Bank of Cyprus: Robust Q3 2023 Profits and Upgraded Credit Rating

Bank of Cyprus has announced robust financial results for the nine months ending September 30, 2023, with an after-tax profit of €349 million. The CEO, Panicos Nicolaou, emphasized the bank's strong quarterly performance, highlighting a liquid and resilient balance sheet. Nicolaou stated, "We have delivered another quarter of strong profitability, achieving an ROTE of over 20 per cent for the third consecutive quarter, demonstrating the group’s continuing ability to generate sustainable profitability and shareholder value creation."

During the third quarter of 2023, the bank reported a Net Interest Income (NII) of €572 million, a 144 per cent YoY increase and 9 per cent higher than the previous quarter. Non-Net Interest Income (Non-NII) rose by 5 per cent YoY, covering 90 per cent of total operating expenses. The cost-to-income ratio was reduced to 31 per cent, down from 54 per cent in the prior year. The profit after tax for the first nine months of 2023 stood at €349 million, a significant improvement from the €19 million loss in the same period last year.

Earnings per share reached €0.78 for the period between January and September 30, 2023, with €0.29 in the third quarter alone. The Return on Tangible Equity (ROTE) was 24.6 per cent during the first nine months of 2023 and 25.6 per cent in the third quarter alone.

The bank maintained a liquid and resilient balance sheet, with the Non-Performing Exposure (NPE) ratio at 3.5 per cent (0.8 per cent on a net basis), down 6 percentage points YoY. NPE coverage is at 77 per cent, and the cost of risk stands at 58 basis points. The retail-funded deposit base is sticky at €19.3 billion, up 3 per cent YoY, and the balance sheet remains highly liquid, with €9.6 billion placed at the European Central Bank (ECB).

Nicolaou highlighted the strong economic growth in Cyprus, stating, "Against the backdrop of geopolitical developments and heightened uncertainty, the Cypriot economy is once again proving resilient with strong economic growth of 2.3 per cent in the second quarter of 2023, outpacing the Eurozone average." The bank extended approximately €1.6 billion in new loans in the first nine months of 2023, supporting the economy while maintaining prudent underwriting standards.

Despite the rising interest rate environment, new lending reached approximately €1.6 billion. The gross performing loan book remained broadly flat YoY at €9.9 billion, reflecting ongoing repayments offsetting new lending. The Bank of Cyprus demonstrated a robust capital position, with a Regulatory CET1 ratio and Total Capital ratio of 15.2 per cent and 20.4 per cent, respectively.

Nicolaou noted, "In October 2023, Moody’s upgraded the bank’s long-term deposit rating to investment grade for the first time in 12 years, confirming this new chapter of becoming a strong, diversified well-capitalised and sustainably profitable organisation." With a strong set of results in the third quarter of 2023, the group's performance is well ahead of 2023 targets, and Nicolaou expects to comfortably exceed the 2023 ROTE target of over 17 per cent. The bank continues to execute its strategy, focusing on supporting customers, delivering shareholder value, and assisting the development of the Cypriot economy.

By fLEXI tEAM