Bank of Cyprus Public Co. Ltd. has become the first major financial institution in Cyprus to issue a forecast for its expected profits for the year, as well as outline a three-year strategic development plan.
Group CEO Andreas Eliades announced during the presentation of the Group 2005 results, that based on the Group financial results to date, the indications for their further development, as well as the current conditions in the markets in which the Group operates, it is expected that the Group profit after tax will reach CYP 120 mln for 2006 compared to CYP 72 mln for 2005, marking an increase of 65%.
Bearing in mind that the profit after tax for 2004 was CYP 39 mln, this
means that profit will have tripled in only two years, said Eliades.
The significant increase is due to the improvement in profitability at the operating level, as well as the expected reduction of the provision charge for bad debts as a percentage of total loans. Specifically, this ratio is expected to fall from 1,2% for 2005 to under 1% for 2006, targeting a further reduction to 0,8% for 2008.
The Group’s 2006-2008 targets have already been announced. Based on the new indications, the Group’s targets are upgraded as follows:
the cost to income target of 51% by 2008 remains (cost to income ratio for 2005 was 56,7%), and an upgraded target has been set for increasing return on equity by two percentage points each year for the next three years to 18%.
Strategic plan
The Group’s three-year strategic plan 2006-2008 adopts the intensification of a series of actions, primarily aiming at profitability improvement, such as: productivity increase, resulting from changes in the organisational structure of the customer service network and the introduction of more developed and flexible systems and procedures, improvement in customer service, introduction of new products and entry into new markets, loan portfolio quality improvement, and continuation of the Group’s dynamic expansion of profitable operations overseas.
The above actions focus on five basic pillars: strengthening of the Group’s presence in Cyprus with improvement in both market share and
profitability, further expansion in Greece through branch network expansion, increase in size and profitability improvement, consolidation of the Group’s presence in the United Kingdom and further expansion in Australia, further exploitation of synergies between the Group’s Cyprus and Greek operations, where available, so that costs are further reduced and the foundations for cost-efficient expansion in new markets are further strengthened, and entry into new markets, such as Russia and the Balkans.
