Bank of Cyprus has strong profitability, a strong capital position, high liquidity and a healthy loan portfolio, Bank of Cyprus CEO Panicos Nicolaou said on Thursday, announcing a profit after tax of €133 million for the first quarter of 2024, up 40% compared to the corresponding quarter of 2023, when the bank's profit was €95 million, and down 4% on a quarterly basis.

Speaking at a press conference at the Bank of Cyprus headquarters in Nicosia, Nicolaou said that the return on tangible equity (ROTE) reached 23.6% and it represents the fifth consecutive quarter with a ROTE over 20%. This shows that the Banks is "tracking ahead of our 2024 targets", Nicolaou noted.

He also noted that the retail funded deposit base is at €19.3 bn, flat quarter on quarter (qoq), but up 2% year on year (yoy).

Nicolaou mentioned that the Bank has a highly liquid balance sheet with €7.2 bn placed at the ECB.

"It was a very good first quarter, the bank's strong profitability continues", he added, highlighting, however, that "we remain serious, disciplined and focused on both cost management and portfolio quality management", noting at the same time that "we continue with the transformation of the bank and the continuous provision of new products and services to our customers".

He also said that they proposed a total distribution of €137 mn in respect of 2023 earnings comprising a cash dividend of €112 mn and an inaugural share buyback of up to €25 mn, corresponding to an overall payout ratio of 30%, a material increase compared to the previous year.

"The important thing is that when interest rates come down to 2% or 2.5% we will still have a good return on capital because of the model we have built in previous years", he said.

BoC's CEO mentioned a seasonally strong quarter of new lending of €676 mn, up 46% qoq and 8% yoy and a gross performing loan book at €10 bn, up 2% qoq.

"Our balance sheet is characterised by a robust capital position, high liquidity and healthy asset quality. Our regulatory CET1 ratio stood at 17.1% as at 31 March 2024 or 17.6% including profits in the quarter net of distribution accrual", he said, adding that the organic capital generation was again strong at c.130 bps.

He also said that NPE ratio was at 3.4% (0.8% on net basis), down 20 bps qoq, while the NPE Coverage was at 77%, up 4 p.p. on prior year.

"Our performance was supported by continued strong net interest income, declining only modestly from the previous quarter, reflecting high rates and ample liquidity as well as our continuous focus on cost discipline and robust asset quality", he underlined.

He added that the Bank's performance was also supported by a Cypriot economy that continues to display strength and resilience against the backdrop of geopolitical uncertainty, referring to a GDP increase of 3.3% for Q1, 2024 in Cyprus and is forecast to grow by c.2.9%, expected to outpace the Eurozone average.

Nicolaou also said that in April 2024 the Group successfully issued €300 mn MREL-eligible green senior preferred notes, thereby finalising its MREL requirements and including a comfortable buffer. This issuance was the first ever green bond issuance for Bank of Cyprus, representing an important step to lead the transition of Cyprus to a sustainable future, he noted.

Referring to criticism that the banks are not lending, Nicolaou noted that the economy of Cyprus ran at 3.3% in the first quarter, recording the best performance in Europe, saying that without financial stability, without healthy banks that can finance the economy, there is no other way for the economy in Cyprus to be financed.

In addition, Deputy CEO and Director of Business Activities Charis Pouangare said that there is a high demand for loans with the average loan amount ranging around 150,000 euros.

Asked to comment on the significant profits recorded by banks, Nicolaou, after asking "why should a private company, such as a bank, be prohibited from making profits and whether only banks make profits", he said, among other things, that the bank enables its customers to make their transactions electronically, most of them free of charge, and "we are the only bank that enables customers to have an account without any charge", while with the special plans and mortgage products, the bank offers the option of fixed interest rates for 3, 5, 10 and 25 years.

He also mentioned that there is no charge for pensioners over 65 years old and that BoC is "the only bank among the big ones" that has no charge for ATMs, while he referred, among other things, to the more than 70 million euros that the bank gave for the oncology department, for the maintenance of the Bank of Cyprus cultural centre and the establishment of SupportCy.

Customer reward Scheme

Regarding the bank's customer rewards scheme, which will be announced next week, Pouangare said that "customers will be placed in three categories (Silver, Gold and Diamond) depending on their cooperation and will have real benefits based on their categorization".

The aim of the Plan is to highlight that "anyone who cooperates with Bank of Cyprus and has a significant partnership with us will be rewarded", he added.

On the possibility of the bank making an acquisition with the aim of expanding, Nicolaou said that "if and when anything comes up that can accelerate or add to our organic growth we will study it", adding that "there is nothing at the moment".