Bank Of Cyprus Holdings Plc · CSECY:BOCH
Bank Of Cyprus — Debt Investor Presentation (October 2020)
55 slides from Bank Of Cyprus's debt investor presentation, Oct 19, 2020
Slide 1: Bank of Cyprus Group Credit Update Presentation
Group Financial Results for the six months ended 30 June 2020 Bank of Cyprus Group Credit Update Presentation October 2020
Slide 2: Disclaimer
Group Financial Results for the six months ended 30 June 2020 DISCLAIMER The financial information included in this presentation is neither reviewed nor audited by the Important Notice Regarding Additional Information Contained in the Investor Presentation Group’s external auditors. The Interim Cond
Slide 3: 1H2020 Highlights and COVID-19 Response
Group Financial Results for the six months ended 30 June 2020 1H2020 Highlights and COVID-19 Response 3
Slide 4: Leading financial hub in Cyprus
Group Financial Results for the six months ended 30 June 2020 Leading financial hub in Cyprus Market share Hellenic Bank 42% 21% 11% 6% 12.5 Gross loans 6.8 € bn 3.4 2.0 35% 30% 5% 11% 16.3 14.2 Deposits € bn 5.4 2.2 98 104 Branch network # branches 22 8 Market leading full service bank in Cyprus So
Slide 5: Substantial improvement on Key Balance Sheet metrics
Group Financial Results for the six months ended 30 June 2020 Substantial improvement on Key Balance Sheet metrics €5.5 bn balance sheet deleveraging c.€11 bn reduction in RWAs Funding structure normalised € bn € bn -€5.5 bn 49% 76% 76% -€10.9 bn 26.8 22.7 -79 p.p. 21.3 141% 12.0 11.8 Total assets R
Slide 6: 1H2020 - Highlights
Group Financial Results for the six months ended 30 June 2020 1H2020 - Highlights • Confirmed COVID-19 cases remain amongst the lowest within EU, despite relaxation of measures COVID-19 • Continue to support colleagues, customers affected by COVID-19 and wider Cypriot economy • Nascent signs of econ
Slide 7: Timely and strong response by the European and the Cypriot authorities
Group Financial Results for the six months ended 30 June 2020 Timely and strong response by the European and the Cypriot authorities Comprehensive and far reaching measures to support performing businesses and the wider economy Government measures include: European Authorities measures-Implications
Slide 8: Cypriot economy: nascent signs of recovery appear post lockdown
Group Financial Results for the six months ended 30 June 2020 Cypriot economy: nascent signs of recovery appear post lockdown Cypriot economy recorded a drop of 11.9% in 2Q2020 vs 15.0% decline in Euro Area Economic Sentiment starting to improve post lockdown 5.0% to 6.1% 120 3.2% 0.8% 6.0% 100 1.0%
Slide 9: New lending at €238 mn in 2Q2020, reflecting COVID-19 lockdown
Group Financial Results for the six months ended 30 June 2020 New lending1 at €238 mn in 2Q2020, reflecting COVID-19 lockdown 98% of new exposures2 in Cyprus since 2016 were performing at the Non-legacy gross loans3 by business activity start of the moratorium € bn % change qoq € mn 563 Private 3.97
Slide 10: Sustained Progress on Digital Transformation
Group Financial Results for the six months ended 30 June 2020 Sustained Progress on Digital Transformation Digitally Engaged Customers (Individuals)1 Digital Transactions2 Ratio (Legal Entities) Jul 20: 72% Jul 20: 52% Jun 20: 71% Jun 20: 53% Apr 20: 70% Apr 20: 60% Jul 19: 67% Jul 19: 30% Jul 18: 6
Slide 11: Supporting customers and society though COVID-19
Group Financial Results for the six months ended 30 June 2020 Supporting customers and society though COVID-19 Loan moratorium Maintaining Operational New lending SupportCY Resilience • Payment holidays until end of • All branches operating as usual • €689 mn new loans in 1H2020 post lockdown • Supp
Slide 12: Continue to support customers through payment deferrals
Group Financial Results for the six months ended 30 June 2020 Continue to support customers through payment deferrals Payment deferrals granted to 25K customers affecting €6.00 bn gross loans COVID-19 moratorium until the end of 2020, as per Gross Loans % of % government measures # customers under G
Slide 13: Private individuals loan portfolio, highly collateralised
Group Financial Results for the six months ended 30 June 2020 Private individuals loan portfolio, highly collateralised Private Individuals: €3.97 bn Other • Housing performing loans: €3.28 bn 17% • Low LTV1 housing portfolio • 65% of portfolio with LTV1<60% • Only 15% of portfolio with LTV1>80% • O
Slide 14: Business portfolio well diversified, with high quality collateral
Group Financial Results for the six months ended 30 June 2020 Business portfolio well diversified, with high quality collateral Business gross loans Breakdown, by Payment deferrals (excluding Legacy)1 Covid-19 impact • 9% with ≥1 payment by • High quality origination via prudent underwriting standar
Slide 15: Portfolio exposure to businesses most impacted by COVID-19
Group Financial Results for the six months ended 30 June 2020 Portfolio exposure to businesses most impacted by COVID-19 Tourism: €1.06 bn Trade: €1.00 bn 31 Mar 2020 30 Jun 2020 % of 31 Mar 2020 30 Jun 2020 % of Hotels & Catering Trade € bn € bn portfolio € bn € bn portfolio Food services 0.06 0.06
Slide 16: Cost of risk reduced to 76 bps for 2Q2020
Group Financial Results for the six months ended 30 June 2020 Cost of risk1 reduced to 76 bps for 2Q2020 4.30% 4.00% Update of IFRS 9 macroeconomic assumptions for the Bank driving increase in COR Mainly impact of by 59 bps in 1H2020 deterioration of 2.80% macro- economic Base Scenario GDP Unemploym
Slide 17: Balance Sheet and Asset Quality
Group Financial Results for the six months ended 30 June 2020 Balance Sheet and Asset Quality 17
Slide 18: Balance sheet composition
Group Financial Results for the six months ended 30 June 2020 Balance sheet composition Total assets Total equity & liabilities € bn € bn 21.37 21.37 20.43 20.43 1.28 1.91 Other assets Other 1.29 1.54 (including HFS) 2.12 1.46 REMU properties 1.48 Equity 2.24 0.26 Funding from 1.17 1.00 Wholesale 0.
Slide 19: Gross loans and NPEs by Customer Type
Group Financial Results for the six months ended 30 June 2020 Gross loans and NPEs by Customer Type Gross loans by customer type (€ mn) 15,900 1,795 12,822 12,709 12,491 4,068 11,593 1,875 1,870 1,710 1,508 2,977 4,077 4,068 4,060 3,762 1,922 1,914 1,863 1,579 7,060 2,209 2,186 2,203 2,203 2,739 2,6
Slide 20: >€12 bn or 83% NPE reduction since peak
Group Financial Results for the six months ended 30 June 2020 >€12 bn or 83% NPE reduction since peak NPEs (€ bn) 15.0 Allowance for Expected Loan (3.8) 5.1 Credit Losses • €12.4 bn or 83% NPE reduction since peak -€12.4 bn ✓ c.€3.8 bn through trades (8.6) Net NPEs 9.9 ✓ c.€8.6 bn organic 2.6 1.5 1.
Slide 21: Accelerated de-risking: NPE sales of €3.8 bn since 2H2018
Group Financial Results for the six months ended 30 June 2020 Accelerated de-risking: NPE sales of €3.8 bn since 2H2018 Helix 1 Velocity 1 Velocity 2 Helix 2 ✓Completed ✓Completed ✓Completed ✓SPA Signed Sale of €2.7 bn NPEs Sale of €34 mn NPEs Sale of €133 mn NPEs Sale of €886 mn NPEs • Retail unsec
Slide 22: €0.9 bn NPE sale agreed, reducing NPE ratio to 22%
Group Financial Results for the six months ended 30 June 2020 €0.9 bn NPE sale agreed, reducing NPE ratio to 22%1 Helix 2 26% NPE reduction 6 p.p. reduction in NPE ratio • Agreement for the sale of €886 mn NPEs NPEs (€ bn) NPE ratio • Completion expected in 1H2021 -26% 3.5 -6 p.p. • Gross considerat
Slide 23: €0.9 bn NPE Trade Delivers Accelerated Risk Reduction
Group Financial Results for the six months ended 30 June 2020 €0.9 bn NPE Trade Delivers Accelerated Risk Reduction €898 mn Helix 2 portfolio (€ mn) 898 30 June 2020 Performing 12 50 Assets sold € mn Receipts € mn Re-performing NPEs1 Contractual Loans2 1.478 Consideration 422 Gross Loans 898 of whic
Slide 24: Clear strategy for residual NPEs
Group Financial Results for the six months ended 30 June 2020 Clear strategy for residual NPEs Re-performing NPEs1: €0.30 bn2 • Close monitoring of redefaults & quality of restructurings • c.€275 mn re-performing NPEs applied to the loan moratorium scheme, extending Group NPEs (€ bn) their exit date
Slide 25: Continuous progress across all segments
Group Financial Results for the six months ended 30 June 2020 Continuous progress across all segments Focus shifts to Retail and SME after intense Corporate attention Corporate Jun 2020 Pro forma1 Dec 19 722 € mn Inflows 4 2,582 Exits (87) NPE ratio 11% Jun 20 639 Corporate 461 €525 mn Helix 2 (114)
Slide 26: €145 mn organic NPE outflows in 2Q2020, leading to €137 mn organic NPE reduction
Group Financial Results for the six months ended 30 June 2020 €145 mn organic NPE outflows in 2Q2020, leading to €137 mn organic NPE reduction Net organic -227 -205 -142 -137 outflows (€ mn) Inflows (€ mn) 50 33 32 New inflows 17 16 Redefaults 8 • €145 mn organic outflows, maintained at similar 8 9
Slide 27: Coverage and collateral maintained post Helix 2
Group Financial Results for the six months ended 30 June 2020 Coverage and collateral maintained post Helix 2 NPE total coverage at 125% when collateral included pro forma for Helix 22 124% 128% 125% 122% 122% 115% 109% 68% 69% 67% 70% 68% 67% 68% 58% 3 Re-performing NPEs 23% 52% 54% 56% 59% 58% 41%
Slide 28: NPE Coverage and Total coverage by segment
Group Financial Results for the six months ended 30 June 2020 NPE Coverage and Total coverage by segment Coverage and collateral maintained post Helix 22 Tangible Collateral 1 Allowance for expected loan credit losses Corporate €378 mn Global Corporate: €147 mn SME €409 mn Retail-Housing €970 mn Ret
Slide 29: Gross loans and coverage by IFRS 9 staging
Group Financial Results for the six months ended 30 June 2020 Gross loans and coverage by IFRS 9 staging Gross loans by IFRS 9 stage (€ mn) Allowance for expected loan credit losses (€ mn) Coverage ratio 12,822 12,709 12,491 11,593 Stage 1 7,209 6,673 7,025 Jun2020 7,022 61% Dec Mar Jun 2,096 2,109
Slide 30: Foreclosures resume on 1 September 2020
Group Financial Results for the six months ended 30 June 2020 Foreclosures resume on 1 September 2020 Cumulative FY2019 1H2020 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 2016 – 20181 Foreclosures 1,437 1,829 5933 330 527 436 536 5933 - commenced2 Auctions held 470 807 1643 82 163 189 373 1643 - • Fol
Slide 31: Lower REMU sales due to COVID-19 lockdown
Group Financial Results for the six months ended 30 June 2020 Lower REMU sales due to COVID-19 lockdown Evolution of REMU stock1 €27 mn sales in 1H2020 Group BV (€ mn) Sales contract prices2 – Organic (€ mn) 1,530 1,490 1,484 1,456 116% 109% 124% 110% 103 98 Greece & Romania 183 91% 90% 91% 90% 182
Slide 32: REMU: €1.28 bn sales of 1,754 properties since set-up in Jan 2016
Group Financial Results for the six months ended 30 June 2020 REMU: €1.28 bn sales of 1,754 properties across all property classes since set-up in Jan 2016 Sales since Real Estate Management Unit set-up Breakdown of cumulative sales1 Sales contract prices1 (€ mn) by on-boarding year (€ mn) # 99 # 33
Slide 33: Capital, MREL and Liquidity
Group Financial Results for the six months ended 30 June 2020 Capital, MREL and Liquidity 33
Slide 34: CET1 at 14.4% pro forma for Helix 2
Group Financial Results for the six months ended 30 June 2020 CET1 at 14.4% pro forma for Helix 25 min OCR (SREP) requirement for 2020 post ECB Announcement 4 -36 bps 17.9% 1.7% 14.3% (0.2%) 14.3% 14.4% 1.8% 0.4% (0.3%) 0.2% (0.1%) 0.5% (0.5%) 0.1% 14.5% 9.7% 9.7% CET1 31 Mar Operating Loan credit R
Slide 35: RWA intensity reduced to 55% in 2Q2020, pro forma for Helix 2
Group Financial Results for the six months ended 30 June 2020 RWA intensity1 reduced to 55% in 2Q2020, pro forma for Helix 23 RWAs reduced by >€10 bn since peak 2014 • c.€640 mn RWA relief qoq Jun 20 Helix 2 RWAs Dec 19 Mar 20 Jun 20 Helix 2 DPP2 Pro forma for - c.€380 mn (SME factor) Helix 23 - c.€
Slide 36: Risk Weighted Assets – Regulatory Capital
Group Financial Results for the six months ended 30 June 2020 Risk Weighted Assets – Regulatory Capital Risk weighted assets by Geography (€ mn) Reconciliation of Group Equity to CET1 30.06.20 € mn 30.06.20 31.12.18 31.12.19 31.03.20 30.06.20 Helix 2 pro forma2 Group Equity per financial statements
Slide 37: SREP requirement for 2020 at 9.7%, post ECB capital relaxations
Group Financial Results for the six months ended 30 June 2020 SREP requirement for 2020 at 9.7%, post ECB’s capital relaxations for COVID-19 SREP requirements for 2020: CET1 ratio at 9.7% SREP requirements for 2020 : Total Capital ratio at 14.5% 14.5% 14.0% 11.0% O-SII 1 0.5% 1.0% 10.5% 1.0% CCB 2 2
Slide 38: Creditor Hierarchy in Cyprus and MREL Requirement
Group Financial Results for the six months ended 30 June 2020 Creditor Hierarchy in Cyprus and MREL Requirement Creditor Hierarchy in Cyprus MREL decision received in May 2020 Updated MREL decision expected early 2021 • Based on BRRD I • Based on BRRD II and SRB’s 2020 MREL Policy Covered deposits •
Slide 39: Deposits at €16.3 bn, broadly flat qoq
Group Financial Results for the six months ended 30 June 2020 Deposits at €16.3 bn, broadly flat qoq Cyprus deposits by passport origin2 € bn 3% Cyprus 16.84 16.38 16.47 16.69 16.25 16.30 4% 6% 3.70 3.49 3.54 Other EU 3.46 3.31 3.32 Russia 20% Other countries 67% Other European countries, excl. Russ
Slide 40: Profitability
Group Financial Results for the six months ended 30 June 2020 Profitability 40
Slide 41: Income Statement
Group Financial Results for the six months ended 30 June 2020 Income Statement • NII decreased to €83 mn in 2Q2020, mainly due € mn 1H2020 1H20191 2Q2020 1Q20201,2 qoq% yoy% to higher cash collections on interest not Net Interest Income 168 170 83 85 -2% -1% previously recognized in 1Q2020, offset b
Slide 42: Drivers of NIM
Group Financial Results for the six months ended 30 June 2020 Drivers of NIM Composition of NII Effective yield on assets & cost of funding NIM • €5 mn annual potential NII benefit from the NII (€ mn) 85 90 84 85 83 189 199 187 195 188 (bps) take up of €1 bn TLTRO III 1 107 110 Non-Legacy Legacy Liq
Slide 43: Non interest income flat qoq, despite COVID-19 lockdown
Group Financial Results for the six months ended 30 June 2020 Non interest income flat qoq, despite COVID-19 lockdown Analysis of Non Interest Income (€ mn) – Quarterly • Net fee and commission income of €33 mn for 2Q2020, down 13% qoq, negatively impacted by COVID-19 lockdown • Transactional fees o
Slide 44: Recurring fees from insurance business
Group Financial Results for the six months ended 30 June 2020 Recurring fees from insurance business • Leading life insurer in Cyprus • Leading non-life insurer in Cyprus • 17.7% market share2 (excl. motor) • Comprehensive insurance business package • 24% market share2 (Life & Health regular) • GWP
Slide 45: Total Operating Expenses down by 18% yoy
Group Financial Results for the six months ended 30 June 2020 Total Operating Expenses down by 18% yoy Cost to Income Ratio (C/I ratio)1 59% 59% 58% 57% 57% 56% • Cost to income ratio1 at 57%, broadly flat qoq FY2018 1H2019 FY2019 1Q2020 2Q2020 1H2020 • Total operating expenses of €81 mn for 2Q2020,
Slide 46: Key highlights
Group Financial Results for the six months ended 30 June 2020 Key highlights Continue to deliver on strategic priorities, while supporting customers, colleagues and communities through COVID-19 1 Continue to support the recovery of the Cypriot economy via prudent new lending Improvement of asset qua
Slide 47: Key Information and Contact Details
Group Financial Results for the six months ended 30 June 2020 Key Information and Contact Details Contacts Credit Ratings Investor Relations Standard & Poor’s Global Ratings: Tel: +35722122239, Email: investors@bankofcyprus.com Long-term issuer credit rating: Affirmed at “B+” on 16 July 2020 (stable
Slide 48: APPENDIX: Glossary & Definitions
Group Financial Results for the six months ended 30 June 2020 APPENDIX Glossary & Definitions 48
Slide 49: Glossary & Definitions
Group Financial Results for the six months ended 30 June 2020 Glossary & Definitions Allowance for expected loan credit 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
Slide 50: Glossary & Definitions
Group Financial Results for the six months ended 30 June 2020 Glossary & Definitions This is the ratio of digitally engaged individual customers to the total number of individual customers. Digitally engaged customers are the individuals who use the digital channels of the Bank (mobile Digitally eng
Slide 51: Glossary & Definitions
Group Financial Results for the six months ended 30 June 2020 Glossary & Definitions IBU Servicing exclusively international activity companies registered in Cyprus and abroad and not residents Legacy exposures Legacy exposures are exposures relating to (i) Restructuring and Recoveries Division (RRD
Slide 52: Glossary & Definitions
Group Financial Results for the six months ended 30 June 2020 Glossary & Definitions 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 Non-interest income
Slide 53: Glossary & Definitions
Group Financial Results for the six months ended 30 June 2020 Glossary & Definitions Loan credit losses for impairment of Credit losses for impairment of customer loans and gains/(losses) on derecognition of loans and changes in expected cash flows on acquired loans customer loans Profit/(loss) afte
Slide 54: Glossary & Definitions
Group Financial Results for the six months ended 30 June 2020 Glossary & Definitions Total income Total income comprises net interest income and non-interest income (as defined). Total loan credit losses, impairments Total loan credit losses, impairments and provisions comprises loan credit losses (
Slide 55: Disclaimer
Group Financial Results for the six months ended 30 June 2020 Disclaimer This document contains certain forward-looking statements which can usually be identified by terms used such as “expect”, “should be”, “will be” and similar expressions or variations thereof or their negative variations, but th
Bank of Cyprus Holdings — Debt Investor Presentation (October 2020) on 6ix