Bank of Cyprus has “the wind in its sails” and has upgraded its guidance for 2023 after exceeding targets last year, its chief executive officer said, a decade after the island’s biggest lender came close to collapse.
The bank, which is listed on the London Stock Exchange, says it intends to commence “meaningful” dividend distributions from 2023 onwards, subject to regulatory approval and market conditions.
“We have the wind in our sails. The guidance for 2023 is for a much better performance,” CEO Panicos Nicolaou said in an interview late on Monday.
It is a significant comeback for the bank, which a decade ago was battling for survival amidst a financial crisis that almost bankrupted Cyprus and forced the island to seek an international bailout.
Should approval be granted, it would be the first time Bank of Cyprus has issued a dividend to shareholders since June 2011, for 2010.
Bank of Cyprus posted a 139% increase in its preliminary after tax 2022 profit to 71 million euros ($75.57 million) on Feb. 20.
Net interest income grew 25% year-on-year to 370 million euros and in updated guidance the bank expects that measure to grow by 40% to 50% this year, or by 520 million to 550 million euros. Its earlier guidance, prepared in November, 2022, was for between 450 million to 470 million euros.
The bank’s recurring return on tangible equity (ROTE) reached 11.3% last year. It is expected to exceed 13% this year, according to its updated guidance, from more than 10% earlier.
With banks deeply exposed to the Greek sovereign debt crisis and fiscal slippage, Cyprus in early 2013 received international aid on condition it wind down one major lender, Laiki, and that Bank of Cyprus recapitalise by converting some savers’ deposits into equity, in a process known as a bail-in.
The bank exited Eastern European markets and Russia and cut non-performing exposures (NPEs) by selling bad debt and restructuring. Its NPEs, worth 15 billion euros in December 2014, now stand at 411 million euros, taking its NPE ratio to total loans from 62.9% to 4%.
Nicolaou, who was appointed its CEO in 2019, said the bank now had a clean balance sheet and was highly liquid.
“This is a new chapter for the bank. We had this high-NPE stigma on us but now its an entirely different situation,” said Nicolaou. “We have transformed the bank.”
(Reuters)
