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23% increase in profits for the first half and upgrade of targets by Bank of Cyprus

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On a quarterly basis, profits, after tax, were up 4% in the second quarter, to €137 million

Αύξηση κερδων 23% γι&alpha α΄ ενο αθμισν απΤρπεζα Κyπρου /></p> <p>An increase in profits, after tax, by 23%, to €270 million, Bank of Cyprus announced for the first half of 2024, compared to the first half of 2023, upgrading its financial targets for 2024 and 2025 and emphasizing the objective for a dividend distribution of 50% of adjusted earnings for 2024, subject to market conditions and required approvals.</p> <p>On a quarterly basis, earnings after tax were up 4% in the second quarter, at €137 million</p> <p>Basic earnings per share amounted to €0.61 for 1H 2024 (compared to €0.49 for 1H 2023), while return on tangible equity (ROTE) was 23.7% for in the first half of 2024.</p> <p>New lending of €1.2 billion is up 10% year-on-year, and the serviced loan portfolio of €10.1 billion is up 3% from in December 2023.</p> <p>In a written statement, Group CEO Panikos Nikolaou states that the Bank has “achieved another quarter of strong profitability, proving the viability of our business model”.</p> <p>“For the sixth consecutive quarter, we recorded a Return on Equity (ROTE) higher than 20%, significantly exceeding the 2024 targets we set in February 2024,” it says, adding that “this strong performance was supported by continued strong and resilient net interest income, continued disciplined cost management despite inflationary pressures as well as low cost of risk”.</p> <p>“Given the strong performance as well as the favorable macroeconomic environment, we are upgrading today our financial targets for 2024 and 2025”, it states and emphasizes that they expect a “Return on Tangible Equity (ROTE) greater than 19% for 2024 and in the mid-teens for 2025, with strong annual capital generation (CET1) before the deduction of distributions, greater than 300 basis points”.</p> <p>According to Mr. Nikolaou, “the quality of the loan portfolio remains healthy and continues to improve, with the ratio of NPLs to loans falling below 3% for the first time”.</p> <p>NPLs fell to 2, 8% of total loans as of June 30, 2024, compared to 3.4% as of March 31, 2024 and 3.6% as of December 31, 2023.</p> <p>NPL coverage ratio stands at 85% in 30 June 2024, compared to 77% on 31 March 2024 and 73% on 31 December 2023.</p> <p>“The Cypriot economy continues to demonstrate strength and resilience, despite geopolitical uncertainty. The growth rate of Cyprus is expected to increase by approximately 2.9% in 2024, exceeding the Eurozone average”, notes the Bank of Cyprus CEO.</p> <p>He also states that “our strong financial and operational performance it is also reflected in higher credit ratings, as Moody's, S&P and Fitch have recently gone ahead with upgrades.”</p> <p>Mr. Nikolaou also states that “our commitment to delivering consistent returns for our shareholders is evidenced by the total distribution of €137 million from 2023 profitability, which included a cash dividend payment of €112 million made in June 2024 and repurchase of own shares amounting to €25 million which started in April 2024”.</p> <p>“For 2024 we aim to distribute towards the higher end of our distribution rate range (i.e. 50%), subject to market conditions and required approvals,” he underlines.</p> <p>Regarding the upgraded financial targets, Bank of Cyprus states that supported by the more favorable interest rate environment and the positive deposit trend, the target for net interest income for 2024 is upgraded from more than €670 million to around €800 million and adds that “this upgrade is mainly due to the fact that the interest rate environment has proved to be more resilient than initially expected, with the pace of interest rate cuts extending”.</p> <p>For 2025, net income from interest rates are expected to be lower than 2024 levels but remain strong, according to the Bank, exceeding €700m, based on the ECB deposit facility rate and 6-month Euribor at 3.0% on average, reflecting mainly the projected lower interest rates and higher cost of deposits, compared to 2024.</p> <p>For 2025, the cost-to-income ratio adjusted for the special tax on deposits is expected to be less than 40%, mainly reflecting lower income as a result of the gradual reduction in interest rates.</p> <p>Overall, the Group says it expects to achieve a Return on Tangible Equity (ROTE) of over 19%, which translates to over 24% calculated on a Common Equity Tier 1 (CET1) ratio of 15% for 2024. For 2025 , the Group expects to generate a Return on Tangible Equity (ROTE) at mid-teens levels, corresponding to high-teens levels calculated on a Common Equity Tier 1 (CET1) ratio of 15%.</p> <p>Regarding the quality of the loan portfolio, according to the announcement of the financial results of the Bank of Cyprus for the first half of the year, the ratio of NPL to loans of the Group decreased to 2.8% on 30 June 2024, indicating that the Group is already aligned with the its NPL-to-loans target that it set for 2024. In this context, the Group aims for a NPL-to-loans ratio lower than 3% until 31 December 2024 and lower than 2.5% until 31 December 2025.</p> <p> < p>The Common Equity Tier 1 (CET1) and the Total Capital Adequacy Ratio, after provision for distribution, amounted to 18.3% and 23.3% respectively as at 30 June 2024.</p> <p>Equity attributable to the Company's owners amounted to €2,387 million on June 30, 2024, compared to €2,381 million on March 31, 2024 and €2,247 million on December 31, 2023.</p> <p>The total revenue for the first half of 2024 was €549 million (compared to €511 million for the first half of 2023, up 7% year-on-year), due to the increase in net interest income as explained above. Total revenue for Q2 2024 was €273 million, compared to €276 million for Q1 2024.</p> <p>Net interest income for the first half of 2024 was €420 million, compared to €358 million for the first half of 2023, up 17% year-on-year. “The annual increase is mainly due to the increase in interest rates on liquid assets and loans, which were partially offset by a low increase in the cost of time deposits and funding costs as well as increased costs arising from hedging activities ( 'hedging')”, reports the Bank of Cyprus.</p> <p>Non-interest income for the first half of 2024 amounted to €129 million (compared to €153 million for the first half of 2023, down 16% year-on-year).</p> <p>The decrease in year-on-year, according to the Bank, is mainly due to the decrease in net gains from foreign exchange trading and net gains from financial instruments, as well as lower net income from fees and commissions.</p> <p>Non-interest income for Q2 2024 was €66m (compared to €63m for Q1 2024, up 5% quarter-on-quarter).</p> <p>Net interest income for Q2 2024 was €207 million, compared to €213 million for Q1 2024, down 3% quarter-on-quarter. The quarterly decrease reflects continued hedging actions to reduce the change in net interest income due to interest rate fluctuations ('sensitivity'), and higher funding costs following the issuance of a senior green bond of € 300 million in April 2024 as the cost of term deposits remains low.</p> <p>Operating profit for the first half of 2024 was €363 million, compared to €331 million for the first half of 2023, up 9% year-on-year, mainly reflecting the significant increase in net interest income. Operating profit for the second quarter of 2024 was €179 million, down 2% quarter-on-quarter due to a decrease in total revenue and an increase in total expenses, as explained above.</p> <p>The total expenses for the first half of 2024 amounted to €186 million (compared to €180 million for the first half of 2023, increased by 4% year-on-year), of which 52% concerns personnel costs (€96 million), 38% concerns other operating expenses (€71 million) and 10% concerns the special tax on deposits and other fees/contributions (€19 million). The annual increase is due to higher personnel costs.</p> <p>Total expenses for Q2 2024 were €94 million (compared to €92 million for Q1 2024, up 1% quarter-on-quarter).</p> <p>Total operating expenses for the first half of 2024 they amounted to €167 million (compared to €162 million for the first half of 2023, up 4% year-on-year), mainly due to higher personnel costs. Total operating expenses for Q2 2024 were €86 million, compared to €81 million in Q1 2024.</p> <p>The Group's total customer deposits amounted to €19,723 million at 30 June 2024 (compared to €19,260 million at 31 March 2024 and €19,337 million at 31 December 2023), up 2% quarter-on-quarter and YTD of the year.</p> <p>The Bank's market share of deposits in Cyprus amounted to 37.5% on 30 June 2024, compared to 37.5% on 31 March 2024 and 37.7% on 31 December 2023. </p> <p>The loan-to-deposit (L/D) ratio (after provisions) stood at 51% on 30 June 2024 (compared to 52% on 31 March 2024 and 51% on 31 December 2023 on the same basis), roughly flat since the beginning of the year.</p> <p>The Group's loans amounted to €10.318 million at 30 June 2024, compared to €10.276 million at 31 March 2024 and €10.277 million at 30 June 2023, approximately at the same levels on an annual basis.</p> <p>New lending in Cyprus in Q2 2024 amounted to €551m (compared to strong new lending of €676m for Q1 2024 positively impacted by seasonality and €462m for the fourth quarter of 2023), down 18% quarter-on-quarter.</p> <p>New lending in the first half of 2024 amounted to €1.227 million, up 10% year-on-year, and mainly due to increased demand for business loans.</p> <p>As at 30 June 2024, the Property Management Division (PMD) managed repossessed properties with a book value of €790m, compared to €836m at 31 March 2024 and with €973m at 30 June 2023 and remains on track to achieve its target of reducing this portfolio to approximately €0.5bn by 31 December 2025.</p> <p>According to H1 2024, DDA completed property sales (and transfers) of €57m (compared to €68m in H1 2023), with property sales gains of approximately €3m in H1 2024 half of 2024 (compared to profits of approximately €4 million in the first half of 2023).</p> <p><noindex></p> <div class=Source: www.kathimerini.com.cy

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