bank of cyprus group...2020/05/26 · bank of cyprus group group financial results for the quarter...

Group Financial Results for the quarter ended 31 March 2020

Bank of Cyprus GroupGroup Financial ResultsFor the quarter ended 31 March 2020


DISCLAIMER

2

This presentation has not been audited by the Group’s external auditors.

This financial information is presented in Euro (€) and all amounts are rounded as indicated. A

comma is used to separate thousands and a dot is used to separate decimals.

Important Notice Regarding Additional Information Contained in the Investor Presentation

The presentation for the Group Financial Results for the quarter ended 31 March 2020 (the

“Presentation”), available on https://www.bankofcyprus.com/en-GB/investor-relations-new/reports-

presentations/financial-results/, includes additional financial information not presented within the

Group Financial Results Press Release (the “Press Release”), primarily relating to (i) NPE

analysis (movements by segments and customer type), (ii) rescheduled loans analysis, (iii) details

of historic restructuring activity including REMU activity, (iv) analysis of new lending, (v) Income

statement by business line, (vi) NIM and interest income analysis and (vii) Loan portfolio analysis

in accordance with the three-stages model for impairment of IFRS 9. Except in relation to any non-

IFRS measure, the financial information contained in the Investor Presentation has been prepared

in accordance with the Group’s significant accounting policies as described in the Group’s Annual

Financial Report 2019. The Investor Presentation should be read in conjunction with the

information contained in the Press Release and neither the financial information in the Press

Release nor in the Investor Presentation constitutes statutory financial statements prepared in

accordance with International Financial Reporting Standards.

https://www.bankofcyprus.com/en-GB/investor-relations-new/reports-presentations/financial-results/


1Q2020 - Highlights

3

Performance in 1Q2020

Good Capital and Liquidity Position

Continued Balance Sheet Repair in 1Q2020

• Total Capital ratio of 17.7%1 and CET1 ratio of 14.3%1

• Significant surplus liquidity of €3.0 bn

• New lending of €451 mn for 1Q2020 (up 2% qoq)

• Total Income of €145 mn, Operating profit of €52 mn in 1Q2020

• Loan credit losses of €64 mn in 1Q2020 (cost of risk at 200 bps), including COVID-related charge of €28 mn

• Underlying result of a loss after tax from organic operations of €23 mn for 1Q2020

• Loss after tax of €26 mn in 1Q2020

• Organic NPE reduction of €142 mn for 1Q2020, despite COVID-19 lockdown in March 2020

• NPEs reduced to €3.7 bn (€1.6 bn net)

• Gross NPE ratio reduced to 29% (net NPE ratio at 15%)

• Coverage increased to 56%; total coverage at 124% when including collateral

• Sale of €133 mn NPEs (Velocity 2) completed in May 2020; capital neutral

(1) Allowing for IFRS 9 transitional arrangements

(2) Excluding Special Levy and contributions to SRF and DGF

(3) Digitally engaged individual customers to the total number of individual customers as per the engagement scorecard. Digital channels include mobile, browser and ATMs. It also captures access to a card as well as online card purchases

Operational efficiency

• Cost to income ratio2 reduced to 58%, following the successful completion of Voluntary Staff Exit Plan in 4Q2019

• Total operating expenses2 reduced to €84 mn for 1Q2020, down by 14% qoq

• 70% of customers currently digitally engaged3

COVID-19

• Safeguarding health of staff and customers, while ensuring operational resilience of the Bank

• Supporting both customers affected by COVID-19 and wider Cypriot economy

• Gradual relaxation of restrictive measures; currently in second phase

• Additional 88 bps of cost of risk (€28 mn) for 1Q2020 reflecting deterioration of macroeconomic outlook

• NPE portfolio sale delayed due to prevailing market and operational conditions

• Current focus on proactively assessing the impact of COVID-19 on loan portfolio


Covid-19 Recent Developments

4


Ongoing slowdown of new cases following government’s swift reaction

5

(1) According to the information provided by University of Cyprus as at 25 May 2020 - https://covid19.ucy.ac.cy

(2) Based on information up to 20 May 2020 provided by https://www.ecdc.europa.eu/en/publications-data/download-todays-data-geographic-distribution-covid-19-cases-worldwide

Total sample testing per 100,000 population per country1 Cumulative cases per 100,000 population2 per country

Days since first case

7726

374

496

212

375

0 10 20 30 40 50 60 70 80 90 100 110

100

200

500

300

400

286

66

Cyprus

SpainGreece

UK ItalyPortugal

Germany

1 All schools closed

2 Travel ban & country lockdown

Stricter lockdown measures

1 3

Fast escalation of measures in Cyprus

1 All schools closed

2

1 2

Fast escalation of measures in Cyprus

3

4

4 Gradual relaxation of measures

• Swift government reaction following the outbreak of COVID-19 in Cyprus in mid-March 2020 for the containment of the pandemic spread

• COVID-19 sample testing per 100,000 population amongst the highest within EU

• Confirmed cases per 100,000 population amongst the lowest within EU

• Gradual relaxation of containment measures commenced on 4 May 2020; currently in phase 2

656 11,144

8,386

6,708

7,611

6,090

5,704

4,335

2,067

1,435

Cyprus

Luxemburg

78

Portugal 297

504Spain

507

216

Ireland

26

380Italy

215Germany

France

Greece

Confirmed cases Tests

https://covid19.ucy.ac.cy/

https://www.ecdc.europa.eu/en/publications-data/download-todays-data-geographic-distribution-covid-19-cases-worldwide


Lifting of restrictions in a gradual and controlled manner

6

Cypriot Government roadmap for reopening the Cypriot society and economy

• Opening of small work sites that are open air such as construction premises

• Opening of shops and other small businesses such as clothing and footwear

• Small retail shops and travel agencies open

• Return of students to high-schools

• Opening of restaurants and cafes (outdoor)

• Opening of museums and libraries

• Return of students to primary schools

• Lifting of nighttime curfew

✓ Phase 1

4 May- 20 May

✓ Phase 2

21 May- 8 Jun

• Opening of shopping malls

• Opening of restaurants and cafes (indoor & outdoor)

• Opening of airports and ports

• Opening of Hotels

• Lifting of lockdown restrictions

• Opening of Casinos

• Opening of theatres, cinemas, festivals etc

Phase 3

9 Jun- 13 Jul

Phase 4

14 Jul-onwards

The relaxation of measures is conditional on no material increase in COVID-19 incidents


Protection of staff and customers’ health is the key priority, while ensuring operational resilience of the Bank

7

Measures to Safeguard Health & Safety

• Establishment of a committee to monitor COVID-19 measures,

trace incidents and to provide regular updates to staff

• Implementation of Health & Safety measures in line with the

guidelines and recommendations issued by Ministry of Health

• Special purpose leave for employees that belong to vulnerable

groups

• Enhanced intensive clean-ups, a precautionary disinfection

procedure is in place throughout the Bank

• Shipment of masks and gloves and sanitisers to branches

• Participation in government’s COVID-19 testing schemes

Ensuring Operational Resilience


• Activation of the Pandemic Plan to ensure operational

resilience and no disruption of the day-to-day activities

• Splitting the operations of critical units to separate locations

and provision of remote access availability

• 28% of staff (excluding branches) currently work remotely,

compared to 44% during the lockdown period

• Digital service channels provide alternative solutions for

carrying out daily banking transactions online

• 70% of customers are currently digitally engaged1


Timely and strong response by the Government of Cyprus

8

(1) For further information, please refer to the Market Update published by the Ministry of Finance: https://www.mof.gov.cy/mof/pdmo/pdmo.nsf/6B8C5026F3AE168BC2258345003BAFEF/$file/Market%20Communication%2006%20April%202020.pdf

(2) For tax periods ending February, March and April, 2020. It involves all companies, without imposing any charges or additional tax. It is noted that arrangements will be made so that the debts will be paid progressively until November 10, 2020 with the exception of companies that do not

have liquidity problems such as pharmacies, supermarkets, etc.

• Immediate introduction of fiscal measures1

• Liquidity support to businesses and households

• Prevention of sharp rise in unemployment

• A large and wide-ranging package of financial

measures

• €3.0 bn of funding raised in April 2020; vote of

confidence to the Cypriot economy

• Issuance of €1.75 bn of 7 year and 30 year Eurobonds

• Issuance of €1.25 bn of 52-week treasury bills

Measures announced in March 2020 include:

• Moratorium of loan instalments for 9 months

• Capital and interest

• Available for all customers (businesses and

private individuals) with less than 30 days past due

as at 29 Feb 2020

• Temporary suspension of VAT payments for 3 months2

• Suspension of the added contribution to the National Health

System for 3 months

• Employment compensation schemes for businesses impacted

by COVID-19, to protect jobs and avoid layoffs

• >50% of private sector employees (220,000) and c.40,000

self-employed workers expected to benefit

Additional measures announced in May 2020 include:

• Liquidity support to small business and self employed

• covering part of the operating expenses like rent, supplier

payments, etc

• >36,000 small businesses and self employed expected to

benefit

• Government loan guarantees scheme withdrawn

• New set of measures expected to be announced, to replace

Government guaranteed facilities proposal now withdrawn

• Tax incentives for the reduction of rent, on a voluntary basis

• Liquidity support to agricultural businesses

Key Highlights:

https://www.mof.gov.cy/mof/pdmo/pdmo.nsf/6B8C5026F3AE168BC2258345003BAFEF/$file/Market%20Communication%2006%20April%202020.pdf


Significant Regulatory measures to mitigate COVID-19 impact

9

• Increased capital and liquidity flexibility

• Flexibility to temporarily “dip into” certain capital buffers

(P2G & CCB) and minimum liquidity requirements

(LCR)

• Bringing forward ability to use lower quality own funds

to meet Pillar 2 Requirements (P2R)

• Delay of phasing-in of 1 Jan 2021 O-SII buffer (0.5%

for the Bank) by 12 months

• Launch of a new Pandemic Emergency Purchase

Programme (PEPP) for an amount of €750 bn

• Exercise temporary flexibility regarding the “Unlikely

to Pay”

• Exercise full flexibility when discussing with banks

the implementation of their NPE reduction strategies

• Avoid procyclicality in models to determine expected

loan credit losses. Central macroeconomic scenarios will

be provided to support IFRS 9 application. Banks should

give a greater weight to long term stable outlook

evidenced by past experience

ECB/CBC

• IFRS 9

• COVID-19 moratorium not an automatic trigger for

increased credit risk

• Minimise cliff effect of transfers between stages

• Govt guarantees may mitigate ECL impact on P&L; no

impact from guarantees on assessment of increased

credit risk

• ECB to provide central macroeconomic scenarios to

guide provisioning policies

• Forbearance

• General COVID-19 moratorium does not trigger

automatic reclassification due to forbearance

• Prudential Definition of Default

• Moratorium extends “90 days past due” deadline via

modified payment schedule

• Renegotiated loans (where NPV remains constant) not

considered distressed restructuring

• EU wide stress test postponed to 2021 to allow banks

to prioritise operational continuity

EBA and ESMA


1.5

8

2.1

4 3.5

9

3.6

1

3.6

2

3.7

4

0.3

9

0.8

2

1.9

5

1.9

9

2.0

0

2.0

4

2.9

6

Business Private Individuals Column1

Supporting customers through payment deferrals

COVID-19 moratorium until the end of 2020, as per the government measures

• Started on 30 March 2020

• Clients can request moratorium on the payment of capital & interest for loans, overdrafts and credit cards

• Moratorium period of 9 months to address seasonality of the Cypriot economy

• Available to all customers (businesses and private individuals) with arrears less than 30 days as at 29 Feb 2020

• Capital plus interest; Interest continues to accrue

• Loan terms will be extended so that payments will continue as per existing schedule

• COVID-19 moratorium does not trigger automatic reclassification due to forbearance

• Continue to monitor the creditworthiness of customers who applied for the loan moratorium

€ bn

#

applications

20 May

2020

%

Gross loans

(excluding legacy)

Private

Individuals21,044 2.04 52%

Businesses 3,628 3.74 72%

Total 24,672 5.78 63%

Applications received

Applications received stabilising

€ bn

10

1.9

7

5.6

0

5.6

2

5.5

4

5.7

8


Gradual reopening of the Cypriot economy; Economic outlook remains uncertain

11

-3.4%

-1.9%

6.7%

3.4%2.0%

4.4%

0.4%

-6.6%

4.1%3.2%

0.8%0.8%

Annual Real GDP yoy % change1

(1) Source: Cyprus Statistical Service

(2) GDP projections under the base scenario of: the Ministry of Finance, the EBRD, the European Commission and the Economics Research centre of the University of Cyprus

Published projections2

-6.0% to -7.4%

Published projections2

5.0% to 6.1%

20142010 20152011 20132012 2016 2020E2017 2018 2019 1Q2020 2021E

Base scenario 2019 2020 2021

GDP 3.2% -6.9% 5.4%

Unemployment 7.1% 9.1% 7.6%

• Cypriot economy recorded an increase of 0.8% for 1Q2020, reflecting the COVID-19 lockdown in March 2020

• Open, small and flexible economy which has demonstrated historically that recovery from economic crisis can be quick

• There are a range of published macroeconomic scenarios and the outlook remains uncertain; The impact on the Cypriot economy and the Bank will largely depend on

the duration and the intensity of the pandemic

• Coordinated monetary, fiscal and regulatory measures announced by the Government and the European Authorities are expected to mitigate the impact

Update of IFRS 9 macroeconomic assumptions for the Bank

driving increase in COR by 88 bps


Well diversified loan portfolio; close monitoring and set up of strategies to prevent further asset quality deterioration

12

3.95

1.04

1.03

1.01

0.65

0.60

0.53

0.34

PrivateIndividuals

Trade

Manufacturing

Real Estate

Hotels & Catering

Other sectors

Professional & Other services

Construction

Gross loans (excluding legacy)1 by business sector of €9.15 bn2

€ bn

(1) Gross loans of the following business lines as at 31 March 2020: Corporate (incl. IB and W&M and Global Corporate), SME, Retail, Insurance and other (incl. H/O

13%

14%

18%

11%

€9.15 bn

Moderate

High

Low

44%

Medium

Private individuals

• Private individuals (44%)

• Refer to slide 13

• High Impact: (11%)

• Tourism (Hotels & Catering)

• Medium Impact: (18%)

• Trade

• Manufacturing

• Moderate Impact: (14%)

• Construction

• Transportation and storage

• Agriculture

• Low: (13%)

• Education

• Real Estate

• Health

Breakdown by COVID-19 impact assessment on business sectors


Private individuals loan portfolio, highly collateralised

13

Private Individuals: €3.95 bn

1) Loan to Value (LTV) is calculated as the Gross IFRS Balance to the indexed market value of the property. Under Pillar 3 disclosure, LTV is calculated as the Gross IFRS Balance to the indexed market value of collateral. Collateral takes into consideration the mortgage amount

registered in the land registry plus legal interest from registration date to the reference date

• Housing performing loans: €3.24 bn

• Low LTV1 housing portfolio

• 67% of portfolio with LTV1<60%

• Only 14% of portfolio with LTV1>80%

• Other: €0.71 bn

• 60% secured portfolio

• of which 60% with property

• of which 40% with other type of collateral

Government and Bank initiatives to support private individuals

• >35% of total employment are expected to be least affected by COVID-19 measures as employed in the government, semi-government and financial sector

• Comprehensive Government income support schemes across employees and self employed, to protect jobs and avoid layoffs until mid June 2020

• >50% of private sector employees (220,000) and c.40,000 self-employed workers expected to benefit

• Implementation of COVID-19 moratorium until the end of 2020, as per the government measures

• 21,044 applications received for €2.04 bn of loans as at 20 May 2020

• Requests driven by Mortgages (81%) and Personal loans (12%)

LTV1 Housing Other

< 60% 67% 29%

60%-80% 19% 5%

80-100% 6% 5%

>100% 8% 61%

82%

18%

Other

Housing


Business portfolio well diversified, with high quality collateral

14

Breakdown of Business gross loans (excluding Legacy)1, by Covid-19 impact

(1) Gross loans of the following business lines: Corporate (incl. IB and W&M and Global Corporate), SME, Retail, Insurance and other (incl. H/O) as at 31 March 2020

(2) For further details please refer to slide 45

(3) Loan to Value (LTV) is calculated as the Gross IFRS Balance to the indexed market value of the property. Under Pillar 3 disclosures LTV is calculated as the Gross IFRS Balance to the indexed market value of collateral. Collateral takes into consideration the mortgage amount

registered in the land registry plus legal interest from registration date to the reference date

24%

25%

31%

20%

Moderate

High

Low

Medium

€5.2 bn• High quality origination via prudent underwriting standards

• Strong assessment of repayment capability

• Strict origination standards

• Effective foreclosure law in place, following the amendments in

recent years2

• 98% of new exposures since 2016 are performing

• 88% of portfolio secured

• of which 79% with property

• of which 21% other type of collateral

• Low LTV3 business portfolio; 70% of the portfolio with LTV3<80%

LTV3 High Medium Moderate Low Total

< 80% 93% 55% 69% 73% 70%

>80% 7% 45% 31% 27% 30%

Total 100% 100% 100% 100% 100%

• High Impact: (20%)

• Tourism (Hotels & Catering)

• Medium Impact: (31%)

• Trade

• Manufacturing

• Moderate Impact: (25%)

• Construction

• Transportation and storage

• Agriculture

• Low: (24%)

• Education

• Real Estate

• Health


Supporting impacted businesses through COVID-19

15

Tourism: €1.03 bn

Hotels & Catering31 Mar 2020

€ bn

% of

portfolio

30 Apr 2020

€ bn

Food services 0.06 5%

Accommodation 0.97 95%

Total 1.03 100%

Unutilised Liquidity1 0.34 0.33

- of which deposits 0.28 28% 0.27

• Majority of Accommodation customers entered the crisis with significant

liquidity, following strong performance in recent years

• According to the Government’s roadmap for the reopening of the economy,

airports are expected to open on 9 June and hotels will reopen by mid-June

• Co-ordinated communication and marketing led by the government, to

capitalise on Cyprus’ successful handling of the health aspects of the

COVID-19 pandemic to date

• c. €1.0 bn2 or 96% applied for payment deferrals

Trade31 Mar 2020

€ bn

% of

portfolio

30 Apr 2020

€ bn

Supermarkets, pharmacies and other

essential retail businesses0.30 28%

All other 0.74 72%

Total 1.04 100%

Unutilised Liquidity1 0.83 0.80

- of which deposits 0.53 52% 0.53

Trade: €1.04 bn

• c. 28% tied up to lower risk essential retail services, not materially

impacted by COVID-19

• Small retail shops opened on 4 May

• Shopping malls expected to open by mid-July

• €0.56 bn2 or 54% applied for payment deferrals

(1) Unutilised overdraft amounts and deposits

(2) As at 20 May 2020


88 bps COR for 1Q2020 reflecting deterioration of macroeconomic outlook

16

(1) Loan credit losses on customer loans including off-balance sheet exposures, net of gains/(losses) on derecognition of loans and advances to customers and change in expected cash flows over average gross loans

• Cost of risk for 1Q2020 at 2.0% of gross loans, of which 88 bps reflect the initial

impact of IFRS 9 Forward Looking Information (FLI) driven by deterioration of

macroeconomic outlook

• Excluding the COVID-19 related charge, the cost of risk for 1Q2020 was 1.12%

• Migration of c.€435 mn gross loans from Stage 1 to Stage 2, resulting from the

deterioration of the macroeconomic outlook

• There are a range of published macroeconomic scenarios and the outlook

remains uncertainbps

7529 48

11629 40

65

56

55

58 53

88

2Q2019

7

173

1Q2019

7 7

1Q20203Q2019

2

4Q2019

5

14

147123

111

200

COVID-19

Interest on net NPEs not received in cash Stage 3

New lending Stage 1 & 2

-3-21

-84

144 123 90 89 200

1.12%

FY2015

4.30%

FY2014 FY2019

2.80%

FY2016 FY2017 FY2018

0.88%

1Q2020

1.00%

1.70%

4.00%

1.12%

2.00%

Impact of

deterioration of

macroeconomic

outlook


Digital Channels offering alternative solutions during lockdown

17


Digital Transformation Programme

• Digital Transformation Programme that started in 2017 beginning to

clearly deliver an improved customer experience

• Customers’ reorientation towards digital channels:

• Increase in active digital users by 15% since Mar 2019

• Awarded as Best Consumer Digital Bank in Cyprus for 2019 by

Global Finance

30 Apr

2020

31 Mar

2019% Change

# active digital users 263K 228K +15%

Digitally engaged ratio1 70% 65% +5%

40%

26% 25% 25%30% 31%

30%

25% 30%26%

31% 30%

30%

49%45%

49%

39% 39%

15 May 2020

30 Mar 2020

16 Mar2020

30 Apr2020

15 Apr2020

7May2020

OnlineBanking

ATM

Branch

Channel Usage (% of volume of transactions) since COVID-19 outbreak

Lockdown period Gradual relaxation of

measures


1Q2020 Group Financial Results

18


Good capital position to withstand the COVID-19 impact

19

SREP requirement for 2020

Pillar 2 Requirement (P2R) of which: 3.0% 3.0%

CET1 3.0% 1.69%

Pillar 1 AT1 0.56%

Pillar 1 T2 0.75%

CET1

ratio

CET1

ratio

post ECB

announcement

14.3% 14.3%

11.0%

9.7%

• Following ECB’s capital relaxations for COVID-19 allowing the use of AT1

and T2 to meet P2R requirement:

• SREP CET1 requirement1 for 2020 reduced to 9.7%; buffer of 460 bps

• SREP Total Capital requirement1 for 2020 at 14.5%; buffer of 320 bps

• Additional ECB’s capital relaxations:

• Flexibility to operate temporarily below CCB, increases CET1 and Total

capital buffer by 250 bps

• In April 2020, the CBC decided to delay the phasing-in of the 1 Jan 2021

O-SII buffer4 (0.5%) by 12 months

131

bps

Capital position as at 31 March 2020

Total

capital ratio

Total capital

ratio

post ECB

announcement

17.7% 17.7%

14.5% 14.5%

min OCR (SREP)1 requirement for 2020

(1) OCR(SREP)- Overall Capital Requirement comprises the Total SREP Capital Requirement (Pillar 1 and Pillar 2 Requirement) plus combined

buffer requirements (capital conservation buffer, countercyclical buffer and systemic buffers). As from 31 March 2020, following ECB measures

CET1 ratio is 9.7%


(3) On 12 March 2020 the ECB announced the implementation of a package of monetary policy measures in order to secure favourable conditions

of financing for the economy with the aim to mitigate the effects of the crisis. Specifically the ECB announced the following relaxation measures

for the minimum capital requirements for Banks in the Eurozone: Banks are temporarily allowed to operate below the level of capital defined by

the Pillar 2 Guidance, the Capital Conservation Buffer and the Countercyclical Buffer. Furthermore, the upcoming change under CRD5

regarding the P2R buffer was brought forward allowing the Pillar 2 Requirement (P2R) to be covered by Additional Tier 1 (AT1) capital and Tier

2 (T2) capital and not only by CET1

(4) The Central Bank of Cyprus (CBC) set the O-SII buffer for the Group at 2%. This buffer will be phased-in gradually, having started from 1

January 2019 at 0.5% and increasing by 0.5% every year thereafter, until being fully implemented (2.0%) on 1 January 2022. In April 2020 the

CBC, as part of the COVID measures, decided to delay the phasing-in by 12 months (1 January 2023). As a result, the phasing-in of 0.5% on 1

January 2021 has been delayed for 12 months.

3 3

2 2 2 2

2019 2020

2020post ECB’s

amendment

of P2R

composition3

Pillar 1 CET1 4.50% 4.50% 4.50%

Pillar 2 Requirement (P2R) CET1 3.00% 3.00% 1.69%

Capital Conservation Buffer (CCB) 2.50% 2.50% 2.50%

Other Systemically Important Institutions (O-SII)4 0.50% 1.00% 1.00%

CET1 Requirement 10.50% 11.00% 9.69%

Pillar 1 AT1 1.50% 1.50% 1.50%

Pillar 1 T2 2.00% 2.00% 2.0%

Total Capital Requirement 14.00% 14.50% 14.50%


CET1 at 14.3%, well above regulatory requirements

20

0

2

4

6

8

10

12

14

16

18

20

22

24

0.2%

Loan credit

losses and

other

impairments

(0.3%) 1.8%

CET1

31 Dec 2019

IFRS 9

phasing in

17.7%

0.4%

Operating

Profits

(0.5%)

RWAs

(0.3%)

Fair value loss

on FVOCI

CET1

31 Mar 2020

AT1

1.6%

T2 Total Capital

31 Mar 2020

14.8% 14.3%

CET1 ratio at 14.3%1,2 and Total capital ratio at 17.7%1


(2) The CET1 ratio for 31 March 2020, including the full impact of IFRS 9 amounted to 12.9%

(3) Loan credit losses and other impairments include the net change of the prudential charges relating to specific credits and other items

(4) OCR(SREP)- Overall Capital Requirement comprises the Total SREP Capital Requirement (Pillar 1 and Pillar 2 Requirement) plus

combined buffer requirements (capital conservation buffer, countercyclical buffer and systemic buffers). As from 31 March 2020, following

ECB measures CET1 ratio is 9.7%

(5) On 20 May 2020, the Group held Cyprus sovereign debt securities of a nominal amount of €735 mn (compared to €542 mn on 31 March

2020), of which €337 mn is held at FVOCI portfolio and €398 mn is held at amortised cost portfolio. The increase since the quarter end is

mainly due to the Group’s participation on the issuance of 52-week treasury bills of the Cyprus Government in April 2020

min OCR (SREP) requirement for 2020 post ECB Announcement 4

• Phasing-in of IFRS 9 transitional arrangements reduced capital by c.30 bps

• Loan credit losses and other impairments reduced capital by c.50 bps, of which c.20bps reflect deterioration of macroeconomic outlook due to COVID-19 outbreak

• Reduction of RWAs by c.€290 mn increased capital by c.20 bps

• Decrease in revaluation reserves, reflecting the decrease in the Fair Value Reserve of the FVOCI debt security portfolio of the Group in 1Q2020, reduced capital by

c.25 bps

• Since 31 March 2020 the mark-to market valuation of the debt portfolio held at FVOCI decreased by a further €5 mn by 20 May 2020. This change is recognised

directly in equity5

9.7%

14.5%

1

3

1,2 1


RWA intensity1 at 62% broadly flat qoq

RWA intensity1 at 62%

21

• RWA decreased by c.€290 mn as balance sheet de-risking

continues

• RWA intensity1 at 62%, broadly flat qoq

Dec 17Dec 14 Dec 15

85%

62%

Dec 18Dec 16 Dec 19 Mar 20

85% 85%

73%70%

61%

RWAs reduced by >€10 bn since peak

RWAs Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Mar 20

€ bn 22,715 19,666 18,865 17,260 15,373 12,890 12,599

(1) Risk Weighted Assets over Total Assets


(1) Servicing exclusively international activity companies registered in Cyprus and abroad and not residents

(2) Origin is defined as the country of the passport of the Ultimate Beneficial Owner

(3) The NSFR has not yet been introduced. The NSFR is calculated as the amount of “available stable funding” (ASF) relative to the amount

of “required stable funding” (RSF), on the basis of Basel III standards. Its calculation is a SREP requirement. The EBA NSFR will be

enforced as a regulatory ratio under CRR II in 2021

Customer deposits of €16.2 bn and significant surplus liquidity of €3.0 bn

22

Deposits at €16.2 bn, down 3% qoq

€ bn

Liquidity ratioMinimum

required31 Mar 2020 Surplus

LCR (Group) 100% 219% €2,989 mn

NSFR3 100% 126% €3,221 mn

1

Sep 19Mar 19

12.94

Jun 19 Dec 19 Mar 20

16.3016.84 16.69

Dec 18

16.38

3.54

16.47 16.25

13.14

3.70

12.76

3.54

12.92

3.46

12.98

3.49

13.15

3.31

-3% -3%

Cyprus IBU Cyprus non-IBU

68%

20%

4%2%

6% Cyprus

Other EU

Russia

Other countries

Other European countries, excl. Russia

Cyprus deposits by passport origin2

• Strong deposit market share of 34.8% at 31 March 2020

• Reduction of deposits by 3% qoq, mostly taking place pre Covid-19 lockdown,

reflecting mainly seasonality and the introduction of liquidity fees to specific

customer groups

• ECB liquidity relaxations for COVID-19 announced in March 2020:

• Flexibility to operate below 100% LCR limit in the short term

• Updated TLTRO III terms significantly more generous

• Introduction of LTROs, providing liquidity until next TLTRO in June 2020

• Launch of Pandemic Emergency Purchase Programme (PEPP) for an

amount of €750 bn

• Relaxation of collateral rules for ECB funding enhances borrowing capacity

of banks

Significant surplus liquidity of €3.0 bn


>€11 bn or 75% NPE reduction since peak

23

0

20

40

60

80

55%

17%

47%

Dec 15Dec 14

63%

53% 30%

62%

Dec 18

50%42%

47%

Dec 16

32%

Dec 17

30%

Dec 19

29%

15%

Mar 20

-34 p.p.

Gross NPE ratio Net NPE ratio

• €11.3 bn or 75% NPE reduction since peak

✓ c. €2.7 bn NPE through trades

✓ c. €8.6 bn organic

• Sale of c.€133 mn retail unsecured NPEs

(Velocity 2), completed in May 2020

• 34 p.p. reduction since peak

9.9

1.6

(2.7)5.1

31 Dec 14 NPE trades

(8.6)

Organic

2.1

31-Mar-20

Allowance for Expected Loan

credit losses

Net NPEs

15.0

3.7

€11.3 bn

NPEs (€ bn)

Gross NPE ratio reduced to 29%; 15% on a net basis


(1) In pipeline to exit NPEs subject to meet all exit criteria; the analysis is performed on a customer basis (formerly called Non-core NPEs)

Core NPE risk reduced to €3.38 bn; 60% cash covered

24

Core NPEs reduced by €70 mn qoq

11.36

6.21

3.45 3.38

2.61

1.21

Mar 20Dec 18Dec 15

0.43

Dec 19

0.36

Re-performing NPEs

Core NPEs

13.97

7.42

3.88 3.74

Corporate

5.70

3.07

Retail

2.59

SMEs

1

€ bn

0.47

Retail

0.66

Corporate

SMEs

2.25

11.36

Retail

0.54

2.28

Corporate

0.63 SMEs

2.152.51

Corporate

1.55

SMEs

Retail

6.213.45

• Organic NPE reduction of €142 mn for

1Q2020, impacted by COVID-19 lockdown in

Mar 2020

• NPEs reduced to €3.7 bn

• Core NPEs reduced to €3.4 bn

• Sale of c.€133 mn NPEs (Velocity 2)

completed in May 2020

3.38

Core NPEs € bn


60%

25%

Mar 20

Re-performing NPEs

Core NPEs

56%

(1) Restricted to Gross IFRS balance


(3) Based on EBA Risk Dashboard as at 31 December 2019

NPE Coverage increased to 56%

25

NPE total coverage at 124% when collateral included

PT ESBOC

56% 54%

IT

50% 48%

CY

45%

GR

45%

EU average

43%

NPE coverage remains above EU average3

• Cash coverage increased to 56%

• Cash coverage of Core NPEs at 60%

• Collateral coverage at 68%

1

2

68%

48%41%52%

Dec 16

67%

Dec 17

70%

Dec 18

122%

68%

54%

Dec 19

68%

56%

Mar 20

109%115%

122% 124%

Allowance for expected loan credit losses

Tangible collateral

31 Mar 2020


-0.10 -0.11-0.06 -0.07 -0.06

-0.06-0.08

-0.12

-0.14

-0.10 -0.09-0.07

-0.04

-0.09-0.06

-2.66

-0.02 -0.02

-0.16

Curing of restructuring-0.01

-0.02DFAs & DFEs

Write-offs

Other-0.28

-3.03

-0.27-0.24

Net organic

outflows

(1) Other includes interest, cash collections and changes in balances

€158 mn organic NPE outflows in 1Q2020, leading to €142 mn organic NPE reduction

26

0.06

0.04

0.010.01

0.03

New inflows

1Q2019

0.03

0.02

0.06

2Q2019 4Q2019

0.03

0.010.01

3Q2019

0.020.020.01 0.01

1Q2020

0.13

Redefaults

Unlikely to pay

0.05

0.03

Sales of NPEs

1

• NPE outflows of €158 mn & inflows of €16

mn in 1Q2020

• NPE inflows for 1Q2020 limited to 1% of

performing book (GBV)

• Moratorium of loan instalments for 9

months for all customers with less than

30 days past due as at 29 Feb 2020,

does not trigger automatic

reclassification due to forbearance

€ bn

-0.15 -0.31 -0.22 -0.21 -0.14



(2) ESTIA-eligible portfolio refers to the initial potentially eligible portfolio based on the Bank’s available data

(3) As at 15 May 2020

Clear strategy for further NPE reduction once economic conditions normalise

27

Group NPEs (€ bn)

0.47

0.66

0.82

0.36

31 Mar 2020

Estia eligible

Corporate

1.43

Re-performing NPEs

Retail

SME

3.74

€3.38 bn

• Close monitoring of redefaults & quality of restructurings

• Exit date may be extended if customers are eligible and apply for the loan moratorium

• Following Covid-19 outbreak, focus on arresting any potential asset quality deterioration

Once economic conditions normalise, the Group expects to resume its efforts to improve its asset

quality position by seeking solutions, both organic and inorganic

• NPE portfolio sale delayed due to prevailing market and operational conditions, resulting from

COVID-19 outbreak; Smaller tail trades under consideration

• Sale of c.€133 mn retail unsecured NPEs (Velocity 2) completed in May 2020

• Retail Estia eligible: Received applications for €383 mn3

• €42 mn3 participating in the scheme and €30 mn3 assessed as non viable

• 76% of the applications remain incomplete with a deadline 30 June 2020

• Realising collateral via consensual and non consensual foreclosures

• Following COVID-19 outbreak, foreclosure process suspended until 31 August 2020, in line with

the latest decision of the Association of Cyprus Banks

Core NPEs : €3.38 bn

1

0.30

0.06

2022+up to 2021

€ bn

Exit dates for re-performing

NPEs1:

2

Re-performing NPEs1: €0.36 bn


REMU sales achieved comfortably above Book Value

28

1,427

1,6411,530

280 280

628 625

273 269

182 183

103 103

24

Dec

2017

Dec

2016

Dec

2018

24

Dec

2019

Commercial properties

Mar

2020

Greece & Romania

Residential

Hotels

Land & plots

Golf

1,490 1,484

Group BV (€ mn)

Evolution of REMU stock1

16

7

2

7

ResidentialTotal Sales

1Q2020

Commercial Land

88% 87% 91% 85%

114% 109% 122% 108%

Net Proceeds / BV Gross Proceeds / OMV

• Trends on real estate market

• Sale contracts (excluding DFAs) down 16% yoy3, reflecting

COVID-19 lockdown and uncertainty about macroeconomic

outlook

• Residential property price index up 2.8% yoy4

• Temporary slowdown of REMU sales due to COVID-19 lockdown

• Visible pipeline of €49 mn (SPAs signed)

• Regulatory approval received for the setup of an Additional

Investment Fund (AIF) with GBV of up to €45 mn

€16 mn sales at a profit of €1 mn in 1Q2020

Sales contract prices2 – Organic (€ mn)

(1) In addition to assets held by REMU, properties classified as “Investment properties” with carrying value of €23 mn as at 31 March 2020

relate to legacy properties

(2) Amounts as per Sales purchase Agreements (SPAs)

(3) Based on data from Land of Registry- Sales contracts

(4) Based on Residential property price index published by Central Bank, dated 22 May 2020


REMU: €1.27 bn sales of 1,673 properties across all property classes since set-up in Jan 2016

29

(1) Amounts as per Sales purchase Agreements (SPAs)

(2) Number of properties sold include 21 properties from the disposal of Cyreit and 23 properties from NPE sale (Helix)

(3) Legacy properties relate to properties that were on-boarded before REMU set-up in January 2016

(4) The BV of the properties disposed at the date of disposal as a proportion of the: BV of the properties disposed at the time of the disposal

plus the BV of the residual properties managed by REMU as at 31 Mar 2020

Sales since Real Estate Management Unit set-up

Sales contract prices1 (€ mn)

# 99 # 331 # 575 # 5792

179

330

238

345

16

160

2016

505

1Q20202017 20192018

Cyreit Sales # properties

Sales €1.27 bn

Breakdown of cumulative sales1

by on-boarding year (€ mn)

294 553 323 96 2

2018 2019Legacy 20172016

€1,268

% Sales

of vintage stock

(BV)455% 45% 49% 27%

36%

23%

11%

10%

13%

7%

Land Residential

Commercial Cyreit

Hotels Overseas

by property type

• Asset disposal strategy tackles both value and volume of assets

• Asset disposals across all property classes

• 55% of Legacy3 and 45% of 2016 book assets now sold

• 36% of sales (by value) relate to land

3

# 89


(1) AIEA: Average Interest earning assets. Please refer to slide 71 for the definition

(2) Debt securities, treasury bills and equity investments

Balance sheet composition

30

Total assets

4.40

Legacy net loans

31 March 2020

0.46

Other assets

(including HFS)

Securities

REMU properties

Performing net loans

Due from banks

8.92

Cash

20.43

1.95

1.68

1.48

1.54

51%

10%

39%

Legacy

net loans

Performing

net loans

Liquids

0.26

Other

0.39

31 March 2020

Equity

Wholesale

Due to banks

Customer

deposits

20.43

16.25

2.24

1.29

Total equity & liabilities

AIEA Mix

1Q2020

AIEA:

€17.5 bn

€ bn € bn

1

1

2


(1) New disbursements in the reporting period including the average YTD change (if positive) for overdraft facilities

(2) Facilities/limits approved in the reporting period

New lending1 at €451 mn in 1Q2020

31

98% of new exposures2 in Cyprus since 2016 are performingPerforming gross loans by business activity

€ mn

Construction

0.34

1.01

1.04

Other sectors

Professional & Other services

3.95

Real Estate

PrivateIndividuals

Trade

0.63

Manufacturing

Hotels & Catering

3.94

1.03

1.01

1.01

1.02

0.60

0.74

0.65

0.53

0.54

0.34

Mar 2020 Dec 2019

€ bn

0.1%

3.0%

1.6%

-1.1%

-18.2%

3.9%

-1.2%

-0.8%

% change qoq

Following the outbreak of COVID-19, new lending is focused on supporting the Cypriot economy

66 47 45 4267

81 99 90 9679

7947

43 4262

302325

254214

225

3530

59

49

4Q20193Q20191Q2019 2Q2019

548

18

1Q2020

563

491

443 451

+2%

Shipping & Syndicated loans

Retail HousingCorporate

SME Retail other


(1) The interest income, non-interest income, staff costs, other operating expenses and loan credit losses related to Project Helix are disclosed under ‘Provisions/net loss relating to NPE sales, including restructuring expenses’ since they are considered one-off items

(2) An amount of c.€12 million relating to one off charge included in ‘Net interest income’ under the statutory basis is presented within ‘Loan credit losses’ under the underlying basis which is related to a change in the method of amortising arrangement fees given that this was a non

recurring item

(3) Provisions/net loss relating to NPE sales, including restructuring expenses’ refer to the net loss on transactions completed during FY2019, net loan credit losses on transactions under consideration at 31 December 2019 and 31 March 2020, as well as the restructuring costs relating to

these trades

Income Statement

32

€ mn 1Q2020 1Q20191 4Q20191 qoq% yoy%

Net Interest Income 85 85 84 2% 0%

Non interest income 60 71 72 -16% -15%

Total income 145 156 156 -7% -7%

Total expenses (93) (103) (103) -10% -10%

Operating profit 52 53 53 0% 0%

Loan credit losses (64) (47) (29)2 120% 36%

Impairments of other financial and non-financial assets (4) (1) (13) -65% -

Provisions for litigation, claims, regulatory and other matters (2) (0) (7) -72% -

Total loan credit losses, impairments and provisions (70) (48) (49) 43% 49%

Advisory and other restructuring costs-organic (3) (6) (8) -56% -48%

Loss after tax-Organic (attributable to the owners) (23) (3) (6) - -

Restructuring costs- Voluntary Staff Exit Plan (VEP) - - (81) - -

Provisions/net loss relating to NPE sales, including restructuring

expenses3 (3) (5) (86) -97% -31%

Share of profit from associates (CNP) - 2 - - -

Reversal of impairment of DTA and impairment of other tax

receivables- 101 (13) - -

(Loss)/profit after tax-attributable to owners (26) 95 (186) -86% -

Net Interest margin (annualised) 1.95% 1.88% 1.87% +8 bps +7 bps

Cost to income ratio 64% 66% 67% -3 p.p. -2 p.p.

Cost to income ratio adjusted for the

special levy and contributions to SRF and DGF 58% 62% 63% -5 p.p. -4 p.p.

Cost of Risk (annualised) 2.00% 1.44% 0.89% +111 bps +56 bps

EPS – Organic (€ cent) -5.1 -0.9 -1.3 -3.8 -4.2

• NII amounted to €85 mn in 1Q2020, broadly

flat qoq. NII in 1Q2020 includes increased

interest cash collections not previously

recognized of c.€4 mn

• NIM at 1.95% for 1Q2020, positively impacted

by the lower volume and cost of deposits

• Non-interest income decreased to €60 mn

mainly due to lower insurance income and

REMU gains

• Total expenses reduced to €93 mn in 1Q2020,

compared to €103 mn in 4Q2019, due to lower

staff costs and lower operating expenses

• C/I ratio reduced to 58%, following the

successful completion of Voluntary Staff Exit

Plan in 4Q2019

• Loan credit losses increased to €64 mn for

1Q2020, of which €28 mn reflect the initial

impact of IFRS 9 Forward Looking Information

(FLI) driven by deterioration of macroeconomic

outlook

• Loss after tax of €26 mn for 1Q2020


(1) Interest income on performing book for 1Q2019 increased from €74 mn to €77 mn since previously disclosed on 13 May 2019, due to reclassification between exposures

Balance sheet de-risking results in a smaller but safer loan book

33

Net Loans: Performing vs Legacy

• Lower but higher quality income resulting from balance sheet de-risking

• Interest Income of performing book reduced by €3 mn qoq, mainly due to the sustained low interest rate environment

• Interest Income of legacy book increased by €1 mn qoq mainly due to increased cash collections not previously recognized

• Interest on Net NPEs not received in cash, fully provided

• Lending rates remain under pressure due to the sustained low interest rate environment

Interest Income on Loans: Performing vs Legacy

8.65

Dec 18Dec 16 Dec 17

1.68

Dec 19 Mar 20

12.04

14.55

3.39

15.62

1.79

10.73 10.60

9.98

4.405.64

10.158.928.94

36%

64%84%

16%

Legacy Performing

77 74 76 75 72

27 27 29 23 24

1Q2019 3Q20192Q2019 4Q2019

104

1Q2020

101 10598 96

€ mn€ bn

Legacy Performing

1


Non-Legacy Legacy Group

1Q2020 1Q2020 1Q2020

Pro

fita

bil

ity

Interest Income on loans (€ mn) (pre FTP) 721 24 96

Loan credit losses

(€ mn)(27) (37) (64)

Interest Income net of loan credit losses

(€ mn)45 (13) 32

Cost of Risk 1.16% 4.13% 2.00%

Effective Yield 3.24% 5.60% 3.62%

Risk adjusted Yield1 2.05% -3.03% 1.23%

Cap

ita

l &

ba

lan

ce

Sh

ee

t Average Net Loans (€ mn) 8,930 1,732 10,662

RWA Intensity2 54% 106% 62%

(1) Interest Income on loans net of loan credit losses/ Average Net Loans

(2) Risk Weighted Assets over Total Assets

Risk adjusted yield will rise as Legacy book reduces

34

• Performing Book is expected to grow and to

increasingly drive Group results

• Legacy book revenues predominantly driven

by loan credit losses unwinding (but offset via

loan credit losses)

• Increased loan credit losses for performing

book mainly due to the deterioration of the

macroeconomic outlook

• Interest on Net NPEs not received in cash,

fully provided (€17 mn in 1Q2020)

• As Legacy book reduces:

• Group risk adjusted yield expected to

rise

• Group Risk intensity expected to fall

supporting CET1 ratio buildCorporate, Global

corporate

IB, W&M

SME and

Retail Banking

Insurance and

Other incl H/O

RRD

Overseas non core

REMU


(1) Cash, placements with banks, balances with central banks and bonds

(2) Other includes funding from central banks and deposits by banks and repurchase agreements. For further details, please see slide 63

(3) Effective yield of liquid assets: Interest income on liquids after hedging, over average liquids (Cash and balances with central banks, placements with banks and bonds)

(4) Effective yield of cost of funding: Interest expense of all interest bearing liabilities after hedging, over average interest bearing liabilities (customer deposits, funding from the central bank, interbank funding, subordinated liabilities)

(5) Interest income on performing book for 1Q2019 increased from €74 mn to €77 mn since previously disclosed on 13 May 2019, due to reclassification between exposures

Drivers of NIM

35

Composition of NII Liquidity build up:

• Challenging interest rate outlook continues

to put pressure on the effective yield of

liquids

• Balance sheet de-risking–smaller but safer

loan book

• Higher-yielding, higher-risk legacy loans

are reducing as we successfully exit NPEs

Loan yields:

• Performing book yields remain under

pressure mainly due to the continued

lower interest rate environment

• Legacy book yields remain volatile

• Interest on Net NPEs not received in

cash, fully provided

Cost of funding:

• Improved to 30 bps, positively affected by

the 5 bps reduction in cost of deposits in

1Q2020

• Overall cost of deposits reduced by 65 bps

since year end 2017

Effective yield on assets & cost of funding

77 74 76 75 72

27 27 2923 24

6 6

110

2Q20191Q2019

44Liquids

3Q2019

1105 102

4Q2019

1Q2020

Legacy

Performing

107100

-3 -3 -3 -3-3 -3 -3

-6 -6 -6-6 -6

-13-10 -8

-8-5

Subordinated

loan stock

Other

-2-2 -1

Net derivative

-22

Customer

deposits

-25

-20-18

-15

355 335 338 330 324

506 530576

485

560

19 17 7 6 8

-50 -43 -39 -38 -30

1Q2019 2Q2019 3Q2019 4Q2019 1Q2020

Performing Legacy

Liquids Cost of funding

5

5

2

43

188 189 199 187NIM

(bps)85 85 90 84NII (€ mn)

1

85 195


37 38 36 39 38

1218

1216

11

12

106

18

24

14 11

101

3Q2019

4

92

1Q2019

72

2Q2019

71

1Q20204Q2019

72

60

(1) Net FX gains/(losses & Net gains/(losses) on financial instruments, and other income

(2) Gains/(losses) from revaluation and disposal of investment properties and on disposal of stock of properties


Non interest income at €60 mn in 1Q2020

36

Analysis of Non Interest Income (€ mn) – Quarterly• Net fee and commission income

accounts for 26% of Total Income,

compared to 25% the previous quarter

• Net fee and commission income

comprises 44% of Transactional

income that is negatively affected by

COVID-19 outbreak

• Recurring income of €49 mn for

1Q2020, down 9% qoq mainly due to

lower insurance income

• Net insurance income of €11 mn for

1Q2020, compared to €16 mn for

4Q2019, primarily due to negative

market performance following the

outbreak of COVID-19 and higher

insurance claims

• Net REMU gains2 of €1 mn in 1Q2020

compared to net gains of €6 mn in

4Q2019 as REMU sales in 1Q2020

were impacted by the COVID-19

lockdown; REMU sales remains

volatile

56 4849

Net fee & commissionNet FX and other income REMU Insurance income net of insurance claims Recurring income1 2

Net fee &

commission %

of total income23% 22% 23% 25% 26%

55

3

49

3 3 3

44%56%

Non-transactional

Transactional

Net fee &

commission


Recurring fees from insurance business

37

• Leading life insurer in Cyprus

• 24% market share (Life & Health regular)

• Gross Written Premiums (GWP) up 7% yoy

Product Mix by premium

• Leading non-life insurer in Cyprus

• 17.7% market share2 (excl. motor)

• GWP up 2% yoy

Product Mix by premium

GWP evolution (€ mn) GWP evolution (€ mn) Group Insurance income net of claims (€ mn)

28 29 31

1Q2018 1Q20201Q2019

+6% +7%

11 11 12

1Q2018 1Q2019 1Q2020

+1% +2%

12 12 11

1Q20201Q20191Q2018

✓ Comprehensive insurance business

package providing coverage for all

financial needs

✓ Stable contributor to the Bank’s

profitability

✓ Well positioned for growth over medium

term

Eurolife

key metrics

1Q2020

GWP (€ mn) 31

GWP Investments & Pensions

(€ mn)

4

PAT (€ mn) 2

AUM1 (€ mn) 408

61%21%

18%Accident &Health

Unit-linked

Traditional Life48%

32%

7%

13%

Other

Motor

Property

Liability

GIC

key metrics

1Q2020

GWP (€ mn) 12

PAT (€ mn) 1

Contribution

to BOCH

% of total

1Q2020

Non interest income 19%

(1) Assets under management

(2) Data based on statistics published on IAC website


(1) Excluding Special Levy and contributions to SRF and DGF

(2) Representation for deconsolidation of UK subsidiary in 3Q2018

(3) The interest income, non-interest income, staff costs, other operating expenses and loan credit losses related to Project Helix are

disclosed under ‘Provisions/net loss relating to NPE sales, including restructuring expenses’ since they are considered one-off items

(4) The contributions are calculated based on the Risk Based Methodology (RBM) as approved by the management committee of the

Deposit Guarantee and Resolution of Credit and Other Institutions Schemes (DGS) and is publicly available on the CBC’s website. In line

with the RBM the contributions are broadly calculated on the covered deposits of all authorised institutions and the target level is to reach

at 0.8% of these deposits by 3 July 2024

Total Expenses

38

Cost to Income Ratio (C/I ratio)1,3

Total operating expenses (€ mn)

FY2018 1Q2019 1H2019 9M2019 FY2019 4Q2019 1Q2020

56%

62%59% 58% 59%

63%

58%

52 52 54 56 56 55 53 49

43 3441 43 38 43

3542

4

2Q20192Q2018 3Q2018

100

1Q20194Q2018 3Q2019 4Q2019 1Q2020

9586

97 99 93 9684

Staff costs unrelated to 4Q2018Other operating expenses Staff costs

5 6 7 6 6 6 7 9

3Q20193Q2018 4Q20182Q2018 1Q2019 4Q20192Q2019 1Q2020

Special Levy and contributions to SRF and DGF (€ mn)

• C/I ratio1 decreased to 58% in 1Q2020, compared to 59%

for FY2019, principally reflecting the lower total operating

expenses

• Staff costs reduced to €49 mn in 1Q2020 reflecting mainly

the net savings from the Voluntary Staff Exit Plan

• Operating expenses for 1Q2020 decreased to €35 mn,

mainly due to lower consultancy and property expenses

• Special levy and contributions to SRF and DGF for 1Q2020

at €9 mn, driven mainly by the Contribution to the Deposit

Guarantee Fund (DGF)

• As from 1 January 2020 and by 3 July 2024 the Group is

subject, on a semi-annual basis, on the Contribution to the

Deposit Guarantee Fund (DGF). The said contribution of the

Group has been set at €2.9 mn for the 1H2020 and this was

charged in 1Q2020 financial results of the Group4

22 3 3 3 3


Key Takeaways

39

• Extent of the spread of COVID-19

• Direct and indirect impact on customers

• Effectiveness of the regulatory and fiscal measures taken to

support the economy and mitigate the impact of the virus

2020 unknowns 2020 knowns

• Good capital and strong liquidity position

• Ongoing slowdown of new cases following government’s swift reaction

• Gradual reopening of the Cypriot economy in four phases

• Update of IFRS 9 macroeconomic assumptions driving increase in COR

by 88 bps for 1Q2020

• Well diversified performing book with most affected sectors entering

the crisis with liquidity buffers

• The economic outlook has deteriorated, and we are seeing this in reduced levels of activity in transactions and lower demand for new loans. The

economic effects are expected to have a negative impact on the Group’s 2020 financial performance. The full impact remains uncertain and will be driven

by the duration of COVID-19 restrictions, the successful reopening of the economy and the timing and shape of economic recovery

Key strategic focus remains the improvement of the asset quality and efficiency of the Bank


Key Information and Contact Details

40

Contacts

Investor RelationsTel: +35722122239, Email: [email protected]

Annita Pavlou Investor Relations Manager

Tel: +357 22 122740, Email: [email protected]

Elena Hadjikyriacou ([email protected]),

Marina Ioannou ([email protected])

Andri Rousou ([email protected]),

Stephanie Koumera ([email protected])

Executive Director Finance

Eliza Livadiotou, Tel: +35722 122128, Email: [email protected]

Visit our website at: www.bankofcyprus.com

Credit Ratings

Standard & Poor’s Global Ratings:

Long-term issuer credit rating: Affirmed at “B+” on 30 July 2019 (stable outlook)

Short-term issuer credit rating: Affirmed at “B” 30 July 2019

Fitch Ratings:

Long-term Issuer Default Rating: Affirmed at “B-" on 29 November 2019 (outlook revised to

negative on 7 April 2020)

Short-term Issuer Default Rating: Affirmed at “B" on 29 November 2019

Viability Rating: Affirmed at “b-” on 29 November 2019

Moody’s Investors Service:

Baseline Credit Assessment: Affirmed at “caa1” on 24 January 2019

Short-term deposit rating: Affirmed at "Not Prime" on 14 June 2019

Long-term deposit rating: Affirmed to “B3” on 14 June 2019 (positive outlook)

Counterparty Risk Assessment: Affirmed at B1(cr) / Not-Prime (cr) on 14 June 2019

Listing:

LSE – BOCH, CSE – BOCH/ΤΡΚΗ, ISIN IE00BD5B1Y92

mailto:[email protected]








APPENDIXMacroeconomic overview

41


SOURCE: Statistical Service of Republic of Cyprus; Bloomberg;

(1) Normalised against Germany Government bond with maturity 15/8/2025 except Greece

(2) Due to the Debt swap of the Hellenic Republic, from November 2017 onwards data for the new Hellenic Republic Bond with maturity

30/01/2028 was used and normalised against the closest maturity of German Government bond (DBR) 15/08/2027

(3) Official estimate from Eurostat’s monthly data

(4) SA: Seasonally Adjusted

Cypriot economy grew by 0.8% in 1Q2020 reflecting COVID-19 lockdown; economic outlook remains uncertain

42

GDP slowed to 0.8% growth SA, year-on-year in Q1 2020

COVID-19 pandemic poses serious challenges to sovereign ratings

Dec 1

2

Mar

13

May 1

3

Au

g 1

3

Oct

13

Ja

n 1

4

Mar

14

Ju

n 1

4

Au

g 1

4

Nov 1

4

Ja

n 1

5

Ap

r 15

Ju

n 1

5

Se

p 1

5

Nov 1

5

Ja

n 1

6

Ap

r 16

Ju

n 1

6

Se

p 1

6

Nov 1

6

Feb

17

Ap

r 17

Ju

l 1

7

Se

p 1

7

Dec 1

7

Feb

18

May 1

8

Ju

l 1

8

Oct

18

Dec 1

8

Feb

19

May 1

9

Ju

l 1

9

Oct

19

Dec 1

9

Mar

20

Cyprus Portugal Italy Spain Greece Ireland

0

0.1

0.2

0.3

0.4

0.5

0.6

Ja

n 2

01

8

Feb

20

18

Apr

20

18

May 2

01

8

Ju

l 20

18

Aug

2018

Sep

2018

No

v 2

018

De

c 2

018

Feb

20

19

Mar

20

19

May 2

01

9

Ju

n 2

01

9

Aug

2019

Sep

2019

No

v 2

019

De

c 2

019

Feb

20

20

Mar

20

20

May 2

02

0

Cyprus - maturity 4/11/2025 Portugal - maturity 15/10/2025 Spain - maturity 31/10/2025

Italy - maturity 01/12/2025 Greece - maturity 30/01/2028

1 1

1

1

2

Unemployment rate dropped to 6.1% in 1Q2020 SA4

Widening of spreads reflecting uncertainty due to COVID-19 spread

BBB-

AA-

BB-

A

BBB

3.3 3.1 3.33.2

0.8

-6.5

-1.9

3.4

6.74.4

3.2

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2011Q4 2012Q4 2013Q4 2014Q4 2015Q4 2016Q4 2017Q4 2018Q4 2019Q4

Real GDP Quarterly SA % change y-o-y Real GDP SA annualised % change y-o-y4 4

400

358

7.67.36.8 6.1

300

320

340

360

380

400

420

440

460

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20

10

Q1

20

10

Q4

20

11

Q3

20

12

Q2

20

13

Q1

20

13

Q4

20

14

Q3

20

15

Q2

20

16

Q1

20

16

Q4

20

17

Q3

20

18

Q2

20

19

Q1

20

19

Q4

Employment in 000s (4Q average NSA (RHS) Unemployment rate SA (%) 4

2020Q

1

S&

P c

red

it r

ati

ng

s

Sp

read

s (

%)

3


SOURCES; Statistical Service of Republic of Cyprus, Eurostat; Calculations by BOC Economic Research

Sectors most adversely affected by COVID-19 are expected to be Tourism and Trade

43

Economic activity has been broadly based with main

drivers tourism and construction

Construction activity – strong recovery in FY2019 Support from key business enablers

Corporate tax rates - 2019

40.2%

38.5%

21.3%

Upper and post-

secondary, non-

tertiary

Less than

Upper secondary

Tertiary

Level of education 2019, age 15-64

Cyprus has the highest number of

university graduates in the population

in the EU after Ireland, at par with UK

31.0%

30.0%

28.0%

25.0%

24.0%

21.0%

19.0%

12.5%

12.5%

Tourism arrivals (mn)Tourism: % changes yoy

201620132011 20142012 2018

2.4

2015 2017 2019 1Q

2019

1Q

2020

2.42.7

2.5 2.4

3.2

3.73.9 4.0

0.4 0.2

-31%

1.20.0 0.3 0.2

1.0

1.01.5

1.0

1.6

1.61.0

0.6

1.5

1.00.1

0.6

-0.8 -0.5 -1.0 -0.4

0.6

0.4 0.6

0.5

0.4

0.6 0.4

0.5

6.7

4.44.1

3.2

2016 2017 2018 2019

Arts & Oher

Public, Edu. &HealthProf. & Admin

Real Est.

Financial

Information

Trade, Tran. &Tour.Construction

18.4 17.3 16.8 17.313.8 12.3

41.6

11.9

24.7

49.8

0.0

10.0

20.0

30.0

40.0

50.0

60.0% changes year-on-year

Production index in construction Building permits volume (4Q moving sums)

-31.0

2.7

11.9

2016 2017 2020

Mar yoy

2018

11.7

19.8

14.6

7.8

-39.0

Total arrivals (% change)

Total receipts (% change)


APPENDIXAdditional asset quality slides

44


The legislative framework1 positively supports organic delivery and the sale of NPEs

45

Other changes

Securitisation Law

Foreclosure Law

Sale of Loans Law

• The July 2018 foreclosure law amendments1 have expedited the process and limited options to frustrate execution

• In July 2019 the Parliament has voted through certain changes to that law which, in the most part, seek to:

– Provide additional checks and balances where banks are seeking to foreclose small loans (<€350k) secured by a PPR, and

– Extend the foreclosure timetable by extending various notice periods

• These amendments have not yet passed into law, as the President of the Republic has referred these to the Supreme Court,

based on legal advice from the Attorney General that elements thereof are unconstitutional

• Discussions are on-going, including, inter alia the MoF, the CBC and the Financial Ombudsman, aiming to introduce

amendments to the foreclosure and loan restructuring framework that are acceptable to all stakeholders

Tax legislation

• Incentives to customers agreeing consensual solutions continue including exception of capital gains tax and transfer fees in sale

of property to banks

• Additional exemption for sale of property directly to third party introduced

Insolvency framework

• Changes aim to close gaps and enhance the participation and applicability of personal repayment schemes for physical persons

• Easier for banks to securitise NPΕs

• Regulated by CBC

Amendments1 approved in July 2018 aim to improve the law and close current gaps that hindered the use of the law via:

✓ Improving the framework around transfer of rights and obligations to the buyer

• Regulating the transfer of rights, obligations, benefits, continuity of lawsuits etc between parties

• Splitting of collateral to cover disposed part of loan in case of cross-collateralisation of loans

• Transfer of collaterals to the name of the buyer without further costs

TIMEFRAME Foreclosure DecisionService time of Notices

Servicing Time +40 days

Valuation

30-115 days

Service Announcement

3-5 days + Servicing Time+ 30 daysAuction

Property transfer & Distribution of proceeds

1-50 days immediately after auction

(1) Amendments to the Foreclosure Legislation, the Sale of Loans Law, the Insolvency framework and the introduction of the Securitisation

Law came into effect on 13/7/2018

(2) The timeframe up to the first auction of 8 months relates to the period from the commencement of the foreclosure (the foreclosure process

is considered to have commenced upon serving notice to the mortgagor) up to the first auction

TIME UP TO AUCTION: ~ 8 MONTHS2

1


Foreclosures are an important tool in NPEs resolution

46

• Solution rate4 at 68%

• c.1/5 properties auctioned are sold at auction

• Following COVID-19 outbreak, foreclosure process suspended until

31 August 2020, in line with the latest decision of the Association of

Cyprus Banks

1,397 properties resolved excluding Helix assets since Jan 2016

718 Consensual

deals

413

Repossessed

266

Sold at

auction

Cumulative

2016 – 20181 FY2019 1Q2020

Foreclosures

commenced2 1,437 1,829 593

Auctions held 470 807 1646

1Q2019 2Q2019 3Q2019 4Q2019 1Q2020

330 527 436 536 593

82 163 189 373 1646

No. of properties

(1) Excluding Helix

(2) The foreclosure process is considered to have commenced upon serving notice to the mortgagor

(3) Properties that have been auctioned unsuccessfully at least once

(4) The [number of cases resolved] as a proportion of [the number of cases that reached or would have reached an auction had they not

closed prior to the auction set date]

(5) Includes DFAs, restructurings and settlements

(6) Auctions held up to ACB announcement suspending foreclosures up to 31 August 2020

5

3

1,397


(1) ESTIA-eligible portfolio refers to the potentially eligible portfolio based on the Bank’s available data

(2) Please refer to slide 74 for the NPE forborne exit criteria

(3) Data available as at 15 May 2020

ESTIA- Government scheme for the resolution of NPEs backed by primary residence

47

• Clear definition of socially protected borrowers

• Resolution part of ESTIA- eligible1 portfolio

• Identification of non-viable (vulnerable) customers

• Facilitates resolution of remaining customers mainly through consensual and

non consensual foreclosures

• Deadline for completion of applications extended to 30 June 2020, due to

COVID-19 outbreak

383435Estia

eligible

ApplicantsNon applicants

€ mn

• Restructured loans will exit NPE definition in accordance with the NPE exit

criteria2

• Government solution under consideration

• Covered by 60% by allowance for expected loan credit losses

• Enforcement measures initiated for non Estia applicants

• Focus on realizing collateral via consensual and non-consensual

foreclosures

• On-board assets in REMU at conservative c.25%-30% discount to open

market value

Participants: €42 mn3

Non viable: €30 mn3

Other: €746 mn3

30

Participants

42

Incomplete/Under review Non viable

311

€818 mn

1

Coverage: 60%


ESTIA- Government scheme for the resolution of NPEs backed by Primary Residence

48

• Eligible loans to be restructured to lower of contractual and Open Market Value (OMV) (on balance sheet solution)

• Government to subsidise 1/3 of instalment, provided certain eligibility criteria1 are met:

➢ Borrowers with loans linked to a Primary Residence (PR) with OMV ≤ €350k

➢ At least 20% of the total borrower’s credit exposures > 90 days past due as at 30 Sept 2017

➢ Annual gross income < €20k to €60k, ranging from €20k for single persons to €60k for couples with 4 or more dependents

• Other household’s net assets, excluding the PR <80% of the OMV of the PR. Cap on value of asset of €250k

• European citizen with legal and continuous residency in EU since 2013

✓ Restructured loans will exit NPE definition in accordance to the NPE exit criteria1

Clear definition of socially protected borrowers, acting as enabler against non-Estia eligible borrowers

Expected to resolve part of ESTIA-eligible portfolio, identify non-viable (vulnerable) customers and facilitate resolution of remaining customers through alternative solutions

Scheme summary

(1) Please refer to slide 74 for the NPE forborne exit criteria


(1) Excluding write offs & non contractual write offs and DFAs and terminated accounts (2) The performance of loans restructured during 4Q2019 is not presented in this graph as it is too early to assess

Restructuring efforts continue; re-default levels stable

49

Quarterly evolution of restructuring activity (Cy operations)

0.06 0.08

0.120.14

0.07 0.090.06

0.10

0.12

0.060.07

0.06

1Q2019 4Q20192Q2019

0.13

0.010.02

3Q2019

0.02

1Q2020

0.28

0.34

0.150.18

Restructured loans Write-offs & non-contractual write-offs DFAs

€ bn

Restructured loans that presented no arrears as at 20 Feb 2019 are eligible to loan moratorium; Moratorium extends “90 days past due” deadline via modified payment

schedule. The Group will not monitor this metric during the loan moratorium period

47

%

56

% 69

%

63

%

10

0%

79

%

73

% 84

%10

0%

78

%

70

% 85

%

59

% 80

%

74

%

74

%

72

%

73

%

69

%

58

%

89

%

88

%

81

%

85

%97

%

96

%

79

%

88

%10

0%

75

%

79

%

80

%10

0%

94

%

88

%

94

%

0%

20%

40%

60%

80%

100%

Corporate SMEs Retail Total Bank - Cyprus3Q2017 4Q2017 1Q2018 2Q2018 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019

74% 80%

Weighted Avg since Sep-17

Cohort analysis of restructured 1,2 loans; 80% of restructured loans present no arrears

Corporate SMEs Retail Total Bank – Cyprus

78%

92%


Fair value of collateral and adequacy of loan credit losses

50

NPE Coverage at 56%

• Resolution of cases within loan credit losses

continued in 1Q2020

• Back-testing of >17k fully settled customers over

last 21 quarters on average within c.10% surplus

over net book value

Back-testing of loan credit losses supports past loan credit losses adequacy

QuarterGross Contractual Balance

€ mn

Surplus/(Gap) in

loan credit losses€ mnNo. of Customers

1Q2015 6.0 1.4 148

2Q2015 79.2 16.0 242

3Q2015 20.2 0.0 441

4Q2015 65.7 -2.1 551

1Q2016 158.3 0.5 1,276

2Q2016 266.9 12.1 2,298

3Q2016 124.5 13.9 115

4Q2016 71.9 -1.1 2,343

1Q2017 119.2 1.2 2,194

2Q2017 200.9 7.5 2,369

3Q2017 75.7 7.8 1,081

4Q2017 137.6 1.8 498

1Q2018 71.7 -3.9 427

2Q2018 44.1 2.6 390

3Q2018 37.4 -0.2 343

4Q2018 47.9 1.6 322

1Q2019 excl. Helix 31.9 1.3 319

2Q2019 39.6 1.6 878

3Q2019 44.1 2.1 336

4Q2019 36.1 2.2 305

1Q2020 13.7 1.6 281

1,692.6 67.9 17,157

Loans and advances to customers31 Mar 2020

(€ mn)

Cash 449

Securities 605

Letters of credit / guarantee 173

Property 15,435

Other 1,556

Surplus collateral (8,615)

Net collateral 9,603

Fair value of collateral and credit enhancements

47 4740

30 29

64

0

10

20

30

40

50

60

0

10

20

30

40

50

60

70

3Q2019

50%53%

1Q2019

54%

2Q2019

48%51%

1Q2019pro forma for Helix

4Q2019

56%

1Q2020

Cash coverage Loan credit losses

€ mn


Continuous progress across all segments (Cy operations)

51

Focus shifts to Retail and SME after intense Corporate attention

1.69

0.66

0.47

0.25

0.12

0.47

Mar 2020

Corporate

Terminated Corporate

SME

Terminated SMEs

Retail

Terminated Retail

NPEs (Cy) €3.66 bn

€2.35 bn

€0.59 bn

€0.72 bn

Retail

SME

Corporate

3.01

0.64

0.59

Exits

Dec 18

Dec 19

(1.99)

0.08Inflows

(0.46)

Helix

(0.05)Exits

Mar 20

1.75

0.72

0.72

Helix (0.56)

Dec 18

Dec 19

0.04Inflows

(0.51)Exits

0.01Inflows

(0.01)Exits

Mar 20

2.47

2.43

2.35

Inflows

Dec 18

0.15

Exits (0.14)

(0.05)Helix

0.01

Dec 19

Mar 20

Inflows

(0.09)Exits

Mar 2020

NPE ratio 12%

NPE coverage 51%

NPE total coverage 108%

Mar 2020

NPE ratio 38%

NPE coverage 54%


Mar 2020

NPE ratio 40%

NPE coverage

➢ Retail Housing 51%

➢ Retail Other 65%


€ bn


(1) Reporting as at 31 December 2017 includes transfers within RRD business lines following an internal reorganisation of RRD in 4Q2017

Gross loans and NPEs by Customer Type

52

Gross loans by customer type (€ bn)

9.47 9.017.06

2.74 2.67

4.353.51

2.98

2.21 2.19

4.224.17

4.07

1.92 1.91

2.092.06

1.79

4.08 4.07

1.87 1.87

Dec 16 Dec 19 Mar 20

12.71

Dec 17

18.75

Dec 18

20.13

15.90

12.82

Retail other Retail Housing Global CorporateSMEs Corporate

5.003.99

3.19

2.99

2.02

1.76

1.77

1.57

1.49

0.73 0.72

1.27

1.22

0.98

1.39 1.33

1.04 1.03

0.50

8.80

Dec 16 Dec 17

7.42

Dec 18 Dec 19

0.160.56 0.16

Mar 20

11.03

3.88 3.74

NPEs by customer type (€ bn)

1

1


(1) Restricted to Gross IFRS balance

NPE Coverage and Total coverage by segment (Cy)

53

Coverage and collateral maintained post NPE sale (Helix)

1

Total Cyprus €3.66 bnCorporate €0.48 bn SME €0.72 bn Retail-Housing €1.33 bn Retail-Other €1.02 bnGlobal Corporate: €0.11

Mar 20

54%

Dec 19

51%

72%70%

50%

Dec 18 Dec 19 Mar 20Dec 19

55%

54%51%

Mar 20 Dec 18

57%

72%

43%

Mar 20Dec 19

62%

Dec 19

55% 57%

Dec 18

72%54%

52%

71% 68%84%

55%

39%

Dec 18

83% 53%

Dec 19

48%

82%

65%51%

68%

106%

Mar 20

57%

58%

Mar 20Dec 18

64%

100%

51% 53%

123%

104%

124%

115%117%123%

127% 125%131% 133%

118% 118%123% 121% 123%

Tangible Collateral

Allowance for expected loan credit losses


Asset quality- NPE analysis

54

(€ mn) Mar-20 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18

A. Gross Loans after Residual Fair value adjustment on initial

recognition12,457 12,551 12,757 12,782 15,437 15,438

Residual Fair value adjustment on initial recognition 252 271 278 290 445 462

B. Gross Loans 12,709 12,822 13,035 13,072 15,882 15,900

B1. Loans with no arrears 8,706 8,820 8,794 8,565 8,402 8,260

B2. Loans with arrears but not NPEs 265 122 156 195 207 221

1-30 DPD 209 88 119 150 138 166

31-90 DPD 56 34 37 45 69 55

B3. NPEs 3,738 3,880 4,085 4,312 7,273 7,419

With no arrears 601 722 802 949 1,356 1,482

Up to 30 DPD 52 54 69 89 108 136

31-90 DPD 72 76 86 125 183 231

91-180 DPD 79 121 159 149 240 178

181-365 DPD 255 263 251 225 316 393

Over 1 year DPD 2,679 2,644 2,718 2,775 5,070 4,999

NPE ratio (NPEs / Gross Loans) 29% 30% 31% 33% 46% 47%

Allowance for expected loan credit losses (including residual

fair value adjustment on initial recognition1)2,109 2,096 2,086 2,145 3,846 3,852

Gross loans coverage 17% 16% 16% 16% 24% 24%

NPEs coverage 56% 54% 51% 50% 53% 52%

(1) Comprise (i) loan credit losses for impairment of customer loans and advances, (ii) the residual fair value adjustment on initial recognition of loans acquired from Laiki Bank and on loans classified at FVPL, and (iii) loan credit losses on off-balance sheet exposures disclosed on the

balance sheet within other liabilities


Analysis of gross loans and NPE ratio by Economic activity

55

Gross loans by economic activity (€ bn)

2.0

4

0.6

6

1.3

9

2.3

4

3.2

0

6.7

7

1.3

1

1.0

4 1.8

5

0.6

4

1.2

7

1.9

5

1.6

1

6.4

7

1.2

0

0.9

1

1.4

1

0.4

7

1.0

8

0.8

9

1.2

9

6.1

0

1.0

4

0.7

6

1.3

6

0.4

7

1.0

8

0.8

5

1.2

9

6.0

2

1.0

0

0.7

5

1.3

8

0.4

6

1.1

0

0.8

3

1.2

8

6.0

1

0.8

9

0.7

6

Trade Manufacturing Hotels & Restaurant Construction Real Estate Private Individuals Professional andother services

Other sectors

31.12.17 31.12.18 30.09.19 31.12.19 31.03.2020

10%11% 47% 7% 6%7%9%3%

NPE ratio by economic activity

45

% 53

%

32

%

76

%

33

%

45

% 52

%

51

%

49

%

52

%

28

%

68

%

53

%

43

%

46

%

34

%

32

%

29

%

8%

36

%

24

%

38

%

32

%

17

%

31

%

27

%

7%

34

%

23

%

37

%

31

%

17

%

31

%

27

%

7%

33

%

22

%

36

%

32

%

15

%

Trade Manufacturing Hotels and Catering Construction Real estate Private individuals Professional and other services

Other sectors

31.12.17 31.12.18 30.09.19 31.12.19 31.03.20

% of total


(1) Reporting as from 31 December 2017 includes transfers within RRD business lines following an internal reorganisation of RRD in 4Q2017

Rescheduled Loans for the Cyprus Operations

56

Rescheduled loans by customer type (€ bn)

3.4 3.02.2

1.71.3

1.0

0.60.6

1.7

1.4

1.1

1.0 0.9

2.7

0.4

2.5

Dec 16

0.5

Dec 17

0.3

0.5

Dec 18

0.40.5

Mar 20

0.4

Dec 19

0.4

6.3

0.4

7.4

4.8

Retail housing SMEsRetail other Global Corporate Corporate

Rescheduled loans1 % gross loans by customer type

RetailHousing

44

%

29

%

24

%

Corporate GlobalCorporate

23

%

40

%

SMEs

16

%

RetailConsumer

32

%

16

%

15

%

25

%

12

%

41

%

40

%

34

%

28

%

28

%

40

%

35

%

23

% 27

%

27

%

22

%

Dec 19Dec 16 Dec 17 Mar 20Dec 18

Rescheduled loans-Asset Quality

31 March 2020 € ‘000

Stage 1 266,138

Stage 2 384,756

Stage 3 1,547,690

POCI 203,784

FVPL 146,643

Total 2,549,011


(1) Includes purchased or originated credit-impaired

Gross loans and allowance for expected loan credit losses by IFRS 9 Stage

57

Gross Loans (€ bn) 31 Mar 2020 31 Dec 2019 qoq %

Stage 1 6.67 7.21 -7%

Stage 21 2.30 1.73 33%

Stage 31 3.74 3.88 -4%

Total 12.71 12.82 -1%

Allowance for expected

loan credit losses (€ bn)31 Mar 2020 31 Dec 2019 qoq %

Stage 1 0.10 0.09 11%

Stage 21 0.06 0.05 45%

Stage 31 1.95 1.96 -1%

Total 2.11 2.10 1%

• Loan migration from Stage 1 to Stage 2 of c.€435

mn in 1Q2020, reflecting the deterioration of the

macroeconomic outlook following the outbreak of

COVID-19

• Net organic reduction of Stage 3 loans by €142 mn

in 1Q2020


REMU – the engine for dealing with foreclosed assets

58

Total Book Value Sales of €14 mn for 1Q2020

Encouraging trends in Real Estate Market;

property prices up 2.8% in 3Q20192

30

62 6748

160

88

14

Cyreit1Q2019 2Q2019 Nicosia Mall

3Q2019 4Q2019 1Q2020

1,378 1,373

112 111

Sales

(14)

Properties

managed by REMU

as at 01 Jan 2020

(4)12

Additions Impairment loss Properties

managed by REMU

as at 31 Mar 2020

1,490 1,484

Investment Properties

REMU focuses now on sales

78.1

2.8

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

30.0

50.0

70.0

90.0

110.0

Q42015 Q22016 Q42016 Q22017 Q42017 Q42018 Q22019 Q32019

Central Bank Residential Property Price index

Residential Propert Price index (2010Q1=100) % change y-o-y (RHS)

Sales contracts (excl. DFAs) in 2019 down 16% yoy3

9.242

2008 2009 20122010 1Q201920152011 2013 2014 2016 2017 2018

5.885

4.481

2019 1Q2020

1.991

8.734

2.366

10.366

-16%

Sales to Cypriots Sales to non-Cypriots

BV € mn

(1) In addition to assets held by REMU, properties classified as “Investment properties” with carrying value of €23 mn as at 31 March 2020

relate to legacy properties

(2) Based on Residential price index published by Central Bank, dated 22 May 2020

(3) Based on data from Land of Registry- Sales contracts

1

€ mn


59

APPENDIXAdditional financial information


Liability and Equity (€ mn) 31.12.2019 31.12.2019

%

change

Deposits by banks 395 533 -26%

Repurchase agreements 170 168 1%

Customer deposits 16,246 16,692 -3%

Subordinated loan stock 255 272 -6%

Other liabilities 1,130 1,169 -3%

Total liabilities 18,196 18,834 -3%

Shareholders’ equity 1,986 2,040 -3%

Other equity instruments 220 220 -

Total equity excluding non-

controlling interests2,206 2,260 -2%

Non controlling interests 29 29 0%

Total equity 2,235 2,289 -2%

Total liabilities and equity 20,431 21,123 -3%

Consolidated Balance Sheet

60

Assets (€ mn) 31.03.2020 31.12.2019

%

change

Cash and balances with Central Banks 4,399 5,060 -13%

Loans and advances to banks 455 321 42%

Debt securities, treasury bills and equity

investments1,948 1,906 2%

Net loans and advances to customers 10,597 10,722 -1%

Stock of property 1,373 1,378 0%

Investment properties 134 136 -2%

Other assets 1,501 1,574 -5%

Non current assets and disposal groups

classified as held for sale24 26 -9%

Total assets 20,431 21,123 -3%


Core Cypriot business

61

Average contractual interest rates (bps) (Cy)

37.5% 37.1%

45.4%41.3% 40.8% 41.1% 41.0%

31.1%32.8%

36.0% 34.7% 34.6% 35.1% 34.8%

Dec 16 Dec 17 Dec 18 Jun 19after Helix

Sep 19 Dec 19 Mar 20

Loans Deposits

Strong market shares in resident and non-resident deposits

29.5% 31.5% 34.1% 35.3% 34.6% 34.9% 34.7%

35.8% 37.3% 38.8% 38.3% 34.7% 35.8% 35.3%

Dec 16 Dec 17 Jun 18 Dec 18 Sep 19 Dec 19 Mar 20

Residents Non-residents

7758

4739 33

24

1 1 1 1 1 1-50

-30

-10

10

30

50

70

90

110

130

150

170

190

210

230

250

4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020

Time & Notice accounts Savings and Current accounts

475 468 460413 402 396 392

41 32 24 24 19 16 11

434 436 436389 383 380 381

4Q2018 1Q2019 2Q2019 2Q2019(excluding

Helix)

3Q2019 4Q2019 1Q2020

Yield on Loans Cost of Deposits Customer spread

Market shares1

Customer deposit rates decline further (bps) (Cy)

(1) The market share on loans was affected as from 30 September 2018 following a decrease in total loans in the banking sector, mainly attributed to €6 bn non-performing loans of Cyprus Cooperative Bank (CyCB) which remained to SEDIPES (a legal entity without license to operate as

a credit institution) as a result of the agreement between CyCB and Hellenic Bank

3241 24 19

Cost of deposits

16 11


Income Statement bridge1 for 1Q2020

62

€ mnUnderlying

basisNPE sales Other Statutory Basis

Net interest income 85 - - 85

Net fee and commission income 38 - - 38

Net foreign exchange gains and net gains on financial instrument transactions and disposal/dissolution of subsidiaries and associates 6 - (1) 5

Insurance income net of claims and commissions 11 - - 11

Net gains from revaluation and disposal of investment properties and on disposal of stock of properties 1 - - 1

Other income 4 - - 4

Total income 145 - (1) 144

Total expenses (93) (3) (5) (101)

Operating profit 52 (3) (6) 43

Loan credit losses (64) - 1 (63)

Impairments of other financial and non-financial instruments (4) - - (4)

Provisions for litigation, claims, regulatory and other matters (2) - 2 -

Loss before tax and non-recurring items (18) (3) (3) (24)

Tax (2) - - (2)

Profit attributable to non-controlling interests - - - -

Loss after tax and before non-recurring items (attributable to the owners of the Company) (20) (3) (3) (26)

Advisory and other restructuring costs - organic (3) - 3 -

Loss after tax – Organic (attributable to the owners of the Company) (23) (3) - (26)

Provisions/net loss relating to NPE sales, including restructuring expenses (3) 3 - -

Loss after tax - attributable to the owners of the Company (26) - - (26)

(1) Please refer to section F1 “Reconciliation of income statement between statutory and underlying basis of the Group Financial Results for the quarter 31 March 2020


Analysis of Interest Income and Interest Expense

63

(1) Interest income on loans and advances to customers for 1Q2019 increased from €101 mn to €104 mn and Interest income on loans and advances to banks and central banks decreased to €2 mn from €5 mn since previously disclosed on 13 May 2019, due to reclassification of

between exposures


Analysis of Interest Income (€ mn) 1Q20191,2 2Q20192 3Q2019 4Q2019 1Q2020

Loans and advances to customers 104 101 105 98 96

Loans and advances to banks and central banks 2 2 1 1 0

Investment at amortised costs 3 3 3 3 3

Investments FVOCI 5 5 6 5 5

Investments classified as loans and receivables - - - - -

114 111 115 107 104

Trading Investment - - - - -

Derivative financial instruments 9 9 9 10 9

Other investments at fair value through profit or loss - - - - -

Total Interest Income 123 120 124 117 113

Analysis of Interest Expense (€ mn)

Customer deposits (13) (10) (8) (8) (5)

Funding from central banks and deposits by banks (1) (1) (1) (0) (0)

Subordinated loan stock (6) (6) (6) (6) (6)

Repurchase agreements (2) (2) (2) (2) (1)

Negative interest on loans and advances to banks and central

banks(4) (4) (5) (5) (4)

(26) (23) (22) (21) (16)

Derivative financial instruments (12) (12) (12) (12) (12)

Total Interest Expense (38) (35) (34) (33) (28)


Cyprus: Income Statement by business line for 1Q2020

64

€ mnConsumer

Banking

SME

Banking

Corporate

Banking

Global

corporate

International

Banking

Wealth &

MarketsRRD REMU Insurance Treasury Other

Total

Cyprus

Net interest income/(expense) 32 9 15 17 5 2 10 (4) - 3 (2) 87

Net fee & commission income (expense) 11 2 3 4 12 1 1 - (1) 1 4 38

Other income 1 - - - 2 1 - 1 10 5 0 20

Total income 44 11 18 21 19 4 11 (3) 9 9 2 145

Total expenses (39) (5) (4) (3) (7) (2) (11) (2) (5) (5) (8) (91)

Operating profit/(loss) 5 6 14 18 12 2 0 (5) 4 4 (6) 54

Loan credit losses of customer loans net of

gains/(losses) on derecognition of loans and changes

in expected cash flows

(3) (3) (9) (17) (1) - (22) - - - - (55)

Impairment of other financial and non financial

instruments- - - - - - - (4) - - - (4)

Provision for litigation, claims, regulatory and other

matters- - - - - - - - - - (2) (2)

Profit/(loss) before tax 2 3 5 1 11 2 (22) (9) 4 4 (8) (7)

Tax - - (1) - (2) - 3 1 - - (2) (1)

Profit attributable to non controlling interest - - - - - - - - - (1) (1)

Profit/(loss) after tax and before restructuring

costs, Helix, and provisions/net loss relating to

NPE sales, including restructuring expenses

(attributable to owners of the Company)

2 3 4 1 9 2 (19) (8) 4 4 (11) (9)

Excluding Helix


Risk Weighted Assets – Regulatory Capital

65

Risk weighted assets by type of risk (€ mn)

Reconciliation of Group Equity to CET1 Risk weighted assets by Geography (€ mn)

Equity and Regulatory Capital (€ mn)


€ mn 31.03.2020

Group Equity per financial statements 2,235

Less: Intangibles (49)

Less: Deconsolidation of insurance and other entities (190)

Add: Regulatory adjustments (IFRS 9 and other items) 63

Less: Revaluation reserves and other unrealised items transferred to Tier II (252)

CET11 1,807

Risk Weighted Assets 12,599

CET1 ratio 1 14,3%

31.12.2018 31.12.2019 31.03.2020

Total equity excl. non-controlling interests 2,341 2.260 2,207

CET1 capital 1,864 1,909 1,807

Tier I capital 2,084 2,129 2,027

Tier II capital 212 190 200

Total regulatory capital (Tier I + Tier II) 2,296 2,319 2,227

31.12.17 31.12.18 31.12.19 31.03.20

Cyprus 16,011 15,070 12,678 12,395

Russia 27 24 8 2

United Kingdom 922 84 48 48

Romania 118 38 29 28

Greece 168 144 121 120

Other 14 13 6 6

Total RWA 17,260 15,373 12,890 12,599

RWA intensity 73% 70% 61% 62%

31.12.17 31.12.18 31.12.19 31.03.20

Credit risk 15,538 13,833 11,547 11,256

Market risk 5 2 - -

Operational risk 1,717 1,538 1,343 1,343

Total 17,260 15,373 12,890 12,599


SREP Requirement for 2020 at 9.7%, post ECB’s capital relaxations for COVID-19

66

SREP requirements for 2020 : Total Capital ratio at 14.5%SREP requirements for 2020: CET1 ratio at 9.7% post ECB

announcement

• Per EBA final guidelines on SREP and supervisory stress testing and the Single Supervisory Mechanism’s (SSM) 2018 SREP methodology own funds held for the purposes of Pillar

II Guidance cannot be used to meet any other capital requirements (Pillar 1, Pillar II requirement or the combined buffer requirements), and therefore cannot be used twice4

• The Bank has received formal notification from the CBC in its capacity as National Resolution Authority, of the final decision by the Single Resolution Board (SRB), for the binding

minimum requirement for own funds and eligible liabilities (MREL) for the Bank, determined as the preferred resolution point of entry. The MREL requirement has been set at

28.36% of risk weighted assets as of 30 June 2019 and must be met by 31 December 2025. This MREL requirement would be equivalent to 18.54% of total liabilities and own funds

(TLOF) as at 30 June 2019. The MREL requirement is in line with the Bank’s expectations, and largely in line with its funding plans5

• The MREL ratio of the Bank as at 31 March 2020, calculated according to SRB’s eligibility criteria currently in effect, and based on our internal estimate stood at 18.09% of RWAs

3.0%

4.5%

11.0%

1.0%0.5%O-SII

2019

2.5%

3.0%

2.5%

Pillar 2R

4.5%

2.5%

2020

1.0%

1.7%

10.5%

4.5%

2020

post ECB

announcement

CCB

Pillar 1

9.7%

2.0%

2019

0.5%

2.5%

1.5%

3.0%

4.5%

1.0%

2.5%

3.0%

14.0%

2.0%

1.5%

4.5%

2020

O-SII

CCB

Pillar 2R

Tier 2

AT1

Pillar 1

14.5%

Total

Pillar 1

of 8%

1

3

2

1

2

(1) The Central Bank of Cyprus (CBC) set the O-SII buffer for the Group at 2%. This buffer will be phased-in gradually, having started from 1

January 2019 at 0.5% and increasing by 0.5% every year thereafter, until being fully implemented (2.0%) on 1 January 2022. In April 2020

the CBC, as part of the COVID measures, decided to delay the phasing-in by 12 months (1 January 2023). As a result, the phasing-in of

0.5% on 1 January 2021 has been delayed for 12 months

(2) In accordance with the legislation in Cyprus which has been set for all credit institutions the applicable rate of the CCB was fully phased in

at 2.5% in 2019

(3) Additional Tier 1 Capital

(4) The new provisions are effective from January 2020

(5) This decision is based on the current legislation, it is expected to be updated annually and could be subject to subsequent changes by the

resolution authorities, especially considering the developments of the Bank Recovery and Resolution Directive (BRRD) and its

transposition into the local legislation


Buffer to MDA Restrictions Level & Distributable Items1

67

Distributable Items at Bank and BOCH levelMaximum Distributable Amount for BOCH

• Distributable Items amount to:

- Bank: c.€0.1 bn and

- BOCH: c.€0.3 bn

• The Bank and BOCH will proceed with a capital reduction process

which will result in the reclassification of €619 mn and €700 mn of

share premium to distributable reserves respectively

• Distributable reserves of Bank and BOCH will increase to c. €0.8 bn and c. €1 bn

respectively, on a pro forma basis as at 31 Dec 2019

• Subject to approvals by ECB, Cyprus and Irish High Court and shareholders

• No prohibition applies to the payment of coupons on any AT1 capital

instruments issued by the Company and the Bank2

• Significant CET1 MDA buffer3 (31 Mar 2020) : ~420 bps (~€530 mn)

• ECB frontloaded the ability to use AT1 and T2 to meet P2R

requirement; this increases CET1 and MDA buffer by c.131 bps

11.0%

0.4%

14.3%

CET1 31 Mar 2020 1 Mar 20203

MDA Threshold

CET1 Ratios

Unfilled

AT1 + T2

capacity

420 bps

[ ] bpsDistance

to MDACET1Ratio (%)

CET1Req

Unfilled AT1 &

T2 Bucket

c. 10.1%

9.7%

(1) Distributable Items definition per CRR

(2) Based on the SREP decisions of prior years, the Company and the Bank were under a regulatory prohibition for equity dividend distribution and therefore no dividends were declared or paid during years 2019 and 2018. Following the 2018 SREP decision, the Company and the

Bank are still under equity dividend distribution prohibition. This prohibition does not apply if the distributions are made via the issuance of new ordinary shares to the shareholders which are eligible as CET1 capital

(3) Including phasing in of O-SII buffer (+50 bps). The Central Bank of Cyprus (CBC) set the O-SII buffer for the Group at 2%. This buffer will be phased-in gradually, having started from 1 January 2019 at 0.5% and increasing by 0.5% every year thereafter, until being fully implemented

(2.0%) on 1 January 2022. In April 2020 the CBC, as part of the COVID measures, decided to delay the phasing-in by 12 months (1 January 2023). As a result, the phasing-in of 0.5% on 1 January 2021 has been delayed for 12 months


(1) The reduction relates to the sale of BOC UK in Sep 18

Analysis of Deposits

68

Deposits by Currency (€ bn)

Deposits by customer Sector (€ bn)

Deposits by Type (€ bn)

12.40 13.83 14.96 15.01 14.58

2.201.74

1.481.692.11 0.11 0.10 0.100.22

Dec 16 Dec 19

0.17

1.28

Dec 17

17.8516.51

0.29

Dec 18

0.291.29 0.29

Mar 20

16.84 16.69 16.25

9.27 10.00 8.78 7.53 7.16

6.186.31

6.71 7.59 7.44

Dec 18

1.06 1.54

Dec 16 Dec 17

16.51

1.351.57

Dec 19

16.25

1.65

Mar 20

17.85 16.84 16.69

6.73 6.63 5.96 5.05 4.79

8.98 10.31 10.05 10.15 9.98

Dec 19

0.91

17.85

0.71

Dec 16

16.25

Mar 20Dec 17

0.80 0.83

Dec 18

0.80

16.51

0.69

0.77

16.84 16.69

1

1

1

Current & demand accounts

Savings accounts

Time deposits

Other Currencies

GBP

EUR

USD

Corporate

Retail

SME

Global Corporate

90%

8%2%

44%

10%

46%

5%

30%

61%

4%

Mar 20


Reduction in Overseas Non-Core Exposures

69

Overseas non-core exposures (€ mn)

• The Group continues its efforts for further

deleveraging and disposal of non-essential assets and

operations in Greece, Romania and Russia

• In accordance with the Group’s strategy to exit from

overseas non-core operations, the operations of the

branch in Romania were terminated in January 2019,

following the completion of deregistration formalities

with respective authorities

• In addition as at 31 March 2020, there were €265 mn

of overseas exposures in Greece (€265 mn at 31

December 2019) not identified as non-core exposures

283

193164

139 137

42

24

149

79

35

25

44

31

23

19

Dec 16

167

9

Dec 17

11

Dec 18 Dec 19 Mar 20

518

312

240

183 177

RussiaGreece Serbia Romania UK


APPENDIXGlossary & Definitions

70


Glossary & Definitions

71

Allowance for expected loan credit

losses (previously ‘Accumulated

provisions’)

Comprises (i) allowance for expected credit losses (ECL) on loans and advances to customers (including allowance for expected credit losses on loans and advances to customers held for sale), (ii)

the residual fair value adjustment on initial recognition of loans and advances to customers, (iii) allowance for expected credit losses for off-balance sheet exposures (financial guarantees and

commitments) disclosed on the balance sheet within other liabilities, and (iv) the aggregate fair value adjustment on loans and advances to customers classified and measured at FVPL

Advisory and other restructuring

costsComprise mainly: fees of external advisors in relation to: (i) disposal of operations and non-core assets, and (ii) customer loan restructuring activities

AIEAAverage of interest earning assets as at the beginning and end of the relevant quarter. Interest earning assets include: cash and balances with central banks, plus loans and advances to banks,

plus net loans and advances to customers (including loans and advances to customers classified as non-current assets held for sale), plus investments (excluding equities and mutual funds)

AT1 AT1 (Additional Tier 1) is defined in accordance with Articles 51 and 52 of the Capital Requirements Regulation (EU) No 575/2013, as amended by CRR II applicable as at the reporting date

Average contractual interest rates

Interest rates on cost of deposits were previously calculated as the Interest Expense over Average Balance. The current calculation which the Bank considers more appropriate is based on the

weighted average of the contractual rate times the balance at the end of the month. The rates are calculated based on the month end contractual interest rates. The quarterly rates are the average

of the three quarter month end contractual rates

Book Value BV= book value = Carrying value prior to the sale of property

CET1 capital ratio (transitional basis) CET1 capital ratio (transitional basis) is defined in accordance with the Capital Requirements Regulation (EU) No 575/2013, as amended by CRR II applicable as at the reporting date

CET1 fully loaded (FL) The CET1 fully loaded (FL) ratio is defined in accordance with the Capital Requirements Regulation (EU) No 575/2013, as amended by CRR II applicable as at the reporting date

Cost of FundingEffective yield of cost of funding: Interest expense of all interest bearing liabilities after hedging, over average interest bearing liabilities (customer deposits, funding from the central bank, interbank

funding, subordinated liabilities). Historical information has been adjusted to take into account hedging

Contribution to DGF Relates to the contribution made to the Deposit Guarantee Fund

Contribution to SRF Relates to the contribution made to the Single Resolution Fund

Cost to Income ratio Cost-to-income ratio comprises total expenses (as defined) divided by total income (as defined)

Cost of RiskLoan credit losses charge (cost of risk) (year to date) is calculated as the annualised ‘loan credit losses’ (as defined) divided by average gross loans (the average balance is calculated as the

average of the opening balance and the closing balance)

CRR DD Default Definition

DFAs Debt for Asset Swaps

DFEs Debt for Equity Swaps

Digitally engaged customers ratioThis is the ratio of digitally engaged individual customers to the total number of individual customers. Digital channels include mobile, browser and ATMs. It also captures access to a card as well as

online card purchases

DTA Deferred Tax Assets



72

DTC Deferred Tax Credit

EBA European Banking Authority

ECB European Central Bank

Effective yield Interest Income on Loans/Average Net Loans

Effective yield of liquid assetsInterest Income on liquids after hedging, over average liquids (Cash and balances with central banks, placements with banks and bonds). Historical information has been adjusted to take into

account hedging

ESMA European Securities and Markets Authority

Foreclosures Value of on-boarded assets is set at a conservative 25%-30% discount from open market valuations, by two independent sources; Includes consensual and non consensual DFAs and DFEs

FTP Fund transfer pricing methodologies applied between the business lines to present their results on an arm’s length basis

GBV Gross Book Value

Gross Loans

Gross loans are reported before the residual fair value adjustment on initial recognition relating to loans acquired from Laiki Bank (calculated as the difference between the outstanding contractual

amount and the fair value of loans acquired) amounting to €252 mn at 31 March 2020 (compared to €271 mn at 31 December 2019).

Additionally, gross loans (i) include loans and advances to customers classified and measured at fair value through profit and loss adjusted for the aggregate fair value adjustment of €328 mn at 31

March 2020 (compared to €427 mn at 31 December 2019), and (ii) are reported after the reclassification between gross loans and allowance for expected credit losses on loans and advances to

customers classified as held for sale (amounting to Nil as at both 31 March 2020 and 31 December 2019)

Gross Sales Proceeds Proceeds before selling charge and other leakages

GVA Gross Value Added

Group The Group consists οf Bank of Cyprus Holdings Public Limited Company, “BOC Holdings” or the “Company”, its subsidiary Bank of Cyprus Public Company Limited, the “Bank” and the Bank’s

subsidiaries

H/O Head Office

IB, W&M International Banking, Wealth and Markets

IBU Servicing exclusively international activity companies registered in Cyprus and abroad and not residents



73

Legacy Legacy relates to RRD, REMU and non-core overseas exposures

Loan credit losses (PL) (previously

‘Provision charge’)

Loan credit losses comprise: (i) credit losses to cover credit risk on loans and advances to customers, (ii) net gains on derecognition of financial assets measured at amortised cost and (iii) net gains

on loans and advances to customers at FVPL

Loan to Value ratio (LTV) Loan to Value (LTV) is calculated as the Gross IFRS Balance to the indexed market value of the property. Under Pillar 3 disclosures LTV is calculated as the Gross IFRS Balance to the indexed

market value of collateral. Collateral takes into consideration the mortgage amount registered in the land registry plus legal interest from registration date to the reference date

Market shares

Both deposit and loan market shares are based on data from the CBC.

The Bank is the single largest credit provider in Cyprus with a market share of 41.0% at 31 March 2020, compared to 41.1% at 31 December 2019, 40.8% at 30 September 2019, 41.3% at 30 June

2019, 46.7% at 31 March 2019, 45.4% at 31 December 2018 and as at 30 September 2018, 38.6% at 30 June 2018 and 37.4% at 31 March 2018.

The market share on loans was affected as at 30 June 2019 following the derecognition of the Helix portfolio upon the completion of Project Helix announced on 28 June 2019.

The market share on loans was affected during the quarter ended 31 March 2019 following a decrease in total loans in the banking sector of €1 bn, mainly attributed to reclassification, revaluation,

exchange rate and other adjustments (CBC).

The market share on loans was affected as at 30 September 2018 following a decrease in total loans in the banking sector, mainly attributed to €6 bn non-performing loans of Cyprus Cooperative

Bank (CyCB) which remained to SEDIPES as a result of the agreement between CyCB and Hellenic Bank.

The market share on loans was affected as at 30 June 2018 following a decrease in total loans in the banking sector of €2.1 bn, due to loan reclassifications, revaluations, exchange rate or other

adjustments (CBC).

Net Proceeds Proceeds after selling charges and other leakages

Net fee and commission income over

total incomeFee and commission income less fee and commission expense divided by total income (as defined)

Net interest margin (NIM)

Net interest margin is calculated as the net interest income (annualised) divided by the quarterly average interest earning assets. Average interest earning assets exclude interest earning assets of

any discontinued operations at each quarter end, if applicable. Interest earning assets include: cash and balances with central banks, plus loans and advances to banks, plus net loans and

advances to customers (including loans and advances to customers classified as non-current assets held for sale), plus investments (excluding equities and mutual funds)

Net loans and advances to

customersComprise gross loans (as defined) net of allowance for expected loan credit losses (as defined, but excluding credit losses on off-balance sheet exposures)

Net loan to deposit ratio Net loan to deposit ratio is calculated as gross loans (as defined) net of allowance for expected loan credit losses (as defined) divided by customer deposits

New lending New lending includes the average YTD change (if positive) for overdraft facilities

Non-interest income

Non-interest income comprises Net fee and commission income, Net foreign exchange gains and net gains on financial instrument transactions and disposal/dissolution of subsidiaries and

associates (excluding net gains on loans and advances to customers at FVPL), Insurance income net of claims and commissions, Net gains/(losses) from revaluation and disposal of investment

properties and on disposal of stock of properties, and Other income



74

Non-recurring items

Non-recurring items as presented in the ‘Unaudited Interim Condensed Consolidated Income Statement – Underlying basis’ relate to: (i) advisory and other restructuring costs - organic, (ii)

restructuring costs – Voluntary Staff Exit Plan (VEP), (iii) Provisions/net loss relating to NPE sales, including restructuring expenses, (iv) Share of profit from associates (CNP), and (v) Reversal of

impairment of DTA and impairment of other tax receivables

NPEs

According to the EBA standards and ECB’s Guidance to Banks on Non-Performing Loans (published in March 2017), NPEs are defined as those exposures that satisfy one of the following conditions:

(i) the borrower is assessed as unlikely to pay its credit obligations in full without the realisation of the collateral, regardless of the existence of any past due amount or of the number of days past due,

(ii) defaulted or impaired exposures as per the approach provided in the Capital Requirement Regulation (CRR), which would also trigger a default under specific credit adjustment, distress

restructuring and obligor bankruptcy, (iii) material exposures as set by the CBC , which are more than 90 days past due, (iv) performing forborne exposures under probation for which additional

forbearance measures are extended, and (v) performing forborne exposures under probation that present more than 30 days past due within the probation period. When a specific part of the

exposures of a customer that fulfils the NPE criteria set out above is greater than 20% of the gross carrying amount of all on balance sheet exposures of that customer, then the total customer

exposure is classified as non-performing; otherwise only the specific part of the exposure is classified as non-performing. The NPEs are reported before the deduction of allowance for expected loan

credit losses (as defined)

The exit criteria of NPE forborne are the following:

1. The extension of forbearance measures does not lead to the recognition of impairment or default

2. One year has passed since the forbearance measures were extended

3. There is not, following the forbearance measures, any past due amount or concerns regarding the full repayment of the exposure according to the post forbearance conditions

NPE coverage ratio (previously

‘NPE Provisioning coverage ratio’)The NPE coverage ratio is calculated as the allowance for expected loan credit losses (as defined) over NPEs (as defined)

NPE ratio NPEs ratio is calculated as the NPEs as per EBA (as defined) divided by gross loans (as defined)

NPEs salesNPE sales refer to NPE sale transactions completed during FY2019, as well as NPE sale transactions under consideration at 31 December 2019 and 31 March 2020, irrespective of whether or not

they met the held for sale classification criteria as at 31 December 2019 or as at 31 March 2020

NSFRThe NSFR is calculated as the amount of “available stable funding” (ASF) relative to the amount of “required stable funding” (RSF), on the basis of Basel III standards. Its calculation is a SREP

requirement. The EBA NSFR will be enforced as a regulatory ratio under CRR II in 2021

OMV Open Market Value

Operating profit Comprises profit before Total loan credit losses, impairments and provisions (as defined), tax, (profit)/loss attributable to non-controlling interests and non-recurring items (as defined)

p.p. percentage points

Non-legacy Relates to all business lines excluding Restructuring and Recoveries Division (“RRD”), REMU and non-core overseas exposures

Phased-in Capital Conservation

Buffer (CCB)In accordance with the legislation in Cyprus which has been set for all credit institutions, the applicable rate of the CCB is 1.25% for 2017, 1.875% for 2018 and 2.5% for 2019 (fully phased-in)



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Loan credit losses for impairment of

customer loans Credit losses for impairment of customer loans and gains/(losses) on derecognition of loans and changes in expected cash flows on acquired loans

Profit/(loss) after tax and before non-

recurring items (attributable to the

owners of the Company)

Excludes non-recurring items (as defined)

Profit/(loss) after tax – organic

(attributable to the owners of the

Company)

Profit/(loss) after tax and before ‘non-recurring items’ as defined (attributable to the owners of the Company), except for the ‘advisory and other restructuring costs – organic’

qoq Quarter on quarter change

Restructured loans Restructuring activity within quarter as recorded at each quarter end and includes restructurings of NPEs, performing loans and re-restructurings

Risk adjusted yield Interest Income on Loans net of allowance for expected loan credit losses/Net Loans

RRD Restructuring and Recoveries Division

RWA Risk Weighted Assets

RWA Intensity Risk Weighted Assets over Total Assets

Special levy Relates to the special levy on deposits of credit institutions in Cyprus

Stage 2 & Stage 3 Loans Include purchased or originated credit-impaired

Tangible Collateral Restricted to Gross IFRS balance

Total Capital ratio Total capital ratio is defined in accordance with the Capital Requirements Regulation (EU) No 575/2013, as amended by CRR II applicable as at the reporting date

Total expenses

Total expenses comprise staff costs, other operating expenses and the special levy and contributions to the Single Resolution Fund (SRF) and Deposit Guarantee Fund (DGF). It does not include

‘advisory and other restructuring costs-organic’, or any restructuring costs relating to the Voluntary Staff Exit Plan, or any restructuring costs relating to NPE sales. ‘Advisory and other restructuring

costs-organic’ amounted to €3 mn for 1Q2020 (compared to €8 mn for 4Q2019). Restructuring costs relating to NPE sales amounted to €3 mn for 1Q2020 (compared to €10 mn for 4Q2019).

Restructuring costs relating to the Voluntary Staff Exit Plan amounted to Nil for 1Q2020, compared to €81 mn for 4Q2019



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Total income Total income comprises net interest income and non-interest income (as defined)

Total loan credit losses, impairments

and provisions

Total loan credit losses, impairments and provisions comprises loan credit losses (as defined), plus (provisions)/reversal of provisions for litigation, claims, regulatory and other matters plus

(impairments)/reversal of impairments of other financial and non-financial assets

T2 Tier 2 Capital

Underlying basis This refers to the statutory basis after being adjusted for certain items as explained in the Basis of Presentation

Write offs

Loans together with the associated loan credit losses are written off when there is no realistic prospect of future recovery. Partial write-offs, including non-contractual write-offs, may occur when it is

considered that there is no realistic prospect for the recovery of the contractual cash flows. In addition, write-offs may reflect restructuring activity with customers and are part of the terms of the

agreement and subject to satisfactory performance

yoy Year on year change


Disclaimer

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This document contains certain forward-looking statements which can usually be identified by terms used such as “expect”, “should be”, “will be” and similarexpressions or variations thereof or their negative variations, but their absence does not mean that a statement is not forward-looking. Examples of forward-lookingstatements include, but are not limited to, statements relating to the Group’s near term and longer term future capital requirements and ratios, intentions, beliefs orcurrent expectations and projections about the Group’s future results of operations, financial condition, expected impairment charges, the level of the Group’s assets,liquidity, performance, prospects, anticipated growth, provisions, impairments, business strategies and opportunities. By their nature, forward-looking statementsinvolve risk and uncertainty because they relate to events, and depend upon circumstances, that will or may occur in the future. Factors that could cause actualbusiness, strategy and/or results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statementsmade by the Group include, but are not limited to: general economic and political conditions in Cyprus and other European Union (EU) Member States, interest rateand foreign exchange fluctuations, legislative, fiscal and regulatory developments and information technology, litigation and other operational risks. Should any one ormore of these or other factors materialise, or should any underlying assumptions prove to be incorrect, the actual results or events could differ materially from thosecurrently being anticipated as reflected in such forward looking statements. The forward-looking statements made in this document are only applicable as from thedate of publication of this document. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to releasepublicly any updates or revisions to any forward looking statement contained in this document to reflect any change in the Group’s expectations or any change inevents, conditions or circumstances on which any statement is based.

bank of cyprus group...2020/05/26 · bank of cyprus group group financial results for the quarter...

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