* Full repayment of ELA within 2017 *
Bank of Cyprus net first quarter profits rose to EUR 50 mln due to increased profitability and a momentum in non-performing loan restructurings which exceeded EUR 1 bln.
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The profit is a turnaround from the EUR 512,000 loss recorded in the last quarter of 2015 and nearly double the EUR 29 mln profits announced in the first quarter last year.
Announcing its financial results, the bank said that the improvement in its funding base enabled the bank to reduce its exposure to the ECB emergency liquidity funding (ELA) to EUR 2.8 repaying a total of EUR 1 bln since the beginning of the year.
“We continue to drive loan restructuring momentum from the previous quarter by completing EUR 1.5 bn of restructurings during the quarter. We made very good progress in reducing the stock of loans with arrears past 90 days by EUR 1.0 bn or 9% during the quarter and we expect to drive further reduction during the coming quarters of 2016,” the group’s CEO John Hourican said in a statement.
Noting the bank’s funding position continues to improve, Hourican stressed “we intend to fully repay ELA as soon as we can. “It was pleasing that we were able to make meaningful progress towards this ambition in the year to date. ELA now stands at EUR 2.8 bln, EUR 1 bln lower since the beginning of the year” he added.
Speaking during a briefing for the financial results, the group’s CFO Eliza Livadotiou said the bank had another “successful quarter,” adding that bank’s profitability is at the highest level of the last quarters.
Profit before provisions and impairments, gains/(losses)on derecognition and changes in expected cash flows, restructuring costs and discontinued operations in the Q1 amounted to EUR 145 mln marking an increase of 9% compared to Q4 2015, despite the EUR 13 mln decline in net interest income. Provisions for impairment of loans in Q1 2016 amounted to EUR 62 mln.
The bank said it provided new lending amounting to EUR 223 mln.
Total loans on March 31 2016 amounted to EUR 21.85 bln compared with EUR 22.59 bln on December 31, 2015. Loans in Cyprus amounted to EUR 19.98 bln representing 91% of the bank’s total loans.
According to the bank, loans in arrears part 90 days declined to EUR 10.29 bln or 47.1% of the total loan book, compared with EUR 11.33 bln on December 31 2015.
The reduction is mainly due to the increasing activity in restructurings including agreements for debt to property swaps, the bank said.
According to a presentation, total restructuring in the last six months from Q4 of 2015 up to the March 31 reached EUR 2.8 bln.
Non performing exposures on the basis of the European Banking Authority directive declined by EUR 641 mln to EUR 13.2 bln from EUR 13,96 bln in December 2015 with the coverage ratio at 38% from 39% in December 2015.
The bank said that a total of EUR 1 bln amounting to 8% of restructured and performing total loans will be removed from the bank’s NPL stock, as the probation period provided in the EBA directive expired.
The bank’s Common Equity Tier 1 Capital rose by 30 basis points to 14.3% from 14.0% in December 2013.
Total deposits on March 31 2016 amounted EUR 14.2 bln compared with EUR 14.2 bln on December 2015.
The bank’s main targets is to significantly reduce its problem loan book, to normalise its funding structure and to fully repay ELA and to focus on core banking activities in Cyprus and the UK, where it plans a premium listing on the LSE.
