Bank of Cyprus successfully completes stress test

The Bank of Cyprus Group on Monday released a statement in which it confirmed that it has successfully completed the EU-wide stress test for 2023.

The announcement by the bank explained that this is not a “pass-or-fail” exercise, and no threshold is set to define the failure or success of banks, but it is designed to be used as an important input in the Supervisory Evaluation Process (SREP).

“The Group has significantly improved its results and resilience to stress under the adverse scenario compared to the Stress Test of 2021,” the announcement said.

In terms of the group’s results, the announcement noted that the capital depletion of the CET1 FL ratio over the 3-year horizon in the adverse scenario is in the range of 300 to 599 basis points, compared to 600 to 899 basis points in the 2021 stress test, and compares well with the average 480 basis points for the 98 ECB stress-tested banks.

In addition, the bank noted that the CET1 FL, as of the end of 2025, is in the range of 8 per cent to 11 per cent, and is above the capital requirements of the bank.

“Despite the more severe stressed scenario applied this year, Bank of Cyprus’ capital depletion is meaningfully lower than for the 2021 EU-wide stress test result thanks to a significant improvement in capital generation and sound asset quality,” the announcement stated.

“This positions the Bank of Cyprus well for potential macroeconomic shocks,” the announcement concluded.