Audited results of the majority state-owned Cyprus Development Bank for 2004 report a turnaround, with profit before provisions for non-performing loans reaching CYP 1.9 mln compared with a loss of CYP 2.7 mln in 2003.
A loss of CYP 0.3 mln was still recorded after provisions for non-performing loans, the permanent impairment in the value of investments and tax, but this was a significant improvement compared with the CYP 20.1 mln loss in 2003.
The CDB said in a statement that progress in implementing the strategic business plan has begun to yield positive results.
One positive factor for the accounts is that interest on overdue balances from the government has now been recognised both for 2004 and previous years.
Other improvements were a fall in provisions for non-performing loans and a cut in operational expenditure.
Detailed results
Turnover rose by 9.6% to CYP 13.7 mln, from CYP 12.5 mln in 2003, while total net interest income reached CYP 6.5 mln compared with CYP 2.4 mln in 2003.
The charge on the profit and loss account for doubtful debts fell to CYP 1.4 mln, from CYP 8.2 mln in 2003.
The Bank transferred CYP 0.6 mln from the reserve account to the profit and loss account, representing a permanent impairment in the value of investments. This was significantly less than the CYP 9.2 mln transfer in 2003.
Deposits rose by 9% from CYP 75 mln in 2003 to CYP 82 mln at the end of 2004.
Strengthening the capital base
The capital adequacy ratio was 12.8% at the end of 2004, compared with the minimum 10% required by the Central Bank of Cyprus.
The bank said that it aims to strengthen its capital base further and that the government as primary shareholder has approved the issue of capital securities and bonds in order to increase Tier 1 and Tier 2 capital.
The aim is to start the securities issues immediately.
“A successful issue will boost the capital adequacy of the bank significantly, helping the achievement of the objectives set out in the strategic plan,” the bank said in a statement.
The preliminary results for the first three months of 2005 point to a continued significant improvement.
