The Bank of Cyprus announced profits of 29,7 million euros for 2021.
It is noted that for the previous year, TK had losses amounting to 171,5 million euros.
The significant improvement in the Bank's financial results is mainly due to the reduction of provisions and occurred despite the reduction of net interest income and the increase in staff costs.
The bank's total forecasts amounted to € 467 million compared to € 1902 million in 2020.
In the fourth quarter of 2021, the bank's profits amounted to € 10 million from € 19 million in the third quarter.
Reduced interest income but boost by Helix2
Net interest income for the year 2021 amounted to € 296 million, compared to € 330 million in the year 2020, reduced by 10% on an annual basis, mainly due to the continuing pressure from the environment of low interest rates and the completion of Helix 2. The decrease was partially offset by the increase in funding from APS III in 2021 and the reduction in the cost of deposits. Net interest income for the fourth quarter of 2021 amounted to € 73 million compared to € 71 million for the third quarter of 2021, mainly due to higher loan volumes and higher interest receipts.
The net interest margin for the year 2021 amounted to € 1.45% (compared to 1.84% for the year 2020) and was negatively affected by the decrease in net interest income and the increase in the average interest-bearing assets
Non-interest income for the year 2021 amounted to € 285 million (compared to € 237 million for the year 2020), increased by 20% on an annual basis and consists of net income from fees and commissions of € 172 million, net foreign exchange gains and net gains / (loss) on financial instruments transactions and sale / liquidation of subsidiaries and associates amounting to € 24 million, net insurance income of € 61 million, net gains / (losses) from revaluation and sale of real estate investments and sale of real estate stocks amounting to € 13 million and other income of € 15 million. financial instruments and sale / dissolution of subsidiaries and associates, increased net income from insurance operations, as well as increased profits from real estate sales by the DDA and reduced real estate revaluation losses.
Net royalty and commission income for 2021 amounted to € 172 million, compared to € 144 million for 2020, up 19% year-on-year, above pre-pandemic levels, reflecting higher volume transactions, as well as the extension of the liquidation commission charge to a wider category of large clients and the introduction of a revised list of charges and commissions from February 1, 2021.
The net profit from foreign exchange trading and net profit / (loss) from transactions with financial instruments and sale / liquidation of subsidiaries and associates for the year 2021 amounted to € 24 million (consisting of net profit from foreign exchange trading and € 16 million. net profit from transactions with financial instruments amounting to € 8 million), compared to € 15 million for the year 2020 (increased by 65% on an annual basis.
The bank had net income from insurance operations of € 61 million for the year 2021, compared to € 56 million for the year 2020, increased by 9% on an annual basis mainly due to higher gross written premiums, which were partially offset by the net change in the discount rate in the life insurance sector and by the higher costs and requirements in the general insurance sector (as claims in 2020 were positively affected by the restrictive measures). Net income from insurance operations amounting to € 18 million for the fourth quarter of 2021, compared to € 12 million for the third quarter of 2021, increased by 60% on a quarterly basis, as a result of the increased claims during the previous quarter, of seasonality and valuation assumptions.
Net profit / (loss) from revaluation and sale of real estate investments and from sale of real estate stocks for the year 2021 amounted to € 13 million (consisting of net profit from sale of real estate stocks of € 13 million, net profit from sale of investments in real estate (€ 1 million) and net loss from revaluation of real estate investments (€ 1 million), compared to € 7 million in profit for 2020 which were affected by the restrictive measures.
Total revenue for the year 2021 amounted to € 581 million, compared to € 567 million for the year 2020 (increased by 2% on an annual basis).
Expenses increased by 2% on an annual basis
Total expenses for the year 2021 amounted to € 383 million (compared to € 373 million for the year 2020, increased by 2% on an annual basis), of which 53% relate to staff costs (€ 202 million) , 38% relate to other operating expenses (€ 145 million) and 9% (€ 36 million) relate to excise duty on deposits and other fees / contributions. Total expenses for the fourth quarter of 2021 amounted to € 99 million compared to € 98 million for the third quarter of 2021, increased by 1% on a quarterly basis. The annual increase of 2% is mainly due to the annual increase of 4% in staff costs.
Total operating expenses for the year 2021 amounted to € 347 million, compared to € 340 million for the year 2020 (increased by 2% on an annual basis).
Staff costs amounted to € 202 million for the year 2021 (compared to € 195 million for the year 2020), increased by 4% on an annual basis, which reflects the renewal of the collective agreement for the year 2021.
The expected effect of the renewal of the collective agreement is the increase in staff costs for the years 2021 and 2022 by 3-4% per year and is in line with the effect of respective renewals for previous years.
Other operating expenses for the year 2021 amounted to € 145 million, reduced by 1% on an annual basis.
The cost-to-income ratio adjusted for excise duty on deposits and other fees / contributions for the year 2021 amounted to 60%, at the same levels on an annual basis.
Deposits increased by 2% - The liquidity ratio to 301%
The Group's total customer deposits amounted to € 17,531 million at 31 December 2021 (compared to € 17,128 million at 30 September 2021 and € 16,533 million at 31 December 2020) and increased by 2% in the fourth quarter and by 6 % from the beginning of the year.
The Group's loans (including loans held for sale) amounted to € 10,856 million at 31 December 2021, compared to € 10,864 million at 30 September 2021 and € 12,261 million at 31 December 2020, down 11% from at the beginning of the year mainly due to the completion of Project Helix 2.
As of December 31, 2021, the Group's Liquidity Coverage Ratio (GDR) rose to 301% (compared to 294% on September 30, 2021 and 254% on December 31, 2020) and is above the minimum regulatory requirements of 100%. The liquidity surplus in the RBM as at 31 December 2021 amounted to € 6.4 billion (compared to € 6.0 billion at 30 September 2021 and € 4.2 billion at 31 December 2020). The increase in the fourth quarter of 2021 (and the third quarter of 2021) is mainly due to the increase in customer deposits.
New lending to Cyprus in the fourth quarter of 2021 amounted to € 471 million (compared to € 427 million in the third quarter of 2021, € 407 million in the second quarter of 2021 and € 487 million in the first quarter of 2021) and amounted to € 1,792 million in total in the year 2021 (increased by 33% on an annual basis and approaching the levels of the year 2019 before the pandemic.
New loans of 1,8 billion euros
Regarding the bank's capital, the Category 1 Common Equity Capital Index (CET1) with transitional provisions amounted to 15.1% on December 31, 2021 and 15.8% adjusted for portfolios held for sale, compared to 14.7% on September 30, 2021 ( 15.3% adjusted for portfolios held for sale) and 14.8% as of December 31, 2020 (and 15.2% adjusted for portfolios held for sale).
Overall Capital Adequacy Ratio stood at 20.0% as at 31 December 2021 and 20.8% as adjusted for portfolios held for sale, compared with 19.7% as at 30 September 2021 (and 20.4% as adjusted for portfolios held for sale. December 18.4 (and 31% adjusted for portfolios held for sale).
Non-performing loans decreased by 7%
Non-performing loans under the European Banking Authority (EBA based on EBA) decreased by € 105 million or 7% in the fourth quarter of 2021, and consist of a net organic reduction of EIA (based on EBA) of € 98 million and further net reduction of MES (based on EBA) of approximately € 7 million for Project Helix 3 loans during the fourth quarter of 2021 (compared to a reduction of € 140 million in the third quarter of 2021), to € 1,343 million at 31 December 2021 (compared to € 1,449 million at 30 September 2021 and € 3,086 million at 31 December 2020). Adjusted for portfolios held for sale, NPLs (based on EBA) are further reduced by € 572 million to € 771 million based on data at 31 December 2021. Overall, in 2021, NPLs decreased by 75% on an adjusted basis . NPLs represent 12.4% of total loans at 31 December 2021, compared to 13.3% at 30 September 2021 and 25.2% at 31 December 2020, on the same basis, ie including NPL portfolios categorized as 'Non-current assets'. and sale groups held for sale '. The decrease in the percentage of NPLs to loans by approximately 13 p.m. in the year 2021, is mainly due to the completion of Project Helix 2.
The coverage rate of MES amounts to 59% on December 31, 2021, at the same levels as on September 30, 2021 and compared to 62% on December 31, 2020.
The bank remains committed to further reducing them to around 5% by the end of 2022 and below 3% by the end of 2025.
The significant milestone of the one-digit percentage of NPLs, enabled a positive review of the Bank's medium-term strategic goals in order to emphasize value creation for shareholders.
This is achieved, among other things, by increasing the target for return on tangible equity from 7% to over 10%, for the year 2025.
At the same time, the foundations are provided for a return to dividend distribution from 2023 onwards, depending on performance and after obtaining the necessary approvals.
In terms of ESG objectives, the Group is committed to achieving a carbon neutral by 2030 and a net zero by 2030, while supporting customers and society in this transition.
"We are reviewing goals," says Panikos Nikolaou
"Having achieved the significant benchmark of the single-digit NPV percentage, we are currently reviewing our medium-term strategic goals, emphasizing value creation for our shareholders, including increasing the target for return on equity from 7% to over 10% the foundations for a return to dividend distribution, depending on the performance and after the necessary approvals are obtained ", states in a statement the CEO of the bank Panikos Nikolaou
"Our strategic pillars remain the same. Revenue enhancement with optimal asset management, improving the operating model through further synergies, ensuring portfolio quality and building organizational resilience through a strategy for a sustainable future. Our transformation plan will enable us to succeed in these strategic pillars, utilizing our customer base across the country. "We are also at an advanced stage of development of a digital platform that will allow us to offer our customers services beyond banking and create new revenue streams."
"Our vision for the future of the Bank is clear and we remain committed to continue to play our role in the economic development of the country, which together with the development and implementation of the Development and Sustainability Plan for Cyprus, is expected to be powerful. "We remain convinced that our strategy will bring sustainable profitability and create value for our shareholders in the medium term."