Bank of Cyprus Holdings PLC · CSECY:BOCH
Bank of Cyprus — 9M2015 Earnings Presentation
61 slides from Bank of Cyprus's earnings presentation, Nov 23, 2015
Slide 1: Group Financial Results for the nine months ended 30 September 2015
Bank of Cyprus Group Group Financial Results for the nine months ended 30 September 2015 Overview Income Statement Review Balance Sheet Review KPIs – Key Takeaways Additional Information 23 November 2015 1
Slide 2: 9M2015 Group Financial Results – Key Highlights
9M2015 Group Financial Results – Key Highlights 90+ DPD were reduced by €649 mn or 5% in 3Q2015 to €12,0 bn, with about half of the reduction relating to the disposal of the Russian operations Improving funding structure; Customer deposits in Cyprus increased by €527 mn or 5% in 3Q2015 and the loans
Slide 3: Overview
Overview Income Statement Review Balance Sheet Review KPIs – Key Takeaways Additional Information 3
Slide 4: BOC – At a glance
BOC – At a glance Strengthened capital position Significant Balance Sheet deleveraging Total assets (€ bn) CET1 ratio (transitional basis) * -27% 15,4% 14,0% 13,9% 14,9% 15,6% 33,0 31,4 30,3 10,5% 10,4% 11,3% 29,4 28,6 27,5 26,8 26,7 25,4 24,2 Capital increase of €1 bn -1,9% Jun Sep Dec Mar Jun Sep
Slide 5: Cyprus - 2015 the year of normalisation and growth
Cyprus - 2015 the year of normalisation and growth GDP growth expected to be positive from 2015 – faster GDP Growth* (yoy) recovery than other peripheral countries 2,2% 2010 2011 2012 2013 2014 2015f 2016f 2017f 1,2% 2,0% 0,6% 1,4% 1,2% 1,4% 0,1% -0,4% 0,3% -0,8% -1,2% -1,8% -1,8% -2,1% (2,4%) (2,5%
Slide 6: Cyprus - 2015 the year of normalisation and growth
Cyprus - 2015 the year of normalisation and growth 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% 60% 8,7% 8,0% 7,4% 40% 3% 3% 2% 2% 3% 20% 1% 3,8% 3,
Slide 7: Income Statement Review
Overview Income Statement Review Balance Sheet Review KPIs – Key Takeaways Additional Information 7
Slide 8: Income Statement Review
Income Statement Review 9M2015 9M20143 yoy % 3Q2015 2Q20154 qoq % 1Q20154 Net interest income 644 743 -13% 205 212 -3% 227 Fees and commission income 115 117 -1% 36 36 0% 43 Insurance income net of insurance claims 32 35 -10% 12 9 35% 11 Core income 791 895 -12% 253 257 -1% 281 Other income (5) 1 -
Slide 9: 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 Recapitalisation bond (€ mn) Net interest income (other) (€ mn) • 3Q2015 Group Net Interest Income (NII) at €205 mn NIM (bps) FY2014: 9M2015: compared to €212 mn for 2Q2015, reflecting
Slide 10: Analysis of Non-interest income
Analysis of Non-interest income Analysis of Non Interest Income (€ mn) Net fee and commission income Insurance income net of insurance claims Net FX gains/(losses) & Net gains/(losses) on other financial instruments (Losses)/gains from revaluation and disposal of investment properties Other income/(
Slide 11: Total expenses
Total expenses Total expenses (€ mn) • Total expenses for 3Q2015 increased to €102 mn from €92 mn for 2Q2015, but remained in line with 9M2014: 9M2015: previous quarters. 2Q2015 operating expenses 312 296 were exceptionally lower if compared to previous 115 105 104 103 102 102 quarters as a conseque
Slide 12: Group Income Statement Highlights
Group Income Statement Highlights Group Income Statement Highlights (€ mn) 9M15: 490 9M14: 584 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 214 9M15: 115 159 161 172 169 149 9M15: 329 9M14: 140 9M15: 73 9M14: 400 9M14: 76 34 55 45 50 11 15 29 31 13 -6 -119 -110 -123 -96 -169 -189 -312 -337 Profit befor
Slide 13: Income Statement Highlights – Group vs Cyprus
Income Statement Highlights – Group vs Cyprus 9M2015 Cyprus Vs Group performance (€ mn) 94% 97% 91% 101% 277% % 766 786 603 644 % contribution of 496 490 Cyprus operations 203 41 -270 -296 73 20 Cyprus operations -6 Rest of operations -26 -130 Net interest income Total income Total expenses Profit b
Slide 14: Balance Sheet Review
Overview Income Statement Review Balance Sheet Review KPIs – Key Takeaways Additional Information 14
Slide 15: Balance Sheet Deleverage
Balance Sheet* Deleverage Shrinking to Strength strategy is successfully coming to an end Change Jun Dec Jun Sep Dec Mar Jun Sep € mn Since 2013 2013 2014 2014 2014 2015 2015 2015 Jun 2013 Cash & bank 3.012 2.530 1.973 2.417 2.908 2.748 2.558 2.385 -627 placements Investments 3.413 3.433 3.538 2.578
Slide 16: Funding Structure
Funding Structure Analysis of Liabilities and Equity (€ bn) Loans to Deposits ratio Total equity Other liabilities ELA ECB funding Customer deposits Customer deposits to Total Assets Adjusting for the disposal Loans to deposits ratio (net) of the majority of the 30,4 29,4 Russian operations 28,6 27,
Slide 17: Eurosystem Funding Reliance Reducing Fast
Eurosystem Funding Reliance Reducing Fast Continuous reduction of ELA with further potential going forward Actions for further ELA reduction 34% 32% • Issue senior unsecured debt subject to market 31% 31% 31% conditions 11,40 11,11 11,16 28% 28% 10,96 10,91 26% • Repos with Counterparties using CyGB
Slide 18: Customer Deposits
Customer Deposits Customer Deposits by Geography (€ mn ) Evolution of Customer deposits** (€ mn) Cyprus UK Russia & Other countries* Adjusting for the disposal of the Group Cyprus majority of the Russian operations 581 442 527 527 14.971 326 14.066 13.803 13.611 13.629 13.608 1.022 13.330 13.169 71
Slide 19: Capital Position
Capital Position Evolution for CET1 ratio during 3Q20151 ‘Clean’ Fully Loaded CET1 ratio2 (September – 20153) +0,7% 15,6% BOC 14,9% 15,1% +0,1% -0,5% CET1 ratio 15,1% -0,4% +0,3% RWA intensity 86% 100% 22% 80% 17% 60% 40% RWAs Change CET1 ratio 30.06.15 Profit before CET1 ratio 30.09.15 DTA CET1 rat
Slide 20: Capital Position
Capital Position SREP Process and onsite inspection • Current SREP and onsite inspection process and related considerations with the ECB expected to be concluded by end-2015. • The onsite inspection and related draft recommendation letter state that, on the basis of a modified set of assumptions, th
Slide 21: Gross Loans
Gross Loans Gross Loans* by Geography (€ mn) • Group gross loans totalled €22,9 bn at 30 September 2015, compared to €23,9 bn at 30 Cyprus Russia UK Other countries** June 2015. Gross loans in Cyprus totalled €21,0 bn at 30 September 2015, and accounted for -19% 92% of gross loans of the Group. -6%
Slide 22: Credit Risk – Quality of Loan portfolio
Credit Risk – Quality of Loan portfolio 90+ DPD Loans NPEs Adjusting for the disposal of the majority Adjusting for the disposal of the majority of the Russian operations of the Russian operations 62,9% 63,0% 61,9% 62,2% 62,2% 52,5% 53,2% 53,1% 52,9% 53,0% 52,5% 48,6% 48,6% 49,8% 15,0 15,2 14,8 14,4
Slide 23: Credit Risk – Provisions
Credit Risk – Provisions Accumulated provisions Provision coverage ratios Excluding disposal of the 90+ DPD provision coverage Accumulated provisions (€ bn) Excluding disposal of the majority of the Russian NPLs/NPEs provision coverage majority of the Russian Provisions % Gross loans operations oper
Slide 24: Credit Risk – 90+ DPD loans by days past due and customer type
Credit Risk – 90+ DPD loans by number of days past due and by customer type 90+ DPD loans by number of days past due (€ bn) Group 90+ DPD ratios by customer type (%) 13,00 12,76 12,59 12,98 12,65 12,79 12,65 12,00 Corporate SMEs Retail 3,76 3,37 3,00 63% 63% 64% 4,85 4,02 3,54 3,36 2,67 62% 60% 59%
Slide 25: Credit Risk by customer type – 90+ DPD fully covered by provisions & collateral
Credit Risk by customer type – 90+ DPD fully covered by provisions & tangible collateral 30 September Retail - Retail - Corporate SMEs Cyprus 2015 Housing Other 48% 21% 21% 10% 100% 21,0 Gross loans 10,0 4,5 4,3 (€ bn) 2,2 61% 66% 90+ DPD loans 50% 54% by segment 26% Loan Loss Reserve (LLR) 51% 43%
Slide 26: Restructuring and Recoveries Division
Restructuring and Recoveries Division Good progress has been made with Restructuring efforts on top 30 exposures1 assumed by RRD € bn Restructuring implemented or to be signed €5,3 bn €5,0 bn €4,7 bn Detailed non binding heads of terms for €4,3 bn €4,3 bn restructuring agreed 1,2 1,0 0,9 Good progre
Slide 27: Overseas non-core operations
Overseas non-core operations Overseas non-core operations (€ mn) The non-core overseas operations as at 30 September 2015 were as follows: 1.311 -25% 166 1.179 Greece: The net exposure comprised: (a) Net on-balance sheet exposures (excluding 155 1.051 627 1.000 foreclosed properties) totalling €49 m
Slide 28: KPIs – Key Takeaways
Overview Income Statement Review Balance Sheet Review KPIs – Key Takeaways Additional Information 28
Slide 29: Significant progress made on Group KPIs, with a clear plan of action
Significant progress made on Group KPIs, with a clear plan of action to achieve medium-term targets Key Pillars & Plan of action Medium- Key Group Group Cyprus term Category performance Dec- Sep- Sep- target indicators 2014 2015 2015 (2017) * • Continue restructuring, capitalising on the foreclosure
Slide 30: Key Takeaways
Key Takeaways Leading financial institution in an economy that is on the road to economic recovery CET1 ratio at 15,6% (transitional basis); capital position shields the Group from further shocks and helps in regaining trust of counterparties; at the same time, we are confident about the outcome
Slide 31: Additional Information
Overview Income Statement Review Balance Sheet Review KPIs – Key Takeaways Additional Information 31
Slide 32: 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 33: Consolidated Balance Sheet
Consolidated Balance Sheet € mn % 30.09.15 31.12.14 € mn % 30.09.15 31.12.14 change change Cash and balances with Amounts due to banks +99% 323 162 -13% 986 1.139 Central Banks Funding from Central Banks -35% 5.403 8.284 Placements with banks -15% 1.399 1.647 Repurchase agreements -37% 368 580 Debt
Slide 34: Consolidated Income Statement
Consolidated Income Statement € mn 3Q2015 2Q2015* 1Q2015* 4Q2014* 3Q2014* Net interest income 205 212 227 225 231 Net fee and commission income 36 36 43 35 37 Insurance income net of insurance claims 12 9 11 10 10 Core income 253 257 281 270 278 Other income (2) 4 (7) 6 (16) Total income 251 261 274
Slide 35: Income Statement bridge for 9M2015
Income Statement bridge for 9M2015 Per financial € mn Per presentation Reclassification statements Net interest income 644 644 Net fee and commission income 115 115 Net foreign exchange gains/(losses) and net gains/(losses) on other financial instruments 18 41 59 Insurance income net of insurance cl
Slide 36: Cyprus Income Statement
Cyprus Income Statement (€ mn) 9M2015 9M2014 3Q2015 2Q2015 1Q2015 4Q2014 3Q2014 Net interest income 603 704 192 200 211 216 216 Net fee & commission income 110 111 34 34 42 34 35 Insurance income net of insurance claims 31 33 11 8 12 10 9 Core income 744 848 237 242 265 260 260 Other income /(expens
Slide 37: Cyprus: Income Statement by business line
Cyprus: Income Statement by business line (€ mn) Consum SME Corporate International Wealth & RRD Other Total er Banking Banking Banking Brokerage & Cyprus Banking Asset Management Net interest income 187 52 52 46 5 221 40 603 Net fee & commission income 41 7 6 36 1 11 8 110 Other income /(expenses)
Slide 38: Summary Income Statement by Geography
Summary Income Statement by Geography (€ mn) UK OTHER 9M2015 9M2014 9M2015 9M2014 Net interest income 23 26 35 65 Net fee & commission income 4 3 9 17 Insurance income net of insurance claims - - 1 2 Other income /(expenses) 0 1 (6) 13 Total income 27 30 39 97 Staff costs (11) (9) (24) (29) Other op
Slide 39: 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) 30.09.14 31.12.14 31.03.15 30.06.15 30.09.15 30.09.14 31.12.14 31.03.15 30.06.15 30.09.15 Cyprus 20.296 20.452 20.473 19.607 19.551 Shareholders’ equity 3.728 3.465 3.
Slide 40: Reconciliation of Group Equity to CET1
Reconciliation of Group Reconciliation Equity of Group to CET Equity 1 1 to CET (€ mn) 30.09.15 Group Equity per financial statements 3.538 Less : Intangibles and other deductions (16) Less: Deconsolidation of insurance and other entities (229) Less: Regulatory adjustments (Minority Interest, DTA an
Slide 41: BOC - Main performance indicators
BOC- Main performance indicators 30 September 2015 Ratios Group 9M2015 ROAA** 0,4% ROE ** 2,8% Performance Net Interest Margin 3,85% Cost to income ratio 38% Loans to deposits 132% 90+ DPD (€ mn)/ 90+ DPD ratio 11.998 (52,5%) 90+ DPD coverage 41% Asset Quality Cost of risk** 2,1%* Provisions / Gross
Slide 42: Analysis of Deposits by Geography and by Type
Analysis of Deposits by Geography and by Type Deposits by geography 30 September 2015 (%) Total 16,97 Cyprus non-IBU Cyprus IBU UK Russia & Other countries* Cyprus - non IBU Cyprus - IBU** 1,25 14,97 (€ bn) 14,07 13,80 13,61 13,63 13,61 UK Russia 1,30 1,02 13,33 13,17 1,24 0,83 0,87 0,79 0,55 0,61 0
Slide 43: 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 30 September 2015 (%) Total Households Non financial corporations Other financial corporations General Governments Market Shares (€ bn) General Governments 12,71 Other financial 14
Slide 44: Gross loans by Geography and by Customer Type
Gross loans by Geography and by Customer Type Gross loans by geography 30 September 2015 (%) Cyprus UK Total 24,09 23,93 22,86 25,30 24,74 23,77 Russia Other Countries* (€ bn) 1% 2% 5% 0,80 0,70 0,69 0,97 0,67 0,58 1,17 1,30 1,11 1,21 0,91 1,03 1,07 1,13 1,03 0,49 0,26 1,14 Other countries* Russia U
Slide 45: NPEs by Geography and by Customer Type
NPEs by Geography and by Customer Type NPEs by geography 30 September 2015 (%) Cyprus UK Total 15,17 14,96 Russia Other Countries* 14,73 14,81 (€ bn) 0,56 0,58 0,47 14,22 0,57 2,7% Other countries* 0,64 1,8% 0,52 0,11 0,65 0,39 0,6% Russia 0,57 0,11 0,10 0,26 0,26 0,08 UK Cyprus 13,75 13,86 13,59 13
Slide 46: 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 41,1% -600 40,8% 40,5% 40,0% 39,5% 39,3% 39,2% 39,1% 38,9% 38,8% 38,6% 38,5% -900 38,1% 38,0% 37,7% 37,3% 37,2% -1.200 -1.500 -1.800 27,5% 27,9% 26,4% -2.100 25,7% 2
Slide 47: UK Operations
UK Operations UK Loans (€ bn) Loans by sector ex-Laiki UK loans Consumer 1,46 1,38 Credit 1,28 Housing 2% 1,19 1,17 1,11 1,13 1,14 1,03 SMEs 2% 0,83 0,72 0,65 0,91 22% 0,56 0,45 0,40 0,30 1,03 1,13 1,14 0,83 0,77 0,81 0,91 0,74 0,73 0,72 0,74 Dec Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep 2012 2013 201
Slide 48: Asset Quality
Asset Quality (€ mn) Sept-15 Jun-15 Mar-15 Dec-14 Sep-14 A. Gross Loans after Fair value on Initial recognition 21.597 22.575 22.540 22.206 23.136 Fair value on Initial recognition 1.266 1.351 1.545 1.566 1.606 B. Gross Loans 22.863 23.926 24.085 23.772 24.742 B1. Loans with no arrears 9.925 10.178
Slide 49: 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% 12,76 12,65 12,79 12,65 12,59 0,57 0,55 0,47 12,00 0,89 0,52 0,26 0,58 0,11 0,09 0,09 0,28 0,55 84% 0,60 83% 0,61 0,39 82% 0,25 0,51 0,51 80% 80
Slide 50: 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) 30.09.14 31.12.14 31.03.15 30.06.15 30.09.15 % of total 19% 8% 16% 7% 21% 6% 23% 5,55 5,37 5,33 5,20 5,13 5,02 4,91 4,87 4,87 4,78 4,59 4,53 4,41 4,38 4,34 3,90 3,85 3,85 3,80 3,75 2,63 2,30 2,20 2,14 1,90 1,8
Slide 51: 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) 30.09.14 31.12.14 31.03.15 30.06.15 30.09.15 % of 18% 15% 32% 11% 4% 7% 8% 5% total 7,96 7,92 7,86 7,85 7,41 4,09 4,19 4,14 4,04 3,59 3,96 3,38 3,20 3,17 2,70 3,12 2,32 2,50 2,47 2,48 2,38 2,12 2,09 2,0
Slide 52: Credit Risk – 90+ DPD by customer type
Credit Risk – 90+ DPD by customer type Group 90+ DPD loans by customer type (€ bn) Corporate SMEs Retail other Retail housing 13,0 12,8 13,0 12,8 12,0 12,6 12,7 12,6 1,3 1,3 1,2 1,3 1,2 1,2 1,2 1,1 1,2 1,2 1,1 1,1 1,2 1,3 1,2 1,1 3,3 3,5 3,1 3,1 3,1 3,4 3,3 3,0 7,2 6,9 7,0 7,1 7,2 7,2 7,1 6,8 31.12.
Slide 53: 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) 11,0 90+ DPD formation 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 1.319 1.240 3.319 1.
Slide 54: 90+ DPD in Cyprus and GDP growth
90+ DPD in Cyprus and GDP growth Correlation between quarterly change of 90+ DPD (%) and GDP growth (%) 3,00% Quarterly change of 90+ DPD (%) GDP growth (%) y/y 2,4% 52,00% 2,1% 2,2% 2,00% 1,2% 1,2% 1,2% 41,7% 42,00% 1,00% 0,6% 0,1% 0,00% -0,4% 32,00% 27,1% -0,8% 26,2% -1,00% -1,2% 20,4% -1,8% -1,8%
Slide 55: Rescheduled Loans for the Cyprus operations
Rescheduled Loans for the Cyprus operations Rescheduled Loans by customer type (€ bn) Rescheduled Loans (€ bn) Retail housing Retail consumer SMEs Corporate 885 8,4 8,2 7,4 -453 1,7 1,7 5,7 1,5 0,6 8.394 -512 0,6 0,5 8.209 1,3 1,8 1,7 1,5 -105 0,4 1,1 3,9 4,3 4,2 2,9 31.12.14 31.03.15 30.06.15 30.09
Slide 56: Credit Risk - Analysis of problem loans
Credit Risk - Analysis of problem loans Analysis of problem loans - Cyprus operations (€ bn) (Sept-15) 0,4 13,5 1,1 0,7 0,1 11,3 10,4 0,1 (0,1) 0,8 €2,2 bn with arrears Impaired -no other IFRS and Total 90+ DPD with forbearance re-forborne forborne >30+ Contagion effect Other NPEs >90+DPD arrears re
Slide 57: Credit Risk - Collateral values
Credit Risk - Collateral values Valuation of collateral – A Conservative approach for Key highlights of provisioning methodology prudent calculation of provisions The valuation is a combination of: Assumptions and Key drivers: • New valuations, from independent valuers for (i) New • Older valuations
Slide 58: Macroeconomic overview
Macroeconomic overview Construction growth % qoq Indicators of private consumption (annual percentage change) Construction growth % qoq 40% 30% 20% 20% 10% 0% 0% -20% -10% -20% -40% -30% -60% Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan 2015 May 2011 May 2012 May 2013 May 2014 May 2015 Mar 2011 Mar 2012
Slide 59: Macroeconomic overview
Macroeconomic overview Total Government revenue vs expenditure (% of GDP) Prudent fiscal policy delivers strong results (% of GDP) Total revenue Total expenditure 1,00% -0,2% -0,1% 44,0% -0,9% 42,5% 42,8% -1,00% 42,1% 42,0% 41,4% 40,4% 40,6% 40,5% -3,00% 39,6% 39,1% -4,8% -4,9% -2,8% 40,0% 39,0% -5,
Slide 60: 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 61: 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