Bank of Cyprus Holdings PLC · CSECY:BOCH
Bank of Cyprus — FY2011 Earnings Presentation
44 slides from Bank of Cyprus's earnings presentation, Feb 21, 2012
Slide 1: Preliminary Financial Results 2011
Bank of Cyprus Group Preliminary Financial Results 2011 – Highlights Income Statement and Balance Sheet Review Performance by Geographic Market Strategic Priorities for 2012 Appendices Preliminary Financial Results 2011* 21 February 2012 * The final audited financial results of the Group could poten
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: Table of Contents
Table of Contents I. Preliminary Financial Results 2011 – Highlights II. Income Statement and Balance Sheet Review III. Performance by Geographic Market IV. Strategic Priorities for 2012 V. Appendices 3
Slide 4: Preliminary Financial Results 2011 - Highlights
Preliminary Financial Results 2011 – Highlights Income Statement and Balance Sheet Review Performance by Geographic Market Strategic Priorities for 2012 Appendices Preliminary Financial Results 2011 - Highlights 4
Slide 5: Preliminary FY11 Financial Highlights
Preliminary FY11 Financial Highlights Increasing organic profitability, healthy liquidity and a plan to strengthen the capital base • FY11 Net Interest Income €1.168 mn (+12% yoy) Increasing • FY11 Profit before provisions and impairment of GGBs organic €805 mn (+11% yoy) profitability • FY11 Profit
Slide 6: Preliminary FY11 Financial Highlights
Preliminary FY11 Financial Highlights • Including GGBs impairment, Tier 1 capital ratio at 8,9% and Core Tier 1 capital ratio at 5,1% Capital position • Post the completion of the Capital Strengthening Plan, the pro-forma Tier 1 ratio is estimated at 10,5% and the pro-forma Core Tier 1 ratio is esti
Slide 7: Capital Strengthening Plan
Capital Strengthening Plan VOLUNTARY CONVERSION OF CECSs RIGHTS ISSUE (Convertible Enhanced Capital Securities) TO SHARES Size of Issue: €397 mn Size of Issue: €600 mn Offered to: Current shareholders and Offered to: CECS holders eligible holders of convertible securities Exchange ratio: 1 Mandatory
Slide 8: Capital Strengthening Plan timetable
Capital Strengthening Plan timetable TIMETABLE IN RELATION TO THE RIGHTS ISSUE Ex-Rights Date 27 January 2012 Record Date 31 January 2012 Trading period 23 February – 12 March 2012 (inclusive) Subscription period 23 February – 19 March 2012 (inclusive) TIMETABLE FOR THE TENDER OFFER FOR VOLUNTARY EX
Slide 9: Impairment of Greek Government Bonds
Impairment of Greek Government Bonds • At 31 December 2011, the nominal value of the GGBs was €2.092 mn • The Group impaired the book value of the Greek Government Bonds by 60% of their nominal value • GGBs impairment in 2011, including related hedging cost, of €1.323 mn (pre tax €1.345 mn) • At 31
Slide 10: Income Statement and Balance Sheet Review
Preliminary Financial Results 2011 – Highlights Income Statement and Balance Sheet Review Performance by Geographic Market Strategic Priorities for 2012 Appendices Income Statement and Balance Sheet Review 10
Slide 11: Profit and Loss
Group Profit and Loss (€ mn) FY11 FY10 yoy % 4Q11 3Q11 qoq % Net interest income 1.168 1.041 +12% 313 302 +4% Net fee & commission income 232 231 +1% 61 58 +5% FX income and net gains from financial instruments 49 110 -56% 16 7 +133% Insurance income net of insurance claims 61 59 +3% 14 15 -4% Other
Slide 12: Profit and Loss highlights
Profit and Loss highlights Amounts in € mn FY11 FY10 Change Total Income 1.541 1.450 +6% Profit before provisions and GGBs 805 725 +11% impairment Profit before tax excluding the impairment of 378 348 +8% Greek Government Bonds Profit after tax excluding the impairment of 312 306 +2% Greek Governmen
Slide 13: Higher Interest Margins and Increasing Net Interest Income
Higher Interest Margins and Increasing Net Group Interest Income Group Net Interest Margin (bp) 334 • FY11 Group NIM at 2,98%, an increase of 311 32 basis points compared to FY10 (2,66%) 272 277 278 255 251 260 264 265 236 213 • 4Q11 Net Interest Income at €313 mn (+15% yoy and +4% qoq) FFY11: 298 F
Slide 14: Solid Net Interest Income and NIM trends in main markets
Solid Net Interest Income and Net Interest Margin Group trends in main markets Net Interest Income and NIM - Cyprus 256 271 Increasing Net Interest Income and Net 221 223 Interest Margin in main markets 202 210 213 210 213 219 187 184 161 165 • Cyprus – FY11 NII at €609 mn (+16% yoy) 143 121 120 128
Slide 15: Increasing recurring income
Group Increasing recurring income Net interest income (€ mn) Fee and commission income (€ mn) +12% 374 360 330 334 332 334 61 314 58 302 289 294 61 56 57 59 278 59 264 252 71 52 246 61 233 63 235 57 54 52 48 54 313 302 271 273 276 277 255 231 242 228 215 207 198 194 185 181 1Q08 2Q08 3Q08 4Q08 1Q09
Slide 16: Analysis of Non interest income
Group Analysis of Non interest income Fee and commission income FX income and Net gains from financial instruments Insurance income Other income 409 373 • Fee and commission income flat 9 59 31 • FX income higher in FY11 (€45 mn in FY11, compared to €39 mn in FY10) 61 110 49 • Gains from financial i
Slide 17: Increased Pre-provision Profitability and High Efficiency
Increased Pre-provision Profitability and Group High Efficiency Profit & Loss highlights (€ mn) +6% FY09 FY10 FY11 +12% 1.541 1.450 1.286 1.168 +11% 1.041 +2% 848 805 674 725 736 725 612 Net Interest Income Operating income Operating expenses Profit before provisions* Cost to Income ratio (%) • High
Slide 18: High Ability to Manage Through Credit Cycle
High Ability to Manage Through Credit Cycle Group Due to Increased Pre-provision Profit Margin Provision charge Pre-provision profit margin 52% 49% 53% 148 45% 46% 49% 44% 44% 135 134 126 281 293 109 107 111 109 252 250 261 268 243 246 426 375 135 134 148 295 109 107 111 109 126 229 183 146 73 79 1Q
Slide 19: Adequate loan quality
Group Adequate loan quality Group NPLs ratio and Provision coverage • Adequate loan quality Provision Coverage NPLs ratio Group NPLs ratio at 10,2% 55% 55% 54% 54% 51% • Adequate provision coverage at 51% • NPLs coverage increases to 118% taking 10,2% 7,6% 8,2% 8,6% into account tangible collatera
Slide 20: Balance Sheet Overview
Group Balance Sheet Overview € mn % 31.12.11* 31.12.10 € mn % 31.12.11 31.12.10 yoy yoy * Cash and balances with Amounts due to banks and -39% 1.375 2.242 -17% 3.852 4.620 central banks repurchase agreements Placements with banks Customer deposits -10% 29.654 32.953 and reverse repurchase -47% 2.844
Slide 21: Solid Funding Structure: Strong Deposit Franchise
Solid Funding Structure: Strong Deposit Franchise Group and Limited Dependence on Wholesale Funding Net Loans % Customer deposits Customer deposits % Total Assets 135% 129% 120% 120% 77% 77% 78% 80% 78% 87% 89% 92% 84% 86% 55% 55% 50% 48% 31.12.10 31.03.11 30.06.11 30.09.11 31.12.11 31.12.10 31.03.1
Slide 22: Capital Strengthening Plan to strengthen capital base
Capital Strengthening Plan to strengthen capital Group base Capital adequacy ratios Including GGBs impairment, Total capital ratio at 9,2%, Tier 1 capital ratio at 8,9% and Core Tier 1 capital ratio at 5,1% 11,9% 10,8% 11,3% Upon the completion of Capital Strengthening 10,5% 9,2% Plan the pro-
Slide 23: Evolution of capital position
Evolution of capital position Upon completion of Capital Strengthening Plan: Regulatory capital (€ bn) >1,6x 2,96 3,13 2,81 • Regulatory Tier 1 capital is 2,61 2,61 2,38 2,68 2,20 2,25 estimated to be 1,6x times higher 1,85 1,60 compared to Dec-08 (€2,61 bn vs 1,43 €1,60 bn) Core Tier 1 capital Tier
Slide 24: Performance by Geographic Market
Preliminary Financial Results 2011 – Highlights Income Statement and Balance Sheet Review Performance by Geographic Market Strategic Priorities for 2012 Appendices Performance by Geographic Market 24
Slide 25: Resilient Cypriot operations
Cyprus Resilient Cypriot operations Profit & Loss Highlights (€ mn) Cyprus NII (€ mn), NIM and Spread (bp) +16% NII NIM Customer Spread FY10 FY11 609 350 358 +15% 325 325 326 331 314 325 337 523 501 301 437 258 +23% 236 315 256 271 256 221 210 213 210 213 219 223 -9% 187 202 184 161 165 139 143 128
Slide 26: Leading financial institution in Cyprus with an unrivalled deposit franchise
Leading financial institution in Cyprus with an Cyprus unrivalled deposit franchise • A strong deposit franchise benefiting from a flight to quality; 31,8% deposit market share (bigger than the Gross Loans (€bn) combined share of 2nd and 3rd largest banks); a 3,7% Retail SMEs Corporate percentage po
Slide 27: Greece: Facing a challenging market
Greece Facing a challenging market Profit & Loss Highlights (€mn) Greece NII (€mn), NIM and Spread (bp) +7% FY10 FY11 NII NIM Customer Spread 332 310 +2% +18% 322 328 320 320 302 302 291 289 305 314 284 217 194 197 184 302 209 256 258 275 226 214 219 222 239 193 201 154 11 84 77 77 76 80 79 79 85 89
Slide 28: Managing portfolio through difficult economic conditions
Managing portfolio through difficult economic Greece conditions Gross Loans (€ bn) Retail SMEs Corporate 9,8 10,1 10,0 -2% yoy • Loans to deposits ratio 121% 2,8 3,2 3,4 +5% yoy • Selective increase in Corporate loans, 3,8 3,7 -4% yoy 3,6 reduction in SMEs and Retail 3,2 3,2 3,0 -7% yoy • Loans mark
Slide 29: Russia: Performance to benefit from business expansion
Performance to benefit from business Russia expansion Profit and Loss Highlights (€ mn) Russia NII (€ mn) & NIM (bp) FY10 FY11 Net Interest Income Net Interest Margin +5% 598 630 631 619 559 570 595 +9% 171 179 470 473 505 396 414 130 32 34 34 31 32 33 119 30 21 24 19 16 15 1Q09 2Q09 3Q09 4Q09 1Q10
Slide 30: Russia: Continuing business expansion
Russia Continuing business expansion Gross Loans (€ bn) Customer Deposits (€ bn) 1,29 2,00 1,89 1,12 1,02 1,41 0,90 1,17 31.12.08 31.12.09 31.12.10 31.12.11 31.12.08 31.12.09 31.12.10 31.12.11 Loan diversification • Business expansion continued in FY11 Car finance Other 8% Corporate Consumer 16% • S
Slide 31: Romania - Ukraine: Resilient EE operations
Romania - Ukraine Resilient EE operations Profit and Loss Highlights Romania Profit and Loss Highlights Ukraine (€ mn) (€ mn) 26,6 FY10 FY11 FY10 FY11 23,3 22,4 18,2 18,2 16,1 9,0 10,8 10,5 8,2 8,5 5,9 5,5 6,9 4,6 3,2 Net Interest Profit before Provisions Profit after Net Interest Profit before Prov
Slide 32: Strategic priorities for 2012
Preliminary Financial Results 2011 – Highlights Income Statement and Balance Sheet Review Performance by Geographic Market Strategic Priorities for 2012 Appendices Strategic priorities for 2012 32
Slide 33: Strategic priorities for 2012
Strategic priorities for 2012 Strategic priorities for 2012 Safeguard healthy liquidity Strengthen capital position Maintain organic profitability Manage risks effectively 33
Slide 34: Key information and contact details
Key information and contact details Credit Ratings: Participation in indices: Fitch: BB+ / F-2 / bb CSE General Index , FTSE/CySE 20 Moody’s : Ba2 / NP / D- FTSE/ATHEX Top 20 FTSE Med 100 Listing: FTSE New EU ATHEX – BOC DJ STOXX EU Enlarged TMI CSE – BOCY ISIN CY0000100111 Contacts Yiannis Kypri Ch
Slide 35: Appendices
Preliminary Financial Results 2011 – Highlights Income Statement and Balance Sheet Review Performance by Geographic Market Strategic Priorities for 2012 Appendices Appendices 35
Slide 36: Gross Loans by Geography
Gross Loans by Geography 28,9 28,9 Total 26,5 2,9 2,0 2,5 1,9 2,0 1,4 (€ bn) Other countries 10,2 10,0 9,8 Russia Greece 12,8 13,9 14,9 Cyprus 31.12.09 31.12.10 31.12.11 31.12.10 As % of 31.12.11 As % of YoY (%) Market (Eur mn) total (Eur mn) total Share (%) Cyprus 13.883 48% 14.931 52% +8% 28,4% Gr
Slide 37: Gross Loans Segmental Diversification
Gross Loans Segmental Diversification Group: €28.872 mn Consumer Credit 12% (-3% yoy) Mortgages Corporate 19% 44% (-4% yoy) (+7% yoy) SMEs 25% (-7% yoy) Cyprus: €14.931 mn Greece: €9.983 mn Consumer Consumer Credit Credit 13% 13% (+17% yoy) (-12% yoy) Corporate 34% (+5% yoy) Corporate Mortgages Mort
Slide 38: Customer Deposits by Geography
Customer Deposits by Geography 33,0 28,6 29,7 Total 2,4 2,0 1,1 1,5 Other countries 1,0 1,3 9,8 (€ bn) 7,7 Russia 10,9 Greece Cyprus 19,7 19,2 14,7 31.12.09 31.12.10 31.12.11 31.12.10 As % of 31.12.11 As % of YoY (%) Market (Eur mn) total (Eur mn) total Share (%) Cyprus 19.695 60% 19.166 65% -3% 31,
Slide 39: Cyprus: Summary profit & loss and key indicators
Cyprus: Summary profit & loss and key indicators Excluding the impact from the impairment of GGBs in FY11 (€ mn) FY11 FY10 y/y % 4Q11 q/q % Net interest income 609 523 +16% 165 +3% Net fee & commission income 135 127 +6% 37 +10% Foreign exchange income and gains from financial 14 +177% 39 76 -49% in
Slide 40: Greece: Summary profit & loss and key indicators
Greece: Summary profit & loss and key indicators Excluding the impact from the impairment of GGBs in FY11 (€ mn) FY11 FY10 y/y % 4Q11 q/q % Net interest income 332 310 +7% 89 +4% Net fee & commission income 52 51 +2% 14 +4% Foreign exchange income and gains from financial (1) +43% 1 22 -96% instrume
Slide 41: Russia: Summary profit & loss and key indicators
Russia: Summary profit & loss and key indicators (€ mn) FY11 FY10 y/y % 4Q11 q/q % Net interest income 130 119 +9% 33 +4% Net fee & commission income 34 41 -16% 9 -2% Foreign exchange income and gains from financial 2 -35% 8 9 -14% instruments Insurance income net of insurance claims -- -- -- -- --
Slide 42: Other countries: Summary profit & loss and key indicators
Other countries: Summary profit & loss and key indicators (€ mn) FY11 FY10 y/y % 4Q11 q/q % Net interest income 97 89 +10% 26 +8% Net fee & commission income 11 12 -8% 2 -20% Foreign exchange income and gains from financial 1 1 3 -56% instruments Insurance income net of insurance claims -- -- -- --
Slide 43: Operations in Australia and United Kingdom
Operations in Australia and United Kingdom Profit and Loss Highlights Australia Profit and Loss Highlights UK (€ mn) (€ mn) FY10 FY11 FY10 FY11 28,6 26,1 23,0 17,5 12,8 12,4 9,5 6,5 5,9 6,1 6,6 5,8 4,0 4,8 0,7 1,0 Net Interest Profit before Provisions Profit after tax Net Interest Profit before Prov
Slide 44: Securities Portfolio
Group Securities Portfolio Portfolio by rating Portfolio by issuer 2% 23% 26% 54% 9% 11% 75% Gvt and Gvt guaranteed Financial Institutions Aaa-Aa3 A1-A3 Baa1-Baa3 <Baa3 Corporate • Average life of securities portfolio is 6,7 years • Average rating of securities portfolio is Ba2; excluding GGBs, the