.jpg)
Bank of Cyprus BOC.CY (BOCY) said it was unscathed by the global credit crunch, but said it had no immediate plans to expand into new markets. The Bank, Cyprus's largest lender, posted a 55 percent increase in its 2007 group net profit to 485 million euros and restated its profit guidance for 2008 to 540 million euros, an 11 percent increase over 2007. It is scheduled to release its first-quarter results on May 28.
After a year which saw it launch full banking activities in Russia and clinch a deal to acquire a bank in Ukraine, the bank told shareholders on Wednesday expansion into additional new markets was not foreseen in the near future.
"We expect 2008 to be a year of entrenchment in (existing) new markets, further expansion of our network in Greece and an increase in market shares in Greece and Cyprus," outgoing chairman Eleftherios Ioannou said.
"Although expansion into new markets is not among our immediate plans we are looking at conditions in countries of an interest to us through the presence of representative offices so when we decide to proceed we know the conditions on the ground," he told shareholders at its annual general meeting.
Chief Executive Andreas Eliades said the bank was not exposed to risks from the American sub prime crisis, which has had a domino effect throughout the global financial sector.
"The Bank possibly has the most robust liquidity in the Greek and Cypriot markets because the main source of finance are its client deposits, which are increasing," Eliades said.
Low bad debts
Eliades assured anxious shareholders that Bank of Cyprus has one of the lowest ratios as regards bad debts, down at 2.7% in Greece and off sharply in Cyprus, because of the Bank’s prudent policy of offering well balanced products that identify risks and deal with problematic cases in rapid time.
“The issue is to be extra careful during good times, which we have been as in bad times banks in reality become extra careful.”
Directors
Eliades defended the independent Board members who are also from the business community and have large dealings with the Bank when pressed by a number of shareholders that under the corporate governance code, Board members were not in effect independent if they owed “too much” money to the bank.
Without referring to names, Eliades said Bank of Cyprus makes EUR 2 mln on the business of one Board member alone. “Would you prefer if this business went to a competitor bank,” asked Eliades, adding that loan approvals for Board members are taken at the highest level and without the participation of the Board member for whom the decision will be made. “Everything is done at arm’s length.”
According to the Annual Report of the Bank, four directors have loans from the Bank that exceeds EUR 70 mln. Other four members have loans of EUR 11.9 mln. For the total amount of all director loans, the bank has EUR 130.9 mln coverage and is booking annual interest income amounting to EUR 4.7 mln.
