Ratings agency S&P Global this week announced a one-notch upgrade in the long-term credit rating of the Bank of Cyprus (BoC) to “BB” from “BB-,” with a positive outlook.
According to the relevant announcement, this decision is grounded in several key factors, including the significant progress made by Cypriot banks in balancing their funding profiles while concurrently reducing dependence on foreign depositors. Additional factors include the improved operating environments for Cypriot banks, the enhanced profitability prospects stemming from higher interest rates, improved efficiency, as well as the containment of credit losses by the Bank of Cyprus.
What is more, S&P acknowledged the bank’s ability to generate capital through organic profitability, despite its return to dividend distributions in 2023, sourced from full-year profits in 2022. It should be noted that in November of this year, the Bank of Cyprus reported robust financial results for the nine months ending September 30, 2023, posting an after-tax profit of €349 million, combined with a strong quarterly performance, while highlighting a liquid, resilient balance sheet.
In the third quarter of 2023, the bank reported a Net Interest Income (NII) of €572 million, up 144 per cent year-on-year and 9 per cent higher than the previous quarter. Non-Net Interest Income (Non-NII) rose by 5 per cent year on year, covering 90 per cent of total operating expenses. Moreover, the cost-to-income ratio was reduced to 31 per cent, down from 54 per cent in the prior year. Profit after tax for the first nine months of 2023 stood at €349 million, a significant improvement from the €19 million loss in the same period last year. In addition, earnings per share reached €0.78 for the period between January to September 30, 2023, with €0.29 in the third quarter alone. The Return on Tangible Equity (ROTE) was 24.6 per cent during the first nine months of 2023 and 25.6 per cent in the third quarter alone. What is more, according to the same report, the bank’s Non-Performing Exposure (NPE) ratio stood at 3.5 per cent (0.8 per cent on a net basis), down 6 percentage points year on year.
Finally, NPE coverage stands at 77 per cent, and the cost of risk stands at 58 basis points.
Source: Cyprus Mail
