Bank of Cyprus Group (BoC)

Bank of Cyprus Group (BoC)
Non-Deal Roadshow
December 2014
Presenters
John Hourican
Dr. Chris Patsalides
Chief Executive Officer
Finance Director
Eliza Livadiotou
2
Euan Hamilton
Group Chief Financial Officer
Director of Restructuring and
Recoveries Division
Michalis Athanasiou
Constantinos Pittalis
Group Chief Risk Officer
Investor Relations Manager
A stronger Bank of Cyprus – key investment highlights
Well-capitalised bank post equity raise with a world class
Board of Directors
Dominant position in a recovering Cypriot economy,
evidenced in positive rating action for Cyprus and the Bank
Stronger liquidity position and reduced reliance on
Eurosystem funding
Loan book deterioration being contained; dedicated NPL
management unit and adoption of foreclosure legislation
Clear strategic focus — attractive and profitable core
businesses
Strong management team with significant turn-around and
restructuring experience
•
A solid Basel III capital position with a FL CET1 ratio at 14.9%
•
New world-class Board of Directors with significant financial
institutions management expertise
•
Pro-active strengthening of the capital base enabled the Bank to
pass the AQR and the stress test
•
c.41% market share of gross loans, c.25% of deposits, c.26% of
life premiums and c.13% of non-life premiums
•
Faster economic recovery evidenced by Moody’s upgrade,
improved credit outlook and positive revisions to GDP forecasts
•
ELA funding reduced by €3.9bn since peak
•
Further repayment planned in 2015 through wholesale market
funding, repos and deleveraging actions
•
Stabilising deposit base
•
90+DPD1 loans fully covered through provisions and
conservatively valued collateral
•
Progress made on foreclosure law – further clarity around
implementation likely to be available in the coming year
•
Group profitability driven by core Cyprus operations
•
Deleveraging actions to further support core market focus
•
Steady progress in improving profitability of core operations
•
Present management has accomplished several key milestones
with further planned strategic actions to come in 2015:
– Successful Laiki system integration
– €1bn equity raise and ongoing balance sheet derisking
– Significant progress in the restructuring of top NPL exposures
Bank of Cyprus will continue to benefit significantly from the economic recovery in Cyprus and vice versa
(1) Loans with a specific provision (impaired loans) and loans past due for more than 90 days but not impaired
3
Following a traumatic 2013, significant steps were taken in 2014 to
stabilise the Bank
Pre-2009
2009 - 2013
2013
2014
Cyprus bailout by IMF/EC
Greek
sovereign
crisis
recession
& property
crisis
Period of
growth
Equity raise
Resolution & shares suspension
Sale of Greek operations
New Board
Depositor bail-in
Rating upgrade4
Laiki acquisition
Relisting
New CEO
Shareholding
evolution
Funding evolution
4
(1)
(2)
(3)
(4)
Retail investors
13%
Bailed-in depositors
1%
Cypriot / Greek
institutionals
Foreign institutionals
10%
5%
18%
Bailed-in depositors
Legacy Laiki Bank
81%
Others
7%
6%
Customer deposits
5%
10%
Total equity
31%
Other liabilities
Shareholders & debt
security holders as at
March 2013
10%
ELA
ECB
Total equity
28%
Other liabilities
Euro system
funding
36%
As of December 2012
As of June 2014
As of September 2014
Moody’s upgrade of BoC’s long-term deposits to Caa3 as of 17 Nov 2014
Customer deposits
ELA
14%
3%
Legacy Laiki Bank
New shareholders
6%
Customer deposits
48%
92%
47%
43%
72%
1%
Post-capital increase3
Pre-capital increase2
Pre bail-in1
49%
ECB
Total equity
Other liabilities
Euro system
funding
31%
Capital raise increased CET1 position to around 15%
€1.6bn buffer
vs 8%
15,4%
4.3%
(0.2%)
14,9%
(0.5%)
11,3%
Capital
increase of
€1bn
Jun-14
CET1 ratio (transitional
basis)
(1)
5
Capital increase
Q3'14 movement
Sep-14 CET1 ratio
(transitional basis)
Fully Loaded – main capital deduction from CRD IV transitional to fully loaded is in relation to Deferred Tax Assets (DTAs)
Fully loaded impact
1
Sep-14 CET1 ratio
(fully loaded)
BoC now appropriately capitalised relative to peers
A solid Basel III capital position leading to successfully clearing the AQR and the stress test
Basel III fully loaded CET1 ratio of Southern European banks (9M 2014)1
14.9%
14.9%
12.7%
12.4%
12.0%
11.8%
11.7%
11.5%
11.4%
11.3%
11.2%
10.4%
BoC
Source:
(1)
6
Peer 1
Peer 2
Peer 3
Peer 4
Peer 5
Peer 6
Peer 7
Peer 8
Peer 9
Peer 10
Peer 11
10.4%
Peer 12
Company financials
Banks include Alpha Bank, National Bank of Greece, Creval, BPS, Piraeus Bank, BPM, BPER, Sabadell, Popular, Carige, Liberbank, BCP, Eurobank and Hellenic bank
10.2%
Peer 13
9.9%
Peer 14
Capital raise helped the Bank pass ECB Comprehensive Assessment
AQR and stress test impacts
AQR
Baseline
11.5%
10,4%
(3.1%)
Adverse
11.6%
Adjusted
for capital
increase
Adjusted
for capital
increase
€931m
Surplus
0,5%
7,3%
€81m
7,7%
7,3%
7,3%
Surplus
5,9%
(5.8%)
4,3%
1,5%
CET1 ratio
2013
AQR
adjustment
CET1 ratio
AQR
adjusted
CET1 ratio
AQR
adjusted
Baseline
scenario
impact
CET1 post
baseline
CET 1 AQR
adjusted
Adverse
scenario
impact
CET1 post
Capital
CET1 post
adverse increase Sepcapital
2014 1
increase
Result of the Comprehensive Assessment validated timing and size of capital raise
(1)
7
Excludes retail offer of €100m
Adverse
scenario
threshold
5.5%
Potential to add more provisions as a result of AQR adjustments
Analysis of AQR aggregate adjustments
Adjustments due to
collective provisioning
review
Impact on CET 1
capital
-
240
240
-
-
87
87
Residential Real Estate
-
-
-
-
Other Retail
-
-
153
153
Corporates
160
117
214
491
Total
160
117
454
731
Adjustments to
provisions on sampled
files
Adjustments to provisions
due to extrapolation of
findings
Retail
-
of which SME
Portfolio (€m)
•
Mainly due to the assessment of lower recovery on defaulted
assets. 90% of Corporates were assessed as “gone concern” – this
meant that the only source of recovery would be the realisation of
the collateral; this is contrary to the Bank’s methodology which
assumes recovery of the Corporate to normal trading operations
•
Mainly due to AQR conservative assumptions, due to
methodology for recognition of provisions on performing assets
and the fact that the AQR methodology assumed a rate of
default based on the year 2013 which was an exceptionally bad
year for the Bank
• Separately, following AQR and based on SSM’s request, the Group is reviewing certain accounting estimates relating to
provisions in light of the higher degree of conservatism applied in the AQR  if required, any such changes in estimates would
be reflected in Q4 2014
• Further, while AQR and stress test did not show a capital shortfall, this review of accounting estimates (on a prospective basis)
may impact the Bank’s capital position going forward
8
Equity raise has attracted high quality professional investors and a
world class Board of Directors
Current shareholding of BoC (9M’14)
Revised Board composition
Post-capital increase
Name
Designation
Dr. Josef Ackermann
Chairman
Independent
Mr. Wilbur Ross
Vice Chairman
Independent
Mr. Vladimir Strzhalkovskiy
Vice Chairman
Independent
Mr. John Patrick Hourican
CEO
Dr. Christodoulos Patsalides
Finance Director
Mr. Arne Berggren
Represents EBRD
Independent
Mr. Maxim Goldman
Represents Renova
Mr. Marios Kalochoritis
Independent
Mr. Michalis Spanos
Senior Independent
Mr. Ioannis Zographakis
Independent
15%
5%
5%
47%
10%
18%
Bailed-in depositors
Legacy Laiki Bank
EBRD
WL Ross and WL Ross introduced investors
Renova Group
Other new shareholders
• Significant investor interest in all aspects of the Bank of Cyprus
story, including equity, but also potential future corporate actions
• Targeted marketing effort led to 100+ investor meetings and 27 new
high quality investors being added to the shareholder base
9
•
•
•
AGM of BoC was held on 20 Nov 2014
6 directors were newly appointed to the board
4 directors were re-elected
Newly elected directors
Scope for investor participation in Bank of Cyprus equity post
re-listing
Non-deal
roadshow
18
Sep
20
Nov
27
Nov
15
Dec
16
Dec
9
Jan
Medium
-term
Close of
€1bn share
capital
increase
AGM and
new Board
election
Q3 results
published
Retail offer
begins
Cyprus and
Athens
relisting
Retail offer
closes
Listing on a
major
European
exchange
2015
Mediumterm
2014
Investors have the opportunity to gain or increase exposure in BoC stock following the re-listing - an element of
liquidity is likely to be available from certain bailed in depositors (who have been locked in since the shares were
suspended in Cyprus and Athens)
10
Improving macro indicators supportive of Cyprus’s economic
recovery
GDP growth expected to be positive from 2015E – significant improvement relative to original Troika expectations
Q1'12
Q2'12
Q3'12
Q4'12
Q1' 13
Q2 '13
Q3 '13
Q4 '13
Q1 '14
Q2 '14
2014E
2015E
0,4%
(2,5%)
2016E
1,6%
2017E
2,0%
2018E
2019E
2,1%
2,2%
(2,0%)
(3,7%)
(1,6%)
(4,9%)
(3,7%)
(4,0%)
(6,1%)
(5,2%)
(5,1%)
(3,9%)
(5,3%)
(5,5%)
(6,2%)
(7,4%)
Actual
(2,8%)
(2,5%)
(7,1%)
(8,7%)
Troika original forecast
Forecast
Significant uptick in sentiment – has entered into positive territory in Q3’14 after bottoming in Q3’13
Economic sentiment — values seasonally adjusted
Similar to 2008 levels
Zero level (100)
Q1'03
Q1'04
Q1'05
Q1'06
Q1'07
Q1'08
Q1'09
ESI-Cyprus index
Source:
11
EC, EIU, CBC, Troika, company reports, Cyprus Centre of Economic Research and University of Cyprus
Q1'10
Q1'10
Q1'12
Q1'13
Q1'14
Nov-14
Upside potential for macro recovery
1
3
Recovery supported by a resilient tourism sector…
…and significant additional growth levers
Tourism revenues (€bn)
1
CAGR:
9%
Business hub given strategic location at the
crossroads of Europe, Asia, Middle East and Africa
2,1
1,9
1,7
2009
Small, flexible economy; real unit labour costs
dropped by 11% during 2012-2014 boosting
competitiveness
1,5
1,5
2
2010
2011
2012
2013
2
Drivers of
macroeconomic
recovery
3
…an enabling business environment…
2014 corporate tax rates
Education for persons 20-64 (2013)
12,5%
4
38,9%
12,5%
Growth prospects in tourism, education &
R&D, health & medical, professional and
financial services
Tertiary
Budget deficit contracted faster than
anticipated- expected to meet the Maastricht
criteria in 2014
21,0%
23,0%
40,4%
26,0%
29,6%
20,7%
Upper secondary
Less than
Upper Secondary
30,0%
31,4%
33,3%
Cyprus has the highest number
of university graduates per capita
in Europe
Double taxation avoidance treaties
with c. 50 countries
12
Source:
EC, EIU, CBC, Troika, and company reports
5
Potential for energy / hydrocarbon industry (potential
c.5Tcf on Aphrodite site)
Positive outlook evidenced in credit confidence and ratings
CDS spreads significantly narrowed vs. periphery peers
Cyprus sovereign ratings
1.000
Last
action
Outlook
Moody's B3
Upgrade
Stable
S&P
B+
Upgrade Stable
Fitch
B-
Affirmed
DBRS
B (low) Upgrade
Agency
800
Rating
600
400
200
0
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14
Apr-14
Jul-14
Oct-14
Ratings uplift for Cyprus and the Bank
Moodys ratings
14
Baa1
Baa3
12
Ba2
10
B1
8
Baa1
Baa2
Baa2
Ba1
B3
6
Caa2
4
B3
Caa1
2
Ca
0
Jan-13
Caa3
Apr-13
Cyprus
Jul-13
Portgual
Oct-13
Italy
Jan-14
Spain
Apr-14
Greece
Jul-14
Ireland
Oct-14
BoC
Investor confidence returning as CDS trades inside Greece since February 2014…
…also reflected in ratings, with gap narrowing for Bank of Cyprus
Source:
13
Bloomberg, Moody’s, S&P, Fitch, DBRS
Positive
Stable
A smaller, stronger and more stable banking system
Recent developments in the Cypriot banking system
Monthly change in banking system deposits (€bn)
0,2 0,5
0,2
• Monthly change in banking system deposits
remain at a manageable level since lifting of
domestic capital restrictions - but significant
system wide funding gap from the bail-in
remains; part of reduction of deposits utilised
to repay loans
• The bulk of the Cyprus banking system is now
under direct supervision of the SSM
(0,2)(0,1)(0,2)(0,1)
(1,0)
(1,0)
(1,4)
(1,7)
(0,8)
(0,5)(0,2)
0,0
(0,4)
(0,2)(0,4)(0,2)
(1,4)
(3,8)
(5,3)
(6,3)
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Oct-14
Sep-14
Loans and deposits (€bn)
80
70
• 4 banks participated in the ECB assessment
(BoC, CCB, Hellenic and RCB) – only Hellenic
failed the assessment but then confirmed plans
to raise capital
60
50
40
30
20
Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Oct-14
Loans
Source: Central Bank of Cyprus, IMF, ECB and company reports
14
Deposits
Dominant position in the Cypriot banking & insurance market
37%
25.8
Gross loans
€bn
41%
21.9
13.3
Laiki
4,4
BoC
Deposits
€bn
(Pre-bail in)
9M2014
39%
25%
24.6
Laiki
BoC
11.2
(Pre-bail in)
9M2014
5,2
1,2
0,8
2,3
2,8
1,1
29
7
13.4
6,1
349
203
Branch network
# branches
130
Laiki
BoC
68
(Pre-bail in)
Life
Insurance
premiums1
€m
Non-life
26%
13%
91
56
81
54
2
2
15
Source:
(1)
(2)
14
9M2014
CBC, IMF, company disclosure (Bank of Cyprus and competitors) as of 9M 2014
FY2013
49.9% owned by the Bank
xx%
Market share as of Sep 2014
Shrink to core strength: significant deleveraging progress
BoC: steady balance sheet reduction Q-o-Q
€bn
-17% (30 Jun 2013 to 30 Sep 2014)
+9%
-8%
-3%
33,0
-3%
-4%
30,3
30,3
29,4
28,6
27,5
Dec-12
(Pre-bail in)
H1 2013
(Resolution)
Jun-13
Dec-13
H2 2013
Mar-14
Q1 2014
Jun-14
Q2 2014
Sep-14
Q3 & Q4 2014
Pending actions
Asset
(Buyer)
“Fix or sell” strategy
Greek ops (Piraeus)
Romanian assets
(Marfin)
Kyprou AM
(Alpha Trust)
Banca Transilvania
(stake sell down)
Ukrainian operations
(Alfa)
Serbian exposure
(Piraeus)
Govt. bond repayment
UK loan book
Marriot related assets
in Romania
• Romania (remaining
exp.)
• Uniastrum
• Cyprus / Greece RE
Combined impact of 2014 transactions on Group: increase in CET1 ratio of 0.8% and
improvement in Group liquidity of about €1.8bn
16
Continued momentum to execute
specific deleveraging / de-risking
Eurosystem funding reliance reducing fast
Continuous reduction of ELA and ECB funding with further potential going forward
(€ bn)
11,4
36%
36%
37%
11,2
11,0
10,9
1,4
1,4
1,3
36%
Eurosystem Funding as xx% of
balance sheet
31%
10,2
1,4
8,6
0,9
8.4
0,9
11,4
9,9
9,6
9,5
8,8
7,7
7,5
Further actions planned for
2015
~ €1bn capital market transactions
~ €0.5bn repos & deleveraging
Apr-13
Sep-13
Dec-13
Mar-14
Jun-14
ELA
17
Sep-14
ECB funding
Nov-14
Asset quality stabilising
Group 90+DPD loans by geography
€bn
90+DPD
ratio (% of
27.4%
38.8%
47.4%
48.6%
7.7
11.0
13.0
0,7
0,3
0,5
13.0
11,5
11,5
11,4
11,7
Sep-13
Dec-13
Jun-14
Sep-14
total loans)
0,7
0,2
0,5
2,9
0,1
0,5
4,2
9,7
Dec-12
Jun-13
1
Pre-bail in
Cyprus
49.8%
13.0
0,4
0,3
0,6
12.6
0,4 0,3
0,5
0,8 0,3
0,5
Russia
52.5%
UK
Others
Group 90+DPD loans by segment
€bn
7.7
13.0
13.0
12.6
13.0
2,5
2,5
2,4
2,5
3,3
3,3
3,2
3,4
7,2
7,2
7,0
7,1
Sep-13
Dec-13
Jun-14
Sep-14
11.0
2,2
1,9
1,9
3,9
Dec-12
2,6
6,2
Jun-13
1
Pre-bail in
Corporate
(1)
18
SMEs
Information for Q1 2013 is not available as it has not been possible to publish the financial results for the three months ended 31 March 2013
Retail
Credit Risk – 90+ DPD fully covered by provisions & tangible collateral
9M2014
Corporate
14.8%
Gross loans
(€bn)
SMEs
8.1%
Housing
Consumer
RRD
Cyprus
17.5%
7.3%
52.3%
100.0%
21,9
3,2
1,8
3,8
11,5
1,6
81,9%
53,7%
90+DPD loans
by segment1
22,7%
30,5%
16,2%
Loan Loss
Reserve (LLR)
coverage
46,0%
29,3%
18,4%
Tangible
coverage
66,0%
81,6%
84,1%
45,7%
76,6%
75,4%
112,0%
110,9%
102,5%
94,3%
113,4%
111,9%
Total
coverage
29,0%
48,6%
36,8%
36,5%
Significant provision and collateral coverage, with additional comfort from personal guarantees
xx
19
(1)
% of total gross loans (Cyprus only)
Shown as a % of segmental loans
Dedicated NPL unit is fully operational and showing early successes
Restructuring & Recoveries Division (RRD): structure
CEO
1
An independent and centralised unit that is
responsible for and specialises in the management
and monitoring of customers in arrears
2
A single unit to manage the customer from early
delinquency until foreclosure
3
Dedicated channels for addressing delinquent
customers per segment (e.g., Retail2, SME and
Corporate)
4
Build internal capabilities in a centralised manner to
effectively and efficiently address arrears (e.g.,
analytics, systems)
Restructuring
& Recoveries Division
Strategy
and
analytics
Financial
solutions
Corporate
91
€5.7 bn
€
Retail2 and
SME
Debt
recovery
services
166
222
€1.6 bn
€4.3 bn
Real estate
management1
Dedicated unit housing €11.5bn of exposures supported by c.490 employees, reporting directly to the CEO  in
order to manage arrears in an independent and centralised way as required by the Arrears Management Directive
(1)
(2)
20
Currently using the services of external property consultants
No retail client ownership within RRD
Good progress in restructuring efforts
Achievements over the last 6 months (April to September)
€330m
Sold the Group’s largest single name NPL exposure
• Loans extended to a Serbian real estate management company sold
to Piraeus Bank for approximately €165m and realised an accounting
gain of €27m
Summary of restructuring efforts for
top 30 exposures
€5.0bn
5%
6%
€1.2bn
Restructured loans
• Addressed the restructuring backlog: de-bottlenecking of restructuring
processes
• Designing a workflow process for managing arrears in the retail book
following the restoration of limited underwriting authority within Retail
Arrears Management, following positive discussions with the Central
Bank of Cyprus
• Delivered specialised trainings to upskill employees
22%
26%
41%
€1.1bn
Removed from 90+DPD
• Initiated a transformational project to implement best practices and
driving cultural change in managing arrears following a Central Bank
of Cyprus driven audit
Restructuring agreed and implemented
Detailed non binding heads of terms for restructuring agreed
15
Appointed Receivers/Managers for the recovery of debt in 2014
• Recently appointed a receiver in a c. €200m Bank exposure – the
island’s largest receivership
Diligence ongoing
Receiver/manager appointed
Other recovery cases
21
Passing of Foreclosure law a key step in the recovery process
Summary
Key challenges & issues
• Establishes clear procedures for timing of repossession, valuation and
auction, aiming to reduce repossession timetable from 10+ years to as
little as 18 months
• Passing of the Bill was a key requirement for further disbursement of
funds from the Troika
• Untested process
• Insolvency framework (designed to protect vulnerable parties from
foreclosure) is still being discussed at Government and supranational
levels
• Courts are not adequately
resourced
Recent Developments
• Managing reputational
implications
• Bill passed by the House of Representatives on 6 September
• Supreme Court ruled on 31 October, four of the six bills that limited the
effect of the foreclosure bill on low-income groups as unconstitutional
• An internal working group established to design and coordinate the
Bank's processes and procedures in implementing the newly set
provisions of the Law
22
• Delay in the enactment of
related accompanying
regulations
Clear strategic segregation leading to a strong Core Bank
€bn
Core bank
• Gross loans: 10.41
• Deposits: 10.91
Phase 1:
Restructuring
• Comprised of Banking
(Consumer, SME, Corporate,
International), Insurance, AM,
Wealth and Brokerage
Phase 2:
Today
• Self funded but largely
encumbered to fund the noncore balance sheet
Restructuring & Recoveries
Division
• Gross loans: 11.51
• Deposits: 0.31
• Manages all exposures above
€100m and problem loans
• Decent cash flow generation
Overseas & Disposal Group
• Gross loans: 3.01
• Deposits: 2.11
• Key remaining transactions
include Romania, Russia, UK
and select Cypriot / Greek
exposures
• Break-even or negative
returns
• Consumes capital and parent
funding
• Already generating attractive
returns
Medium-term objective
Phase 3:
Delivering
returns
• Engine of growth for Cyprus
• Maintain strong profitability
(1) Data as of 30 September 2014
23
• Actively manage and collect
• Accelerate run-off where
possible
• Exit as appropriate to repatriate
capital and funding
Group balance sheet and P&L primarily driven by Cyprus core
Cyprus Core forms 42% of Group loans…
September 2014: €24.7bn
… and 82% of Group deposits
September 2014: €13.3bn
By type
€10.4bn
12%
42%
46%
16%
8%
23%
IBS & Others
17%
SME
31%
63%
Consumer
Cyprus Core
RRD
Overseas and Disposal Group
Cyprus Core
Savings
Current
82%
Cyprus Core
Overseas and Disposal Group
6%
2%
Corporate
52%
RRD
By type
€10.9bn
Time
Cyprus Core
L/D: Cyprus core — 88% vs. Group — 148%
… as well as a key driver of profitability (9M’14)
%
% contribution of
Cyprus operations
€m
89%
704
88%
790
826
76%
76%
204%
941
171
Cyprus (Core
+ RRD)
Group
-280
Net interest income
Total income
-367
Total expenses
84
-373
-492
Provisions
Profit after tax & before
one-offs
Profit after tax and before one-offs for Cyprus operations of €171m for 9M’14, compared to Group total of €84m
24
Significant progress made on Group KPIs, with a clear plan of action to
achieve medium-term targets
Category
Key
performance
indicators
90+ DPD
coverage
Group
2013
38%
Group
9M’ 14
38%
Cyprus
9M’ 14
37%
Mediumterm
target
(2017)
Capital
Margins
and
efficiency
Provisioning
charge
3.7%
2.6%
2.2%
<1.0%
Eurosystem
funding % total
balance sheet
36%
31%
n.a.
<25%
Basel 3
transitional
CET1
15.4%
n.a.
>12%
Net interest
margin
3.5%
4.0%
3.9%
~3.25%
Fee and
commission
income/ total
income
14.3%
13.9%
14.2%
Increase
Cost to income
ratio
25
10.4%
47%
39%
34%
1. Reverse
trend on
overdue
loans
• Continue re-structuring capitalising on the foreclosure
law
• Seek FDI to enhance business viability
• Re-cycle re-structured loans into the lending
business for continued support and service
2. Normalise
funding;
Eliminate
ELA
• Boost deposits by leveraging on stronger capital
position
• Access DCM on the back of improved ratings,
stronger financial soundness and better prospects
• Proceeds from exiting non-core overseas activities
3. Focus on
core
markets
in Cyprus
• Direct lending into promising sectors with a view to
funding the recovery of the Cypriot economy
• Further diversify income stream by boosting fee
income from new sources in international business
and wealth
4. Achieve a
lean
operating
model
• Set-out a digital vision and introduce appropriate
technology to enhance product distribution channels
• Introduce technology and processes to reduce
operating costs
• Introduce HR policies aimed at enhancing productivity
5. Deliver
returns
• Strengthen governance and risk- management to
deliver appropriate medium-term risk-adjusted returns
• Listing of shares on a larger and more liquid
exchange
40%-50%
Asset
quality
Funding
Key Pillars & Plan of action
40%-45%
Key levers of future success for Bank of Cyprus
Supporting upside potential while downside is mitigated by Bank position and management actions
Drivers of Upside
 Accelerated macro recovery and positive upgrade, supported by hydrocarbon story
 Bank’s ability to stimulate economy, accessing promising sectors via its dominant market share
 Scope for significantly higher fees & commissions income
 Collateral value recovery
 New markets for IBS / Wealth
 Success of “digital vision”
Downside / uncertain outcomes
– Further run on deposits following lifting of capital controls
– Asset quality & property price deterioration
– Lower pace / impact of legislative reform
– Russian geo-political instability and de-offshorisation
– Litigation
26
Mitigated by management actions
– Deposits stabilising ; retention / gathering programme
– Continual review and reduction of higher risk exposures
– Diversification away from Russia / Ukraine
– Appropriate provisions made in respect of legal actions
Key takeaways
27
•
Leading financial institution in an economy that is on the road to economic recovery, as evidenced
by the Moody’s upgrade
•
MoU implementation on track with 5th Troika review mission being another positive one
•
CET1 ratio improved to 15.4% (transitional basis, 14.9% CET1 B3 FL) driven the successful €1
bn share capital increase through a private placement with international institutional investors and
existing investors
•
Deposit base showing signs of stabilisation, with 3Q2014 deposit outflows in Cyprus reduced to
just 3%; early release of all blocked decree deposits
•
ELA reduced through deleveraging actions and capital proceeds
•
RRD up and running with signs that measures are yielding results, despite the lack of the
appropriate legal infrastructure
•
Loan quality challenges remain; 90+ DPD remain high; imperative that the Bank is given the tools
to engage effectively with borrowers
•
Election of a new Board with members bringing a wealth of banking and broader corporate
experience
Appendices
Appendices
> Income statement
30 - 34
> Balance sheet
35 - 46
> Management team
29
47
Income Statement Review
9M2014
3Q2014
2Q2014
qoq
change %
1Q2014
Net interest income
790
244
279
-12%
267
Net fee and commission income
131
43
43
+1%
45
35
10
12
-13%
13
Other (expenses)/income
(15)
(6)
(24)
-66%
15
Total income
941
291
310
-7%
340
(367)
(122)
(121)
+0%
(124)
574
169
189
-11%
216
(492)
(163)
(183)
-11%
(146)
2
(2)
2
n/a
2
84
4
8
-68%
72
(15)
(5)
(8)
-27%
(2)
Loss attributable to non-controlling interests
15
7
6
Profit after tax and before restructuring costs, discontinued
operations and net profit from disposal of non-core assets
84
6
6
-15%
72
Restructuring costs
(32)
(11)
(16)
-
(5)
Loss from discontinued operations
(36)
-
-
-
(36)
Net profit from disposal of non-core assets1
60
-
60
-
-
Profit/(loss) after tax
76
(5)
50
n/a
31
4.03%
3.83%
4.26%
-43 b.p.
3.99%
39%
42%
39%
+3 p.p.
36%
Selected lines from Income Statement (€m)
Insurance income net of insurance claims
Total expenses
Profit before provisions for impairment of customer loans,
restructuring costs and discontinued operations
Provisions for impairment of customer loans
Share of profit /(loss) from associates
Profit before tax, restructuring costs and discontinued operations
Tax
Net interest margin
Cost-to-Income ratio
(1) This relates to the loss on disposal of the Ukrainian operations (€114m), the profit on disposal of the stake in Banca Tnansilvania (€47m) the profit on disposal of the
loans in Serbia (€27m) and the profit from the early repayment of the Cyprus Government Bond (€100m)
30
b.p. = basis points, p.p. = percentage points ; 100 b.p. = 1 p.p.
2
Net Interest Income and Net Interest Margin
Net Interest Income (€m)
Interest income from Laiki Recapitalisation Bond
290
268
267
279
44
43
44
224
224
235
44
246
3Q'13
4Q'13
1Q'14
2Q'14
244
26
• 3Q2014 Net Interest Income (NII) at €244m
(compared to €279m for 2Q2014) on the back of
lower customer spread reflecting reduced lending
rates and lower interest income following the
repayment of €950m of a sovereign bond by the
Republic of Cyprus (Laiki recapitalisation bond)
in July 2014
218
3Q'14
• During 3Q2014 the Bank reduced its Base
lending rates in order to help the rejuvenation of
the domestic economy
Net Interest Margin (bp)
FY2013: 354
394
• 3Q2014 Group Net Interest Margin (NIM) at
3.83% (compared to 4.26% for 2Q2014) due to
reduction of net interest income
9M2014: 403
380
399
426
383
• NII and NIM continue to be affected by the
competitive conditions in the domestic banking
market and by the high-though-declining reliance
on Eurosystem funding which is cheaper than the
cost of customer deposits
310
1H'13¹
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
(1) Information for 1Q2013 and 2Q2013 is not available as it has not been possible to publish the financial results for the three months ended 31 March 2013.
31
Analysis of Non-interest income
Analysis of Non Interest Income (€m)
Fee and commission Income
Insurance income net of insurance claims
FX income & Net income/(loss) from financial instruments
Other income/(expense)
13%
21%
10%
16%
Non Interest
Income %
Operating income
42
73
31
47
x
18%
65
45
43
41
%
43
43
Non Interest
income (€m)
23
12
9
14
13 14
3
12
6
1
10
-5 -1
-30
-38
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
• The majority of non-interest income is recurring deriving from fees and commission income
and income from the insurance business
• All businesses are focusing on increasing fee income; e.g. International Banking Services
(IBS), a significant contributor of fee income in the past, is focused on reactivating volumes
in incoming and outgoing payments to improve non-interest income
• Recurring income from insurance business reflecting the Group’s leading position in the
insurance business in Cyprus
32
Total Expenses
Quarterly Total expenses (€m)
Other operating expenses
134
52
82
3Q'13
•
3Q2014 Total expenses of €122m compared
to €121m for 2Q2014
•
Staff costs for 3Q2014 at €67m broadly at the
same level as in the previous quarters
•
The cost-to-income ratio for 9M2014 has been
broadly stable at 39%
Staff costs
126
124
121
122
62
57
53
55
64
67
68
67
4Q'13
1Q'14
2Q'14
3Q'14
Group Cost to Income Ratio
57%
49%
47%
36%
1H'13¹
9M'13
FY'13
1Q'14
38%
39%
1H'14
9M'14
(1) Information for 1Q2013 and 2Q2013 is not available as it has not been possible to publish the financial results for the three months ended 31 March 2013.
33
Core Cyprus operations key driver of Group performance
High net interest margins for Cyprus– supported by
cheap Eurosystem funding
(bps)
Lower CIR for Cyprus driven by Laiki integration /
streamlining
423
377
372
384
24% reduction in personnel (VRS)
35% reduction in expenses
354
314
50%
43%
9M2014: 388
38%
30%
33%
34%
1H'14
9M'14
FY2013: 353
1H'13
3Q'13
4Q'13
1Q'14
2Q'14
3Q'14
Historical fee and commission income / total income
for Cyprus
0.8
0.7
1.0
0.3
19%
13%
13%
13%
14%
84%
81%
87%
87%
87%
86%
2012
2013
1Q2014
Fee and commission income
Total income (€ bn)
(1)
2Q2014
Other income
9M'13
FY'13
1Q'14
Improvement in cost of risk1 for Cyprus
0.3
16%
2011
34
0.3
1H'13
4,8%
4,5%
3,8%
1,9%
2.4%
1Q'14
1H'14
2,2%
3Q2014
1H'13
9M'13
Cost of risk for the Cyprus operations has been calculated as provisions for impairment of loans and advances / gross loans
FY'13
9M'14
Balance Sheet Deleverage - Shrinking to Strength
€m
Jun
2013
Sep
2013
Dec
2013
Mar
2014
Jun
2014
Sep
2014
Change
Since
Jun
2013
Cash & bank placements
3,012
2,578
2,530
2,105
1,973
2,417
-595
Investments
3,413
3,505
3,433
3,475
3,538
2,578
-835
23,769
22,575
21,764
21,234
20,063
19,794
-3,975
Other assets
2,762
2,739
2,622
2,564
2,984
2,694
-68
Total assets
32,956
31,397
30,349
29,378
28,558
27,483
-5,473
Customer deposits
16,970
15,468
14,971
14,066
13,803
13,330
-3,640
-
1,301
1,400
1,400
1,400
920
+920
11,107
9,856
9,556
9,506
8,785
7,684
-3,423
Interbank funding
983
1,038
790
753
802
707
-276
Other liabilities
976
944
895
894
954
1,057
+81
2,920
2,790
2,737
2,759
2,814
3,785
+865
32,956
31,397
30,349
29,378
-1,559
-1,048
-971
-820
-1,075
n/a
n/a
10.4%
10.6%
11.3%
15.4%
11.3x
11.2x
11.1x
10.6x
10.1x
7.3x
Net Loans
ECB funding
ELA
Total equity
Total liab. & equity
Balance sheet
deleverage qoq
CET1 ratio
(transitional basis)
Leverage ratio
(Assets/Equity)
35
28,558 27,483
Net loans reduction driven by
disposal of non-core assets and
the ongoing deleveraging
Deposit reduction less than
reduction in gross loans
Overall ELA reduction from peak
about €3.9 bn (including November
repayment)
-5,473
Steady reduction of total assets
CET1 ratio and Leverage ratio
strengthened by Share Capital
Increase
Credit Risk – Quality of Loan portfolio
Problem Loans (€ bn)
NPLs (Old definition)
+29%
NPLs (New definition)
7,69
10,21
12,98
13,00
+1%
14,58
14,74
+0%
-2%
12,76
-1%
12,59
12,98
Jun-14
Sep-14
NPLs>90+DPD
by €1.8 bn
+3%
8,25
4,82
4,05
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Quarterly change in problem loans (€ bn)
90+ DPD
2.92
1.97
3Q'13
Sep-13
4Q'13
0,40
-0,25
1Q'14
0,45 0,59 0,39
0,15
-0,17
2Q'14
2Q'14
pro-forma
excl.
deleverage
3Q'14
Mar-14
In 3Q2014, 90+ DPD1 increased by €387m
reflecting the recessionary conditions and
difficult legislative environment.
•
NPLs2 continue to rise as restructured loans
remain classified as NPLs for longer
•
NPLs growth rate maintained at 1% for 3Q2014
•
Adjusting for the disposal of the Ukraine
operations and Serbian loans, the 3Q2014
increase in 90+DPD and NPLs was lower than
the 2Q2014 increase
NPLs
0,14
Dec-13
•
0,91
0,02
36
14,04
14,44
6,66
2,95
(1)
(2)
13,13
+18%
6,45
5,13
+1%
11,01
90+ DPD
4,97
+3%
+7%
90+ DPD are loans with a specific provision (i.e. impaired loans) and loans past-due for more than 90 days but not impaired
NPLs as per the Central Bank of Cyprus definition
Credit Risk – Provisions
Trends in 90+DPD and provisions
Group loan quality indicators
90+ DPD provision coverage
47,4%
90+ DPD ratio
48,6%
48,6%
49,8%
•
90+ DPD ratio at 52.5%
•
90+ DPD provision coverage stood
at 38%; Taking into account
tangible collateral, 90+ DPD are
fully covered
•
Accumulated provisions at €4.9 bn
or 20% of gross loans
•
Conservative provisioning
assessment takes into account
property value indexation, expected
future evaluation of property prices
and costs incurred during the
recovery period
52,5%
38,8%
27,4%
17,2%
30%
48%
42%
37%
38%
39%
39%
38%
Dec-11
Dec-12
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
18,6%
19,1%
19,3%
20,0%
Accumulated provisions
Accumulated provisions (€ bn)
Provisions % Gross loans
16,2%
17,6%
13,1%
5,2%
37
1,5
3,7
4,6
4,8
5,0
5,0
4,9
4,9
Dec-11
Dec-12
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Credit Risk – Gross loans and 90+ DPD by Business Line
Gross loans by type/business line (new presentation adopted as from June 2014 1)
28.4
27.4
26.7
3,4
3,4
3,0
5,4
5,3
5,4
5,3
6,4
6,2
6,1
6,1
13,1
12,5
12,2
11,9
Jun-13
Sep-13
Dec-13
Mar-14
Corporate
SMEs
Retail Housing
Retail Consumer and other
26.3
2,9
25.3
24.7
4,1
1,5
5,8
2,0
3,9
2,7
5,2
4,4
1,5
5,6
1,9
3,9
2,6
4,9
Jun-14
Sep-14
RRD- Mid and Large Corporates
RRD- SMEs
Total
(€ bn)
RRD- Recoveries
Group 90+DPD loans by type/business line (new presentation adopted as of June 2014 1)
13.0
12.8
1,2
1,3
1,2
1,3
1,2
1,3
4,0
4,4
3,3
3,3
3,5
1,2
1,2
6,2
7,2
6,8
3,9
0,6
0,5
0,8
1,6
3,8
7,2
Jun-13
Sep-13
1,2
1,0
2,6
Corporate
38
Total
13.0
11.0
SMEs
Retail Housing
Dec-13
Retail Consumer and other
Mar-14
12.6
13.0
(€ bn)
0,6
Jun-14
RRD- Mid and Large Corporates
0,8
1,6
0,6
Sep-14
RRD- SMEs
(1) As part of the restructuring of the Group, management is currently monitoring the loan portfolio of the Group using new business line definitions. An important
component of the Group’s new operational structure is the establishment of the RRD for the purposes of centralising and streamlining the management of its
delinquent loans. No comparative information is available.
RRD- Recoveries
Credit Risk – Gross loans and 90+ DPD by Segment
Gross loans by segment
28.4
27.4
26.7
26.3
8,9
8,7
8,4
6,4
6,2
13,1
Jun-13
25.3
24.7
8,2
7,2
7,0
6,1
6,1
5,5
5,5
12,5
12,2
11,9
12,6
12,2
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Corporate
SMEs
Total
(€ bn)
Retail
Group 90+DPD loans by segment
13.0
13.0
2,5
2,5
3,3
6,2
Jun-13
11.0
12.6
1,3
2,4
2,5
3,3
3,5
3,2
3,4
7,2
7,2
6,8
7,0
7,1
Sep-132
Dec-13
Mar-14
Jun-14
Sep-14
2,2
2,6
Corporate
39
13.0
12.8
SMEs
Retail
Total
(€bn)
Loans and Deposits by Geography
Deposits by Geography
Gross Loans by Geography
€m
31.12.13
31.03.14
30.06.14
30.09.14
22,964
22,763
22,185
21,881
UK
1,284
1,194
1,172
1,112
Russia
1,429
1,290
1,304
1,208
Other
countries1
1,066
1,016
639
541
Cyprus
26,743
Group
26,263
25,300
24,742
€m
31.12.13
2,2%
Cyprus
4,5%
UK
30.06.14
30.09.14
Cyprus non-IBU
8,658
8,196
8,094
7,785
Cyprus IBU
4,047
3,789
3,594
3,458
12,705
11,985
11,688
11,243
1,244
1,249
1,252
1,289
Russia
919
767
845
794
Other countries2
103
65
18
4
14,971
14,066
13,803
13,330
Cyprus – Total
UK
Group
Gross Loans by Geography
4,9%
31.03.14
Deposits by Geography
6,0%
0,0%
Cyprus
9,7%
Cyprus - IBU
Russia
UK
Romania
Russia
25,9%
58,4%
Romania
88,4%
Total Cyprus
84.3%
40
(1)
(2)
Other countries: Romania, Ukraine (until March 2014) and Greece
Other countries: Romania and Ukraine (until March 2014)
Analysis of Deposits by Geography and by Type
Deposits by geography
Russia
17,0
0.10
1,3
UK
4,8
Other countries*
1,2
15,5
0,1
1,3
15,0
0,1
1,2
4,1
4,0
9,7
8,9
8,7
8,2
8,1
7,8
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
15.47
15,0
14,1
13,8
13,3
3,5
0,9
3,7
0,9
4,0
0,8
1,1
0,9
0,8
Cyprus IBU
Cyprus non-IBU
13,8
14,1
0,1
1,2
3,8
* Other countries: Romania and Ukraine
0,8
0,0
1,3
3,6
13,3
0,0
0,8 1,3
3,5
Total
(€ bn)
Deposits by type of deposit
Current & demand
accounts
Savings accounts
Time deposits
17,0
3,4
0,8
12,7
Jun-13
41
3,3
0,9
3,5
0,9
11,3
10,6
9,6
9,1
8,5
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Total
(€ bn)
Loans and Deposits in Cyprus
Gross loans by type/business line (presentation adopted as from June 2014 1)
24.0
23.3
23.0
22.8
3,0
2,9
2,6
2,6
5,3
5,2
5,3
5,2
5,4
5,3
5,2
5,2
10,3
9,9
9,9
9,8
Jun-13
Sep-13
Dec-13
Mar-14
RRD- Recoveries
RRD- Mid Corporations
RRD- Large Corporations
Retail Consumer and other
Retail Housing
SMEs
Corporate
22.2
21.9
Total
(€ bn)
4,1
1,5
5,8
1,7
3,9
1,9
3,4
4,4
1,5
5,6
1,6
3,8
1,8
3,2
Jun-14
Sep-14
Cyprus Deposits (€ bn)
42
IBUs
14,4
Non-IBUs
4,8
13,0
12,7
12,0
11,7
11,2
4,1
4,0
3,8
3,6
3,5
9,7
8,9
8,7
8,2
8,1
7,8
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
(1) As part of the restructuring of the Group, management is currently monitoring the loan portfolio of the Group using new business line definitions. An important
component of the Group’s new operational structure is the establishment of the RRD for the purposes of centralising and streamlining the management of its delinquent
loans
Analysis of Loans and 90+ DPD ratios by Economic Activity
Gross loans by economic activity (€ bn)
32%
Manufacturing
Hotels &
Restaurants
Construction
Real estate
Private
Individuals
1,53
1,53
1,72
1,92
Professional
& other
services
1,73
2,44
2,32
2,78
3,59
4,12
3,63
4,20
4,61
4,09
4,21
4,13
4,25
4,15
1,61
1,85
1,82
1,93
1,89
0,96
0,95
0,95
1,11
1,00
2,74
2,70
2,83
2,82
3,12
Trade
6%
9%
2,31
15%
8,73
17%
2,18
6%
4%
11%
30.09.14
7,96
30.06.14
8,05
31.03.14
8,54
% of
total
31.12.13
8,41
30.06.13
Other
sectors
90+ DPD ratios by economic activity
Trade
43
Manufacturing
Hotels &
Restaurants
Construction
Real estate
Private
Individuals
Professional
& other
services
Other
sectors
60,5%
59,6%
64,0%
64,7%
41,1%
57,7%
54,9%
53,5%
56,8%
40,8%
36,8%
34,1%
33,0%
32,1%
25,6%
51,2%
50,4%
48,0%
51,7%
46,0%
78,3%
76,7%
72,1%
69,6%
54,8%
30.09.14
59,8%
51,9%
46,8%
51,1%
30.06.14
40,1%
55,3%
53,3%
51,1%
31.03.14
49,7%
37,6%
46,7%
31.12.13
44,8%
44,4%
44,1%
40,7%
30.06.13
90+ DPD and Quarterly Change of 90+ DPD
90+ DPD (€ bn) and Quarterly change of 90+ DPD (€m)
13,0 13,0 12,8 12,6
Quarterly change of 90+ DPD (€ mn)
13,0
11,0
90+ DPD (€ bn)
90+ DPD
formation
7,7
6,5
387
-165
Jun-14
Sep-14
-247
Mar-14
20
Dec-13
Sep-13
Jun-13¹
Dec-12
(1) Information for 1Q2013 and 2Q2013 is not available as it has not been possible to publish the financial results for the three months ended
31 March 2013.
44
1.972
3.319
1.240
1.319
FY2013
€5,311m
Sep-12
Jun-12
Mar-12
Dec-11
FY2012
€2,723m
Sep-11
Jun-11
Mar-11
64
100
609
402
156
232
96
Dec-10
FY2011
€1,399m
Sep-10
Jun-10
5,0 5,1 5,1
9M2014
-€25m
558
410
265
2,9
FY2010
€1,329m
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
FY2009
€945m
-85
329
380
321
2,5
2,0 2,3 2,2
1,6
1,3
4,0 4,4
3,8
3,6
3,5
Credit Risk – Non-performing Loans
Trends in Non-performing loans
NPLs (based on Central Bank of Cyprus rules)
Loans restructured and less than 90 days past due
Loans more than 90 days past due and Loans restructured and more than 90 days past due
Total NPL ratio
60%
58%
58%
53%
Dec-13
45
53%
55%
6%
8%
47%
47%
Mar-14
60%
55%
Jun-14
9%
9%
49%
51%
Sep-14
•
NPL ratio (based on Central Bank of Cyprus rules) at 60% at 30 September 2014. New EBA definition to
be adopted as from December 2014.
•
NPLs provisioning coverage ratio at 34% at 30 September 2014
•
At 30 September 2014, the NPLs ratio comprises Loans restructured and less than 90 days past due
(9% of gross loans) and Loans more than 90 days past due and Loans restructured and more than
90 days past due (51% of gross loans)
Reversal in customer outflows during H2 2014
Average daily customer flows per month (€m)
•
Customer outflows significantly abated during
H2 2014 and the deposit base showed signs of
stabilisation
•
Customer outflows during Q1 2014 reflect one
off items and seasonality factors such as
payments of taxes, dividends by international
companies and the impact from the release of
the 6m decree deposits as well as the
relaxation of restrictive measures
•
Since May 2014, the Bank experienced
customer inflows every month (with the
exception of August) despite:
15,0
6,0
(11,4)(8,8)
(20,0)
6,0
2,0 3,0
3,0 4,0 1,0
1,0
(4,7)
(8,0) (8,0) (5,0)
(3,0)
(4,0)
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
(44,9)
(49,7)
Increasing fresh funds balances1 (€m)
–
The release of €1.2 bn of blocked
decree deposits in July and October
2014
–
The full abolition of internal controls at
the beginning of June 2014
1.538
1.240
1.119 1.188
1.336 1.394
898
443
507
599
610
652
700
740
(1)
46
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
•
Funds received from abroad minus funds sent abroad per customer, post March 2013 and not subject to restrictive measures
Fresh funds balance1 increased to €1,538m.
The amount of fresh money is approximately
9.3% of total customer deposits
A strong and experienced Management team
Executive management
John
Hourican
Dr. Chris
Patsalides
Eliza
Livadiotou
Michalis
Athanasiou
Chief Executive Officer
• Joined in October 2013
• Formerly Chief Executive of RBS’s investment bank
division
Finance Director
• Joined 1996
• Strong financial markets experience and longevity
with the Bank
• Former executive at CBC; familiar with local regulations
and government policy making
Dr. Charis
Pouangare
Consumer & SME banking
• Joined in 1991
• Significant experience with the bank in all local sectors,
Retail, SME and Corporate
• Excellent knowledge of customer needs and market
dynamics
Nicolas
Sparsis
Corporate banking
• Joined in 1983
• Significant knowledge of the local business market and
extensive experience in customer relationship
management
Group Chief Financial Officer
• Joined 1999
• Robust financial knowledge and longevity with the Bank
• Chartered Accountant, formerly at Arthur Andersen
Group Chief Risk Officer
• Joined Laiki in 1995
• Extensive local and international experience including the
disposal of 2 banking subsidiaries
• Formerly Treasurer and Director of International
Operations of Cyprus Popular Bank
RRD (NPL management and large exposures >€100m)
Euan
Hamilton
Business segments (origination of new business)
Director of Restructuring and Recoveries Division
• Joined in December 2013
• Oversaw the run-down of c.£75bn of non-core assets at
RBS
Louis
Pochanis
International Banking Services
• Joined in 1993
• Set up Private Banking and Wealth Management in
Cyprus and then Greece
• Wealth/Brokerage/AM: Costas Argyrides
• International Operations: Miltiades Michaelas
• Eurolife: Artemis Pantelidou
• General Insurance: Stelios Christodoulou
• Human Resources: Solonas Matsias
• Blend of extensive restructuring experience and long standing local market knowledge and client relationships
• Clearly defined separation among business lines, particularly NPL management
47
Disclaimer
This presentation has been prepared for information and background purposes only. It is confidential and neither it nor
any part of it may be reproduced (electronically or otherwise) or redistributed, passed on, or the contents otherwise
divulged, directly or indirectly, to any other person (excluding the recipient's professional advisers) or published in whole
or in part for any purpose without the prior written consent of the Bank of Cyprus Public Company Ltd (the "Bank"). This
presentation does not purport to be all-inclusive or to contain all of the information that a person considering the
purchase of any offered securities may require to make a full analysis of the matters referred to herein. Certain
statements, beliefs and opinions in this presentation are forward-looking. Such statements can be generally identified
by the use of terms such as “believes”, “expects”, “may”, “will”, “should”, “would”, “could”, “plans”, “anticipates” and
comparable terms and the negatives of such terms. By their nature, forward-looking statements involve risks and
uncertainties and assumptions about the Group that could cause actual results and developments to differ materially
from those expressed in or implied by such forward-looking statements. These risks, uncertainties and assumptions
could adversely affect the outcome and financial effects of the plans and events described herein. We have based
these forward-looking statements on our current expectations and projections about future events. Any statements
regarding past trends or activities should not be taken as a representation that such trends or activities will continue in
the future. Readers are cautioned not to place undue reliance on forward-looking statements, which are based on facts
known to and/ or assumptions made by the Group only as of the date of this presentation. The Bank's ability to achieve
its projected results depends on many factors which are outside management's control. Actual results may differ
materially from those contained or implied in the forward-looking statements. We assume no obligation to update such
forward -looking statements or to update the reasons that actual results could differ materially from those anticipated in
such forward-looking statements. This presentation does not constitute an offer to sell, or a solicitation of an offer to
buy, any security in the United States, or any other jurisdiction. The delivery of this presentation shall under no
circumstances imply that there has been no change in the affairs of the Group or that the information set forth herein is
complete or correct as of any date. This presentation shall not be used in connection with any investment decision
regarding any of our securities, which should only be made based on expressly authorised materials from us identified
as such, nor in connection with any decision whether or how to vote on any matter submitted to our stockholders. The
securities issued by the Bank have not been, and will not be, registered under the US Securities Act of 1933 (“the
Securities Act”), or under the applicable securities laws of any other jurisdiction and may only be offered or sold in the
United States to “qualified institutional buyers” as defined in Rule 144A under the Securities Act and outside the United
States in compliance with Regulation S under the Securities Act.
48

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