Bank of Cyprus announced today financial results for the year 2018. The bank recorded a net loss of 104 million euros compared to 552 million losses in 2017.
In a statement CEO John Hourican said that on 1 March 2019 the Cyprus Parliament adopted legislative amendments allowing for the conversion of deferred tax assets (DTA) into deferred tax credits (DTC).
The adjustments relate to deferred tax assets totalling €302 million and recognised on tax losses totalling €2.42 bn and can be set off against future profits of the Bank until 2028 at a tax rate of 12.5%. There are tax losses of c.€7 bn for which no deferred tax asset has been recognised the Bank said.
These amendments are expected to result in a ''more efficient capital treatment'' of the DTC.
Hourican said that in 2018 the group generated a total income of €781 million and a positive operating result of €381 million. The underlying result for the year is a profit of €140 mn. The impact of Project Helix amounted to a loss of €150 million in 2018, expected to decline to €105 million by completion as the time value of money unwinds. The rapid de-risking of the Bank has also resulted in a partial impairment of the deferred tax asset of €80 million recorded in the fourth quarter, resulting in a net loss of €67 million, which is expected to be reversed in the first quarter 2019, post legislative amendments
In August 2018 the Bank reached an agreement for the sale of loans with a gross book value of €2.8 billion of which €2.7 billion related to non-performing exposures secured by real estate collateral (Project Helix). The Portfolio will be transferred to a licensed Cypriot Credit Acquiring Company.
Since the peak in 2014, and including the sale of the Helix portfolio, Bank of Cyprus has now reduced NPEs by 68% to €4.8 bn pro forma for Helix, covered by 47% provisioning, which is above the EU average Hourican said.
Bank of Cyprus said it recorded fifteen consecutive quarters of organic NPE reduction. Total expenses for 2018 were €400 million (compared to €382 million for 2017), 54% of which related to staff costs (€217 million).
Hourican reiterated that there is still much to do, and that the Bank ''remains as focused as ever on continuing to seek solutions, both organic and inorganic, to make the Bank a stronger, safer, Cyprus-focused institution, capable of supporting the local economy.”
Following the announcment of financial results in London the BOC stock price rose as much as 8%.