Bank of Cyprus Holdings PLC · CSECY:BOCH
Bank of Cyprus — FY2013 Earnings Presentation
42 slides from Bank of Cyprus's earnings presentation, Feb 28, 2014
Slide 1: Preliminary Financial Results for the year ended 31 December 2013
Bank of Cyprus Group Preliminary Financial Results* for the year ended 31 December 2013 Preliminary Financial Results FY2013 – Highlights Income Statement Review Balance Sheet Review Restructuring Appendices 28 February 2014 * The Preliminary Financial Results have not been audited by the Group’s ex
Slide 2: 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
Slide 3: Preliminary Financial Results FY2013 Highlights
Preliminary Financial Results FY2013 Highlights Preliminary Financial Results FY2013 – Highlights Income Statement Review Balance Sheet Review Restructuring Appendices Following the Eurogroup decisions to recapitalise Bank of Cyprus via a bail-in of depositors, the Bank was placed under resolution f
Slide 4: Preliminary Financial Results FY2013 Highlights
Preliminary Financial Results FY2013 Highlights • Loss from continuing operations €77 mn for 4Q2013; including restructuring costs of €16 mn, loss attributable to shareholders €93 mn • Loss from continuing operations €426 mn for FY2013; including restructuring costs of €158 mn and €1.456 mn losses f
Slide 5: Recent Developments
Recent Developments • Integration of ex-Laiki business on track • Branches in Cyprus reduced to 130 from 203 in May 2013; another 3 branches to be closed during 2014 • Next milestone for integration process is the IT banking system unification scheduled to be completed by end of 1H2014 • Implementat
Slide 6: Income Statement Review
Income Statement Review Preliminary Financial Results FY2013 – Highlights Income Statement Review Balance Sheet Review Restructuring Appendices 6
Slide 7: Income Statement Review
Income Statement Review Selected lines from Income Statement (€ mn ) FY2013 FY2012 Change 4Q2013 3Q2013 Change Net Interest income 999 702 +42% 274 296 -8% Net fee & commission income 169 173 -2% 43 41 +6% Other income 6 45 -87% (3) 24 -113% Total income 1.174 920 +28% 314 361 -13% Total expenses (5
Slide 8: Net Interest Income (NII) and Net Interest Margin (NIM)
Net Interest Income (NII) and Net Interest Margin (NIM) Net Interest Income (€ mn) • 4Q2013 NII at €274 mn (compared to €296 mn for 3Q2013), mainly due to lower customer spread (i.e. 429 lower yield on loans); FY2013 NII at €999 mn 296 274 • 4Q2013 Group NIM at 3,87% (compared to 4,02% for 3Q2013) d
Slide 9: Analysis of Non Interest Income
Analysis of Non Interest Income Non Interest Income (€ mn) Other income/(expense) • FY2013 Non interest income of €175 mn Insurance income FX income & Net income from financial instruments Fee and commission Income • 4Q2013 Non interest income of €40 mn compared to €65 mn for 3Q2013 218 175 63 65 5
Slide 10: Total expenses
Total expenses Total expenses (€ mn ) Quarterly Total expenses (€ mn ) Other operating expenses Staff costs Other operating expenses Staff costs -5% 545 552 137 130 251 230 54 64 322 83 -21% 294 66 FY2012 FY2013 3Q2013 4Q2013 Group Cost to income ratio • 4Q2013 Total expenses of €130 mn compared to
Slide 11: Income Statement Highlights
Income Statement Highlights Income Statement Highlights (€ mn ) 499 429 1H2013* 3Q2013 4Q2013 361 296 274 314 214 224 184 70 65 40 -35 -77 -137-130 -285 -261-268 -314 -538 Net interest Non interest Total income Total expenses Profit before Provisions for Loss from income income impairments impairmen
Slide 12: Balance Sheet Review
Balance Sheet Review Preliminary Financial Results FY2013 – Highlights Income Statement Review Balance Sheet Review Restructuring Appendices 12
Slide 13: Funding Structure
Funding Structure Analysis of Liabilities and Equity (€ bn) Funding from Central Banks ECB funding (€ bn) Total equity Other liabilities ELA ELA funding (€ bn) ECB + ELA funding % Total assets ECB funding Customer deposits 36% 36% 34% 32,96 -5% -3% 11,11 11,16 10,96 31,03 31,40 30,36 1,30 1,40 11,11
Slide 14: Customer Deposits
Customer Deposits Deposits by Geography (€ mn ) Loans to deposits ratio Cyprus Russia UK Other Net loans (€ bn) Customer deposits (€ bn) Loans to deposits ratio 16.970 140% 146% 145% -9% 105 -3% 23,8 1.295 15.468 22,6 21,8 14.971 17,0 103 15,5 15,0 1.153 1.285 103 1.244 1.078 918 30.06.13 30.09.13 3
Slide 15: Loan Quality
Loan Quality Problem Loans (€ bn) NPLs (Old definition) qoq:+29% qoq:+7% NPLs (New definition) 14,04 90+ DPD 13,13 11,01 12,98 13,00 qoq:+18% qoq:+0,2% 7,69 10,21 6,45 4,97 5,07 5,13 8,25 6,66 4,82 3,43 4,05 2,95 31.12.11 31.03.12 30.06.12 30.09.12 31.12.12 30.06.13 30.09.13 31.12.13 Quarterly chang
Slide 16: Loan Quality
Loan Quality Group loan quality indicators • 90+ DPD ratio at 49% 90+ DPD provision coverage** • 90+ DPD provision coverage 90+ DPD ratio* 49% improved to 38%; Taking into 47% account tangible collateral the 90+ 39% DPD are fully covered 27% 23% 17% 18% 18% • Accumulated provisions at €4,98 bn or 18
Slide 17: Loan Quality
Loan Quality New definition of NPLs Loans restructured and less than 90 days past due Loans more than 90 days past due or Loans restructured and more than 90 days past due New definition Old definition 53% 53% 48% 48% 6% 4% 36% 29% 44% 47% 30.06.13 30.09.13 30.09.13 31.12.13 31.12.13 • New definitio
Slide 18: Capital position
Capital position Capital adequacy ratios Analysis of Risk weighted assets (RWA) (€ bn) 30.06.13 30.09.13 31.12.13 Credit risk Market risk Operational risk 10,5% 10,5% 10,2% 10,2% 10,7% 10,4% 10,6% 23,51 -2% 10,2%10,2% 22,97 -2% 22,48 1,84 1,84 2,06 0,55 0,08 0,01 21,12 21,05 20,41 Core tier 1 capita
Slide 19: Evolution of Core tier 1 capital ratio in 4Q2013
Evolution of Core tier 1 capital ratio in 4Q2013 Risk weighted 22.970 -2% 22.478 Assets € mn Core tier 1 10,2% -0,4% -0,1% +0,3% +0,2% 10,2% capital ratio +184 +62 -268 -16 4Q2013 Loss from 2.334 continuing 2.296 operations before tax and non- controlling interest €84 mn Core tier 1 Profit before Im
Slide 20: Restructuring
Restructuring Preliminary Financial Results FY2013 – Highlights Income Statement Review Balance Sheet Review Restructuring Appendices 20
Slide 21: Restructuring Plan charts the future strategic direction
Restructuring Plan charts the future strategic direction Restructuring Plan defines actions to create a safer, smaller, more focused institution capable of supporting the recovery of the Cypriot economy Rebuilding trust and confidence of both depositors and investors Preserving the Bank’s status as
Slide 22: Restructuring of Cypriot operations
Restructuring of Cypriot operations Branch rationalisation – (branch numbers) • Integration of ex-Laiki business on track • Branch network in Cyprus reduced to 130 branches -36% from 203 branches in May 2013; 3 branches expected to close during 2014. 203 190 158 142 133 130 127 • Next milestone for
Slide 23: New organisational structure
New organisational structure STRUCTURE CHART – BANK OF CYPRUS GROUP REMUNERATION & NOMINATIONS & HUMAN RESOURCES BOARD OF DIRECTORS CORPORATE GOVERNANCE COMMITTEE COMMITTEE STRATEGY & RISK COMMITTEE RESTRUCTURING COMMITTEE AUDIT COMMITTEE DIRECTOR DIRECTOR OF ASSET & LIABILITY INTERNAL COMPLIANCE GR
Slide 24: Creation of Restructuring and Recoveries Division (RRD)
Creation of Restructuring and Recoveries Division (RRD) Division handles delinquent customers in all sectors • Most significant change is the establishment of a strong restructuring and recovery area. The Bank had a fragmented approach to the management of stressed, distressed and delinquent clients
Slide 25: Main Challenges
Main Challenges Managing loan quality deterioration – Recovery of NPLs Integrating Laiki Bank – Achieving operational efficiencies Enhance capital position while making progress on non-core disposals Managing liquidity – Defending deposit franchise – Regaining trust Exogenous factors such as the fai
Slide 26: Key information and contact details
Key information and contact details Credit Ratings: Fitch: Restricted Default (from 26 March 2013) Moody’s : Ca / NP / E (from 22 March 2013) Listing: ATHEX – BOC CSE – BOCY ISIN CY0000100111 Since 19 March 2013, the shares of the Bank have been suspended from trading on ATHEX and CSE Contacts Inves
Slide 27: Appendices
Appendices Preliminary Financial Results FY2013 – Highlights Income Statement Review Balance Sheet Review Restructuring Appendices 27
Slide 28: Group Income Statement
Group Income Statement (€ mn) FY2013 FY2012 yoy % 4Q2013 3Q2013 qoq% Net interest income 999 702 +42% 274 296 -8% Net fee & commission income 169 173 -2% 43 41 +6% Net foreign exchange income and gains/(losses) from financial instruments 5 (3) - 23 9 +169% Insurance income net of insurance claims 65
Slide 29: Consolidated Balance Sheet
Consolidated Balance Sheet € mn % yoy 31.12.13 31.12.12 € mn % yoy 31.12.13 31.12.12 Cash and balances with Amounts due to banks -42% 196 341 -3% 1.240 1.272 Central Banks Funding from Central Banks - 10.956 - Placements with banks -27% 1.290 1.769 Repurchase agreements -2% 594 608 Debt securities,
Slide 30: Loans and Deposits by Geography
Loans and Deposits by Geography Gross Loans by Geography Deposits by Geography € mn 30.06.13 30.09.13 31.12.13 € mn 30.06.13 30.09.13 31.12.13 Cyprus 24.219 23.540 23.192 Cyprus non-IBU 9.665 8.948 8.658 Cyprus IBU 4.752 4.054 4.047 UK 1.527 1.451 1.351 Cyprus – Total 14.417 13.002 12.706 Russia 1.7
Slide 31: Analysis of Gross Loans by Geography and customer Type
Analysis of Gross Loans by Geography and customer Type Gross loans by geography *Other countries: Romania and Ukraine 28,35 27,40 26,74 Total 0,81 0,79 0,77 Other countries* 1,53 1,79 1,45 1,62 1,35 1,43 (€ bn) Russia UK Cyprus 24,22 23,54 23,19 30.06.13 30.09.13 31.12.13 Gross loans by customer typ
Slide 32: Analysis of Deposits by Geography and by Type
Analysis of Deposits by Geography and by Type Deposits by geography * Other countries: Romania and Ukraine Total 16,97 (€ bn) Other countries* 15,47 14,97 1,15 0,1 Russia 1,30 1,08 0,1 0,92 0,1 1,29 1,24 UK 4,75 4,05 4,05 Cyprus IBU Cyprus non-IBU 9,67 8,95 8,66 30.06.13 30.09.13 31.12.13 Deposits b
Slide 33: Cyprus: Summary income statement and key indicators
Cyprus: Summary income statement and key indicators (€ mn) FY2013 FY2012 yoy (%) 4Q2013 3Q2013 qoq (%) Net interest income 834 514 +62% 240 254 -6% Net fee & commission income 132 133 -1% 35 31 +12% Net foreign exchange income and gains/(losses) 21 (13) -264% 36 11 +249% from financial instruments I
Slide 34: Loans and Deposits in Cyprus
Loans and Deposits in Cyprus Cyprus Loans by customer type (€ bn) 24,22 23,54 23,19 2,99 2,91 2,60 Consumer Credit 5,33 5,20 5,28 Housing 5,35 5,28 5,20 SMEs Corporate 10,55 10,15 10,11 30.06.13 30.09.13 31.12.13 Cyprus Deposits (€ bn) IBUs 14,42 13,00 12,71 Non-IBUs 4,75 4,05 4,05 9,67 8,95 8,66 30
Slide 35: Russia: Summary income statement and key indicators
Russia: Summary income statement and key indicators (€ mn) FY2013 FY2012 yoy (%) 4Q2013 3Q2013 qoq (%) Net interest income 97 120 -19% 22 23 -6% Net fee & commission income 28 33 -16% 7 7 -3% Net foreign exchange income and gains/(losses) 4 6 -33% 0 1 - from financial instruments Other income/(expen
Slide 36: Russian operations
Russian operations Russian Loans (€ bn) Loans by sector 2,00 Consumer 1,89 2,02 Credit 1,79 25% 1,62 1,43 Mortgages Corporate 3% 54% SMEs 31.12.10 31.12.11 31.12.12 30.06.13 30.09.13 31.12.13 18% Russian Deposits (€ bn) 1,29 1,25 1,12 1,15 1,08 0,92 31.12.10 31.12.11 31.12.12 30.06.13 30.09.13 31.12
Slide 37: UK: Summary income statement and key indicators
UK: Summary income statement and key indicators (€ mn) FY2013 FY2012 yoy (%) 4Q2013 3Q2013 qoq (%) Net interest income 29 22 +30% 5 10 -54% Net fee & commission income 5 4 +8% 1 1 -27% Net foreign exchange income and gains/(losses) 1 2 -68% (2) 2 - from financial instruments Other income 0 0 - (0) 0
Slide 38: UK operations
UK operations UK Loans (€ bn) Loans by sector ex-Laiki UK loans Consumer Credit Mortgages 2% 1,53 1,45 2% 1,35 1,08 1,04 0,83 0,79 0,72 0,63 SMEs Corporate 1,08 1,04 44% 52% 0,83 0,74 0,73 0,72 31.12.10 31.12.11 31.12.12 30.06.13 30.09.13 31.12.13 UK Deposits (€ bn) 1,30 1,29 1,26 1,24 1,21 1,22 31.
Slide 39: Other countries: Summary income statement
Other countries*: Summary income statement (€ mn) FY2013 FY2012 yoy (%) 4Q2013 3Q2013 qoq (%) Net interest income 39 46 -12% 7 8 -9% Net fee & commission income 4 3 +54% 1 2 -53% Net foreign exchange income and gains/(losses) (21) 2 - (11) (5) - from financial instruments Insurance income net of ins
Slide 40: 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* 60,5% 57,3% 12,98 13,00 50,4% 49,8% 48,8% 11,01 0,44 0,46 0,35 0,45 0,39 40,9% 0,47 0,39 0,25 0,46 31,7% 28,9% 28,5% 25,6% 23,9% 16,4% 11,72 11,70 9,91 30.
Slide 41: Analysis of loans and 90+ DPD ratios by customer type
Analysis of loans and 90+ DPD ratios by customer type Gross loans by customer type (€ bn) 30.06.13 30.09.13 31.12.13 13,10 12,51 12,24 6,37 6,24 6,12 5,44 5,30 5,37 3,44 3,35 3,01 Corporate SMEs Housing Consumer Credit 90+ DPD ratios by customer type 30.06.13 30.09.13 31.12.13 57,9% 58,6% 52,2% 54,5
Slide 42: 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) 8,73 8,54 8,49 30.06.13 30.09.13 31.12.13 4,61 4,54 4,25 4,20 4,15 4,06 3,12 2,99 2,83 2,78 2,44 2,31 1,93 1,92 1,92 1,90 1,89 1,73 1,11 1,06 1,00 Professional Trade Manufacturing Hotels & Construction