The Bank of Cyprus’ board of directors is convening today, February 17, to review the preliminary financial results of the group.

The bank will release the official announcement related to the results on Tuesday, before the stock market opens on the Cyprus Stock Exchange and the Athens Stock Exchange.

Two financial analysis firms, Keefe, Bruyette & Woods (KBW) and Axia Ventures Group (Axia), have provided their forecasts, which generally align.

The bank’s net interest income, its primary revenue source, is projected to reach €194 million in the fourth quarter of 2024.

This marks an 11.8 per cent decline from the same quarter in 2023 and a 4.9 per cent drop from the previous quarter.

This decrease is expected due to falling interest rates in the European Union, a trend that began in mid-2023.

The European Central Bank (ECB) further reduced rates by 0.25 per cent in late January.

Net interest income had surged from late 2022 when interest rates rose as part of the ECB’s efforts to control inflation.

However, after peaking in the fourth quarter of 2023, it has been gradually declining. KBW predicts this downward trend will continue into 2025.

As a result, KBW expects net interest income to fall by 18.2 per cent in 2025, reaching €669 million from €818 million in 2024.

Both firms anticipate a slight increase in net fees and commissions compared to the previous quarter.

Axia also expects higher net foreign exchange gains and other income than KBW’s projections.

Total fourth-quarter revenue is estimated at €270 million by Axia and €264 million by KBW.

On an annual basis, this represents a change of 0.5 per cent and 0 per cent, respectively, from 2023.

At the same time, overall expenses are forecasted to rise to €111 million, reflecting a 4.7 per cent increase from the previous quarter and 3.7 per cent from the same quarter in 2023.

Axia estimates provisions for bad loans and other risks at €33 million, while KBW places them at €39 million.

These figures suggest a significant decline in provisions compared to 2023.

For fourth-quarter profitability, Axia expects €12 million more in pre-tax profits than KBW, though the higher tax rate it anticipates narrows the difference to just €2 million.

The forecasted net profit attributable to shareholders for the final quarter of 2024 is €103 million and €101 million, respectively.

These figures represent a decline of 25.4 per cent and 26.8 per cent from the same period in 2023 and a drop of 20.8 per cent and 22.3 per cent compared to the previous quarter.

Despite this, full-year profitability is expected to increase due to strong performance in the first half of 2024, with annual net profits estimated to rise by 3.7 per cent and 3.3 per cent, respectively, compared to 2023.

Importantly, all financial analysis firms covering the Bank of Cyprus recommend buying its stock.

Their target price ranges between €5.80 and €7.10, compared to its current trading price of €5.08 on the Cyprus Stock Exchange.