TIDMBOCH
RNS Number : 8623Y
Bank of Cyprus Holdings PLC
13 May 2019
Announcement
Group Financial Results for the quarter ended 31 March 2019
Nicosia, 13 May 2019
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014.
Key Highlights for the quarter ended 31 March 2019
Good Capital Position
* CET1 ratio of 14.9% pro forma for Helix (13.4% as
reported)
* Total Capital ratio of 17.9% pro forma for Helix
(16.2% as reported)
Continuing progress on Balance Sheet repair
* Helix legal completion process underway, following
ECB's "Significant Risk Transfer" approval received
in March 2019. Completion expected during 2Q2019
* Sixteen consecutive quarters of organic NPE
reduction. NPEs down by c.70% since December 2014
* NPEs reduced by EUR157 mn to EUR4.6 bn (EUR2.4 bn
net) pro forma for Helix
* NPE ratio at 35% and coverage at 48% pro forma for
Helix
* Management actively exploring strategies to further
accelerate de-risking including further portfolio
sales
Strong liquidity position
* Significant liquidity surplus of EUR3.8 bn, pro forma
for Helix
* Deposits at EUR16.3 bn at quarter end, down by 3% qoq,
up 1% yoy for Cyprus
* Loan to deposit ratio of 67% pro forma for Helix
Positive Performance in 1Q2019
* Total Income of EUR176 mn, Operating profit of EUR71
mn, Underlying profit after tax before restructuring
costs of EUR23 mn
* Cost of risk of 1.2% reflecting continued de-risking
* Helix loss of EUR21 mn relating mainly to completion
and timing adjustments
* Positive impact of EUR109 mn following tax
legislation amendments adopted in March 2019
* Profit after tax of EUR95 mn
Group Chief Executive Statement
"Our results this quarter reflect continuing progress against
our core objective of balance sheet repair.
We have continued to make good progress towards completion of
the sale of c.EUR2.7 bn non-performing loans in Project Helix,
including obtaining the required regulatory approvals from the ECB
for the Significant Risk Transfer benefit from the Transaction. We
expect completion during the second quarter of 2019.
Project Helix complements our on-going organic non-performing
exposure (NPE) reduction, which amounted to EUR157 mn for the
quarter, broadly in line with our organic target of c.EUR800 mn for
2019. This was the sixteenth consecutive quarter of organic
reductions in NPEs.
Since the peak in 2014, and pro forma for the sale of the Helix
portfolio, we have now reduced the stock of NPEs by c.70% to EUR4.6
bn. This stock of delinquent loans is covered by 48%
provisions.
Even though we have reduced NPEs by c.70% since peak, there are
still EUR4.6 bn of delinquent loans to be addressed, and for which
we have plans in place. Approximately EUR900 mn of these are in
fact fully performing but trapped in the regulatory definition, and
approximately another EUR900 mn should be positively tackled over
time by the Government's ESTIA scheme supporting lower value
primary residences. This leaves a core of EUR2.8 bn of delinquent
loans that we are actively addressing, exploring strategies to
further accelerate our de-risking, including significant portfolio
sales.
The Bank's capital position remains good. As at 31 March 2019
the CET1 ratio (IFRS 9 transitional) was 14.9% and the Total
Capital ratio was 17.9%, both pro forma for Helix, well in excess
of our regulatory requirements.
The Bank continues to operate with a significant liquidity
surplus and, reflecting that, we have reduced our deposit gathering
and willingness to pay for deposits. At the end of the first
quarter, pro forma for Helix we had significant surplus liquidity
of EUR3.8 bn. During the quarter our deposits reduced by 3% to
EUR16.3 bn. New lending in Cyprus during the first quarter was
EUR563 mn, flat year on year. Our loan to deposit ratio at the
quarter-end stood at 67% pro forma for Helix.
During the first quarter of the year, the Group generated total
income of EUR176 mn and a positive operating result of EUR71 mn.
The underlying profit after tax result before restructuring costs
for the quarter is a profit of EUR23 mn. The profit and loss
account was positively impacted by EUR109 mn following tax
legislation amendments adopted in March 2019 and negatively
impacted by completion and timing adjustments of EUR21 mn for
Project Helix. The result of these was a profit after tax for the
first quarter of EUR95 mn.
2019 is a year in which management is putting in place the final
significant steps to repair the balance sheet. We have also worked
hard on revising our business model. Our Digital Transformation
Programme that started in 2017 is now beginning to clearly deliver
an improved customer experience and our branch network is now half
the size it was in 2013. But there is a need to further
rationalise, further modernise and reduce the cost of running the
Bank. Considerable work is going on in this important area which is
a key focus for management this year.
We are pleased to have maintained our leading market position in
a strengthening Cypriot economy, which expanded by 3.9% in 2018. We
remain as focused as ever on continuing to seek solutions, both
organic and inorganic, to make the Bank a stronger, safer, Cyprus-
and future- focused institution, capable of supporting the local
economy."
John Patrick Hourican
A. Group Financial Results - Underlying Basis
Unaudited Interim Condensed Consolidated Income Statement
----------------------------------------------------------------------------------------------------
1Q2018
EUR mn 1Q2019 represented(2,3) 4Q2018(3) qoq +% yoy +%
-------------------------------------- -------- ----------------- --------- --------- ---------
Net interest income 102 106 104 -1% -3%
Net fee and commission income 40 39 43 -9% 1%
Net foreign exchange gains
and net gains on financial
instrument transactions and
disposal/dissolution of subsidiaries 10 29 15 -32% -65%
Insurance income net of claims
and commissions 12 12 15 -19% 0%
Net gains from revaluation
and disposal of investment
properties and on disposal
of stock of properties 4 19 3 30% -79%
Other income 8 6 9 -3% 27%
-------------------------------------- -------- ----------------- --------- --------- ---------
Total income 176 211 189 -6% -17%
-------------------------------------- -------- ----------------- --------- --------- ---------
Staff costs (57) (52) (59) -3% 9%
Other operating expenses (42) (37) (44) -3% 12%
Special levy and contribution
to Single Resolution Fund (6) (7) (7) -7% -13%
Total expenses (105) (96) (110) -3% 9%
-------- ----------------- --------- ---------
Operating profit 71 115 79 -11% -38%
-------------------------------------- -------- ----------------- --------- --------- ---------
Provision charge (47) (52) (32) 49% -10%
Impairments of other financial
and non-financial assets (1) (6) (7) -93% -91%
Provisions for litigation,
regulatory and other matters 0 (2) (13) -102% -114%
-------------------------------------- -------- ----------------- --------- --------- ---------
Total provisions and impairments (48) (60) (52) -11% -21%
-------------------------------------- -------- ----------------- --------- --------- ---------
Share of profit from associates 2 1 0 97% 50%
-------------------------------------- -------- ----------------- --------- --------- ---------
Profit before tax and non-recurring
items 25 56 27 -6% -53%
-------------------------------------- -------- ----------------- --------- --------- ---------
Tax (2) (4) 7 -141% -19%
(Profit)/loss attributable
to non-controlling interests (0) 2 (4) -89% -129%
-------------------------------------- -------- ----------------- --------- --------- ---------
Profit after tax and before
non-recurring items 23 54 30 -25% -58%
-------------------------------------- -------- ----------------- --------- --------- ---------
Advisory and other restructuring
costs - excluding discontinued
operations and NPE sale (Helix) (7) (8) (16) -60% -9%
Profit after tax - Organic 16 46 14 15% -66%
-------- ----------------- --------- ---------
Profit/(loss) from discontinued
operations (UK) - 3 (1) - -
Restructuring costs relating
to NPE sale (Helix) (1) (6) (1) -28% -83%
Loss relating to NPE sale
(Helix) (21) - - - -
Reversal/(impairment) of DTA
and tax receivables 101 - (79) - -
-------------------------------------- -------- ----------------- --------- --------- ---------
Profit/(loss) after tax -
attributable to the owners
of the Company 95 43 (67) - 119%
-------------------------------------- -------- ----------------- --------- --------- ---------
1Q2018
Key Performance Ratios(3) 1Q2019 represented(2,3) 4Q2018(3) qoq + yoy +
-------------------------------------- -------- ----------------- --------- --------- ---------
Net Interest Margin (annualised)(1) 2.27% 2.38% 2.21% +6 bps -11 bps
-------------------------------------- -------- ----------------- --------- --------- ---------
Cost to income ratio 60% 46% 58% +2 p.p. +14 p.p.
-------------------------------------- -------- ----------------- --------- --------- ---------
Cost to income ratio excluding
special levy and contribution
to Single Resolution Fund 56% 42% 54% +2 p.p. +14 p.p.
-------------------------------------- -------- ----------------- --------- --------- ---------
Operating profit return on
average assets (annualised)(1) 1.3% 2.1% 1.4% -0.1 p.p. -0.8 p.p.
-------------------------------------- -------- ----------------- --------- --------- ---------
Basic earnings per share attributable
to the owners of the Company
- Organic (EUR cent) 3.61 10.48 3.12 0.49 (6.87)
-------------------------------------- -------- ----------------- --------- --------- ---------
Basic earnings/(losses) per
share attributable to the
owners of the Company (EUR
cent) 21.23 9.67 (14.93) 36.16 11.56
-------------------------------------- -------- ----------------- --------- --------- ---------
1. Ignoring the classification of the Helix portfolio of EUR1,103 mn
(NBV) and of the Velocity portfolio of EUR5 mn (NBV) as disposal groups
held for sale. 2. Represented for the disposal of the UK subsidiary
3. Including the impact from IFRIC Presentation of unrecognised interest
following the curing of a credit-impaired financial asset (IFRS 9)).
; p.p. = percentage points, bps = basis points, 100 basis points (bps)
= 1 percentage point
A. Group Financial Results - Underlying Basis (continued)
Unaudited Interim Condensed Consolidated Balance Sheet
============================================================================================================
EUR mn 31.03.2019 31.12.2018 +%
==================================================== ================= =========== ======================
Cash and balances with central
banks 3,913 4,610 -15%
Loans and advances to banks 448 473 -5%
Debt securities, treasury bills
and equity investments 1,711 1,515 13%
Net loans and advances to customers 10,955 10,922 0%
Stock of property 1,542 1,530 1%
Other assets 1,727 1,555 11%
Non-current assets and disposal
groups held for sale 1,449 1,470 -1%
==================================================== ================= =========== ======================
Total assets 21,745 22,075 -1%
==================================================== ================= =========== ======================
Deposits by banks 480 432 11%
Funding from central banks 830 830 -
Repurchase agreements 251 249 1%
Customer deposits 16,298 16,844 -3%
Subordinated loan stock 254 271 -6%
Other liabilities 1,163 1,082 7%
==================================================== ================= =========== ======================
Total liabilities 19,276 19,708 -2%
==================================================== ================= =========== ======================
Shareholders' equity 2,223 2,121 5%
==================================================== ================= =========== ======================
Other equity instruments 220 220 -
==================================================== ================= =========== ======================
Total equity excluding non-controlling
interests 2,443 2,341 4%
==================================================== ================= =========== ======================
Non-controlling interests 26 26 2%
==================================================== ================= =========== ======================
Total equity 2,469 2,367 4%
==================================================== ================= =========== ======================
Total liabilities and equity 21,745 22,075 -1%
==================================================== ================= =========== ======================
Key Balance Sheet figures and 31.03.2019 31.03.2019 31.12.2018 +
ratios Before NPE
Sale (Helix)(1)
==================================================== ================= =========== =========== =========
Gross loans (EUR mn) 15,882 13,155 13,148 0%
==================================================== ================= =========== =========== =========
Accumulated provisions (EUR
mn) 3,846 2,227 2,254 -1%
==================================================== ================= =========== =========== =========
Customer deposits (EUR mn) 16,298 16,298 16,844 -3%
==================================================== ================= =========== =========== =========
Loans to deposits ratio (net) 74% 67% 65% +2 p.p.
==================================================== ================= =========== =========== =========
NPE ratio 46% 35% 36% -1 p.p.
==================================================== ================= =========== =========== =========
NPE provisioning coverage ratio 53% 48% 47% +1 p.p.
==================================================== ================= =========== =========== =========
Leverage ratio 10.6% 10.6% 10.0% 0.6 p.p.
==================================================== ================= =========== =========== =========
Capital ratios and risk weighted 31.03.2019 31.03.2019 31.12.2018 +
assets pro forma(2)
==================================================== ================= =========== =========== =========
Common Equity Tier 1 (CET1)
ratio (transitional for IFRS
9)(3) 14.9% 13.4% 11.9%(4) +150 bps
==================================================== ================= =========== =========== =========
Total capital ratio 17.9% 16.2% 14.9% +130 bps
==================================================== ================= =========== =========== =========
Risk weighted assets (EUR mn) 13,884 15,391 15,373 0%
==================================================== ================= =========== =========== =========
p.p. = percentage points, bps = basis points, 100 basis points (bps)
= 1 percentage point; 1. Ignoring the classification of the Helix
portfolio of EUR1,103 mn (NBV) and of the Velocity portfolio of EUR5
mn (NBV) as disposal groups held for sale. 2. Pro forma for Helix.
3. The CET1 FL ratio as at 31 March 2019 (including the full impact
of IFRS 9) amounts to 11.9% and 13.3% pro forma for Helix (compared
to 10.1% and 13.5% respectively for 31 December 2018). 4. The CET1
ratio transitional also for DTA as at 31 December 2018 stood at 12.1%.
Commentary on Underlying Basis
Reclassifications to comparative information for 1Q2018 and
4Q2018 were made in order to present the financial information on a
comparable basis to the current year presentation. They mainly
relate to the following items: (i) unrecognised interest on
previously credit impaired loans which have cured during the period
in line with an IFRIC discussion, which took place in November 2018
(Presentation of unrecognised interest following the curing of a
credit impaired financial asset (IFRS 9)) was reclassified from net
interest income to 'Credit losses to cover credit risk on loans and
advances to customers'; (ii) the results of the discontinued
operations in the UK were represented as discontinued operations;
(iii) Interest income and interest expense relating to financial
instruments classified at FVPL have been reclassified to 'Income
similar to interest income' and 'Expense similar to interest
expense' respectively in order to be consistent with the
presentation requirements for the interest income calculated using
the effective interest rate method, on financial instruments
measured at amortised cost and financial assets measured at FVOCI
following the adoption of IFRS 9. The reclassifications and
representation did not have an impact on the results for the
quarter or the equity of the Group.
A.1. Balance Sheet Analysis
A.1.1 Capital Base
Total equity (excluding non-controlling interests) totalled
EUR2,443 mn at 31 March 2019, compared to EUR2,341 mn at 31
December 2018. Shareholders' equity totalled EUR2,223 mn at 31
March 2019, compared to EUR2,121 mn at 31 December 2018.
The Common Equity Tier 1 capital (CET1) ratio on an IFRS 9
transitional basis stood at 13.4% at 31 March 2019 (and 14.9% pro
forma for Helix), compared to 11.9% at 31 December 2018. The CET1
ratio transitional also for deferred tax assets (DTA) stood at
12.1% as at 31 December 2018. The DTAs were fully phased in as of 1
January 2019. During 1Q2019 the CET1 ratio was positively affected
by the tax legislation amendments relating to the conversion of
deferred tax assets into deferred tax credits.
The Group has elected to apply the EU transitional arrangements
for regulatory capital purposes (EU Regulation 2017/2395) where the
impact on the impairment amount from the initial application of
IFRS 9 on the capital ratios is phased-in gradually. The amount
added each year decreases based on a weighting factor until the
impact of IFRS 9 is fully absorbed back to CET1 at the end of the
five years. The impact on the capital ratios for the year 2018 was
5% of the impact on the impairment amounts from the initial
application of IFRS 9, increasing to 15% (cumulative) for the year
2019.
The CET1 ratio on a fully-loaded basis amounts to 11.9% at 31
March 2019 (and 13.3% pro forma for Helix), compared to 10.1% at 31
December 2018 (and 13.5% pro forma for DTC and Helix). On a
transitional basis and on a fully phased-in basis after the five
year period of transition is complete, the impact of IFRS 9 is
expected to be manageable and within the Group's capital plans.
As at 31 March 2019, the Total Capital ratio stood at 16.2% (and
17.9% pro forma for Helix), compared to 14.9% at 31 December
2018.
The Group's capital ratios are above the minimum CET1 regulatory
capital ratio of 10.5% (comprising a 4.5% Pillar I requirement, a
3.0% Pillar II requirement, the Capital Conservation Buffer of 2.5%
and the Other Systemically Important Institution Buffer of 0.5%)
and the overall Total Capital requirement of 14.0%, comprising an
8.0% Pillar I requirement (of which up to 1.5% can be in the form
of Additional Tier 1 capital and up to 2.0% in the form of Tier 2
capital), a 3.0% Pillar II requirement (in the form of CET1), the
Capital Conservation Buffer of 2.5% and the Other Systemically
Important Institution Buffer of 0.5%. The ECB has also provided
non-public guidance for an additional Pillar II CET1 buffer.
In accordance with the provisions of the Macroprudential
Oversight of Institutions Law of 2015, the Central Bank of Cyprus
(CBC) is also the responsible authority for the designation of
banks that are Other Systemically Important Institutions (O-SIIs)
and for the setting of the O-SII buffer requirement for these
systemically important banks. The Group has been designated as an
O-SII and the O-SII buffer currently set by the CBC for the Group
is 2%. This buffer will be phased-in gradually, starting from 1
January 2019 at 0.5% and increasing by 0.5% every year thereafter,
until being fully implemented (2.0%) on 1 January 2022.
Based on the SREP decisions of prior years, the Company and the
Bank were under a regulatory prohibition for equity dividend
distribution and therefore no dividends were declared or paid
during years 2018 and 2017. Following the 2018 SREP decision, the
Company and the Bank are still under equity dividend distribution
prohibition. This prohibition does not apply if the distribution is
made via the issuance of new ordinary shares to the shareholders
which are eligible as CET1 capital. No prohibition applies to the
payment of coupons on any AT1 capital instruments issued by the
Company and the Bank.
The EBA final guidelines on Supervisory Review and Evaluation
Process (SREP) and supervisory stress testing in July 2018 and the
Single Supervisory Mechanism's (SSM) 2018 SREP methodology provide
that CET1 held for the purposes of Pillar II add-ons cannot be used
to meet any other capital requirements (Pillar 1, P2R or the
combined buffer requirements), and therefore cannot be used twice.
Such restrictions are, however, only expected to apply with effect
from the 2019 SREP cycle. Pillar II add-ons derive from the Group's
individual capital guidance, which is a point in time assessment
made in the context of the SREP process and, accordingly, they may
vary over time.
Additional Tier 1
In December 2018, the Company proceeded with the issuance of
EUR220 mn of Additional Tier 1 Capital Securities.
Legislative amendments for the conversion of DTA to DTC
Legislative amendments allowing for the conversion of specific
deferred tax assets (DTA) into deferred tax credits (DTC) were
adopted by the Cyprus Parliament on 1 March 2019 and published on
the Official Gazette of the Republic on 15 March 2019. The law
amendments cover the income tax losses transferred from Laiki Bank
to the Bank in March 2013. The introduction of CRD IV in January
2014 and its subsequent phasing-in led to a more capital intensive
treatment of this DTA for the Bank. The law amendments have
resulted in improved regulatory capital treatment, under Capital
Requirements Regulation (EU) No. 575/2013 ("CRR"), of the DTA
amounting to c.EUR285 mn or a CET1 uplift of c.190 bps.
Pro forma capital ratios
With the completion of Project Helix expected in 2Q2019, the
CET1 ratio (IFRS 9 transitional basis) of 13.4% as at 31 March 2019
improves to 14.9% pro forma for Helix. The Total Capital ratio of
16.2% as at 31 March 2019 improves to 17.9% pro forma for
Helix.
Share premium reduction of the Bank
The Bank (BOC PCL) will proceed (subject to approvals mainly by
the Court of Cyprus and the ECB) with a capital reduction process
which will result in the reclassification of c.EUR551 mn of the
Bank's share premium account balance as distributable reserves
which shall be available for distribution to the shareholders of
the Bank, resulting in total net distributable reserves of c.EUR1
bn on a pro forma basis (31 December 2018). The reduction of
capital will not have any impact on regulatory capital or the total
equity position of BOC PCL or the Group.
The distributable reserves provide the basis for the calculation
of distributable items under the CRR, which provides that coupons
on AT1 capital instruments may only be funded from distributable
items.
A.1.2 Funding and Liquidity
Funding
Funding from Central Banks
At 31 March 2019, the Bank's funding from central banks amounted
to EUR830 mn, which relates to ECB funding, (at the same level as
at 31 December 2018), comprising solely of funding through the
Targeted Longer-Term Refinancing Operations (TLTRO II).
Deposits
Customer deposits totalled EUR16,298 mn at 31 March 2019,
compared to EUR16,844 mn at 31 December 2018. Customer deposits
decreased by 3% qoq and increased by 1% yoy for deposits in Cyprus.
Cyprus deposits account for 100% of Group customer deposits after
the disposal of the UK subsidiary in 2018.
The Bank's deposit market share in Cyprus reached 35.2% at 31
March 2019 (compared to 36.0% at 31 December 2018, on the same
basis). Customer deposits accounted for 75% of total assets at 31
March 2019.
The Loan to Deposit ratio (L/D) stood at 74% at 31 March 2019
when ignoring the classification of the Helix portfolio as a
disposal group held for sale, compared to 72% at 31 December 2018,
compared to a high of 151% at 31 March 2014. Post NPEs sales (Helix
and Velocity), the L/D ratio is reduced by a further 7 p.p to
67%.
Subordinated Loan Stock
At 31 March 2019 the Bank's subordinated loan stock (including
accrued interest) amounted to EUR254 mn (compared to EUR271 mn as
at 31 December 2018) and relates to unsecured subordinated Tier 2
Capital Notes of nominal value EUR250 mn, issued by the Bank in
January 2017.
Liquidity
At 31 March 2019 the Group Liquidity Coverage Ratio (LCR) stood
at 216% (compared to 231% at 31 December 2018) and was in
compliance with the minimum regulatory requirement of 100%.
The Net Stable Funding Ratio (NSFR) has not yet been introduced.
It will become a regulatory indicator when CRR2 is enforced with
the limit set at 100%. At 31 March 2019, the Group's NSFR, on the
basis of Basel standards, stood at 117% (compared to 119% at 31
December 2018).
A.1.3 Loans
Group gross loans totalled EUR15,882 mn at 31 March 2019,
compared to EUR15,900 mn at 31 December 2018. Gross loans in Cyprus
totalled EUR15,686 mn at 31 March 2019 and accounted for 99% of
Group gross loans. The exposures remaining in the UK post the sale
of BOC UK are being run down over time and have been categorised as
non-core overseas exposures as of 30 September 2018.
New loans granted in Cyprus reached EUR563 mn for 1Q2019, flat
year on year.
At 31 March 2019, the Group net loans and advances to customers
totalled EUR10,955 mn (compared to EUR10,922 mn at 31 December
2018).
In addition, at 31 March 2019, net loans and advances to
customers of EUR1,103 mn were classified as a disposal group held
for sale in line with IFRS 5 and relate to Helix, compared to
EUR1,148 mn at 31 December 2018. Moreover, at 31 March 2019, net
loans and advances to customers of EUR5 mn (compared to EUR6 mn as
at 31 December 2018) were classified as a disposal group held for
sale in line with IFRS 5 and relate to Project Velocity, an
agreement to sell a non-performing loan portfolio of primarily
retail unsecured exposures.
The Bank is the single largest credit provider in Cyprus with a
market share of 46.7% at 31 March 2019, compared to 45.4% at 31
December 2018.
A.1.4 Loan portfolio quality
Tackling the Group's loan portfolio quality remains the top
priority for management. The Group continues to make steady
progress across all asset quality metrics and the loan
restructuring activity continues. The Group has been successful in
engineering restructuring solutions across the spectrum of its loan
portfolio.
Non-performing exposures (NPEs) as defined by the European
Banking Authority (EBA) were reduced by EUR146 mn or 2% during
1Q2019 to EUR7,273 mn at 31 March 2019, accounting for 46% of gross
loans (ignoring the classification of the Helix (and Velocity)
portfolio as a disposal group held for sale), compared to 47% at 31
December 2018 on the same basis.
The organic reduction of NPEs in 1Q2019 on the residual
portfolio was EUR157 mn, broadly in line with an organic target of
c.EUR800 mn for 2019. This included an amount of EUR104 mn, which
relates to a reclassification between gross loans and accumulated
provisions on loans and advances to customers classified as a
disposal group held for sale.
The provisioning coverage ratio of NPEs stood at 53% at 31 March
2019 (ignoring the classification of the Helix (and Velocity)
portfolio as a disposal group held for sale), compared to 52% at 31
December 2018 on the same basis.
When taking into account tangible collateral at fair value, NPEs
are fully covered.
31.12.2018(1)
31.03.2019(1)
% of gross % of gross
EUR mn loans EUR mn loans
==================================== ====== ========== ====== ==========
NPEs as per EBA definition 7,273 45.8% 7,419 46.7%
Of which, in pipeline to exit:
- NPEs with forbearance measures,
no arrears(2) 1,084 6.8% 1,211 7.6%
1. Ignoring the classification of the Helix portfolio of EUR1,103mn
(NBV) and of the Velocity portfolio of EUR5 mn (NBV) as disposal
groups held for sale. 2. The analysis is performed on a customer
basis.
Overall, the Group has recorded organic NPE reductions for
sixteen consecutive quarters and expects the organic reduction of
residual NPEs (post Helix) to continue during the coming
quarters.
Project Helix
During 2018, in addition to the organic reduction of NPEs, the
Group accelerated balance sheet de-risking through reaching an
agreement in August 2018 for the sale of a portfolio of loans (the
'Portfolio') with a gross book value of EUR2.8 bn (of which EUR2.7
bn relate to non-performing loans as at 30 June 2018), secured by
real estate collateral ('NPLs') (known as 'Project Helix', or the
'Transaction'). The Portfolio had a contractual balance of c.EUR5.7
bn as at 31 March 2018.
Following the completion of Project Helix, the Bank's gross NPEs
will be c.70% lower than its peak in 2014.
Project Helix reduces the NPE ratio by c.11 p.p. to 35% as at 31
March 2019. Ignoring the classification of the Helix (and Velocity)
portfolios as disposal groups held for sale, the NPE ratio is
46%.
The NPE provision coverage as at 31 March 2019 is 48%, compared
to 47% as at 31 December 2018. Ignoring the classification of the
Helix (and Velocity) portfolios as disposal groups held for sale,
the NPE provision coverage is 53%.
In March 2019, the Bank received approval from the ECB for the
Significant Risk Transfer ('SRT') benefit from the Transaction.
This is an important step towards completion of the Transaction,
which remains subject to various outstanding conditions precedent.
All relevant figures and pro forma calculations are based on 31
March 2019 financial results, unless otherwise stated. Calculations
on a pro forma basis assume completion of the Transaction, expected
to occur in 2Q2019.
ESTIA
In July 2018, the Government announced a scheme aimed at
addressing NPEs backed by primary residence, known as ESTIA. This
Scheme is expected to positively impact c.EUR0.9 bn of retail core
NPEs, subject to eligibility criteria and participation rate. This
Estia eligible portfolio refers to the potentially eligible
portfolio based on the Bank's available data. Eligibility criteria
relate primarily to the Open Market Value (OMV) of the residence,
total income and net wealth of the household. These will act as a
clear definition of socially protected borrowers, acting as an
enabler against strategic defaulters. In accordance with the
Scheme, the eligible loans are to be restructured to the lower of
contractual and OMV, and the Government to subsidise one third of
the instalment. The terms of the Scheme are subject to
finalisation. The Bank is currently awaiting the official launch of
the Scheme by the Government.
Project Velocity
In December 2018, the Bank entered into an agreement with APS
Delta s.r.o, to sell a non-performing loan portfolio of primarily
retail unsecured exposures, with a contractual balance of EUR245 mn
and a gross book value of EUR34 mn as at 30 September 2018 (known
as "Project Velocity" or the "Sale"). This portfolio comprises of
9,700 heavily delinquent borrowers, including 8,800 private
individuals and 900 small-to-medium-sized enterprises. The gross
book value of this portfolio as at 31 March 2019 was EUR33 mn.
The Sale is expected to be neutral to both the profit and loss
account and to capital. The Sale is subject to the necessary
approvals and is expected to be completed during 2Q2019.
The Group actively explores strategies to further accelerate
de-risking, including significant portfolio sales.
A.1.5. Real Estate Management Unit (REMU)
The Real Estate Management Unit (REMU) on-boarded EUR45 mn of
assets (including construction cost) in 1Q2019 (down by 61% qoq and
66% yoy), via the execution of debt for asset swaps and repossessed
properties. The focus for REMU is increasingly shifting from
on-boarding of assets resulting from debt for asset swaps towards
the disposal of these assets. The Group completed disposals of
EUR30 mn in 1Q2019 (compared to EUR42 mn in 4Q2018), resulting in a
profit on disposal of EUR4 mn for 1Q2019. During the quarter ended
31 March 2019, the Group executed sale-purchase agreements (SPAs)
with contract value of EUR37 mn (119 properties). In addition, the
Group signed SPAs for disposals of assets with contract value of
EUR103 mn.
Following the incorporation of Cyreit Variable Capital
Investment Company PLC, properties of carrying value EUR166 mn were
reclassified from the stock of properties (measured at the lower of
cost and net realisable value under IAS 2) to investment properties
(measured at fair value under IAS 40). In November 2018, the Bank
signed an agreement for the disposal of its entire holding in the
investment shares of the Cyreit Fund, resulting in a valuation loss
of EUR14 mn recorded in 3Q2018, relating to both properties and
other receivables. The completion of the disposal is subject to
regulatory approvals and expected in 2Q2019.
As at 31 March 2019, assets held by REMU had a carrying value of
EUR1.5 bn, in addition to assets reclassified to investment
properties of EUR166 mn, which were subsequently classified as a
disposal group held for sale. As at 31 March 2019, properties with
carrying value of EUR98 mn were included in the portfolio for the
NPE sale (Helix), compared to EUR74 mn as at 31 December 2018.
Assets held by REMU (Group) qoq
EUR mn 1Q2019 1Q2018 4Q2018 +% yoy +%
------ ------ ------ ----
Opening balance 1,530 1,641 1,558 -2% -7%
------------------------------------------------------------------ ------ ------ ------ ---- ------
On-boarded assets (including construction cost) 45 134 117 -61% -66%
------------------------------------------------------------------ ------ ------ ------ ---- ------
Sales (30) (55) (42) -29% -45%
------------------------------------------------------------------ ------ ------ ------ ---- ------
Transfer to investment properties - (166) - - -
------------------------------------------------------------------ ------ ------ ------ ---- ------
Transfer to non-current assets and disposal groups held for sale (1) - (102) -99% -
------------------------------------------------------------------ ------ ------ ------ ---- ------
Closing balance 1,542 1,552 1,530 1% -1%
------------------------------------------------------------------ ------ ------ ------ ---- ------
Analysis by type and country Cyprus Greece Romania Total
31 March 2019 (EUR mn)
------------------------------- ------- ------- -------- ------
Residential properties 172 25 0 197
Offices and other commercial
properties 226 42 7 275
Manufacturing and industrial
properties 82 37 0 119
Hotels 35 0 - 35
Land (fields and plots) 904 7 4 915
Properties under construction 1 - - 1
------------------------------- ------- ------- -------- ------
Total 1,420 111 11 1,542
------------------------------- ------- ------- -------- ------
Cyprus Greece Romania Total
31 December 2018 (EUR mn)
------------------------------- ------- ------- -------- ------
Residential properties 164 25 0 189
Offices and other commercial
properties 228 44 7 279
Manufacturing and industrial
properties 80 38 0 118
Hotels 35 0 - 35
Land (fields and plots) 896 8 4 908
Properties under construction 1 - - 1
------------------------------- ------- ------- -------- ------
Total 1,404 115 11 1,530
------------------------------- ------- ------- -------- ------
A.1.6 Non-core overseas exposures
The remaining non-core overseas net exposures (including both
on-balance sheet and off-balance sheet exposures) at 31 March 2019
are as follows:
EUR mn 31 March 2019 31 December 2018
--------------
Greece 152 164
Romania 33 35
Serbia 7 7
Russia 21 23
UK 1 11
--------- -------------- -----------------
The Group continues its efforts for further deleveraging and
disposal of non-essential assets and operations.
In addition to the above, at 31 March 2019 there were overseas
exposures of EUR157 mn in Greece (compared to exposures of EUR144
mn at 31 December 2018), not identified as non-core exposures,
since they are considered by management as exposures arising in the
normal course of business.
In accordance with the Group's strategy to exit from overseas
non-core operations, the operations of the branch in Romania were
terminated in January 2019, following the completion of
deregistration formalities with respective authorities.
A.2. Income Statement Analysis
A.2.1 Total income
1Q2018 Yoy(2)
EUR mn 1Q2019 represented(2,3) 4Q2018(3) qoq +% +%
------ ----------------- --------- ------
Net interest income 102 106 104 -1% -3%
---------------------------------------- ------ ----------------- --------- ------ --------
Net fee and commission income 40 39 43 -9% 1%
Net foreign exchange gains and
net gains on financial instrument
transactions and disposal/dissolution
of subsidiaries 10 29 15 -32% -65%
Insurance income net of claims
and commissions 12 12 15 -19% 0%
Net gains from revaluation and
disposal of investment properties
and on disposal of stock of properties 4 19 3 30% -79%
Other income 8 6 9 -3% 27%
---------------------------------------- ------ ----------------- --------- ------ --------
Non-interest income 74 105 85 -13% -30%
---------------------------------------- ------ ----------------- --------- ------ --------
Total income 176 211 189 -6% -17%
---------------------------------------- ------ ----------------- --------- ------ --------
Net Interest Margin (annualised)(1) 2.27% 2.38% 2.21% 6 bps -11 bps
---------------------------------------- ------ ----------------- --------- ------ --------
Average interest earning assets
(EUR mn)(1) 18,243 17,981 18,468 -1% 1%
---------------------------------------- ------ ----------------- --------- ------ --------
1. Ignoring the classification of the Helix portfolio of EUR1,103
mn (NBV) and of the Velocity portfolio of EUR5 mn (NBV) as disposal
groups held for sale.
2. Represented for the disposal of the UK subsidiary.
3. Including the impact from IFRIC Presentation of unrecognised
interest following the curing of a credit-impaired financial asset
(IFRS 9))
p.p. = percentage points, bps = basis points, 100 basis points
(bps) = 1 percentage point
Net interest income (NII) and net interest margin (NIM) for
1Q2019 amounted to EUR102 mn and 2.27% respectively, when ignoring
the classification of the Helix portfolio as a disposal group held
for sale. NII remained at similar levels when compared to EUR104 mn
for 4Q2018 and down by 3% compared to EUR106 mn a year earlier. The
NIM for 1Q2019 improved by 6 bps to 2.27%, positively impacted by
the reduction in the volume and cost of deposits. The yoy decline
in NIM of 11 bps reflects the lower volume on loans and pressure on
lending rates.
Quarterly average interest earning assets for 1Q2019 amounted to
EUR18,243 mn, compared to EUR18,468 mn for 4Q2018, down by 1%,
primarily driven by the decrease in the volume of deposits.
Non-interest income for 1Q2019 amounted to EUR74 mn, mainly
comprising net fee and commission income of EUR40 mn, net foreign
exchange gains and net gains on financial instrument transactions
and disposal/dissolution of subsidiaries of EUR10 mn, net insurance
income of EUR12 mn, net gains from revaluation and disposal of
investment properties and on disposal of stock of properties of
EUR4 mn and other income of EUR8 mn.
Net fee and commission income for 1Q2019 amounted to EUR40 mn,
at similar levels compared to 1Q2018 and compared to EUR43 mn in
4Q2018 (down by 9% qoq), reflecting quarterly seasonality.
Net foreign exchange gains and net gains on financial instrument
transactions and disposal/dissolution of subsidiaries of EUR10 mn
for 1Q2019, comprising mainly net foreign exchange gains of EUR7 mn
and net gains on revaluation of financial instruments of EUR3 mn,
decreased by 65% yoy and 32% qoq. The yoy decrease is due to an
ad-hoc gain on disposal of bonds during 1Q2018 of EUR19 mn. The qoq
decrease is mainly due to elevated foreign exchange gains in 4Q2018
related to the closing of hedging positions of overseas / run down
operations.
Net insurance income of EUR12 mn for 1Q2019, at the same levels
as for 1Q2018, but decreased by 19% qoq mainly due to elevated
insurance claims in 1Q2019.
Net gains from revaluation and disposal of investment properties
and on disposal of stock of properties for 1Q2019 amounted to EUR4
mn, relating to net gains on disposal of stock of properties (REMU
gains), at similar levels to the previous quarter (net gains of
EUR3 mn) and compared to net gains of EUR19 mn for 1Q2018, which
comprised net profit from the disposal of stock of properties of
EUR11 mn (REMU gains) and a valuation gain on reclassification of
EUR8 mn.
Total income for 1Q2019 amounted to EUR176 mn, compared to
EUR189 mn for 4Q2018 (down by 6% qoq) and to EUR211 mn for 1Q2018
(down by 17% yoy).
A.2.2 Total expenses
EUR mn 1Q2019 1Q2018 represented(2,3) 4Q2018(3) qoq +% yoy +%
-------- ----------------------- --------- -------
Staff costs (57) (52) (59) -3% 9%
Other operating expenses (42) (37) (44) -3% 12%
--------------------------------- -------- ----------------------- --------- ------- --------
Total operating expenses (99) (89) (103) -3% 10%
--------------------------------- -------- ----------------------- --------- ------- --------
Special levy and contribution
to Single Resolution Fund (SRF) (6) (7) (7) -7% -13%
Total expenses (105) (96) (110) -3% 9%
-------- ----------------------- --------- -------
Cost to income ratio(1) 60% 46% 58% +2 p.p. +14 p.p.
--------------------------------- -------- ----------------------- --------- ------- --------
Cost to income ratio excluding
special levy and contribution
to SRF(1) 56% 42% 54% +2 p.p. +14 p.p.
--------------------------------- -------- ----------------------- --------- ------- --------
1
1 1. Ignoring the classification of the Helix portfolio of EUR1,103
mn (NBV) and of the Velocity portfolio of EUR5 mn (NBV) as disposal
groups held for sale.
2. Represented for the disposal of the UK subsidiary.
3. Including the impact from IFRIC Presentation of unrecognised
interest following the curing of a credit-impaired financial asset
(IFRS 9))
p.p. = percentage points, bps = basis points, 100 basis points
(bps) = 1 percentage point
Total expenses for 1Q2019 were EUR105 mn (compared to EUR110 mn
for 4Q2018), 54% of which related to staff costs
(EUR57 mn), 40% to other operating expenses (EUR42 mn) and 6%
(EUR6 mn) to special levy and contribution to Single Resolution
Fund (SRF).
Total operating expenses for 1Q2019 were EUR99 mn, increased by
10% yoy, compared to EUR89 mn for 1Q2018 and decreased by 3% qoq,
compared to EUR103 mn for 4Q2018.
Staff costs of EUR57 mn for 1Q2019 increased by 9% yoy (compared
to EUR52 mn in 1Q2018) and decreased by 3% qoq when compared to
EUR59 mn for 4Q2018, which included an amount of EUR4 mn recorded
in 4Q2018 related to previous quarters and one-off transactional
staff costs. The remaining increase of EUR2 mn relates to the
increase in employer's social insurance contributions from the
beginning of the year and the additional contributions to the new
general healthcare system which commenced in March 2019.
Other operating expenses for 1Q2019 were EUR42 mn, decreased by
3% qoq (EUR44 mn in 4Q2018) and increased by 12% yoy (EUR37 mn in
1Q2018), driven mainly from projects relating to the Digital
Transformation Programme and other professional services.
The cost to income ratio excluding special levy and contribution
to Single Resolution Fund for 1Q2019 was 56%, (compared to 54% for
4Q2018), principally reflecting the decrease in total income.
Management remains focused on cost reduction this year and
considerable work is in progress.
A.2.3 Profit before tax and non-recurring items
qoq
EUR mn 1Q2019 1Q2018 represented(1,2) 4Q2018(2) +% yoy +%
-------- ----------------------- --------- -----
Operating profit 71 115 79 -11% -38%
------------------------------------ -------- ----------------------- --------- ----- ------
Provision charge (47) (52) (32) 49% -10%
Impairments of other financial
and non-financial assets (1) (6) (7) -93% -91%
Provisions for litigation,
regulatory and other matters 0 (2) (13) -102% -114%
------------------------------------ -------- ----------------------- --------- ----- ------
Total provisions and impairments (48) (60) (52) -11% -21%
------------------------------------ -------- ----------------------- --------- ----- ------
Share of profit from associates 2 1 0 97% 50%
------------------------------------ -------- ----------------------- --------- ----- ------
Profit before tax and non-recurring
items 25 56 27 -6% -53%
------------------------------------ -------- ----------------------- --------- ----- ------
1. Represented for the disposal of the UK subsidiary.
2. Including the impact from IFRIC Presentation of unrecognised
interest following the curing of a credit-impaired financial
asset (IFRS 9))
Operating profit for 1Q2019 was EUR71 mn, compared to EUR79 mn
for 4Q2018, down by 11% qoq, and compared to EUR115 mn for 1Q2018,
down by 38% yoy, mainly due to the lower volume on loans and
pressure on lending rates.
The provision charge for 1Q2019 totalled EUR47 mn, compared to
EUR32 mn for 4Q2018 (up by 49% qoq) and compared to EUR52 mn for
1Q2018 (down by 10% yoy). The qoq increase reflects further
de-risking.
The annualised provisioning charge for 1Q2019, ignoring the
classification of the Helix portfolio as a disposal group held for
sale and including the impact from IFRIC Presentation of
unrecognised interest following the curing of a credit-impaired
financial asset (IFRS 9)), accounted for 1.2% of gross loans,
compared to a provisioning charge of 0.8% for FY2018, on the same
basis.
At 31 March 2019, accumulated provisions, including fair value
adjustment on initial recognition and provisions for off-balance
sheet exposures and ignoring the classification of the Helix
portfolio as a disposal group held for sale, totalled EUR3,846 mn
(compared to EUR3,852 mn at 31 December 2018) and accounted for
24.2% of gross loans on the same basis (at the same levels as at 31
December 2018). Ignoring the classification of the Helix portfolio
as a disposal group held for sale, the decrease in accumulated
provisions in 1Q2019 amounted of EUR6.5 mn, whilst the decrease in
accumulated provisions in the previous quarter amounted to EUR141
mn.
Impairments of other financial and non-financial assets for
1Q2019 was EUR1 mn, compared to EUR7 mn for 4Q2018 (down by 93%
qoq) and to EUR6 mn for 1Q2018 (down by 91% yoy). Impairments of
other financial and non-financial assets for 4Q2018 primarily
related to the discounting of Greek tax receivables.
Provisions for litigation, regulatory and other matters for
1Q2019 was less than EUR1 mn, compared to EUR13 mn for 4Q2018,
which primarily related to litigation for securities issued by the
BOC PCL between 2007 and 2011 and other provisions for regulatory
matters.
A.2.4 Profit/(loss) after tax
EUR mn 1Q2019 1Q2018 represented(1,2) 4Q2018(3) qoq +% yoy +%
-------- ----------------------- --------- ------
Profit before tax and non-recurring
items 25 56 27 -6% -53%
---------------------------------------------- -------- ----------------------- --------- ------ ------
Tax (2) (4) 7 -141% -19%
(Profit)/loss attributable to non-controlling
interests (0) 2 (4) -89% -129%
---------------------------------------------- -------- ----------------------- --------- ------ ------
Profit after tax and before non-recurring
items 23 54 30 -25% -58%
---------------------------------------------- -------- ----------------------- --------- ------ ------
Advisory and other restructuring
costs - excluding discontinued
operations and NPE sale (Helix) (7) (8) (16) -60% -9%
Profit after tax - Organic 16 46 14 15% -66%
-------- ----------------------- --------- ------
Profit/(loss) from discontinued
operations (UK) - 3 (1) - -
Restructuring costs relating to
NPE sale (Helix) (1) (6) (1) -28% -83%
Loss relating to NPE sale (Helix) (21) - - - -
Reversal/(impairment) of DTA and
tax receivables 101 - (79) - -
---------------------------------------------- -------- ----------------------- --------- ------ ------
Profit/(loss) after tax - attributable
to the owners of the Company 95 43 (67) - 119%
---------------------------------------------- -------- ----------------------- --------- ------ ------
1. Represented for the disposal of the UK subsidiary.
2. Including the impact from IFRIC Presentation of unrecognised
interest following the curing of a credit-impaired financial asset
(IFRS 9))
The tax charge for 1Q2019 totalled EUR2 mn, compared to a tax
charge of EUR4 mn for 1Q2018 and a tax credit of EUR7 mn in 4Q2018
which comprised mainly reversals of tax provisions relating to
prior years.
Profit after tax and before non-recurring items for 1Q2019 was
EUR23 mn, compared to a profit of EUR30 mn for 4Q2018 and a profit
of EUR54 mn for 1Q2018.
Advisory and other restructuring costs - excluding discontinued
operations and NPE sale (Helix) for 1Q2019 amounted to EUR7 mn,
compared to EUR16 mn for 4Q2018 and to EUR8 mn for 1Q2018.
Profit after tax arising from the organic operations of the
Group for 1Q2019 amounted to EUR16 mn, compared to EUR14 mn for
4Q2018 and to EUR46 mn for 1Q2018.
Restructuring costs relating to NPE sale (Helix) for 1Q2019 were
EUR1 mn, at the same level as for 4Q2018, comprising mainly
advisory costs and legal fees.
Loss relating to NPE sale (Helix) for 1Q2019 was EUR21 mn,
relating mainly to completion and timing adjustments.
Reversal/(impairment) of DTA and tax receivables totalled EUR101
mn for 1Q2019, comprising the positive impact of EUR109 mn
following amendments to the Income Tax legislation in Cyprus
adopted in March 2019, and an impairment of EUR8 mn relating to
Greek tax receivables adversely impacted from legislative changes.
The carrying value of the remaining receivable at the quarter end
was c.EUR4 mn. The impairment of the DTA for 4Q2018 was EUR79 mn
and resulted from the on-going review of the recoverability of the
DTA.
Profit after tax attributable to the owners of the Company for
1Q2019 was EUR95 mn, compared to a loss of EUR67 mn for 4Q2018 and
a profit of EUR43 mn for 1Q2018.
B. Operating Environment
In 2018 real GDP grew by 3.9% after growing by 4.5% in 2017 and
by 4.8% in 2016 (Cyprus Statistical Service). Economic activity was
driven by tourism, construction and professional services and by
domestic demand on the expenditure side. Fixed investment remains
sub-par, not accounting for ship registrations and driven by
building and construction activity.
Looking forward, according to the European Commission, real GDP
in 2019 and 2020 will slow further, to 3.1% and 2.7% respectively
(European Economic Forecast, Spring 2019). With external demand
weakening, export growth will be moderating. Slowing growth in the
Euro Area and persistent uncertainties in major trading partners
increase downside risks and weigh on the outlook. In the early part
of the year developments have been relative restrictive evidenced
in a drop in tourist arrivals in January-March, a decline in car
registrations in January-April, and a slowdown in the volume of
retail sales in January-March. The volume of building permits
though had risen sharply January-February.
Cyprus has close trade and investment links with the UK, making
its economy vulnerable to the impact of Brexit on the UK economy.
Tourist arrivals from the UK accounted for about 34% of total
arrivals in 2017-2018. A possible decline in tourist arrivals from
the UK and a drop in their spending will need to be mitigated by
increasing arrivals and revenues from other countries.
Demographic trends in Cyprus are not very favourable. Total
population and the labour force will be growing at very slow pace,
based on Eurostat's population projections. To mitigate problems
that will ensue, policy will need to focus on retirement ages,
labour force participation rates, and productivity growth
especially as society and economy will be evolving to the digital
revolution.
The fiscal consolidation of the programme years has been
successful. The large budget deficits of 2009-14 have been reversed
into substantial surplus positions. In 2018 the budget surplus
reached 3.5% of GDP when the fiscal burden of the Cyprus
Cooperative Bank transaction, is excluded. The primary surplus
correspondingly reached 6% of GDP. Public debt as a ratio to GDP
rose from 95.8% in 2017 to 102.5% in 2018 (Cyprus Statistical
Service). The increase was driven by the Cyprus Cooperative Bank
transaction and the underlying fundamentals remain favourable
supporting a resumption of the declining trend in 2019.
The European Central Bank will maintain a very loose monetary
policy in the medium term and policy rates will rise only
gradually.
The labour market is recovering strongly. Employment increased
by 5.9% in 2018, compared with an increase of 3,1% in 2017 (Cyprus
Statistical Service). As a result, the unemployment rate dropped to
7.6% in the fourth quarter of 2018 seasonally adjusted and to an
average of 8.4% in the year as a whole from 11% in 2017 and
contributed to strong private consumption growth (Cyprus
Statistical Service).
Consumer inflation accelerated modestly in 2018 up to 1.4% from
0.5% in 2017 (Cyprus Statistical Service). This was owed in large,
to higher global energy prices, as the categories rising faster
were those of housing and transport. In the first four months of
2019 inflation was 1,4% and was driven by food prices and housing
expenditures. Overall prices are rising but inflationary pressures
remain weak. Price increases will be determined by future
developments regarding wages and disposable income on the one hand,
and energy costs on the other.
In the banking sector, the stock of Non Performing Exposures
(NPEs) dropped by about half in 2018 to EUR10.4 billion or 30.5% of
gross loans in December, compared with a ratio of 42.5% a year
earlier. The ratio of total impairments to total NPEs was 51.2% at
the end of December 2018 (Central Bank of Cyprus). This followed
the Cyprus Cooperative Bank transaction and the sale of a package
of NPEs by Bank of Cyprus. Despite this steep reduction however,
the NPE ratio remains high and constitutes a source of
vulnerability for the banking sector and the economy at large.
Prudential oversight has been strengthened. In July 2018, the
Cyprus government took additional steps to address regulatory
issues relating to NPEs. Parliament voted on Cyprus government
legislative proposals for strengthening the foreclosure and
insolvency framework and facilitating the securitisation of NPEs
and the sale of loans. Taken together, these measures, along with
ESTIA, a scheme to aid households with non-performing exposures
secured with primary homes, will support further reductions in the
remaining stock of NPEs.
The sovereign risk ratings of the Cyprus government improved
considerably in the recent period reflecting expectations of a
sustained decline in public debt as a ratio to GDP, expected
further declines in non-performing exposures and a more stable
price environment following a protracted period of deflation and
low inflation. In November 2018 Fitch Ratings upgraded its
Long-Term Issuer Default ratings for Cyprus to investment grade
(BBB-) affirming in April 2019. In September 2018, S&P Global
Ratings also upgraded Cyprus to investment grade (BBB-). In July
2018 Moody's Investors Service upgraded Cyprus' sovereign rating to
Ba2 from Ba3 affirmed in April 2019. All maintain stable
outlook.
C. Business Overview
As the Cypriot operations account for 99% of gross loans and
100% of customer deposits, after the disposal of the UK operations,
the Group's financial performance is highly correlated to the
economic and operating conditions in Cyprus and will consequently
benefit from the country's recovery. Most recently, in March 2019,
Fitch Ratings affirmed their long-term issuer default rating of B-
(positive outlook). In January 2019, Moody's Investors Service
upgraded the Bank's long-term deposit rating to B3 from Caa1, with
a positive outlook. The positive outlook reflects expectations of
further improvements in the banks' financial fundamentals, mainly
asset quality over the next 12-18 months, in the context of an
improved operating environment in Cyprus. At the end of August
2018, Standard and Poor's upgraded their long-term issuer credit
rating on the Bank to 'B+' from 'B' and changed the outlook to
stable from positive. The key drivers for the ratings were the
improvement in the Bank's financial fundamentals, mainly in asset
quality, and its funding position.
Tackling the Bank's loan portfolio quality is of utmost
importance for the Group. The Group has been successful in
engineering restructuring solutions across the spectrum of its loan
portfolio, and expects the reduction of residual NPEs (post the NPE
sale (Helix)) to continue, with a target of c.EUR800 mn for 2019,
as portfolio size and business line mix is expected to change
radically post execution of Helix. In parallel, the Group is
actively exploring strategies to further accelerate de-risking
including further portfolio sales.
The strategic focus of the Group is to reshape its business
model to grow in the core Cypriot market through prudent new
lending. As at 31 March 2019, the Bank's capital position remains
good and is strengthened pro forma Helix. The Group expects to
continue to be able to support the recovery of the Cyprus economy
through the provision of new lending. Growth in new lending in
Cyprus is focused on selected industries that are more in line with
the Bank's target risk profile, such as tourism, trade,
professional services, information/communication technologies,
energy, education and green projects.
Aiming at supporting investments by SMEs and mid-caps to boost
the Cypriot economy, and create new jobs for young people, the Bank
continues to provide joint financed schemes. To this end, the Bank
continues its partnership with the European Investment Bank (EIB),
the European Investment Fund (EIF), the European Bank for
Reconstruction and Development (EBRD) and the Cyprus
Government.
Management is also placing emphasis on diversifying income
streams by optimising fee income from international transaction
services, wealth management and insurance. The Group's insurance
companies, EuroLife Ltd and General Insurance of Cyprus Ltd
operating in the sectors of life and general insurance
respectively, are leading players in the insurance business in
Cyprus, with such businesses providing a recurring income, further
diversifying the Group's income streams. The insurance income net
of insurance claims for 1Q2019 amounted to EUR12 mn, at the same
levels as for 1Q2018, contributing to 17% of non-interest
income.
In order to further optimise its funding structure, the Bank
continues to focus on the shape and cost of deposit franchise,
taking advantage of the increased customer confidence towards the
Bank, as well as improving macroeconomic conditions.
Management remains focused on cost reduction this year, for
which considerable work is on-going. The Digital Transformation
Programme that started in 2017 is beginning to deliver an improved
customer experience (see below) and the branch network is half the
size it was in 2013.
Digital Transformation
As part of its vision to be the leading financial hub in Cyprus,
the Bank continues its Digital Transformation Programme in
collaboration with IBM, the Bank's Strategic Digital Transformation
Partner, which focuses on three strategic pillars: developing
digital services and products that enhance the customer experience,
streamlining internal processes and introducing new ways of working
to improve the workplace environment. In the last few months,
various new features were introduced on the new mobile app, such as
the ability to apply for e-products and transfer amounts over
EUR150 through QuickPay. Moreover, the introduction of the 1Bank
B2B (business to business) APIs (Application Programming
Interfaces) is gaining traction. These are interfaces that enable
businesses to enjoy access to 1Bank functionality directly through
their own systems without the need to access the 1Bank website. The
BoC wallet was also launched, which allows mobile payments through
Android devices. In addition, the IBU Gateway was introduced that
provides 24/7 access to Professional Associates and IBU/Wealth
customers to apply for products or services and get a ready-to-sign
application form.
The Bank has led the way in Cyprus in establishing an open
banking ecosystem, by being the first bank in Cyprus to launch its
PSD2 APIs (Payment Service Directive2, Application Programming
Interfaces) and also by integrating with eight UK banks allowing
customers to view their account balances and transactions from the
integrated banks together with their Bank of Cyprus accounts
through 1Bank. Building on the success of the integration of the UK
banks we are now working on integrating Cypriot banks. Furthermore,
several other initiatives are in progress, including enhancing
digital channels to improve customer experience, providing online
services using digital signatures, automating internal end to end
processes using a BPM (Business Process Management) platform and
introducing collaboration and knowledge sharing tools across the
organisation. The adoption of digital products and services has
continued to increase and is gaining momentum. For example, the
Digital Adoption rate which is a composite measure capturing
customers' digital engagement with the Bank and the digital economy
has increased to 65.9% at 31 March 2019 compared to 61.6% at 31
March 2018. Furthermore, the number of transfers and payments
initiated via digital channels has also significantly increased
over the last 12 months (936 thousand in March 2019 compared to 544
thousand in March 2018, i.e. 72% increase). As far as the mobile
app usage is concerned, the number of active mobile users has
increased by 21% since March 2018, while the average number of
customer mobile logins per month has increased by 25% over the same
period.
D. Strategy and Outlook
The Group remains on track for implementing its strategic
objectives aiming to become a stronger, safer and a more focused
institution capable of supporting the recovery of the Cypriot
economy and delivering appropriate shareholder returns in the
medium term.
The key pillars of the Group's strategy are to:
-- Materially reduce the level of delinquent loans
-- Further optimise the funding structure
-- Maintain an appropriate capital position by internally generating capital
-- Focus on the core Cyprus market
-- Achieve a lean operating model
-- Deliver value to shareholders and other stakeholders
KEY PILLARS PLAN OF ACTION
1. Materially reduce the level of delinquent
loans * Sustain momentum in restructuring and continue
reduction of NPEs
* Focus on terminated portfolios (in Recovery Unit) -
"accelerated consensual foreclosures"
* Real estate management via REMU
* Continue to explore alternative measures for
accelerating NPE reduction, such as NPE sales,
securitisations etc.
--------------------------------------------------------------
2. Further optimise the funding structure * Focus on shape and cost of deposit franchise
--------------------------------------------------------------
3. Maintain an appropriate capital position * Internally generating capital
--------------------------------------------------------------
4. Focus on core Cyprus market
* Targeted lending in Cyprus into growing sectors to
fund recovery
* New loan origination, while maintaining lending
yields
* Revenue diversification via fee income from
international business, wealth, and insurance
--------------------------------------------------------------
5. Achieve a lean operating model
* Implementation of digital transformation program
underway, aimed at enhancing productivity through
alternative distribution channels and reducing
operating costs over time
* Post the execution of further NPE reduction, the Bank
is focusing on the need to manage costs
--------------------------------------------------------------
6. Deliver value
* Deliver appropriate medium term risk-adjusted returns
--------------------------------------------------------------
E. Statutory Financial Results
Unaudited Interim Consolidated Income Statement
Three months ended
31 March
2019 2018 (represented)
--------- -------------------
EUR000 EUR000
--------- -------------------
Continuing operations
--------- -------------------
Turnover 237,102 254,216
========= ===================
Interest income 126,967 144,423
--------- -------------------
Income similar to interest income 13,199 12,731
--------- -------------------
Interest expense (26,313) (40,049)
--------- -------------------
Expense similar to interest expense (11,807) (11,486)
--------- -------------------
Net interest income 102,046 105,619
--------- -------------------
Fee and commission income 42,778 41,840
--------- -------------------
Fee and commission expense (9,502) (2,603)
--------- -------------------
Net foreign exchange gains 6,869 6,899
--------- -------------------
Net gains on financial instrument transactions
and disposal/dissolution of subsidiaries 3,953 18,719
--------- -------------------
Insurance income net of claims and commissions 12,413 12,440
--------- -------------------
Net (losses)/gains from revaluation and disposal
of investment properties (404) 8,272
--------- -------------------
Net gains on disposal of stock of property 4,400 10,516
--------- -------------------
Other income 8,075 6,369
--------- -------------------
170,628 208,071
--------- -------------------
Staff costs (57,099) (52,225)
--------- -------------------
Special levy on deposits on credit institutions
in Cyprus and contribution to single Resolution
Fund (6,338) (7,311)
--------- -------------------
Other operating expenses (60,831) (52,684)
--------- -------------------
46,360 95,851
--------- -------------------
Net gains on derecognition of financial assets
measured at amortised cost 2,848 15,522
--------- -------------------
Credit losses to cover credit risk on loans and
advances to customers (59,822) (63,969)
========= ===================
Credit losses of other financial instruments (7,441) (1,404)
========= ===================
Impairment of non-financial instruments (1,389) (5,006)
========= ===================
(Loss)/profit before share of profit from associates (19,444) 40,994
--------- -------------------
Share of profit from associates 2,228 1,490
--------- -------------------
(Loss)/profit before tax from continuing operations (17,216) 42,484
--------- -------------------
Income tax 112,353 (3,553)
--------- -------------------
Profit after tax from continuing operations 95,137 38,931
--------- -------------------
Discontinued operations
--------- -------------------
Profit after tax from discontinued operations - 2,664
--------- -------------------
Profit for the period 95,137 41,595
========= ===================
Attributable to:
Owners of the Company - continuing operations
(profit) 94,690 40,491
------- --------
Owners of the Company - discontinued operations
(profit) - 2,664
------- --------
Total profit attributable to the owners of the
Company 94,690 43,155
------- --------
Non-controlling interests - continuing operations 447 (1,560)
------- --------
Profit for the period 95,137 41,595
======= ========
Basic and diluted profit per share attributable
to the owners of the Company
(EUR cent) - continuing operations 21.2 9.1
===== ====
Basic and diluted profit per share attributable
to the owners of the Company
(EUR cent) 21.2 9.7
===== ====
Unaudited Interim Consolidated Statement of Comprehensive
Income
Three months ended
31 March
2019 2018
--------- ----------
EUR000 EUR000
--------- ----------
Profit for the period 95,137 41,595
--------- ----------
Other comprehensive income (OCI)
--------- ----------
OCI to be reclassified in the consolidated income
statement in subsequent periods
--------- ----------
Fair value reserve (debt instruments)
--------- ----------
Net gains/( losses) on investments in debt instruments
measured at fair value through OCI (FVOCI) 6,951 (5,468)
--------- ----------
Transfer to the consolidated income statement
on disposal 396 (18,474)
--------- ----------
7,347 (23,942)
--------- ----------
Foreign currency translation reserve
--------- ----------
(Loss)/profit on translation of net investment
in foreign branches and subsidiaries (6,809) 3,105
--------- ----------
Profit/(loss) on hedging of net investments in
foreign branches and subsidiaries 6,019 (3,248)
--------- ----------
Transfer to the consolidated income statement
on disposal/dissolution of foreign operations - (47)
--------- ----------
(790) (190)
--------- ----------
Total OCI that may be classified in the consolidated
income statement in subsequent periods 6,557 (24,132)
--------- ----------
OCI not to be reclassified in the consolidated
income statement in subsequent periods
--------- ----------
Fair value reserve (equity instruments)
--------- ----------
Share of net gains/(losses) from fair value changes
of associates 2,156 (868)
--------- ----------
Net gains on investments in equity instruments
designated at FVOCI 176 1,670
--------- ----------
2,332 802
--------- ----------
Property revaluation
--------- ----------
Tax 29 16
--------- ----------
Actuarial (losses)/gains on the defined benefit
plans
--------- ----------
Remeasurement (losses)/ gains on defined benefit
plans (1,991) 443
--------- ----------
Total OCI not to be classified in the consolidated
income statement in subsequent periods 370 1,261
--------- ----------
Other comprehensive income/(loss) for the period
net of taxation 6,927 (22,871)
--------- ----------
Total comprehensive income for the period 102,064 18,724
========= ==========
Attributable to:
--------- ----------
Owners of the Company 101,599 20,284
--------- ----------
Non-controlling interests 465 (1,560)
--------- ----------
Total comprehensive income for the period 102,064 18,724
========= ==========
Unaudited Interim Consolidated Balance Sheet
31 March 31 December
2019 2018
Assets EUR000 EUR000
----------- ------------
Cash and balances with central banks 3,913,391 4,610,491
----------- ------------
Loans and advances to banks 448,043 472,532
----------- ------------
Derivative financial assets 10,672 24,754
----------- ------------
Investments 1,417,058 777,104
----------- ------------
Investments pledged as collateral 293,939 737,587
----------- ------------
Loans and advances to customers 10,954,529 10,921,786
----------- ------------
Life insurance business assets attributable
to policyholders 429,044 402,565
----------- ------------
Prepayments, accrued income and other assets 302,053 256,002
----------- ------------
Stock of property 1,542,011 1,530,388
----------- ------------
Investment properties 24,517 24,475
----------- ------------
Property and equipment 292,933 260,723
----------- ------------
Intangible assets 170,311 170,411
----------- ------------
Investments in associates and joint venture 119,090 114,637
----------- ------------
Deferred tax assets 379,126 301,778
----------- ------------
Non-current assets and disposal groups held
for sale 1,448,721 1,470,038
----------- ------------
Total assets 21,745,438 22,075,271
=========== ============
Liabilities
----------- ------------
Deposits by banks 479,756 431,942
----------- ------------
Funding from central banks 830,000 830,000
----------- ------------
Repurchase agreements 251,432 248,945
----------- ------------
Derivative financial liabilities 42,893 38,983
----------- ------------
Customer deposits 16,298,250 16,843,558
----------- ------------
Insurance liabilities 618,356 591,057
----------- ------------
Accruals, deferred income and other liabilities 332,759 285,483
----------- ------------
Pending litigation, claims, regulatory and other
matters 117,347 116,951
----------- ------------
Subordinated loan stock 254,278 270,930
----------- ------------
Deferred tax liabilities 44,404 44,282
----------- ------------
Non--current liabilities and disposal group
held for sale 6,571 5,812
----------- ------------
Total liabilities 19,276,046 19,707,943
----------- ------------
Equity
----------- ------------
Share capital 44,620 44,620
----------- ------------
Share premium 1,294,358 1,294,358
----------- ------------
Revaluation and other reserves 200,011 190,411
----------- ------------
Retained earnings 683,940 591,941
----------- ------------
Equity attributable to the owners of the Company 2,222,929 2,121,330
----------- ------------
Other equity instruments 220,000 220,000
----------- ------------
Total equity excluding non--controlling interests 2,442,929 2,341,330
----------- ------------
Non--controlling interests 26,463 25,998
----------- ------------
Total equity 2,469,392 2,367,328
----------- ------------
Total liabilities and equity 21,745,438 22,075,271
=========== ============
The Group adopted the accounting standard IFRS 16 Leases on 1
January 2019. The impact on adoption was an increase in assets of
EUR37,278 thousand and an increase in liabilities of EUR37,278
thousand with no impact on retained earnings or equity of the
Group. The effect of the adoption of IFRS 16 remains subject to
change until the Group finalises its financial statements for the
year ended 31 December 2019.
Reclassifications to comparative information were made to
conform to current period presentation and relate to:
-- Unrecognised interest on previously credit impaired loans
which have cured during the period in line with an IFRIC
discussion, which has taken place in November 2018 (Presentation of
unrecognised interest following the curing of a credit impaired
financial asset (IFRS 9)) was reclassified from net interest income
to 'Credit losses to cover credit risk on loans and advances to
customers'.
-- The results of the discontinued operations in the UK (Bank of
Cyprus UK Ltd and its subsidiary, Bank of Cyprus Financial Services
Ltd) were represented as discontinued operations.
-- Interest income and interest expense relating to financial
instruments classified at FVPL have been reclassified to 'Income
similar to interest income' and 'Expense similar to interest
expense' respectively in order to be consistent with the
presentation requirements for the interest income calculated using
the effective interest rate method, on financial instruments
measured at amortised cost and financial assets measured at FVOCI
following the adoption of IFRS 9.
-- Changes in expected cash flows have been reclassified from
'Net gains on derecognition of financial assets measured at
amortised cost' to 'Credit losses to cover credit risk on loans and
advances to customers'.
-- All credit losses of other financial instruments were
reclassified out of 'Credit losses to cover credit risk on loans
and advances to customers' to the face of the Interim Consolidated
Income Statement.
Unaudited Interim Consolidated Statement of Changes in
Equity
Attributable to the owners of the Company Other Non- Total
equity controlling equity
instruments interests
Share Share Treasury Retained Property Financial Life Foreign Total
capital premium shares earnings revaluation instruments insurance currency
reserve fair value in-force translation
reserve business reserve
reserve
-------- ---------- --------- --------- ------------ ------------ ---------- ------------ ----------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
-------- ---------- --------- --------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
1 January 2019 44,620 1,294,358 (21,463) 591,941 79,433 15,289 101,001 16,151 2,121,330 220,000 25,998 2,367,328
-------- ---------- --------- --------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Profit for the
period - - - 94,690 - - - - 94,690 - 447 95,137
-------- ---------- --------- --------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Other
comprehensive
(loss)/income
after
tax for the
period - - - (1,991) 22 9,668 - (790) 6,909 - 18 6,927
-------- ---------- --------- --------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Total
comprehensive
income/(loss)
for
the period - - - 92,699 22 9,668 - (790) 101,599 - 465 102,064
-------- ---------- --------- --------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Increase in
value
of in-force
life
insurance
business - - - (800) - - 800 - - - - -
-------- ---------- --------- --------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
Tax on
increase
in value of
in-force
life
insurance
business - - - 100 - - (100) - - - - -
-------- ---------- --------- --------- ------------ ------------ ---------- ------------ ---------- ------------ ------------ ----------
31 March 2019 44,620 1,294,358 (21,463) 683,940 79,455 24,957 101,701 15,361 2,222,929 220,000 26,463 2,469,392
======== ========== ========= ========= ============ ============ ========== ============ ========== ============ ============ ==========
Attributable to the owners of the Company Non- Total
controlling equity
interests
Share Share Treasury Accumulated Property Financial Other Life Foreign Total
capital premium shares losses revaluation instruments reserves insurance currency
reserve fair value in-force translation
reserve business reserve
reserve
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ----------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ---------- ------------ ----------
1 January 2018 44,620 2,794,358 (21,463) (527,128) 92,878 54,485 6,059 105,651 36,098 2,585,558 31,150 2,616,708
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ---------- ------------ ----------
Impact of
adopting
IFRS 9 at 1
January
2018 - - - (299,150) - (8,470) - - - (307,620) - (307,620)
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ---------- ------------ ----------
Restated balance
at 1 January
2018 44,620 2,794,358 (21,463) (826,278) 92,878 46,015 6,059 105,651 36,098 2,277,938 31,150 2,309,088
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ---------- ------------ ----------
Profit/(loss)
for
the period - - - 43,155 - - - - - 43,155 (1,560) 41,595
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ---------- ------------ ----------
Other
comprehensive
income/(loss)
after
tax for the
period - - - 443 16 (23,140) - - (190) (22,871) - (22,871)
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ---------- ------------ ----------
Total
comprehensive
income/(loss)
for
the period - - - 43,598 16 (23,140) - - (190) 20,284 (1,560) 18,724
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ---------- ------------ ----------
Increase in
value
of in-force
life
insurance
business - - - (800) - - - 800 - - - -
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ---------- ------------ ----------
Tax on increase
in value of
in-force
life insurance
business - - - 100 - - - (100) - - - -
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ---------- ------------ ----------
Transfer of gain
on disposal of
FVOCI
equity
investments
to accumulated
losses - - - 89 - (89) - - - - - -
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ---------- ------------ ----------
Increase in
non-controlling
interests due
to
change in the
shareholding
of subsidiary - - - - - - - - - - 13,473 13,473
-------- ---------- --------- ------------ ------------ ------------ --------- ---------- ------------ ---------- ------------ ----------
31 March 2018 44,620 2,794,358 (21,463) (783,291) 92,894 22,786 6,059 106,351 35,908 2,298,222 43,063 2,341,285
======== ========== ========= ============ ============ ============ ========= ========== ============ ========== ============ ==========
F. Notes
F.1 Reconciliation of income statement between statutory and underlying basis
EUR000 Underlying Reclassification Statutory
basis basis
Net interest income 102,046 - 102,046
=========== ================= ==========
Net fee and commission income 39,532 (6,256) 33,276
=========== ================= ==========
Net foreign exchange gains and net gains
on financial instrument transactions
and disposal/dissolution of subsidiaries 10,191 631 10,822
=========== ================= ==========
Insurance income net of claims and commissions 12,413 - 12,413
=========== ================= ==========
Net gains from revaluation and disposal
of investment properties and on disposal
of stock of property 3,996 - 3,996
=========== ================= ==========
Other income 8,075 - 8,075
----------- ----------------- ----------
Total income 176,253 (5,625) 170,628
=========== ================= ==========
Total expenses (105,331) (18,937) (124,268)
----------- ----------------- ----------
Operating profit 70,922 (24,562) 46,360
=========== ================= ==========
Provisions charge (46,704) (10,270) (56,974)
=========== ================= ==========
Impairments of other financial and non-financial
instruments (580) (8,250) (8,830)
=========== ================= ==========
Reversal of provisions for litigation
and regulatory matters 228 (228) -
=========== ================= ==========
Share of profit from associates 2,228 - 2,228
----------- ----------------- ----------
Profit/(loss) before tax, restructuring
costs and discontinued operations 26,094 (43,310) (17,216)
=========== ================= ==========
Income tax (2,875) 115,228 112,353
=========== ================= ==========
Profit attributable to non-controlling
interests (447) - (447)
----------- ----------------- ----------
Profit after tax and before restructuring
costs, the NPE sale (Helix) and discontinued
operations 22,772 71,918 94,690
=========== ================= ==========
Advisory and other restructuring costs-excluding
the NPE sale (Helix) (6,689) 6,689 -
----------- ----------------- ----------
Profit after tax (Organic) 16,083 78,607 94,690
=========== ================= ==========
Restructuring costs relating to NPE sale
(Helix) (1,075) 1,075 -
=========== ================= ==========
Loss relating to NPE sale (Helix) (21,040) 21,040 -
=========== ================= ==========
Net reversal of impairment of deferred
tax asset (DTA) and Greek tax asset 100,722 (100,722) -
----------- ----------------- ----------
Profit after tax (attributable to the
owners of the Company) 94,690 - 94,690
=========== ================= ==========
The reclassification differences between the statutory and
underlying bases mainly relate to the impact from the NPE sale
(Helix) and related restructuring costs and impairment of DTA. In
detail:
-- EUR6.3 million fee and commission expense related to the
revised income tax legislation disclosed within 'Net reversal of
impairment of deferred tax asset (DTA) and Greek tax asset' under
the underlying basis.
-- 'Net foreign exchange gains and net gains on financial
instrument transactions and disposal/dissolution of subsidiaries'
under the statutory basis include an amount of EUR0.6 million
relating to net gains on loans and advances to customers measured
at fair value through profit or loss (FVPL) disclosed within
'Provisions charge' under the underlying basis.
-- 'Restructuring costs relating to NPE sale (Helix)' of EUR1.1
million, 'Reversal of provisions for litigation and regulatory
matters' of EUR0.3 million and 'Advisory and other restructuring
costs-excluding the NPE sale (Helix)' of EUR6.7 million disclosed
as expenses under the statutory basis are shown separately under
the underlying basis.
-- The loss relating to NPE sale (Helix) of EUR9.6 million and
loss of EUR11.4 million disclosed within 'Provisions charge' and
'Operating expenses' respectively under the statutory basis is
separately disclosed under the underlying basis.
-- Impairment of Greek tax asset of EUR8.3 million and reversal
of impairment of DTA of EUR115.2 million disclosed within
'Impairment of other financial and non-financial instruments' and
'Income tax' respectively under the statutory basis are separately
disclosed in 'Net reversal of impairment of deferred tax asset
(DTA) and Greek tax asset' per the underlying basis.
F.2 Customer deposits
Analysis of customer deposits is presented below:
31 March 31 December
2019 2018
By type of deposit EUR000 EUR000
----------- --------------
Demand 6,490,591 6,708,852
----------- --------------
Savings 1,371,824 1,352,452
----------- --------------
Time or notice 8,435,835 8,782,254
----------- --------------
16,298,250 16,843,558
=========== ==============
By currency
----------- --------------
Euro 14,519,930 14,961,025
----------- --------------
US Dollar 1,382,545 1,482,867
----------- --------------
British Pound 291,460 292,640
----------- --------------
Russian Rouble 23,474 25,529
----------- --------------
Swiss Franc 7,921 7,994
----------- --------------
Other currencies 72,920 73,503
----------- --------------
16,298,250 16,843,558
By customer sector
----------- ------------
Corporate 1,670,615 1,750,517
----------- ------------
SMEs 726,667 800,671
----------- ------------
Retail 9,825,733 10,032,047
----------- ------------
Restructuring
----------- ------------
- corporate 70,492 69,180
----------- ------------
- SMEs 26,847 29,299
----------- ------------
- retail other 14,178 16,773
----------- ------------
Recoveries
----------- ------------
- corporate 8,024 6,492
----------- ------------
International banking services 3,537,237 3,707,713
----------- ------------
Wealth management 418,457 430,866
----------- ------------
16,298,250 16,843,558
=========== ============
All deposits are in Cyprus.
F.3 Loans and advances to customers
31 March 31 December
2019 2018
EUR000 EUR000
------------ ------------
Gross loans and advances to customers at amortised
cost 12,453,197 12,430,367
------------ ------------
Allowance for ECL (1,892,566) (1,904,153)
------------ ------------
Loans and advances to customers measured at
amortised cost 10,560,631 10,526,214
------------ ------------
Loans and advances to customers measured at
FVPL 393,898 395,572
------------ ------------
10,954,529 10,921,786
============ ============
F.4 Credit risk concentration of gross loans and advances to customers
Geographical and industry and business line concentrations of
Group gross loans and advances to customers at amortised cost are
presented below:
31 March 2019 Cyprus Other Total Fair value Gross loans
countries adjustment at amortised
on initial cost after
recognition fair value
adjustment
on initial
recognition
By economic activity EUR000 EUR000 EUR000 EUR000 EUR000
----------- ----------- ----------- ------------- --------------
Trade 1,446,675 41,344 1,488,019 (23,758) 1,464,261
----------- ----------- ----------- ------------- --------------
Manufacturing 444,006 10,168 454,174 (5,834) 448,340
----------- ----------- ----------- ------------- --------------
Hotels and catering 951,651 3,811 955,462 (19,558) 935,904
----------- ----------- ----------- ------------- --------------
Construction 947,480 5,791 953,271 (13,302) 939,969
----------- ----------- ----------- ------------- --------------
Real estate 973,626 22,338 995,964 (17,415) 978,549
----------- ----------- ----------- ------------- --------------
Private individuals 6,175,496 1,150 6,176,646 (125,270) 6,051,376
----------- ----------- ----------- ------------- --------------
Professional and other services 914,513 47,723 962,236 (36,028) 926,208
----------- ----------- ----------- ------------- --------------
Other sectors 714,901 779 715,680 (7,090) 708,590
----------- ----------- ----------- ------------- --------------
12,568,348 133,104 12,701,452 (248,255) 12,453,197
=========== =========== =========== ============= ==============
By business line
----------- ----------- ----------- ------------- --------------
Corporate 3,501,016 120,476 3,621,492 (47,776) 3,573,716
----------- ----------- ----------- ------------- --------------
SMEs 1,215,829 11,729 1,227,558 (16,392) 1,211,166
----------- ----------- ----------- ------------- --------------
Retail
----------- ----------- ----------- ------------- --------------
- housing 2,887,793 - 2,887,793 (43,942) 2,843,851
----------- ----------- ----------- ------------- --------------
- consumer, credit cards
and other 947,774 899 948,673 2,781 951,454
----------- ----------- ----------- ------------- --------------
Restructuring
----------- ----------- ----------- ------------- --------------
- corporate 457,262 - 457,262 (7,512) 449,750
----------- ----------- ----------- ------------- --------------
- SMEs 481,203 - 481,203 (9,765) 471,438
----------- ----------- ----------- ------------- --------------
- retail housing 456,593 - 456,593 (4,064) 452,529
----------- ----------- ----------- ------------- --------------
- retail other 306,001 - 306,001 (8,387) 297,614
----------- ----------- ----------- ------------- --------------
Recoveries
----------- ----------- ----------- ------------- --------------
- corporate 134,818 - 134,818 (5,453) 129,365
----------- ----------- ----------- ------------- --------------
- SMEs 598,689 - 598,689 (24,876) 573,813
----------- ----------- ----------- ------------- --------------
- retail housing 728,280 - 728,280 (39,447) 688,833
----------- ----------- ----------- ------------- --------------
- retail other 560,675 - 560,675 (38,742) 521,933
----------- ----------- ----------- ------------- --------------
International banking services 180,147 - 180,147 (2,046) 178,101
----------- ----------- ----------- ------------- --------------
Wealth management 112,268 - 112,268 (2,634) 109,634
----------- ----------- ----------- ------------- --------------
12,568,348 133,104 12,701,452 (248,255) 12,453,197
=========== =========== =========== ============= ==============
31 December 2018 Cyprus Other Total Fair value Gross loans
countries adjustment at amortised
on initial cost after
recognition fair value
adjustment
on initial
recognition
By economic activity EUR000 EUR000 EUR000 EUR000 EUR000
----------- ----------- ----------- ------------- --------------
Trade 1,447,623 39,682 1,487,305 (24,096) 1,463,209
----------- ----------- ----------- ------------- --------------
Manufacturing 437,030 7,572 444,602 (6,439) 438,163
----------- ----------- ----------- ------------- --------------
Hotels and catering 877,501 3,806 881,307 (20,354) 860,953
----------- ----------- ----------- ------------- --------------
Construction 991,122 2,552 993,674 (14,661) 979,013
----------- ----------- ----------- ------------- --------------
Real estate 980,152 21,644 1,001,796 (16,231) 985,565
----------- ----------- ----------- ------------- --------------
Private individuals 6,234,765 11,536 6,246,301 (135,603) 6,110,698
----------- ----------- ----------- ------------- --------------
Professional and other services 866,093 45,758 911,851 (36,551) 875,300
----------- ----------- ----------- ------------- --------------
Other sectors 720,876 4,704 725,580 (8,114) 717,466
----------- ----------- ----------- ------------- --------------
12,555,162 137,254 12,692,416 (262,049) 12,430,367
=========== =========== =========== ============= ==============
By business line
----------- ----------- ----------- ------------- --------------
Corporate 3,363,298 125,138 3,488,436 (49,982) 3,438,454
----------- ----------- ----------- ------------- --------------
SMEs 1,188,456 11,188 1,199,644 (16,537) 1,183,107
----------- ----------- ----------- ------------- --------------
Retail
----------- ----------- ----------- ------------- --------------
- housing 2,871,294 - 2,871,294 (45,016) 2,826,278
----------- ----------- ----------- ------------- --------------
- consumer, credit cards
and other 940,388 904 941,292 2,965 944,257
----------- ----------- ----------- ------------- --------------
Restructuring
----------- ----------- ----------- ------------- --------------
- corporate 531,462 24 531,486 (7,907) 523,579
----------- ----------- ----------- ------------- --------------
- SMEs 560,806 - 560,806 (11,637) 549,169
----------- ----------- ----------- ------------- --------------
- retail housing 498,601 - 498,601 (4,481) 494,120
----------- ----------- ----------- ------------- --------------
- retail other 328,952 - 328,952 (8,588) 320,364
----------- ----------- ----------- ------------- --------------
Recoveries
----------- ----------- ----------- ------------- --------------
- corporate 164,821 - 164,821 (7,439) 157,382
----------- ----------- ----------- ------------- --------------
- SMEs 630,968 - 630,968 (26,178) 604,790
----------- ----------- ----------- ------------- --------------
- retail housing 697,212 - 697,212 (40,577) 656,635
----------- ----------- ----------- ------------- --------------
- retail other 480,733 - 480,733 (39,923) 440,810
----------- ----------- ----------- ------------- --------------
International banking services 192,646 - 192,646 (2,158) 190,488
----------- ----------- ----------- ------------- --------------
Wealth management 105,525 - 105,525 (4,591) 100,934
----------- ----------- ----------- ------------- --------------
12,555,162 137,254 12,692,416 (262,049) 12,430,367
=========== =========== =========== ============= ==============
Loans and advances to customers classified as held for sale
Industry and business lines concentrations and geographical
analysis of Group loans and advances to customers at amortised cost
classified as held for sale are presented in the table below:
31 March 2019 Cyprus Other Total Fair value Gross loans
countries adjustment at amortised
on initial cost after
recognition fair value
adjustment
on initial
recognition
By economic activity EUR000 EUR000 EUR000 EUR000 EUR000
---------- ----------- ---------- ------------- --------------
Trade 352,152 - 352,152 (11,347) 340,805
---------- ----------- ---------- ------------- --------------
Manufacturing 206,599 - 206,599 (7,340) 199,259
---------- ----------- ---------- ------------- --------------
Hotels and catering 258,536 - 258,536 (11,968) 246,568
---------- ----------- ---------- ------------- --------------
Construction 989,017 - 989,017 (74,141) 914,876
---------- ----------- ---------- ------------- --------------
Real estate 393,410 57,230 450,640 (11,192) 439,448
---------- ----------- ---------- ------------- --------------
Private individuals 230,938 - 230,938 (8,560) 222,378
---------- ----------- ---------- ------------- --------------
Professional and other services 142,066 - 142,066 (5,941) 136,125
---------- ----------- ---------- ------------- --------------
Other sectors 195,280 6,222 201,502 (6,723) 194,779
---------- ----------- ---------- ------------- --------------
2,767,998 63,452 2,831,450 (137,212) 2,694,238
========== =========== ========== ============= ==============
By business line
---------- ----------- ---------- ------------- --------------
Corporate 4,800 - 4,800 (6) 4,794
---------- ----------- ---------- ------------- --------------
Retail
---------- ----------- ---------- ------------- --------------
- consumer, credit cards
and other 2 - 2 - 2
---------- ----------- ---------- ------------- --------------
Restructuring
---------- ----------- ---------- ------------- --------------
- corporate 838,986 - 838,986 (23,878) 815,108
---------- ----------- ---------- ------------- --------------
- SMEs 208,544 - 208,544 (4,594) 203,950
---------- ----------- ---------- ------------- --------------
- retail housing 265 - 265 - 265
---------- ----------- ---------- ------------- --------------
- retail other 5,638 - 5,638 (195) 5,443
---------- ----------- ---------- ------------- --------------
Recoveries
---------- ----------- ---------- ------------- --------------
- corporate 1,291,675 63,452 1,355,127 (86,461) 1,268,666
---------- ----------- ---------- ------------- --------------
- SMEs 376,225 - 376,225 (18,229) 357,996
---------- ----------- ---------- ------------- --------------
- retail housing 637 - 637 (114) 523
---------- ----------- ---------- ------------- --------------
- retail other 41,218 - 41,218 (3,735) 37,483
---------- ----------- ---------- ------------- --------------
International banking services 8 - 8 - 8
---------- ----------- ---------- ------------- --------------
2,767,998 63,452 2,831,450 (137,212) 2,694,238
========== =========== ========== ============= ==============
Loans and advances to customers classified as held for sale
(continued)
31 December 2018 Cyprus Other Total Fair value Gross loans
countries adjustment at amortised
on initial cost after
recognition fair value
adjustment
on initial
recognition
By economic activity EUR000 EUR000 EUR000 EUR000 EUR000
---------- ----------- ---------- ------------- --------------
Trade 373,351 - 373,351 (12,213) 361,138
---------- ----------- ---------- ------------- --------------
Manufacturing 202,193 - 202,193 (7,216) 194,977
---------- ----------- ---------- ------------- --------------
Hotels and catering 258,529 - 258,529 (11,960) 246,569
---------- ----------- ---------- ------------- --------------
Construction 995,430 - 995,430 (74,233) 921,197
---------- ----------- ---------- ------------- --------------
Real estate 409,632 55,225 464,857 (11,765) 453,092
---------- ----------- ---------- ------------- --------------
Private individuals 218,531 - 218,531 (9,098) 209,433
---------- ----------- ---------- ------------- --------------
Professional and other services 140,748 - 140,748 (5,941) 134,807
---------- ----------- ---------- ------------- --------------
Other sectors 191,463 6,011 197,474 (6,727) 190,747
---------- ----------- ---------- ------------- --------------
2,789,877 61,236 2,851,113 (139,153) 2,711,960
========== =========== ========== ============= ==============
By business line
---------- ----------- ---------- ------------- --------------
Corporate 15,249 - 15,249 (584) 14,665
---------- ----------- ---------- ------------- --------------
SMEs 2,841 - 2,841 - 2,841
---------- ----------- ---------- ------------- --------------
Retail
---------- ----------- ---------- ------------- --------------
- consumer, credit cards
and other 128 - 128 (1) 127
---------- ----------- ---------- ------------- --------------
Restructuring
---------- ----------- ---------- ------------- --------------
- corporate 859,214 - 859,214 (24,379) 834,835
---------- ----------- ---------- ------------- --------------
- SMEs 216,866 - 216,866 (4,858) 212,008
---------- ----------- ---------- ------------- --------------
- retail housing 272 - 272 - 272
---------- ----------- ---------- ------------- --------------
- retail other 5,773 - 5,773 (210) 5,563
---------- ----------- ---------- ------------- --------------
Recoveries
---------- ----------- ---------- ------------- --------------
- corporate 1,274,835 61,236 1,336,071 (86,644) 1,249,427
---------- ----------- ---------- ------------- --------------
- SMEs 374,336 - 374,336 (17,991) 356,345
---------- ----------- ---------- ------------- --------------
- retail housing 635 - 635 (115) 520
---------- ----------- ---------- ------------- --------------
- retail other 39,720 - 39,720 (4,371) 35,349
---------- ----------- ---------- ------------- --------------
International banking services 8 - 8 - 8
---------- ----------- ---------- ------------- --------------
2,789,877 61,236 2,851,113 (139,153) 2,711,960
========== =========== ========== ============= ==============
F.5 Credit quality of gross loans and advances to customers
The following tables present the Group's loans and advances to
customers at amortised cost by staging and by business line
concentration:
31 March 2019 Stage Stage Stage POCI Total
1 2 3
EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------- ---------- ---------- -----------
Gross loans at amortised cost
before fair value adjustment
on initial recognition 6,134,582 1,993,907 3,793,141 779,822 12,701,452
---------- ---------- ---------- ---------- -----------
Fair value adjustment on initial
recognition (75,113) (20,280) (40,240) (112,622) (248,255)
---------- ---------- ---------- ---------- -----------
Gross loans at amortised cost
after fair value adjustment
on initial recognition 6,059,469 1,973,627 3,752,901 667,200 12,453,197
========== ========== ========== ========== ===========
Gross loans at amortised cost Stage Stage Stage POCI Total
before fair value adjustment 1 2 3
on initial recognition
31 March 2019
By business line EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------- ---------- -------- -----------
Corporate 2,362,349 805,905 367,809 85,429 3,621,492
---------- ---------- ---------- -------- -----------
SMEs 748,333 360,252 107,122 11,851 1,227,558
---------- ---------- ---------- -------- -----------
Retail
---------- ---------- ---------- -------- -----------
- housing 2,212,238 338,472 326,671 10,412 2,887,793
---------- ---------- ---------- -------- -----------
- consumer, credit cards and
other 583,003 210,259 135,210 20,201 948,673
---------- ---------- ---------- -------- -----------
Restructuring
---------- ---------- ---------- -------- -----------
- corporate 43,342 93,496 241,699 78,725 457,262
---------- ---------- ---------- -------- -----------
- SMEs 53,078 48,298 341,436 38,391 481,203
---------- ---------- ---------- -------- -----------
- retail housing 6,391 3,640 432,048 14,514 456,593
---------- ---------- ---------- -------- -----------
- retail other 4,195 593 283,805 17,408 306,001
---------- ---------- ---------- -------- -----------
Recoveries
---------- ---------- ---------- -------- -----------
- corporate - - 101,453 33,365 134,818
---------- ---------- ---------- -------- -----------
- SMEs - - 487,036 111,653 598,689
---------- ---------- ---------- -------- -----------
- retail housing - - 546,216 182,064 728,280
---------- ---------- ---------- -------- -----------
- retail other 79 - 388,892 171,704 560,675
---------- ---------- ---------- -------- -----------
International banking services 67,686 77,950 31,404 3,107 180,147
---------- ---------- ---------- -------- -----------
Wealth management 53,888 55,042 2,340 998 112,268
---------- ---------- ---------- -------- -----------
6,134,582 1,993,907 3,793,141 779,822 12,701,452
========== ========== ========== ======== ===========
Fair value adjustment on initial Stage Stage Stage POCI Total
recognition 1 2 3
31 March 2019
By business line EUR000 EUR000 EUR000 EUR000 EUR000
--------- --------- --------- ---------- ----------
Corporate (22,121) (12,058) (12,619) (978) (47,776)
--------- --------- --------- ---------- ----------
SMEs (11,007) (3,521) (1,201) (663) (16,392)
--------- --------- --------- ---------- ----------
Retail
--------- --------- --------- ---------- ----------
- housing (43,286) 161 (672) (145) (43,942)
--------- --------- --------- ---------- ----------
- consumer, credit cards and
other 3,335 (95) (259) (200) 2,781
--------- --------- --------- ---------- ----------
Restructuring
--------- --------- --------- ---------- ----------
- corporate (452) (1,662) (4,279) (1,119) (7,512)
--------- --------- --------- ---------- ----------
- SMEs (67) (660) (3,480) (5,558) (9,765)
--------- --------- --------- ---------- ----------
- retail housing (122) - (2,382) (1,560) (4,064)
--------- --------- --------- ---------- ----------
- retail other 25 (13) (3,927) (4,472) (8,387)
--------- --------- --------- ---------- ----------
Recoveries
--------- --------- --------- ---------- ----------
- corporate - - (1,614) (3,839) (5,453)
--------- --------- --------- ---------- ----------
- SMEs - - (1,800) (23,076) (24,876)
--------- --------- --------- ---------- ----------
- retail housing - - (3,288) (36,159) (39,447)
--------- --------- --------- ---------- ----------
- retail other - - (4,372) (34,370) (38,742)
--------- --------- --------- ---------- ----------
International banking services (350) (980) (233) (483) (2,046)
--------- --------- --------- ---------- ----------
Wealth management (1,068) (1,452) (114) - (2,634)
--------- --------- --------- ---------- ----------
(75,113) (20,280) (40,240) (112,622) (248,255)
========= ========= ========= ========== ==========
Gross loans at amortised cost Stage Stage Stage POCI Total
after fair value adjustment 1 2 3
on initial recognition
31 March 2019
By business line EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------- ---------- -------- -----------
Corporate 2,340,228 793,847 355,190 84,451 3,573,716
---------- ---------- ---------- -------- -----------
SMEs 737,326 356,731 105,921 11,188 1,211,166
---------- ---------- ---------- -------- -----------
Retail
---------- ---------- ---------- -------- -----------
- housing 2,168,952 338,633 325,999 10,267 2,843,851
---------- ---------- ---------- -------- -----------
- consumer, credit cards and
other 586,338 210,164 134,951 20,001 951,454
---------- ---------- ---------- -------- -----------
Restructuring
---------- ---------- ---------- -------- -----------
- corporate 42,890 91,834 237,420 77,606 449,750
---------- ---------- ---------- -------- -----------
- SMEs 53,011 47,638 337,956 32,833 471,438
---------- ---------- ---------- -------- -----------
- retail housing 6,269 3,640 429,666 12,954 452,529
---------- ---------- ---------- -------- -----------
- retail other 4,220 580 279,878 12,936 297,614
---------- ---------- ---------- -------- -----------
Recoveries
---------- ---------- ---------- -------- -----------
- corporate - - 99,839 29,526 129,365
---------- ---------- ---------- -------- -----------
- SMEs - - 485,236 88,577 573,813
---------- ---------- ---------- -------- -----------
- retail housing - - 542,928 145,905 688,833
---------- ---------- ---------- -------- -----------
- retail other 79 - 384,520 137,334 521,933
---------- ---------- ---------- -------- -----------
International banking services 67,336 76,970 31,171 2,624 178,101
---------- ---------- ---------- -------- -----------
Wealth management 52,820 53,590 2,226 998 109,634
---------- ---------- ---------- -------- -----------
6,059,469 1,973,627 3,752,901 667,200 12,453,197
========== ========== ========== ======== ===========
31 December 2018 Stage 1 Stage 2 Stage 3 POCI Total
EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------- ---------- ---------- -----------
Gross loans at amortised
cost before fair value
adjustment on initial recognition 6,035,781 1,921,255 3,915,591 819,789 12,692,416
---------- ---------- ---------- ---------- -----------
Fair value adjustment on
initial recognition (77,738) (20,673) (40,432) (123,206) (262,049)
---------- ---------- ---------- ---------- -----------
Gross loans at amortised
cost after fair value adjustment
on initial recognition 5,958,043 1,900,582 3,875,159 696,583 12,430,367
========== ========== ========== ========== ===========
Gross loans at amortised Stage 1 Stage 2 Stage 3 POCI Total
cost before fair value
adjustment on initial recognition
31 December 2018
By business line EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------- ---------- -------- -----------
Corporate 2,215,264 793,249 387,093 92,830 3,488,436
---------- ---------- ---------- -------- -----------
SMEs 739,166 346,148 103,384 10,946 1,199,644
---------- ---------- ---------- -------- -----------
Retail
---------- ---------- ---------- -------- -----------
- housing 2,259,976 300,101 300,584 10,633 2,871,294
---------- ---------- ---------- -------- -----------
- consumer, credit cards
and other 591,242 199,099 130,816 20,135 941,292
---------- ---------- ---------- -------- -----------
Restructuring
---------- ---------- ---------- -------- -----------
- corporate 48,943 92,537 303,955 86,051 531,486
---------- ---------- ---------- -------- -----------
- SMEs 55,295 52,573 406,369 46,569 560,806
---------- ---------- ---------- -------- -----------
- retail housing 6,883 3,745 473,444 14,529 498,601
---------- ---------- ---------- -------- -----------
- retail other 5,140 1,226 304,076 18,510 328,952
---------- ---------- ---------- -------- -----------
Recoveries
---------- ---------- ---------- -------- -----------
- corporate - - 120,234 44,587 164,821
---------- ---------- ---------- -------- -----------
- SMEs - - 515,542 115,426 630,968
---------- ---------- ---------- -------- -----------
- retail housing - - 512,175 185,037 697,212
---------- ---------- ---------- -------- -----------
- retail other 89 - 313,529 167,115 480,733
---------- ---------- ---------- -------- -----------
International banking services 69,620 78,109 41,352 3,565 192,646
---------- ---------- ---------- -------- -----------
Wealth management 44,163 54,468 3,038 3,856 105,525
---------- ---------- ---------- -------- -----------
6,035,781 1,921,255 3,915,591 819,789 12,692,416
========== ========== ========== ======== ===========
Fair value adjustment Stage Stage Stage POCI Total
on initial recognition 1 2 3
31 December 2018
By business line EUR000 EUR000 EUR000 EUR000 EUR000
--------- --------- --------- ---------- ----------
Corporate (25,159) (11,564) (12,282) (977) (49,982)
--------- --------- --------- ---------- ----------
SMEs (10,652) (4,150) (1,113) (622) (16,537)
--------- --------- --------- ---------- ----------
Retail
--------- --------- --------- ---------- ----------
- housing (43,528) (97) (1,246) (145) (45,016)
--------- --------- --------- ---------- ----------
- consumer, credit cards
and other 3,248 352 (375) (260) 2,965
--------- --------- --------- ---------- ----------
Restructuring
--------- --------- --------- ---------- ----------
- corporate (199) (1,988) (2,687) (3,033) (7,907)
--------- --------- --------- ---------- ----------
- SMEs 28 (580) (3,931) (7,154) (11,637)
--------- --------- --------- ---------- ----------
- retail housing (119) (3) (2,796) (1,563) (4,481)
--------- --------- --------- ---------- ----------
- retail other 34 (40) (3,971) (4,611) (8,588)
--------- --------- --------- ---------- ----------
Recoveries
--------- --------- --------- ---------- ----------
- corporate - - (1,654) (5,785) (7,439)
--------- --------- --------- ---------- ----------
- SMEs - - (2,073) (24,105) (26,178)
--------- --------- --------- ---------- ----------
- retail housing - - (3,200) (37,377) (40,577)
--------- --------- --------- ---------- ----------
- retail other - - (4,695) (35,228) (39,923)
--------- --------- --------- ---------- ----------
International banking
services (303) (1,164) (195) (496) (2,158)
--------- --------- --------- ---------- ----------
Wealth management (1,088) (1,439) (214) (1,850) (4,591)
--------- --------- --------- ---------- ----------
(77,738) (20,673) (40,432) (123,206) (262,049)
========= ========= ========= ========== ==========
Gross loans at amortised Stage Stage Stage POCI Total
cost after fair value 1 2 3
adjustment on initial
recognition
31 December 2018
By business line EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------- ---------- -------- -----------
Corporate 2,190,105 781,685 374,811 91,853 3,438,454
---------- ---------- ---------- -------- -----------
SMEs 728,514 341,998 102,271 10,324 1,183,107
---------- ---------- ---------- -------- -----------
Retail
---------- ---------- ---------- -------- -----------
- housing 2,216,448 300,004 299,338 10,488 2,826,278
---------- ---------- ---------- -------- -----------
- consumer, credit cards
and other 594,490 199,451 130,441 19,875 944,257
---------- ---------- ---------- -------- -----------
Restructuring
---------- ---------- ---------- -------- -----------
- corporate 48,744 90,549 301,268 83,018 523,579
---------- ---------- ---------- -------- -----------
- SMEs 55,323 51,993 402,438 39,415 549,169
---------- ---------- ---------- -------- -----------
- retail housing 6,764 3,742 470,648 12,966 494,120
---------- ---------- ---------- -------- -----------
- retail other 5,174 1,186 300,105 13,899 320,364
---------- ---------- ---------- -------- -----------
Recoveries
---------- ---------- ---------- -------- -----------
- corporate - - 118,580 38,802 157,382
---------- ---------- ---------- -------- -----------
- SMEs - - 513,469 91,321 604,790
---------- ---------- ---------- -------- -----------
- retail housing - - 508,975 147,660 656,635
---------- ---------- ---------- -------- -----------
- retail other 89 - 308,834 131,887 440,810
---------- ---------- ---------- -------- -----------
International banking
services 69,317 76,945 41,157 3,069 190,488
---------- ---------- ---------- -------- -----------
Wealth management 43,075 53,029 2,824 2,006 100,934
---------- ---------- ---------- -------- -----------
5,958,043 1,900,582 3,875,159 696,583 12,430,367
========== ========== ========== ======== ===========
The following table presents the credit quality of the Group's
loans and advances to customers at amortised cost by geographical
concentration:
31 March 2019 Cyprus Other Total Fair value Gross loans
countries adjustment at amortised
on initial cost after
recognition fair value
adjustment
on initial
recognition
By staging EUR000 EUR000 EUR000 EUR000 EUR000
----------- ----------- ----------- ------------- --------------
Stage 1 6,133,175 1,407 6,134,582 (75,113) 6,059,469
----------- ----------- ----------- ------------- --------------
Stage 2 1,993,907 - 1,993,907 (20,280) 1,973,627
----------- ----------- ----------- ------------- --------------
Stage 3 3,661,444 131,697 3,793,141 (40,240) 3,752,901
----------- ----------- ----------- ------------- --------------
POCI 779,822 - 779,822 (112,622) 667,200
----------- ----------- ----------- ------------- --------------
12,568,348 133,104 12,701,452 (248,255) 12,453,197
=========== =========== =========== ============= ==============
31 December 2018 Cyprus Other Total Fair value Gross loans
countries adjustment at amortised
on initial cost after
recognition fair value
adjustment
on initial
recognition
By staging EUR000 EUR000 EUR000 EUR000 EUR000
----------- ----------- ----------- ------------- --------------
Stage 1 6,023,870 11,911 6,035,781 (77,738) 5,958,043
----------- ----------- ----------- ------------- --------------
Stage 2 1,921,234 21 1,921,255 (20,673) 1,900,582
----------- ----------- ----------- ------------- --------------
Stage 3 3,790,269 125,322 3,915,591 (40,432) 3,875,159
----------- ----------- ----------- ------------- --------------
POCI 819,789 - 819,789 (123,206) 696,583
----------- ----------- ----------- ------------- --------------
12,555,162 137,254 12,692,416 (262,049) 12,430,367
=========== =========== =========== ============= ==============
Loans and advances to customers classified as held for sale
The credit quality of loans and advances to customers at
amortised cost classified as held for sale by business line
concentration is presented below:
31 March 2019 Stage Stage Stage POCI Total
1 2 3
EUR000 EUR000 EUR000 EUR000 EUR000
------- -------- ---------- ---------- ----------
Gross loans at amortised
cost before fair value adjustment
on initial recognition 12,635 53,058 2,249,296 516,461 2,831,450
------- -------- ---------- ---------- ----------
Fair value adjustment on
initial recognition (292) (1,291) (26,058) (109,571) (137,212)
------- -------- ---------- ---------- ----------
Gross loans at amortised
cost after fair value adjustment
on initial recognition 12,343 51,767 2,223,238 406,890 2,694,238
======= ======== ========== ========== ==========
Loans and advances to customers classified as held for sale
(continued)
Gross loans at amortised Stage Stage Stage POCI Total
cost before fair value adjustment 1 2 3
on initial recognition
31 March 2019
By business line EUR000 EUR000 EUR000 EUR000 EUR000
------- ------- ---------- -------- ----------
Corporate 155 - 3,903 742 4,800
------- ------- ---------- -------- ----------
Retail
------- ------- ---------- -------- ----------
- consumer, credit cards
and other - - 2 - 2
------- ------- ---------- -------- ----------
Restructuring
------- ------- ---------- -------- ----------
- corporate 10,469 45,710 737,860 44,947 838,986
------- ------- ---------- -------- ----------
- SMEs 1,986 7,348 182,259 16,951 208,544
------- ------- ---------- -------- ----------
- retail housing - - 225 40 265
------- ------- ---------- -------- ----------
- retail other 25 - 5,411 202 5,638
------- ------- ---------- -------- ----------
Recoveries
------- ------- ---------- -------- ----------
- corporate - - 987,545 367,582 1,355,127
------- ------- ---------- -------- ----------
- SMEs - - 301,133 75,092 376,225
------- ------- ---------- -------- ----------
- retail housing - - 488 149 637
------- ------- ---------- -------- ----------
- retail other - - 30,462 10,756 41,218
------- ------- ---------- -------- ----------
International banking services - - 8 - 8
------- ------- ---------- -------- ----------
12,635 53,058 2,249,296 516,461 2,831,450
======= ======= ========== ======== ==========
Fair value adjustment on Stage Stage Stage POCI Total
initial recognition 1 2 3
31 March 2019
By business line EUR000 EUR000 EUR000 EUR000 EUR000
------- -------- --------- ---------- ----------
Corporate - - (6) - (6)
------- -------- --------- ---------- ----------
Restructuring
------- -------- --------- ---------- ----------
- corporate (89) (752) (15,634) (7,403) (23,878)
------- -------- --------- ---------- ----------
- SMEs (203) (539) (1,471) (2,381) (4,594)
------- -------- --------- ---------- ----------
- retail other - - (115) (80) (195)
------- -------- --------- ---------- ----------
Recoveries
------- -------- --------- ---------- ----------
- corporate - - (5,089) (81,372) (86,461)
------- -------- --------- ---------- ----------
- SMEs - - (3,466) (14,763) (18,229)
------- -------- --------- ---------- ----------
- retail housing - - - (114) (114)
------- -------- --------- ---------- ----------
- retail other - - (277) (3,458) (3,735)
------- -------- --------- ---------- ----------
(292) (1,291) (26,058) (109,571) (137,212)
======= ======== ========= ========== ==========
Loans and advances to customers classified as held for sale
(continued)
Gross loans at amortised Stage Stage Stage POCI Total
cost after fair value adjustment 1 2 3
on initial recognition
31 March 2019
By business line EUR000 EUR000 EUR000 EUR000 EUR000
------- ------- ---------- -------- ----------
Corporate 155 - 3,897 742 4,794
------- ------- ---------- -------- ----------
Retail
------- ------- ---------- -------- ----------
- consumer, credit cards
and other - - 2 - 2
------- ------- ---------- -------- ----------
Restructuring
------- ------- ---------- -------- ----------
- corporate 10,380 44,958 722,226 37,544 815,108
------- ------- ---------- -------- ----------
- SMEs 1,783 6,809 180,788 14,570 203,950
------- ------- ---------- -------- ----------
- retail housing - - 225 40 265
------- ------- ---------- -------- ----------
- retail other 25 - 5,296 122 5,443
------- ------- ---------- -------- ----------
Recoveries
------- ------- ---------- -------- ----------
- corporate - - 982,456 286,210 1,268,666
------- ------- ---------- -------- ----------
- SMEs - - 297,667 60,329 357,996
------- ------- ---------- -------- ----------
- retail housing - - 488 35 523
------- ------- ---------- -------- ----------
- retail other - - 30,185 7,298 37,483
------- ------- ---------- -------- ----------
International banking services - - 8 - 8
------- ------- ---------- -------- ----------
12,343 51,767 2,223,238 406,890 2,694,238
======= ======= ========== ======== ==========
31 December 2018 Stage Stage Stage POCI Total
1 2 3
EUR000 EUR000 EUR000 EUR000 EUR000
------- -------- ---------- ---------- ----------
Gross loans at amortised
cost before fair value adjustment
on initial recognition 7,148 94,600 2,222,931 526,434 2,851,113
------- -------- ---------- ---------- ----------
Fair value adjustment on
initial recognition (195) (3,261) (24,571) (111,126) (139,153)
------- -------- ---------- ---------- ----------
Gross loans at amortised
cost after fair value adjustment
on initial recognition 6,953 91,339 2,198,360 415,308 2,711,960
======= ======== ========== ========== ==========
Gross loans at amortised Stage Stage Stage POCI Total
cost before fair value adjustment 1 2 3
on initial recognition
31 December 2018
By business line EUR000 EUR000 EUR000 EUR000 EUR000
------- ------- ---------- -------- ----------
Corporate 165 - 14,343 741 15,249
------- ------- ---------- -------- ----------
SMEs 2,835 - 6 - 2,841
------- ------- ---------- -------- ----------
Retail
------- ------- ---------- -------- ----------
- consumer, credit cards
and other - - 125 3 128
------- ------- ---------- -------- ----------
Restructuring
------- ------- ---------- -------- ----------
- corporate 2,110 85,783 722,631 48,690 859,214
------- ------- ---------- -------- ----------
- SMEs 2,038 8,817 187,831 18,180 216,866
------- ------- ---------- -------- ----------
- retail housing - - 231 41 272
------- ------- ---------- -------- ----------
- retail other - - 5,575 198 5,773
------- ------- ---------- -------- ----------
Recoveries
------- ------- ---------- -------- ----------
- corporate - - 967,761 368,310 1,336,071
------- ------- ---------- -------- ----------
- SMEs - - 300,509 73,827 374,336
------- ------- ---------- -------- ----------
- retail housing - - 484 151 635
------- ------- ---------- -------- ----------
- retail other - - 23,427 16,293 39,720
------- ------- ---------- -------- ----------
International banking services - - 8 - 8
------- ------- ---------- -------- ----------
7,148 94,600 2,222,931 526,434 2,851,113
======= ======= ========== ======== ==========
Loans and advances to customers classified as held for sale
(continued)
Fair value adjustment on Stage Stage Stage POCI Total
initial recognition 1 2 3
31 December 2018
By business line EUR000 EUR000 EUR000 EUR000 EUR000
------- -------- --------- ---------- ----------
Corporate - - (584) - (584)
------- -------- --------- ---------- ----------
Retail
------- -------- --------- ---------- ----------
- consumer, credit cards
and other - - - (1) (1)
------- -------- --------- ---------- ----------
Restructuring
------- -------- --------- ---------- ----------
- corporate - (2,722) (13,730) (7,927) (24,379)
------- -------- --------- ---------- ----------
- SMEs (195) (539) (1,470) (2,654) (4,858)
------- -------- --------- ---------- ----------
- retail other - - (132) (78) (210)
------- -------- --------- ---------- ----------
Recoveries
------- -------- --------- ---------- ----------
- corporate - - (4,900) (81,744) (86,644)
------- -------- --------- ---------- ----------
- SMEs - - (3,473) (14,518) (17,991)
------- -------- --------- ---------- ----------
- retail housing - - - (115) (115)
------- -------- --------- ---------- ----------
- retail other - - (282) (4,089) (4,371)
------- -------- --------- ---------- ----------
(195) (3,261) (24,571) (111,126) (139,153)
======= ======== ========= ========== ==========
Gross loans at amortised Stage Stage Stage POCI Total
cost after fair value adjustment 1 2 3
on initial recognition
31 December 2018
By business line EUR000 EUR000 EUR000 EUR000 EUR000
------- ------- ---------- -------- ----------
Corporate 165 - 13,759 741 14,665
------- ------- ---------- -------- ----------
SMEs 2,835 - 6 - 2,841
------- ------- ---------- -------- ----------
Retail
------- ------- ---------- -------- ----------
- consumer, credit cards
and other - - 125 2 127
------- ------- ---------- -------- ----------
Restructuring
------- ------- ---------- -------- ----------
- corporate 2,110 83,061 708,901 40,763 834,835
------- ------- ---------- -------- ----------
- SMEs 1,843 8,278 186,361 15,526 212,008
------- ------- ---------- -------- ----------
- retail housing - - 231 41 272
------- ------- ---------- -------- ----------
- retail other - - 5,443 120 5,563
------- ------- ---------- -------- ----------
Recoveries
------- ------- ---------- -------- ----------
- corporate - - 962,861 286,566 1,249,427
------- ------- ---------- -------- ----------
- SMEs - - 297,036 59,309 356,345
------- ------- ---------- -------- ----------
- retail housing - - 484 36 520
------- ------- ---------- -------- ----------
- retail other - - 23,145 12,204 35,349
------- ------- ---------- -------- ----------
International banking services - - 8 - 8
------- ------- ---------- -------- ----------
6,953 91,339 2,198,360 415,308 2,711,960
======= ======= ========== ======== ==========
Loans and advances to customers classified as held for sale
(continued)
The following table presents the credit quality of the Group's
loans and advances to customers at amortised cost classified as
held for sale by geographical concentration:
31 March 2019 Cyprus Other countries Total Fair value Gross loans
adjustment at amortised
on initial cost after
recognition fair value
adjustment
on initial
recognition
By staging EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------------- ---------- ------------- --------------
Stage 1 12,635 - 12,635 (292) 12,343
---------- ---------------- ---------- ------------- --------------
Stage 2 53,058 - 53,058 (1,291) 51,767
---------- ---------------- ---------- ------------- --------------
Stage 3 2,185,844 63,452 2,249,296 (26,058) 2,223,238
---------- ---------------- ---------- ------------- --------------
POCI 516,461 - 516,461 (109,571) 406,890
---------- ---------------- ---------- ------------- --------------
2,767,998 63,452 2,831,450 (137,212) 2,694,238
========== ================ ========== ============= ==============
31 December 2018 Cyprus Other countries Total Fair value Gross loans
adjustment at amortised
on initial cost after
recognition fair value
adjustment
on initial
recognition
By staging EUR000 EUR000 EUR000 EUR000 EUR000
---------- ---------------- ---------- ------------- --------------
Stage 1 7,148 - 7,148 (195) 6,953
---------- ---------------- ---------- ------------- --------------
Stage 2 94,600 - 94,600 (3,261) 91,339
---------- ---------------- ---------- ------------- --------------
Stage 3 2,161,695 61,236 2,222,931 (24,571) 2,198,360
---------- ---------------- ---------- ------------- --------------
POCI 526,434 - 526,434 (111,126) 415,308
---------- ---------------- ---------- ------------- --------------
2,789,877 61,236 2,851,113 (139,153) 2,711,960
========== ================ ========== ============= ==============
F.6 Credit losses
F.6.1 Credit losses to cover credit risk on loans and advances to customers
Three months ended
31 March
2019 2018
(represented)
-------- ---------------
EUR000 EUR000
-------- ---------------
Impairment loss net of reversals on loans and
advances to customers 69,798 72,841
-------- ---------------
Recoveries of loans and advances to customers
previously written off (8,302) (2,615)
-------- ---------------
Changes in expected cash flows (179) (5,072)
-------- ---------------
Financial guarantees and commitments (1,495) (1,185)
-------- ---------------
59,822 63,969
======== ===============
F.6.2 Credit losses of loans and advances to customers,
including loans and advances to customers held for sale
The movement in ECL of loans and advances, including the loans
and advances to customers held for sale and the closing balance
analysis by staging, is as follows:
31 March 2019 Cyprus Other Total
countries
EUR000 EUR000 EUR000
---------- ----------- ----------
1 January 3,315,259 146,746 3,462,005
---------- ----------- ----------
Foreign exchange and other adjustments 1,719 3,489 5,208
---------- ----------- ----------
Write offs (104,071) 2,123 (101,948)
---------- ----------- ----------
Interest provided not recognised in
the income statement 41,058 2,243 43,301
---------- ----------- ----------
Charge for the period 68,151 1,647 69,798
---------- ----------- ----------
31 March 3,322,116 156,248 3,478,364
========== =========== ==========
Stage 1 30,087 3 30,090
---------- ----------- ----------
Stage 2 57,531 - 57,531
---------- ----------- ----------
Stage 3 2,805,551 156,245 2,961,796
---------- ----------- ----------
POCI 428,947 - 428,947
---------- ----------- ----------
Total 3,322,116 156,248 3,478,364
========== =========== ==========
The credit losses of loans and advances to customers include
credit losses relating to loans and advances to customers
classified as held for sale. Their balance at 31 March 2019 by
staging and geographical area is presented in the table below:
Cyprus Other Total
countries
31 March 2019 EUR000 EUR000 EUR000
---------- ----------- ----------
Stage 1 8,167 - 8,167
---------- ----------- ----------
Stage 2 26,381 - 26,381
---------- ----------- ----------
Stage 3 1,306,685 52,531 1,359,216
---------- ----------- ----------
POCI 192,034 - 192,034
---------- ----------- ----------
Total 1,533,267 52,531 1,585,798
========== =========== ==========
31 March 2018 (represented) Cyprus Other Total
countries
EUR000 EUR000 EUR000
------------ ----------- ------------
1 January 3,205,177 247,673 3,452,850
------------ ----------- ------------
Change in the basis of calculation
of gross carrying values (IFRS 9 grossing
up adjustment) 1,632,322 57,175 1,689,497
------------ ----------- ------------
Impact of adopting IFRS 9 at 1 January
2018 313,928 5,174 319,102
------------ ----------- ------------
Restated balance at 1 January 2018 5,151,427 310,022 5,461,449
------------ ----------- ------------
Foreign exchange and other adjustments (161) (749) (910)
------------ ----------- ------------
Write offs (1,914,544) (26,580) (1,941,124)
Interest provided not recognised in
the income statement 52,542 2,607 55,149
Charge/(credit) for the period - continuing
operations 73,536 (695) 72,841
------------ ----------- ------------
Credit for the period - discontinued
operations - (518) (518)
------------ ----------- ------------
31 March 3,362,800 284,087 3,646,887
============ =========== ============
Stage 1 10,026 1,364 11,390
------------ ----------- ------------
Stage 2 62,432 4,822 67,254
------------ ----------- ------------
Stage 3 2,801,140 274,047 3,075,187
------------ ----------- ------------
POCI 489,202 3,854 493,056
------------ ----------- ------------
Total 3,362,800 284,087 3,646,887
============ =========== ============
The above tables do not include the fair value adjustments on
initial recognition of loans acquired from Laiki Bank and ECL on
financial guarantees which are part of other liabilities on the
balance sheet. There were no loans and advances to customers
classified as held for sale as at 31 March 2018.
As from 1 January 2018, to comply with the requirements of IFRS
9, relating to the measurement and presentation of the gross
carrying amount and accumulated allowance for impairment as
impacted from interest income on impaired loans, the gross carrying
amounts of the loans have been increased by an amount of
EUR1,689,497 thousand and an equivalent adjustment was effected on
the accumulated allowance for impairment. There was no impact on
the net carrying amount of the customer loans and advances from
this change in the presentation.
During the three months ended 31 March 2019 the total
non--contractual write--offs recorded by the Group amounted to
EUR56,244 thousand (year 2018: EUR2,264,902 thousand).
Assumptions have been made about the future changes in property
values, as well as the timing for the realisation of the
collateral, taxes and expenses on the repossession and subsequent
sale of the collateral as well as any other applicable haircuts.
Indexation has been used to estimate updated market values of
properties, while assumptions were made on the basis of a
macroeconomic scenario for future changes in property values.
At 31 March 2019 the weighted average haircut (including
liquidity haircut and selling expenses) used in the collectively
assessed provision calculation for loans and advances to customers
other than those classified as held for sale is c.32% under the
baseline scenario (31 December 2018: c.32%).
The timing of recovery from real estate collaterals used in the
collectively assessed provision calculation for loans and advances
to customers other than those classified as held for sale has been
estimated to be on average 7 years under the baseline scenario
(year ended 31 December 2018: average 7 years).
For the calculation of individually assessed provisions, the
timing of recovery of collaterals as well as the haircuts used are
based on the specific facts and circumstances of each case.
For Stage 3 customers, the calculation of individually assessed
provision is the weighted average of three scenarios; base, adverse
and favourable. The base scenario focuses on the following
variables, which are based on the specific facts and circumstances
of each customer: the operational cash flows, the timing of
recovery of collaterals and the haircuts from the realisation of
collateral. The base scenario is used to derive additional
scenarios for either better or worse cases. Under the adverse
scenario operational cash flows are decreased by 50%, applied
haircuts on real estate collateral are increased by 50% and the
timing of recovery of collaterals is increased by 1 year with
reference to the baseline scenario. Under the favourable scenario,
applied haircuts are decreased by 5%, with no change in the
recovery period with reference to the baseline scenario.
Assumptions used in estimating expected future cash flows
(including cash flows that may result from the realisation of
collateral) reflect current and expected future economic conditions
and are generally consistent with those used in the Stage 3
collectively assessed exposures. In the case of loans held for sale
the Group has taken into consideration the timing of expected sale
and the estimated sale proceeds in determining the ECL. Amounts
previously written off which are expected to be recovered through
sale are presented in 'Recoveries of loans and advances to
customers previously written off'.
For the calculation of expected credit losses three scenarios
were used; base, adverse and favourable with 50%, 30% and 20%
probability respectively.
Any positive cumulative average future change in forecasted
property values was capped to zero for the three months ended 31
March 2019 and the year 2018. This applies to all scenarios.
The above assumptions are also influenced by the ongoing
regulatory dialogue BOC PCL maintains with its lead regulator, the
ECB, and other regulatory guidance and interpretations issued by
various regulatory and industry bodies such as the ECB and the EBA,
which provide guidance and expectations as to relevant definitions
and the treatment/classification of certain parameters/assumptions
used in the estimation of provisions.
Any changes in these assumptions or differences between
assumptions made and actual results could result in significant
changes in the amount of required credit losses of loans and
advances.
F.7 Rescheduled loans and advances to customers
Credit quality
Cyprus Other countries Total
31 March 2019 EUR000 EUR000 EUR000
---------- ---------------- ----------
Stage 1 452,244 121 452,365
---------- ---------------- ----------
Stage 2 369,828 - 369,828
---------- ---------------- ----------
Stage 3 1,929,595 53,657 1.983,252
---------- ---------------- ----------
POCI 255,793 - 255,793
---------- ---------------- ----------
3,007,460 53,778 3,061,238
========== ================ ==========
Cyprus Other countries Total
31 December 2018 EUR000 EUR000 EUR000
---------- ---------------- ----------
Stage 1 508,664 120 508,784
---------- ---------------- ----------
Stage 2 376,794 24 376,818
---------- ---------------- ----------
Stage 3 2,001,947 48,662 2,050,609
---------- ---------------- ----------
POCI 266,263 - 266,263
---------- ---------------- ----------
3,153,668 48,806 3,202,474
========== ================ ==========
F.8 Credit risk disclosures
According to the EBA standards and European Central Bank's (ECB)
Guidance to Banks on Non-Performing loans (which was published in
March 2017), Non-Performing Exposures (NPEs) are defined as those
exposures that satisfy one of the following conditions:
(i) The debtor is assessed as unlikely to pay its credit
obligations in full without the realisation of the collateral,
regardless of the existence of any past due amount or of the number
of days past due.
(ii) Defaulted or impaired exposures as per the approach
provided in the Capital Requirements Regulation (CRR) (Article
178).
(iii) Material exposures (as defined below) which are more than 90 days past due.
(iv) Performing forborne exposures under probation for which
additional forbearance measures are extended.
(v) Performing forborne exposures under probation that present
more than 30 days past due within the probation period.
Exposures include all on and off balance sheet exposures, except
those held for trading, and are categorised as such for their
entire amount without taking into account the existence of
collateral.
The following materiality criteria are applied:
-- When the problematic exposures of a customer that fulfil the
NPE criteria set out above are greater than 20% of the gross
carrying amount of all on balance sheet exposures of that customer,
then the total customer exposure is classified as non-performing;
otherwise only the problematic part of the exposure is classified
as non-performing.
-- Material arrears/excesses are defined as follows:
- Retail exposures:
- Loans: Arrears amount greater than EUR500 or number of
instalments in arrears is greater than one.
- Overdrafts: Excess amount is greater than EUR500 or greater than 10% of the approved limit.
- Exposures other than retail: Total customer arrears/excesses
are greater than EUR1,000 or greater than 10% of the total customer
funded balances.
NPEs may cease to be considered as non-performing only when all
of the following conditions are met:
(i) The extension of forbearance measures does not lead to the
recognition of impairment or default.
(ii) One year has passed since the forbearance measures were extended.
(iii) Following the forbearance measures and according to the
post-forbearance conditions, there is no past due amount or
concerns regarding the full repayment of the exposure.
(iv) No unlikely-to-Pay criteria exist for the debtor.
(v) The debtor has made post-forbearance payments of a
not-insignificant amount of capital (different capital thresholds
exist according to the facility type).
The tables below present the analysis of loans and advances to
customers in accordance with the EBA standards.
Gross loans and advances to customers Provision for impairment and fair value
adjustment on initial recognition
Group gross Of which Of which exposures Total Of which Of which exposures
customer NPEs with forbearance provision NPEs with forbearance
loans measures for measures
and impairment
advances(1) and fair
value
adjustment
on initial
recognition
------------ ---------- ------------------------ ------------ ---------- ------------------------
Total Of which Total Of which
exposures on NPEs exposures on NPEs
with with
forbearance forbearance
measures measures
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
31 March 2019 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Loans and
advances to
customers
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
General
governments 65,766 1 1,258 - 3,577 - 459 -
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Other financial
corporations 135,243 18,263 25,596 2,754 10,669 6,601 2,532 931
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Non-financial
corporations 6,442,880 1,822,010 1,607,387 971,908 941,932 860,196 366,969 347,004
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which: Small
and
Medium sized
Enterprises(2)
(SMEs) 4,744,595 1,389,189 1,025,084 728,542 751,646 685,842 276,920 264,945
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Commercial
real estate(2) 4,493,409 1,177,144 1,073,825 685,261 556,404 493,380 228,679 214,446
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Non-financial
corporations
by sector
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Construction 915,266 365,314 181,845
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Wholesale and
retail
trade 1,431,479 490,853 247,593
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Accommodation
and food
service
activities 1,078,229 85,398 58,750
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Real estate
activities 1,137,441 345,109 172,779
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Manufacturing 478,765 142,390 63,898
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Other sectors 1,401,700 392,946 217,067
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Households 6,520,749 2,770,813 1,856,894 1,481,686 1,253,931 1,191,698 482,814 473,945
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Residential
mortgage
loans(2) 4,968,375 2,085,512 1,495,309 1,173,780 823,351 769,597 342,982 335,416
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Credit for
consumption(2) 879,883 390,512 220,769 189,881 223,514 220,131 77,813 76,540
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
13,164,638 4,611,087 3,491,135 2,456,348 2,210,109 2,058,495 852,774 821,880
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Loans and
advances to
customers
classified
as held for
sale 2,831,450 2,765,693 1,474,481 1,439,200 1,723,010 1,686,830 833,244 814,163
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Total
on-balance
sheet 15,996,088 7,376,780 4,965,616 3,895,548 3,933,119 3,745,325 1,686,018 1,636,043
============ ========== ============ ========== ============ ========== ============ ==========
(_________________________________________________________________)
(1) Excluding loans and advances to central banks and credit
institutions.
(2) The analysis shown in lines 'non-financial corporations' and
'households' is non-additive across categories as certain customers
could be in both categories.
Gross loans and advances to customers Provision for impairment and fair value
adjustment on initial recognition
Group gross Of which Of which exposures Total Of which Of which exposures
customer NPEs with forbearance provision NPEs with forbearance
loans measures for measures
and impairment
advances(3) and fair
value
adjustment
on initial
recognition
------------ ---------- ------------------------ ------------ ---------- ------------------------
Total Of which Total Of which
exposures on NPEs exposures on NPEs
with with
31 December forbearance forbearance
2018 measures measures
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Loans and
advances to
customers
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
General
governments 70,638 3 1,595 - 3,681 - 468 -
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Other financial
corporations 167,910 21,338 28,028 5,621 13,378 8,471 3,374 2,076
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Non-financial
corporations 6,331,381 1,941,479 1,682,997 1,042,164 947,857 864,983 367,235 347,924
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which: Small
and
Medium sized
Enterprises(4)
(SMEs) 4,573,824 1,488,289 1,108,153 793,579 759,484 692,343 280,675 266,736
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Commercial
real estate(4) 4,473,159 1,284,145 1,124,078 742,839 569,351 501,842 231,694 216,486
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Non-financial
corporations
by sector
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Construction 972,059 382,697 184,282
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Wholesale and
retail
trade 1,431,706 522,151 254,823
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Accommodation
and food
service
activities 1,005,691 96,702 58,563
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Real estate
activities 1,140,596 406,226 174,269
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Manufacturing 428,828 134,950 74,884
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Other sectors 1,352,501 398,753 201,036
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Households 6,588,202 2,805,496 1,924,928 1,486,583 1,271,429 1,208,624 481,701 471,184
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Residential
mortgage
loans(4) 5,022,617 2,112,152 1,552,445 1,180,705 828,205 774,656 336,651 327,956
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Credit for
consumption(4) 891,964 397,747 234,572 195,422 225,505 221,996 79,417 77,930
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
13,158,131 4,768,316 3,637,548 2,534,368 2,236,345 2,082,078 852,778 821,184
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Loans and
advances to
customers
classified
as held for
sale 2,851,113 2,749,301 1,492,083 1,437,851 1,697,005 1,646,091 825,977 797,692
------------ ---------- ------------ ---------- ------------ ---------- ------------ ----------
Total
on-balance
sheet 16,009,244 7,517,617 5,129,631 3,972,219 3,933,350 3,728,169 1,678,755 1,618,876
============ ========== ============ ========== ============ ========== ============ ==========
_________________________________
(3) Excluding loans and advances to central banks and credit
institutions.
(4) The analysis shown in lines 'non-financial corporations' and
'households' is non-additive across categories as certain customers
could be in both categories.
F.9 Pending litigation, claims regulatory and other matters
The Group in the ordinary course of business is subject to
enquiries and examinations, requests for information, audits,
investigations and legal and other proceedings by regulators,
governmental and other public bodies, actual and threatened,
relating to the suitability and adequacy of advice given to clients
or the absence of advice, lending and pricing practices, selling
and disclosure requirements, record keeping, filings and a variety
of other matters. In addition, as a result of the deterioration of
the Cypriot economy and banking sector in 2012 and the subsequent
Restructuring of BOC PCL in 2013 as a result of the Bail-in
Decrees, BOC PCL is subject to a large number of proceedings and
investigations that either precede, or result from the events that
occurred during the period of the Bail-in Decrees. Most ongoing
investigations and proceedings of significance relate to matters
arising during the period prior to the issue of the Bail-in
Decrees. Provisions have been recognised for those cases where the
Group is able to estimate probable losses. Where an individual
provision is material, the fact that a provision has been made is
stated. Any provision recognised does not constitute an admission
of wrongdoing or legal liability. While the outcome of these
matters is inherently uncertain, management believes that, based on
the information available to it, appropriate provisions have been
made in respect of legal proceedings and regulatory matters.
F.10 Liquidity regulation
The Group has to comply with provisions on the Liquidity
Coverage Ratio (LCR) under CRD IV/CRR (as supplemented by the
Commission Delegated Regulation (EU) No 2015/61 which prescribes
the criteria for liquid assets and methods of calculation as from 1
October 2015 and the Commission Implementing Regulation (EU) No
2016/322 which prescribes supervisory reporting requirements and
applied from 10 September 2016). It also monitors its position
against the Net Stable Funding Ratio (NSFR) as proposed under Basel
III. The LCR is designed to promote short-term resilience of a
Group's liquidity risk profile by ensuring that it has sufficient
high quality liquid resources to survive an acute stress scenario
lasting for 30 days. The NSFR has been developed to promote a
sustainable maturity structure of assets and liabilities.
In October 2014, the Basel Committee on Banking Supervision
proposed the methodology for calculating the NSFR. It is noted that
the NSFR did not become effective on 1 January 2018 as opposed to
what was expected. It will become a regulatory indicator when
Capital Requirements Regulation 2 (CRR2) is enforced with the limit
set at 100%.
As at 31 March 2019 the Group was in compliance with all
regulatory liquidity requirements. As at 31 March 2019 the LCR
stood at 216% for the Group (compared to 231% at 31 December 2018)
and was in compliance with the minimum regulatory requirement of
100% applicable as from 1 January 2018. As at 31 March 2019 the
Group's NSFR, on the basis of the Basel standards, was 117%
(compared to 119% at 31 December 2018).
F.11 Liquidity reserves
The below table sets out the Group's liquidity reserves:
Composition of the 31 March 2019 31 December 2018
liquidity reserves
Internal Liquidity reserves Internal Liquidity reserves
liquidity as per LCR Delegated liquidity as per LCR Delegated
reserves Reg (EU) reserves Reg (EU)
2015/61 LCR eligible 2015/61 LCR eligible
----------- ------------------------ ----------- ------------------------
Level 1 Level Level Level 2A
2A 1
----------- ------------- --------- ----------- ------------ ----------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
----------- ------------- --------- ----------- ------------ ----------
Cash and balances
with central banks 3,751,861 3,751,861 - 4,447,511 4,447,511 -
----------- ------------- --------- ----------- ------------ ----------
Nostro and overnight
placements with
banks 240,006 - 281,383 - -
----------- ------------- --------- ----------- ------------ ----------
Liquid investments 1,084,893 1,070,720 130,609 881,091 929,380 93,165
----------- ------------- --------- ----------- ------------ ----------
Available ECB Buffer 271,810 - - 108,374 - -
----------- ------------- --------- ----------- ------------ ----------
Total 5,348,570 4,822,581 130,609 5,718,359 5,376,891 93,165
=========== ============= ========= =========== ============ ==========
LCR Liquidity Reserves are as per LCR Delegated Regulation (EU)
2015/61 definition of Liquid Assets. As per the LCR definition the
unencumbered High Quality Liquid Assets (HQLA) form the Liquidity
reserves. Level 1 assets, other than covered bonds (which have a 7%
haircut) do not carry a haircut when calculating the LCR, while
Level 2A assets have a 15% haircut. Internal Liquidity Reserves are
as per the definition of the Bank's Liquidity Policy.
Internal Liquidity Reserves include the nostro and placements
with banks with remaining maturity up to 3 months. Liquid
investments include the unencumbered bonds which are HQLA as per
the LCR definition and/or ECB Eligible bonds. Such assets are shown
at market value net of haircut (which is calculated based on the
methodology of determining ECB haircuts). Finally, the ECB buffer
(this is the unutilised credit line with the ECB) is included.
F.12 Capital management
The primary objective of the Group's capital management is to
ensure compliance with the relevant regulatory capital requirements
and to maintain strong credit ratings and healthy capital adequacy
ratios in order to support its business and maximise shareholders'
value.
With the exception of certain specified provisions, the CRR and
Capital Requirements Directive IV (CRD IV) came into effect on 1
January 2014. The CRR and CRD IV transposed the new capital,
liquidity and leverage standards of Basel III into the European
Union's legal framework. CRR establishes the prudential
requirements for capital, liquidity and leverage for credit
institutions and investment firms. It is directly applicable in all
EU member states. CRD IV governs access to deposit-taking
activities and internal governance arrangements including
remuneration, board composition and transparency. Unlike the CRR,
member states were required to transpose the CRD IV into national
laws and it allowed national regulators to impose additional
capital buffer requirements. CRR introduced significant changes in
the prudential regulatory regime applicable to banks including
amended minimum capital adequacy ratios, changes to the definition
of capital and the calculation of risk weighted assets and the
introduction of new measures relating to leverage, liquidity and
funding. CRR permits a transitional period for certain of the
enhanced capital requirements and certain other measures, which are
largely fully effective in 2019. In addition, the Regulation (EU)
2016/445 of the ECB on the exercise of options and discretions
available in Union law (ECB/2016/4) provides certain transitional
arrangements which supersede the national discretions unless they
are stricter than the EU Regulation 2016/445.
The CET1 ratio of the Group at 31 March 2019 stands at 13.4% and
the total capital ratio at 16.2% on a transitional basis.
The minimum Pillar I total capital requirement is 8.0% and may
be met, in addition to the 4.5% CET1 requirement, with up to 1.5%
by Additional Tier 1 capital and with up to 2.0% by Tier 2
capital.
The Group is also subject to additional capital requirements for
risks which are not covered by the Pillar I capital requirements
(Pillar II add-ons).
Following the annual Supervisory Review and Evaluation Process
(SREP) performed by the ECB in 2018 and based on the final 2018
SREP decision received on 27 March 2019, the Group's minimum
phased-in CET1 capital ratio and Total capital ratio remain
unchanged when ignoring the phasing-in of the Capital Conservation
Buffer (CCB) and the Other Systemically Important Institution
Buffer. The Group's phased-in CET1 capital ratio requirement will
be 10.5%, comprising of a 4.5% Pillar I requirement, a 3.0% Pillar
II requirement, the CCB of 2.5% and the Other Systemically
Important Institution Buffer of 0.5%. The Group's Total capital
ratio requirement will be 14.0%, comprising of a 8.0% Pillar I
requirement, a 3.0% Pillar II requirement, the Capital Conservation
Buffer of 2.5% and the Other Systemically Important Institution
Buffer of 0.5%. The final 2018 SREP decision applies from 1 April
2019.
The Group's minimum phased-in CET1 capital ratio for 2018 was
9.375%, comprising of a 4.50% Pillar I requirement, a 3.00% Pillar
II requirement and the CCB of 1.875%. The ECB had also provided
non-public guidance for an additional Pillar II CET1 buffer.
The overall Total Capital Ratio Requirement for 2018 was 12.875%
comprising of 8.00% Pillar I requirement (of which up to 1.50% can
be in the form of Additional Tier 1 capital and up to 2.00% in the
form of Tier 2 capital), a 3.00% Pillar II requirement (in the form
of CET1) and the CCB of 1.875% applicable as from 1 January
2018.
The above minimum ratios apply for both, BOC PCL and the Group.
BOC PCL is 100% subsidiary of the Company and its principal
activities are the provision of banking, financial services and
management and disposal of property predominately acquired in
exchange of debt.
The capital position of the Group and BOC PCL at 31 March 2019
exceeds both their Pillar I and their Pillar II add-on capital
requirements. However, the Pillar II add-on capital requirements
are a point-in-time assessment and therefore are subject to change
over time.
Based on the provisions of the Macroprudential Oversight of
Institutions Law of 2015 which came into force on 1 January 2016,
the CBC is the designated Authority responsible for setting the
macroprudential buffers that derive from the CRD IV.
In accordance with the provisions of the above law, the CBC
sets, on a quarterly basis, the Countercyclical Capital buffer
(CCyB) level in accordance with the methodology described in this
law. The CCyB is effective as from 1 January 2016 and is determined
for all the countries in the European Economic Area (EEA) by their
local competent authorities ahead of the beginning of each quarter.
The CBC has set the level of the CCyB for Cyprus at 0% for the six
months up to June 2019 and year of 2018.
In accordance with the provisions of this law, the CBC is also
the responsible authority for the designation of banks that are
Other Systemically Important Institutions (O-SIIs) and for the
setting of the O-SII buffer requirement for these systemically
important banks. The Group has been designated as an O-SII and the
CBC set the O-SII buffer for the Group at 2.0%. This buffer will be
phased-in gradually, starting from 1 January 2019 at 0.5% and
increasing by 0.5% every year thereafter, until being fully
implemented (2.0%) on 1 January 2022.
The Capital Conservation Buffer (CCB) is gradually phased-in at
0.625% in 2016, 1.25% in 2017, 1.875% in 2018 and has been fully
implemented on 1 January 2019 at 2.5%.
The Bank Recovery and Resolution Directive (BRRD) requires that
from January 2016 EU member states shall apply the BRRD's
provisions requiring EU credit institutions and certain investment
firms to maintain a minimum requirement for own funds and eligible
liabilities (MREL), subject to the provisions of the Commission
Delegated Regulation (EU) 2016/1450. Although the precise
calibration and ultimate designation of the Group's MREL has not
yet been finalised, BOC PCL is monitoring developments in this area
very closely.
The insurance subsidiaries of the Group comply with the
requirements of the Superintendent of Insurance including the
minimum solvency ratio. The regulated investment firms of the Group
comply with the regulatory capital requirements of the CySEC laws
and regulations.
F.12.1 Capital position
The capital position of the Group and BOC PCL under CRD IV/CRR
basis (after applying the transitional arrangements) is presented
below.
Regulatory capital Group BOC PCL
31 March 31 December 31 March 31 December
2019 2018 2019 2018
----------- ------------ ----------- ------------
EUR000 EUR000 EUR000 EUR000
----------- ------------ ----------- ------------
Transitional Common Equity
Tier 1 2,058,181 1,864,000 2,070,417 1,861,098
(CET1)(5,6)
----------- ------------ ----------- ------------
Transitional Additional
Tier 1 capital (AT1) 220,000 220,000 220,000 220,000
----------- ------------ ----------- ------------
Tier 2 capital (T2) 213,078 212,000 250,000 250,000
----------- ------------ ----------- ------------
Transitional total regulatory
capital(6) 2,491,259 2,296,000 2,540,417 2,331,098
=========== ============ =========== ============
Risk weighted assets -
credit risk(7) 13,852,667 13,832,589 13,739,909 13,820,385
----------- ------------ ----------- ------------
Risk weighted assets - - 2,182 - -
market risk
----------- ------------ ----------- ------------
Risk weighted assets -
operational risk 1,538,588 1,538,588 1,411,788 1,411,788
----------- ------------ ----------- ------------
Total risk weighted assets 15,391,255 15,373,359 15,151,697 15,232,173
=========== ============ =========== ============
% % % %
----------- ------------ ----------- ------------
Transitional Common Equity
Tier 1 ratio 13.4 12.1 13.7 12.2
----------- ------------ ----------- ------------
Transitional total capital
ratio 16.2 14.9 16.8 15.3
----------- ------------ ----------- ------------
IFRS 9 and Deferred Tax Group BOC PCL
Asset fully loaded
31 March 31 December 31 March 31 December
2019 2018 2019 2018
--------- ------------ --------- ------------
EUR000 EUR000 EUR000 EUR000
--------- ------------ --------- ------------
Common Equity Tier 1 ratio
(%) 11.9 10.1 12.2 10.2
--------- ------------ --------- ------------
Total capital ratio (%) 14.9 13.2 15.3 13.4
--------- ------------ --------- ------------
_______________________________
(5) CET1 includes regulatory deductions, primarily comprising
intangible assets amounting to EUR42,879 thousand as at 31 March
2019 (31 December 2018: EUR43,364 thousand). As at 31 December 2018
CET1 included regulatory deductions comprising deferred tax assets
amounting to EUR163,082 thousand.
(6) Following the Regulation (EU) 2016/445 of the ECB of 14
March 2016 on the exercise of options and discretions available in
Union law (ECB/2016/4), the deferred tax asset was phasing-in for 5
years, with effect as from the reporting of 31 December 2016, and
fully phased-in on 1 January 2019.
(7) Includes Credit Valuation Adjustments (CVA).
During the period ended 31 March 2019, the CET1 was negatively
affected by the phased-in of transitional adjustments, mainly the
IFRS 9, and it was positively affected by the profit for the period
of EUR86,955 thousand (unaudited/un-reviewed profit for 31 March
2019) primarily driven by the tax legislation amendments relating
to the conversion of deferred tax assets into deferred tax
credits.
On 1 March 2019 the Cyprus Parliament adopted legislative
amendments allowing for the conversion of deferred tax assets into
deferred tax credits for regulatory purposes, under the CRR. For
more details refer to Note 56.1 of the Consolidated Financial
Statements for the year ended 31 December 2018.
The Group has elected to apply the EU transitional arrangements
for regulatory capital purposes (EU Regulation 2017/2395) where the
impact on the impairment amount from the initial application of
IFRS 9 on the capital ratios will be phased-in gradually. The
amount that will be added each year will decrease based on a
weighting factor until the impact of IFRS 9 is fully absorbed at
the end of the five years.
F.12.2 Overview of RWA
RWAs Minimum capital
requirements
31 March 31 December 31 March
2019 2018 2019
----- ------------------------------- ----------- ----------------
EUR000 EUR000 EUR000
----------------------------------- ----------- ------------ ----------------
1 Credit risk (excluding CCR) 13,523,159 13,237,594 1,081,853
----------------------------------- ----------- ------------ ----------------
Of which the Standardised
2 Approach 13,523,159 13,237,594 1,081,853
----------------------------------- ----------- ------------ ----------------
6 CCR 19,765 22,859 1,581
----------------------------------- ----------- ------------ ----------------
7 Of which mark to market 12,615 13,996 1,009
----------------------------------- ----------- ------------ ----------------
11 Of which risk exposure amount - - -
for contributions to the
default fund of a CCP
----------------------------------- ----------- ------------ ----------------
12 Of which CVA 7,150 8,863 572
----------------------------------- ----------- ------------ ----------------
13 Settlement risk - - -
----------------------------------- ----------- ------------ ----------------
19 Market risk - 2,182 -
----------------------------------- ----------- ------------ ----------------
Of which the Standardised
20 Approach - 2,182 -
----------------------------------- ----------- ------------ ----------------
22 Large exposures - - -
----------------------------------- ----------- ------------ ----------------
23 Operational risk 1,538,588 1,538,588 123,087
----------------------------------- ----------- ------------ ----------------
25 Of which Standardised Approach 1,538,588 1,538,588 123,087
----------------------------------- ----------- ------------ ----------------
Amounts below the thresholds
for deduction (subject to
27 250% risk weight) 309,743 572,136 24,779
----------------------------------- ----------- ------------ ----------------
29 Total 15,391,255 15,373,359 1,231,300
----------------------------------- =========== ============ ================
On 1 March 2019 the Cyprus Parliament adopted legislative
amendments allowing for the conversion of deferred tax assets into
deferred tax credits for regulatory capital purposes, under the
CRR. The law amendment decreased the amounts included in line 27
'Amounts below the thresholds for deduction (subject to 250% risk
weight)' by EUR333 million and increased the amounts included in
line 1 'Credit risk (excluding CCR)' by EUR379 million. Conversely,
the law amendment created additional Financial Sector Entities
(FSE) RWA included in line 27 of EUR71 million. The increase in the
Credit Risk RWA in line 1 driven by the law amendment was partially
offset by a change in the IFRS9 Transitional Ratio allowing for
increased provision amounts to be recognised in the RWA calculation
and a further decrease in the customer advances exposure values
from repayments, debt-for-asset swaps and increased value
adjustments. The decrease in Counterparty Credit Risk (CCR) RWA
observed in line 6 is the result of decreased derivative
transactions exposure values.
Due to the small trading book, Article 94 of the CRR was applied
allowing the RWA for trading book positions to be calculated in
accordance with Article 92 paragraph 3(a) of the CRR and included
in line 1 'Credit risk (excluding CCR)'. The size of the trading
book business will be monitored on a quarterly basis in line with
the specified thresholds described in Article 94 of the CRR.
There were no large exposures for institutions that exceeded the
relevant limits.
F.12.3 Standardised approach - Credit risk exposure and Credit Risk Mitigation (CRM) effects
The table below illustrates the effect of all CRM techniques
applied in accordance with the CRR under the financial collateral
comprehensive method.
31 March 2019 31 December 2018
RWAs and RWA density RWAs and RWA density
-------------------------- -------------------------
Exposure classes RWAs RWA density RWAs RWA density
------------ ------------ ----------- ------------
EUR000 % EUR000 %
------------ ------------ ----------- ------------
Central governments
or central banks 380,392 7.4% 333,243 6.1%
------------ ------------ ----------- ------------
Regional government
or local authorities 1,518 1.7% 701 1.2%
------------ ------------ ----------- ------------
Public sector entities 8 0.0% 7 0.0%
------------ ------------ ----------- ------------
Multilateral development
banks - 0.0% - 0.0%
------------ ------------ ----------- ------------
International organisations - 0.0% - 0.0%
------------ ------------ ----------- ------------
Institutions 174,016 28.1% 177,904 29.8%
------------ ------------ ----------- ------------
Corporates 3,138,478 99.0% 3,016,593 98.8%
------------ ------------ ----------- ------------
Retail 1,038,745 71.1% 987,312 71.1%
------------ ------------ ----------- ------------
Secured by mortgages
on immovable property 1,055,638 37.5% 1,077,148 37.4%
------------ ------------ ----------- ------------
Exposures in default 3,474,345 109.8% 3,695,591 110.8%
------------ ------------ ----------- ------------
Higher-risk categories 1,956,372 150.0% 2,032,341 150.0%
------------ ------------ ----------- ------------
Covered bonds 16,957 10.0% 14,153 10.0%
------------ ------------ ----------- ------------
Collective investment
undertakings (CIUs) 248 51.3% 172 100.0%
------------ ------------ ----------- ------------
Equity 325,136 233.4% 254,220 229.9%
------------ ------------ ----------- ------------
Other items 2,271,049 93.5% 2,220,345 92.4%
------------ ------------ ----------- ------------
Total 13,832,902 66.6% 13,809,730 65.6%
============ ============ =========== ============
On 1 March 2019 the Cyprus Parliament adopted legislative
amendments allowing for the conversion of deferred tax assets into
deferred tax credits for regulatory capital purposes, under the
CRR. The law amendment increased the RWA density in exposure
classes 'Central governments or central banks' which include the
deferred tax asset amounts converted to deferred tax credits
carrying a Risk Weight of 100% and 'Equity' which include the FSE
amounts carrying a Risk Weight of 250%. The law amendment and the
increased exposure values from Balance Sheet line 'Other assets'
that take a 100% Risk Weight included in exposure class 'Other
items' resulted in the overall increased RWA density. The increase
in the overall RWA density was partially offset by the improvement
in the RWA density of exposure class 'Exposures in default' from
the change in the IFRS9 transitional ratio. The change in the IFRS9
transitional ratio allows increased provisions to be recognised in
the RWA calculation hence more unsecured defaulted exposures are
eligible for the 100% Risk Weight compared to a 150% Risk Weight.
The RWA density of exposure class 'Institutions' has decreased due
to the shift of the portfolio to lower Risk Weights from greater
concentration of exposures to Institutions with higher grade
external ratings.
The significant decrease in the RWA density of 'Collective
investment undertakings (CIUs)' results from new investments in
CIUs with a good quality external rating.
The RWA density of all other exposure classes remained
stable.
F.13 Leverage ratio
According to CRR Article 429, the leverage ratio, expressed as a
percentage, is calculated as the capital measure divided by the
total exposure measure of the Group.
The leverage ratio of the Group is presented below:
31 March 31 December
2019 2018
Transitional basis EUR000 EUR000
----------- ------------
Capital measure (Tier 1) 2,191,225 2,084,000
=========== ============
Total exposure measure 21,732,683 22,052,298
=========== ============
Leverage ratio (%) 10.08% 9.45%
=========== ============
IFRS 9 fully loaded
----------- ------------
Capital measure (Tier 1) 1,928,769 1,745,473
=========== ============
Total exposure measure 21,516,543 21,893,785
=========== ============
Leverage ratio (%) 8.96% 7.97%
=========== ============
The decrease in the 'Total exposure measure' follows the
movements in the Group's balance sheet assets. The decrease is
offset by the law amendment adopted on 1 March 2019 by the Cyprus
Parliament allowing for the conversion of deferred tax assets into
deferred tax credits for regulatory capital purposes resulting in
lower 'Asset amounts deducted from Tier 1 capital'.
The law amendments on Income Tax Law improved the regulatory
capital treatment of the DTA under CRR and increased CET1 compared
to 31 December 2018 transitional ratios, by c.170 bps (unaudited).
This improvement includes the impact from the reversal of
impairment of the related DTA of EUR109 million recognised in
previous year, which was reversed in the Interim Consolidated
Income Statement for the three months ended 31 March 2019.
The leverage ratio including EUR86,955 thousand profit for the
period ended 31 March 2019 (unaudited/un-reviewed) is calculated at
9.37% on a transitional basis and 10.48% on IFRS 9 fully loaded
basis.
F.14 Internal Capital Adequacy Assessment Process (ICAAP),
Internal Liquidity Assessment Process (ILAAP), Pillar II and
SREP
The Group prepares the ICAAP and ILAAP reports annually. Both
reports for 2018 were approved by the Board of Directors and
submitted to the ECB on 25 April 2019.
The Group also undertakes a quarterly review of its ICAAP
results (as at the end of June and as at the end of September)
considering the latest actual and forecasted information. During
the quarterly review, the Group's risk profile and risk management
policies and processes are reviewed and any changes since the
annual ICAAP exercise are taken into consideration. The ICAAP
process demonstrates that the Group has sufficient capital under
both the base case and stress scenarios under the Normative
internal perspective. Under the Economic internal perspective there
are shortfalls in the adverse scenario, which however can be
largely neutralised by the available mitigants.
The Group also undertakes a quarterly review for the ILAAP
through quarterly stress tests submitted to the Assets and
Liabilities Committee (ALCO) and Board Risk Committee. During the
quarterly review, the liquidity risk drivers are assessed and, if
needed, the stress test assumptions are amended accordingly. The
quarterly review identifies whether the Group has an adequate
liquidity buffer to cover the stress outflows. The Group's ILAAP
analysis demonstrates that the volume and capacity of liquidity
resources available to the Group are adequate.
The ECB, as part of its supervisory role, has been conducting
the SREP and onsite inspections on the Group. SREP is a holistic
assessment of, amongst other things, the Group's business model,
internal governance and institution-wide control arrangements,
risks to capital and adequacy of capital to cover these risks and
risks to liquidity and adequacy of liquidity resources to cover
these risks. The objective of the SREP is for the ECB to form an
up-to-date supervisory view of the Group's risks and viability and
to form the basis for supervisory measures and dialogue with the
Group. Additional capital and other requirements could be imposed
on the Group as a result of these supervisory processes, including
a revision of the level of Pillar II add-ons as the Pillar II
add-ons capital requirements are a point-in-time assessment and
therefore subject to change over time.
G. Definitions & Explanations
Accelerated Following the Regulation (EU) 2016/445 of the ECB
phase-in period of 14 March 2016 on the exercise of options and discretions,
the DTA was phasing-in by 60% for 2017, 80% for 2018
and 100% for 2019 (fully phased-in).
Accumulated Comprise (i) provisions for impairment of customer
provisions loans and advances, (ii) the fair value adjustment
on initial recognition of loans acquired from Laiki
Bank and on loans classified at FVPL, and (iii) provisions
for off-balance sheet exposures disclosed on the balance
sheet within other liabilities.
Advisory and Comprise mainly: fees of external advisors in relation
other restructuring to: (i) disposal of operations and non-core assets,
costs and (ii) customer loan restructuring activities
AT1 AT1 (Additional Tier 1) is defined in accordance with
Articles 51 and 52 of the Capital Requirements Regulation
(EU) No 575/2013.
CET1 capital CET1 capital ratio (transitional basis) is defined
ratio (transitional in accordance with the Capital Requirements Regulation
basis) (EU) No 575/2013.
CET1 fully loaded The CET1 fully loaded (FL) ratio is defined in accordance
(FL) with the Capital Requirements Regulation (EU) No 575/2013.
Contribution Relates to the contribution made to the Single Resolution
to SRF Fund.
Cost to Income Cost-to-income ratio comprises total expenses (as
ratio defined) divided by total income (as defined).
Data from the The latest data was published on 9 May 2019.
Statistical
Service of the
Republic of
Cyprus, Cyprus
Statistical
Service
ECB European Central Bank
ELA Emergency Liquidity Assistance
Gross loans Gross loans are reported before the fair value adjustment
on initial recognition relating to loans acquired
from Laiki Bank (calculated as the difference between
the outstanding contractual amount and the fair value
of loans acquired) amounting to EUR445 mn at 31 March
2019 (compared to EUR462 mn at 31 December 2018, EUR480
mn at 30 September 2018, EUR514 mn at 30 June 2018
and to EUR566 mn at 31 March 2018).
Additionally, gross loans (i) include loans and advances
to customers measured at fair value through profit
and loss of EUR454 mn and (ii) are reported after
the reclassification between gross loans and expected
credit losses on loans and advances to customers classified
as a disposal group held for sale of EUR104 mn.
Group The Group consists f Bank of Cyprus Holdings Public
Limited Company, "BOC Holdings" or the "Company",
its subsidiary Bank of Cyprus Public Company Limited,
the "Bank" and the Bank's subsidiaries.
Leverage ratio The leverage ratio is the ratio of tangible total
equity (including Other equity instruments) to total
assets for the relevant period.
Market Shares Both deposit and loan market shares are based on data
from the Central Bank of Cyprus.
The Bank is the single largest credit provider in
Cyprus with a market share of 46.7% at 31 March 2019,
compared to 45.4% at 31 December 2018 and as at 30
September 2018 and compared to 38.6% at 30 June 2018
and 37.4% at 31 March 2018.
The market share on loans was affected during the
quarter ended 31 March 2019 following a decrease in
total loans in the banking sector of EUR1 bn, mainly
attributed to reclassification, revaluation, exchange
rate and other adjustments (CBC).
The market share on loans was affected as at 30 September
2018 following a decrease in total loans in the banking
sector, mainly attributed to EUR6 bn non-performing
loans of Cyprus Cooperative Bank (CyCB) which remained
to SEDIPES as a result of the agreement between CyCB
and Hellenic Bank.
The market share on loans was affected as at 30 June
2018 following a decrease in total loans in the banking
sector of EUR2.1 bn, due to loan reclassifications,
revaluations, exchange rate or other adjustments (CBC).
Net fee and Net fee and commission income over total income is
commission income the net fee and commission income divided by the total
over total income income (as defined).
Net Interest Net interest margin is calculated as the net interest
Margin income (annualised) divided by the average interest
earning assets. Interest earning assets include: cash
and balances with central banks, plus loans and advances
to banks, plus net customer loans and advances, plus
investments (excluding equities and mutual funds).
Net loans and Loans and advances net of accumulated provisions (as
advances defined).
Net loan to Net loan to deposits ratio is calculated as the net
deposit ratio loans and advances to customers divided by customer
deposits, including net loans and deposits held for
sale, where applicable.
Net Stable Funding The NSFR is calculated as the amount of "available
Ratio (NSFR) stable funding" (ASF) relative to the amount of "required
stable funding" (RSF), on the basis of Basel III standards.
Its calculation is a SREP requirement. The European
Banking Authority (EBA) is working on finalising the
NSFR and enforcing it as a regulatory ratio under
CRR2.
New lending New lending includes the average YTD change (if positive)
for overdraft facilities
Non-interest Non-interest income comprises Net fee and commission
income income, Net foreign exchange gains and net gains on
other financial instruments and loss on disposal/dissolution
of subsidiaries, Insurance income net of claims and
commissions, Net gains/(losses) from revaluation and
disposal of investment properties and on disposal
of stock of properties, and Other income.
Non-performing According to the EBA reporting standards on forbearance
exposures (NPEs) and non-performing exposures (NPEs), published in
2014, ECB's Guidance to Banks on Non-Performing Loans
published in March 2017 and EBA Guidelines on management
of non-performing and forborne exposures published
in October 2018 and applicable from June 2019, a loan
is considered an NPE if: (i) the debtor is assessed
as unlikely to pay its credit obligations in full
without the realisation of the collateral, regardless
of the existence of any past due amount or of the
number of days past due, or (ii) the exposures are
impaired i.e. in cases where there is a specific provision,
or (iii) there are material exposures which are more
than 90 days past due, or (iv) there are performing
forborne exposures under probation for which additional
forbearance measures are extended, or (v) there are
performing forborne exposures under probation that
present more than 30 days past due within the probation
period. The NPEs are reported before the deduction
of accumulated provisions (as defined).
Non-recurring Non-recurring items as presented in the 'Unaudited
items Consolidated Income Statement - Underlying basis'
relate to: (i) advisory and other restructuring costs,
(ii) discontinued operations (UK sale), (iii) loss
relating to NPE sale (Helix) and (iv) impairment of
DTA and tax receivables.
NPE ratio NPEs ratio is calculated as the NPEs as per EBA (as
defined) divided by gross loans (as defined).
Operating profit Comprises profit before total provisions and impairments
(as defined), share of profit from associates, tax,
(profit)/loss attributable to non-controlling interests
and non-recurring items (as defined).
Operating profit Operating profit return on average assets is calculated
return on average as the annualised operating profit (as defined) divided
assets by the average of total assets for the relevant period.
Phased-in Capital In accordance with the legislation in Cyprus which
Conservation has been set for all credit institutions, the applicable
Buffer (CCB) rate of the CCB is 1.25% for 2017, 1.875% for 2018
and 2.5% for 2019 (fully phased-in).
Pro forma for In addition to the impact from Project Helix, this
Helix pro forma also includes the impact from the agreement
for the sale of a portfolio of retail unsecured NPEs,
with gross book value EUR33 mn as at 31 March 2019,
known as Project Velocity.
Profit/(loss) Excludes non-recurring items (as defined)
after tax and
before non-recurring
items
Provision charge The provision charge comprises provisions for impairments
of customer loans and provisions for off-balance sheet
exposures, net of gain/(loss) on derecognition of
loans and advances to customers and changes in expected
cash flows.
Provisioning Provisioning charge (cost of risk) (year to date)
charge (cost is calculated as the provision charge (as defined)
of risk) divided by average gross loans (the average balance
calculated as the average of the opening balance and
the closing balance).
Provisioning Provisioning coverage ratio for NPEs is calculated
coverage ratio as accumulated provisions (as defined) over NPEs (as
for NPEs defined).
Quarterly average Average of interest earning assets as at the beginning
interest earning and end of the relevant quarter. Interest earning
assets assets include: cash and balances with central banks,
plus loans and advances to banks, plus net customer
loans and advances, plus investments (excluding equities
and mutual funds).
Qoq Quarter on quarter change
Special levy Relates to the special levy on deposits of credit
institutions in Cyprus.
Total Capital Total capital ratio is defined in accordance with
ratio the Capital Requirements Regulation (EU) No 575/2013.
Total expenses Total expenses comprise staff costs, other operating
expenses and the special levy and contribution to
the Single Resolution Fund. It does not include 'advisory
and other restructuring costs-excluding discontinued
operations and NPE sale (Helix)' or any restructuring
costs or loss relating to NPE sale (Helix).
'Advisory and other restructuring costs-excluding
discontinued operations and NPE sale (Helix)' amount
to EUR7 mn for 1Q2019, EUR42 mn for FY2018 (EUR16
mn for 4Q2018, EUR11 mn for 3Q2018, EUR7 mn for 2Q2018
and EUR8 mn for 1Q2018) and EUR29 mn for the year
ended 31 December 2017.
Restructuring costs relating to NPE sale (Helix) amount
to EUR1 mn for 1Q2019, EUR18 mn for FY2018 (EUR1 mn
for 4Q2018, EUR5 mn for 3Q2018, EUR6 mn for 2Q2018
and EUR6 mn for 1Q2018) and EURNil for the year ended
31 December 2017.
Loss relating to NPE sale (Helix) amounts to EUR21
mn for 1Q2019, EUR150 mn for FY2018 (EURNil for 4Q2018,
EUR15 mn for 3Q2018, EUR135 mn for 2Q2018 and EURNil
for 1Q2018) and EURNil for the year ended 31 December
2017.
Total income Total income comprises net interest income and non-interest
income (as defined).
Total provisions Total provisions and impairments comprise provision
and impairments charge (as defined), plus (provisions)/reversal of
provisions for litigation, regulatory and other matters
plus (impairments)/reversal of impairments of other
financial and non-financial assets.
Underlying basis Statutory basis adjusted for certain items as detailed
in the Basis of Presentation.
Write offs Loans together with the associated provisions are
written off when there is no realistic prospect of
future recovery. Partial write-offs, including non-contractual
write-offs, may occur when it is considered that there
is no realistic prospect for the recovery of the contractual
cash flows. In addition, write-offs may reflect restructuring
activity with customers and are part of the terms
of the agreement and subject to satisfactory performance.
Yoy Year on year change
Basis of Presentation
This announcement covers the results of Bank of Cyprus Holdings
Public Limited Company, "BOC Holdings" or "the Company", its
subsidiary Bank of Cyprus Public Company Limited, the "Bank" or
"BOC PCL", and together with the Bank's subsidiaries, the "Group",
for the quarter ended 31 March 2019.
At 31 December 2016, the Bank was listed on the CSE and the
Athens Exchange. On 18 January 2017, BOC Holdings, incorporated in
Ireland, was introduced in the Group structure as the new holding
company of the Bank. On 19 January 2017, the total issued share
capital of BOC Holdings was admitted to listing and trading on the
LSE and the CSE.
Financial information presented in this announcement is being
published for the purposes of providing an overview of the Group
financial results for the quarter ended 31 March 2019. The
financial information in this announcement does not constitute
statutory financial statements of BOC Holdings within the meaning
of section 340 of the Companies Act 2014. The Group statutory
financial statements for the year ended 31 December 2018, upon
which the auditors have given an unqualified report, were published
on 28 March 2019 and are expected to be delivered to the Registrar
of Companies of Ireland within 28 days of 30 September 2019. The
Board of Directors approved the Group statutory financial
statements for the quarter ended 31 March 2019 on 13 May 2019.
Statutory basis: Statutory information is set out on pages
20-25. However, a number of factors have had a significant effect
on the comparability of the Group's financial position and results.
Accordingly, the results are also presented on an underlying
basis.
Underlying basis: The statutory results are adjusted for certain
items (as described on page 26) to allow a comparison of the
Group's underlying performance, as set out on pages 4-5.
The financial information included in this announcement is
neither reviewed nor audited by the Group's external auditors.
This announcement and the presentation for the Group Financial
Results for the quarter ended 31 March 2019 have been posted on the
Group's website www.bankofcyprus.com (Investor Relations/Financial
Results).
Definitions: The Group uses a number of definitions in the
discussion of its business performance and financial position which
are set out in section G.
The Group Financial Results for the quarter ended 31 March 2019
are presented in Euro (EUR) and all amounts are rounded as
indicated. A comma is used to separate thousands and a dot is used
to separate decimals.
Forward Looking Statements
This document contains certain forward-looking statements which
can usually be identified by terms used such as "expect", "should
be", "will be" and similar expressions or variations thereof or
their negative variations, but their absence does not mean that a
statement is not forward-looking. Examples of forward-looking
statements include, but are not limited to, statements relating to
the Group's near term and longer term future capital requirements
and ratios, intentions, beliefs or current expectations and
projections about the Group's future results of operations,
financial condition, expected impairment charges, the level of the
Group's assets, liquidity, performance, prospects, anticipated
growth, provisions, impairments, business strategies and
opportunities. By their nature, forward-looking statements involve
risk and uncertainty because they relate to events, and depend upon
circumstances, that will or may occur in the future. Factors that
could cause actual business, strategy and/or results to differ
materially from the plans, objectives, expectations, estimates and
intentions expressed in such
forward-looking statements made by the Group include, but are
not limited to: general economic and political conditions in Cyprus
and other European Union (EU) Member States, interest rate and
foreign exchange fluctuations, legislative, fiscal and regulatory
developments and information technology, litigation and other
operational risks. Should any one or more of these or other factors
materialise, or should any underlying assumptions prove to be
incorrect, the actual results or events could differ materially
from those currently being anticipated as reflected in such forward
looking statements. The forward-looking statements made in this
document are only applicable as from the date of publication of
this document. Except as required by any applicable law or
regulation, the Group expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward looking statement contained in this document to reflect any
change in the Group's expectations or any change in events,
conditions or circumstances on which any statement is based.
Contacts
For further information please contact:
Investor Relations
+ 357 22 122239
investors@bankofcyprus.com
The Bank of Cyprus Group is the leading banking and financial
services group in Cyprus, providing a wide range of financial
products and services which include retail and commercial banking,
finance, factoring, investment banking, brokerage, fund management,
private banking, life and general insurance. The Bank of Cyprus
Group operates through a total of 108 branches in Cyprus. Bank of
Cyprus also has representative offices in Russia, Ukraine and
China. The Bank of Cyprus Group employs 4,156 staff worldwide. At
31 March 2019, the Group's Total Assets amounted to EUR21.7 bn and
Total Equity was EUR2.5 bn. The Bank of Cyprus Group comprises Bank
of Cyprus Holdings Public Limited Company, its subsidiary Bank of
Cyprus Public Company Limited and its subsidiaries.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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May 13, 2019 10:52 ET (14:52 GMT)
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