Kathimerini.com.cy
Bank of Cyprus' profit for 2022 was 71 million euros, up from 30 million euros in 2021.
More specifically, the profit for Q2 2022 was EUR 80 million, compared to a loss of EUR 59 million in Q3 2022. And thanks to rising interest rates, profit after tax and before non-recurring items increased by 107% year over year to EUR 188 million. The corresponding profit in 2021 was EUR 91 million.
The Common Equity Tier 1 (CET1) ratio with transitional provisions was 15.4% on 31 December 2022, compared to 14.2% on 30 September 2022 and 14.7% adjusted for Helix 3 and 15.1% on 31 December 2021 (and 15.8% adjusted for portfolios held for sale). During the second quarter of 2022, the Common Equity Tier 1 (CET1) ratio was positively impacted by income before provisions and the reduction in weighted assets (primarily as a result of the completion of Project Helix 3), and negatively impacted by provisions and impairments, as well as the AT1 coupon payment. All capital ratios at December 31, 2022, in this release include unaudited/provisional earnings for the year 2022. The Group has opted to apply the EU transitional arrangements for the purposes of regulatory capital requirements (EU Regulation 2017/2395), where the impact of impairment from the initial application of IFRS 9 on capital ratios will be gradually absorbed and fully (100%) incorporated on 1 January 2023.
In comparison to 19.1% on 30 September 2022 (and 19.8% adjusted for Helix 3) and 20.0% on 31 December 2021 (and 20.8% adjusted for portfolios held for sale), the Total Capital Ratio was 20.6% on 31 December 2022.
Deposits
The Group's total customer deposits were at the same level as the second quarter and up 8% year over year at €18,998 million at December 31, 2022 (as opposed to €18,792 million on September 30, 2022, and €17,531 million on December 31, 2021).
The Bank's market share for deposits in Cyprus was 37.2% as of December 31, 2022, up from 37.1% on September 30, 2022, and 34.8% on December 31, 2021. At the end of 2022, customer deposits represented 75% of total assets and 81% of total liabilities (up 4 bps from 31 December 2021).
New lending granted in Cyprus reached €444 mn for 4Q2022 (compared to €489 mn for 3Q2022, €537 mn for 2Q2022 and €622 mn for 1Q2022) and totaled a record of €2,092 mn for FY2022 (compared to €1,792 mn for FY2021) up by 17% YoY, whilst maintaining strict lending criteria. The YoY increase is driven by the increase in lending activity across all sectors, with corporate being the main driver. New lending in 4Q2022 comprised €234 mn of corporate loans, €165 mn of retail loans (of which €122 mn were housing loans), €44 mn of SME loans and €1 mn of shipping and international loans.
On 31 December 2022, the Group net loans and advances to customers totaled €9,953 mn (compared to €10,088 mn on 30 September 2022 and €9,836 mn on 31 December 2021, excluding those classified as held for sale), increased by 1% since the beginning of the year.
ROTE at 11.3%
In comparison to the previous year, the Return on Tangible Equity (ROTE) before non-recurring items (attributable to owners of the Company) for the year 2022 is 11.3% as opposed to 5.5%. This calculation is based on "Profit after tax and before non-recurring items (attributable to owners of the Company)".
NIM at 4% decreased by €607 million, or 60%, in the second quarter of 2022 compared to the third quarter by €150 million (from €1,018 million on 30 September 2022 and €1,343 million on 31 December 2021). The completion of Project Helix 3 in the amount of €550 million and net organic NPL reductions in the amount of €57 million were the main causes of the decline in Q2 2022. (NPL inflows under EAT minus NPL outflows under EAT). As a result, NPLs account for 4.0% of all loans at the end of 2022, down from 9.3% at the end of 2022 and 12.4% at the end of 2021.
NIM at 4%
NPLs based on the European Banking Authority (EBA) decreased by €607 million, or 60%, in the second quarter of 2022 compared to a decline of €150 million in the third quarter, to reach €411 million at the end of the year (vs. €1,018 million at the end of September 2022 and €1,343 million at the end of December 2021). The completion of Project Helix 3 in the amount of €550 million and net organic NPL reductions in the amount of €57 million were the main causes of the decline in Q2 2022. (NPL inflows under EAT minus NPL outflows under EAT). As a result, NPLs account for 4.0% of all loans at the end of 2022, down from 9.3% at the end of 2022 and 12.4% at the end of 2021.
Cost of employees at 190 million
The total cost of operations in 2022 was €381 million, down 1% from €383 million in 2021. Of this amount, 50% goes toward staff costs (€190 million), 40% goes toward other operating costs (€153 million), and 10% goes toward special deposit tax and other fees/contributions (€38 million). The total costs for Q2 2022 were €100 million, up 9% from Q3 2022's total costs of €91 million. A 25% quarterly increase in other operating expenses was the main contributor to the increase.
Personnel costs amounted to €190 million for the year 2022, compared to €202 million for the year 2021, down 6% year-over-year, as a result of Voluntary Staff Separation Plans which took place in 2022. Personnel costs amounted to €44 million for the second quarter of 2022, down 6% on a quarterly basis mainly due to savings from the completion of the FSA in July 2022 partially offset by the revised step and compensation system and the long-term incentive plan. The FTA resulted in a 16% reduction in the Group's permanent staff, with a total cost of €104 million of which €101 million was recognized in the consolidated income statement in Q3 2022. Upon completion of the FAC, the annual savings are estimated at approximately €37 million or 19% of staff costs with an amortization period of 2.7 years. The expected savings from the FTA are expected to be partially offset by the renewal of the collective agreement in 2023.
Cost to revenue ratio 49%
For the year 2022, the cost-to-revenue ratio was 49%, down from 60% for the year 2021 after accounting for the special deposit tax and other fees and contributions. For Q2 2022, the cost-to-revenue ratio was 38%, while it was 47% for Q3 2022 after adjusting for the special tax on deposits and other fees/contributions. Higher overall revenues are the cause of the quarterly decline in 9 e.m. The Division will continue to be concerned with efficiency and cost containment in an inflationary environment, and it expects the cost-to-revenue ratio adjusted for the special deposit tax and other fees/fees for 2023 to drop to about 45% (mid-40s). The Group wants to keep its overall operating costs between €350 and €360 million. Due to ongoing investments in the Group's digital transformation and operating model as well as the renewal of the collective agreement in 2023, operating expenses are anticipated to increase in 2023. It is anticipated that the cost-to-income ratio for 2024 will be roughly the same as it was for 2023 after accounting for the special deposit tax and other fees and contributions.
Completed sales
Project Helix 3 refers to the agreement the Group made in November 2021 with investment funds associated with PIMCO for the sale of real estate with a book value of approximately €88 million on September 30, 2022, as well as a loan portfolio with a gross book value of €555 million (of which €551 million relates to NPLs). In November 2022, Project Helix 3 was completed.
[This article was translated from its Greek original]
