Bank of Cyprus Group profit after tax for 2008 increased by 4% to EUR506 mln compared to EUR485 mln in 2007, beating analyst expectations ranging from EUR 460 to 506 mln, but short of its target of EUR 540 mln. The results, which correspond to a very satisfactory return on equity (25%) include gains of about EUR90 mln which primarily represent profit from transactions for hedging foreign exchange risk.
The Group’s total loans for 2008 reached EUR 25.1 bln, recording an increase of 29% compared to 2007. The Group’s total loans in Cyprus and Greece recorded annual increases of 25% and 22% respectively.
The Group’s total deposits reached EUR 27.9 bln compared to EUR 25.2 bln in 2007, recording an increase of 11%. The Group’s total deposits in Cyprus and Greece recorded annual increases of 1% and 19% respectively.
The strong liquidity of the Group, with a loans to deposits ratio of 90%, and its minimal reliance on wholesale funding (13%) provide a strong competitive advantage for the Group, particularly under the current adverse conditions prevailing in global money markets.
Despite the dynamic expansion of the Group’s operations the quality of the loan portfolio continued to improve, with the non performing loans ratio decreasing to 3.7% compared to 3.8% at 31 December 2007.
The provision charge was contained at 0.4% (2007: 0.3%) of total loans, reflecting both the good quality of the loan portfolio of the Group and the very satisfactory level of accumulated provisions which include an accumulated collective provision amounting to 1% of total loans.
The Group’s capital adequacy ratio as per Basel II requirements is estimated at 11.3% and the tier 1 ratio at 7.3%.
Uniastrum Bank
On 31 October 2008 Bank of Cyprus completed the acquisition of an 80% interest in Uniastrum Bank in Russia. Uniastrum Bank is accounted for as a subsidiary from the date of acquisition.
Uniastrum’s net profit for the year 2008 reached EUR 16 mln (RUB602 mln) and its contribution to the total profits of the Group for 2008 amounted to EUR 5 mln, as only the last two months of its 2008 profits were consolidated. At the end of the year Uniastrum’s loans reached EUR 875 mln (RUB 36,1 bln), recording an annual increase of 2%. At the end of 2008, Uniastrum’s capital adequacy ratio stood at 17% in accordance with the rules of the Central Bank of Russia, which can support the immediate expansion of the loan portfolio.
Particularly encouraging is the development of Uniastrum’s liquidity, with its deposits reaching EUR 890 mln (RUB 36.8bln), at 31 December 2008, recording a decrease of 4% from 31 December 2007. Compared to 31 October 2008, deposits recorded an increase of 9%, highlighting the increasing confidence of Uniastrum’s customers since its acquisition by Bank of Cyprus. Uniastrum’s loan to deposits ratio stands at 98%.
2009 forecast
Bank of Cyprus forecast that 2009 net profit will range between EUR 300 mln to EUR 400 mln, with the Group having made an adjustment for higher provisions. The Group expects a positive contribution from all the new markets where it operates with the profit of Uniastrum Bank for the year 2009 expected to reach about EUR25 mln.
Source: Financial Mirror
Dominic Farrell
