The ease with which Bank of Cyprus Pcl (BOC) surpassed analyst expectations regarding its 9M06 profit that increased 158% YoY to CYP 130 mln have led the Bank to decide to revise higher its targets, BOC CEO Andreas Eliades said.
“We are on track to beat our own year-end estimate of CYP 160 mln, which the Bank had made in February,” said Eliades.
The Financial Mirror had forecast even before the release of the 9M results, that the full year profit of BOC would range between CYP 180-185 mln.
Eliades added that the bank would also revise its 3-year targets, which it had revised higher when the first half results were released. The third revision in the main targets is likely to be made in January, Eliades said.
Under the second revised targets, the cost to income ratio of BOC is supposed to decline to 51% by 2008, whereas in the 9M06 results, the Bank has already achieved a cost to income ratio of 46.9%.
“We are on track to deliver the best cost-to-income ratio when compared to other Greek banks of comparable size to ours,” said Eliades, stressing that the improvement has been achieved without any layoffs, and instead by keeping costs under control while boosting income through increased productivity and efficiencies.
The Return on Equity (ROE), previously forecast at 18% by 2008 has already been passed by a wide margin since in the 9M06 results, the ROE was up at 21.2%. The level of provisions to gross advances, forecast to decline to 0.8% of advances by 2008 is already at 0.8% by 9M06 results, which according to Eliades will be squeezed even lower.
Â
Major improvements
The Cyprus operations have experienced an unprecedented turnaround with net profit for 9M06 increasing 269% YoY to CYP 100 mln, while the Greek operations saw profit rising 43% YoY to CYP 26 mln in the 9M06 period.
The ratio of Non-Performing Loans improved to 6.6% from 9.3%, with the target being to reach 7.5% and lower. According to Eliades, the Bank also managed to increase the coverage of the NPL to 60% from 43% in January 2006, with the balance covered by adequate pledges and guarantees.
Provision for bad debt also fell to 0.8% of gross advances from 1.2% in 2005 and are on target to decline below 0.8%.
Part of the reason why the
Deposits in foreign currency also surged sharply higher. By end of September 2006, such deposits had reached the equivalent of CYP 6.4 bln for a lead in overall market share of 29.8%.
The staff pension fund that in 2004 had a shortfall of CYP 106 mln has all but disappeared.
The Insurance operations saw profit rise to CYP 13 mln and now make up 8% of pretax profits.
