Bank of Cyprus posts nine-month profit of €349 million — group performance ‘well ahead of targets’

The Bank of Cyprus on Monday reported robust financial results for the nine months ending September 30, 2023, posting an after-tax profit of €349 million, combined with a strong quarterly performance, while highlighting a liquid, resilient balance sheet.

“We have delivered another quarter of strong profitability, achieving an ROTE of over 20 per cent for the third consecutive quarter, demonstrating the group’s continuing ability to generate sustainable profitability and shareholder value creation,” Bank of Cyprus CEO Panicos Nicolaou said.

“During the nine months of 2023, we recorded a profit after tax of €349 million, corresponding to a ROTE of 24.6 per cent, facilitated by strong revenues,” he added.

In the third quarter of 2023, the bank reported a Net Interest Income (NII) of €572 million, up 144 per cent year-on-year and 9 per cent higher than the previous quarter.

Non-Net Interest Income (Non-NII) rose by 5 per cent year on year, covering 90 per cent of total operating expenses.

Moreover, the cost-to-income ratio was reduced to 31 per cent, down from 54 per cent in the prior year.

Profit after tax for the first nine months of 2023 stood at €349 million, a significant improvement from the €19 million loss in the same period last year.

In addition, earnings per share reached €0.78 for the period between January to September 30, 2023, with €0.29 in the third quarter alone.

The Return on Tangible Equity (ROTE) was 24.6 per cent during the first nine months of 2023 and 25.6 per cent in the third quarter alone.

Furthermore, the bank has maintained a liquid and resilient balance sheet, with asset quality in line with targets.

The Non-Performing Exposure (NPE) ratio stands at 3.5 per cent (0.8 per cent on a net basis), down 6 percentage points year on year.

Additionally, NPE coverage is at 77 per cent, and the cost of risk stands at 58 basis points.

The retail-funded deposit base is sticky at €19.3 billion, up 3 per cent year on year and broadly flat quarter on quarter.

The balance sheet remains highly liquid, with €9.6 billion placed at the European Central Bank (ECB).

“Our balance sheet is characterised by ample liquidity as well as strong asset quality and a robust capital position,” the Bank of Cyprus CEO noted, explaining that “over one-third of our assets are cash balances with central banks, benefitting significantly from higher rates while our deposit base continued to grow”.

The bank also made note of the strong economic growth in Cyprus. “Against the backdrop of geopolitical developments and heightened uncertainty, the Cypriot economy is once again proving resilient with strong economic growth of 2.3 per cent in the second quarter of 2023, outpacing the Eurozone average,” Nicolaou stated.

“As the largest financial group in Cyprus, we continue to support the economy by extending approximately €1.6 billion in new loans in the first nine months of 2023, whilst maintaining prudent underwriting standards,” he added.

What is more, despite the rising interest rate environment, new lending reached approximately €1.6 billion.

The gross performing loan book remained broadly flat year on year at €9.9 billion, reflecting ongoing repayments offsetting new lending.

The results also showed that the Bank of Cyprus has a robust capital position, with a Regulatory CET1 ratio and Total Capital ratio of 15.2 per cent and 20.4 per cent, respectively.

Including third-quarter profits net of dividend accrual, the CET1 ratio stands at 15.8 per cent, while the Total Capital ratio stands at 21.0 per cent.

The bank also achieved organic capital generation of approximately 345 basis points in the first nine months of 2023, including around 125 basis points in the third quarter alone.

Notably, the bank’s Long Term Deposit rating was upgraded to Investment grade by Moody’s in October 2023.

“In October 2023, Moody’s upgraded the bank’s long-term deposit rating to investment grade for the first time in 12 years, confirming this new chapter of becoming a strong, diversified well-capitalised and sustainably profitable organisation,” Nicolaou stated.

“With another strong set of results in the third quarter of 2023, the group’s performance is well ahead of 2023 targets and notwithstanding typical fourth-quarter seasonality, we expect to comfortably exceed our 2023 ROTE target of over 17 per cent,” he added.

“We continue to execute strategy, with a clear focus on supporting our customers, delivering shareholder value and assisting the development of the Cypriot economy,” Nicolaou concluded.