Bank of Cyprus losses drop to €2 bln, NPLs rise to 53%

The Bank of Cyprus said on Friday that its losses for 2013 stood at €2.04 bln, 8% down from the year-earlier losses of €2.214 bln, with the biggest headache for the island’s leading lender being the recovery of non-performing loans, currently estimated at €14.04 bln or 53% of gross loans.
NPLs rose from €13.13 bln as at the end of the third quarter, according to the Central Bank’s definition with which the Bank of Cyprus disagrees.
Loans due for more than 90 days were up a mere €20 mln at €13.003 bln as at December 31, 2013, compared with €12.983 mln as at September 30, and accounted for 49% of gross loans, with the bank maintaining its end of third-quarter projection that the rate of NPLs had stabilised, as had the outflow of deposits.
The Bank said the core tier 1 capital ratio was sustained at 10.2% at the end of 2013, level from September 30.
Provisions for impairment of loans for the year ended December 31, 2013 were €1.067 bln, with the provisioning charge accounting for 3.9% of gross loans. Provisions for impairment of loans for the fourth quarter of 2013 were €268 mln, compared to €261 mln for the third quarter of 2013.
CEO John Hourican said in a statement that “the on-going challenging economic conditions continue to pressure the loan book, necessitating additional provisions that resulted in further losses for the fourth quarter of 2013”.
He added that “despite these losses, the Core tier 1 capital ratio was sustained at 10.2% at 31 December 2013, due to the reduction in risk weighted assets”.
“Focusing on arresting asset quality deterioration, making progress on non-core disposals and maintaining capital ratios are core to building a strong platform for the safe return of depositors,” he noted.
The Group, he said, “is proceeding steadily with the implementation of its restructuring plan and is ahead of plan on a number of fronts”.
The bank’s CEO said there were deposit inflows in the fourth quarter of 2013, adding that “the stability in our deposit base and improved liquidity have allowed the release of the 6-month blocked deposits ahead of plan. Depositors with released funds have generally stayed with the bank and indeed the retention of deposits exceeded expectations,” he said.
At 31 December 2013, gross loans and deposits were €26.7 bln and €15.0 bln, respectively, with a net loans to deposits ratio of 145% (compared to 146% at September 30).
The Emergency Liquidity Assistance (ELA) funding has been reduced to €9.56 bln at December 31, 2013, down from €9.86 bln at September 30, whereas ECB funding totalled €1.4 bln at 31 December 2013.
Total income stood at €1.174 bln, with net interest income at €999 mln and net interest margin at 3.62%. Total income for the fourth quarter of 2013 was €314 mln, with net interest income at €274 mln and net margin income at 3.87%.
Total expenses for 2013 were €552 mln and the cost to income ratio was at 47%. Total expenses for the fourth quarter of 2013 were €130 mln, 5% lower than the third quarter of 2013.
Profit before impairments, restructuring costs and discontinued operations was €622 mln for the whole of 2013 and for the fourth quarter of 2013 €184 mln.
Losses from continuing operations (defined as loss before restructuring costs, discontinued operations and the disposal of Greek operations) for 2013 totalled €426 mln. Losses from continuing operations for the fourth quarter of 2013 totalled €77 mln.
The disposal of Greek operations in the first quarter of 2013 resulted in a combined loss on disposal and from discontinued operations of €1.456 mln.
Restructuring costs for the year totalled €158 mln, of which €121 mln relate to the cost of the two Voluntary Retirement Schemes (VRS) implemented during the year.