Business »

BoC – Losses of €1.94 billion for the first 9 months of 2013

Constantinos Philippides
Share on StockTwits
Published on

The losses of Bank of Cyprus accelerated to €1,94 billion, for the first nine months of 2013, reflecting the ongoing contraction of the economy and further deterioration of asset quality.

Specifically, based on the financial results for the nine months ended in 30th of September 2013, the Bank recorded losses of €1.947 million (€1,8 billion as at 30th June 2013), which is mainly attributed to the increase of new NPL ratio at 48 % of total loan portfolio of the Bank, from 36 % at 30th of June 2013.

The CEO of Bank John Patrick Chourikan linked the Bank’s progress in the course of the economy and a brief idea for another tough year.

“We will have another difficult year for the country, will have another difficult year for the sector and will therefore be another difficult year as a bank”, he said.

According to data from the Bank ‘s ratio of core tier and the total capital adequacy ratio fell to 10,2% (€2,33 billion) and 10.5% respectively compared with 10,5% (€2.47 billion ) and 10.7% respectively as of June 30th of this year, a deterioration attributed mainly to non-recurring costs for the Voluntary Retirement Scheme (€98 million).

However, according to the Bank, the challenges for the quality of the loan portfolio continued during the fourth quarter of 2013, loans in arrears more than 90 days to stabilize.

Simultaneously continued deleveraging of the loan portfolio, which decreased by €0,9 billion as of €28,3 billion at June 30th fell to €27,4 billion.

According to officials of the Bank repaid several loans from deposits, which declined by €17 billion as of June 30th, to €15,5 billion on 30th of September. Thus, the loans to deposits ratio increased to 146% from 140 % at June 30th.

Loans past due more than 90 days amounted to 47% of total loans compared with 39% at June 30th 2013 and the coverage ratio of loans more than 90 days with forecasts fell to 37% from 42% at June 30th 2013.

Non-performing loans under the new Directive of the Central Bank of Cyprus(CBC) represent 48% of total loans.

Bank officials estimate that by CB directive on Non-Performing Loans (NPLs ) and in particular the provision that requires the Bank to maintain a loan that was setup as NPLs for six months in case of dose escalation after the first month which the highest dose is the new repayment schedule will result in a further increase with increasing NPLs arrangements and restructuring loans.

They note that if there was this provision of the MPLs, Bank would be 0.4% or
€1,0 billion less.

However, Mr Chourikan again emphasized that “our priority remains in restoring the confidence of investors and customers” and added:
“This can only be achieved through our focus on stemming the decline in asset quality, the progress regarding by selling non-core assets and to maintain capital adequacy in order to rebuild a strong foundation for the safe return of depositors in the Bank”.

The legislation divestments will motivate borrowers.

In this context Mr. Chourikan said that by amending the legislation to allow the sale will help the Bank to reduce NPLs, adding that the amendment should be combined with the modernisation of Lands.

“What I see is a need to amend the law to ensure that we get the teeth to act in the interests of the Bank and the interest of the country,” he said, adding that the current legislation the seizure and sale of property took around 12 years”.

He noted that the amendment legislation would provide an incentive for borrowers to repay their debts.

Referring to large borrowers of the Bank, Mr. Chourikan said that discussions are conducted continuously on the basis of facts in order to interest the Bank.

“The only good thing of being a foreigner is that you are not emotionally connected with the borrower, you’re not emotionally attached to the Bank and you’re not emotionally attached to the island. But I know that we can begin to achieve (restructuring) for the success of the Bank and the success of the island and to that I am focused”, he concluded.

Share on StockTwits