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Cyprus

Co-op Q1 profit shrinks to €2.6m amid rising NPLs

The state-owned Cooperative Central Bank said that it generated a €2.6m after-tax profit in January to March this year compared to a profit of €23.6m in the respective period of 2016.

The drop in net earnings was partly on a €18.2m increase in provisions in the first quarter to €29.3m and a €10.1m drop in net interest income to €62.6m compared to the respective quarter of 2016, the bank said in an emailed statement on Thursday. The bank, which is currently facing demands from unions for more pay, reduced its staff costs to €23.1m in the first quarter from €23.6m a year before helping overall expenses drop to €40.5m from €42.8m respectively. The cost to income ratio dropped to 49.7 per cent from 59.5 per cent.

The bank, which received following the 2013 banking crisis a capital injection of almost €1.7bn from the taxpayer, saw its non-performing loans rise by €5.6m to €7.2bn which translates to 60.1 per cent of total loans compared to 59.9 per cent in the fourth quarter, it said. The amount of restructured loans dropped in the first quarter of the year to €204.4m from €281.7m in the fourth quarter of 2016. Loans with 90 days in arrears or more rose by €24.9m in the first quarter to €5.7m making up 46.7 per cent of total loans.

The Cooperative Central Bank, rocked by a decision of the financial ombudsman in March, as a result of which it returned €111m to overcharged borrowers, posted a €7m net profit in 2016 and adjusted its 2015 results to reflect a net loss of €176.4m. It originally posted a net loss of €165.6m in 2015.

At the end of the first quarter, the bank saw its core equity tier 1 ratio rise by 9 basis points to 15.51 per cent compared to three months before, the Co-op said.

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