Cyprus Mail

Bank of Cyprus posts 76 million euros after tax profit in January to September

By Marie Kambas

Bank of Cyprus posted a 76 million profit in the first nine months of the year saying its deposits were starting to stabilize while the quality of its loan portfolio remained challenging with rising non-performing loans, the lender said.

The bank, which was suspended from trading on the Cyprus and Athens Stock Exchanges in March 2013 during the bailout crisis, anticipates the resumption of share trading around December 16, the lender said in an emailed statement today.

“The Group’s performance is underpinned by the performance of our core Cypriot operations, supporting our efforts of shrinking to strength through the disposal of non-core operations and assets,” chief executive John Hourican said in a separate statement.

The bank, which disposed of assets in Serbia, Romania and Ukraine this year, recorded a 5 million euro loss in the third quarter alone, compared to a 50 million euro profit booked in the second quarter of the year, it said and added it was running a process to dispose its remaining Romanian loan and real estate portfolio.

“The Bank has appointed advisors to assess its strategic options relating to its Russian assets. The Bank continues its efforts to dispose real estate related assets in Greece and Cyprus,” Bank of Cyprus said.

“The group’s total deposits were 13.3 billion euros at September 30, 2014 compared to 13,8 billion euros at June 30, 2014,” the lender said. “The reduction in the stock of deposits during the third quarter of 2014 reflects the ongoing deleverage with customers using their savings to reduce their borrowings, the release of 600 million euros of blocked decree deposits at the end of July 2014, the public debate during the period regarding the foreclosure and insolvency legislation and seasonality factors”.

Non performing loans, calculated under Cyprus Central Bank rules, accounted for about 60 per cent or 14.7 billion euros of gross loans as per September 30, compared to 58 per cent or 14.6 billion euros the as per June 30, the bank said.

“For the Bank to be successful in tackling its loan portfolio quality problem, there has to be the necessary changes in the legislation for foreclosures and insolvency that would prevent strategic defaults and would introduce the appropriate moral hazard in the relationship between the Bank and the borrowers,” it said.

Provision for the impairment of customer loans were expected to remain elevated, driven by the default rate of borrowers and the likely further reductions in collateral values, it said.

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