BOC insists profits are sustainable

Bank of Cyprus Pcl (BOC) insists that its profits are mostly derived from core banking operations and the investment gains amounting to 1% of overall profits are sustainable.

BOC CEO Andreas Eliades stressed that the bulk of the 9M results reported earlier and which amounted to CYP 130 mln are from core operations, that are sustainable.

In a message to the 70.000 and more BOC shareholders, the CEO said that what they should realize and concentrate is the sustainability of the profits. “We managed to deliver the fantastic results because of our ability to boost income by 26% while keeping cost increases to 2%, during a period of time when the Bank is engaged in an aggressive expansion drive.”

Referring to the CYP 12.4 mln in net gains from sale and change in value of available for sale investments, BOC Group Chief General Manager Charilaos Stavrakis said the real profits from such investments amounted to CYP 40 mln, of which CYP 12 mln were reported in the P&L account for the 9M06 reporting period, while the rest were booked in the Reserve Account.

Though the bank took a 3Q06 hit of CYP 6 mln on its substantial bond portfolio because of interest rates increases, overall, Stavrakis said if all the positions were to be liquidated, the Bank would book a total profit of CYP 40 mln.

Stavrakis then added that in his opinion the gains from investments are sustainable because of the expertise of the Bank’s Treasury Department, which is active in international markets, though he too stressed that such gains make up only 1% of the total profit.