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Bank of Cyprus: Profits of 133 million in the 1st quarter of 2024

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Return on Equity (ROTE) calculated on Common Equity Tier 1 (CET1) of 15% for Q1 2024 increases to 29.1%

Τρ. Κyπρου: Κερ&delta ;ηεατσο τμνο presented 133 million euros the Bank of Cyprus for the 1st quarter of 2024, against 95 million euros for the 1st quarter of 2023.</p>
<p>Profits after tax attributable to the owners of the Company for the first quarter of 2024 amounted to €133 million, and correspond to a Return on Tangible Equity (ROTE) of 23.6%, compared to €138 million for the fourth quarter of 2023 and €95m for Q1 2023 (compared to a Return on Tangible Equity (ROTE) of 25.6% for Q4 2023 and 21.3% for Q1 2023). Return on Tangible Equity (ROTE) calculated on Common Equity Tier 1 (CET1) of 15% for Q1 2024 increases to 29.1%, compared to Return on Tangible Equity (ROTE) of 28.8% for Q4 quarter 2023 and 21.9% for the first quarter 2023, calculated on the same basis). Adjusted earnings before non-recurring items used in the Group's distribution policy (ie, defined as earnings after tax and before non-recurring items attributable to the owners of the Group, taking into account distributions from other equity securities such as the coupon payment to holders of Class 1 Notes payable semi-annually), amounted to €133m for Q1 2024, compared to €125m for Q4 2023 and €96m for Q1 quarter 2023.</p>
<p>Total equity excluding minority rights amounted to €2,601 million as of March 31, 2024, compared to €2,467 million as of December 31, 2023 and €2,119 million as of March 31, 2023. Equity attributable to owners of the Company stood at €2.381 million at 31 March 2024, compared to €2.247 million at 31 December 2023 and €1.899 million at 31 March 2023.</p>
<p>The Common Equity Tier 1 (CET1) ratio with transitional provisions calculated for supervisory purposes stood at 17.1% on 31 March 2024, compared to 17.4% on 31 December 2023. In this announcement, the capital ratios calculated for supervisory purposes on 31 March 2024, do not include Q1 2024 earnings (these ratios are listed as supervisory). Including the profits for the first quarter of 2024 of approximately 130 bp., reduced for a related provision for distribution at the highest percentage ('payout ratio') of the approved distribution policy of the Group of approximately 70 bp. in accordance with the principles of the delegated Regulation (EU) no. 241/2014, the Common Equity Tier 1 (CET1) ratio with transitional provisions (referred to as the ratio including retained earnings) increased to 17.6% on March 31, 2024. Based on the latest DEEA decision, any distribution is subject to supervisory approval. The provision for a distribution from 2024 earnings is not a commitment to pay a distribution nor is it a guarantee or assurance that a distribution will be paid.</p>
<p><strong>Net interest income</strong></p>
<p >Net interest income for Q1 2024 was €213 million, compared to €220 million for Q4 2023, down 3% quarter-on-quarter, a smaller-than-expected decline. The quarterly decrease reflects the small decrease in Euribor interest rates, the small increase in deposit costs as well as hedging actions. Net interest income increased 31% year-on-year, benefiting from higher interest rates on liquid assets and loans, which were partially offset by low pass-through of interest rate increases to term deposit costs ) and from financing costs, following the issuance of a senior bond of €350 million in July 2023.</p>
<p>At 31 March 2024, the Group's net loans and receivables from customers amounted to €10.028 million (compared to €9.822 million at 31 December 2023), up 2% year-to-date.</p>
<p >The Bank is the largest lender in Cyprus with a market share of 42.9% as at 31 March 2024, compared to 42.2% as at 31 December 2023.</p>
<p>In December 2023, the Bank entered into an agreement with the Cyprus Asset Management Company ('KEDIPES') for the acquisition of a portfolio of serviced and restructured loans of approximately €58 million with a reference date of December 31, 2022 (the 'Transaction'). The Transaction had no impact on the Bank's income statement and capital position. The Transaction was completed in March 2024.</p>
<p><strong>Non-Performing Loans (NPLs)</strong></p>
<p>European Banking Authority (EBA) non-performing loans (NPLs) decreased by €18m, or 5% in Q1 2024, compared to a net NPL increase of €7m in Q4 2023, to € 347 million at 31 March 2024 (compared to €365 million at 31 December 2023.</p>
<p>As a result, NPLs represent 3.4% of total loans at 31 March 2024, compared to 3.6% as at 31 December 2023.</p>
<p>The NPL coverage ratio stands at 77% as at 31 March 2024, compared to 73% as at 31 December 2023. Taking into account collateral at fair value, the NPLs are fully covered. </p>
<p>Overall, from their peak in 2014, NPLs have fallen by €14.6bn or 98% to below €0.4bn and the NPL-to-loans ratio by 59 percentage points, from 63% to below 4%.</p >
<p>The Group's total customer deposits amounted to €19,260 million at 31 March 2024 (compared to €19,337 million at 31 December 2023 and €18,974 million at 31 March 2023), flat year-to-date and up by 2% on an annual basis. As of March 31, 2024, customer deposits are mostly from individuals and 58% of deposits are protected by the deposit guarantee fund.</p>
<p>The Bank's market share of deposits in Cyprus stood at 37.5% at 31 March 2024, compared to 37.7% at 31 December 2023. Customer deposits constituted 77% of total assets and 86% of total liabilities at 31 March 2024 (compared to 73% of total assets and 80% of total liabilities at 31 December 2023). The annual increase is due to the repayment of SPPPMA loans amounting to €1.7 billion.</p>
<p>As at 31 March 2024, the Group's Liquidity Coverage Ratio (LCR) stood at 315% (compared to 359% at 31 December 2023), well above the minimum regulatory requirements of 100%. The liquidity surplus in the DKR as of March 31, 2024 amounted to €7.3 billion (compared to €9.1 billion as of December 31, 2023). The decrease in the liquidity surplus in Q1 2024 is due to the payment of €1.7 billion from the seventh tranche of PFMA III in March 2024. Excluding the remaining PFMA III of €300m (expiring in June 2024) and including the issuance of a green bond with a high repayment priority of €300 million in April 2024, the liquidity of the Group remains stable with the DCR amounting to 315% and the liquidity surplus to €7.3 billion.</p>
<p><strong>The cost to revenue</strong></p>
<p>Staff costs for Q1 2024 were €48m (compared to €51m for Q4 2023, down 6% quarter-on-quarter), mainly due to a lower provision for performance-based staff benefits and of the reduced staff severance costs during the quarter. Personnel costs increased by 5% year-on-year, mainly due to salary increases, higher cost-of-living adjustments (automatic indexation (ATA)) and higher employer contributions.</p>
<p>The cost-to-income ratio adjusted for special tax on deposits and other fees/charges for Q1 2024 was 29%, compared to 32% for Q4 2023 and 34% for Q1 2023; reduced by 3 e.m. on a quarterly basis and by 5 e.m. on an annual basis, benefiting from strong revenues and continued focus on cost management.</p>
<p><strong>Statement by CEO Panikos Nikolaos</strong></p>
<p>“We have had a strong start to the year, supported by strong financial results and receiving approval for substantial distribution, which is another important milestone in our strategy. We proposed a total distribution of €137 million from the 2023 profitability, which consists of a cash dividend of €112 million and the first repurchase of own shares of up to €25 million, corresponding to a payout ratio of 30%, a significant increase compared to the previous year.</p>
<p>During the first quarter of the year, we have achieved a Return on Tangible Equity (ROTE) of 23.6%, the fifth consecutive quarter with a Return on Tangible Equity (ROTE) greater than 20%, proving that the Group is on track to meet its targets 2024. Our performance was supported by continued strong net interest income, which decreased slightly quarter-on-quarter, reflecting our high interest rates and high liquidity, as well as continued focus on disciplined cost management and maintaining strong loan quality portfolio.</p>
<p>Our performance was supported by the Cypriot economy, which continues to demonstrate strength and resilience despite geopolitical uncertainty. In the first quarter of 2024, Cyprus's growth rate increased by 3.3%, and is expected to increase by approximately 2.9%1 in 2024, exceeding the Eurozone average.</p>
<p>Our balance sheet is characterized by a strong capital position, high liquidity and healthy loan portfolio quality. The Common Equity Tier 1 (CET1) ratio (calculated for regulatory purposes) stood at 17.1% as at 31 March 2024 and including earnings for the first quarter of 2024 less a related provision for distribution2, at 17.6%. Organic capital formation remained strong at around 130 bp. Tangible book value per share improved 26% year-on-year to €5.23, reflecting our efforts to create shareholder value.</p>
<p>In April 2024, the Group successfully completed the issuance of a €300 million senior green bond, thereby achieving compliance and building up a sufficient buffer against the final Minimum Requirement for Equity and Eligible Liabilities ('MREL'). This issue marks Bank of Cyprus' first green bond issue, representing a significant step for the Bank in its goal to lead Cyprus' transition to a sustainable future.</p>
<p>Our positive financial results in this quarter provide the basis for achieving a Return on Tangible Equity (ROTE) of more than 17%, calculated on a Common Equity Tier 1 (CET1) of 15%. We will review our financial goals with the financial results of the first half of 2024. We continue to implement the strategy we have set, focusing on supporting our customers, creating value for our shareholders, while supporting the development of the Cypriot economy.”< /p><br />
<div class=Source: www.kathimerini.com.cy

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