The Bank of Cyprus (BoC) on Tuesday reported a profit after tax of €401 million for the first nine months of 2024, representing a 15 per cent increase year-on-year.
According to the bank’s latest financial results, €131 million of this amount was generated during the third quarter.
“We continue to generate strong financial and operational results and are well positioned to deliver sustainable earnings as economies transition to a declining interest rate environment,” said group CEO Panicos Nicolaou.
The bank also delivered a robust return on tangible equity (ROTE) of 22.9 per cent, and net interest income (NII) rose to €624 million, up 9 per cent from the previous year.
Additionally, NII in the third quarter stood strong at €204 million, remaining steady compared to the second quarter despite a 25 basis point interest rate reduction.
“Our resilient net interest income, diversified business model, ample liquidity and strong asset quality have been pivotal in achieving strong profitability,” Nicolaou stated.
“We delivered the seventh consecutive quarter of ROTE of over 20 per cent on a rapidly growing equity base,” he added.
He further noted that the after-tax profit of €401 million for the first nine months of 2024 is equivalent to €0.90 earnings per share.
He stressed that the “22.9 per cent ROTE is tracking well ahead against our 2024 targets, translating into strong growth of tangible book value per share”.
The bank also highlighted the fact that the Cypriot economy is set to grow by approximately 3.7 per cent in 2024, outpacing the Euro area average.
Nicolaou said that “the Cypriot economy continues to display strength and resilience against geopolitical developments”.
New lending activity surged to €1.7 billion, marking a 9 per cent rise year-on-year.
The bank’s gross performing loan book grew to €10 billion, reflecting a 3 per cent increase since December 2023.
Nicolaou stated that the bank “continues to support the domestic economy by extending €1.7 billion of new loans in the first nine months of the year, an increase of 9 per cent compared to the same period last year”.
Operating expenses rose 7 per cent year-on-year to €266 million, influenced by inflationary pressures, while the cost-to-income ratio remained low at 32 per cent, with a slightly elevated 35 per cent in Q3 due to a small-scale voluntary staff exit plan.
In terms of the bank’s liquidity, its retail-funded deposit base grew to €20 billion, up 4 per cent year-on-year and 1 per cent quarter-on-quarter.
Moreover, the Bank of Cyprus reported a highly liquid balance sheet with €7.5 billion placed at the European Central Bank (ECB).
Capital ratios for the Bank of Cyprus also demonstrated strength. The Common Equity Tier 1 (CET1) ratio stood at 18.6 per cent, rising to 19.1 per cent after factoring in third-quarter profits net of distribution accruals.
“We are delighted that the current regulatory approval requirement for dividend payments is expected to be lifted in January 2025, based on our draft SREP4 letter,” the group CEO stated.
“Our asset quality remains healthy demonstrated by an NPE ratio of 2.4 per cent whilst coverage exceeded 95 per cent,” he added.
Furthermore, the total capital ratio increased from 23.7 per cent to 24.3 per cent under similar adjustments.
The Bank of Cyprus stated that it aims for a 50 per cent payout ratio for 2024, aligning with the upper end of its distribution policy.
Meanwhile, in a move aimed at enhancing stock liquidity and visibility, the bank delisted from the London Stock Exchange in September 2024 and was listed on the Athens Stock Exchange (ATHEX).
The tangible book value per share rose by 20 per cent year-on-year to €5.57 as of September 30, 2024.
“In the third quarter we successfully executed our plan to list on the Athens Stock Exchange (ATHEX) in conjunction with a delisting from the London Stock Exchange (LSE),” Nicolaou said.
“We expect the ATHEX listing to improve the liquidity of the bank’s shares as well as the bank’s market visibility,” he added.
“Looking ahead”, Nicolaou continued, “we will continue to execute on those levers under our control“.
The chief executive reiterated the bank’s target of “achieving a high-teens ROTE on a 15 per cent CET1 ratio for 2025, despite lower market rate expectations since we guided in August 2024”.
“We will update our detailed financial targets, and we will review our distribution policy alongside our full-year 2024 financial results in the context of prevailing market conditions,” he added.
“Given our strong capital generation, our diversified business model and supportive macroeconomic environment, we maintain our commitment to support our customers and the broader economy, re-invest in the business and deliver attractive shareholder returns,” Nicolaou concluded.
