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(Alliance News) - Bank of Cyprus Holdings PLC on Monday reported profit growth as interest rates remained high.
The Nicosia-based lender said pretax profit in the third quarter of 2023 rose 3.4% to EUR153 million from EUR148 million a quarter ago, and surged from EUR59 million in the third quarter of 2022.
Net interest income rose 9.2% to EUR214 million from EUR196 million in the second quarter and jumped from EUR89 million a year prior, supported by rising interest rates. The bank's annualised net interest margin rose to 3.63% in the third quarter of 2023 from 3.43% in the second quarter, and was considerably higher than 1.53% in the third quarter of 2022.
Return on tangible equity fell to 25.6% in the third quarter from 26.6% in the second quarter but was far higher than 11.7% in the third quarter of 2022.
The bank's CET1 ratio as at September 30 was 15.2%, down from 15.6% at June 30 and higher than 14.7% on September 30, 2022. The CET1 ratio compares a bank's capital against its risk assets, with a higher ratio being more financially sound.
Looking ahead, Bank of Cyprus anticipates continued "strong" economic growth, citing Cyprus's GDP expansion of 2.3% in the second quarter of 2023.
It targets a net interest income of over EUR650 million for 2023, a jump of at least 76% from EUR370.3 million in 2022, and its return on tangible equity ratio to remain over 17%.
Regarding its loan portfolio quality, the bank said: "The elevated inflation combined with the rising interest rate environment are expected to weigh on customer behaviour. Despite the higher interest rates, there are no material signs of asset quality deterioration to date. While defaults have been limited, the additional monitoring and provisioning for sectors and individuals vulnerable to the deteriorated macroeconomic environment remain in place to ensure that potential difficulties in the repayment ability are identified at an early stage, and appropriate solutions are provided to viable customers."
Bank of Cyprus shares were 0.1% lower at 259.70 pence each on Monday morning in London.
By Tom Budszus, Alliance News reporter
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