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Capital Intelligence: Revises Bank of Cyprus outlook to positive

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States that the Bank's Long-Term Foreign Currency Rating (LT FCR) and Short-Term Foreign Currency Rating (ST FCR) are affirmed at 'BB' and 'B', respectively

Capital Intelligence: Αναθεωρε προοπτικΕς της Τραπεζας Κyπρου &sigma ;ε θετικς

Capital Intelligence Ratings announced on Friday that it has revised the outlook on Bank of Cyprus' Long-Term Foreign Currency Rating (LT FCR) and Bank Autonomous Rating (BSR) from stable to positive.

It says the long-term rating is affirmed. foreign currency rating (LT FCR) and the Bank's short-term foreign currency rating (ST FCR) of 'BB' and 'B', respectively.

At the same time, CI Ratings affirmed its Bank Standalone Rating (BSR) Bank at 'bb'. Structural Financial Strength (CFS) has been upgraded to 'bb+' from 'bb'.

“The revision of the LT FCR and BSR outlook to positive and the upward adjustment of the CFS ratio rating reflects the Bank's much improved net and operating profitability and reduced NPL ratio combined with strong capital ratios in Q3 2023” , he says.

He adds that these factors together strengthened the Bank's credit loss absorption capacity and resilience, especially in the event of possible adverse changes in the operating environment.

“Cyprus' healthy economic performance has contributed to an improvement in the banks' operating environment in terms of asset quality risks, despite modest lending opportunities and profitability,” it notes.

Furthermore, it states that the operating and net The Bank's profitability improved significantly in 9M 2023, albeit from a low base, having returned to positive territory in 2021.

“The high level of liquidity in the form of cash has significantly benefited the net interest margin in the face of sharply higher interest rates and the delayed revaluation of deposits. Effective cost management has contributed to better profitability.”

It also says that it expects that healthy profitability will continue into 2024, although inflationary pressure on operating expenses will at least partially offset cost savings in the short term.”

Regarding NPLs, he states that NPLs have decreased significantly over the last three years due to sales but also through organic NPL reductions such as write-offs, collections.

In addition, he notes that REMU properties are still the 4% of total assets in Q3 2013, and therefore higher than the reported NPLs and equal to 42% of total equity which is considered significant.

“Although we recognize the significant amounts of ongoing property sales, we consider the REMU properties to be part of the loan restructurings and therefore almost NPL. The Bank aims to halve the proportion of REMU properties by the end of 2025,” he notes.

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Source: www.kathimerini.com.cy

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