Bank of Cyprus Holdings PLC · CSECY:BOCH
Bank of Cyprus — 9M 2012 Earnings Presentation
38 slides from Bank of Cyprus's earnings presentation, Nov 28, 2012
Slide 1: Financial Results for the nine months ended 30 September 2012
Bank of Cyprus Group Financial Results 9M 2012 – Highlights Income Statement Review Balance Sheet Review Performance by Geographic Market Key challenges Appendices Financial Results for the nine months ended 30 September 2012 28 November 2012 1
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. Financial Results 9M 2012 - Highlights II. Income Statement Review III. Balance Sheet Review IV. Performance by Geographic Market V. Key challenges VI. Appendices 3
Slide 4: Financial Results 9M 2012 Highlights
Financial Results 9M 2012 - Highlights Income Statement Review Balance Sheet Review Performance by Geographic Market Key challenges Appendices Financial Results 9M 2012 Highlights 4
Slide 5: 9M 2012 Financial Highlights
9M 2012 Financial Highlights • 9M12 Net interest income at €809 mn (-5% yoy) due to the GGBs exchange, the decrease in interest spread and the increase in impaired loans Profitability • 9M12 Profit before provisions €517 mn (-15% yoy) • 9M12 Provisions for impairment of loans €822 mn (+179% yoy) • 9
Slide 6: Income Statement Review
Financial Results 9M2012 – Highlights Income Statement Review Balance Sheet Review Performance by Geographic Market Key challenges Appendices Income Statement Review 6
Slide 7: Organic profitability
Group Organic profitability Profit & Loss highlights (€ mn) -9% 9M09 9M10 9M11 9M12 -5% 1.127 1.043 1.022 949 854 809 -15% 768 -3% 616 606 495 531 521 505 512 517 454 CAGR CAGR CAGR CAGR 10% 3% 1% 4% Net Interest Income Operating income Operating expenses Profit before provisions • 9M12 Net interest
Slide 8: Containing operating expenses
Group Containing operating expenses Number of employees Number of branches 12.009 Dec-10 Total branches -8% from Dec-11 Dec-10: 595 31/12/2010 Sep-12 Dec-11: 583 Sep-12: 556 11.551 211 199 185 188 181 190 11.326 143 137 11.175 11.183 126 11.101 56 59 59 Dec 2010 Sep 2011 Dec 2011 Mar 2012 June 2012
Slide 9: Profit and Loss highlights
Group Profit and Loss highlights Amounts in € mn 9M2012 9M2011 Change Profit before provisions 517 606 -15% Provisions for impairment of loans (822) (295) +179% Tax* 9 (58) -115% (Loss)/profit after tax excluding GGBs impairment, change in (291) 254 -215% the fair value of related hedging and relate
Slide 10: Interest Margins and Net Interest Income
Group Interest Margins and Net Interest Income Group Net Interest Margin (bp) 334 331 • 9M12 Group NIM at 3,09%, +19 basis points 311 299 291 compared to 9M11 (2,90%) 277 278 260 264 265 272 • 3Q12 Group NIM at 2,91% 9M12: 309 • 9M12 Net Interest Income at €809 mn (-5% yoy) 9M11: 290 • 3Q12 Net Inte
Slide 11: Balance Sheet Review
Financial Results 9M2012 – Highlights Income Statement Review Balance Sheet Review Performance by Geographic Market Key challenges Appendices Balance Sheet Review 11
Slide 12: Strong Deposit Franchise and Limited Dependence on Wholesale Funding
Strong Deposit Franchise and Limited Dependence Group on Wholesale Funding Net Loans % Customer deposits Customer deposits % Total Assets 137% 140% 135% 80% 79% 77% 76% 76% 92% 93% 94% 93% 89% 48% 49% 50% 30.09.11 31.12.11 31.03.12 30.06.12 30.09.12 30.09.11 31.12.11 31.03.12 30.06.12 30.09.12 Bank
Slide 13: Loan quality
Group Loan quality Group asset quality indicators NPLs Provision Coverage NPLs ratio Loans in arrears>90 days 54% 51% 50% 46% 47% • Group NPLs ratio at 17,1% 22,9% • Ongoing deterioration of 17,2% 17,6% 18,0% loan portfolio due to the 14,6% intensified economic 17,1% 11,9% 14,2% crisis in the main m
Slide 14: Capital position
Group Capital position Capital adequacy ratios • Core Tier 1 capital ratio at 5,0%, Tier 1 capital ratio at 7,3% and Total capital at 7,6% 7,5%7,8% 7,3%7,6% 7,3%7,6% • Including €429 mn or 1,8% of Convertible Enhanced Capital Securities, then EBA core 5,1% 5,0% tier 1 at 6,8% 3,6% • RWAs optimisatio
Slide 15: Capital position
Group Capital position • On 27 June 2012, in light of the 30 June 2012 deadline for the recapitalisation of banks, the Group announced that it was not able to fully cover the capital shortfall as estimated by EBA and applied to the Republic of Cyprus for capital support. • Capital deficit as defined
Slide 16: Performance by Geographic Market
Financial Results 9M2012 – Highlights Income Statement Review Balance Sheet Review and Capital position Performance by Geographic Market Key challenges Appendices Performance by Geographic Market 16
Slide 17: Cyprus deteriorating environment affecting performance
Cyprus deteriorating environment Cyprus affecting performance Profit & Loss Highlights (€ mn) Cyprus NII (€ mn), NIM and Spread (bp) NII NIM Customer Spread -7% 9M11 9M12 -18% 350 358 357 443 +206% 325 326 331 325 337 330 412 314 313 373 308 315 -97% 271 256 248 231 213 213 219 223 210 210 200 161 1
Slide 18: Leading financial institution in Cyprus
Cyprus Leading financial institution in Cyprus Gross Loans (bn) Corporate SMEs Mortgage Consumer Credit 14,7 14,9 14,9 14,9 +1% yoy 1,9 1,9 1,9 1,8 -3% yoy 3,5 3,5 3,5 • Loan growth has been 3,8 +5% yoy 2,5 2,5 significantly subdued due to 2,4 2,3 -2% yoy economic conditions 7,0 7,0 7,0 7,0 +1% yoy
Slide 19: Unrivalled deposit franchise
Cyprus Unrivalled deposit franchise Deposits (€ bn) • A strong deposit franchise; 26,7% deposit market share IBUs Non-IBUs (bigger than the combined 19,6 19,0 20,2 19,6 19,2 19,2 19,1 18,5 market of share of 2nd and 3rd -6% yoy largest commercial banks) 14,7 9,8 10,2 10,8 11,2 11,2 11,4 11,8 11,3 +1
Slide 20: Facing an intensifying economic recession
Greece Facing an intensifying economic recession Profit & Loss Highlights (€mn) Greece NII (€mn), NIM and Spread (bp) NII NIM Customer Spread +192% 9M11 9M12 340 320 314 320 308 302 302 305 +5% 436 291 289 337 302 317 243 254 275 281 151 151 149 256 258 239 248 214 219 222 -7 77 77 80 79 79 85 89 92
Slide 21: Managing portfolio through difficult economic conditions
Managing portfolio through difficult economic Greece conditions Gross Loans (€ bn) Corporate SMEs Mortgage Consumer Credit • Active efforts to reduce the loan book • Total loans -7% yoy 10,2 -7% yoy • Corporate loans -10% yoy 10,0 9,7 9,5 1,3 1,3 • SME loans -4% yoy 1,2 1,2 -12% yoy 1,7 • Consumer l
Slide 22: Russian operations
Russia Russian operations Profit & Loss Highlights (€ mn) Russia NII (€ mn) & NIM (bp) Net Interest Income Net Interest Margin -7% 9M11 9M12 598 630 631 619 559 570 595 578 544 97 505 510 90 -24% 34 34 +78% 30 32 31 32 33 31 31 28 45 45 24 35 25 15 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3
Slide 23: Russian operations
Russia Russian operations Gross Loans (€ bn) Customer Deposits (€ bn) 1,29 1,29 1,35 1,12 1,25 1,28 2,09 2,09 2,08 1,98 2,00 1,89 Loan diversification • Focus on SME and consumer credit Consumer Credit 18% • Increase in loans by +5% yoy • Efforts to become self funded Mortgages 3% SMEs • Deposits at
Slide 24: Operations in Romania and Ukraine
Romania - Ukraine Operations in Romania and Ukraine Profit and Loss Highlights Romania Profit and Loss Highlights Ukraine (€ mn) (€ mn) 9M11 9M12 18,6 9M11 9M12 16,9 15,7 16,3 16,3 13,1 9,6 6,9 8,8 4,8 7,3 5,7 6,5 2,6 -6,6 1,0 Net Interest Profit before Provisions Profit after Net Interest Profit be
Slide 25: Operations in United Kingdom
Operations in United Kingdom Profit and Loss Highlights UK (€ mn) 9M11 9M12 • The banking business of UK branch (Bank of Cyprus UK) was transferred to a banking 21,2 subsidiary (Bank of Cyprus UK Limited) 18,6 effective on 25 of June 2012 9,2 7,0 • Bank of Cyprus UK Limited is a UK-based 3,4 3,0 4,3
Slide 26: Key challenges
Financial Results 9M2012 – Highlights Income Statement Review Balance Sheet Review and Capital position Performance by Geographic Market Key challenges Appendices Key challenges 26
Slide 27: Key challenges
Key challenges Macro developments in main markets including sovereign debt crisis Managing asset quality deterioration in the main markets Strengthening liquidity and efforts to secure deposit base Recapitalisation and restructuring plan following PIMCO exercise 27
Slide 28: Key information and contact details
Key information and contact details Credit Ratings: Participation in indices: Fitch: BB- / B / c CSE General Index , FTSE/CySE 20 Moody’s : Caa1 / NP / E FTSE/ATHEX Top 20 Listing: FTSE Med 100 ATHEX – BOC FTSE New EU CSE – BOCY DJ STOXX EU Enlarged TMI ISIN CY0000100111 Contacts Yiannis Kypri Chris
Slide 29: Appendices
Financial Results 9M2012 – Highlights Income Statement Review Balance Sheet Review and Capital position Performance by Geographic Market Key challenges Appendices Appendices 29
Slide 30: Profit and Loss
Group Profit and Loss (€ mn) 9M12 9M11 yoy % 3Q12 3Q12v2Q12 % Net interest income 809 854 -5% 251 -5% Net fee & commission income 167 171 -2% 55 -4% FX income and net (losses)/gains from financial instruments (8) 33 -123% 9 +135% Insurance income net of insurance claims 48 47 +2% 17 +4% Other income
Slide 31: Balance Sheet Overview
Group Balance Sheet Overview € mn % yoy 30.09.12* 30.09.11*** € mn % 30.09.12* 30.09.11*** yoy Cash and balances with Amounts due to banks and +76% 2.939 1.674 +48% 4.738 3.211 central banks repurchase agreements Customer deposits Placements with banks and -12% 27.873 31.852 reverse repurchase -41%
Slide 32: Analysis of Gross Loans
Group Analysis of Gross Loans Loans by Geography Total 28,8 28,9 28,5 28,2 (€ bn) 2,0 2,0 1,8 1,7 Other countries 2,0 2,0 2,1 2,1 Russia 10,2 10,0 9,7 9,5 Greece Cyprus 14,7 14,9 14,9 14,9 30.09.11 31.12.11 30.06.12 30.09.12 Loans by sector 28,8 28,9 28,5 28,2 3,6 3,6 3,5 3,4 Consumer Credit Mortgag
Slide 33: Analysis of Customer Deposits
Group Analysis of Customer Deposits Deposits by geography Total 30,9 (€ bn) 29,7 27,9 1,5 28,2 1,5 1,3 1,5 1,6 1,3 Other countries 1,2 1,3 8,5 7,7 Russia 6,3 6,5 Greece Cyprus 19,6 19,2 19,1 18,5 30.09.11 31.12.11 30.06.12 30.09.12 Deposits by type 30,9 29,7 28,2 27,9 5,6 6,6 6,2 2,3 6,0 Time deposi
Slide 34: Loans and Deposits by Geography
Group Loans and Deposits by Geography Loans by Geography Deposits by Geography 30.09.11 30.09.12 As % of YoY 30.09.11 30.09.12 As % of YoY (€ mn) (€ mn) total (%) (€ mn) (€ mn) total (%) Cyprus 14.719 14.883 53% +1% 19.613 18.511 66% -6% Greece 10.158 9.472 34% -7% 8.510 6.511 23% -23% Russia 1.977
Slide 35: Cyprus: Summary profit & loss and key indicators
Cyprus: Summary profit & loss and key indicators Excluding the impairment of GGBs, the change in fair value of related hedging instruments and the related taxation (€ mn) 9M12 9M11 9M12 versus 3Q12 3Q12 versus 9M11 (%) 2Q12 (%) Net interest income 412 443 -7% 120 -10% Net fee & commission income 101
Slide 36: Greece: Summary profit & loss and key indicators
Greece: Summary profit & loss and key indicators Excluding the impairment of GGBs, the change in fair value of related hedging instruments and the related taxation (€ mn) 9M12 9M11 9M12 versus 3Q12 3Q12 versus 9M11 (%) 2Q12 (%) Net interest income 254 243 +5% 83 +4% Net fee & commission income 36 38
Slide 37: Russia: Summary profit & loss and key indicators
Russia: Summary profit & loss and key indicators (€ mn) 9M12 9M11 9M12 versus 3Q12 3Q12 versus 9M11 (%) 2Q12 (%) Net interest income 90 97 -7% 31 +1% Net fee & commission income 25 26 -6% 8 -17% Foreign exchange income and gains from financial instruments 5 6 -14% 3 -580% Other income 1 6 -86% -- -6
Slide 38: Other countries: Summary profit & loss and key indicators
Other countries: Summary profit & loss and key indicators (€ mn) 9M12 9M11 9M12 versus 3Q12 3Q12 versus 9M11 (%) 2Q12 (%) Net interest income 53 71 -26% 16 -18% Net fee & commission income 5 9 -40% 2 +6% Foreign exchange income and gains from financial instruments 2 0 -- 0 -35% Other income 0 4 -- -