The Bank of Cyprus has announced profit after tax of €95 mn for the first quarter of 2023 vs €17 mn for the corresponding period last year.

The Bank announced Tuesday at a press conference that net income from interest reached €162m showing an increase of 127% compared to last year, while return on tangible equity (ROTE) stood at 21.3% for Q12023 compared to 4.0% for Q1 2022, "with rates higher than expected and anticipated increases in deposit costs not yet developing."

The NPE ratio was at 3.8% (1.1% net) down by 7.6 p.p on an annual basis, while the NPE coverage was at 73%. 

As regards robust capital and liquidity, CET1 ratio was 15.2%, and Total Capital ratio at 20.3%.

According to the Bank of Cyprus, new lending was seasonally strong and reached €624 mn, up 41% on a quarter basis and broadly flat on an annual basis, while gross performing loan book of €9.9 bn, was up 1% on a quarter basis and yearly basis.

According to a statement by the Group Chief Executive Panicos Nicolaou,“this year we have achieved a significant milestone with the delivery of our longstanding intention to resume dividend payments after 12 years. This represents an important step in the Group’s journey of delivering sustainable profitability and shareholder returns".

He added that "we have proposed a dividend of €0.05 per ordinary share, in respect of 2022 earnings, equivalent to a 14% payout ratio on adjusted recurring profitability or 31% based on profit after tax as reported in 2022 annual report".

Going forward, he said dividends are expected to build prudently and progressively towards a payout ratio in the range of 30-50% adding that the dividend decision was supported by the strong start to the year with the performance in the quarter ahead of our FY2023 targets.

"Overall, we generated profit after tax of €95 mn, corresponding to a ROTE of 21.3%. Total income amounted to €234 mn, of which €162 mn relates to net interest income, more than double last year’s level".

He said that the growth in net interest income was underpinned by interest rate rises as well as a continued modest deposit pass-through level, while  non interest income of €72 mn (increased by 8% on prior year) remained a significant contributor to their profitability and diversified business model.

Despite elevated inflation, he continued, "our cost base was 3% lower on the prior period, reflecting the benefits from recent efficiency actions. As a result, the cost to income ratio (excluding levies and contributions) stood at 34%, compared to 60% in the prior year".

Against the backdrop in the global and European economic environment, the Cypriot economy continues to demonstrate its strength with GDP forecast to grow by c.2.8% in 2023, which is expected to outperform the Eurozone average, he stressed. 

Nicolaou said that as the largest financial group in Cyprus, "we continued to support the economy by extending a seasonally strong €0.6 bn of new loans in 1Q2023, an increase of 41% on the prior quarter, whilst maintaining strict lending criteria".

"Our performing loan book grew by 1% both qoq and yoy to €9.9 bn. Our capital position remains robust and comfortably in excess of our regulatory requirements. We ended the quarter with a CET1 ratio of 15.2% and a Total Capital ratio of 20.3%, generating c.90 bps of organic capital".

In addition, he said that "our liquidity position remains robust, stemming from our highly liquid balance sheet and growing retail-funded deposit base".

As at 31 March 2023, he continued, "our cash balances amounted to €9.2 bn whilst our deposits remained flat qoq, but increased by 7% on the prior year to €19.0 bn. 2023 is providing evidence of the Group’s transformation into a strong, diversified, well-capitalised and sustainably profitable banking and financial services group."

Furthermore, he said that we have closed the chapter on the restructuring effort of recent years and have started a new chapter in which we aim to provide sustainable returns to shareholders, while continuing to serve our customers, support the Cypriot economy and contribute to the community.

"Our positive set of financial results this quarter provides the foundations to help us deliver against our targets. We look forward to presenting and discussing an update of the Group’s outlook at our Investor Update, on 8 June 2023” he concluded.