The island’s three largest banks recorded a satisfactory increase in profits during the first quarter on the back of a strong performance in local operations.
Bank of Cyprus (BOC) recorded the best increase in total income growth, lifting its total income by 17.8% year-on-year to CYP 98.3 mln, helped by a sharp 62% increase in insurance income and 19.7% increase in net interest income.
Hellenic Bank (HB) scored an impressive rebound in total income to CYP 28.6 mln, up 16.9% y/y, recording satisfactory increases in net interest income, fees & commissions, foreign exchange and insurance activities.
Laiki Bank (CPB) had the lowest increase in total income with overall income up 10% to CYP 58 mln, restrained in part by unchanged growth in insurance income while net interest income was up by 14.6%.
In terms of cost control, BOC and CPB reported a modest 8.4% y/y increase in first quarter costs, with BOC managing to cut its other costs, while Laiki managed the best performance in restraining the staff costs, which only increased by 8%.
Hellenic Bank was the worst performer in terms of controlling costs as total costs surged 14% to CYP 20.4 mln, with staff costs rising at double the rate of growth for Laiki at 15%. The bank has blamed its aggressive Greek expansion drive for being responsible for the above-average cost increase.
BOC boasted the lowest cost-to-income ratio among the majors at 59.9% end of Q105 compared to 65% in Q104, followed by Laiki at 61.6% end of Q105 compared to 66% end of Q104 while HB remained stuck a 71% end of Q105 compared to 73% end of Q104.
Provisions
Laiki and Hellenic recorded an actual 4.2% y/y drop in their doubtful debt provisions charges while BOC continued to set aside more of its profits aside, as it hiked provisions by 24% y/y to CYP 19.9 mln.
Analysts believe that the near-collapse of the Suphire Group and the liquidation of Golden Sun Leisure may have been responsible for the increase in provisions for BOC.
The high level of provisions and non-performing loans, which continue to hover at around 10% on average of the local bank loan portfolios is seen as one of the major disadvantages facing Cypriot banks.
Profits rise
Hellenic Bank scored the best year-on-year performance, lifting profits by 105% to CYP 2.9 mln, while impressive profit increases were also reported by BOC, up 49% to CYP 16 mln and Laiki, up 43% at CYP 8.9 mln.
BOC boosted shareholder funds by CYP 18.3 mln to CYP 577.4 mln, Laiki boosted shareholder funds by CYP 10.9 mln to CYP 316.1 mln while HB boosted shareholder funds by CYP 3.3 mln to CYP 144.3 mln.
