Bank of Cyprus Holdings PLC · CSECY:BOCH
Bank of Cyprus — FY2015 Earnings Presentation
55 slides from Bank of Cyprus's earnings presentation, Feb 25, 2016
Slide 1: Preliminary Group Financial Results for the year ended 31 December 2015
Bank of Cyprus Group Preliminary Group Financial Results for the year ended 31 December 2015 * The Preliminary Group Financial Results have not been audited by the Group‟s external auditors 25 February 2016
Slide 2: Preliminary FY2015 financial results – Highlights
Preliminary FY2015 financial results – Highlights • 90+ DPD1 down by €1,3 bn or 10% during FY2015; 90+ DPD ratio at 50% • 90+ DPD provision coverage boosted by 7 percentage points to 48%; Elevated provision charges for Improving Asset 4Q2015 following the assumption changes in the Bank’s provisionin
Slide 3: Income Statement Review
Income Statement Review € mn FY2015 FY20143 4Q2015 3Q20154 qoq % Total income 1.040 1.168 253 251 1% Total expenses (416) (427) (119) (102) 16% Profit before provisions and impairments1 624 741 134 149 -10% Provisions for impairment of customer loans net of gains on loans derecognition and changes i
Slide 4: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Net Interest Income and Net Interest Margin Interest income from Laiki Recap. bond (€ mn) Net interest income (other) (€ mn) • 4Q2015 Net Interest Income (NII) at €198 NIM (bps) NIM (excluding Laiki Recap. bond) (bps) mn, compared to €205 mn for 3Q2015, re
Slide 5: Analysis of Non-interest income
Analysis of Non-interest income Analysis of Non Interest Income (€ mn) – Quarterly 1 Net fee and commission income Insurance income net of insurance claims Other % 14% 13% 16% 14% 14% 15% Net fee and commission 50 47 55 income % Total income 49 46 31 1 5 11 54 4 x 16 54 10 47 10 45 9 45 12 48 Non in
Slide 6: Total expenses
Total expenses Total expenses (€ mn) • Total expenses for 4Q2015 increased to €119 mn from €102 mn for 3Q2015, with the increase FY2014: 427 FY2015: 416 reflecting primarily higher non-recurring advisory and professional expenses and increased provisions for 115 119 litigations and legal settlements
Slide 7: Income Statement Highlights – Group vs Cyprus
Income Statement Highlights – Group vs Cyprus FY2015 Cyprus Vs Group performance (€ mn) 94% 98% 92% 102% 58% % 1.017 1.040 788 842 % contribution of 634 624 Cyprus operations 54 -383 -416 Cyprus operations 23 Rest of operations -33 -10 -252 -186 Group -438 Net interest income Total income Total expe
Slide 8: Capital Position
Capital Position Evolution for CET1 ratio during 4Q2015 • CET1 ratio (transitional basis) totalled 14,0% at 31 0,6% December 2015, compared to 15,6% at 30 15,6% September 2015. Adjusting for DTA, the Fully Loaded (2,5%) 14,0% CET1 ratio totalled 13,1% 0,2% (0,9%) 0,1% 13,1% • CET1 ratio remains high
Slide 9: Capital Position
Capital Position „Clean‟ Fully Loaded CET1 ratio1 (September – 20152) Clean' Fully Loaded CET1 ratio (LHS) Average 'Clean' Fully Loaded CET1 ratio • “Clean” Fully loaded RWA % Total Assets (RHS) Average (RWA % Total Assets) CET1 ratio at 13,1%, 25% 90% higher than average 80% for EU peers, reflectin
Slide 10: ELA Reliance Reducing Fast
ELA Reliance Reducing Fast Continuous reduction of ELA with further potential going forward Actions for further ELA reduction 34% 32% • New deposit inflows 31% 31% 31% 28% 28% • Regaining access to wholesale and interbank 11,40 market 11,11 26% 9,86 9,56 9,51 23% • Maturity of non-core bonds 8,78 20
Slide 11: Customer Deposits
Customer Deposits Growing customer deposit1 base (€ bn ) Improving funding structure 2 Customer deposits to Total Assets Cyprus UK Russia & Other countries Loans to deposits ratio (net) 14,97 14,07 14,18 1,02 13,80 13,61 13,63 13,61 13,33 13,17 0,00 1,24 0,83 0,86 0,61 0,00 1,49 151% 148% 148% 0,61
Slide 12: Asset Quality
Asset Quality 90+ DPD Non Performing Exposures (NPEs) 90+ DPD (€ bn) 90+ DPD ratio NPEs (€ bn) NPEs ratio 62,9% 63,0% 61,9% 62,2% 53,2% 53,1% 61,8% 52,9% 52,5% 15,0 15,2 14,8 50,1% 14,2 14,0 12,7 12,8 12,6 12,0 11,3 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Evolution of 9
Slide 13: Asset Quality
Asset Quality 90+ DPD inflows in the Cyprus operations have been reduced significantly Group 90+ DPD by Customer type (€ bn) 90+ DPD inflows – Cyprus operations (€ bn) Corporate SMEs Retail other Retail housing 90+ DPD inflows Average quarterly inflows 0,68 12,65 12,79 12,65 0,60 12,00 1,17 1,21 1,2
Slide 14: Asset Quality
Asset Quality Cost of risk1 Accumulated provisions Accumulated provisions (€ bn) Cost of Risk - Cyprus Cost of Risk - Group Provisions % Gross loans 4,3% 24,1% 3,6% 21,6% 22,2% 22,5% 21,6% 4,0% 18,6% 19,1% 19,3% 20,0% 2,8% 2,8% 2,7% 2,1% 2,2% 2,1% 2,4% 2,4% 2,2% 1,9% 1,7% 1,6% 1,5% 5,0 5,0 4,9 4,9 5
Slide 15: Asset Quality
Asset Quality 90+ DPD fully covered by provisions & tangible collateral Dec -14 Mar -15 Jun -15 Sep -15 Dec -15 • For Cyprus operations, 90+ DPD 114% 110% 109% 111% 118% provision coverage increased to 46% at 31 December 2015, 76% 70% 72% 72% 71% compared to 39% at 30 Total BoC – Cyprus 38% 39% 39%
Slide 16: Asset Quality
Asset Quality Restructuring Activity by quarter (€ bn) Corporate SMEs Retail Total restructurings Average restructurings 1,35 FY2014: FY2015: €1,73 bn €3,33 bn 0,69 0,73 0,64 0,56 0,42 0,44 0,63 0,82 0,23 0,44 0,38 0,32 0,29 0,33 0,34 0,27 0,24 0,11 0,08 0,17 0,20 0,15 0,09 0,19 0,09 0,11 0,06 0,09
Slide 17: Asset Quality
Asset Quality Top 20 group exposures • Top 20 group exposures reduced by 10% during FY2015 to €3,15 bn at 31 December 2015; Top 20 customer groups exposure € bn Top 20 90+ DPD € bn Top 20 90+DPD ratio Top 20 90+DPD provision coverage • 90+ DPD ratio for Top 20 group was reduced to 73% at 31 December
Slide 18: Overseas non-core exposures
Overseas non-core exposures Overseas non-core exposures (€ mn) The non-core overseas exposures at 31 December 2015 were as follows: 1.311 Greece: The net exposure comprised: 31% (a) Net on-balance sheet exposures (excluding 166 1.179 foreclosed properties) totalling €22 mn; 155 1.051 (b) 641 foreclo
Slide 19: Significant progress made on Group KPIs
Significant progress made on Group KPIs Well on track to meet 2017 targets – A clear plan of action to achieve new Medium Term Targets Key Medium Key Pillars & Plan of action Dec- Dec- Targets Category performance Term 2014 2015 2017 indicators Targets • Intensify restructuring and workout activitie
Slide 20: Key Takeaways
Key Takeaways Unrivalled franchise in an economy that is recovering fast; Exit from Troika MoU in March 2016 CET1 ratio (transitional basis) at 14,0%, well above the minimum regulatory requirement; the Bank does not need to raise any capital; Leverage ratio at 12,6%, one of the highest ratios am
Slide 21: Key Information and Contact Details
Key Information and Contact Details Credit Ratings: Fitch Ratings: Long-term Issuer Default Rating: upgraded to "CCC" on 28 April 2015 Short-term Issuer Default Rating: affirmed at "C" on 28 April 2015 Viability Rating: upgraded to “ccc” on 28 April 2015 Moody‟s Investors Service: Baseline Credit As
Slide 22: BOC – At a glance
BOC – At a glance Strengthened capital position Significant Balance Sheet deleveraging Improved funding structure Loans to deposits ratio CET1 ratio Leverage ratio Total Assets (€ bn) RWA (€ bn) Customer deposits % Total assets 33,0 140% 145% 141% 30,3 14,0% 14,0% 121% 26,8 23,3 10,5% 10,4% 12,5% 12
Slide 23: Consolidated Balance Sheet
Consolidated Balance Sheet € mn % 31.12.15 31.12.14 € mn % 31.12.15 31.12.14 change change Cash and balances with Amounts due to banks 49% 242 162 24% 1.423 1.139 Central Banks Funding from Central Banks -46% 4.453 8.284 Placements with banks -20% 1.314 1.647 Repurchase agreements -36% 368 580 Debt
Slide 24: Income Statement Review
Income Statement Review € mn FY2015 FY20143 yoy % 4Q2015 3Q20154 qoq % Net interest income 842 969 -13% 198 205 -4% Fees and commission income 154 152 1% 38 36 7% Insurance income net of insurance claims 48 46 5% 16 12 39% Core income 1.044 1.167 -11% 252 253 - Other income (4) 1 - 1 (2) 141% Total
Slide 25: Consolidated Income Statement by quarter
Consolidated Income Statement by quarter € mn 4Q2015 3Q2015 2Q2015* 1Q2015* 4Q2014* Net interest income 198 205 212 227 225 Net fee and commission income 38 36 36 43 35 Insurance income net of insurance claims 16 12 9 11 10 Core income 252 253 257 281 270 Other income 1 (2) 4 (7) 6 Total income 253
Slide 26: Analysis of Operating Expenses
Analysis of Operating Expenses € mn FY2015 FY2014 4Q2015 3Q2015 Operating lease rentals for property and equipment 10 13 2 3 Advertising, marketing and communication expenses 22 24 8 8 Property related costs 43 35 16 10 Insurance expenses 15 14 4 4 Depreciation and amortisation 19 20 5 5 Special tax
Slide 27: Income Statement bridge for FY2015
Income Statement bridge for FY2015 Per financial € mn Per presentation Reclassification statements Net interest income 842 842 Net fee and commission income 154 154 Net foreign exchange gains/(losses) and net gains/(losses) on other financial instruments 31 54 85 Insurance income net of insurance cl
Slide 28: Cyprus Income Statement
Cyprus Income Statement € mn FY2015 FY2014 4Q2015 3Q2015 2Q2015 1Q2015 4Q2014 Net interest income 788 919 186 192 200 211 216 Net fee & commission income 147 145 36 34 34 42 34 Insurance income net of insurance claims 47 43 16 11 8 12 10 Core income 982 1.107 238 237 242 265 260 Other income /(expen
Slide 29: Cyprus: Income Statement by business line for FY2015
Cyprus: Income Statement by business line for FY2015 Wealth & International Consumer SME Corporate Brokerage & Total € mn Banking RRD Other Banking Banking Banking Asset Cyprus Management Net interest income 243 69 76 62 7 286 45 788 Net fee & commission income 55 9 8 47 2 15 11 147 Other income 5 0
Slide 30: Summary Income Statement by Geography
Summary Income Statement by Geography € mn UK OTHER2 FY2015 FY2014 FY2015 FY2014 Net interest income 31 31 40 79 Net fee & commission income 5 5 9 20 Insurance income net of insurance claims - - 1 2 Other income /(expenses) 0 1 (19) 5 Total income 36 37 31 106 Staff costs (13) (12) (25) (38) Other o
Slide 31: Risk Weighted Assets by Geography – Regulatory Capital
Risk Weighted Assets by Geography – Regulatory Capital Risk weighted assets by Geography (€ mn) Equity and Regulatory Capital (€ mn) 31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 Cyprus 20.452 20.473 19.607 19.551 18.438 Shareholders’ equity 3.465 3.502 3.
Slide 32: Reconciliation of Group Equity to CET 1
Reconciliation of Group Equity to CET 1 € mn 31.12.15 Group Equity per financial statements 3.077 Less : Intangibles and other deductions (17) Less: Deconsolidation of insurance and other entities (228) Less: Regulatory adjustments (Minority Interest, DTA and other items) (34) Less: Revaluation rese
Slide 33: BOC- Main performance indicators
BOC- Main performance indicators 31 December 2015 Ratios Group FY2015 ROAA (1,7%) ROAE (12,9%) Performance Net Interest Margin 3,79% Cost to income ratio 40% Loans to deposits 121% 90+ DPD/ 90+ DPD ratio €11.329 mn (50,1%) 90+ DPD coverage 48% Asset Quality Cost of risk 4,3%* Provisions / Gross Loan
Slide 34: Funding Structure
Funding Structure Analysis of Liabilities and Equity (€ bn) Total equity Other liabilities ELA ECB funding Customer deposits 30,4 29,4 28,6 27,5 26,8 26,7 25,4 24,2 23,3 15,0 14,1 13,8 13,3 13,2 13,6 13,6 13,6 14,2 1,4 1,4 1,4 0,9 0,9 0,8 0,5 7,7 0,5 9,6 9,5 8,8 7,4 6,9 5,9 0,7 4,9 3,8 1,7 1,6 1,8 1
Slide 35: Analysis of Deposits by Geography and by Type
Analysis of Deposits by Geography and by Type Deposits by geography 31 December 2015 (%) Total 16,97 Cyprus non-IBU Cyprus IBU UK Russia & Other countries* 14,97 Cyprus - non IBU Cyprus - IBU** UK 1,25 14,07 14,18 (€ bn) 1,30 1,02 13,80 13,33 13,17 13,61 13,63 13,61 1,24 0,83 0,87 0,79 0,55 0,61 0,6
Slide 36: Analysis of Deposits by sector for Cyprus operations
Analysis of Deposits by sector for Cyprus operations Deposits by sector as per CBC classification for Cyprus operations 31 December 2015 (%) Total Households Non financial corporations Other financial corporations General Governments Market Shares (€ bn) General Governments Other financial corporati
Slide 37: Gross loans by Geography and by Customer Type
Gross loans by Geography and by Customer Type Gross loans by geography 31 December 2015 (%) Cyprus UK Russia Other Countries* Total 24,09 23,93 22,86 25,30 24,74 23,77 22,59 (€ bn) 1,2% 2,1% 0,80 0,70 0,67 0,58 5,3% 0,69 0,49 0,26 0,48 1,17 1,30 1,11 1,21 0,91 0,97 1,03 1,07 1,13 1,03 1,14 1,21 0,25
Slide 38: NPEs by Geography and by Customer Type
NPEs by Geography and by Customer Type NPEs by geography 31 December 2015 (%) Cyprus UK Total Russia Other Countries* 15,17 (€ bn) 14,96 14,81 14,73 0,56 0,58 0,47 14,22 1,8% 2,8% Other countries* 0,57 13,97 0,64 0,5% Russia 0,52 0,65 0,39 0,57 0,11 0,11 0,38 0,10 0,26 UK 0,26 0,08 0,25 0,07 Cyprus
Slide 39: Market Shares and Customer flows in Cyprus
Market Shares and Customer flows in Cyprus Market share evolution in Cyprus Cumulative Customer flows** (€ mn) Deposits Loans 300 0 -300 40,5% 40,0% -600 39,5% 39,3% 39,1% 38,8% 38,5% 38,1% 37,9% 37,7% -900 -1.200 -1.500 -1.800 28,2% -2.100 27,9% 27,5% 26,5% 26,4% 25,7% -2.400 25,3% 24,9% 25,5% 24,8
Slide 40: UK Operations
UK Operations Gross Loans (€ bn) Loans by sector as at 31 December 2015 Consumer Credit 1,21 Housing 2% 1,13 1,14 SMEs 1% 0,91 1,03 21% Corporate Dec 2014 Mar 2015 Jun 2015 Sept 2015 Dec 2015 76% Customer Deposits (€ bn) 1,49 1,45 1,39 1,36 1,30 Dec 2014 Mar 2015 Jun 2015 Sept 2015 Dec 2015 40
Slide 41: Asset Quality
Asset Quality (€ mn) Dec-15 Sept-15 Jun-15 Mar-15 Dec-14 A. Gross Loans after Fair value on Initial recognition 21.385 21.597 22.575 22.540 22.206 Fair value on Initial recognition 1.207 1.266 1.351 1.545 1.566 B. Gross Loans 22.592 22.863 23.926 24.085 23.772 B1. Loans with no arrears 10.443 9.925
Slide 42: 90+ DPD by Geography
90+ DPD by Geography 90+ DPD by Geography (€ bn) 90+ DPD ratios by Geography Cyprus Russia UK Other countries* Cyprus Russia UK Other countries* 12,98 100% 100% 12,79 12,65 12,59 12,65 0,57 0,55 0,47 12,00 0,52 0,26 0,58 0,11 0,09 0,09 84% 0,28 0,55 0,60 83% 0,61 0,39 82% 0,51 11,33 80% 80% 80% 0,51
Slide 43: Asset Quality
Asset Quality 90+ DPD inflows in the Cyprus operations have been significantly reduced 90+ DPD inflows – Cyprus operations (€ bn) 90+ DPD inflows – Corporate Loans (€ bn) 90+ DPD inflows Average quarterly inflows Corporate 90+ DPD inflows Average quarterly inflows 0,68 0,60 0,36 0,37 0,34 0,39 0,29
Slide 44: Asset Quality
Asset Quality Performance of restructured loans (post-31 December 2013, by quarter) as at 31 December 2015 * Total Bank – Cyprus Corporate 100% 95% 97% 100% 1Q2014 2Q2014 3Q2014 88% 92% Quarterly average 83% 79% 78% 79% 4Q2014 1Q2015 2Q2015 86% 87% 80% 73% 73% 80% 65% 64% 73% 3Q2015 67% 60% 60% 40%
Slide 45: Analysis of Loans and 90+ DPD ratios by Business Line
Analysis of Loans and 90+ DPD ratios by Business Line* Gross loans by business line (€ bn) 31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 % of total 19% 8% 16% 7% 21% 6% 23% 5,37 5,33 5,20 5,13 5,31 5,02 4,91 4,87 4,78 4,59 4,53 4,73 4,38 4,34 4,29 3,85 3,85 3,80 3,75 3,68 2,30 2,20 2,14 1,83 1,83 1,8
Slide 46: Analysis of Loans and 90+ DPD ratios by Economic Activity
Analysis of Loans and 90+ DPD ratios by Economic Activity Gross loans by economic activity (€ bn) 31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 % of 18% 15% 32% 10% 4% 7% 8% 5% total 7,92 7,86 7,85 7,41 7,33 4,19 4,14 4,07 4,04 3,96 3,42 3,38 3,20 3,17 3,12 2,50 2,47 2,48 2,38 2,36 2,12 2,09 2,07 1,8
Slide 47: 90+ DPD and Quarterly Change of 90+ DPD
90+ DPD and Quarterly Change of 90+ DPD 90+ DPD (€ bn) and Quarterly change of 90+ DPD (€ mn) Quarterly change of 90+ DPD (€ mn) 13,0 13,0 12,8 12,6 13,0 12,7 12,8 12,6 12,0 90+ DPD (€ bn) 11,3 11,0 90+ DPD annual change 7,7 6,5 5,0 5,1 5,1 4,4 3,8 4,0 3,5 3,6 2,9 2,3 2,2 2,5 2,0 1,6 1,3 1.240 3.319
Slide 48: Rescheduled Loans for the Cyprus operations
Rescheduled Loans for the Cyprus operations Rescheduled Loans by customer type (€ bn) Rescheduled Loans (€ bn) 1.332 Retail housing Retail consumer SMEs Corporate 8,4 8,2 8,4 -491 7,4 1,7 1,7 1,7 -582 8.392 5,7 1,5 0,6 8.209 0,6 0,6 0,5 -76 1,3 1,8 1,7 1,7 1,5 0,4 1,1 3,9 4,3 4,2 4,4 2,9 31.12.14 31
Slide 49: Credit Risk - Analysis of problem loans
Credit Risk - Analysis of problem loans Analysis of problem loans - Cyprus operations (€ bn) (Dec-15) 0,4 13,3 1,5 0,7 0,1 0,1 10,6 9,7 0,8 €2,7 bn with arrears Impaired -no other IFRS and Total 90+ DPD with forbearance re-forborne within forborne >30+ Contagion effect NPEs >90+DPD arrears reclassif
Slide 50: Macroeconomic overview
Macroeconomic overview GDP growth expected to be positive from 2015 – faster GDP Growth* (yoy) recovery than other peripheral countries 2,3% 2,7% 2010 2011 2012 2013 2014 2015* 1,2% 1,1% 0,2% 1,6% -0,4% 1,4% -0,8% 0,3% -1,2% -1,8% -1,8% -2,1% -2,3% -2,4% (2,4%) (2,5%) -3,2% -3,7% (5,4%) -4,7% (3,4%)
Slide 51: Macroeconomic overview
Macroeconomic overview Government budget and primary balance and public Tourist Arrivals and Receipts: yoy % changes debt as % of GDP 120% 103% 108% 106% 98% 94% 13% 14,4% Arrivals Receipts 100% 79% 80% 66% 10,1% 56% 8% 9,0% 60% 8,7% 8,0% 40% 3% 3% 2% 2% 3% 20% 1% 3,8% 3,2% 4,2% 1,5% 1,5% 0% -20% 0%
Slide 52: Macroeconomic overview
Macroeconomic overview Indicators of private consumption Construction growth % qoq (annual percentage change) 70,0% 68,0% Construction growth % qoq 5,0% 60,0% 67,0% 0,0% 50,0% -5,0% 40,0% 66,0% -10,0% 30,0% 65,0% -15,0% 20,0% -20,0% 10,0% 64,0% -25,0% 0,0% 63,0% -30,0% -10,0% -35,0% -20,0% 62,0% 4Q2
Slide 53: Macroeconomic overview
Macroeconomic overview Total Government revenue vs expenditure (% of GDP) Prudent fiscal policy delivers strong results (% of GDP) Total revenue Total expenditure Actual fiscal balance & current forecast Original Programme fiscal target 44,0% 42,5% 42,8% 1,00% 42,1% -0,2% -0,1% 42,0% 41,4% -0,7% 40,
Slide 54: Non-Performing Loans definition
Non-Performing Loans definition Non-Performing Exposures (NPEs) –as per the EBA definition: In 2014 the European Banking Authority (EBA) published its reporting standards on forbearance and non-performing exposures (NPEs). According to the EBA standards, a loan is considered a non- performing exposu
Slide 55: Disclaimer
Disclaimer 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 suc