(Alliance News) -Â Bank of Cyprus Holdings PLC on Monday said a prolonged outbreak of Covid-19 could hit financial results, while market volatility could drag out the sale of a portfolio of non-performing exposures.
Bank of Cyprus said branches remain open and it is closely monitoring the virus.
"On the basis of currently available information, the group is not in a position to assess the likelihood and/or magnitude of any future impact of Covid-19 on the group's operations, as this will mainly depend on the rate and extent of the spread of the virus, its direct and indirect impact on customers and measures taken to support the economy," the lender said.
However, any prolonged outbreak, resulting in a further weakening of global bond markets, a deterioration in the interest rate environment and impacting the Cypriot economy, is expected to hit the firm's results for the current year.
"The group notes the positive package of measures announced by the European Central Bank, the European Commission and the Cyprus government which should help to support the European and Cypriot economy, as the impact of the virus becomes more apparent, and provide a degree of capital flexibility for the group," Bank of Cyprus said.
Against a backdrop of market volatility due to Covid-19, the company said it continues to work with its advisers towards the sale of a portfolio of NPEs. However, this process may take longer than first expected due to market and operational conditions.
In the context of expected credit losses under IFRS 9, the bank expects to recognise additional provisions of EUR75 million in its fourth-quarter results for 2019, with a negative capital impact of 45 basis points.
"On completion of an NPE trade, the group's capital ratios would benefit from a RWA reduction, subject to regulatory approval," Bank of Cyprus said.
The group added it continues to operate with "significant surplus liquidity" of EUR3.0 billion as at September 30.
Shares in Bank of Cyprus closed down 14% at EUR0.71 in London on Monday.
By Lucy Heming;Â lucyheming@alliancenews.com
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Bk. Cyprus Hldg (BOCH)