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(Alliance News) - Bank of Cyprus Holdings PLC on Tuesday reported a fall in net interest income in the first nine months of 2019 but is pleased with the progress being made to clear its non-performing loans.
In the nine months to September 30, the lender reported a pretax profit, before recurring items, of EUR59 million, down 29% year on year from EUR83 million. Bank of Cyprus recorded an operating profit of EUR188 million, 9.6% lower than a year before.
Net interest income in the nine month period was up 4% to EUR260 million from EUR250 million. Total income was flat at EUR495 million.
The lender's total expenses grew 7.3% year on year to EUR307 million from EUR286 million, resulting in a rise in its cost-to-income ratio to 62% from 58% a year before.
The bank's net interest margin in the period was 1.92%, up from 1.84% the year before.
Bank of Cyprus ended the period with a total loan book of EUR13.04 billion, down slightly from EUR13.15 billion at the start of 2019. The lender did however see its non-performing loan ratio fall to 31% from 36% over the same period.
Bank of Cyprus recorded EUR491 million of new lending in the third quarter.
Customer deposits ended the period at EUR16.47 billion, down 2.2% from the start of the year.
Bank of Cyrus ended September with a CET1 ratio of 14.9% versus 15.2% a year ago and 11.9% at the beginning of 2019. The lender's risk-weighted assets dropped 12% in the nine month period to EUR13.52 billion.
The lender said the organic reduction of its non-performing loan portfolio is continuing ahead of guidance.
Chief Executive Panicos Nicolaou said: "Our results this quarter reflect continuing progress against our core objective of balance sheet repair and normalisation of our bank.
"Following the completion of the sale of about EUR2.7 billion non-performing loans in Project Helix in June, which added 140 basis points of capital in the second quarter, the continued organic NPE reduction remains ahead of our organic target of about EUR800 million for 2019. The organic NPE reduction in the third quarter of the year amounted to EUR227 million, bringing the total organic reduction in the nine months of 2019 to EUR684 million. This represents the eighteenth consecutive quarter of organic NPE reductions."
Project Helix was Bank of Cyprus's effort to sell off its non-performing loans.
Back in June, it said it had completed the sale of a non-performing loan portfolio to US private equity firm Apollo Global Management LLC. The deal was first announced in August of 2018 and saw the EUR2.8 billion loan book portfolio sold for EUR1.2 billion in cash.
Nicolaou added: "The bank is returning to strength, through a disciplined approach to balance sheet repair, the disposal of non-core businesses and cost rationalisation through digital transformation. Good progress has been made throughout the year, however there remains more to do and we are focused on delivering balance sheet de-risking at pace and further efficiency gains across our cost base.
"Our strategy of making the bank stronger, safer and future-focused is unchanged. This will enable us to continue to support the strengthening Cypriot economy, which expanded by 3.1% during the first nine months of the year."
Shares in Bank of Cyprus were 1.6% lower in London on Tuesday at EUR1.36 each.
By Paul McGowan; paulmcgowan@alliancenews.com
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