Bank of Cyprus generates €95m net profit in first quarter

Bank of Cyprus said Monday it has generated a €95m net profit in the first quarter of the year on tax legislation amendments and adjustments in the sale of non-performing exposures.

The BoC said it had generated €176m in total income while its profit and loss account was positively impacted by €109m following tax legislation amendments adopted in March 2019 and negatively impacted by completion and timing adjustments of €21m for Project Helix.

Legislative amendments allowing for the conversion of specific deferred tax assets (DTA) into deferred tax credits (DTC) by parliament on March 1, 2019.

The law amendments cover the income tax losses transferred from Laiki Bank to the BoC in March 2013.

BoC said it has seen 16 consecutive quarters of organic non-performing exposures (NPEs) reduction — down by 70 per cent since December 2014.

In Q1 NPEs fell by €157m to €4.6bn or 35 per cent of the entire portfolio.

The management actively exploring strategies to further accelerate de-risking including further portfolio sales.

“Our results this quarter reflect continuing progress against our core objective of balance sheet repair,” said BoC CEO John Hourican. “We have continued to make good progress towards completion of the sale of €2.7b non-performing loans in Project Helix, including obtaining the required regulatory approvals from the ECB for the Significant Risk Transfer benefit from the Transaction. We expect completion during the second quarter of 2019.”

Project Helix complements the lender’s ongoing organic NPE reduction, which amounted to €157m for the quarter, broadly in line with the target of €800m for 2019.

Hourican said €900m worth of NPEs were in fact fully performing but trapped in the regulatory definition, and an additional €900m should be positively tackled over time by the government’s ESTIA scheme supporting lower value primary residences.

“This leaves a core of €2.8 bn of delinquent loans that we are actively addressing, exploring strategies to further accelerate our de-risking, including significant portfolio sales,” he said.