Bank of Cyprus revelling in comeback

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Bank of Cyprus has “the wind in its sails” and has upgraded its guidance for 2023 after exceeding targets last year, its chief executive officer said, a decade after the island’s biggest lender came close to collapse.

The bank, which is listed on the London Stock Exchange, says it intends to commence “meaningful” dividend distributions from 2023 onwards, subject to regulatory approval and market conditions.

“We have the wind in our sails.

“The guidance for 2023 is for a much better performance,” CEO Panicos Nicolaou said in a Reuters interview.

It is a significant comeback for the bank, which a decade ago was battling for survival amidst a financial crisis that almost bankrupted Cyprus and forced the island to seek an international bailout.

Should approval be granted, it would be the first time the Bank of Cyprus has issued a dividend to shareholders since June 2011 for 2010.

Bank of Cyprus posted a 139% increase in its preliminary after-tax 2022 profit to €71 mln on February 20.

Net interest income grew 25% year-on-year to €370 mln, and in updated guidance, the bank expects that measure to grow by 40% to 50% this year, or by €520 mln to €550 mln.

Its earlier guidance, prepared in November 2022, was between €450 mln to €470 mln.

The bank’s recurring return on tangible equity (ROTE) reached 11.3% last year.

According to its updated guidance, it is expected to exceed 13% this year from more than 10% earlier.

With banks deeply exposed to the Greek sovereign debt crisis and fiscal slippage, Cyprus in early 2013 received international aid on condition that it wind down one major lender, Laiki, and that Bank of Cyprus recapitalise by converting some savers’ deposits into equity, in a process known as a bail-in.

The bank exited Eastern European markets and Russia and cut non-performing exposures (NPEs) by selling bad debt and restructuring.

Its NPEs, worth €15 bln in December 2014, now stand at €411 mln, taking its NPE ratio to total loans from 62.9% to 4%.

Nicolaou appointed its CEO in 2019, said the bank now had a clean balance sheet and was highly liquid.

“This is a new chapter for the bank.

“We had this high-NPE stigma on us, but now it’s an entirely different situation,” said Nicolaou.

“We have transformed the bank.” (source Reuters)