The Bank of Cyprus announced a net profit of 19 million for the quarter ended September 30, 2021, while everything shows that the focus is now on Helix3 and the single-digit number of non-performing loans in improving the Bank's business model.
During the announcement of the financial results, emphasis was placed on the completion of the agreement for the sale of Helix3 as well as the vertical reduction of non-performing loans in single digits.
As it was hinted at today's press conference, as long as the issue of red loans is gradually resolved, the bank's attention will be focused on the business model and on improving the way the financial institution operates.
It was stressed how the Bank with the restructuring and the loan sale agreements the number of NPLs has dropped from 62,9% in December 2014 to 8,6% in September 2021.
Therefore, priority will be given at the moment to the improvement of the Bank's operation, noting that great importance will be given to the reduction of staff costs.
It was clarified that the expected Voluntary Exit Plan is not going to have the character of an extended plan but will be quite targeted and according to the needs of the Bank.
Profits of 19 million and new borrowing of € 1,3 billion
The profits of Bank of Cyprus in the third quarter of 2021 amounted to 19 million euros, while since the beginning of the year a total profit of 20 million euros has been recorded. During the nine months of 2021, the Bank of Cyprus provided new loans amounting to € 1,3 billion, recording an increase of 35% compared to the corresponding period last year.
Revenues of € 139 million for the third quarter of 2021 were announced, recording a decrease of 8% on a quarterly basis, partly affected by the completion of Helix 2. Also recorded are total operating expenses2 of € 89 million for the third quarter of 2021, which remains at the same levels on a quarterly basis while the cost-to-income ratio is 64% for the third quarter of 2021, increased by 6 p.m. on a quarterly basis, mainly due to the completion of Helix 2.
During the announcements, emphasis was placed on the strong capital position and liquidity of the Organization with the Class 1 Common Share Capital Index (CET1) ranging at 15.3% and the Overall Capital Adequacy Ratio at 20.4.
Deposits amount to € 17.1 billion being increased by 2% on a quarterly basis while there is a significant liquidity surplus of 6 billion.
It was also noted that 96% of the serviced loans which were under a suspended installment payment regime did not show any delays until today while there is strict supervision by the Bank.
"The strong recovery of economic activity continued in the third quarter of the year, and we continued to work towards achieving our medium-term goals.
Earlier this month, we reached an agreement for the sale of an NPL portfolio with a gross book value of € 0.6 billion (Project Helix 3), reducing the NPV to loans, adjusted for Helix 3, to a single-digit rate of 8.6%.
This transaction is a milestone and allows us to achieve our strategic goal of achieving a single-digit MED rate on loans, one year earlier than expected with a positive impact on capital ratios and our results. Overall, from their highest level in 2014, we have reduced NPLs by € 14.1 billion or 94% to less than € 1 billion and the NPVs to loans by 54 percentage points, from 63% to less than 9% on an adjusted basis. The loan credit charge for the nine months amounts to 66 basis points and the repayment of loans under the suspension of capital and interest payments remains strong. Adjusted for Helix 3, NPLs at the end of the quarter amount to € 0.9 billion and we remain focused on our goal of achieving NPLs on loans of around 5% in the medium term.
Our total earnings for the nine months amounted to € 20 million affected by NES sales and restructuring costs. Our earnings before non-recurring items - a more indicative measure of our performance - amounted to € 64 million for the nine months. Total revenue remains stable despite the effects of the non-recognition of non-performing loans with the completion of Helix 2 at the end of June. Net fee and commission income for the nine months remains strong, up 20% year-on-year to 30% of total revenue. We continue to work to improve our business model in order to improve our profitability and our operating expenses have remained stable on a quarterly basis.
The cost-to-income ratio (excluding excise tax and contributions) for the nine months was 61%. We maintain our commitment to reduce the cost-to-income ratio to our medium-term target of approximately 55%. The capital position of the Bank remains at good levels and significantly exceeds the regulatory requirements. As of September 30, 2021, our capital ratios (with transitional provisions) amounted to an Overall Capital Adequacy Ratio of 20.4% and a Class 1 Common Equity Ratio (CET1) of 15.3%, adjusted for Helix 3.
We continue to support the domestic economy and have granted new borrowing of € 1.3 billion in the first nine months of the year, up 35% year-on-year. We remain committed to continuing to play our part in the country's economic development, which is expected to fully offset the 2020 contraction by the end of the year, and with the implementation of the Cyprus Development and Sustainability Plan, is expected to be maintained at pre-pandemic levels. At the same time, we remain focused and on track to achieve our medium-term goals. "