Cyprus’ largest banking and financial services group, Bank of Cyprus Group, announced a profit after tax of €349 million for the nine months ending on September 30th, 2023. This marks a significant turnaround from the €19 million loss reported in the same period last year. The third quarter of 2023 was particularly strong, contributing €129 million to the profit after tax, a 3% increase from the previous quarter.

The bank's impressive performance is largely attributed to its Net Interest Income (NII), which saw a 144% year-on-year increase, totaling €572 million. In the third quarter alone, NII rose by 9% compared to the previous quarter. Complementing this growth, Non-Net Interest Income (Non-NII) climbed to €224 million, a 5% year-on-year increase, accounting for 90% of total operating expenses.

Despite a 3% rise in total operating expenses year on year, the bank successfully reduced its cost-to-income ratio to 31%, down from 54% the previous year. The Earnings per Share for the first nine months of 2023 were at €0.78, including €0.29 in the third quarter.

The Return on Tangible Equity (ROTE) was an impressive 24.6% for the first nine months and 25.6% in the third quarter of 2023, demonstrating the bank's efficiency in generating shareholder value.

The Non-Performing Exposure (NPE) ratio stood at 3.5%, a decrease of 6 percentage points year on year. The NPE coverage ratio was at a robust 77%, offering a substantial safeguard against potential credit losses. The cost of risk was reported at 58 basis points.

The bank's deposit base remained stable, with a retail-funded deposit base of €19.3 billion, reflecting a 3% increase year on year and remaining consistent quarter on quarter. The balance sheet showed high liquidity, with €9.6 billion placed at the European Central Bank (ECB).

The regulatory Common Equity Tier 1 (CET1) ratio and Total Capital ratio were at 15.2% and 20.4%, respectively. With the inclusion of third-quarter profits net of dividend accrual, the CET1 ratio increased to 15.8%, and the Total Capital ratio to 21.0%. The bank reported organic capital generation of approximately 345 basis points for the first nine months, including around 125 basis points in the third quarter.

Panicos Nicolaou, the Group Chief Executive of Bank of Cyprus, expressed satisfaction and confidence with the bank's continued robust profitability. He highlighted the achievement of a Return on Tangible Equity (ROTE) exceeding 20% for the third consecutive quarter, underlining the Group's sustained profitability and shareholder value creation.

Nicolaou noted that the bank recorded a profit after tax of €349 million during the first nine months of 2023, leading to an impressive ROTE of 24.6%. This strong performance, he attributed to significant revenue growth, with total income reaching €796 million. Net interest income, a major contributor, accounted for €572 million, more than double the previous year's figure, benefiting from a higher interest rate environment and effective deposit pass-through management.

He also emphasized the importance of non-interest income as a significant and sustainable contributor to the Group's profitability, covering approximately 90% of total operating expenses. The cost-to-income ratio further improved to 31%, driven by higher income, while cost management efforts mitigated inflationary pressures.

As Cyprus' largest financial group, Bank of Cyprus continued to support the economy by extending approximately €1.6 billion in new loans during the first nine months of 2023.

Nicolaou highlighted the bank's strong balance sheet, characterized by ample liquidity, strong asset quality, and a robust capital position. He also noted Moody's upgrade of the bank's long-term deposit rating to investment grade in October 2023, signaling a new chapter in the bank's journey towards becoming a strong, diversified, well-capitalized, and sustainably profitable organization.

Expressing confidence in the Group's 2023 performance, Nicolaou anticipated comfortably exceeding the ROTE target of over 17%, despite typical seasonality in the fourth quarter. He praised the bank's diversified business model, generating income from various sources and maintaining good liquidity with limited bond investments. He also noted the bank's leadership in digital transformation.

Regarding new loans in Cyprus, Nicolaou observed that they have not decreased significantly, as people gradually accept that very low interest rates are unlikely to return soon. He also mentioned an increase in early loan repayments.

On the topic of foreclosures, Nicolaou expressed satisfaction with the laws under consideration, communicating with the Ministry of Finance on this matter. He believes the proposed framework could solve a long-standing issue in Cyprus, but expressed concerns about the time needed for dispute resolutions, preferring the quicker Financial Ombudsman process over the more uncertain court durations.

Finally, Nicolaou commented on the potential for collaborations and acquisitions among banks, stating that if it adds value to shareholders, they will certainly consider it.