BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY Bank of Cyprus Group
Preliminary Group Financial Results
For the year ended 31 December 2023
DISCLAIMER
The financial information included in this presentation is neither reviewed nor audited by the Group's external auditors.
This financial information is presented in Euro (€) and all amounts are rounded as indicated. A comma is used to separate thousands and a dot is used to separate decimals.
On 1 January 2023, the Group adopted IFRS 17 'Insurance contracts which replaced IFRS 4 'Insurance contracts'. Comparative data have been restated accordingly, unless otherwise stated (for further information refer to section "Commentary on Underlying Basis" of the press release).
For Glossary & Definitions refer to slides 74-80
Important Notice Regarding Additional Information Contained in the Investor Presentation
The presentation for the Group Financial Results for the year ended 31 December 2023 (the "Investor
Presentation"), available on https://bankofcyprus.com/en-gb/group/investor-relations/reports-presentations/financial-results/, includes additional financial information not presented within the Group Financial Results Press Release (the "Press Release"), primarily relating to (i) NPE analysis (movements by segments and customer type), (ii) rescheduled loans analysis, (iii) details of historic restructuring activity including REMU activity, (iv) income statement by business line, (v) NIM and interest income analysis, (vi) net interest income sensitivities, (vii) loan portfolio analysis in accordance with the three-stages model for impairment of IFRS 9, (viii) fixed income portfolio per issuer type and (ix) income statement of insurance and payment solutions business. Except in relation to any non-IFRS measure, the financial information contained in the Investor Presentation has been prepared in accordance with the Group's significant accounting policies as described in the Group's Annual Financial Report 2022 and updated in the Interim Financial Report 2023. The Investor Presentation should be read in conjunction with the information contained in the Press Release and neither the financial information in the Press Release nor in the Investor Presentation constitutes statutory financial statements prepared in accordance with International Financial Reporting Standards.
Forward Looking Statements
This document contains certain forward-looking statements which can usually be identified by terms used such as "expect", "should be", "will be" and similar expressions or variations thereof or their negative variations, but their absence does not mean that a statement is not forward-looking.
Examples of forward-looking statements include, but are not limited to, statements relating to the Group's near term, medium term and longer term future capital requirements and ratios, intentions, beliefs or current expectations and projections about the Group's future results of operations, financial condition, expected impairment charges, the level of the Group's assets, liquidity, performance, prospects, anticipated growth, provisions, impairments, business strategies and opportunities. By their nature, forward-looking statements involve risk and uncertainty because they relate to events, and depend upon circumstances, that will or may occur in the future. Factors that could cause actual business, strategy and/or results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements made by the Group include, but are not limited to: general economic and political conditions in Cyprus and other European Union (EU) Member States, interest rate and foreign exchange fluctuations, legislative, fiscal and regulatory developments, information technology, litigation and other operational risks, adverse market conditions, the impact of outbreaks, epidemics or pandemics and geopolitical developments. This creates significantly greater uncertainty about forward-looking statements. Should any one or more of these or other factors materialise, or should any underlying assumptions prove to be incorrect, the actual results or events could differ materially from those currently being anticipated as reflected in such forward-looking statements. The forward-looking statements made in this document are only applicable as at the date of publication of this document. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained in this document to reflect any change in the Group's expectations or any change in events, conditions or circumstances on which any statement is based. Changes in our reporting frameworks and accounting standards, including the recently announced reporting changes and the implementation of IFRS 17 'Insurance Contracts', which may have a material impact on the way we prepare our financial statements and (with respect to IFRS 17) may negatively affect the profitability of Group's insurance business.
2
Table of Contents
Executive Summary - Updated Financial Targets
- Executive Summary and Updated Financial Targets
- FY2023 Financial Performance
- Capital, Liquidity & Asset Quality
- ESG update
- Appendix
Appendix
3
Why Bank of Cyprus
Strong Macro
- Open economy growing faster than the Eurozone average
- Strong recovery in tourism, proving Cyprus' resilience
- Fiscal discipline, sovereign rated investment grade
- Attractive business hub with low tax regime
Diversified & Sustainable Profitability
- Holistic offering with integrated bank-insurance-payment model; digitally engaged
- Benefitted from higher rates; positioning for a normalised rate environment
- Strong capital-lightnon-interest income
- Efficiency focus with low cost to income ratio
- Delivering shareholder returns
Market Leader
- Market leader in a consolidated market
- 42% loan market share; 38% deposit market share
- #1 Life and #2 Non-Life Insurance provider in Cyprus
- #1 in domestic card processing and payment solutions
Prudent & Resilient
- Strong capital base with CET1 >16%
- Strong deposit franchise; one of the most liquid banks in EU with LCR >300%
- Asset quality in line with EU peers; NPE ratio at 3.6%
- Experienced management team delivering targets ahead of schedule
Sustainable mid-teens ROTE over the medium-term, on normalised rates of c.2.0-2.5%
Data as at 31 December 2023; with exception of insurance business which are dated 31 December 2022 | 4 |
Resilient Economy Outperforming Eurozone Average
GDP growth of 2.3% for 4Q2023
Real GDP (yoy % change)
2021: 9.9% | 2022: 5.1% | 2023: 2.5% | |||||||||||||||
16.9% | |||||||||||||||||
15.00% | |||||||||||||||||
10.00% | 3.4% | 14.8% | 2.2% 2.3% | ||||||||||||||
5.00% | |||||||||||||||||
0.00% | -10.4% | 0.1% | |||||||||||||||
-2.9% | 0.0% | ||||||||||||||||
-5.00% | |||||||||||||||||
-10.00% | Cyprus | Euro area | |||||||||||||||
-15.00% | |||||||||||||||||
-14.1% | |||||||||||||||||
-20.00% | |||||||||||||||||
1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 | 2Q23 | 3Q23 | 4Q23 | ||
Estimated GDP growth of c.2.9%1 for 2024, (vs c.1.2%2 for Eurozone average)
Unemployment rate decreased to 6.0% in 3Q2023
Quarterly (%) (seasonally adjusted)
2021: 7.5% | 2022: 6.8% | |||||||||||||
9.00% | 7.6% | 8.3% | ||||||||||||
8.00%7.4% | 6.6% | |||||||||||||
7.1% | ||||||||||||||
7.00% | 8.0% | 6.5% | ||||||||||||
6.8% 7.1% | ||||||||||||||
6.00% | 6.6% | 6.1% 6.0% | ||||||||||||
5.00% | ||||||||||||||
Cyprus | Euro area | |||||||||||||
4.00% | ||||||||||||||
1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 | 4Q21 | 1Q22 | 2Q22 | 3Q22 | 4Q22 | 1Q23 | 2Q23 | 3Q23 |
Unemployment rate expected to decrease to c.5.8%1 in 2024 (vs c.6.6%2 for Eurozone average)
Tourist revenue up 11% vs 2019 levels
Tourism arrivals (k) | Revenue (€ mn) | ||||||
January-December | January - November | ||||||
3,977 | 3,846 | +11% | 2,916 | ||||
2,628 | 2,382 | ||||||
3,201 | |||||||
2019 | 2022 | 2023 | 2019 | 2022 | 2023 |
Cyprus inflation and ECB Depo rate |
Cyprus HICP index (yoy% change)
ECB Depo rate
2022 HICP: 8.1% | 2023 HICP: 3.9% | |||
13% | 10.6% | |||
11% | ||||
9% | ||||
7% | 6.1% | |||
5.0% | 3.5% | 4.0% | ||
5% | ||||
3% | 0.0% | |||
1% | -0.5% | 3.0% 2.4% | 2.0% | |
-1%
Jan 22 Apr 22 Jul 22 Oct 22 Jan 23 Apr 23 Jul 23 Oct 23 Jan 24
Estimated HICP of c.2.5%1 for 2024
Source: Cystat, Eurostat | ||
1) | Projections for Cyprus in accordance with Ministry of Finance in October 2023 | 5 |
2) | European Commission 2023 Autumn Forecast | |
Strong Performance in FY2023 Supported by Interest Rate Tailwinds…
Strong revenues supported by higher rates while maintaining a well-diversified business model
(€ mn) | Breakdown of FY2023 Non-NII | |||||||||||||
1,092 | ||||||||||||||
300 | 21% | |||||||||||||
567 | 581 | 662 | 11% | €300 mn 50% | ||||||||||
237 | 285 | 292 | 792 | NII >2x | ||||||||||
18% | ||||||||||||||
prior levels | ||||||||||||||
330 | 296 | 370 | ||||||||||||
FY2020 | FY2021 | FY2022 | FY2023 | |||||||||||
Non-NII | NII | F&C1 | Payments (JCC) | |||||||||||
Insurance | Other | |||||||||||||
Non-NII expected to continue covering 70-80% of total operating expenses2
Average 80% | 82% | 90% | 88% |
70%-80% |
at 82% | 70% |
Non-NII/
Total OPEX2
FY2019 | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 |
Cost to income ratio2 improved to 31% | Robust asset quality with NPE ratio <4% | Cost of risk within 50-80 bps target | |||||||||||||||||
60% | 60% | ||||||||||||||||||
49% | 25.2% | (bps) | |||||||||||||||||
118 | |||||||||||||||||||
31% | 12.4% | ||||||||||||||||||
57 | 62 | ||||||||||||||||||
44 | |||||||||||||||||||
4.0% | 3.6% | ||||||||||||||||||
FY2020 | FY2021 | FY2022 | FY2023 | Dec 20 | Dec 21 | Dec 22 | Dec 23 | FY2020 | FY2021 | FY2022 | FY2023 |
1) | Net fee and commission income from banking activities (i.e. excluding net fee and commission income from JCC) | 6 |
2) | Excluding special levy on deposits and other levies/contributions |
…Leading to Accelerated Shareholder Value Creation
Robust capital position at 18.7% pre-distributions
CET1 ratio
350 bps | ||||||
18.7% | Dividend accrual 1 | |||||
15.1% | 15.2% | |||||
16.5% | ||||||
2021 | 2022 | 2023 |
Tangible book value per share up 24% yoy
1.75 | 1.75 | 2.20 | ||||||
€ | 4.93 | • | Dividend distributions building | |||||
3.98 | +24% | prudently and progressively | ||||||
towards 30-50% payout ratio4 | ||||||||
3.92 | ||||||||
0.05 | ||||||||
• | Sustainable CET1 generation5 | |||||||
3.93 | between 200-250 bps in 2024 | |||||||
2021 | 2022 | 2023 | ||||||
Dividend per share | Tangible book value per share |
Tangible book value (€ bn)
Organic capital generation of 482 bps2,3 in 2023 | Earnings per share up €0.96 yoy | ||
bps | 482 | € | 1.09 |
+0.96
c.60 | c.70 | 0.07 | 0.13 | |||
2021 | 2022 | 2023 | 2021 | 2022 | 2023 |
- Dividend accrual at the top end of the Group's dividend policy (dividend policy: 30-50% payout ratio; accrued 50% payout ratio) in line with Commission Delegated Regulation (EU) No 241/2014 principles
- Pre RWA and other movements
- Based on profit after tax (pre-distributions)
- Calculated on adjusted recurring profitability: Profit after tax before non-recurring items (attributable to the owners of the Company) taking into consideration the distributions from other equity instruments such as AT1 coupon. Any recommendation for a dividend is subject to regulatory approval
- Yoy Increase in CET1 ratio pre-distributions7
Snapshot for 4Q2023; Current ROTE over 20% in Excess of Medium-Term Target
Net Interest Income at its peak, up 3% qoq
(€ mn)
196
162
136
71 74 89
214 220
Cost to income ratio1 at 32% supported by higher income
60% 57%
47%
39%
34% 29% 30% 32%
1Q2022 | 2Q2022 | 3Q2022 | 4Q2022 | 1Q2023 | 2Q2023 | 3Q2023 | 4Q2023 |
Strong ROTE above 25%
26.6% | 25.6% | 25.6% | ||||||||
17.3% | 21.3% | |||||||||
4.0% | 5.7% | |||||||||
<0% | ||||||||||
1Q2022 | 2Q2022 | 3Q2022 | 2 | 4Q2022 | 1Q2023 | 2Q2023 | 3Q2023 | 4Q2023 | ||
1Q2022 | 2Q2022 | 3Q2022 | 4Q2022 | 1Q2023 | 2Q2023 | 3Q2023 | 4Q2023 |
Upgrades by credit rating agencies in FY2023
✓2outlooknotches upgrade3 to investment grade Baa3, positive
✓2 notches upgrade4 to BB, positive outlook
✓1 notch upgrade5 to BB, positive outlook
1) | Excluding special levy on deposits and other levies/contributions | 4) | Of long-term Issuer default rating | |
2) | Includes cost of Voluntary Staff Exit Plan of €101 mn | 5) | Of long-term issuer credit rating | 8 |
3) | Of long-term deposit rating |
Financial Performance Surpassed 2023 Targets, Supported by Rates
2023 Targets | FY2023 | |
(June 2023 Investor Update Guidance) | ||
Net Interest Income | >€650 mn | €792 mn |
Average ECB Depo rate | 3.0% | 3.3% |
Cost to Income Ratio1 | sub 40% | 31% |
ROTE | >17% | 24.8% |
NPE Ratio | <4% | 3.6% |
Cost of Risk | 50-80 bps | 62 bps |
Dividends | Building prudently and progressively to 30%-50%pay-out ratio2 | |
✓
✓
✓
✓
✓
- Excluding special levy on deposits and other levies/contributions
- Payout ratio calculated on adjusted recurring profitability: Profit after tax before non-recurring items (attributable to the owners of the Company) taking into consideration the distributions from other equity instruments such as AT1 coupon. Any
recommendation for a dividend is subject to regulatory approval | 9 |
2024 and 2025 ROTE Targets Reiterated
FY2024 | FY2025 | FY2024 | |||
(June 2023 Investor | (June 2023 Investor | ||||
(February 2024) | |||||
Update Guidance) | Update Guidance) | ||||
Net Interest Income | >625 mn | Lower than 2024 | >670 mn | ||
Average ECB Depo rate | 3.1% | 2.5% | 3.4% | ||
Cost to Income Ratio1 | c.40s | Mid 40s | c.40s | ||
ROTE | >17% | >16% | >17%4 | ||
on 15% CET1 ratio | |||||
NPE Ratio | <4% | <3% | c.3% | ||
To normalise towards 40-50 bps over the | Trending towards | ||||
Cost of risk | normalised levels of 40-50 | ||||
medium-term | |||||
bps | |||||
+200-250 bps organic capital generation2 | +200-250 bps CET1 | ||||
Capital | p.a. pre distributions | ||||
generation5 pre distributions | |||||
CET1 of c.19% end-2025 | |||||
Dividends | Building prudently and progressively to 30%-50%pay-out ratio3 | ||||
2025 ROTE
of >16%4
reiterated
on 15% CET1 ratio
Average ECB depo
rate 2.2%
- Excluding special levy on deposits and other levies/contributions
- Based on profit after tax (pre-distributions)
- Calculated on adjusted recurring profitability: Profit after tax before non-recurring items (attributable to the owners of the Company) taking into consideration the distributions from other equity instruments such as AT1 coupon. Any recommendation for a dividend is subject to regulatory approval
- Excluding amounts reserved for future distributions
5) Yoy Increase in CET1 ratio pre-distributions | 10 |
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Bank of Cyprus Holdings plc published this content on 19 February 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2024 12:53:05 UTC.
