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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Bank Of Cyprus Holdings Public Limited Company | LSE:BOCH | London | Ordinary Share | IE00BD5B1Y92 | ORD EUR0.10 (CDI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 4.00 | 1.27% | 320.00 | 315.00 | 320.00 | 320.00 | 316.00 | 316.00 | 21,819 | 10:15:23 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMBOCH
RNS Number : 0465X
Bank of Cyprus Holdings PLC
21 November 2017
Announcement
Group Financial Results for the nine months ended 30 September 2017
Nicosia, 21 November 2017
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014.
Important Notice Regarding Additional Information Contained in the Investor Presentation
The presentation for the Group Financial Results for the nine months ended 30 September 2017 (the "Presentation"), available on http://www.bankofcyprus.com/, includes additional financial information not presented within this Announcement, primarily relating to (i) NPE analysis (movements by segments geography and customer type), (ii) 90+ DPD analysis and 90+ DPD ratios (by Geography, business line and economic activity), (iii) reconciliations between 90+ DPD and NPEs for the Cyprus operations, (iv) rescheduled loans analysis, (v) details of historic restructuring activity including REMU activity, (vi) analysis of new lending, (vii) Income statement by business line, (viii) UK operations analysis and (ix) NIM and interest income analysis. Except in relation to any non-IFRS measure, the financial information contained in the Presentation has been prepared in accordance with the Group's significant accounting policies as described in the Group's Annual Financial Report 2016 and updated in the Mid-Year Financial Report 2017. The Presentation should be read in conjunction with the information contained in this Announcement and neither the financial information in this Announcement nor the Presentation constitute financial statements prepared in accordance with International Financial Reporting Standards.
Hot Features
Premium
Key Highlights for the nine months ended 30 September
2017
Continued Progress on 'organic' Balance Sheet repair
* Ten consecutive quarters of NPE reduction
* NPEs down by EUR588 mn qoq to EUR9.2 bn (down by 17%
during 9M2017 and by 39% since December 2014)
* Coverage at 49%; medium term target substantially
achieved; coverage now above EU average
Acceleration initiatives
* Launching of listed Real Estate fund in Cyprus of a
size of c.EUR190 mn
* Continue to explore other structured solutions to
accelerate de-risking potentially in the near term,
in one or more transactions
Capital is sufficient
* CET1 at 12.4% and 11.9% fully loaded; Total Capital
ratio at 13.8%
* SREP 2018 CET1 ratio reduced to 9.375% from 9.50%;
SREP 2018 total capital ratio reduced to 12.875% from
13.00%
* IFRS 9 estimated impact based on 30 September 2017
Balance Sheet is a decrease in shareholders' equity
ranging between EUR250 mn - EUR300 mn. On a
transitional basis and on a fully phased-in basis
after the period of transition is complete, the
impact of IFRS 9 is expected to be manageable and
within the Group's capital plans
Improved funding and liquidity position
* Deposits up by EUR731 mn (4%) qoq; up by EUR805 mn in
9M2017 facilitating liquidity ratio compliance
* Loan to deposit ratio at 85%
* Compliance with LCR and NSFR liquidity requirements
Resilient operating performance
* Quarterly operating profit of EUR124 mn (EUR130 mn
2Q2017)
* New lending of EUR1.7 bn in 9M2017, exceeding new
lending in FY2016
* NIM of 3.18% for 9M2017 but 2.86% in 3Q2017
reflecting accelerated de-risking and cost of
liquidity compliance
* Cost to income ratio of 45% for 9M2017
Preliminary 2018 EPS guidance maintained
* EPS of c.EUR0.40 maintained
* More normal credit cost (
* Accelerated de-risking puts pressure on NIM but
expected to be offset by reduced provisioning
* CET1 >13.0% and Total capital ratio >15.0%
-------------------------------------------------------------------
Group Chief Executive Statement
"The Bank continues to make steady and positive progress in its journey back to strength. Our results this quarter reflect our previously communicated strategy. In the third quarter, we continued to direct all operating profitability to further increase coverage levels on delinquent exposures to best position the Bank to present a more normal credit cycle charge in 2018. This strategy will continue into the fourth quarter.
Momentum in NPE reduction was maintained. This is the tenth consecutive quarter of material NPE reduction. We have reduced the stock of NPEs by c.EUR2 bn since the beginning of the year and by c.40% since December 2014. Coverage levels against non-performing exposures are now above the EU average and still increasing.
We expect the organic reduction of our NPE stock to continue its downward trajectory in the coming quarters. At the same time, we are actively exploring structured solutions to further accelerate reduction and further normalise the Bank.
Today we are pleased to announce the first of these accelerative non-organic balance sheet repair initiatives. Following approval by CySeC to register a real estate fund as an Alternative Investment Fund (AIF), the Bank is launching a Real Estate Fund to be listed on the Cyprus Stock Exchange, subject to meeting certain conditions. This c.EUR190 mn Fund is the first of its kind in Cyprus and adds further pace to our efforts to accelerate balance sheet de-risking.
Deposits increased by EUR731 mn or 4% in the quarter. The increase in our deposit base facilitates compliance with liquidity requirements. The re-shaping of deposit tenures to drive EU and local liquidity ratio compliance and the continued de-risking of higher margin delinquent exposures adds negative pressure on the Bank's Net Interest Margin. The profit-pressure created by this dynamic in the future should be more than offset by reduced provisioning and the positive contribution of new lending. In the near-term we expect to see continued headline margin pressure. However we are maintaining our 2018 EPS guidance of 40 cents and a return to profitability in 2018.
Capital levels are adequate. As at 30 September 2017 the Bank's CET1 ratio (transitional) was at 12.4% and the Total Capital Ratio was at 13.8%, both in excess of regulatory requirements. Following the Supervisory Review and Evaluation Process (SREP) performed by the ECB in 2017, based on the pre-notifications received, we expect an improvement to the SREP requirements of 75 bps in Pillar II which will be broadly offset by a 62.5 bps further phasing-in of the Capital Conservation Buffer effective from 1 January 2018.
We have now substantially completed our work in anticipation of the introduction of IFRS 9. The expected impact on the Bank's starting shareholders' equity for 2018, based on the Balance Sheet as at 30 September 2017 is estimated to be in the range of EUR250 mn - EUR300 mn. This is conservatively inside the range we previously expected.
We are proud to maintain a leading position in a fast growing Cyprus economy. The economy expanded by 3.9% in the third quarter. We continue to support the Cyprus economy through the provision of new lending. New lending in the nine months to 30 September 2017 was EUR1.7 bn and this exceeded lending in the entirety of 2016.
John Patrick Hourican
Financial Results
Interim Condensed Consolidated Income Statement
(9M)
qoq yoy
EUR mn 9M2017 9M2016 3Q2017 2Q2017 +% +%
--------------------------------------- ------ ------ ------ ------ ----- ----
Net interest income 454 524 138 160 -14% -13%
Net fee and commission income 133 112 45 45 0% 19%
Net foreign exchange gains
and net gains on other financial
instruments 32 35 9 12 -19% -8%
Insurance income net of claims
and commissions 39 35 14 15 5% 13%
Net gains from revaluation
and disposal of investment
properties and on disposal
of stock of properties 22 3 12 1 571% 733%
Other income 13 8 5 4 3% 54%
--------------------------------------- ------ ------ ------ ------ ----- ----
Total income 693 717 223 237 -6% -3%
--------------------------------------- ------ ------ ------ ------ ----- ----
Staff costs (168) (171) (57) (57) -1% -2%
Other operating expenses (128) (113) (43) (44) -2% 13%
Special levy and contribution
to Single Resolution Fund (17) (15) 1 (6) - 17%
Total expenses (313) (299) (99) (107) -7% 5%
--------------------------------------- ------ ------ ------ ------ ----- ----
Operating profit 380 418 124 130 -4% -9%
--------------------------------------- ------ ------ ------ ------ ----- ----
Provision charge (729) (267) (73) (592) -88% 173%
Impairments of other financial
and non-financial assets (38) (34) (2) (4) -61% 11%
Provisions for litigation
and regulatory matters (73) 0 (38) (18) 109% -
--------------------------------------- ------ ------ ------ ------ ----- ----
Total provisions and impairments (840) (301) (113) (614) -82% 180%
--------------------------------------- ------ ------ ------ ------ ----- ----
Share of profit from associates
and joint ventures 5 3 1 2 -36% 64%
--------------------------------------- ------ ------ ------ ------ ----- ----
(Loss)/profit before tax
and restructuring costs (455) 120 12 (482) -102% -
--------------------------------------- ------ ------ ------ ------ ----- ----
Tax (76) (16) (4) (66) -95% 361%
Profit attributable to non-controlling
interests (1) (3) 0 (1) 3% -75%
--------------------------------------- ------ ------ ------ ------ ----- ----
(Loss)/profit after tax and
before restructuring costs (532) 101 8 (549) -101% -
--------------------------------------- ------ ------ ------ ------ ----- ----
Advisory, VEP and other restructuring
costs (21) (98) (7) (7) 7% -79%
Net gain on disposal of non-core
assets - 59 - - - -
--------------------------------------- ------ ------ ------ ------ ----- ----
(Loss)/profit after tax (553) 62 1 (556) - -
--------------------------------------- ------ ------ ------ ------ ----- ----
9M)
Yoy
Key Performance Ratios 9M2017 9M2016 3Q2017 2Q2017 qoq +%
---------------------------------- -------- ------ ------ -------- ------- --------
-52 -33
Net Interest Margin (annualised) 3.18% 3.51% 2.86% 3.38% bps bps
Cost to income ratio 45% 42% 44% 45% -1 p.p. +3 p.p.
Cost to income ratio excluding
special levy and contribution
to Single Resolution Fund 43% 40% 45% 43% +2 p.p. +3 p.p.
Operating profit return on
average assets (annualised) 2.3% 2.5% 2.2% 2.3% -1 p.p. -2 p.p.
Basic earnings per share
(EUR cent) (123.92) 0.69 0.27 (124.63) 124.90 (124.61)
---------------------------------- -------- ------ ------ -------- ------- --------
* p.p. = percentage points, bps = basis points,
100 basis points (bps) = 1 percentage point
Interim Condensed Consolidated Balance Sheet
------------------------------------------------------------------
EUR mn 30.09.2017 31.12.2016 +%
------------------------------------ ---------- ---------- ----
Cash and balances with central
banks 2,739 1,506 82%
Loans and advances to banks 972 1,088 -11%
Debt securities, treasury bills
and equity investments 1,025 674 52%
Net loans and advances to customers 14,833 15,649 -5%
Stock of property 1,548 1,427 8%
Other assets 1,736 1,828 -5%
Total assets 22,853 22,172 3%
------------------------------------ ---------- ---------- ----
Deposits by banks 479 435 10%
Funding from central banks 830 850 -2%
Repurchase agreements 259 257 1%
Customer deposits 17,315 16,510 5%
Subordinated loan stock 263 - -
Other liabilities 1,109 1,014 9%
------------------------------------ ---------- ---------- ----
Total liabilities 20,255 19,066 6%
------------------------------------ ---------- ---------- ----
Shareholders' equity 2,562 3,071 -17%
------------------------------------ ---------- ---------- ----
Non-controlling interests 36 35 3%
------------------------------------ ---------- ---------- ----
Total equity 2,598 3,106 -16%
------------------------------------ ---------- ---------- ----
Total liabilities and equity 22,853 22,172 3%
------------------------------------ ---------- ---------- ----
Key Balance Sheet figures and ratios 30.09.2017 31.12.2016 +%
--------------------------------------------------- ---------- ---------- ---------
Gross loans (EUR mn) 19,253 20,130 -4%
Accumulated provisions (EUR mn) 4,470 4,519 -1%
Customer deposits (EUR mn) 17,315 16,510 5%
Loan to deposit ratio (net) 85% 95% -10 p.p.
90+ DPD ratio 37% 41% -4 p.p.
90+ DPD provisioning coverage ratio 62% 54% +8 p.p.
NPE ratio 48% 55% +7 p.p.
NPE provisioning coverage ratio 49% 41% +8 p.p.
Quarterly average interest earning assets (EUR mn) 19,150 19,060 1 %
Leverage ratio 10.7% 13.2% -2.5 p.p.
--------------------------------------------------- ---------- ---------- ---------
Capital ratios and risk weighted assets 30.09.2017 31.12.2016 +%
------------------------------------------------------------------------------- ------------- ---------- ---------
Common Equity Tier 1 capital ratio (CET1) (transitional) 12.4% 14.5% -2.1 p.p.
CET1 (fully loaded) 11.9% 13.9% -2.0 p.p.
Total capital ratio 13.8% 14.6% -8 bps
Risk weighted assets (EUR mn) 17,273 18,865 -8%
------------------------------------------------------------------------------- ------------- ---------- ---------
* p.p. = percentage points, bps = basis points, 100 basis points (bps) = 1 percentage point
A. Analysis of Group Financial Results for the nine months ended 30 September 2017
A.1 Balance Sheet Analysis
A.1.1 Capital Base
Shareholders' equity totalled EUR2,562 mn at 30 September 2017, compared to EUR2,543 mn at 30 June 2017 and to EUR3,071 mn at 31 December 2016. The Common Equity Tier 1 capital (CET1) ratio (transitional basis) improved to 12.4% at 30 September 2017, compared to 12.3% at 30 June 2017 and 14.5% at 31 December 2016. During 9M2017 the CET1 ratio was negatively affected by the additional provision charge in 2Q2017 and the deferred tax asset phasing-in, despite the reduction in risk- weighted assets (RWA). Adjusting for Deferred Tax Assets, the CET1 ratio on a fully-loaded basis totalled 11.9% at 30 September 2017, compared to 11.8% at 30 June 2017 and 13.9% at 31 December 2016. As at 30 September 2017, the Total Capital ratio stood at 13.8%.
The Group's minimum phased-in CET1 capital ratio stands at 9.50%, comprising of 4.50% Pillar I requirement, a 3.75% Pillar II requirement and the capital conservation buffer (CCB) of 1.25% applicable for 2017. Following the Supervisory Review and Evaluation Process (SREP) performed by the ECB in 2017, based on the pre-notification received in September 2017, the Pillar II requirement which will be applicable as from 1 January 2018, is expected to be 3.00% compared to current level of 3.75%. As a result, the Group's minimum phased-in CET1 capital ratio is expected to be reduced to 9.375% from 9.50%, comprising of a 4.50% Pillar I requirement, a 3.00% Pillar II requirement and the CCB of 1.875% applicable as from 1 January 2018. The ECB has also provided revised lower non-public guidance for an additional Pillar II CET1 buffer. The group CET1 ratio remains comfortably above this combined Pillar II requirement and guidance.
The overall Total Capital Requirement currently stands at 13.00%, comprising of a Pillar I requirement of 8.00% (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 Pillar II requirement of 3.75% (in the form of CET1), and the CCB of 1.25% applicable for 2017. Following the 2017 SREP pre-notification decision received, the overall Total Capital Requirement is expected to be reduced to 12.875% from 13.00%, comprising of 8.00% Pillar I requirement, a 3.00% Pillar II requirement and the CCB of 1.875% applicable as from 1 January 2018.
The new SREP requirements will be effective as from 1 January 2018, and as at the date of publication of this announcement these requirements remain subject to ECB final confirmation, which is expected by the end of 2017.
The Group may explore opportunities, subject to market conditions, to raise up to 1.5% of Additional Tier 1 (AT1) and/or Tier 2 capital in the near term to further strengthen the Group's capital base. In preparation for a potential issuance of AT1 capital instruments, the Bank will proceed (subject to the approval of the Cypriot courts) with the full reduction of its capital reduction reserve (which, at 30 September 2017, amounted to EUR1.3 bn) in order to eliminate the Bank's accumulated losses of EUR0.6 bn at 30 September 2017 (the accumulated losses as at 30 September 2017 reflect the elimination of accumulated losses of EUR0.6 bn at 31 December 2016 through the reduction of the capital reduction reserve as approved by the Cypriot courts in July 2017), thus creating retained earnings of EUR0.8 bn on a 30 September 2017 pro-forma basis. The reduction of capital will not have any impact on regulatory capital or the total equity position of the Bank or the Group.
The retained earnings will provide the basis for the calculation of distributable items under the Capital Requirements Regulation (EU) No. 575/2013 ('CRR'). The CRR provides that coupons on AT1 capital instruments may only be paid out of distributable items. Distributable items for the purposes of the CRR are determined, in part, by reference to retained earnings. Assuming the capital reduction referred to above is effected, the Bank would have EUR0.8 bn in distributable items on a 30 September 2017 pro-forma basis. The Bank is currently under a dividend distribution prohibition which is expected to continue in 2018 following the 2017 SREP pre-notification received in September 2017 (subject to final confirmation upon issue of the final 2017 SREP decision by the ECB which is expected before the end of 2017). However, based on the pre-notification, such prohibition will not apply to the payment of coupons on any AT1 capital instruments issued by the Bank. Both the retained earnings and distributable items of the Bank will partly decrease as a result of the IFRS 9 implementation on 1 January 2018.
The Group continues to develop its processes to enable the implementation of IFRS 9 on 1 January 2018. The new accounting standard requires these changes on the implementation date, 1 January 2018, to be recognised through equity rather than the income statement. As a result, the impact on initial implementation of IFRS 9, as at 1 January 2018, will impact the equity of the Group and will not affect the income statement.
The Group's current estimated IFRS 9 impact based on the 30 September 2017 balance sheet is a decrease of shareholders' equity ranging between EUR250 mn and EUR300 mn and is primarily driven by credit impairment provisions. This estimated reduction in shareholders' equity equates to a decrease in the tangible net asset value at 30 September 2017 of EUR0.56 to EUR0.67 per share.
The Group expects to implement transitional arrangements for regulatory capital purposes currently being finalised by European regulators (http://data.consilium.europa.eu/doc/document/ST-13725-2017-INIT/en/pdf) which would result in only c.5% of the estimated IFRS 9 impact affecting the capital ratios during 2018. On a transitional basis and on a fully phased-in basis after the period of transition is complete, the impact of IFRS 9 is expected to be manageable and within the Group's capital plans.
A.1.2 Funding and Liquidity
Funding
Funding from Central Banks
At 30 September 2017, the Bank's funding from central banks totalled EUR830 mn, which relates wholly to ECB funding, compared to funding from the ECB at 30 June 2017 of EUR900 mn and funding from central banks at 31 December 2016 of EUR850 mn, which comprised ELA of EUR200 mn and ECB funding of EUR650 mn. The ECB funding of EUR830 mn at the quarter- end comprises wholly of funding through Targeted Longer-Term Refinancing Operations (TLTRO II).
The Bank fully repaid ELA in January 2017.
Deposits
Group customer deposits totalled EUR17,315 mn at 30 September 2017, compared to EUR16,584 mn at 30 June 2017 and EUR16,510 mn at 31 December 2016. Group customer deposits increased by EUR731 mn or 4%, during the quarter with customer deposits in Cyprus increasing by EUR579 mn or 4%. Cyprus deposits stood at EUR15,589 mn at 30 September 2017, accounting for 90% of Group customer deposits. The Bank's deposit market share in Cyprus reached 32.3% at 30 September 2017. Customer deposits accounted for 76% of total assets at 30 September 2017. The Loan to Deposit ratio (L/D) stood at 85% at 30 September 2017, down from 90% at 30 June 2017, compared to a high of 151% at 31 March 2014. The 5 p.p. reduction in L/D ratio mainly relates to the significant increase in deposits during the quarter.
Subordinated Loan Stock
In January 2017 the Bank tapped the debt capital markets and issued EUR250 mn unsecured and subordinated Tier 2 Capital Notes.
Liquidity
As at 30 September 2017 the Group Liquidity Coverage Ratio (LCR) stood at 141% (compared to 108% at 30 June 2017, and 49% at 31 December 2016) and is in compliance with the minimum regulatory requirement of 80% (which will increase to 100% by 1 January 2018). The Net Stable Funding Ratio (NSFR ratio) is expected to be introduced on 1 January 2018, with a minimum requirement of 100%. As at 30 September 2017 the Group's NSFR, on the basis of Basel standards, was 107% (compared to 102% at 30 June 2017 and 95% at 31 December 2016).
As at 30 September 2017, the Bank was not in compliance with all the local regulatory liquidity requirements set by the Central Bank of Cyprus (CBC) with respect to its operations in Cyprus. In September 2017, the CBC proceeded with a partial relaxation of the regulatory liquidity requirements. According to the Capital Requirements Regulation (CRR), the local liquidity requirements are expected to be abolished by the end of 2017. For the purposes of bridging the requirements gap between national prudential liquidity requirements currently in place and the LCR under the CRR framework, it is expected that the CBC will move in the direction of a measure in the form of a liquidity add-on that will be imposed on top of the LCR.
A.1.3 Loans
Group gross loans totalled EUR19,253 mn at 30 September 2017, compared to EUR19,505 mn at 30 June 2017 and EUR20,130 mn at 31 December 2016. Gross loans in Cyprus totalled EUR17,406 mn at 30 September 2017 and accounted for 90% of Group gross loans. The Bank is the single largest credit provider in Cyprus with a market share of 39.5% at 30 September 2017. Gross loans in the UK amounted to EUR1,510 mn at 30 September 2017 and accounted for 8% of Group total gross loans. New loan originations for the Group reached EUR1,725 mn for the 9M2017 (of which EUR1,301 mn were granted in Cyprus and EUR424 mn by the UK subsidiary), exceeding new lending in FY2016.
At 30 September 2017, Group net loans and advances to customers totalled EUR14,833 mn (30 June 2017: EUR14,913 mn; 31 December 2016: EUR15,649 mn), including net loans and advances to customers with carrying value of EUR374 mn which were classified as held for sale as at 30 September 2017 in line with IFRS 5.
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.
Loans in arrears for more than 90 days (90+ DPD) were reduced by EUR379 mn or 5% qoq in 3Q2017 and by EUR1.1 bn or 14% in 9M2017. The decrease was the result of restructuring activity, debt for asset swaps and write offs. 90+ DPD stood at EUR7,182 mn at 30 September 2017, accounting for 37% of gross loans (90+ DPD ratio), compared to 39% at 30 June 2017 and 41% at 31 December 2016. The provisioning coverage ratio of 90+ DPD increased to 62% at 30 September 2017, compared to 61% at 30 June 2017 and 54% at 31 December 2016. When taking into account tangible collateral at fair value, 90+ DPD loans are fully covered. The provisioning coverage ratio of 90+ DPD, calculated with reference to the contractual balances of customers, totalled 74% at 30 September 2017, compared to 73% at 30 June 2017 and 67% at 31 December 2016.
30.09.2017 30.06.2017
EUR mn % of gross EUR mn % of gross
Loans loans
=============================== ====== ========== ====== ==========
90+ DPD 7,182 37.3% 7,561 38.8%
Comprising:
- Loans with arrears for
over 90 days but not impaired 1,397 7.3% 1,420 7.3%
- Impaired loans 5,785 30.0% 6,141 31.5%
Of which:
- impaired with no arrears 342 1.8% 409 2.1%
- impaired with arrears
less than 90 days 43 0.2% 29 0.1%
=============================== ====== ========== ====== ==========
Non-performing exposures (NPEs) as defined by the European Banking Authority (EBA) were reduced by EUR588 mn or 6% during 3Q2017 and by EUR1.9 bn or 17% during 9M2017 to EUR9,164 mn at 30 September 2017, accounting for 48% of gross loans, compared to 50% at 30 June 2017 and 55% at 31 December 2016. This is the fifth consecutive quarter during which the quarterly reduction of NPEs exceeded the reduction of 90+ DPD mainly due to the curing of restructured performing NPEs that met the exit criteria following satisfactory performance post their restructuring. The provisioning coverage ratio of NPEs improved to 49% at 30 September 2017, up from 48% at 30 June 2017 and 41% at 31 December 2016. When taking into account tangible collateral at fair value, NPEs are fully covered. The provisioning coverage ratio of NPEs, calculated with reference to the contractual balances of customers, stood at 62% at 30 September 2017, compared to 60% at 30 June 2017 and 54% at 31 December 2016.
30.09.2017 30.06.2017
% of gross % of gross
EUR mn loans EUR mn loans
============================== ====== ========== ====== ==========
Non-performing exposures
(NPEs) as per EBA definition 9,164 47.6% 9,752 50.0%
Of which:
- NPEs with forbearance
measures, no impairments
and no arrears 1,406 7.3% 1,558 8.0%
============================== ====== ========== ====== ==========
The Group has recorded significant NPE reductions for ten consecutive quarters and expects the organic reduction of NPEs to continue in the coming quarters. In parallel the Group is actively exploring alternative avenues to accelerate this reduction. The gross value of c.EUR450 mn of the loan portfolio classified as held for sale as at 30 September 2017, in line with IFRS 5, includes NPEs of c.EUR370 mn, mainly corporate and SMEs. The Bank is continuing to explore other structured solutions to accelerate de-risking potentially in the near term, in one or more transactions.
A.1.5 Real Estate Management Unit
The Real Estate Management Unit (REMU) on-boarded EUR127 mn of assets, via the execution of debt for asset swaps, in 3Q2017 (up by 26% qoq) and EUR356 mn of assets in 9M2017. 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 EUR64 mn in 3Q2017, compared to EUR30 mn in 2Q2017 and disposals of EUR204 mn in 9M2017. In addition, in 2Q2017 the Group disposed of a property with carrying value EUR10 mn, previously classified as investment property. Post 30 September 2017, the Group completed additional disposals of EUR9 mn. Since the beginning of the year, the Group executed sale-purchase agreements (SPAs) with contract value of EUR270 mn and in addition signed SPAs for disposals of assets with contract value of EUR27 mn.
The Bank has received approval by the Cyprus Securities and Exchange Commission ('CySEC') to register a Real Estate Fund in Cyprus, CYREIT Variable Capital Investment Company PLC (the 'Fund'), subject to meeting certain conditions. The Fund is structured as an Alternative Investment Fund (AIF) with an anticipated size of c.EUR190 mn. The Fund will follow a core and core+ strategy by acquiring a diversified portfolio of high-quality income yielding commercial real estate assets in Cyprus with stable lease roll. These properties are located throughout Cyprus and are currently rented to various tenants offering gross average rental yield returns of over 6% per annum on a 5 to 10 year horizon. The Fund will be distributing, in the form of cash dividends, at least 80% of all distributable net proceeds on an annual basis. Upon satisfaction of CySEC's conditions and the Fund receiving final authorisation from CySEC for commencing its operations, the Bank shall proceed with the offering of all or part of its shares in the Fund to qualifying local and international institutional and well-informed investors. The shares of the Fund will be listed on the Non-Tradable Investment Schemes Market of the Cyprus Stock Exchange (CSE).
As at 30 September 2017, assets held by REMU had a carrying value of EUR1.5 bn.
Assets held by REMU
(Group) (EUR mn) 9M2017 3Q2017 FY2016
---------------------- ------- ------- -------
Opening balance 1,427 1,502 542
======== ======= =======
On-boarded
assets 356 127 1,086
======== ======= =======
Sales (204) (64) (166)
======== ======= =======
Closing balance 1,548 1,548 1,427
======== ======= =======
Analysis by type and Cyprus Greece Romania Total
country
30 September 2017 (EUR
mn)
------------------------------- ------- ------- -------- ------
Residential properties 134 27 8 169
Offices and other commercial
properties 284 52 10 346
Manufacturing and industrial
properties 89 41 1 131
Hotels 65 1 - 66
Land (fields and plots) 772 4 7 783
Properties under construction 53 - - 53
------------------------------- ------- ------- -------- ------
Total 1,397 125 26 1,548
------------------------------- ------- ------- -------- ------
Cyprus Greece Romania Total
31 December 2016 (EUR
mn)
------------------------------- ------- ------- -------- ------
Residential properties 90 37 9 136
Offices and other commercial
properties 256 56 12 324
Manufacturing and industrial
properties 82 53 1 136
Hotels 74 1 - 75
Land (fields and plots) 739 6 10 755
Properties under construction 1 - - 1
------------------------------- ------- ------- -------- ------
Total 1,242 153 32 1,427
------------------------------- ------- ------- -------- ------
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 30 September 2017 are as follows:
EUR mn 30 September 2017 31 December 2016 --------- ------------------ ----------------- Greece 214 283 Romania 76 149 Serbia 9 42 Russia 37 44 --------- ------------------ -----------------
The Group continues its efforts for further deleveraging and disposal of non-essential assets and operations in Greece, Romania and Russia. In accordance with the Group's strategy to exit from overseas non-core operations, the operations of the Bank's branch in Romania are expected to be terminated by the end of 2017.
In addition to the above, at 30 September 2017 there were overseas exposures of EUR169 mn in Greece (compared to exposures of EUR173 mn in Greece as at 30 June 2017), not identified as non-core exposures, since they are considered by management as exposures arising in the normal course of business.
A.2 Income Statement Analysis
A.2.1 Total income
(9M)
qoq yoy
EUR mn 9M2017 9M2016 3Q2017 2Q2017 +% +%
---------------------------------- ------ ------ ------ ------ ---- ----
Net interest income 454 524 138 160 -14% -13%
---------------------------------- ------ ------ ------ ------ ---- ----
Net fee and commission income 133 112 45 45 0% 19%
Net foreign exchange gains
and net gains on other financial
instruments 32 35 9 12 -19% -8%
Insurance income net of claims
and commissions 39 35 14 15 5% 13%
Net gains from revaluation
and disposal of investment
properties and on disposal
of stock of properties 22 3 12 1 571% 733%
Other income 13 8 5 4 3% 54%
---------------------------------- ------ ------ ------ ------ ---- ----
Non-interest income 239 193 85 77 11% 24%
---------------------------------- ------ ------ ------ ------ ---- ----
Total income 693 717 223 237 -6% -3%
---------------------------------- ------ ------ ------ ------ ---- ----
-52 -33
Net Interest Margin (annualised) 3.18% 3.51% 2.86% 3.38% bps bps
Average interest earning
assets (EUR mn) 19,089 19,974 19,150 18,996 1% -4%
---------------------------------- ------ ------ ------ ------ ---- ----
* p.p. = percentage points, bps = basis points, 100 basis points (bps) = 1 percentage point
Net interest income (NII) and net interest margin (NIM) for 9M2017 amounted to EUR454 mn and 3.18% respectively, down by 13% compared to EUR524 mn a year earlier. The NII and NIM for 3Q2017 amounted to EUR138 mn and 2.86% respectively, compared to EUR160 mn and 3.38% in 2Q2017. The decline reflects primarily lower cash collections of interest on delinquent exposures not previously recognised usually arising on the curing of NPEs, lower volumes of loans, the low interest rate environment and the cost of liquidity compliance.
Average interest earning assets for 9M2017 amounted to EUR19,089 mn, down by 4% yoy, largely due to debt for asset swaps and the elevated provision charges in 2Q2017. Average interest earning assets for 3Q2017 amounted to EUR19,150 mn, up by 1%, compared to EUR18,996 mn the previous quarter, due to increased liquid assets.
Non-interest income for 9M2017 amounted to EUR239 mn, mainly comprising of net fee and commission income of EUR133 mn, net insurance income of EUR39 mn and net foreign exchange income and net gains on financial instruments of EUR32 mn. Non-interest income for 9M2017 increased by 24% yoy, largely driven by the new and increased commission charges introduced in 4Q2016. Non-interest income for 3Q2017 was EUR85 mn, up by 11% qoq, comprising primarily net fee and commission income of EUR45 mn and net insurance income of EUR14 mn. The remaining component of non-interest income for 3Q2017 was a profit of EUR26 mn (compared to EUR17 mn for the previous quarter), which includes a net gain of EUR12 mn on the disposal of assets by REMU (compared to EUR1 mn for the previous quarter).
Total income for 9M2017 amounted to EUR693 mn, compared to EUR717 mn for 9M2016 (3% decrease yoy), with the reduction primarily reflecting the yoy reduction in NII. Total income for 3Q2017 amounted to EUR223 mn, compared to EUR237 mn for 2Q2017.
A.2.2 Total expenses
(9M)
qoq yoy
EUR mn 9M2017 9M2016 3Q2017 2Q2017 +% +%
------------------------------ ------ ------ ------ ------ --- ----
Staff costs (168) (171) (57) (57) -1% -2%
Other operating expenses (128) (113) (43) (44) -2% 13%
------------------------------ ------ ------ ------ ------ --- ----
Total operating expenses (296) (284) (100) (101) -1% 4%
------------------------------ ------ ------ ------ ------ --- ----
Special levy and contribution
to Single Resolution Fund
(SRF) (17) (15) 1 (6) - 17%
------------------------------ ------ ------ ------ ------ --- ----
Total expenses (313) (299) (99) (107) -7% 5%
------------------------------ ------ ------ ------ ------ --- ----
Total expenses for 9M2017 were EUR313 mn, 54% of which related to staff costs (EUR168 mn), 41% to other operating expenses (EUR128 mn) and 5% to special levy and contribution to SRF. Total expenses for 3Q2017 were EUR99 mn, down by 7% qoq, mainly due to the reversal of the SRF contribution. Staff costs and other operating expenses amounted to EUR57 mn and EUR43 mn respectively, at similar levels with the previous quarter. During the quarter, special levy and SRF contribution amounted to (EUR1 mn) as there was a reversal of the 2017 annual SRF contribution of c.EUR6 mn, following the amendment of the Law on the Imposition of a Special Tax Credit Law to allow the offsetting of the SRF contribution with the special levy charge.
The cost to income ratio for 9M2017 was 45%, compared to 46% for 1H2017. Cost to income for 1H2017 was negatively affected by the SRF contribution. The cost to income ratio for 3Q2017 was 44%, compared to 45% in 2Q2017.
A.2.3 (Loss)/profit before tax and restructuring costs
(9M)
qoq yoy
EUR mn 9M2017 9M2016 3Q2017 2Q2017 +% +%
--------------------------------- ------ ------ ------ ------ ----- ----
Operating profit 380 418 124 130 -4% -9%
--------------------------------- ------ ------ ------ ------ ----- ----
Provisions (729) (267) (73) (592) -88% 173%
Impairments of other financial
and non-financial assets (38) (34) (2) (4) -61% 11%
Provisions for litigation
and regulatory matters (73) 0 (38) (18) 109% -
--------------------------------- ------ ------ ------ ------ ----- ----
Total provisions and impairments (840) (301) (113) (614) -82% 180%
--------------------------------- ------ ------ ------ ------ ----- ----
Share of profit from associates
and joint ventures 5 3 1 2 -36% 64%
--------------------------------- ------ ------ ------ ------ ----- ----
(Loss)/profit before tax
and restructuring costs (455) 120 12 (482) -102% -
--------------------------------- ------ ------ ------ ------ ----- ----
Operating profit for 9M2017 was EUR380 mn, compared to EUR418 mn for 9M2016 (down by 9% yoy). The decrease mainly reflects the lower net interest income and higher non-staff costs. Operating profit for 3Q2017 was EUR124 mn, compared to EUR130 mn the previous quarter.
Provisions for 9M2017 totalled EUR729 mn, up by 173% yoy, following the additional provisions of c.EUR500 mn in 2Q2017. The elevated provisioning levels in 2Q2017 reflect changes in the Bank's provisioning assumptions as a result of the Group's reconsideration of its strategy to more actively explore other innovative strategic solutions to further accelerate balance sheet de-risking. It also concludes the active and on-going regulatory dialogue with the ECB on this matter. Provisions for 3Q2017 amounted to EUR73 mn, down by 88% qoq.
The annualised provisioning charge for 9M2017 accounted for 4.1% of gross loans, compared to an annualised provisioning charge of 4.2% for 1H2017. An amount of c.EUR500 mn reflecting the one-off effect of the change in the provisioning assumptions is included in the cost of risk, but is not annualised.
At 30 September 2017, accumulated provisions, including fair value adjustment on initial recognition and provisions for off-balance sheet exposures, totalled EUR4,470 mn (compared to EUR4,638 mn at 30 June 2017 and EUR4,519 mn at 31 December 2016) and accounted for 23.2% of gross loans (compared to 23.8% at 30 June 2017 and to 22.4% at 31 December 2016). The decrease of accumulated provisions in 3Q2017 of EUR168 mn is mainly affected by write offs during the quarter. The increase of accumulated provisions in the previous quarter amounted to EUR304 mn largely driven by the incremental provisions of c.EUR500 mn.
Impairments of other financial and non-financial assets for 9M2017 totalled EUR38 mn, compared to EUR34 mn for 9M2016 (up by 11% yoy), primarily affected by impairment charges relating to legacy exposures and legacy stock of properties in Greece and Romania. The 3Q2017 charge of EUR2 mn (compared to a charge of EUR4 mn in 2Q2017), reflects a EUR17 mn impairment loss on legacy properties in Greece reflecting additional haircuts taken to the carrying value in light of the stabilisation of property prices in Greece and the Group's strategy to accelerate disposals of legacy assets and exit from overseas non-core operations. This was partly offset by a reversal of EUR15 mn of impairment charges relating to legacy exposures following recent developments.
Provisions for litigation and regulatory matters for 9M2017 amounted to EUR73 mn. Provisions for litigation and regulatory matters for 3Q2017 amounted to EUR38 mn, primarily relating to redress provisions for the UK operations, following further analysis of the customer remediation from a pilot exercise which completed in 3Q2017. The charge for 2Q2017 amounted to EUR18 mn comprising EUR13 mn relating to litigations for securities issued by the Bank between 2007 and 2011 and EUR5 mn relating to redress provisions for the UK operations.
A.2.4 (Loss)/profit after tax
(9M)
qoq yoy
EUR mn 9M2017 9M2016 3Q2017 2Q2017 +% +%
--------------------------------------- ------ ------ ------ ------ ----- ----
(Loss)/profit before tax
and restructuring costs (455) 120 12 (482) -102% -
--------------------------------------- ------ ------ ------ ------ ----- ----
Tax (76) (16) (4) (66) -95% 361%
Profit attributable to non-controlling
interests (1) (3) 0 (1) 3% -75%
--------------------------------------- ------ ------ ------ ------ ----- ----
(Loss)/profit after tax and
before restructuring costs (532) 101 8 (549) -101% -
--------------------------------------- ------ ------ ------ ------ ----- ----
Advisory, VEP and other restructuring
costs (21) (98) (7) (7) 7% -79%
Net gain on disposal of non-core
assets - 59 - - - -
--------------------------------------- ------ ------ ------ ------ ----- ----
(Loss)/profit after tax (553) 62 1 (556) - -
--------------------------------------- ------ ------ ------ ------ ----- ----
The tax charge for 9M2017 totalled EUR76 mn compared to EUR16 mn in 9M2016. The tax charge for 3Q2017 totalled EUR4 mn compared to EUR66 mn in 2Q2017. The elevated tax charge in 2Q2017 reflects the reduction of Deferred Tax Assets (DTA) of EUR62 mn, following the increase in provisions for impairment of loans and advances to customers and evaluation of the recoverability assessment of the DTA balance.
Loss after tax and before restructuring costs for 9M2017 totalled EUR532 mn, compared to a profit after tax and before restructuring costs of EUR101 mn for 9M2016. Profit after tax and before restructuring costs for 3Q2017 was EUR8 mn, compared to a loss after tax and before restructuring costs of EUR549 mn for 2Q2017.
Advisory, VEP and other restructuring costs for 9M2017 totalled EUR21 mn, compared to EUR98 mn for 9M2016 (down by 79% yoy). The elevated levels in the previous year relate mainly to the Voluntary Exit Plan (VEP). Advisory and other restructuring costs for 3Q2017 were EUR7 mn, at the same level as the previous quarter.
Net gain on disposal of non-core assets for 9M2016 of EUR59 mn related mainly to the gain on disposal of the investment in Visa Europe.
Loss after tax attributable to the owners of the Company for 9M2017 was EUR553 mn, compared to a profit after tax of EUR62 mn for 9M2016. Profit after tax attributable to the owners of the Company for 3Q2017 was EUR1 mn, compared to a loss after tax of EUR556 mn for 2Q2017.
B. Operating Environment
The Cyprus economy continued to perform well with the recovery strengthening into the first three quarters of 2017. Rising economic activity has, in turn, led to improved employment conditions and significant reductions in the unemployment rate whilst price inflation turned positive for the first time in five years. In public finances, the general government budget remained in surplus in the first half of the year whilst the current account deteriorated, driven by a widening of the gap in the goods and services balance. In the banking sector, non-performing loans continued to decline with significant improvements in the relevant metrics whilst funding conditions remain comfortable. The outlook over the medium term remains positive and risks are fairly balanced.
Real GDP increased by 3.9% year-on-year in the third quarter of the year on a seasonally adjusted basis, compared with an average increase of 3.8% in the first half, and an average increase of 3% in the whole of the previous year, according to data from the Cyprus Statistical Service. Economic activity remained broadly based mainly driven by tourism, trade, transportation and professional services. Manufacturing activity and particularly construction, made important contributions in the period.
Tourism continues to grow significantly benefiting from regional demand diversion. Total arrivals increased by 14.7% in the year to September and revenues by 13.5% to August, according to the Cyprus Statistical Service. In the labour market, the unemployment rate declined significantly in the year dropping to 11.3% in the second quarter on a seasonally adjusted basis compared with a 13% yearly average in 2016 according to Eurostat. After falling for the previous four years consumer prices increased by 0.7% in the year to September driven almost exclusively by higher costs for electricity and fuels. In property markets demand has been rising as evidenced in an increasing number of sales contracts. The Central Bank's Residential Property Price Index increased for the second consecutive time in the second quarter of the year rising by 1.1% year-on-year.
In the area of public finance, the government budget has been near balance or in surplus since 2014 when recapitalisation costs for the cooperative sector are excluded. Cyprus has consistently outperformed its fiscal targets during and after the economic adjustment programme. According to Eurostat the government budget was in surplus of 0.4% of GDP in 2016 and the corresponding primary surplus was 3%.
The overall outlook thus remains positive provided the external environment remains favourable. Real GDP growth is expected to average between 2.2% and 3% a year in the medium term according to most available forecasts, and the unemployment rate is expected to decline significantly. Inflation is expected to remain low aided by modest wage increases and low energy costs. The positive growth environment is expected to support a balanced budget and significant reductions in the stock public debt, both in absolute terms and in relation to GDP, and to also facilitate loan restructuring and a significant reduction in non-performing loans. Continued growth in the economy, debt sustainability and reductions in the stock of non-performing loans in the banking sector, remain the cornerstones for macroeconomic stability and further gains in competitiveness.
Downside risks to the outlook are associated with the still high levels of non-performing loans, and public debt ratio, and with a possible deterioration of the external environment for Cyprus. This may involve slower growth in the UK with a weakening of the pound as a result of uncertainty resulting from Brexit. The direct consequences on Cyprus from Brexit, will mostly emanate from tourist activity. The possible loss of UK tourist arrivals may be mitigated at least in part, by increases in arrivals of tourists from other destinations as airline connectivity improves. Political uncertainty in Europe triggered by a British exit or by the refugee crisis could also lead to increased economic uncertainty and undermine economic confidence.
In this context of a strengthening economy and narrowing imbalances, the Cyprus government benefited from a series of rating upgrades. Most recently in October 2017, Fitch Ratings upgraded its Long-Term Issuer Default ratings to 'BB' from 'BB-' with positive outlook. In September 2017, S&P Global Ratings affirmed its long term sovereign rating on Cyprus at 'BB' and upgraded its outlook to 'positive' from 'stable'. In July 2017, Moody's Investors Service upgraded the long-term issuer rating of the Cyprus sovereign to Ba3 from B1 and maintained its outlook to positive. The key drivers for rating upgrades have been stronger economic performance than expected, progress in the banking sector and consistent fiscal outperformance.
C. Business Overview
With the Cypriot operations accounting for 90% of gross loans and 90% of customer deposits, 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 October 2017, Standard and Poor's assigned a 'B/B' long- and short-term issuer credit ratings with positive outlook. The Bank currently has a long-term deposit rating from Moody's Investors Service Cyprus Limited of Caa1 with a positive outlook and a long-term issuer default rating from Fitch Ratings Limited of B- with stable outlook. 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. Recently an internal reorganisation of the Restructuring and Recoveries Division (RRD) was executed with the aim of boosting resources on both the Retail and SME portfolios of RRD in order to further improve pace and sustainability in these portfolios. Additionally, the Group is proceeding with the creation of an incremental servicing engine powered by an external party.
The strategic focus of the Group is to reshape its business model to grow in the core Cypriot market through prudent new lending and carefully developing the UK franchise. The Bank's capital position is sufficient and 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. The Bank is currently looking to carefully expand its UK operations, remaining consistent with the Group's overall credit appetite and regulatory environment. With selective presences in London and Birmingham and a predominantly retail funded franchise, the UK strategy is to support its core proposition in the property market, specifically targeting the professional buy-to-let market and further expanding its mortgage business and its savings, current accounts and trade-related products for SMEs, professionals and Cypriot residents.
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. 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 boosting 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, constitute a leading player 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 9M2017 amounted to EUR39 mn, up by 13% yoy, compared to EUR35 mn for 9M2016 contributing to 16% of non-interest income.
The Bank proceeded with the set-up of a UCITS (Undertakings for Collective Investment in Transferrable Securities) Management Company, BOC Asset Management (BOCAM). BOCAM, a 100% owned subsidiary of the Group, will offer a broad spectrum of investment products and services to private and institutional clients. The primary services offered include the management, administration and safekeeping of UCITS units catering to the current and future investment needs of clients in Cyprus.
In order to further improve its funding structure, the Bank is stepping up its efforts to grow lower cost deposits, and take advantage of the increased customer confidence towards the Bank, as well as improving macroeconomic conditions.
On 19 January 2017, BOC Holdings was admitted to listing and trading on the London Stock Exchange ("LSE") and the Cyprus Stock Exchange ("CSE"). The listing on the LSE is another significant milestone in the execution of the Group's strategy. It is expected to improve the liquidity of the Group's stock, which will enhance the Group's visibility and lead to a broader base of investors capable of supporting the Group in the long-term. This will further enhance the confidence of all stakeholders in the Group. BOC Holdings continues to work towards a premium listing on the LSE, and intends to apply for a step up to the premium segment of the LSE at a future date, with the intention of becoming eligible for inclusion in the FTSE UK Index series.
The Bank has received approval by the Cyprus Securities and Exchange Commission ('CySEC') to register a Real Estate Fund in Cyprus, CYREIT Variable Capital Investment Company PLC (the 'Fund'), subject to meeting certain conditions. The Fund is structured as an Alternative Investment Fund (AIF) with an anticipated size of c.EUR190 mn. The Fund will follow a core and core+ strategy by acquiring a diversified portfolio of high-quality income yielding commercial real estate assets in Cyprus with stable lease roll. These properties are located throughout Cyprus and are currently rented to various tenants offering gross average rental yield returns of over 6% per annum on a 5 to 10 year horizon. The Fund will be distributing, in the form of cash dividends, at least 80% of all distributable net proceeds on an annual basis. Upon satisfaction of CySEC's conditions and the Fund receiving final authorisation from CySEC for commencing its operations, the Bank shall proceed with the offering of all or part of its shares in the Fund to qualifying local and international institutional and well-informed investors. The shares of the Fund will be listed on the Non-Tradable Investment Schemes Market of the Cyprus Stock Exchange (CSE).
D. 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 improve the funding structure
-- Maintain an appropriate capital position by internally generating capital
-- Focus on the core Cyprus market and the UK operations
-- 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
* Focus on terminated portfolios (in Recovery Unit) -
"accelerated consensual foreclosures"
* Real estate management via REMU
* Explore alternative NPE reduction measures such as
NPE sales, securitisations etc.
------------------------------------------------------ --------------------------------------------------------------
2. Further improve the funding structure
* Focus on shape and cost of deposit franchise
* Increase loan pool for the Additional Credit Claim
framework of ECB
* Further diversify funding sources
------------------------------------------------------ --------------------------------------------------------------
3. Maintain an appropriate capital position
* Internally generating capital
* Potential AT1 issuance
------------------------------------------------------ --------------------------------------------------------------
4. Focus on core markets
* Targeted lending in Cyprus into promising sectors to
fund recovery
* New loan origination, while maintaining lending
yields
* Revenue diversification via fee income from
international business, wealth, and insurance
* Careful expansion of UK franchise by leveraging the
UK subsidiary
------------------------------------------------------ --------------------------------------------------------------
5. Achieve a lean operating model
* Tangible savings through a targeted reduction program
* Introduce technology/processes to improve
distribution channels and reduce costs
* Human resource policies aimed at enhancing
productivity
------------------------------------------------------ --------------------------------------------------------------
6. Deliver returns
* Deliver appropriate medium term risk-adjusted returns
------------------------------------------------------ --------------------------------------------------------------
D. Outlook (continued)
The table below shows the Group's performance against the Medium Term Targets.
Group Key Performance Indicators Actual Actual Medium-Term Preliminary
Dec-2016 Sept Targets 2018
2017 EPS Guidance
maintained
=========================================== ========== ============ ============ ================
Asset 90+ Days Past Due
Quality ratio 41% 37% <20% <30%
================= ======================== ========== ============ ============ ================
NPEs ratio 55% 48% <30% <40%
========================================== ========== ============ ============ ================
Substantially
NPEs coverage ratio 41% 49% >50% delivered
========================================== ========== ============ ============ ================
Provisioning charge 1.7% 4.1%* <1.0% <1.0%
(Cost of Risk)
(annualised)*
================= ======================== ========== ============ ============ ================
Funding Net Loans % Deposits 95% 85% 90%-110% <100%
================= ======================== ========== ============ ============ ================
Capital CET1 Ratio 14.5% 12.4% >13% >13%**
================= ======================== ========== ============ ============ ================
Total Capital Ratio 14.6% 13.8% >15% >15%**
========================================== ========== ============ ============ ================
<3%;
25 bps
pressure
on 2018
target
due to
change
in balance
Margins Net interest margin sheet
and efficiency (annualised) 3.5% 3.2% 3.00% shape
================= ======================== ========== ============ ============ ================
Net fee and commission 17%*** 19% >20%
income / total Delivered
income but efforts
for further
improvement
continuing
================= ======================== ========== ============ ============ ================
Falling
revenue
puts
Cost to Income pressure
ratio 41% 45% 40%-45% on C/I
========================================== ========== ============ ============ ================
Balance Total assets EUR22.2 EUR22.9 >EUR25
Sheet bn bn bn Total
assets
to reach
c.EUR24
bn by
Dec 2018
================= ======================== ========== ============ ============ ================
Earnings
per share EPS**** EUR0.71 (EUR123.92) EUR0.40
================= ======================== ========== ============ ============ ================
* An amount of c.EUR500 mn reflecting the one-off effect of the change in the provisioning assumptions is included in the cost of risk, but is not annualised.
** On an IFRS 9 phased-in basis (per the proposal of the Council of the European Union).
*** The net fee and commission income over total income for December 2016 excludes non-recurring fees of approximately EUR7 mn.
**** The preliminary 2018 guidance for the earnings per share (EPS) does not include the impact of any unplanned or unforeseen risk reduction trades, or macro events.
E. Statutory Financial Results
Interim Consolidated Income Statement
Nine months
ended
30 September
------------------------------------------- ----------------------
2017 2016
------------------------------------------- ---------- ----------
EUR000 EUR000
------------------------------------------- ---------- ----------
Turnover 882,224 928,621
------------------------------------------- ========== ==========
Interest income 618,177 680,323
------------------------------------------- ---------- ----------
Interest expense (163,838) (155,836)
------------------------------------------- ---------- ----------
Net interest income 454,339 524,487
------------------------------------------- ---------- ----------
Fee and commission income 141,014 118,908
------------------------------------------- ---------- ----------
Fee and commission expense (7,846) (6,877)
------------------------------------------- ---------- ----------
Net foreign exchange gains 32,347 27,904
------------------------------------------- ---------- ----------
Net gains on financial instrument
transactions 143 65,727
------------------------------------------- ---------- ----------
Insurance income net of claims and
commissions 39,072 34,672
------------------------------------------- ---------- ----------
(Losses)/gains from revaluation and
disposal of investment properties (2,677) 5,649
------------------------------------------- ---------- ----------
Gains/(losses) on disposal of stock
of property 24,382 (3,042)
------------------------------------------- ---------- ----------
Other income 12,468 10,421
------------------------------------------- ---------- ----------
693,242 777,849
------------------------------------------- ---------- ----------
Staff costs (168,066) (233,558)
------------------------------------------- ---------- ----------
Special levy on deposits on credit
institutions in Cyprus (17,028) (14,603)
------------------------------------------- ---------- ----------
Other operating expenses (222,613) (149,144)
------------------------------------------- ---------- ----------
285,535 380,544
------------------------------------------- ---------- ----------
Gain on derecognition of loans and
advances to customers and changes
in expected cash flows 154,901 37,994
------------------------------------------- ---------- ----------
Provisions for impairment of loans
and advances to customers and other
customer credit losses (884,134) (304,876)
------------------------------------------- ========== ==========
Impairment of other financial instruments (7,443) (11,822)
------------------------------------------- ========== ==========
Impairment of non-financial instruments (30,262) (22,012)
------------------------------------------- ========== ==========
(Loss)/profit before share of profit
from associates and joint ventures (481,403) 79,828
------------------------------------------- ---------- ----------
Share of profit from associates and
joint ventures 5,235 3,189
------------------------------------------- ---------- ----------
(Loss)/profit before tax (476,168) 83,017
------------------------------------------- ---------- ----------
Income tax (75,678) (17,839)
------------------------------------------- ---------- ----------
(Loss)/profit for the period (551,846) 65,178
------------------------------------------- ========== ==========
Attributable to:
-------------------------------------- ---------- -------
Owners of the Company/Bank of Cyprus
Public Company Ltd (552,750) 61,627
-------------------------------------- ---------- -------
Non-controlling interests 904 3,551
-------------------------------------- ---------- -------
(Loss)/profit for the period (551,846) 65,178
-------------------------------------- ========== =======
Basic and diluted (losses)/earnings
per share attributable to the owners
of the Company/Bank of Cyprus Public
Company Ltd (cent) (123.9) 0.7
--------------------------------------- ======== ====
Interim Consolidated Statement of Comprehensive Income
Nine months
ended
30 September
---------------------------------------------- ---------------------
2017 2016
---------------------------------------------- ---------- ---------
EUR000 EUR000
---------------------------------------------- ---------- ---------
(Loss)/profit for the period (551,846) 65,178
---------------------------------------------- ---------- ---------
Other comprehensive income (OCI)
---------------------------------------------- ---------- ---------
OCI to be reclassified in the consolidated
income statement in subsequent periods
---------------------------------------------- ---------- ---------
Foreign currency translation reserve
---------------------------------------------- ---------- ---------
Profit/(loss) on translation of net
investment in foreign branches and
subsidiaries 696 (42,262)
---------------------------------------------- ---------- ---------
(Loss)/profit on hedging of net investments
in foreign branches and subsidiaries (335) 44,352
---------------------------------------------- ---------- ---------
Transfer to the consolidated income
statement on dissolution/disposal
of foreign operations 210 1,049
---------------------------------------------- ---------- ---------
571 3,139
---------------------------------------------- ---------- ---------
Available-for-sale investments
---------------------------------------------- ---------- ---------
Net gains from fair value changes
before tax 39,230 1,427
---------------------------------------------- ---------- ---------
Share of net gains from fair value
changes of associates 1,920 1,652
---------------------------------------------- ---------- ---------
Transfer to the consolidated income
statement on impairment (86) 498
---------------------------------------------- ---------- ---------
Transfer to the consolidated income
statement on sale (498) (47,239)
---------------------------------------------- ---------- ---------
40,566 (43,662)
---------------------------------------------- ---------- ---------
41,137 (40,523)
---------------------------------------------- ---------- ---------
OCI not to be reclassified in the
consolidated income statement in subsequent
periods
---------------------------------------------- ---------- ---------
Property revaluation
---------------------------------------------- ---------- ---------
Tax 445 159
---------------------------------------------- ---------- ---------
Actuarial gain/(loss) on the defined
benefit plans
---------------------------------------------- ---------- ---------
Remeasurement gains/(losses) on defined
benefit plans 1,939 (18,975)
---------------------------------------------- ---------- ---------
2,384 (18,816)
---------------------------------------------- ---------- ---------
Other comprehensive income/(loss)
after tax for the period 43,521 (59,339)
---------------------------------------------- ---------- ---------
Total comprehensive (loss)/income
for the period (508,325) 5,839
---------------------------------------------- ========== =========
Attributable to:
---------------------------------------------- ---------- ---------
Owners of the Company/Bank of Cyprus
Public Company Ltd (509,392) 6,907
---------------------------------------------- ---------- ---------
Non-controlling interests 1,067 (1,068)
---------------------------------------------- ---------- ---------
Total comprehensive (loss)/income
for the period (508,325) 5,839
---------------------------------------------- ========== =========
Interim Consolidated Balance Sheet
30 September 31 December
2017 2016
--------------------------------------------- ------------- ------------
Assets EUR000 EUR000
--------------------------------------------- ------------- ------------
Cash and balances with central banks 2,738,737 1,506,396
--------------------------------------------- ------------- ------------
Loans and advances to banks 971,615 1,087,837
--------------------------------------------- ------------- ------------
Derivative financial assets 20,209 20,835
--------------------------------------------- ------------- ------------
Investments 728,622 373,879
--------------------------------------------- ------------- ------------
Investments pledged as collateral 296,797 299,765
--------------------------------------------- ------------- ------------
Loans and advances to customers 14,458,358 15,649,401
--------------------------------------------- ------------- ------------
Life insurance business assets attributable
to policyholders 511,657 499,533
--------------------------------------------- ------------- ------------
Prepayments, accrued income and other
assets 241,220 269,911
--------------------------------------------- ------------- ------------
Stock of property 1,548,264 1,427,272
--------------------------------------------- ------------- ------------
Investment properties 28,686 38,059
--------------------------------------------- ------------- ------------
Property and equipment 278,853 280,893
--------------------------------------------- ------------- ------------
Intangible assets 156,624 146,963
--------------------------------------------- ------------- ------------
Investments in associates and joint
ventures 115,698 109,339
--------------------------------------------- ------------- ------------
Deferred tax assets 383,581 450,441
--------------------------------------------- ------------- ------------
Non-current assets held for sale 374,149 11,411
--------------------------------------------- ------------- ------------
Total assets 22,853,070 22,171,935
--------------------------------------------- ============= ============
Liabilities
--------------------------------------------- ------------- ------------
Deposits by banks 479,005 434,786
--------------------------------------------- ------------- ------------
Funding from central banks 830,000 850,014
--------------------------------------------- ------------- ------------
Repurchase agreements 258,773 257,367
--------------------------------------------- ------------- ------------
Derivative financial liabilities 46,960 48,625
--------------------------------------------- ------------- ------------
Customer deposits 17,314,523 16,509,741
--------------------------------------------- ------------- ------------
Insurance liabilities 594,833 583,997
--------------------------------------------- ------------- ------------
Accruals, deferred income and other
liabilities 423,019 335,925
--------------------------------------------- ------------- ------------
Subordinated loan stock 263,029 -
--------------------------------------------- ------------- ------------
Deferred tax liabilities 45,141 45,375
--------------------------------------------- ------------- ------------
Total liabilities 20,255,283 19,065,830
--------------------------------------------- ------------- ------------
Equity
--------------------------------------------- ------------- ------------
Share capital 44,620 892,294
--------------------------------------------- ------------- ------------
Share premium 2,794,358 552,618
--------------------------------------------- ------------- ------------
Capital reduction reserve - 1,952,486
--------------------------------------------- ------------- ------------
Revaluation and other reserves 258,564 218,678
--------------------------------------------- ------------- ------------
Accumulated losses (535,781) (544,930)
--------------------------------------------- ------------- ------------
Equity attributable to the owners
of the Company/Bank of Cyprus Public
Company Ltd 2,561,761 3,071,146
--------------------------------------------- ------------- ------------
Non-controlling interests 36,026 34,959
--------------------------------------------- ------------- ------------
Total equity 2,597,787 3,106,105
--------------------------------------------- ------------- ------------
Total liabilities and equity 22,853,070 22,171,935
--------------------------------------------- ============= ============
Interim Consolidated Statement of Changes in Equity
Attributable to the owners of the Company Non- Total
controlling equity
interests
---------------- ------------------------------------------------------------------------------------------------------------------------------------------------- ------------ ----------
Share Share Capital Treasury Accumulated Property Revaluation Other Life Foreign Total
capital premium reduction shares losses revaluation reserve reserves insurance currency
reserve reserve of in-force translation
available-for-sale business reserve
investments reserve
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
1 January
2017 892,294 552,618 1,952,486 (25,333) (544,930) 90,936 7,139 6,059 103,251 36,626 3,071,146 34,959 3,106,105
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
(Loss)/profit
for the period - - - - (552,750) - - - - - (552,750) 904 (551,846)
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
Other
comprehensive
income after
tax for the
period - - - - 1,939 445 40,403 - - 571 43,358 163 43,521
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
Total
comprehensive
(loss)/income
for the period - - - - (550,811) 445 40,403 - - 571 (509,392) 1,067 (508,325)
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
Increase
in value
of in-force
life insurance
business - - - - (2,286) - - - 2,286 - - - -
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
Tax on increase
in value
of in-force
life insurance
business - - - - 286 - - - (286) - - - -
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
Transfer
of realised
profits on
disposal
of properties - - - - 7,403 (7,403) - - - - - - -
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
Cancellation
of shares
due to
reorganisation (892,294) - - - - - - - - - (892,294) - (892,294)
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
Change of
parent company
to Bank of
Cyprus
Holdings
Public Limited
Company and
issue of
new shares 44,620 2,241,740 (1,952,486) - 558,420 - - - - - 892,294 - 892,294
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
Disposal
of treasury
shares - - - 3,870 (3,863) - - - - - 7 - 7
---------------- ---------- ---------- ------------ --------- ------------ ------------ ------------------- --------- ---------- ------------ ---------- ------------ ----------
30 September
2017 44,620 2,794,358 - (21,463) (535,781) 83,978 47,542 6,059 105,251 37,197 2,561,761 36,026 2,597,787
---------------- ========== ========== ============ ========= ============ ============ =================== ========= ========== ============ ========== ============ ==========
Attributable to the owners of Bank of Cyprus Public Company Non- Total
Ltd controlling equity
interests
--------------- ------------------------------------------------------------------------------------------------------------------------------------------------------ ------------ ----------
Share Share Capital Treasury Accumulated Property Revaluation Other Life Foreign Reserve Total
capital premium reduction shares losses revaluation reserve reserves insurance currency of
reserve reserve of in-force translation disposal
available-for-sale business reserve group
investments reserve and
assets
held
for
sale
--------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ----------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
--------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ----------
1 January
2016 892,294 552,618 1,952,486 (41,301) (601,152) 99,218 47,125 6,059 99,050 30,939 17,619 3,054,955 22,376 3,077,331
--------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ----------
Profit for
the period - - - - 61,627 - - - - - - 61,627 3,551 65,178
--------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ---------- Other comprehensive (loss)/income after tax for the period - - - - (18,975) 159 (39,043) - - 3,139 - (54,720) (4,619) (59,339) --------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ---------- Total comprehensive income /(loss) for the period - - - - 42,652 159 (39,043) - - 3,139 - 6,907 (1,068) 5,839 --------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ---------- Increase in value of in-force life insurance business - - - - (2,520) - - - 2,520 - - - - - --------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ---------- Tax on increase in value of in-force life insurance business - - - - 209 - - - (209) - - - - - --------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ---------- Transfer of realised profits on sale of properties - - - - 8,310 (8,310) - - - - - - - - --------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ---------- Disposal of subsidiary - - - - 17,619 - - - - - (17,619) - - - --------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ---------- Acquisition of subsidiary - - - - - - - - - - - - 18,753 18,753 --------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ---------- Disposals of treasury shares - - - 41,301 (40,560) - - - - - - 741 - 741 --------------- -------- -------- ---------- --------- ------------ ------------ ------------------- --------- ---------- ------------ --------- ---------- ------------ ---------- 30 September 2016 892,294 552,618 1,952,486 - (575,442) 91,067 8,082 6,059 101,361 34,078 - 3,062,603 40,061 3,102,664 --------------- ======== ======== ========== ========= ============ ============ =================== ========= ========== ============ ========= ========== ============ ==========
F. Notes
F.1 Reconciliation of income statement between statutory and underlying basis
EURmn Underlying Reclassification Statutory
Basis Basis
=========================== =========== ================= ==========
Net interest income 454 - 454
=========================== =========== ================= ==========
Net fee and commission
income 133 - 133
=========================== =========== ================= ==========
Net foreign exchange
gains and net
gains on other
financial instruments 32 - 32
=========================== =========== ================= ==========
Insurance income
net of claims
and commissions 39 - 39
=========================== =========== ================= ==========
Net gains from
revaluation and
disposal of investment
properties and
on disposal of
stock of properties 22 - 22
=========================== =========== ================= ==========
Other income 13 - 13
=========================== ----------- ----------------- ----------
Total income 693 - 693
=========================== =========== ================= ==========
Total expenses (313) (94) (407)
=========================== ----------- ----------------- ----------
Operating profit 380 (94) 286
=========================== =========== ================= ==========
Provisions (729) - (729)
=========================== =========== ================= ==========
Impairments of
other financial
and non-financial
instruments (38) - (38)
=========================== =========== ================= ==========
Provisions for
litigation and
regulatory matters (73) 73 0
=========================== =========== ================= ==========
Share of profit
from associates
and joint ventures 5 - 5
=========================== ----------- ----------------- ----------
Loss before tax
and restructuring
costs (455) (21) (476)
=========================== =========== ================= ==========
Tax (76) - (76)
=========================== =========== ================= ==========
Profit attributable
to non-controlling
interests (1) - (1)
=========================== ----------- ----------------- ----------
Loss after tax
and before restructuring
costs (532) (21) (553)
=========================== =========== ================= ==========
Advisory and other
restructuring
costs (21) 21 0
=========================== ----------- ----------------- ----------
Loss after tax (553) - (553)
=========================== =========== ================= ==========
The reclassification difference between the underlying and statutory bases relates to EUR94 mn expenses (EUR73 mn relate to Provisions for litigation and regulatory matters and EUR21 mn to Advisory and other restructuring costs), which for the purpose of management reporting are monitored and reported below the operating profit.
F.2 Customer deposits
Analysis of customer deposits is presented below:
30 September 31 December
2017 2016
-------------------- ------------- ------------
By type of deposit EUR000 EUR000
-------------------- ------------- ------------
Demand 6,254,877 6,182,096
-------------------- ------------- ------------
Savings 1,250,092 1,061,786
-------------------- ------------- ------------
Time or notice 9,809,554 9,265,859
-------------------- ------------- ------------
17,314,523 16,509,741
-------------------- ============= ============
By currency
-------------------- ------------- ------------
Euro 13,392,882 12,397,828
-------------------- ------------- ------------
US Dollar 1,762,191 2,201,980
-------------------- ------------- ------------
British Pound 1,981,001 1,690,118
-------------------- ------------- ------------
Russian Rouble 53,127 92,472
-------------------- ------------- ------------
Romanian Lei 310 1,669
-------------------- ------------- ------------
Swiss Franc 9,270 18,087
-------------------- ------------- ------------
Other currencies 115,742 107,587
-------------------- ------------- ------------
17,314,523 16,509,741
-------------------- ============= ============
By customer sector Cyprus United Romania Total
Kingdom
----------------------- ----------- ---------- -------- -----------
30 September 2017 EUR000 EUR000 EUR000 EUR000
----------------------- ----------- ---------- -------- -----------
Corporate 1,507,356 36,542 135 1,544,033
----------------------- ----------- ---------- -------- -----------
SMEs 654,633 200,664 124 855,421
----------------------- ----------- ---------- -------- -----------
Retail 8,250,332 1,487,619 20 9,737,971
----------------------- ----------- ---------- -------- -----------
Restructuring
----------------------- ----------- ---------- -------- -----------
- Corporate 135,911 - - 135,911
----------------------- ----------- ---------- -------- -----------
- SMEs 42,932 - - 42,932
----------------------- ----------- ---------- -------- -----------
Recoveries
----------------------- ----------- ---------- -------- -----------
- Corporate 8,404 - - 8,404
----------------------- ----------- ---------- -------- -----------
International banking
services 4,238,246 - - 4,238,246
----------------------- ----------- ---------- -------- -----------
Wealth management 751,605 - - 751,605
----------------------- ----------- ---------- -------- -----------
15,589,419 1,724,825 279 17,314,523
----------------------- =========== ========== ======== ===========
31 December 2016
----------------------- ----------- ---------- -------- -----------
Corporate 1,184,681 53,457 1,446 1,239,584
----------------------- ----------- ---------- -------- -----------
SMEs 566,172 204,166 178 770,516
----------------------- ----------- ---------- -------- -----------
Retail 7,778,136 1,207,028 104 8,985,268
----------------------- ----------- ---------- -------- -----------
Restructuring
----------------------- ----------- ---------- -------- -----------
- Corporate 192,442 - - 192,442
----------------------- ----------- ---------- -------- -----------
- SMEs 27,685 - - 27,685
----------------------- ----------- ---------- -------- -----------
Recoveries
----------------------- ----------- ---------- -------- -----------
- Corporate 11,176 - - 11,176
----------------------- ----------- ---------- -------- -----------
International banking
services 4,494,755 - - 4,494,755
----------------------- ----------- ---------- -------- -----------
Wealth management 788,315 - - 788,315
----------------------- ----------- ---------- -------- -----------
15,043,362 1,464,651 1,728 16,509,741
----------------------- =========== ========== ======== ===========
F.3 Credit risk concentration of gross loans and advances to customers
Geographical and industry concentrations of Group gross loans and advances to customers are presented below:
30 September Cyprus Greece United Romania Russia Total Fair Gross
2017 Kingdom value loans
adjustment after
on initial fair
recognition value
adjustment
on initial
recognition
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
By economic
activity EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Trade 2,044,816 537 13,522 8,613 51,249 2,118,737 (76,217) 2,042,520
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Manufacturing 643,766 - 6,618 7,027 24,228 681,639 (21,381) 660,258
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Hotels and
catering 1,347,098 - 107,229 15 - 1,454,342 (50,029) 1,404,313
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Construction 2,469,127 - 3,262 12,742 11,972 2,497,103 (164,694) 2,332,409
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Real estate 1,848,679 19,503 1,276,429 94,687 1 3,239,299 (88,516) 3,150,783
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Private
individuals 6,783,222 214 43,956 262 - 6,827,654 (204,820) 6,622,834
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Professional
and other
services 1,205,407 - 58,138 5,367 63,133 1,332,045 (64,559) 1,267,486
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Other sectors 1,063,401 338 1,276 36,779 - 1,101,794 (51,081) 1,050,713
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
17,405,516 20,592 1,510,430 165,492 150,583 19,252,613 (721,297) 18,531,316
------------------- =========== ======= ========== ======== ======== =========== ============= =============
By customer
sector
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Corporate 7,171,981 20,378 1,228,422 154,402 140,502 8,715,685 (320,165) 8,395,520
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
SMEs 3,759,086 - 250,086 10,833 10,081 4,030,086 (175,828) 3,854,258
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Retail
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- housing 4,105,745 - 12,930 98 - 4,118,773 (93,610) 4,025,163
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- consumer,
credit cards
and other 2,045,392 214 18,992 159 - 2,064,757 (123,764) 1,940,993
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
International
banking
services 269,145 - - - - 269,145 (3,220) 265,925
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Wealth management 54,167 - - - - 54,167 (4,710) 49,457
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
17,405,516 20,592 1,510,430 165,492 150,583 19,252,613 (721,297) 18,531,316
------------------- =========== ======= ========== ======== ======== =========== ============= =============
By business
line
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Corporate 3,292,179 20,378 1,223,877 91,558 140,502 4,768,494 (87,072) 4,681,422
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
SMEs 1,235,121 - 250,086 10,629 10,081 1,505,917 (15,514) 1,490,403
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Retail
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- housing 3,012,922 - 12,930 98 - 3,025,950 (31,224) 2,994,726
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- consumer,
credit cards
and other 1,103,259 214 16,960 159 - 1,120,592 (14,362) 1,106,230
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Restructuring
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- major
corporate 1,421,788 - - 33,878 - 1,455,666 (56,128) 1,399,538
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- corporate 850,995 - - - - 850,995 (9,766) 841,229
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- SMEs 1,181,139 - - - - 1,181,139 (44,594) 1,136,545
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- retail
housing 441,987 - - - - 441,987 (6,406) 435,581
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- retail
other 224,496 - - - - 224,496 (8,254) 216,242
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Recoveries
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- corporate 1,607,019 - 4,545 28,966 - 1,640,530 (167,199) 1,473,331
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- SMEs 1,342,826 - - 204 - 1,343,030 (115,720) 1,227,310
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- retail
housing 650,836 - - - - 650,836 (55,980) 594,856
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- retail
other 717,637 - 2,032 - - 719,669 (101,148) 618,521
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
International
banking
services 269,145 - - - - 269,145 (3,220) 265,925
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Wealth management 54,167 - - - - 54,167 (4,710) 49,457
------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
17,405,516 20,592 1,510,430 165,492 150,583 19,252,613 (721,297) 18,531,316
------------------- =========== ======= ========== ======== ======== =========== ============= =============
The table above includes gross loans after fair value
adjustment on initial recognition of EUR450,004 thousand
in Cyprus, classified as held for sale under IFRS 5.
31 December Cyprus Greece United Romania Russia Total Fair Gross
2016 Kingdom value loans
adjustment after
on initial fair
recognition value
adjustment
on initial
recognition
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
By economic
activity EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Trade 2,044,324 - 13,964 11,141 55,100 2,124,529 (87,576) 2,036,953
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Manufacturing 658,811 - 7,133 7,735 25,396 699,075 (25,734) 673,341
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Hotels and
catering 1,302,543 - 112,773 3,263 - 1,418,579 (62,665) 1,355,914
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Construction 2,874,331 - 3,181 75,918 12,793 2,966,223 (210,436) 2,755,787
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Real estate 2,022,559 19,599 1,056,924 200,825 6,934 3,306,841 (114,140) 3,192,701
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Private individuals 6,980,383 214 45,557 3,093 - 7,029,247 (227,057) 6,802,190
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Professional
and other
services 1,332,250 - 54,865 12,458 97,148 1,496,721 (80,501) 1,416,220
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Other sectors 1,054,255 337 1,361 32,927 - 1,088,880 (120,344) 968,536
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
18,269,456 20,150 1,295,758 347,360 197,371 20,130,095 (928,453) 19,201,642
--------------------- =========== ======= ========== ======== ======== =========== ============= =============
By customer
sector
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Corporate 7,517,473 19,936 1,040,941 334,440 179,293 9,092,083 (481,340) 8,610,743
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
SMEs 4,100,298 - 222,337 12,641 11,144 4,346,420 (202,240) 4,144,180
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Retail
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- housing 4,202,358 - 13,314 100 - 4,215,772 (100,509) 4,115,263
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- consumer,
credit cards
and other 2,064,802 214 19,166 179 6,934 2,091,295 (135,350) 1,955,945
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
International
banking services 321,571 - - - - 321,571 (3,619) 317,952
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Wealth management 62,954 - - - - 62,954 (5,395) 57,559
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
18,269,456 20,150 1,295,758 347,360 197,371 20,130,095 (928,453) 19,201,642
--------------------- =========== ======= ========== ======== ======== =========== ============= =============
By business
line
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Corporate 2,557,653 19,936 1,036,331 237,203 165,592 4,016,715 (71,064) 3,945,651
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
SMEs 1,377,837 - 222,337 12,442 11,144 1,623,760 (29,071) 1,594,689
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Retail
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- housing 3,531,293 - 13,314 100 - 3,544,707 (40,640) 3,504,067
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- consumer,
credit cards
and other 1,317,434 214 17,617 179 - 1,335,444 (26,435) 1,309,009
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Restructuring
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- major corporate 2,080,586 - - 33,947 - 2,114,533 (156,190) 1,958,343
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- corporate 1,014,853 - - - - 1,014,853 (22,795) 992,058
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- SMEs 1,219,572 - - - - 1,219,572 (50,393) 1,169,179
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Recoveries
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- corporate 1,864,381 - 4,610 63,290 13,701 1,945,982 (231,291) 1,714,691
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- SMEs 1,502,889 - - 199 - 1,503,088 (122,776) 1,380,312
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- retail
housing 671,065 - - - - 671,065 (59,869) 611,196
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
- retail
other 747,368 - 1,549 - 6,934 755,851 (108,915) 646,936
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
International
banking services 321,571 - - - - 321,571 (3,619) 317,952
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
Wealth management 62,954 - - - - 62,954 (5,395) 57,559
--------------------- ----------- ------- ---------- -------- -------- ----------- ------------- -------------
18,269,456 20,150 1,295,758 347,360 197,371 20,130,095 (928,453) 19,201,642
--------------------- =========== ======= ========== ======== ======== =========== ============= =============
Restructuring major corporate business line includes customers with exposures over EUR100,000 thousand, whereas restructuring corporate business line includes customers with exposures between EUR6,000 thousand and EUR100,000 thousand.
F.4 Credit quality of gross loans and advances to customers
The following table presents the credit quality of the Group's gross loans and advances to customers:
30 September 2017 31 December 2016
--------------- ------------------------------------------- -------------------------------------------
Gross Fair value Gross Gross Fair Gross
loans adjustment loans loans value loans
before on initial after before adjustment after
fair recognition fair value fair on initial fair
value adjustment value recognition value
adjustment on initial adjustment adjustment
on initial recognition on initial on initial
recognition recognition recognition
--------------- ------------- ------------- ------------- ------------- ------------- -------------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
--------------- ------------- ------------- ------------- ------------- ------------- -------------
Neither
past due
nor impaired 11,241,667 (145,508) 11,096,159 10,990,773 (166,185) 10,824,588
--------------- ------------- ------------- ------------- ------------- ------------- -------------
Past due
but not
impaired 2,226,041 (34,430) 2,191,611 2,238,127 (38,743) 2,199,384
--------------- ------------- ------------- ------------- ------------- ------------- -------------
Impaired 5,784,905 (541,359) 5,243,546 6,901,195 (723,525) 6,177,670
--------------- ------------- ------------- ------------- ------------- ------------- -------------
19,252,613 (721,297) 18,531,316 20,130,095 (928,453) 19,201,642
--------------- ============= ============= ============= ============= ============= =============
Past due loans are those with delayed payments or in excess of authorised credit limits. Impaired loans are those for which a provision for impairment has been recognised on an individual basis or for which incurred losses exist at their initial recognition or customers in Debt Recovery.
During the nine months ended 30 September 2017 the total non-contractual write-offs recorded by the Group amounted to EUR340,490 thousand (year 2016: EUR517,694 thousand). The remaining gross loan balance of these customers as at 30 September 2017 was EUR263,776 thousand (31 December 2016: EUR305,591 thousand), of which EUR13,970 thousand
(31 December 2016: EUR19,651 thousand) were past due for more than 90 days but not impaired and EUR193,407 thousand (31 December 2016: EUR130,964 thousand) were impaired.
Loans and advances to customers that are past due but not impaired
30 September 31 December
2017 2016
-------------------- ------------- ------------
Past due analysis: EUR000 EUR000
-------------------- ------------- ------------
- up to 30 days 520,234 455,394
-------------------- ------------- ------------
- 31 to 90 days 308,540 375,161
-------------------- ------------- ------------
- 91 to 180 days 165,519 128,675
-------------------- ------------- ------------
- 181 to 365 days 263,969 140,714
-------------------- ------------- ------------
- over one year 967,779 1,138,183
-------------------- ------------- ------------
2,226,041 2,238,127
-------------------- ============= ============
The fair value of the collateral that the Group holds (to the extent that it mitigates credit risk) in respect of loans and advances to customers that are past due but not impaired as at 30 September 2017 is EUR1,815,890 thousand (31 December 2016: EUR1,762,528 thousand). The fair value of the collateral is capped to the gross carrying value of the loans and advances to customers.
Impaired loans and advances to customers
30 September 2017 31 December 2016
---------------- ------------------------------- -------------------------------
Gross loans Fair value Gross Fair value
and advances of collateral loans of collateral
and advances
---------------- -------------- --------------- -------------- ---------------
EUR000 EUR000 EUR000 EUR000
---------------- -------------- --------------- -------------- ---------------
Cyprus 5,441,896 3,326,278 6,384,503 3,953,086
---------------- -------------- --------------- -------------- ---------------
Greece 20,592 17,962 19,936 17,962
---------------- -------------- --------------- -------------- ---------------
Russia 150,582 36,417 196,144 87,381
---------------- -------------- --------------- -------------- ---------------
United Kingdom 10,712 3,290 12,041 7,213
---------------- -------------- --------------- -------------- ---------------
Romania 161,123 43,701 288,571 54,436
---------------- -------------- --------------- -------------- ---------------
5,784,905 3,427,648 6,901,195 4,120,078
---------------- ============== =============== ============== ===============
The fair value of the collateral presented above has been computed based on the extent that the collateral mitigates credit risk and has been capped to the gross carrying value of the loans and advances to customers.
30 September 31 December
2017 2016
------------------- ------------- ------------
Impaired: EUR000 EUR000
------------------- ------------- ------------
* no arrears 342,022 471,855
------------------- ------------- ------------
- up to 30 days 17,918 62,119
------------------- ------------- ------------
- 31 to 90 days 25,157 29,201
------------------- ------------- ------------
- 91 to 180 days 12,923 49,572
------------------- ------------- ------------
- 181 to 365 days 96,544 51,438
------------------- ------------- ------------
- over one year 5,290,341 6,237,010
------------------- ------------- ------------
5,784,905 6,901,195
------------------- ============= ============
Interest income on impaired loans
Interest income from loans and advances to customers includes interest on the recoverable amount of impaired loans and advances to customers amounting to EUR105,095 thousand for the nine months ended 30 September 2017 (corresponding period of 2016: EUR157,713 thousand).
F.5 Provision for impairment of loans and advances to customers
The movement in provisions for impairment of loans and advances is as follows:
30 September 2017 Cyprus United Other Total
Kingdom countries
-------------------------------------- ---------- --------- ----------- ----------
EUR000 EUR000 EUR000 EUR000
-------------------------------------- ---------- --------- ----------- ----------
1 January 3,170,161 10,782 371,298 3,552,241
-------------------------------------- ---------- --------- ----------- ----------
Transfer between geographical
areas 23 (23) - -
-------------------------------------- ---------- --------- ----------- ----------
Transfer upon acquisition
of property through a restructuring
activity (12,792) - - (12,792)
-------------------------------------- ---------- --------- ----------- ----------
Foreign exchange and other
adjustments 51,915 (158) (6,337) 45,420
-------------------------------------- ---------- --------- ----------- ----------
Applied in writing off
impaired loans and advances (556,072) (117) (125,510) (681,699)
-------------------------------------- ---------- --------- ----------- ----------
Interest accrued on impaired
loans and advances (80,423) (3) (1,153) (81,579)
-------------------------------------- ---------- --------- ----------- ----------
Collection of loans and
advances previously written
off 5,392 287 2 5,681
-------------------------------------- ---------- --------- ----------- ----------
Charge for the period 857,194 1,117 13,226 871,537
-------------------------------------- ---------- --------- ----------- ----------
30 September 3,435,398 11,885 251,526 3,698,809
-------------------------------------- ========== ========= =========== ==========
Individual impairment 2,556,716 8,959 250,016 2,815,691
-------------------------------------- ========== ========= =========== ==========
Collective impairment 878,682 2,926 1,510 883,118
-------------------------------------- ========== ========= =========== ==========
30 September 2016 Cyprus United Other Total
Kingdom countries
------------------------------ ---------- --------- ----------- ----------
EUR000 EUR000 EUR000 EUR000
------------------------------ ---------- --------- ----------- ----------
1 January 3,731,750 39,394 422,289 4,193,433
------------------------------ ---------- --------- ----------- ----------
Dissolution of subsidiaries - (6,154) - (6,154)
------------------------------ ---------- --------- ----------- ----------
Acquisition of subsidiary (8,577) - - (8,577)
------------------------------ ---------- --------- ----------- ----------
Foreign exchange and other
adjustments 96,666 (4,447) 3,670 95,889
------------------------------ ---------- --------- ----------- ----------
Applied in writing off
impaired loans and advances (718,967) (3,954) (76,460) (799,381)
Interest accrued on impaired
loans and advances (110,353) - (1,515) (111,868)
------------------------------ ---------- --------- ----------- ----------
Collection of loans and
advances previously written
off 1,285 - 34 1,319
------------------------------ ---------- --------- ----------- ----------
Charge for the period 266,130 (1,475) 37,921 302,576
------------------------------ ---------- --------- ----------- ----------
30 September 3,257,934 23,364 385,939 3,667,237
------------------------------ ========== ========= =========== ==========
Individual impairment 2,848,643 20,676 378,965 3,248,284
------------------------------ ========== ========= =========== ==========
Collective impairment 409,291 2,688 6,974 418,953
------------------------------ ========== ========= =========== ==========
The above table does not include the fair value adjustment on initial recognition of loans acquired from Laiki Bank and provisions for impairment on financial guarantees and commitments which are part of other liabilities on the balance sheet. The balance of provisions for impairment of loans and advances to customers at 30 September 2017 includes EUR75,855 thousand for loans and advances to customers classified as held for sale. There were no loans and advances to customers classified as held for sale as at 30 September 2016 or as at 31 December 2016.
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 30 September 2017 the average haircut (including liquidity haircut and selling expenses) used in the collective provisions calculation is 34% (31 December 2016: average of 10% of the current market value of the property for those collaterals for which the increase in their value is capped to zero and 10% of the projected market value of the property for those collaterals for which their value is expected to drop).
The timing of recovery from real estate collaterals used in the collective provision calculation has been estimated to be on average 6 years (31 December 2016: average of 3 years except for customers in Debt Recovery, average of 6 years).
For the calculation of specific provisions, the timing of recovery of collaterals as well as the haircuts used were based on the specific facts and circumstances of each case.
In accordance with the Loan Impairment and Provisioning Procedures Directives of 2014 and 2015 of the CBC, the cumulative average future change in property values during the year has been capped to zero.
The above assumptions are also influenced by the ongoing regulatory dialogue the Bank 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 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 difference between assumptions made and actual results could result in significant changes in the amount of required provisions for impairment of loans and advances.
F.6 Rescheduled loans and advances to customers
Credit quality
Cyprus Greece Russia United Romania Total
Kingdom
------------------- ---------- ------- ------- --------- -------- ----------
30 September
2017 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
------------------- ---------- ------- ------- --------- -------- ----------
Neither past
due nor impaired 3,459,877 - - 4,839 96 3,464,812
------------------- ---------- ------- ------- --------- -------- ----------
Past due but
not impaired 1,335,179 - - 1,025 62 1,336,266
------------------- ---------- ------- ------- --------- -------- ----------
Impaired 1,865,243 338 77,102 1,927 39,415 1,984,025
------------------- ---------- ------- ------- --------- -------- ----------
6,660,299 338 77,102 7,791 39,573 6,785,103
------------------- ========== ======= ======= ========= ======== ==========
31 December
2016
------------------- ---------- ------- ------- --------- -------- ----------
Neither past
due nor impaired 4,021,923 - - 3,925 85 4,025,933
------------------- ---------- ------- ------- --------- -------- ----------
Past due but
not impaired 1,212,177 - 671 962 225 1,214,035
------------------- ---------- ------- ------- --------- -------- ----------
Impaired 2,167,770 337 83,222 2,087 78,571 2,331,987
------------------- ---------- ------- ------- --------- -------- ----------
7,401,870 337 83,893 6,974 78,881 7,571,955
------------------- ========== ======= ======= ========= ======== ==========
F.7 Credit risk disclosures based on the Loan Impairment and Provisioning Procedures Directive of 2014 and 2015
The CBC issued to credit institutions the Loan Impairment and Provisioning Procedures Directives of 2014 and 2015 (Directive), which provides guidance to banks for loan impairment policy and procedures for provisions. The purpose of this Directive is to ensure that credit institutions have in place adequate provisioning policies and procedures for the identification of credit losses and prudent application of International Financial Reporting Standards (IFRSs) in the preparation of their financial statements. The Directive requires certain disclosures in relation to the loan portfolio quality, provisioning policy and levels of provision. The tables disclose Non-Performing Exposures (NPEs) based on the definitions of EBA standards.
According to the EBA standards, 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 Requirement 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.
The tables below present the analysis of loans and advances to customers in accordance with the EBA standards.
Gross loans and advances to Provision for impairment and
customers fair value adjustment on initial
recognition
---------------- ------------------------------------------------- --------------------------------------------------
30 September Group Of which Of which exposures Total Of which Of which exposures
2017 gross NPEs with forbearance provision NPEs with forbearance
customer measures for measures
loans impairment
and and fair
advances value
adjustment
on initial
recognition
---------------- ----------- ---------- ------------------------ ------------ ---------- ------------------------
Total Of which Total Of which
exposures on NPEs exposures on NPEs
with with
forbearance forbearance
measures measures
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
General
governments 98,207 3,872 4,272 3,608 3,014 2,221 2,213 2,155
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Other financial
corporations 439,307 319,490 229,993 200,366 110,161 107,499 36,101 34,836
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Non-financial
corporations 10,968,456 5,361,530 4,325,918 2,906,773 2,885,284 2,755,379 1,303,402 1,237,448
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which: Small
and Medium
sized
Enterprises
(SMEs) 8,522,703 4,799,729 3,535,559 2,497,201 2,544,858 2,460,906 1,090,663 1,051,150
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Commercial
real estate(2) 8,390,052 4,297,675 3,754,464 2,445,050 2,222,847 2,117,491 1,076,571 1,026,372
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Non-financial
corporations
by sector
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Construction 2,463,525 1,756,592 963,411
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Wholesale and
retail
trade 2,049,782 913,800 528,135
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Accommodation
and
food service
activities 1,375,056 463,674 225,845
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Real estate
activities 2,811,479 1,085,826 554,394
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Manufacturing 664,754 353,912 182,551
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Other sectors 1,603,860 787,726 430,948
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Households 7,746,643 3,479,213 2,559,675 1,756,977 1,421,647 1,355,223 509,983 489,565
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Residential
mortgage
loans(2) 5,254,242 2,373,347 2,007,773 1,323,224 767,435 717,600 316,778 301,446
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Credit
for
consumption(2) 1,029,453 523,779 294,210 228,676 285,213 275,198 86,905 83,013
---------------- ----------- ---------- ------------ ---------- ------------ ---------- ------------ ----------
Total
on-balance
sheet 19,252,613 9,164,105 7,119,858 4,867,724 4,420,106 4,220,322 1,851,699 1,764,004
---------------- =========== ========== ============ ========== ============ ========== ============ ==========
Note: the above table includes loans and advances classified as held for sale.
Gross loans and advances to Provision for impairment and
customers fair value adjustment on initial
recognition
---------------- --------------------------------------------------- --------------------------------------------------
Group Of which Of which exposures Total Of which Of which exposures
gross NPEs with forbearance provision NPEs with forbearance
customer measures for measures
loans impairment
and and fair
advances(1) value
adjustment
on initial
recognition
------------ ----------- ------------------------ ------------ ---------- ------------------------
Total Of which Total Of which
exposures on NPEs exposures on NPEs
with with
forbearance forbearance
measures measures
------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
31 December
2016 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000 EUR000
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
General
governments 103,626 4,241 4,978 4,073 2,685 1,615 1,861 1,555
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Other financial
corporations 487,262 372,797 234,505 203,512 220,013 216,926 119,703 119,701
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Non-financial
corporations 11,590,608 6,818,489 5,052,743 3,738,859 3,020,161 2,932,686 1,211,059 1,178,127
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Of which: Small
and Medium
sized
Enterprises(2) 9,398,025 6,116,979 4,306,269 3,294,185 2,642,367 2,564,855 1,030,218 998,465
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Commercial
real estate(2) 8,951,533 5,535,377 4,413,488 3,252,816 2,240,852 2,168,019 1,004,617 974,143
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Non-financial
corporations
by sector
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Construction 2,921,229 2,242,250 1,009,104
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Wholesale and
retail
trade 2,060,864 1,060,451 445,368
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Accommodation
and
food service
activities 1,334,040 705,634 262,566
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Real estate
activities 2,900,224 1,438,774 664,801
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Manufacturing 682,641 394,884 165,308
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Other sectors 1,691,610 976,496 473,014
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Households 7,948,599 3,838,722 2,803,740 1,942,888 1,237,835 1,168,475 334,936 317,645
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Residential
mortgage
loans(2) 5,413,446 2,601,852 2,166,098 1,469,563 603,504 551,690 192,535 179,947
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Of which:
Credit
for
consumption(2) 1,062,416 589,843 312,853 242,723 292,588 283,181 65,865 62,917
---------------- ------------ ----------- ------------ ---------- ------------ ---------- ------------ ----------
Total
on-balance
sheet 20,130,095 11,034,249 8,095,966 5,889,332 4,480,694 4,319,702 1,667,559 1,617,028
---------------- ============ =========== ============ ========== ============ ========== ============ ==========
_________________________
[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.
F.8 Pending litigation, claims and regulatory 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 the Bank in 2013 as a result of the Bail-in Decrees, the Bank 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.
On 22 May 2017, the Cyprus Commission for the Protection of Competition (the Commission) imposed a fine of EUR18 mn against the Bank. The fine relates to complaints filed in 2010 relating to the Bank's alleged abuse of its dominant market position in its cards business. The Bank disagrees with the decision of the Commission and the Bank has already filed a recourse before the Administrative Court against the imposition of the fine by the Commission. The payment of the fine is suspended pending appeal. A fine of EUR1.7 mn has also been imposed to JCC Payment Systems Ltd (JCC), a card-processing business currently 75% owned by the Bank.
UK regulatory matters
During 2016 the Group reported on a Financial Conduct Authority (FCA) conduct principle issue for which a provision has been recorded in 2016 and 2017 (30 September 2017: EUR52,775 thousand). The level of the provision represents the best estimate of all probable outflows arising from customer redress based on information available to management. Management has continued to reassess the adequacy of the provision, as well as the assumptions underlying the calculations based upon experience and other relevant factors prevailing at that time.
F.9 Liquidity regulation
In addition to the liquidity ratios applicable at each banking location where the Group operates, it 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.
The CRR requires phased-in compliance with the LCR standard as from 1 October 2015 with an initial minimum ratio of 60%, increasing to 70% on 1 January 2016, 80% on 1 January 2017 and 100% as from 1 January 2018.
In October 2014, the Basel Committee on Banking Supervision proposed the methodology for calculating the NSFR. The NSFR is expected to be the minimum standard by 1 January 2018.
As at 30 September 2017 the Group is in compliance with its regulatory liquidity requirements with respect to the LCR. On the basis of the Commission Delegated Regulation (EU) 2015/61 the Group's LCR as at 30 September 2017 was 141% (31 December 2016: 49%); on the basis of Basel standards the Group's NSFR was 107% (31 December 2016: 95%). Following the full repayment of ELA funding on 5 January 2017, the Group is concentrating its efforts to comply with its regulatory liquidity ratios.
Furthermore, the Bank and Bank of Cyprus UK Ltd must comply with their local regulatory liquidity ratios. The minimum regulatory liquidity ratios for the operations in Cyprus are set by the CBC. In September 2017, the CBC proceeded with a partial relaxation of the regulatory liquidity requirements. According to the CRR, the local liquidity requirements are expected to be abolished by the end of 2017. For the purposes of bridging the requirements gap between national prudential liquidity requirements currently in place and the LCR under the CRR framework, it is expected that the CBC will move in the direction of a measure in the form of a liquidity add-on that will be imposed on top of the LCR. As at 30 September 2017 the Bank was in compliance with the CBC EUR stock ratio and the CBC EUR 0-30 days mismatch ratios, but was not in compliance with the rest of the local regulatory liquidity requirements.
F.10 Liquidity reserves
The below table sets out the Group's liquidity reserves:
Composition of 30 September 2017 31 December 2016
the liquidity reserves
------------------------- ------------------------------- -----------------------------
Liquidity Liquidity Liquidity
reserves reserves reserves
as per LCR
Delegated
Reg (EU)
2015/61
------------------------- ---------- ------------------- ---------- -----------------
Level Level Liquidity
1 2A reserves
of
which Delegated
Reg (EU)
2015/61
LCR eligible
Level 1
---------- ---------- ------- ---------- -----------------
EUR000 EUR000 EUR000 EUR000 EUR000
------------------------- ---------- ---------- ------- ---------- -----------------
Cash and balances
with central banks 2,736,054 2,310,717 - 1,505,120 1,146,015
------------------------- ---------- ---------- ------- ---------- -----------------
Nostro and overnight
placements with
banks 448,639 - - 423,603 -
------------------------- ---------- ---------- ------- ---------- -----------------
Other placements
with banks 314,700 - - 376,145 -
------------------------- ---------- ---------- ------- ---------- -----------------
Liquid investments 656,743 558,565 58,464 154,787 256,325
------------------------- ---------- ---------- ------- ---------- -----------------
Available ECB Buffer 91,497 - - 124,998 -
------------------------- ---------- ---------- ------- ---------- -----------------
Other investments 8,019 - - 6,340 -
------------------------- ---------- ---------- ------- ---------- -----------------
Total 4,255,652 2,869,282 58,464 2,590,993 1,402,340
------------------------- ========== ========== ======= ========== =================
Investments under Liquidity Reserves are shown at market value net of haircut (as prescribed by regulators) in order to reflect the actual liquidity value that can be obtained. Liquid investments include off balance sheet Bank of England Treasury Bills acquired by Bank of Cyprus UK Ltd through the encumbrance of customer loans with the Bank of England. Under LCR Liquidity Reserves, all Cyprus Government Bonds remain eligible for inclusion as Level 1 assets given that they are issued by a Member State. LCR does not require liquid assets to be eligible as collateral for central bank operations and are included at market value.
F.11 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 shareholder value.
With the exception of certain specified provisions, the CRR and Capital Requirements Directive (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 will be largely fully effective by 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 30 September 2017 stands at 12.4% (transitional) and the total capital ratio at 13.8%.
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).
The Group's minimum phased-in CET1 capital ratio stands at 9.50%, comprised of a 4.50% Pillar I requirement, a 3.75% Pillar II requirement and the capital conservation buffer (CCB) of 1.25% applicable for 2017. Following the Supervisory Review and Evaluation Process (SREP) performed by the ECB in 2017, based on the pre-notification received in September 2017, the Pillar II requirement which will be applicable as from 1 January 2018, is expected to be 3.00% compared to current level of 3.75%. As a result, the Group's minimum phased-in CET1 capital ratio is expected to be reduced to 9.375% from 9.50%, comprising of a 4.50% Pillar I requirement, a 3.00% Pillar II requirement and the CCB of 1.875% applicable as from 1 January 2018. The ECB has also provided revised lower non-public guidance for an additional Pillar II CET1 buffer.
The overall Total Capital Requirement currently stands at 13.00%, comprising of a Pillar I requirement of 8.00% (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 Pillar II requirement of 3.75% (in the form of CET1), and the CCB of 1.25% applicable for 2017. Following the 2017 SREP pre-notification decision received, the overall Total Capital Requirement is expected to be reduced to 12.875% from 13.00%, comprising of 8.00% Pillar I requirement, a 3.00% Pillar II requirement and the CCB of 1.875% applicable as from 1 January 2018.
The new SREP requirements will be effective as from 1 January 2018, and as at the date of publication of this announcement these requirements remain subject to ECB final confirmation, which is expected by the end of 2017.
The minimum CET1 requirement including Pillar II, applicable for the year 2016 was determined by the ECB at 11.75% in November 2015 and included CCB on a fully loaded basis.
The above minimum ratios apply for both, the Bank and the Group. The Bank is 100% subsidiary of the Company and its principal activities are the provision of banking and financial services and management and disposal of property generally acquired in debt satisfaction.
The Group and the Bank capital position at 30 September 2017 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 by the CBC ahead of the beginning of each quarter. The CBC has set the level of the CCyB at 0% for the years of 2016 and 2017.
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%. 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.
Following the enactment of the amendments in the Cypriot Banking Law on 3 February 2017, the Capital Conservation Buffer (CCB) is gradually phased-in at 0.625% in 2016, 1.25% in 2017, 1.875% in 2018 and is 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, the Bank is monitoring developments in this area very closely.
The Group's overseas banking subsidiaries comply with the regulatory capital requirements of the local regulators in the countries in which they operate. 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.11.1 Capital position
The capital position of the Group and the Bank under CRD IV/CRR basis (after applying the transitional arrangements) is presented below.
Group Bank
------------------------- --------------------------- ---------------------------
Regulatory capital 30 September 31 December 30 September 31 December
2017 2016 2017 2016
------------------------- ------------- ------------ ------------- ------------
EUR000 EUR000 EUR000 EUR000
------------------------- ------------- ------------ ------------- ------------
Transitional Common
Equity Tier 1 (CET1)(3
4) 2,145,261 2,727,997 2,095,459 2,727,172
------------------------- ------------- ------------ ------------- ------------
Transitional Additional - - - -
Tier 1 capital (AT1)
------------------------- ------------- ------------ ------------- ------------
Tier 2 capital (T2) 246,618 21,423 255,080 12,394
------------------------- ------------- ------------ ------------- ------------
Transitional total
regulatory capital(4) 2,391,879 2,749,420 2,350,539 2,739,566
------------------------- ============= ============ ============= ============
Risk weighted assets
- credit risk(5) 15,378,723 16,861,793 14,420,647 16,041,100
------------------------- ------------- ------------ ------------- ------------
Risk weighted assets
- market risk 4,935 6,231 2,695 2,750
------------------------- ------------- ------------ ------------- ------------
Risk weighted assets
- operational risk 1,888,975 1,997,200 1,827,938 1,827,938
------------------------- ------------- ------------ ------------- ------------
Total risk weighted
assets 17,272,633 18,865,224 16,251,280 17,871,788
------------------------- ============= ============ ============= ============
% % % %
------------------------- ------------- ------------ ------------- ------------
Transitional Common
Equity Tier 1 ratio 12.4 14.5 12.9 15.3
------------------------- ------------- ------------ ------------- ------------
Transitional total
capital ratio 13.8 14.6 14.5 15.3
------------------------- ------------- ------------ ------------- ------------
During the nine months ended 30 September 2017, the CET1 was negatively affected by the loss for the period and by the phase in of transitional adjustments, mainly deferred tax asset. The Risk-Weighted Assets (RWA) were positively affected by the Group's ongoing efforts for risk-weighted assets optimisation as well as of the increased provisioning. As a result of the above, the CET1 ratio decreased by 210 bps during the period.
[3] CET1 includes regulatory deductions, primarily comprising deferred tax assets and intangible assets amounting to EUR130,805 thousand and EUR88,407 thousand as at 30 September 2017 and 31 December 2016 respectively.
[4] 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 phase-in period reduced from 10 to 5 years, with effect as from the reporting of 31 December 2016.
[5] Includes Credit Valuation Adjustments (CVA)
F.11.2 Overview of RWA
RWA
Minimum
capital
requirements
--- -------------------------- ---------------------------- ---------------
30 June 30 September
30 September 2017 2017
2017
--- -------------------------- --------------- ----------- ---------------
EUR000 EUR000 EUR000
--- -------------------------- --------------- ----------- ---------------
Credit risk (excluding
counterparty credit
1 risk (CCR)) 14,489,330 14,581,725 1,159,146
--- -------------------------- --------------- ----------- ---------------
Of which the standardised
2 approach 14,489,330 14,581,725 1,159,146
--- -------------------------- --------------- ----------- ---------------
6 CCR 45,795 50,151 3,664
--- -------------------------- --------------- ----------- ---------------
Of which mark to
7 market 22,657 24,763 1,813
--- -------------------------- --------------- ----------- ---------------
11 Of which risk exposure - - -
amount for contributions
to the default
fund of a Central
Counterparty (CCP)
--- -------------------------- --------------- ----------- ---------------
Of which Credit
Valuation Adjustment
12 (CVA) 23,138 25,388 1,851
--- -------------------------- --------------- ----------- ---------------
13 Settlement Risk - - -
--- -------------------------- --------------- ----------- ---------------
19 Market risk 4,935 5,061 395
--- -------------------------- --------------- ----------- ---------------
Of which the standardised
20 approach 4,935 5,061 395
--- -------------------------- --------------- ----------- ---------------
22 Large Exposures - - -
--- -------------------------- --------------- ----------- ---------------
23 Operational risk 1,888,975 1,888,975 151,118
--- -------------------------- --------------- ----------- ---------------
24 Of which basic - - -
indicator approach
--- -------------------------- --------------- ----------- ---------------
Of which standardised
25 approach 1,888,975 1,888,975 151,118
--- -------------------------- --------------- ----------- ---------------
Amounts below the
thresholds for
deduction (subject
27 to 250% risk weight) 843,598 842,465 67,488
--- -------------------------- --------------- ----------- ---------------
29 Total 17,272,633 17,368,377 1,381,811
--- -------------------------- =============== =========== ===============
The rows not applicable to the Group are not presented in the table above.
The main changes in RWA are observed in line 2. The RWA movement observed in line 2 relates to the redistribution of the exposures to lower risk exposure classes. Particularly, (a) a significant decrease in balance sheet amounts in the higher risk exposure classes (exposures in default and higher-risk categories) due to repayments and intense increased provisioning, (b) a movement of exposure amounts from higher risk exposure classes (exposures in default and higher-risk categories) towards lower risk categories (Corporates, Retail, Secured by mortgages on immovable properties, and Other items) due to customer loan restructurings, new customer loans, and debt-for-property and debt-for-equity swaps deleveraging actions, and (c) increase in balance sheet amounts to exposures with central governments or central banks which carry 0% risk weight.
F.11.3 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.
30 September 31 December
2017 2016
----------------------------- ------------------------- -------------------------
RWA and RWA RWA and RWA
density density
----------------------------- ------------------------- -------------------------
Exposure classes RWA RWA density RWA RWA density
----------------------------- ----------- ------------ ----------- ------------
EUR000 % EUR000 %
----------------------------- ----------- ------------ ----------- ------------
Central governments or
central banks - 0.0 - 0.0
----------------------------- ----------- ------------ ----------- ------------
Regional government or
local authorities 1,379 20.0 626 20.0
----------------------------- ----------- ------------ ----------- ------------
Public sector entities 1 0.0 1 0.0
----------------------------- ----------- ------------ ----------- ------------
Multilateral development
banks - 0.0 - 0.0
----------------------------- ----------- ------------ ----------- ------------
International organisations - 0.0 - 0.0
----------------------------- ----------- ------------ ----------- ------------
Institutions 275,238 28.1 318,843 30.1
----------------------------- ----------- ------------ ----------- ------------
Corporates 3,457,906 98.4 3,449,352 98.7
----------------------------- ----------- ------------ ----------- ------------
Retail 1,418,479 71.0 1,422,499 70.8
----------------------------- ----------- ------------ ----------- ------------
Secured by mortgages on
immovable property 1,660,506 37.6 1,615,895 38.7
----------------------------- ----------- ------------ ----------- ------------
Exposures in default 3,168,105 105.5 4,072,498 109.8
----------------------------- ----------- ------------ ----------- ------------
Higher-risk categories 2,574,842 150.0 3,071,736 150.0
----------------------------- ----------- ------------ ----------- ------------
Covered bonds 8,709 10.0 1,167 10.0
----------------------------- ----------- ------------ ----------- ------------
Collective investment
undertakings 47 100.0 41 100.0
----------------------------- ----------- ------------ ----------- ------------
Equity 320,640 231.0 332,938 231.6
----------------------------- ----------- ------------ ----------- ------------
Other items 2,447,076 106.8 2,522,648 111.2
----------------------------- ----------- ------------ ----------- ------------
Total 15,332,928 70.5 16,808,244 80.0
----------------------------- =========== ============ =========== ============
Exposure classes with zero exposure values are not included in the table above.
The RWA density has significantly decreased since 31 December 2016 due to redistribution of the exposures to lower risk exposure classes. Particularly, (a) a significant decrease in balance sheet amounts in the higher risk exposure classes (exposures in default and higher-risk categories) due to repayments and intense increased provisioning, (b) a movement of exposure amounts from higher risk exposure classes (exposures in default and higher-risk categories) towards lower risk categories (Corporates, Retail, Secured by mortgages on immovable properties, and Other items) due to customer loan restructurings, new customer loans, and debt-for-property and debt-for-equity swaps deleveraging actions, and (c) increase in balance sheet amounts to exposures with central governments or central banks which carry 0% risk weight.
F.12 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:
30 September 31 December
2017 2016
------------------------ ------------- ------------
Transitional basis EUR000 EUR000
------------------------ ------------- ------------
Capital measure (CET1) 2,145,261 2,727,997
------------------------ ============= ============
Total exposure measure 22,792,452 22,833,225
------------------------ ============= ============
Leverage ratio (%) 9.4 11.9
------------------------ ============= ============
Fully loaded basis
------------------------ ------------- ------------
Capital measure (CET1) 2,046,997 2,611,563
------------------------ ============= ============
Total exposure measure 22,798,514 22,785,112
------------------------ ============= ============
Leverage ratio (%) 9.0 11.5
------------------------ ============= ============
F.13 Internal Capital Adequacy Assessment Process (ICAAP), Internal Liquidity Assessment Process (ILAAP), Pillar II and SREP
The Group prepared the ICAAP and ILAAP reports for the year 2016. Both reports were approved by the Board of Directors and have been submitted to the ECB in April 2017.
The Group also undertakes a quarterly review of its ICAAP results. During the quarterly review of the ICAAP, the Group's risk profile and risk management policies and processes are reviewed and any changes since the full ICAAP exercise are taken into consideration. The quarterly review identifies whether the Group is exposed to new risks and assesses the adequacy of capital resources in order to cover its risks, as these have evolved (compared to the full ICAAP exercise). Given completion of the full ICAAP report in April 2017, one quarterly review took place in the third quarter of 2017, covering the period up to end of June 2017, and another one will take place in the fourth quarter of 2017 covering the period up to end of September 2017.
A quarterly review is also performed for the ILAAP through quarterly stress tests submitted to the Assets and Liabilities Committee (ALCO) and Board Risk Committee, as from 2016. 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 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-on 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
phase-in of the ECB of 14 March 2016 on the exercise
period of options and discretions available in
Union law (ECB/2016/4), the DTA phase-in
period was reduced from 10 to 5 years,
with effect as from the reporting of 31
December 2016. The applicable rate of
the DTA phase-in is 60% for 2017, 80%
for 2018 and 100% for 2019 (fully phased-in).
Accumulated Comprise (i) provisions for impairment
provisions of customer loans and advances, (ii) the
fair value adjustment on initial recognition
of loans acquired from Laiki Bank, and
(iii) provisions for off-balance sheet
exposures disclosed on the balance sheet
within other liabilities.
Advisory, Comprise mainly: 1) fees of external advisors
VEP and other in relation to: (i) disposal of operations
restructuring and non-core assets, (ii) customer loan
costs restructuring activities which are not
part of the effective interest rate and
(iii) the listing on the London Stock
Exchange and 2) voluntary exit plan cost.
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)
ratio (transitional is defined in accordance with the Basel
basis) II requirements.
CET1 fully CET1 fully loaded is defined in accordance
loaded with the Capital Requirements Regulation
(EU) No 575/2013.
Contribution Relates to the contribution made to the
to SRF Single Resolution Fund.
Core strategy This is an unleveraged, low-risk/low-potential
return strategy with predictable cash
flows. Such fund will generally invest
in stable, fully leased, multi-tenant
properties within strong, diversified
metropolitan areas.
Core+ strategy This is a moderate-risk/ moderate-return
strategy. Such fund will generally invest
in core properties; however, many of these
properties will require some form of enhancement
or value-added element.
Cost to Income Cost-to-income ratio is the total staff
ratio costs and other operating expenses excluding
restructuring costs divided by total income,
excluding gains/(losses) on disposals
of non-core assets. Restructuring costs
amount to EUR20.7 mn, EUR13.8 mn, EUR7.3
mn, EUR114.3 mn and EUR98.3 mn for the
nine months ended 30 September 2017, the
six months ended 30 June 2017, for the
three months ended 31 March 2017, for
the year ended 31 December 2016 and for
the nine months ended 30 September 2016,
respectively. Gains on disposal of non-core
assets pre-tax was EUR0 mn, EUR0 mn, EUR0
mn, EUR59.2 mn and EUR59.2 mn for the
nine months ended 30 September 2017, for
the six months ended 30 June 2017, for
the three months ended 31 March 2017,
for the year ended 31 December 2016 and
for the nine months ended 30 September
2016, respectively.
Data from The latest data was published on 14 November
the Statistical 2017.
Service of
the Republic
of Cyprus
Deferred The DTA adjustments relate to Deferred
Tax Asset Tax Assets totalling EUR384 mn and recognised
adjustments on tax losses totalling EUR3.1 bn and
can be set off against future profits
of the Bank until 2028 at a tax rate of
12.5%. There are tax losses of c. EUR8.5
bn for which no deferred tax asset has
been recognised. The recognition of deferred
tax assets is supported by the Bank's
business forecasts and takes into account
the recoverability of the deferred tax
assets within their expiry period.
Earnings The preliminary 2018 guidance for the
per Share earnings per share (EPS) does not include
(EPS) the impact of any unplanned or unforeseen
risk reduction trades, or macro events.
ECB European Central Bank
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 EUR721 mn at 30 September 2017 (compared
to EUR812 mn at 30 June 2017).
Group The Group consists of Bank of Cyprus Holdings
Public Limited Company, "BOC Holdings",
its subsidiary Bank of Cyprus Public Company
Limited, the "Bank" and the Bank's subsidiaries.
IFRS 9 assessment The IFRS 9 assessment is a "point in time"
estimate and is not a forecast. The actual
effect of the implementation of IFRS 9
on the Bank and the Group could vary significantly
from these estimates. The Bank continues
to refine models, methodologies and controls,
and monitor regulatory and other developments
in advance of IFRS 9 adoption on 1 January
2018. All estimates are based on the Bank's
current interpretation of the requirements
of IFRS 9, reflecting industry guidance
and discussions to date.
Leverage The leverage ratio is the ratio of tangible
ratio total equity to total assets for the relevant
period.
Loans in Loans in arrears for more than 90 days
arrears for (90+ DPD) are defined as loans past-due
more than for more than 90 days and loans that are
90 days (90+ impaired (impaired loans are those (i)
DPD) for which a provision for impairment has
been recognised on an individual basis
or (ii) for which incurred losses existed
at their initial recognition or (iii)
customers in Debt Recovery).
Loans in 90+ DPD ratio means loans in arrears for
arrears for more than 90 days (90+ DPD) (as defined)
more than divided by gross loans (as defined).
90 days (90+
DPD) ratio
(Loss)/profit (Loss)/profit after tax excludes advisory,
after tax VEP and other restructuring costs, as
and before well as net gains on disposal of non-core
restructuring assets.
costs
Market Shares Both deposit and loan market shares are
based on data from the Central Bank of
Cyprus.
Net fee and Net fee and commission income over total
commission income is the fee and commission income
income over divided by total income, excluding gains/(losses)
total income on disposals of non-core assets. Gains
on disposal of non-core assets pre-tax
was EUR0 mn, EUR0 mn, EUR0 mn, EUR59.2
mn and EUR59.2 mn for the nine months
ended 30 September 2017, for the six months
ended 30 June 2017, for the three months
ended 31 March 2017, for the year ended
31 December 2016 and for the nine months
ended 30 September 2016, respectively.
The ratio of 17% for 2016 excludes non-recurring
fees of approximately EUR7 mn.
Net Interest Net interest margin is calculated as the
Margin net interest 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)
and derivatives.
Net loans Loans and advances net of accumulated
and advances provisions
Net loan Net loan to deposits ratio is calculated
to deposit as the net loans and advances to customers
ratio divided by customer deposits, including
loans and deposits held for sale.
Non-performing In 2014 the European Banking Authority
exposures (EBA) published its reporting standards
(NPEs) on forbearance and non-performing exposures
(NPEs). According to the EBA standards,
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).
NPE ratio NPEs ratio is calculated as the NPEs as
per EBA (as defined) divided by gross
loans (as defined).
Operating Comprises profit before total provisions
profit and impairments (as defined), share of
profit from associates and joint ventures,
tax, profit attributable to non-controlling
interests, advisory, VEP and other restructuring
costs, and net gains on disposal of non-core
assets (where applicable).
Operating Operating profit return on average assets
profit return is calculated as the operating profit
on average divided by the average of total assets
assets for the relevant period.
Phased-in In accordance with the legislation in
Capital Conservation Cyprus which has been set for all credit
Buffer (CCB) institutions, the applicable rate of the
CCB is 1.25% for 2017, 1.875% for 2018
and 2.5% for 2019 (fully phased-in).
Proposal Proposal for a Regulation of the European
of the Council Parliament and of the Council amending
of the European Regulation (EU) No 575/2013 as regards
Union the transitional period for mitigating
the impact on own funds of the introduction
of IFRS 9 and the large exposures treatment
of certain public sector exposures denominated
in non-domestic currencies of Member States
http://data.consilium.europa.eu/doc/document/ST-9480-2017-INIT/en/pdf
Provision The provision charge comprises provisions
charge for impairments of customer loans, 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
charge (cost to date) is calculated as the provisions
of risk) for impairment of customer loans and provisions
for off-balance sheet exposures, net of
gain on derecognition of loans and advances
to customers and changes in expected cash
flows divided by average gross loans (the
average balance calculated as the average
of the opening balance and the closing
balance). The ratios for the nine months
ended 30 September 2017 and for the six
months ended 30 June 2017 are annualised,
noting that the additional provisions
of c.EUR500 mn are included in the calculation
of Cost of Risk but are not annualised.
Provisioning Provisioning coverage ratio for 90+ DPD
coverage is calculated as the accumulated provisions
ratio for (as defined) over 90+ DPD (as defined).
90+ DPD
Provisioning Provisioning coverage ratio for 90+ DPD
coverage is calculated as the accumulated provisions
ratio for (as defined) divided by 90+DPD (as defined),
90+ DPD calculated after the addition of total contractual
with reference interest due of those loans to both to
to the contractual the numerator and denominator.
balances
of customers
Provisioning Provisioning coverage ratio for NPEs is
coverage calculated as accumulated provisions (as
ratio for defined) over NPEs (as defined).
NPEs
Provisioning Provisioning coverage ratio for NPEs is
coverage calculated as accumulated provisions (as
ratio for defined) over NPEs (as defined), after
NPEs calculated the addition of total contractual interest
with reference due of those loans to both to the numerator
to the contractual and denominator.
balances
of customers
Quarterly Average of interest earning assets as
average interest at the beginning and end of the relevant
earning assets quarter. 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) and derivatives.
Special levy Relates to the special levy on deposits
of credit institutions in Cyprus.
The remaining Comprises net foreign exchange gains,
component net gains on financial instrument transactions,
of non-interest gains/(losses) from revaluation and disposal
income of investment properties and on disposal
of stock of properties, and other income.
Total Capital Total capital ratio is defined in accordance
ratio with the Capital Requirements Regulation
(EU) No 575/2013.
Total income Total income comprises net interest income
and non-interest income.
Total provisions Total provisions and impairments comprise
and impairments provision charge (as defined), plus provisions
for litigation and regulatory matters
plus impairments of other financial and
non-financial assets.
Underlying Statutory basis adjusted for certain items
basis as detailed in the Basis of Preparation.
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.
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" and together with the Bank's subsidiaries, the "Group", for the nine months ended 30 September 2017.
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. As a result of this corporate change, the comparative information for 2016 and as at 31 December 2016 are presented for the Bank together with its subsidiaries.
Financial information presented in this announcement is not the statutory financial statements of BOC Holdings. BOC Holdings' most recent statutory financial statements for the purposes of Chapter 4 of Part 6 of the Companies Act 2014 of Ireland for the period 11 July 2016 to 31 December 2016, upon which the auditors have given an unqualified audit report (with emphasis of matter on material uncertainty related to going concern), were published on 27 April 2017 and have been annexed to the annual return and delivered to the Registrar of Companies of Ireland.
Statutory basis: Statutory information is set out on pages 18-22. 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 to allow a comparison of the Group's underlying performance, as described on page 23.
The financial information included in this announcement is neither reviewed nor audited by the Group's external auditors.
This announcement and the presentation of the Financial Results of the Group for the nine months ended 30 September 2017 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 Financial Results of the Group 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. These forward-looking statements include, but are not limited to, statements relating to the Group's intentions, beliefs or current expectations and projections about the Group's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, provisions, impairments, 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 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 123 branches, of which 121 operate in Cyprus, 1 in Romania and 1 in the United Kingdom*. Bank of Cyprus also has representative offices in Russia, Ukraine and China. The Bank of Cyprus Group employs 4,319 staff worldwide. At 30 September 2017, the Group's Total Assets amounted to EUR22.9 bn and Total Equity was EUR2.6 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.
*Bank of Cyprus UK Ltd has re-designated 3 locations from Branches to Business Centres, whilst opening a further 4 Business Centres across the UK, as part of its ongoing geographic diversification strategy.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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