gross loans and expected
credit losses on loans and advances to customers classified
as a disposal group held for sale of EUR99 mn.
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.
Leverage ratio The leverage ratio is the ratio of tangible total
equity to total assets for the relevant period.
Market Shares Both deposit and loan market shares are based on data
from the Central Bank of Cyprus.
The Bank is the single largest credit provider in
Cyprus with a market share of 45.4% at 31 December
2018, at the same levels as at 30 September 2018 and
compared to 38.6% at 30 June 2018 and 37.4% at 31
March 2018.
The market share on loans was affected as at 30 September
2018 following a decrease in total loans in the banking
sector, mainly attributed to EUR6 bn non-performing
loans of Cyprus Cooperative Bank (CyCB) which remained
to SEDIPES as a result of the agreement between CyCB
and Hellenic Bank.
The market share on loans was affected as at 30 June
2018 following a decrease in total loans in the banking
sector of EUR2.1 bn, as reported by CBC, (due to loan
reclassifications, revaluations, exchange rate or
other adjustments).
Net fee and Net fee and commission income over total income is
commission income the net fee and commission income divided by the total
over total income income (as defined).
Net Interest Net interest margin is calculated as the net interest
Margin income (annualised) divided by the average interest
earning assets. Interest earning assets include: cash
and balances with central banks, plus loans and advances
to banks, plus net customer loans and advances, plus
investments (excluding equities and mutual funds)
and derivatives.
Net loans and Loans and advances net of accumulated provisions (as
advances defined).
Net loan to Net loan to deposits ratio is calculated as the net
deposit ratio loans and advances to customers divided by customer
deposits, including net loans and deposits held for
sale, where applicable.
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), on the basis of Basel III standards.
Its calculation is a SREP requirement. The European
Banking Authority (EBA) is working on finalising the
NSFR and enforcing it as a regulatory ratio under
CRR2.
Non-interest Non-interest income comprises Net fee and commission
income income, Net foreign exchange gains and net gains on
other financial instruments and loss on disposal/dissolution
of subsidiaries and associates, Insurance income net
of claims and commissions, Net gains/(losses) from
revaluation and disposal of investment properties
and on disposal of stock of properties, and Other
income.
Non-performing According to the EBA reporting standards on forbearance
exposures (NPEs) and non-performing exposures (NPEs), published in
2014, ECB's Guidance to Banks on Non-Performing Loans
published in March 2017 and EBA Guidelines on management
of non-performing and forborne exposures published
in October 2018 and applicable from June 2019, a loan
is considered an NPE if: (i) the debtor 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, or (ii) the exposures are
impaired i.e. in cases where there is a specific provision,
or (iii) there are material exposures which are more
than 90 days past due, or (iv) there are performing
forborne exposures under probation for which additional
forbearance measures are extended, or (v) there are
performing forborne exposures under probation that
present more than 30 days past due within the probation
period. The NPEs are reported before the deduction
of accumulated provisions (as defined).
Non-recurring Non-recurring items as presented in the 'Unaudited
items Consolidated Income Statement - Underlying basis'
relate to: (i) advisory and other restructuring costs,
(ii) discontinued operations (UK sale), (iii) loss
relating to NPE sale (Helix) and (iv) impairment of
DTA.
NPE ratio NPEs ratio is calculated as the NPEs as per EBA (as
defined) divided by gross loans (as defined).
Operating profit Comprises profit before total provisions and impairments
(as defined), share of profit from associates, tax,
(profit)/loss 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 average of total assets for the relevant period.
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).
Pro forma for Relates to the conversion of Deferred Tax Assets (DTA)
DTC to Deferred Tax Credits (DTC) as per CRR Article 39(2),
following legislative amendments adopted by the Cyprus
Parliament on 1 March 2019, allowing for a release
of capital. According to Cyprus Law, for a law of
the Parliament to become effective it must be published
in the Official Gazette of the Republic and, unless
another date is provided by the law itself, a law
comes into operation upon such publication. In normal
circumstances, a law is published in the Official
Gazette of the Republic some days after it is adopted
by Parliament.
Pro forma for Relates to both pro forma for DTC (as defined) and
DTC and Helix pro forma for Helix (as defined), in this order.
Pro forma for In addition to the impact from Project Helix, this
Helix pro forma also includes the impact from the agreement
for the sale of a portfolio of retail unsecured NPEs,
with gross book value EUR33 mn as at 31 December 2018,
known as Project Velocity.
Profit/(loss) Excludes non-recurring items (as defined)
after tax and
before non-recurring
items
Provision charge The provision charge comprises provisions for impairments
of customer loans and provisions for off-balance sheet
exposures, net of gain/(loss) on derecognition of
loans and advances to customers and changes in expected
cash flows.
Provisioning Provisioning charge (cost of risk) (year to date)
charge (cost is calculated as the provision charge (as defined)
of risk) divided by average gross loans (the average balance
calculated as the average of the opening balance and
the closing balance). An amount of c.EUR500 mn reflecting
the one-off effect of the change in the provisioning
assumptions was included in the cost of risk for FY2017,
but was not annualised.
Provisioning Provisioning coverage ratio for NPEs is calculated
coverage ratio as accumulated provisions (as defined) over NPEs (as
for NPEs defined).
Quarterly average Average of interest earning assets as at the beginning
interest earning and end of the relevant quarter. Interest earning
assets assets include: cash and balances with central banks,
plus loans and advances to banks, plus net customer
loans and advances, plus investments (excluding equities
and mutual funds) and derivatives.
Qoq Quarter on quarter change
Special levy Relates to the special levy on deposits of credit
institutions in Cyprus.
Total Capital Total capital ratio is defined in accordance with
ratio the Capital Requirements Regulation (EU) No 575/2013.
Total expenses Total expenses comprise staff costs, other operating
expenses and the special levy and contribution to
the Single Resolution Fund. It does not include 'advisory
and other restructuring costs-excluding discontinued
operations and NPE sale (Helix)' or any restructuring
costs or loss relating to NPE sale (Helix).
'Advisory and other restructuring costs-excluding
discontinued operations and NPE sale (Helix)' amount
to EUR42 mn for FY2018 (EUR16 mn for 4Q2018, EUR11
mn for 3Q2018, EUR7 mn for 2Q2018 and EUR8 mn for
1Q2018) and EUR29 mn for the year ended 31 December
2017. Restructuring costs relating to NPE sale (Helix)
amount to EUR18 mn for FY2018 (EUR1 mn for 4Q2018,
EUR5 mn for 3Q2018, EUR6 mn for 2Q2018 and EUR6 mn
for 1Q2018) and EURNil for the year ended 31 December
2017. Loss relating to NPE sale (Helix) amounts to
EUR150 mn for FY2018 (EURNil for 4Q2018, EUR15 mn
for 3Q2018, EUR135 mn for 2Q2018 and EURNil for 1Q2018)
and EURNil for the year ended 31 December 2017.
Total income Total income comprises net interest income and non-interest
income (as defined).
Total provisions Total provisions and impairments comprise provision
and impairments charge (as defined), plus (provisions)/reversal of
provisions for litigation, regulatory and other matters
plus (impairments)/reversal of impairments of other
financial and non-financial assets.
Underlying basis Statutory basis adjusted for certain items as detailed
in the Basis of Presentation.
Write offs Loans together with the associated provisions are
written off when there is no realistic prospect of
future 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" and
together with the Bank's subsidiaries, the "Group", for the year
ended 31 December 2018.
At 31 December 2016, the Bank was listed on the 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 preliminary Group financial
results for the year ended 31 December 2018. The financial
information in this preliminary 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
2018 are expected to be delivered to the Registrar of Companies of
Ireland within 28 days of 30 September 2019 (as at the date of this
report, such statutory financial statements have not been reported
on by independent auditors of BOC Holdings). The Board of Directors
approved this financial information on 3 March 2019. BOC Holdings'
most recent statutory financial statements for the purposes of
Chapter 4 of Part 6 of the Companies Act 2014 of Ireland for the
year ended 31 December 2017, upon which the auditors have given an
unqualified audit report, were published on 27 March 2018 and have
been annexed to the annual return and delivered to the Registrar of
Companies of Ireland.
Statutory basis: Statutory information is set out on pages 4-5.
However, a number of factors have had a significant effect on the
comparability of the Group's financial position and results.
Accordingly, the results are also presented on an underlying
basis.
Underlying basis: The statutory results are adjusted for certain
items (as described on pages 9-10) to allow a comparison of the
Group's underlying performance, as set out on pages 6-8.
The financial information included in this announcement is not
audited by the Group's external auditors.
This announcement and the presentation for the Preliminary Group
Financial Results for the year ended 31 December 2018 have been
posted on the Group's website www.bankofcyprus.com (Investor
Relations/Financial Results).
Definitions: The Group uses a number of definitions in the
discussion of its business performance and financial position which
are set out in section F.
The Preliminary Group Financial Results for the year ended 31
December 2018 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. These
forward-looking statements include, but are not limited to,
statements relating to the Group's intentions, beliefs or current
expectations and projections about the Group's future results of
operations, financial condition, liquidity, performance, prospects,
anticipated growth, provisions, impairments, 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 EU Member States, interest
rate and foreign exchange fluctuations, legislative, fiscal and
regulatory developments and information technology, litigation and
other operational risks. 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 from 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.
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. The Bank of Cyprus
Group operates through a total of 112 branches in Cyprus. Bank of
Cyprus also has representative offices in Russia, Ukraine and
China. The Bank of Cyprus Group employs 4,146 staff worldwide. At
31 December 2018, the Group's Total Assets amounted to EUR22.1 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR CKQDNABKKNNK
(END) Dow Jones Newswires
March 04, 2019 02:01 ET (07:01 GMT)
Bank Of Cyprus Holdings ... (LSE:BOCH)
Gráfica de Acción Histórica
De Feb 2024 a Mar 2024
Bank Of Cyprus Holdings ... (LSE:BOCH)
Gráfica de Acción Histórica
De Mar 2023 a Mar 2024