22.02.2022
The Bank of Cyprus, the island’s largest lender, returned to profitability in 2021 after losses in 2020 hit by the pandemic, while targeting a 5% NPL ratio by the end of 2022 and a dividend distribution from 2023 for the first time since 2010.
The bank generated an after-tax profit of €30m in 2021 compared to a net loss of €175m in 2020, while reducing its NPL ratio to 7.5% due to two NPL transactions (Spiral 2 and 3) with an aggregate book value of €1.9 billion. Along with a €400 million organic reduction in NPLs, the bank reduced its NPLs by 75% in 2021.
In addition, the bank said its CET1 capital ratio stood at 15.8% in 2021 and its overall capital adequacy ratio reached 20.8%.
“Having reached a milestone for unequivocal NPLs, we are now updating our medium-term targets with a strong focus on creating value for our shareholders, including increasing our target for return on tangible capital from 7% to over 10%, building the foundation for profitability. distribution of dividends subject to implementation and relevant approvals,” Panikos Nikolaou said in a statement.He added that “our strategic principles remain unchanged; income growth in a more capital-efficient way; improving the operating model through increased efficiency; asset quality assurance; and building organizational resilience through a sustainable program”, noting that “our transformation plan will enable us to deliver on these strategic principles using our nationwide client database.”
In 2021, the bank generated a total income of 581 million euros, and its operating profit reached 198 million euros.
Net interest income (NIP) for 2021 was €296 million compared to €330 million in 2020, down 10% year-on-year, mainly due to continued pressure from low interest rates.
However, non-interest income for 2021 rose to €285 million, up 20% year-on-year, driven by higher net fee income, higher net foreign exchange differences and net gains/(losses) on financial instruments and their disposals/liquidations of subsidiaries and associates, higher net insurance income, as well as higher income from the sale of REMU and lower losses from the revaluation of investment property.
At the end of 2021, the bank’s total assets amounted to 24.96 billion euros, compared to 21.5 billion euros in the corresponding period of 2020, and total liabilities amounted to 22.8 billion euros at the end of 2021, compared to 19.4 billion euros at the end of 2020.The bank’s gross loans, including loans held for sale, were €10.8 billion at 31 December 2021 compared to €12.2 billion at 31 December 2020, down 11% year-to-date, mainly due to the completion Helix 2 project. Net loans amounted to 9.8 billion euros at the end of 2021, compared to 9.9 billion euros at the end of 2020.
Deposits at the end of 2021 rose to 17.53 billion euros from 16.53 billion euros at the end of 2020, while the ratio of net loans to deposits was 56% at the end of 2021 from 60% in the corresponding period of 2020.
In addition, the bank’s NPLs fell to €771 million adjusted for Helix 2 from €1.76 billion at the end of 2020, with the NPL ratio (according to the EBA directive) falling to 7.5% of total loans from 16% at the end of 2020.
Total expenditure in 2021 was €383m compared to €373m in 2020, up 2% year-on-year, of which €202m or 53% was staff costs, 38% or €145m , for other operating expenses and 9% or 36 million euros in respect of a special fee on deposits and other contributions.
According to the bank, the cost-to-income ratio (adjusted for a special deposit fee) was 60% for 2021, remaining broadly stable compared to 2020.
At the end of 2021, assets held by the Property Management Unit (REMU), excluding assets classified as held for sale, were €1.21 billion, compared to €1.47 million at the end of 2020.
Assets on board in 2021 were €34 million, compared to €146 million in 2020, and sales reached €140 million in 2021, compared to €80 million the previous year.
