The Bank of Cyprus on Tuesday announced its preliminary financial results for 2024, reporting a profit after tax of €508 million.

This marks a 4 per cent increase compared to the previous year, with €107 million earned in the fourth quarter alone.

In addition, the bank reported that basic earnings per share stood at €1.14, up 5 per cent year-on-year.

“This performance is testament to our robust capital and liquidity position, our strong asset quality and our diversified business model,” said Bank of Cyprus group CEO Panicos Nicolaou.

“As a result, we generated a profit after tax of €508 million, 4 per cent higher than 2023 and surpassed all our key financial targets for 2024, accelerating shareholder value creation,” he added.

The results also showed that the bank delivered a return on tangible equity (ROTE) of over 20 per cent, the second consecutive year it has exceeded that percentage.

Net interest income (NII) rose by 4 per cent year-on-year to €822 million, although the fourth quarter saw a slight decline of 3 per cent quarter-on-quarter, primarily due to lower interest rates.

Total operating expenses increased by 8 per cent to €367 million, mainly driven by higher staff costs, IT investments, marketing, and professional fees.

Despite this, the cost-to-income ratio remained low at 34 per cent for the year, although it rose to 38 per cent in the fourth quarter due to seasonal expenses.

The bank maintained a high level of liquidity and asset quality, with the non-performing exposure (NPE) ratio reducing to 1.9 per cent and NPE coverage at 111 per cent.

The cost of risk was recorded at 30 basis points. Retail deposits grew to €20.5 billion, reflecting a 6 per cent annual increase and a 3 per cent rise in the last quarter.

The bank’s balance sheet remained highly liquid, with €7.6 billion placed at the European Central Bank (ECB).

“Our asset quality remains healthy demonstrated by an NPE ratio below 2 per cent whilst NPEs are fully covered,” the BoC group CEO explained.

In terms of capital strength and shareholder returns, the bank’s Common Equity Tier 1 (CET1) ratio stood at 19.2 per cent, while the total capital ratio reached 24.0 per cent.

The bank generated 400 basis points of CET1 capital in 2024. The tangible book value per share increased by 17 per cent to €5.775 as of December 31, 2024.

The bank has also proposed a shareholder distribution with a 50 per cent payout ratio, including a €211 million cash dividend and a €30 million share buyback.

“In line with our ongoing, unwavering commitment of providing sustainable shareholder returns, we delivered on our promises and today we are pleased to propose a distribution based on a 50 per cent payout ratio, at the top-end of our 2024 distribution policy,” Nicolaou stated.

“This comprises a €211 million cash dividend and a €30 million share buyback, a significant increase in both payout ratio and total quantum compared to the previous year. In total it represents a double-digit yield, which is above the 2024 Eurozone banking sector average,” he added.

He further stated that “overall, we delivered €400 million of cumulative distributions out of 2022-2024 earnings, representing 24 per cent of our market capitalisation and exceeding the target we set at the investor update event in June 2023 in both size and timing”.

Meanwhile, the bank contextualised its results by mentioning that they were achieved in conjunction with the Cypriot economy growing by 3.4 per cent in 2024.

It also is expected to grow by around 3.3 per cent in 2025, outpacing the Eurozone average.

What is more, the bank recorded record new lending of €2.4 billion, a 20 per cent increase compared to the previous year.

Additionally, the bank’s gross performing loan book reached €10.2 billion, up by 4 per cent year-on-year.

“Looking ahead, as the interest rate environment normalises towards approximately 2 per cent, we reiterate our 2025 target of delivering high-teens ROTE on 15 per cent CET1 ratio or mid-teens ROTE on reported equity,” Nicolaou said.

“Our priorities going forward will centre on prudent capital management, driving new growth initiatives focused on loan book growth, non interest income diversification, maintaining cost discipline whilst re-investing in the business and protecting the fundamentals of our asset quality,” he added.

He also stated that the bank “recognises the importance of continuing to deliver attractive shareholder returns and hence we are also upgrading our distribution policy today by increasing the payout ratio range to 50-70 per cent”.

“We will also consider the introduction of interim dividends,” he said.

“As we enter 2025”, he concluded, “we are fully equipped to continue succeeding in the future, leveraging on our key strengths to ensure we are a well-capitalised and highly profitable organisation, with an unparalleled focus on supporting our customers and the broader economy.”