Profits from ordinary operations reached €20 million in the second quarter and €42 million for the first half. Net interest income (NII) decreased by 31% to €73 million for the half, compared to €106 million in the same period last year due to the lowering of interest rates and the simultaneous increase in non-performing exposures.
“The hit from the loans interest rates reduction is immediate whereas the benefit from the decrease in deposit interest rates will materialise gradually upon deposits renewal,” the bank said in an announcement.
Non-interest income amounted to €46 million for the first six months of 2015 and improved by 50% on a quarter to quarter basis.
Thus, Group total net income at June 30 reached €119 million and total expenses €77 million, of which personnel costs were €39 million and administrative and other expenses €35 million.
“Conditions remain fragile and the non-performing exposures (NPEs) remain at unprecedented levels, reaching 61% as at the end of June,” said CEO Bert Pijls.
“During the second quarter of 2015 we continued our efforts in managing our Non-Performing Loans, and in this respect we have built further provisions achieving a coverage ratio of 46%. I expect that it will take a few more quarters of GDP growth for NPLs to stabilise and subsequently improve and reduce. Until then, some volatility may remain.”
CEO Pijls said he was encouraged by developments in the real estate sector.
“The number of transactions are up versus last year and prices are more stable. In fact, according to the RICS index, residential real estate prices increased during the first quarter by 0.6%. This is good news because moderate house price inflation will aid the real estate recovery, which in turn will fuel further GDP growth and create jobs. In this context, I very much welcome the recent tax incentives announced and implemented by the government. As a result of those initiatives we have already received a number of initial expressions of interest from potential investors.”
“Residential mortgage lending is currently at levels not seen since 2010. There is pent-up demand, mortgage rates and real estate prices are attractive and many clients believe that now is a good time to get back into the market, especially given the tax incentives.”
At June 30, total assets were marginally down at €7.4 billion (2014: €7.6 billion), while the net loans to deposits ratio remained stable at 51%.
On a year to date basis, deposits dropped by 2% to €6.2 billion, compared to €6.3 billion in December 2014.
The bank said that liquidity remains strong as its total cash and deposits with banks were maintained at €3.2 billion and it is the only systemic bank in Cyprus, which has no dependence whatsoever on the ECB’s Emergency Liquidity Assistance (ELA) programme.
The total gross loans amounted to €4.4 billion. Thus, the Group’s capital adequacy exceeds the ECB’s minimum requirements, with the Common Equity Tier 1 (CET 1) Ratio at 13.5% on June 30; the same time the Group’s capital adequacy ratio was 18.1%.
Source: Financial Mirror
