Bank of Cyprus has reported a noteworthy after-tax profit of €220 million for the first half of 2023, with a substantial €125 million of these profits realized during the second quarter of the year. A notable leap from the €43 million profit recorded in the first half of 2022, these results underscore the bank's robust financial performance.

According to the released data, the bank's total operating expenses have demonstrated prudent management, exhibiting a 2% year-on-year reduction. This reflects the strategic initiatives implemented in 2022 to enhance operational efficiency, ultimately resulting in a commendable cost-to-income ratio of 32%.

The bank's net interest income has experienced a remarkable increase, reaching €358 million, an impressive uptick of 146% compared to the previous year. This remarkable feat has been achieved through judicious management of rising interest rates and the continued maintenance of low deposit costs.

A standout metric, the Return on Equity (ROTE), surged to an impressive 24.0% for the first half of 2023, in stark contrast to the modest 4.9% recorded during the same period in 2022. This substantial rise reflects the marked increase in net interest income and underscores the bank's commitment to delivering robust financial outcomes.

Despite the challenges posed by an escalating interest rate environment, Bank of Cyprus has maintained consistency in its new lending, amounting to €1.1 billion, equivalent to the corresponding period in the previous year.

In terms of managing its loan portfolio, the bank's non-performing loan portfolio stood at €9.9 billion, maintaining a steady trajectory both quarter-on-quarter and year-on-year. This stability is attributed to the offsetting of new lending with consistent repayments.

The Non-Performing Loans (NPL) to loans ratio stood at 3.6% (0.8% after credit losses), showcasing a 7 percentage point decrease on an annual basis. This improvement is further highlighted by the heightened NPL coverage ratio of 78%, accompanied by a notable rise in the credit loss charge, scaling to 48 basis points.

The bank's deposit base saw a commendable 4% year-on-year increase, reaching €19.2 billion, indicative of strong liquidity. This is underscored by the significant €9.1 billion tactically positioned with the European Central Bank (ECB) to bolster the bank's financial stability.

Bank of Cyprus has showcased its adherence to regulatory requirements by achieving compliance with the Minimum Requirement for Equity and Eligible Liabilities (MREL) for the looming December 31, 2025 deadline. This milestone was facilitated through the successful issuance of a €350 million senior bond in July 2023.

The bank's commitment to organic capital formation remains resolute, with an impressive 220 basis points recorded for H1 2023, out of which around 120 basis points were achieved during Q2 2023.

Key financial strength indicators further reflect the bank's robust position, with the Common Equity Tier 1 (CET1) ratio resting at 16.0%, complemented by a Total Capital Adequacy Ratio of 21.1%.

Bank of Cyprus has strategically orchestrated a successful refinancing endeavor, culminating in the successful rejuvenation of AT1 Capital Securities, amounting to €220 million.

In a noteworthy move, a dividend was disbursed in June 2023, reflecting a 'pay-out ratio' of 14% of the 2022 earnings, marking the bank's first dividend payment in 12 years. This event is emblematic of the bank's transformation into a fortified, well-capitalized, and sustainably profitable financial institution.

Attributing the commendable profits to a tandem of escalating interest rates and enhanced operational efficiency, Panicos Nikolaou, CEO of the Bank of Cyprus Group, asserted, "This performance validates our steadfast progress towards the objectives we unveiled during our inaugural investor briefing in June 2023."

Nikolaou elaborated on the meticulously set objectives, including elevating the Return on Tangible Equity (ROTE) to over 17% by 2023 and exceeding 16% by 2025. These aspirations were meticulously calculated in alignment with a Common Equity Tier 1 (CET1) ratio of 15%. He highlighted the creation of organic capital between approximately 200-250 basis points annually for the years 2023-2025 before factoring in expected dividends. 

Additionally, Nikolaou emphasized the commitment to providing a stable return to shareholders, with the 'pay-out ratio' progressively increasing, targeting a range of 30%-50% of adjusted profitability.

Elaborating on the financial intricacies that drove this success, Nikolaou highlighted the total revenue of €511 million, with a substantial €358 million stemming from net interest income. 

The doubling of net interest income from the previous year underscores the bank's adept management in light of rising interest rates and the ongoing low deposit costs. Despite persistent inflationary pressures, Nikolaou commended the successful cost control measures, with total operating expenses down 2% year-on-year, leading to the commendable cost-to-income ratio of 32%.

With liquidity being a cornerstone of its strategy, Nikolaou emphasized the bank's advantageous position to harness the benefits of rising interest rates. Over a third of the bank's assets are strategically placed in cash and central bank deposits, culminating in a 4% year-on-year growth of the deposit base to €19.2 billion.

In its role as the largest financial institution in Cyprus, the bank has further demonstrated its commitment to the economy by disbursing new loans amounting to €1.1 billion during the first half of 2023, all while maintaining stringent lending criteria.

The CEO concluded by affirming, "The significant strides in our financial performance are aligned with our goals, providing a sturdy foundation for value creation and delivering a consistent return to our esteemed shareholders." This sentiment aptly encapsulates the Bank of Cyprus' unwavering pursuit of excellence and sustainable financial growth.