Bank Of Cyprus Holdings Plc · CSECY:BOCH
Bank Of Cyprus — FY2014 Earnings Presentation
57 slides from Bank Of Cyprus's earnings presentation, Feb 25, 2015
Slide 1: Preliminary Group Financial Results for the year ended 31 December 2014
Bank of Cyprus Group Preliminary Group Financial Results* for the year ended 31 December 2014 2014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators Key Takeaways Additional Information 25 February 2015 * The Preliminary Group Financial Results have not been audited by
Slide 2: Preliminary Group Financial Results FY2014 – Key Highlights
Preliminary Group Financial Results FY2014 – Key Highlights Common Equity Tier 1 capital (CET1) ratio at 14,0% Further balance sheet deleverage by €649 mn during 4Q2014; Completion of sale of excess UK loan portfolio Recurring profitability stabilising; Profit before provisions and impairments for 4
Slide 3: 2014 Overview and presentation notes
2014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators Key Takeaways Additional Information As from the fourth quarter of 2014, the Group’s operations in Russia are treated as a disposal group held for sale and results have been presented accordingly as discontinued op
Slide 4: 2014 overview: Cyprus economy proving resilient & on recovery path
2014 overview: Cyprus economy proving resilient & on recovery path GDP growth expected to be positive from 2015E – Banking system deposits outflow arrested (€ bn) faster recovery than other peripheral countries 2010 2011 2012 2013 2014e 2015f 2016f 2017f 1,4% 0,2 0,5 0,3% 2,0% 0,2 0,0 0,0 0,3 1,6% 0
Slide 5: 2014 overview: Strengthened capital position – Passed 2014 ECB Comprehensive Assessment
2014 overview: BOC Group Strengthened capital position – Passed 2014 ECB Comprehensive Assessment Common Equity Tier 1 capital ratio (transitional basis) Total Assets (€ bn) 15,4% -12% 14,0% 30,3 29,4 11,3% 10,4% 28,6 27,5 26,8 31.12.13 30.06.14 30.09.14 31.12.14 31.12.13 31.03.14 30.06.14 30.09.14
Slide 6: 2014 overview: Improved liquidity position
2014 overview: BOC Group Improved liquidity position Total customer flows per quarter (€ mn) Reduced Eurosystem funding 450 355 ELA funding (€ bn) ECB funding (€ bn) 65 11,11 11,16 10,96 10,91 -11 10,18 -546 -446 -411 FY2014: €93 mn 1,30 1,40 1,40 net customer inflows 1,40 8,60 8,28 8,03 11,11 0,92
Slide 7: 2014 overview: Loan portfolio quality stabilisation signs
2014 overview: BOC Group Loan portfolio quality stabilisation signs; 90+ DPD reduced during 2014 90+ DPD formation slows down sharply Loan Quality Indicators € mn 90+ DPD provision coverage 90+ DPD (€ bn) 13,0 12,8 12,6 13,0 12,7 5.311 2.723 945 1.329 1.399 38% 39% 39% 38% 40% -350 31.12.13 31.03.14
Slide 8: 2014 overview: FY2014 Cyprus Vs Group performance
2014 overview: BOC Group FY2014 Cyprus Vs Group performance (€ mn) 95% 95% 90% 97% % 271% 1.177 % contribution of 1.114 919 967 Cyprus operations 725 747 389 430 Cyprus operations 48 63 41 22 114 42 Rest of operations Group -72 Net interest income Total income Total expenses Profit before Profit/(lo
Slide 9: Income Statement Review
2014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators Key Takeaways Additional Information 9
Slide 10: Income Statement Review
Income Statement Review qoq Selected lines from Income Statement (€ mn) FY2014 4Q2014 3Q2014 change % 2Q2014 Net interest income 967 225 231 -3% 263 Other income 210 62 32 +96% 55 Total income 1.177 287 263 +9% 318 Total expenses (430) (118) (103) 14% (104) Profit before provisions and impairments,
Slide 11: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Net Interest Income (€ mn) • 4Q2014 Group Net Interest Income (NII) at €225 mn (compared to €231 mn for 3Q2014) Interest income from Laiki Recapitalisation Bond primarily due to deleveraging actions 248 263 • Group Net Interest Margin (NIM) at 3,81% for 23
Slide 12: 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 profits/(losses) on other financial instruments Other income/(expenses) % Non interest 20% 17% 12% 22% income % Total income 61 55
Slide 13: Total expenses
Total expenses Total expenses (€ mn) Other operating expenses Staff costs • 4Q2014 Total expenses increased to €118 mn compared to €103 mn for 3Q2014 mainly due to advertising, regulatory and ECB 105 104 103 118 Comprehensive Assessment related costs, listing costs, and other advisory fees 47 45 44
Slide 14: Cyprus operations key driver of Group performance
Cyprus operations key driver of Group performance High net interest margins for Cyprus operations – Lower Cost to income ratio for Cyprus operations supported by cheap Eurosystem funding (bps) 423 377 372 384 379 354 314 50% 43% FY2014: 385 38% 35% 33% FY2013: 353 31% 31% 1H2013 3Q2013 4Q2013 1Q2014
Slide 15: Balance Sheet Review
2014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators Key Takeaways Additional Information 15
Slide 16: Balance Sheet Deleverage - Shrinking to Strength
Balance Sheet* Deleverage - Shrinking to Strength Change Jun Dec Mar Jun Sep Dec Since € mn 2013 2013 2014 2014 2014 2014 Jun 2013 Cash & bank placements 3.012 2.530 2.105 1.973 2.417 2.908 -104 Investments 3.413 3.433 3.475 3.538 2.578 2.541 -872 Net loans reduction driven by Net Loans 23.769 21.76
Slide 17: Gross Loans
Gross Loans Gross Loans by Geography (€ mn) • Gross Loans* were reduced by €0,97 bn in 4Q2014 mainly reflecting the disposal of loans in Cyprus Russia UK Other countries** the UK and the reduction of loans in Cyprus. In constant exchange rates, gross loans were -16% reduced by €676 mn 28.349 -6% -2%
Slide 18: 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 10,96 10,91 10,18 1,40 1,40 1,40 8,60 30,35 8,28 29,38 8,03 28,56 11,11 0,92 27,48 0,88 0,83 26,83 9,56
Slide 19: Eurosystem Funding Reliance reducing fast
Eurosystem Funding Reliance reducing fast Continuous reduction of ELA and ECB funding with further potential going forward (€ bn) Eurosystem 36% 36% 37% 36% 31% 31% Funding as xx% of balance sheet 11,40 11,16 10,96 10,91 1,30 10,18 1,40 1,40 1,40 8,60 8,28 8,03 In light of challenging 0,92 market co
Slide 20: Customer Deposits
Customer Deposits Customer Deposits by Geography (€ mn ) Loans to deposits ratio Cyprus UK Russia & Other countries* Net loans (€ bn) Customer deposits (€ bn) 14.971 Loans to deposits ratio 14.066 13.803 1.022 13.330 13.169 1.244 832 863 1.249 798 550 151% 148% 1.252 1.289 1.305 145% 148% 142% 21,8
Slide 21: Capital Position
Capital Position Evolution of CET1 ratio since 30.09.2014 15,4% +0,2% 14,0% 14,0% 13,4% -1,8% +0,2% +0,1% -0,1% -0,6% CET1 ratio Profit before Provisions Other Disposal of RWA Change CET1 ratio DTA CET1 ratio 30.09.14 provisions adjustments non core 31.12.14 31.12.14 (fully (transitional) assets (tr
Slide 22: Credit Risk – Quality of Loan portfolio
Credit Risk – Quality of Loan portfolio Problem Loans (€ bn) 90+ DPD NPLs (CBC definition) NPEs (EBA definition) 15,05 14,96 14,58 14,74 14,44 14,04 12,98 13,13 13,00 12,98 12,76 12,59 12,65 30.09.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 90+ DPD formation slows down sharply • 90+ DPD* decreas
Slide 23: Credit Risk – Provisions
Credit Risk – Provisions Group loan quality indicators 90+ DPD provision coverage • 90+ DPD ratio at 53,2% 90+ DPD ratio 52,5% 53,2% 47,4% 48,6% 48,6% 49,8% • 90+ DPD provision coverage 38,8% improved to 40%; Taking into account tangible collateral at fair value, 90+ DPD are fully covered • Accumula
Slide 24: Credit Risk – 90+ DPD by Geography and by customer type
Credit Risk – 90+ DPD by Geography and by customer type Group 90+ DPD loans by geography €bn 48,6% 48,6% 49,8% 52,5% 53,2% 90+DPD ratio (% of total loans) 13,0 12,8 12,6 13,0 12,7 0,9 0,8 0,5 0,6 0,6 0,3 0,5 0,3 0,4 0,3 0,5 0,3 0,6 0,5 0,1 11,3 11,3 11,3 11,6 11,5 31.12.13 31.03.14 30.06.14 30.09.14
Slide 25: Credit Risk by customer type – 90+ DPD fully covered by provisions & tangible collateral
Credit Risk by customer type – 90+ DPD fully covered by provisions & tangible collateral Retail - Retail - Corporate SMEs Cyprus Housing Other 48% 21% 21% 11% 100% 10,1 4,5 4,4 21,2 Gross loans 2,2 (€ bn) 61,4% 65,9% 50,1% 53,9% 90+ DPD loans 26,4% by segment Loan Loss Reserve (LLR) 49,2% 40,8% 31,7
Slide 26: Restructuring and Recoveries Division
Restructuring and Recoveries Division Good progress has been made with Restructuring efforts of top exposures1 € bn Restructuring implemented or be signed €5,3 bn €5,0 bn Detailed non binding heads of terms for restructuring 1,2 1,0 agreed Good progress in agreeing heads of terms for 1,3 restructuri
Slide 27: Overseas non-core operations
Overseas non-core operations Disposing of overseas operations considered as non-core • As part of its Deleveraging strategy, and through specific, deliberate and well-timed actions, the Bank has managed to reduce its risk profile, to enhance its liquidity position and to improve its capital position
Slide 28: Key Performance Indicators
2014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators 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 2013 2014 2014 target indicators (2017) * • Continue re-structuring capitalising on the foreclosure 1. Reverse law
Slide 30: Key Takeaways
2014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators Key Takeaways Additional Information 30
Slide 31: Key Takeaways
Key Takeaways Leading financial institution in an economy that is on the road to economic recovery CET1 ratio at 14,0% (transitional basis); capital position shields the Group from further shocks and helps in regaining trust of counterparties Completion of review of AQR results and reduction o
Slide 32: Additional Information
2014 Overview Income Statement Review Balance Sheet Review Loan Quality Key Performance Indicators Key Takeaways Additional Information 32
Slide 33: 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 34: Consolidated Balance Sheet
Consolidated Balance Sheet € mn % 31.12.14 31.12.13 € mn % 31.12.14 31.12.13 change change Cash and balances with Amounts due to banks -18% 162 196 -8% 1.139 1.240 Central Banks Funding from Central Banks -24% 8.284 10.956 Placements with banks +28% 1.647 1.290 Repurchase agreements -2% 580 594 Debt
Slide 35: Consolidated Balance Sheet – ignoring classification of disposal groups as Held for Sale
Consolidated Balance Sheet – ignoring classification of disposal groups as Held for Sale € mn % 31.12.14 31.12.13 € mn % 31.12.14 31.12.13 change change Cash and balances with Amounts due to banks -2% 192 196 -1% 1.225 1.240 Central Banks Funding from Central Banks -24% 8.284 10.956 Placements with
Slide 36: Consolidated Income Statement
Consolidated Income Statement € mn FY2014 FY2013 4Q2014 3Q2014 2Q2014 1Q2014 Net interest income 967 880 225 231 263 248 Net fee and commission income 153 140 37 37 37 42 Net foreign exchange gains/(losses) and net profits/(losses) on other financial instruments 7 (2) 15 (13) (1) 6 Insurance income
Slide 37: Consolidated Income Statement – Pre classification
Consolidated Income Statement – Pre classification* € mn FY2014 FY2013 4Q2014 3Q2014 2Q2014 1Q2014 Net interest income 1.025 977 235 244 279 267 Net fee and commission income 170 167 39 43 43 45 Net foreign exchange gains/(losses) and net profits/(losses) on other financial 7 2 12 (12) (0) 7 instrum
Slide 38: Income Statement by Geography
Income Statement by Geography (€ mn) CYPRUS RUSSIA UK ROMANIA GREECE FY2014 FY2013 FY2014 FY2013 FY2014 FY2013 FY2014 FY2014 Net interest income 919 834 58 97 31 29 15 1 Net fee & commission income 145 132 17 28 5 5 - 3 Net FX income/(losses) and net 9 18 0 3 1 1 (2) (1) gains/(losses) from financia
Slide 39: Income Statement – Impact from reclassification of held for sale
Income Statement – Impact from reclassification of held for sale (€ mn) Income Statement Held for sale Consolidated as published classification Income Statement * FY2014 FY2014 Net interest income 967 58 1.025 Net fee & commission income 153 17 170 Net foreign exchange income/(losses) and net gains/
Slide 40: 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) 31.03.14 30.06.14 30.09.14 31.12.14 30.06.14 30.09.14 31.12.14 Cyprus 20.124 19.807 20.296 20.504 Shareholders’ equity 2.748 3.728 3.470 Russia 1.318 1.276 1.203 706 C
Slide 41: Loans and Deposits by Geography
Loans and Deposits by Geography Gross Loans by Geography Deposits by Geography € mn 31.12.13 30.06.14 30.09.14 31.12.14 € mn 31.12.13 30.06.14 30.09.14 31.12.14 Cyprus 22.800 22.020 21.716 21.200 Cyprus non- 8.658 8.094 7.785 7.847 IBU** UK 1.284 1.172 1.112 914 Cyprus IBU** 4.047 3.594 3.458 3.467
Slide 42: Gross loans by Geography and by Customer Type
Gross loans by Geography and by Customer Type Gross loans by geography 28,35 26,74 26,26 25,30 24,74 23,77 Total 1,27 1,23 1,18 0,80 (€ bn) 1,46 1,79 0,70 0,69 Other countries* 1,28 1,43 1,19 1,29 1,17 1,30 1,11 1,21 0,97 0,91 Russia UK Cyprus 23,83 22,80 22,60 22,02 21,72 21,20 30.06.13 31.12.13 31
Slide 43: Analysis of Deposits by Geography and by Type
Analysis of Deposits by Geography and by Type Deposits by geography Russia & Other 16,97 countries* 14,97 Total 1,25 14,07 13,80 UK 1,30 1,02 13,33 13,17 0,83 0,87 (€ bn) 1,24 1,25 0,79 0,55 1,30 4,75 1,25 1,29 Cyprus IBU 4,05 3,79 3,59 3,46 3,47 Cyprus non-IBU 9,67 8,66 8,20 8,09 7,79 7,85 30.06.13
Slide 44: Deposit Market Share in Cyprus – Fresh funds
Deposit Market Share in Cyprus – Fresh funds Deposit market share evolution in Cyprus • Marginal increase in the Bank’s market share of deposits (both for Residents Non-Residents Residents and Non-Residents) during 35,2% the last couple of months of 2014 for 32,2% 30,8% the first time since the bail
Slide 45: Cyprus: Summary Income Statement and Key Indicators
Cyprus: Summary Income Statement and Key Indicators € mn FY2014 FY2013 4Q2014 3Q2014 2Q2014 1Q2014 Net interest income 919 834 216 216 251 236 Net fee and commission income 145 132 34 35 36 40 Net foreign exchange gains/(losses) and net profits/(losses) on other 9 18 14 (10) (1) 6 financial instrume
Slide 46: UK: Summary Income Statement and Key Indicators
UK: Summary Income Statement and Key Indicators (€ mn)) FY2014 FY2013 4Q2014 3Q2014 2Q2014 1Q2014 Net interest income 31 29 5 10 9 7 Net fee & commission income 5 5 2 1 1 1 Net foreign exchange income and (losses)/gains from financial 1 1 0 - 1 - instruments Other (expenses)/income (0) - 0 1 (1) - T
Slide 47: UK Operations
UK Operations UK Loans (€ bn) Loans by sector ex-Laiki UK loans Consumer Credit 1,46 1,38 Housing 2% 1,28 2% 1,19 1,17 1,11 0,83 0,72 0,65 0,91 0,56 0,45 0,40 0,30 SMEs Corporate 0,83 0,81 0,91 43% 53% 0,74 0,73 0,72 0,74 0,77 31.12.12 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 U
Slide 48: Russian Operations
Russian Operations Russian Loans (€ bn) • Based on the progress of the disposal process of the Russian operations, the said operations have been classified as a disposal group held for sale. 1,79 In line with the Group’s accounting policy, an 1,62 impairment loss of up to the carrying value of 1,43
Slide 49: Overseas Operations – Romania & Greece
Overseas Operations – Romania & Greece Romanian Gross loans (€ mn) Total exposure in Greece 31 December 2014 € mn 657 637 Net Exposure from on balance sheet financial 97 631 533 assets 518 Exposure from off balance sheet financial 185 assets About 600 foreclosed properties (book value) 179 31.12.13
Slide 50: Asset Quality
Asset Quality (€ mn) Dec-14 Sep-14 Jun-14 Mar-14 Dec-13 A. Gross Loans after Fair value on Initial recognition 22.206 23.136 23.685 24.450 24.840 Fair value on Initial recognition 1.566 1.606 1.615 1.813 1.903 B. Gross Loans 23.772 24.742 25.300 26.263 26.743 B1. Loans with no arrears 10.065 10.298
Slide 51: 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* 12,76 12,59 12,98 84% 12,65 80% 0,57 75% 0,89 0,52 0,26 0,58 0,28 0,55 0,09 0,25 0,51 65% 0,44 0,51 54% 53% 52% 51% 49% 46% 39% 34% 11,28 11,60 11,47 11,18
Slide 52: 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 30.09.14 31.12.14 % of total 18% 10% 16% 7% 23% 6% 20% 5,21 4,87 5,84 5,55 5,33 4,78 4,34 3,94 3,90 3,85 4,06 4,41 2,73 2,63 2,30 2,01 1,90 1,75 1,50 1,48 1,40 Corporate SMEs Housing Consumer Credit R
Slide 53: 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) 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 % of 10% 4% 6% 17% 13% 33% 8% 9% total 8,41 8,54 8,05 7,96 7,85 4,21 4,13 4,12 4,09 4,25 4,20 3,63 3,59 3,96 2,82 2,74 2,70 3,12 2,44 2,83 2,32 2,18 2,47 1,8
Slide 54: Credit Risk by line of business – 90+ DPD fully covered by provisions & tangible collateral
Credit Risk by line of business – 90+ DPD fully covered by provisions & tangible collateral Corporate SMEs Housing Consumer RRD Cyprus 13% 8% 18% 7% 54% 100% 21,2 Gross loans 11,4 2,7 1,7 3,8 (€ bn) 1,5 83,0% 90 +DPD loans 53,9% 18,3% 26,8% 27,9% by segment 15,6% Loan Loss Reserve (LLR) 44,7% 51,0%
Slide 55: 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 11,0 90+ DPD (€ bn) 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 1,3 1,6 1.319 1.240 3.319 1.972 100 321 380
Slide 56: Non-Performing Loans definition
Non-Performing Loans definition Non-Performing Loans (NPLs) –as per the Central Bank of Cyprus Directive: In accordance with the directive, a loan is considered as non-performing when it shows arrears of more than 90 days or if it has been restructured and at the time of restructuring presented arre
Slide 57: 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