Bank of Cyprus Group Public Co. Ltd. is seen lifting its first half profits by 80% on the back of a healthy increase in net interest income, higher trading gains and a moderate increase in provisions.
According to a poll conducted by the Financial Mirror among Cyprus’ leading analysts, CLR, SFS and Egnatia, the Bank is seen lifting its first half profits ended 30 June 2005 by 80% year-on-year to CYP 29.3 mln from CYP 16.2 mln in the first half of 2004.
The forecast increase is significantly above the 49% y/y growth in profits recorded during the first quarter of the year, when BOC reported net profits of CYP 16 mln and lifted its return on equity (ROE) from 6.9% to 11.3% and close to its target of 13% by 2007.
Christos Hadjichristodoulou, Head of Research at CLR Securities & Financial Services, is the most bullish, forecasting BOC gains of CYP 31.1 mln for the first half. Hadjichristodoulou has also upped his year-end forecast for BOC profits from CYP 56-57 mln previously to CYP 60 mln.
Andreas Constantinou, Manager Research at SFS Securities & Financial Services, expects BOC to report net profits between CYP 28.5 to CYP 29 mln, with most of the improvement originating from gains in net interest income, the containment of provisions for bad debts to 1.2% of gross loans and better investment performance.
The improvement in BOC’s trading performance is also one of the reasons why Constantinos Constantinou of Egnatia Financial Services is expecting an improvement in BOC profits to CYP 27.8 mln for the first half compared to CYP 16.2 mln a year ago in the same period.
Last year, BOC had booked a CYP 2.5 mln loss in its Profit & Loss account because of trading related losses. Egnatia’s Constantinou expects the trading results to contribute CYP 2 mln in profits this year.
Andreas Constantinou of SFS however, pointed out that the true loss from investment related activities last year during the first half amounted to CYP 6.4 mln, of which CYP 2.5 mln were impairment in value of investment losses and CYP 3.8 mln in revaluation losses.
The CSE GENX was up 17% during the first half, about the same as in the first quarter.
Hadjichristodoulou of CLR also points out that the first half results were helped by the exceptional gain of CYP 2 mln arising from the sale of property in the UK, which also helps explain why he is the most bullish among the island’s top forecasting firms on the Bank’s profit targets.
None of the analysts polled by the Financial Mirror expects an interim dividend announcement, with only Hadjichristodoulou of CLR bracing for such an announcement after the third quarter and ahead of a possible rights issue end of the year.
