Bank of Cyprus profits soar to €220m in first half of 2023

The Bank of Cyprus Group on Wednesday announced an after-tax profit of €220m for the first six months of this year, a five-fold increase on the €43m posted for the corresponding period in 2022.
The second quarter of this year yielded a profit of €125m as interest rates kept increasing.

“In the first half of 2023 we delivered a strong financial and operational performance, on the back of continuing interest rate rises, improved efficiency and broadly stable cost of risk,” said Group Chief Executive Panicos Nicolaou in a statement.

The strong profitability continued to benefit from rising interest rates. Total income was €511m of which Net Interest Income (NII) was €358m, up by 146 per cent year on year, assisted by the rising rates and low deposit passthrough, the bank said.

Total operating expenses had also been reduced by 2 per cent, reflecting an efficiency drive in 2022 which included a voluntary exit scheme that cut wage costs. Cost to income ratio was reduced to 32 per cent, while the Return of Tangible Equity (ROTE) for the first half of 2023 was 24 per cent compared to 4.9 per cent last year.

All the bank’s performance indicators have improved. The Non-Performing Exposures ratio is at 3.6 per cent, down 7 percentage points year on year, while it has a highly liquid balance sheet with €9.1bn deposited at the European Central Bank.

“We have a highly liquid balance sheet and are therefore benefiting significantly from higher rates,” said Nicolaou.
“Over one third of our assets are cash balances with central banks while our deposit base grew modestly by four per cent year on year to €19.2bn.”

Apart from rising interest rates the Bank of Cyprus said it also benefited from the economy’s positive economic outlook. Cyprus’ growth rate was 3.4 per cent in the first quarter of this year, the second highest in the eurozone, with GDP estimated to increase by 2.8 per cent in 2023. New lending was stable at €1.1bn despite rising interest rates.

Things have not looked so good for the Bank of Cyprus in over a decade. In June the bank made its first dividend payment for 12 years.

Nicolaou said this “marked the Group’s transformation into a strong, diversified, well-capitalised and sustainably profitable banking and financial services organisation.”
He added: “The Group’s strong financial performance is progressing well, in line with our targets, and lays the foundations for shareholder value creation and sustainable returns.”