Bank of Cyprus Holdings PLC · CSECY:BOCH
Bank of Cyprus — H1 2014 Earnings Presentation
47 slides from Bank of Cyprus's earnings presentation, Aug 27, 2014
Slide 1: Group Financial Results for the six months ended 30 June 2014
Bank of Cyprus Group Group Financial Results for the six months ended 30 June 2014 Share Capital Increase Income Statement Review Balance Sheet Review Loan Quality Key Performance Indicators Key Takeaways 27 August 2014 Additional Information 1
Slide 2: 1H2014 Financial Results – Key Highlights
1H2014 Financial Results – Key Highlights Common Equity Tier 1 capital (CET1) ratio (transitional) improved by 70 bps to 11,3% driven by deleveraging and by profit on disposal of non-core operations and assets Following the intended share capital increase* of €1 bn, CET1 ratio (fully loaded) rises t
Slide 3: Share Capital Increase
Share Capital Increase Income Statement Review Balance Sheet Review Loan Quality Key Performance Indicators Key Takeaways Additional Information Following the Eurogroup decisions to recapitalise the Bank via a bail-in of depositors, the Bank was placed under resolution from 25 March 2013 until 30 Ju
Slide 4: Capital Position – Impact of capital increase
Capital Position – Impact of capital increase Successful capital raising places the Bank at the upper end of the capital league table €1,6bn buffer vs 8% 4,3% 0,4% 15,1% Net positive impact due to Pillar 2 11,3% capital raise 7,1% 10,4% on DTA (0,9%) deduction Capital increase (Assuming €1bn) Pillar
Slide 5: The Bank will join the league of best capitalised banks in Europe
The Bank will join the league of best capitalised banks in Europe A solid pro-forma Basel III capital position Basel III CET1 of Southern European banks 15,1% €1,0bn 4.3% capital 12,0% 11,7% 11,6% 11,5% 11,4% 11,4% raise 11,2% 11,0% 10,4% 10,4% 9,9% 9,0% 8,3% 1H 10,8% 20141 BoC pro- Alpha Bank 6 Cre
Slide 6: Income Statement Review
Share Capital Increase Income Statement Review Balance Sheet Review Loan Quality Key Performance Indicators Key Takeaways Additional Information 6
Slide 7: Income Statement Review
Income Statement Review qoq Selected lines from Consolidated Income Statement (€ mn) 1H2014 2Q2014 1Q2014 change % Net interest income 546 279 267 +4% Net fee and commission income 88 43 45 -6% Insurance income net of insurance claims 25 12 13 -9% Other (expenses)/income (9) (24) 15 n/a Total income
Slide 8: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Net Interest Income (€ mn) • 2Q2014 Net Interest Income (NII) increased to €279 mn (compared to €267 mn for 1Q2014) 290 279 • 2Q2014 Group Net Interest Margin (NIM) 268 267 improved to 4,26% on the back of improved funding cost. Reduced cost of Eurosystem
Slide 9: Analysis of Non Interest Income
Analysis of Non Interest Income Quarterly Non Interest Income (€ mn) • 2Q2014 Non interest income of €31 mn compared to €73 mn for 1Q2014 primarily due to Other income/(expense) the impairment of exposures to Laiki Insurance income net of insurance claims subsidiaries that were transferred to the Ba
Slide 10: Total Expenses
Total Expenses Quarterly Total expenses (€ mn) • 2Q2014 Total expenses of €121 mn compared Other operating expenses Staff costs to €124 mn for 1Q2014 134 • Staff costs for 2Q2014 at €68 mn broadly at 126 124 121 the same level as in the previous quarter 52 62 57 53 • The cost-to-income ratio for 1H2
Slide 11: 1H2014 Income Statement Highlights – Group vs Cyprus
1H2014 Income Statement Highlights – Group vs Cyprus 1H2014 Group Income Statement Highlights (€ mn) % 89% 88% 76% 95% 83% 148% % contribution of Cyprus operations 650 546 572 487 387 405 Cyprus 116 78 Group -186 -245 -272 -329 Net interest income Total income Total expenses Profit before Provisions
Slide 12: Core Cyprus Operations main driver of Group Profitability
Core Cyprus Operations main driver of Group Profitability High net interest margins for Cyprus– supported by Lower CIR for Cyprus driven by Laiki integration / cheap Eurosystem funding streamlining (bps) 423 384 24% reduction in personnel (VRS) 377 372 35% reduction in expenses 314 50% 1H2014: 404 4
Slide 13: Balance Sheet Review
Share Capital Increase Income Statement Review Balance Sheet Review Loan Quality Key Performance Indicators Key Takeaways Additional Information 13
Slide 14: Shrinking to Strength
Shrinking to Strength qoq 2014 qoq 2014 €mn 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 change change % Cash & bank Reduction of cash and bank placements by €132 mn 3.012 2.578 2.530 2.105 1.973 -132 -6% during Q2 2014 placements Investments 3.413 3.505 3.433 3.475 3.538 +63 +2% Reduction of net lo
Slide 15: Gross Loans
Gross Loans Gross Loans by Geography (€ mn ) • Stable reduction of Gross Loans on a quarterly Cyprus Russia UK Other basis -11% • Following the deleveraging actions completed in April and May 2014, Gross Loans were reduced -3% 28.349 by a further 4% during 2Q2014 27.402 -2% -2% 1.104 26.743 26.263 -
Slide 16: Funding Structure
Funding Structure Analysis of Liabilities and Equity (€ bn) Funding from Central Banks Total equity Other liabilities ELA ELA funding (€ bn) ECB funding (€ bn) ECB funding Customer deposits 11,11 11,16 10,96 10,91 32,96 -5% 1,30 10,18 -3% 1,40 1,40 9,63 31,40 -3% 30,35 -3% 29,38 1,40 28,56 11,11 0,9
Slide 17: Reduction of Reliance on Eurosystem Funding
Reduction of Reliance on Eurosystem Funding Continuous reduction of ELA and ECB funding with further potential going forward (€ bn) 36% of balance sheet 11,4 11,2 11,0 10,9 1,3 10,2 1,4 1,4 9,6 0,6 1,4 0,9 2,0 Eurosystem 0,5 funding 0,7 target: <25% of balance 11,4 sheet 9,9 5,0 9,6 9,5 8,7 8,8 7,0
Slide 18: Customer Deposits
Customer Deposits Deposits by Geography (€ mn ) Loans to deposits ratio Cyprus Russia UK Other Net loans (€ bn) Customer deposits (€ bn) 16.970 -9% 15.468 Loans to deposits ratio 105 -3% 14.971 1.295 103 103 -6% 14.066 13.803 146% 145% 151% 148% -2% 140% 1.153 1.285 65 1.244 18 1.078 919 1.249 1.252
Slide 19: Deposit Base Largely Stable Despite Lifting of Controls
Deposit Base Largely Stable Despite Lifting of Controls Actual outflows were significantly lower than the reduction in deposit base, as part of the reduction was due to repayment of loans 1H2013 2H2013 1Q2014 2Q2014 (€ bn) Net outflows in Q1’14 partly driven by seasonality & payment of taxes (7,7 )
Slide 20: Loan Quality
Share Capital Increase Income Statement Review Balance Sheet Review Loan Quality Key Performance Indicators Key Takeaways Additional Information 20
Slide 21: Loan Quality
Loan Quality Problem Loans (€ bn) +3% +1% NPLs (Old definition) +7% 14,44 14,58 +29% 13,13 14,04 NPLs (New definition) NPLs>90+DPD by €2 bn 90+ DPD 11,01 12,98 13,00 12,76 12,59 +18% +0% -2% -1% 7,69 10,21 6,45 5,13 8,25 4,97 6,66 4,82 4,05 2,95 31.12.11 30.06.12 30.09.12 31.12.12 30.06.13 30.09.13
Slide 22: Loan Quality – Trends in Non-performing loans
Loan Quality 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 New definition NPLs 58% 58% 55% 55% 53% 53% 9% 48% 48% 8% 6% 4% 47% 47% 49
Slide 23: Loan Quality – Trends in 90+DPD and provisions
Loan Quality Trends in 90+DPD and provisions Group loan quality indicators • 90+ DPD ratio at 49,8% 90+ DPD provision coverage 90+ DPD ratio • 90+ DPD provision coverage remained stable at 39%; Taking into 48,6% 48,6% 49,8% 47,4% account tangible collateral, 90+ DPD 38,8% are fully covered 27,4% • A
Slide 24: Loan Quality – 90+DPD loans by geography
Loan Quality Group 90+DPD loans by geography €bn 90+DPD ratio 27,4% 38,8% 47,4% 48,6% 48,6% (% of total loans) 49,8% 13,0 13,0 12,8 12,6 7,7 11,0 0,4 0,7 0,8 0,3 0,8 0,3 0,3 0,5 0,3 0,7 0,5 0,5 0,4 0,2 0,5 2,9 0,1 11,5 11,5 11,3 11,4 0,5 9,7 4,2 31.12.12 30.06.131 30.09.13 31.12.13 31.03.14 30.06.14
Slide 25: Key Performance Indicators
Share Capital Increase Income Statement Review Balance Sheet Review Loan Quality Key Performance Indicators Key Takeaways Additional Information 25
Slide 26: Key Performance Indicators
Key Performance Indicators Key Performance Medium-Term Actual Actual • The Group will publish on a Indicators Target quarterly basis selective Dec-13 Jun-14 Dec-17 features of its Restructuring Asset quality Plan and the KPIs agreed with the Central Bank of Cyprus. 90+ DPD coverage ratio 38% 39% >50
Slide 27: Key Takeaways
Share Capital Increase Income Statement Review Balance Sheet Review Loan Quality Key Performance Indicators Key Takeaways Additional Information 27
Slide 28: Key Takeaways
Key Takeaways Leading financial institution in an economy that is on the road to economic recovery MoU implementation on track with the 5th Troika review mission being another positive one Ahead of Restructuring Plan, with Laiki integration completed with a seamless IT migration in early June
Slide 29: Additional Information
Share Capital Increase Income Statement Review Balance Sheet Review Loan Quality Key Performance Indicators Key Takeaways Additional Information 29
Slide 30: Key Information and Contact Details
Key Information and Contact Details Credit Ratings: Fitch Ratings: Long-term Issuer Default Rating: upgraded to "CC" on 4 July 2014 Short-term Issuer Default Rating: upgraded to "C" on 4 July 2014 Viability Rating: affirmed at “cc” on 4 July 2014 Moody’s Investors Service: Long-term deposit ratings:
Slide 31: Consolidated Balance Sheet
Consolidated Balance Sheet € mn % 30.06.14 31.12.13 € mn % 30.06.14 31.12.13 change change Cash and balances with Amounts due to banks -12% 219 196 -31% 859 1.240 Central Banks Funding from Central Banks -7% 10.185 10.956 Placements with banks -14% 1.114 1.290 Repurchase agreements -2% 583 594 Debt
Slide 32: Loans and Deposits by Geography
Loans and Deposits by Geography Gross Loans by Geography Deposits by Geography € mn 31.12.13 31.03.14 30.06.14 € mn 31.12.13 31.03.14 30.06.14 Cyprus 22.964 22.763 22.185 Cyprus non-IBU 8.658 8.196 8.094 Cyprus IBU 4.047 3.789 3.594 UK 1.284 1.194 1.172 Cyprus – Total 12.705 11.985 11.688 Russia 1.4
Slide 33: Analysis of Deposits by Geography and by Type
Analysis of Deposits by Geography and by Type Deposits by geography 16,97 Other countries* 0,10 15,47 14,97 13,80 Total 1,15 14,07 1,30 1,08 0,10 0,92 0,10 Russia 1,29 0,77 0,06 0,02 (€ bn) 1,24 1,25 0,85 UK 4,75 1,25 4,05 4,05 3,79 3,59 Cyprus IBU Cyprus non-IBU 9,67 8,95 8,66 8,20 8,09 30.06.13 30
Slide 34: Analysis of Gross Loans by Geography and by Type
Analysis of Gross Loans by Geography and by Type Gross loans by geography 28,35 27,40 Total 26,74 26,26 25,30 1,11 1,09 (€ bn) 1,07 1,02 0,64 Other countries* 1,46 1,79 1,38 1,62 1,28 1,43 1,29 1,30 1,19 1,17 Russia UK Cyprus 23,99 23,31 22,96 22,76 22,18 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14
Slide 35: Cyprus: Summary Income Statement and Key Indicators
Cyprus: Summary Income Statement and Key Indicators (€ mn) 1H2014 2Q2014 1Q2014 qoq (%) 4Q2013 Net interest income 487 251 236 +7% 240 Net fee & commission income 75 35 40 -10% 35 Net foreign exchange income/(losses) and net gains/(losses) from financial instruments (18) (31) 13 n/a 36 Insurance inc
Slide 36: Loans and Deposits in Cyprus
Loans and Deposits in Cyprus Gross loans by type/business line (presentation adopted as from June 2014*) 23,99 23,31 22,96 22,76 22,18 RRD- Recoveries Total RRD- Mid Corporations (€ bn) 2,99 2,91 2,60 2,57 RRD- Large Corporations 4,06 5,33 5,20 5,28 5,23 1,50 Retail Consumer and other 5,35 5,84 Reta
Slide 37: Russia: Summary Income Statement and Key Indicators
Russia: Summary Income Statement and Key Indicators (€ mn) 1H2014 2Q2014 1Q2014 qoq (%) 4Q2013 Net interest income 34 15 19 -16% 22 Net fee & commission income 10 6 4 +31% 7 Net foreign exchange income and net gains from financial instruments 2 1 1 - - Other income/(expenses) - - - - (1) Total incom
Slide 38: Russian Operations
Russian Operations Russian Loans (€ bn) Loans by sector 2,02 Consumer 1,79 Credit 1,62 25% 1,43 1,29 1,30 Mortgages Corporate 3% 53% SMEs 31.12.12 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 19% Russian Deposits (€ bn) 1,25 1,15 1,08 0,92 0,77 0,85 31.12.12 30.06.13 30.09.13 31.12.13 31.03.14 30.06
Slide 39: UK: Summary Income Statement and Key Indicators
UK: Summary Income Statement and Key Indicators (€ mn) 1H2014 2Q2014 1Q2014 qoq (%) 4Q2013 Net interest income 16 9 7 +11% 5 Net fee & commission income 2 1 1 -7% 1 Net foreign exchange income and (losses)/gains from financial instruments 1 1 - - (2) Other (expenses)/income (1) (1) - - (0) Total inc
Slide 40: UK Operations
UK Operations UK Loans (€ bn) Loans by sector ex-Laiki UK loans Consumer Credit 1,46 1,38 Mortgages 2% 1,28 2% 1,19 1,17 0,83 0,72 0,65 0,56 0,45 0,40 Corporate 47% 0,83 0,77 SMEs 0,74 0,73 0,72 0,74 49% 31.12.12 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 UK Deposits (€ bn) 1,30 1,29 1,24 1,25 1,2
Slide 41: Other Countries: Summary Income Statement
Other Countries*: Summary Income Statement (€ mn) 1H2014 2Q2014 1Q2014 qoq (%) 4Q2013 Net interest income 9 4 5 -29% 1 Net fee & commission income 1 1 - - - Net foreign exchange losses and losses from financial instruments (1) (1) - - (11) Insurance income net of insurance claims 2 1 1 -66% 2 Other
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* 73,9% 71,4% 68,9% 13,00 62,5% 12,98 59,9% 12,76 12,59 11,01 0,74 0,76 51,5% 0,75 0,38 49,9% 0,28 49,7% 0,45 0,32 49,3% 0,47 0,44 0,25 0,51 0,28 0,69 0,18 4
Slide 43: Analysis of Loans and 90+ DPD ratios by Type
Analysis of Loans and 90+ DPD ratios by Type* Gross loans by customer type (€ bn) 30.06.13 30.09.13 31.12.13 31.03.14 13,10 12,51 12,24 11,93 6,37 6,24 6,12 6,09 5,44 5,30 5,37 5,30 3,44 3,35 3,01 2,93 Corporate SMEs Housing Consumer Credit 90+ DPD ratios by customer type 30.06.13 30.09.13 31.12.13
Slide 44: 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) 30.06.14 % of total 20% 11% 16% 8% 23% 6% 16% 5,21 5,84 3,94 4,06 2,73 2,01 1,50 Corporate SMEs Housing Consumer Credit RRD-Mid and RRD-SMEs RRD - Recoveries Large Corporates 90+ DPD ratios by business line 30
Slide 45: 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) 8,41 8,73 8,54 8,49 8,05 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 4,61 4,54 4,21 4,13 4,12 4,25 4,20 4,15 4,06 3,63 3,12 2,82 2,74 2,99 2,83 2,78 2,44 2,44 2,18 2,31 1,85 1,82 1,72 1,93 1,92 1,92 1,
Slide 46: 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) 13,0 13,0 12,8 12,6 Quarterly change of 90+ DPD (€ mn) 11,0 90+ DPD (€bn) 7,7 6,5 5,0 5,1 5,1 4,0 4,4 3,5 3,6 3,8 2,3 2,2 2,5 2,9 2,0 1,3 1,6 1.319 1.240 3.319 1.972 321 380 329 265 410 558 232 156 402 609
Slide 47: 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