Bank of Cyprus Reports €508 Million Profit for 2024, Exceeding Financial Targets

The Bank of Cyprus announced its preliminary financial results for 2024 on Tuesday, revealing a profit after tax of €508 million. This figure represents a 4 per cent increase compared to the previous year, with €107 million earned in the fourth quarter alone.

The bank further reported that basic earnings per share had risen by 5 per cent year-on-year to €1.14. Bank of Cyprus Group CEO Panicos Nicolaou commented on the strong financial performance, stating, “This performance is testament to our robust capital and liquidity position, our strong asset quality and our diversified business model.”

He added, “As a result, we generated a profit after tax of €508 million, 4 per cent higher than 2023 and surpassed all our key financial targets for 2024, accelerating shareholder value creation.”

Additionally, the bank delivered a return on tangible equity (ROTE) of over 20 per cent for the second consecutive year. Net interest income (NII) increased by 4 per cent year-on-year to €822 million. However, the fourth quarter saw a slight 3 per cent quarter-on-quarter decline, which was attributed to lower interest rates.

Total operating expenses rose by 8 per cent, reaching €367 million, driven primarily by increased staff costs, IT investments, marketing expenses, and professional fees. Despite the rise in expenses, the cost-to-income ratio remained relatively low at 34 per cent for the year, though it increased to 38 per cent in the fourth quarter due to seasonal expenses.

The bank continued to maintain strong liquidity and asset quality, with the non-performing exposure (NPE) ratio reducing to 1.9 per cent and NPE coverage reaching 111 per cent. The cost of risk was recorded at 30 basis points. Retail deposits grew to €20.5 billion, reflecting a 6 per cent annual increase and a 3 per cent rise in the last quarter. The balance sheet remained highly liquid, with €7.6 billion placed at the European Central Bank (ECB).

Commenting on asset quality, Nicolaou stated, “Our asset quality remains healthy, demonstrated by an NPE ratio below 2 per cent whilst NPEs are fully covered.”

In terms of capital strength and shareholder returns, the bank’s Common Equity Tier 1 (CET1) ratio stood at 19.2 per cent, while the total capital ratio reached 24.0 per cent. The bank generated 400 basis points of CET1 capital in 2024, and the tangible book value per share increased by 17 per cent to €5.775 as of December 31, 2024.

The bank also announced a proposed shareholder distribution with a 50 per cent payout ratio, comprising a €211 million cash dividend and a €30 million share buyback. Nicolaou emphasized the significance of this move, stating, “In line with our ongoing, unwavering commitment of providing sustainable shareholder returns, we delivered on our promises and today we are pleased to propose a distribution based on a 50 per cent payout ratio, at the top-end of our 2024 distribution policy.”

He elaborated, “This comprises a €211 million cash dividend and a €30 million share buyback, a significant increase in both payout ratio and total quantum compared to the previous year. In total it represents a double-digit yield, which is above the 2024 Eurozone banking sector average.”

Nicolaou further highlighted that “overall, we delivered €400 million of cumulative distributions out of 2022-2024 earnings, representing 24 per cent of our market capitalisation and exceeding the target we set at the investor update event in June 2023 in both size and timing.”

The bank contextualized its results by noting that the Cypriot economy grew by 3.4 per cent in 2024 and is expected to expand by approximately 3.3 per cent in 2025, outpacing the Eurozone average. The bank also recorded record new lending of €2.4 billion, a 20 per cent increase compared to the previous year, while its gross performing loan book reached €10.2 billion, up by 4 per cent year-on-year.

Looking to the future, Nicolaou stated, “Looking ahead, as the interest rate environment normalises towards approximately 2 per cent, we reiterate our 2025 target of delivering high-teens ROTE on 15 per cent CET1 ratio or mid-teens ROTE on reported equity.”

He outlined the bank’s priorities for the coming years, saying, “Our priorities going forward will centre on prudent capital management, driving new growth initiatives focused on loan book growth, non-interest income diversification, maintaining cost discipline whilst re-investing in the business and protecting the fundamentals of our asset quality.”

Nicolaou also acknowledged the importance of delivering attractive shareholder returns and announced an upgraded distribution policy, stating, “We recognise the importance of continuing to deliver attractive shareholder returns and hence we are also upgrading our distribution policy today by increasing the payout ratio range to 50-70 per cent.”

“We will also consider the introduction of interim dividends,” he added.

In conclusion, Nicolaou reaffirmed the bank’s commitment to its future success, stating, “As we enter 2025, we are fully equipped to continue succeeding in the future, leveraging on our key strengths to ensure we are a well-capitalised and highly profitable organisation, with an unparalleled focus on supporting our customers and the broader economy.”

By fLEXI tEAM