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Group Financial Results for the six months ended 30 June 2020
Bank of Cyprus GroupGroup Financial ResultsFor the six months ended 30 June 2020
Group Financial Results for the six months ended 30 June 2020
DISCLAIMER
2
The financial information included in this presentation is neither reviewed nor audited by the
Group’s external auditors.
The Interim Condensed Consolidated Financial Statements for the six months ended 30 June
2020 have not been audited by the Group’s external auditors.
The Group’s external auditors have conducted a review of the Interim Condensed Consolidated
Financial Statements in accordance with the International Standard on Review Engagements
2410 “Review of Interim Financial Information performed by the Independent Auditor of the Entity”
(UK & Ireland).
This financial information is presented in Euro (€) and all amounts are rounded as indicated. A
comma is used to separate thousands and a dot is used to separate decimals.
Important Notice Regarding Additional Information Contained in the Investor Presentation
The presentation for the Group Financial Results for the six months ended 30 June 2020 (the
“Presentation”), available on https://www.bankofcyprus.com/en-GB/investor-relations-new/reports-
presentations/financial-results/, includes additional financial information not presented within the
Group Financial Results Press Release (the “Press Release”), primarily relating to (i) NPE
analysis (movements by segments and customer type), (ii) rescheduled loans analysis, (iii) details
of historic restructuring activity including REMU activity, (iv) analysis of new lending, (v) Income
statement by business line, (vi) NIM and interest income analysis and (vii) Loan portfolio analysis
in accordance with the three-stages model for impairment of IFRS 9. Except in relation to any non-
IFRS measure, the financial information contained in the Investor Presentation has been prepared
in accordance with the Group’s significant accounting policies as described in the Group’s Annual
Financial Report 2019 and updated in the Interim Financial Report 2020. The Investor
Presentation should be read in conjunction with the information contained in the Press Release
and neither the financial information in the Press Release nor in the Investor Presentation
constitutes statutory financial statements prepared in accordance with International Financial
Reporting Standards.
Group Financial Results for the six months ended 30 June 2020
Highlights
3
Group Financial Results for the six months ended 30 June 2020
1H2020 - Highlights
4
Performance in 2Q2020
Good Capital and StrongLiquidity Position
€1.3 bn NPE reduction in 1H2020, including NPE sales
• Total Capital ratio of 17.9%2 and CET1 ratio of 14.4%2 pro forma for Helix 21
• Deposits at €16.3 bn, broadly flat qoq; significant surplus liquidity of €3.9 bn (LCR at 257%)
• New lending of €238 mn for 2Q2020 (down by 47% qoq), impacted by COVID-19 lockdown
• Underlying result of profit after tax from organic operations of €4 mn for 2Q2020
• Provisions/net loss relating to NPE sales4 of €104 mn for 2Q2020, including Helix 2 loss of €68 mn and loan credit
losses of €21 mn for potential future NPE sales
• Loss after tax of €100 mn for 2Q2020 and €126 mn for 1H2020
• €0.9 bn NPE sale (Helix 2) agreed in August 2020
• Organic NPE reduction of €137 mn in 2Q2020, despite lockdown
• Completion of €133 mn NPE sale (Velocity 2) in 2Q2020
• NPEs reduced to €2.6 bn (€1.1 bn net), pro forma for Helix 21
• Gross NPE ratio reduced to 22% (11% net) and coverage maintained at 58%, pro forma for Helix 21
(1) Calculations on a pro forma basis assume completion of the transaction
(2) Allowing for IFRS 9 transitional arrangements
(3) Excluding Special Levy and contributions to SRF and DGF
(4) Including restructuring expenses
Operational efficiency• Cost to income ratio3 at 57% for 2Q2020, broadly flat on prior quarter
• Total operating expenses3 reduced to €81 mn for 2Q2020, down by 18% yoy and by 3% qoq
• Increased usage of digital channels sustained post lockdown
COVID-19 • Confirmed COVID-19 cases remain amongst the lowest within EU, despite relaxation of measures
• Continue to support colleagues, customers affected by COVID-19 and wider Cypriot economy
• Nascent signs of economic recovery post lockdown
Group Financial Results for the six months ended 30 June 2020
€0.9 bn NPE sale agreed, reducing NPE ratio to 22%1
5
Helix 2
• Agreement for the sale of €886 mn NPEs
• Completion expected in 1H2021
• Gross consideration of 46% of gross book value and 29% of
contractual balance3, payable in cash, of which 65% is deferred
and paid in instalments over 48 months from completion,
without any conditions attached
• The consideration can be increased through an earnout
arrangement, depending on the performance of the Helix 2
portfolio
• NPEs reduced by 26% to €2.6 bn1
• NPE ratio reduced by 6 p.p. to 22%1
• Net NPEs reduced to €1.1 bn1 (-89%1 since peak)
• Loss of €68 mn recorded in 1H2020
• -36 bps CET1 capital impact at completion
• +10 bps CET1 capital impact upon full payment of deferred
consideration
Jun 2020 pro forma for Helix 2
Jun 2020
3.5
2.6
-26%
28%
22%
Jun 2020 Jun 2020 pro forma for Helix 2
-6 p.p.
Jun 2020post DPP payment
Mar 2020 Jun 2020
14.3% 14.4%14.3%
Jun 2020 pro forma for Helix 2
14.9%
26% NPE reduction 6 p.p. reduction in NPE ratio
CET1 ratio at 14.4%2 pro forma for Helix 21
NPEs (€ bn) NPE ratio
(1) Calculations on a pro forma basis assume completion of the transaction
(2) Allowing for IFRS 9 transitional arrangements
(3) As at 30 September 2019
(4) Deferred Purchase Price
1
1
1
Total CET1 impact +10 bps:
-48 bps already included in 2Q2020
+12 bps on completion
+46 bps upon full payment of deferred
consideration
4
Group Financial Results for the six months ended 30 June 2020
Accelerated de-risking: NPE sales of €3.8 bn since 2H2018
6
Sale of €2.7 bn NPEs
• Mainly secured large
Corporate and SME NPEs
• 48 cents on GBV
• c.60 bps capital accretive1
• Bank retained €45 mn of senior bond
• Completed in 2Q2019
Sale of €133 mn NPEs
• Retail unsecured NPEs
• Capital neutral1
• Completed in 2Q2020
Sale of €34 mn NPEs
•Retail unsecured NPEs
•Capital neutral1
•Completed in 2Q2019
Sale of €886 mn NPEs
•Mainly secured Retail and
SME NPEs
•46 cents on GBV
• -36 bps capital impact on
completion
•+10 bps capital impact
upon full repayment of
deferred consideration
•Completion expected in
1H2021
Continue to assess acceleration of de-risking through additional NPE sales in the future
Helix 1
✓Completed
Velocity 1
✓Completed
Velocity 2
✓Completed
Helix 2
✓SPA Signed
(1) On completion
Group Financial Results for the six months ended 30 June 2020
>€12 bn or 83% NPE reduction since peak
7
0
20
40
60
8063% 62%
Dec 14 Dec 16
53% 50%
Dec 17Dec 15
42%
55% 47%
32%
47%
30%
Dec 18
30%
17%
Dec 19
29%
15%
Mar 20
28%
14%
Jun 20
22%
11%
Jun 20pro forma for Helix 2
-41 p.p.
Gross NPE ratio Net NPE ratio
• €12.4 bn or 83% NPE reduction since peak
✓ c.€3.8 bn through trades
✓ c.€8.6 bn organic
• NPE ratio reduced to 22% pro forma for Helix 21
(11% on a net basis)
• Helix 2 reduced NPE ratio by 6 p.p.
• 41 p.p. reduction since peak
9.9
1.1
Organic
(3.8)5.1
15.0
Allowance for Expected Loan
Credit Losses
Net NPEs
1.5
31 Dec 14 NPE trades
(8.6)
30 Jun 2020
pro forma for Helix 2
2.6
-€12.4 bn
NPEs (€ bn)
Gross NPE ratio reduced to 22%; 11% on a net basis pro forma for Helix 21
(1) Calculations on a pro forma basis assume completion of the transaction
1
1
Group Financial Results for the six months ended 30 June 2020
4.3
2.2 2.2
3.4
3.4
0.3 0.4 1.6
Europe Cyprus
COVID-19 remains contained despite relaxation of measures
8
(1) Based on information up to 26 August 2020 provided by https://www.ecdc.europa.eu/en/publications-data/download-todays-data-geographic-distribution-covid-19-cases-worldwide
14 day moving average of confirmed new cases per 100,000 population1
4
Gradual relaxation of measures
1 Opening of retail shops and gradual return of students to schools
5 Opening of cafes and restaurants
6 Opening of airports and ports
Lockdown period
Fast escalation of measures
to contain pandemic spread
Travel ban & country lockdown
Night curfew introduced
All schools closed
2
7 Mandatory use of masks in indoor crowded spaces
• Remain vigilant to prevent a second wave of infection
as restrictive measures are relaxed through extensive
COVID-19 sample testing
• Introduction of specific measures in July 2020, for the
management of the recent increase in COVID-19 cases,
following the relaxation of the travelling restrictions
3
Lifting of restrictions in a gradual and controlled manner
1 32 4 5 6 7
Group Financial Results for the six months ended 30 June 2020
Cypriot economy: nascent signs of recovery appear post lockdown
9
Economic Sentiment starting to improve post lockdown
Source: Cyprus Statistical Service, Economics Research centre of the University of Cyprus and Eurostat
(1) GDP projections under the base scenario of: the Ministry of Finance, the EBRD, the European Commission and the Economics Research centre of the University of Cyprus
Tourism arrivals (mn) impacted by COVID-19 lockdown
0.55
AprFebJan Mar May Jun Jul
0.06
-85% yoy
2019 2020
-8.7%
6.0%
Cypriot economy recorded a drop of 11.9% in 2Q2020 vs 15.0% decline in Euro Area
• Cypriot economy contracted by 11.9% in 2Q2020, reflecting COVID-
19 lockdown
• Restart of the economy as of early May 2020, post lockdown
• Unprecedent policy response to mitigate COVID-19 impact
• Economic sentiment index improved since May 2020, driven by
improvement in confidence in nearly all sectors as well as
improvement in consumer confidence
• Weak international summer tourism arrivals, although partly offset by
domestic tourism
-15.0%
1Q2020
3.2%
1.0%
4Q2020
0.8%
-3.1% -11.9%
2Q2020 2020E12021E1
Cyprus Euro Area
40
60
80
100
120
Fe
b-1
4
Ma
y-1
4
Au
g-1
4
Nov-1
4
Fe
b-1
5
Ma
y-1
5
Au
g-1
5
Nov-1
5
Fe
b-1
6
Ma
y-1
6
Au
g-1
6
Nov-1
6
Fe
b-1
7
Ma
y-1
7
Au
g-1
7
Nov-1
7
Fe
b-1
8
Ma
y-1
8
Au
g-1
8
Nov-1
8
Fe
b-1
9
Ma
y-1
9
Au
g-1
9
Nov-1
9
Fe
b-2
0
Ma
y-2
0
Au
g-2
0
-6.0% to -7.4%
5.0% to 6.1%
Group Financial Results for the six months ended 30 June 2020
Timely and strong response by the European and the Cypriot authorities
10
1) The Cyprus Enterprise Fund
Government measures include:
1. Subsidy of interest rate of new Business Loans (€180 mn)
• Subsidy of interest rate for new loans to self employed and businesses
• Subsidy of interest rate for 4 years
2. Subsidy of interest rate of new Housing Loans (€45 mn)
• Subsidy of interest for 4 years
3. Financing of SMEs through CYPEF1 (€800 mn)
• 50%-50% risk sharing between the Government and the banks
4. Government Guarantee to EIB (€1.0 bn)
• Government additional funding of €500 mn to eligible businesses
For more details on the government measures, pleaser refer to slides 46-47
Comprehensive and far reaching measures to support performing businesses and the wider economy
European Authorities measures-Implications for Cyprus
1. EU Recovery Fund (€2.7 bn)
• Cyprus expects to receive €1.3 bn in grants during the period
2021-23 and additional loans up to €1.4 bn
• The exact amounts will depend on the finalisation of the
allocation criteria and on the government’s national plan that will
be submitted to the European Commission
2. Pan-European Guarantee Fund (PEGF) (€300-€400 mn)
• Liquidity support to eligible businesses through the PEGF of EIB
• Guarantee to the banks of up to 80%
3. EU SURE Programme (€479 mn)
• Financial assistance in the form of loans supporting member
states in their employment preservation schemes
4. Access to ESM’s Pandemic Crisis Support through the Enhanced
Conditions Credit Line, for c.€440 mn (2% of GDP)
Group Financial Results for the six months ended 30 June 2020
Supporting customers and society though COVID-19
11
Loan moratorium
• Payment holidays until end of
2020 (capital & interest) for
customers with arrears <30 days
as at 29 Feb 2020
• €6.0 bn (>25k customers
approved)
- €2.1 bn private individuals
- €3.9 bn businesses
• €689 mn new loans in 1H2020
• Participation in the governmental
schemes for the subsidy of
interest rate to private individuals
and businesses
• Strong pipeline of over €65 mn
for new housing loans, as at 21
August 2020
• Support to ministries, agencies
and authorities in the fight
against COVID-19
• Donations of c.€0.5 mn for the
fight of the pandemic:
• c.€220K for the purchase of
medical equipment
• c.€260K for the support of
educational activities
• Grants covering cost of
repatriation flights
New lending SupportCY
• All branches operating as usual
post lockdown
• Increased usage of digital
channels sustained post
lockdown
• 72% of customers currently
digitally engaged1 (vs 66% in
1H2019)
• 83% of total transactions2 are
performed through digital
channels (vs 75% in 1H2019)
Maintaining Operational
Resilience
(1) This is the ratio of digitally engaged individual customers to the total number of individual customers. Digitally engaged customers are the individuals who use the digital channels of the Bank (mobile banking app, browser and ATMs) to perform banking transactions, as well as digital
enablers such as a bank-issued card to perform online card purchases
(2) This is the ratio of the number of digital transactions performed by individuals and legal entity customers to the total number of transactions. Transactions include deposits, withdrawals, internal and external transfers. Digital channels include mobile, browser and ATMs
Group Financial Results for the six months ended 30 June 2020
Continue to support customers through payment deferrals
12
€ bn# customers
approved
Gross Loans
under
moratorium
30 Jun 2020
% of
Gross loans
(excluding
legacy)1
%
with ≥1 payment
by 30 June 2020
Private
Individuals20,427 2.09 53% 25%
Businesses 4,627 3.91 76% 9%
Total 25,054 6.00 66% 15%
Payment deferrals granted to 25K customers affecting €6.00 bn gross loans
(1) Gross loans as at 30 June 2020: Corporate (incl. IB and W&M and Global Corporate),
SME, Retail, Insurance and H/O
(2) Unlikely to pay criteria
COVID-19 moratorium until the end of 2020, as per
government measures
• Application period ended 30 June 2020
• Moratorium period of up to Dec 2020 to address
seasonality of the Cypriot economy
• Capital plus interest; Interest continues to accrue
• COVID-19 moratorium does not trigger automatic
reclassification due to forbearance
• Continue to monitor the creditworthiness of
customers who applied for the loan moratorium
Businesses
• Individual assessment of businesses was initiated in May 2020, with an initial focus on high
risk customers
• Largest 30 businesses under moratorium amount to €1.7 bn or nearly half of all business
loans under moratorium; over 70% has been reviewed without triggering a change in UTP2
• 9% of businesses under moratorium paid at least 1 instalment, until 30 June 2020
Private Individuals
• Individual assessments of private individuals under moratorium has also commenced with
priority to individuals with low credit scoring and employed in high risk industries, such as
tourism
• One quarter of private individuals under moratorium paid at least 1 instalment until 30 June
2020
Group Financial Results for the six months ended 30 June 2020
Well diversified loan portfolio; close monitoring and set up of strategies to prevent further asset quality deterioration
13
Gross loans (excluding legacy)1 by business sector of €9.15 bn
€ bn
(1) Gross loans as at 30 June 2020 of Corporate (incl. IB and W&M and Global Corporate), SME, Retail, Insurance and H/O
14%
16%
15%
12%
Private individuals
43%
Low
Moderate
Medium
High
€9.15 bn
• High Impact: (12%)
• Tourism (Hotels & Catering)
• Medium Impact: (15%)
• Trade
• Manufacturing
• Moderate Impact: (16%)
• Construction
• Transportation and storage
• Low: (14%)
• Real Estate
• Education
• Health
• Private individuals (43%)
• Refer to slide 14
Breakdown by COVID-19 impact assessment on business sectors
Construction
Trade
PrivateIndividuals
Hotels & Catering
Manufacturing
Real Estate
Other sectors
Professional & Other services
3.97
1.06
0.53
1.02
1.00
0.64
0.60
0.33
Group Financial Results for the six months ended 30 June 2020
Private individuals loan portfolio, highly collateralised
14
Private Individuals: €3.97 bn
1) Loan to Value (LTV) is calculated as the Gross IFRS Balance to the indexed market value of the property. Under Pillar 3 disclosure, LTV is calculated as the Gross IFRS Balance to the indexed market value of collateral. Collateral takes into consideration the mortgage amount
registered in the land registry plus legal interest from registration date to the reference date
• Housing performing loans: €3.28 bn
• Low LTV1 housing portfolio
• 65% of portfolio with LTV1<60%
• Only 15% of portfolio with LTV1>80%
• Other: €0.69 bn
• 61% secured portfolio
• of which 59% with property
• of which 41% with other type of collateral
LTV1 Housing
€3.28 bn
Other
€0.69 bn
< 60% 65% 29%
60%-80% 20% 5%
80-100% 7% 5%
>100% 8% 61%
83%
17%
Housing
Other
12%
7%Other
81%
Personal
Housing
Payment deferrals: €2.09 bn
c.25% with ≥1 payment by
30 June 2020
Group Financial Results for the six months ended 30 June 2020
Business portfolio well diversified, with high quality collateral
15
Breakdown, by
Covid-19 impact
(1) Gross loans as at 30 June 2020 of Corporate (incl. IB and W&M and Global Corporate), SME, Retail, Insurance and H/O
(2) Facilities/limits approved in the reporting period
(3) Loan to Value (LTV) is calculated as the Gross IFRS Balance to the indexed market value of the property. Under Pillar 3 disclosures LTV is calculated as the Gross IFRS Balance to the indexed market value of collateral. Collateral takes into consideration the mortgage amount
registered in the land registry plus legal interest from registration date to the reference date
25%
28%
26%
21%
€5.18 bn
• High Impact: (21%)
• Tourism (Hotels &
Catering)
• Medium Impact:(26%)
• Trade
• Manufacturing
• Moderate Impact: (28%)
• Construction
• Transportation and
storage
• Low: (25%)
• Real Estate
• Education
• Health
Payment deferrals
• High quality origination via prudent underwriting standards
• Strong assessment of repayment capability
• Strict origination standards
• Effective foreclosure law in place, following the amendments
in recent years
• 98% of new exposures2 since 2016 were performing at the start
of the moratorium
• 89% of portfolio secured
• of which 79% with property
• of which 21% other type of collateral
• Low LTV3 business portfolio; 72% of the portfolio with LTV3<80%
LTV3 High Medium Moderate Low Total
< 80% 94% 58% 67% 73% 72%
>80% 6% 42% 33% 27% 28%
Total 100% 100% 100% 100% 100%
25%
29%
20%
26%
€3.91 bn
Business gross loans
(excluding Legacy)1
• 9% with ≥1 payment by
30 June 2020
Group Financial Results for the six months ended 30 June 2020
Portfolio exposure to businesses most impacted by COVID-19
16
Tourism: €1.06 bn
Hotels & Catering31 Mar 2020
€ bn
30 Jun 2020
€ bn
% of
portfolio
Food services 0.06 0.06 5%
Accommodation 0.97 1.00 95%
Total 1.03 1.06 100%
Unutilised Liquidity1 0.34 0.31
- of which deposits 0.28 0.26 25%
• Majority of Accommodation customers entered the crisis with
significant liquidity, following strong performance in recent years
• c.€1.0 bn or 95% under payment deferrals
• Payroll subsidy by the government of up to 60% for hotels whose
turnover was reduced by more than 35%-40%
Trade31 Mar 2020
€ bn
30 Jun 2020
€ bn
% of
portfolio
Supermarkets, pharmacies and
other essential retail businesses0.30 0.29 29%
All other 0.74 0.71 71%
Total 1.04 1.00 100%
Unutilised Liquidity1 0.83 0.88
- of which deposits 0.53 0.56 56%
Trade: €1.00 bn
• c.29% tied up to lower risk essential retail services, not materially
impacted by COVID-19
• €0.6 bn or 59% under for payment deferrals
(1) Unutilised overdraft amounts and deposits
Group Financial Results for the six months ended 30 June 2020
66 47 45 42 6727
81 99 90 9679
69
7947 43 42
62
302325
254214
225
100
35 30
59
4918
1Q2019 2Q2019
25
3Q2019 1Q20204Q2019
17
2Q2020
563548
491
443 451
238
-47%
(1) New disbursements in the reporting period including the average YTD change (if positive) for overdraft facilities
(2) Facilities/limits approved in the reporting period
(3) Gross loans as at 30 June 2020: Corporate (incl. IB and W&M and Global Corporate), SME, Retail, Insurance
and H/O
New lending1 at €238 mn in 2Q2020, reflecting COVID-19 lockdown
17
98% of new exposures2 in Cyprus since 2016 were performing at the
start of the moratoriumNon-legacy gross loans3 by business activity
€ mn
3.95
Other sectors
PrivateIndividuals
Manufacturing
Trade
Professional & Other services
Hotels & Catering
Real Estate
Construction
3.97
0.60
1.06
1.03
1.00
1.04
1.02
1.01
0.60
0.64
0.65
0.53
0.53
0.33
0.34
Jun 2020 Mar 2020
€ bn
0.6%
3.4%
-4.5%
0.8%
-0.7%
-1.1%
0.1%
-2.2%
% change qoq
• Following the outbreak of COVID-19, new lending is focused on supporting the
Cypriot economy
• Strong market share of 52.6% in new housing loans in 1H2020
• High quality origination via prudent underwriting standards
• New lending demand expected to pick up in 2H2020, especially for housing
loans in the context of the government scheme for interest rate subsidy
• Strong pipeline of over €65 mn for new housing loans, as at 21 August 2020
Shipping & Syndicated loans
SME
Corporate
Retail other
Retail Housing
Group Financial Results for the six months ended 30 June 2020
Usage of digital channels sustained post lockdown
18
(1) This is the ratio of digitally engaged individual customers to the total number of individual customers. Digitally engaged customers are the individuals who use the digital channels of the Bank (mobile banking app, browser and ATMs) to perform banking transactions, as well as digital
enablers such as a bank-issued card to perform online card purchases
Digital Transformation Programme
• Digital Transformation Programme that started in 2017 beginning to
clearly deliver an improved customer experience
• Customers’ reorientation towards digital channels:
• Increase in active digital users by 18% since Jun 2019
• 72% of customers currently digitally engaged1(vs 66% in 1H2019)
• Awarded Best Consumer Digital Bank in Cyprus for 2019 by
Global Finance
31%22% 23% 25% 25% 25%
34%
30%32%
35% 37% 37%
35%
48% 45%40% 38% 38%
Jul 2020Mar 2020 Apr 2020 Jun 20208-31 May 2020
1-7 May 2020
OnlineBanking
ATM
Branch
Channel Usage (% of volume of transactions) since COVID-19 outbreak
Lockdown period Gradual relaxation of
measures
Group Financial Results for the six months ended 30 June 2020
Sustained Progress on Digital Transformation
19
Digitally Engaged Customers (Individuals)1
Jun 20: 71%
Apr 20: 70%
Jul 19: 67%
Jul 18: 62%
Digital Transactions2 Ratio (Legal Entities)
Jun 20: 53%
Apr 20: 60%
Jul 19: 30%
Jul 18: 28%
Jul 20: 83%
Digital Transactions2 Ratio (Total Portfolio) Average mobile logins per month
Jun 20: 19.8x
Apr 20: 21.1x
Jul 19: 13.3x
Jul 18: 11.8x
Jun 20: 83%
Apr 20: 85%
Jul 19: 73%
Jul 18: 69%
Jul 20: 72% Jul 20: 52%
Jul 20: 18.5x
(1) This is the ratio of digitally engaged individual customers to the total number of individual customers. Digitally engaged customers are the individuals who use the digital channels of the Bank (mobile banking app, browser and ATMs) to perform banking transactions, as well as digital
enablers such as a bank-issued card to perform online card purchases
(2) This is the ratio of the number of digital transactions performed by individuals and legal entity customers to the total number of transactions. Transactions include deposits, withdrawals, internal and external transfers. Digital channels include mobile, browser and ATMs
Group Financial Results for the six months ended 30 June 2020
Capital and Liquidity
20
Group Financial Results for the six months ended 30 June 2020
0.5%
Other NPE sales related
losses
Amendments to
capital regulations
(0.5%)
Helix 2 CET1 30 Jun2020
CET1 31 Mar2020
Helix 2
1.8%
AT1
14.4%1.7%
T2 Total capital ratio 30 Jun 2020 pro forma for Helix 2
Loan credit losses &
other impairments
Operatingprofit
RWAs
0.2%
CET1 30 Jun2020 pro forma for
Helix 2
0.4% (0.3%) (0.1%) (0.2%)
Other
14.3% 14.3%
17.9%
0.1%
CET1 at 14.4% pro forma for Helix 25
21
min OCR (SREP) requirement for 2020 post ECB Announcement 4
9.7%
14.5%
P&L
Impact
Release
of
RWAs
-36 bps
9.7%
• Helix 2 reduces capital by 36 bps on completion
• c.40 bps organic capital generation from operating profitability
• Loan credit losses and other impairments3 reduced capital by
c.30 bps
• c.50 bps capital benefit from amendments to capital regulations
• Flexibility to operate below Capital Conservation Buffer (CCB)
and P2G, at least until end of 2022
1 1,2
1,2,51,5
3
• Amendments in capital regulations in June 2020
Benefit recorded in 2Q2020
• SME factor: c.+ 40 bps
• Extension of IFRS 9 transitional arrangements: c.+10 bps
Benefit not yet recorded
• Add back to CET1 of unrealised losses on government debt : c.+10 bps
• No full deduction of software assets from CET1: c.+10 bps
• Helix 2 benefit upon full payment of deferred consideration: +46 bps
• Onsite inspection by the SSM on the stock of REMU properties completed
• Findings relating to a possible prudential charge of up to c.50 bps, under review by SSM
• Size and timing of impact, if any, uncertain
+20
bps
1. Allowing for IFRS 9 transitional arrangements
2. The CET1 ratio for 30 June 2020, including the full impact of IFRS 9 amounted to 12.6% and 12.7% pro forma for Helix 2
3. Loan credit losses and other impairments include the net change of the prudential charges relating to specific credits and other items
4. OCR(SREP)- Overall Capital Requirement comprises the Total SREP Capital Requirement (Pillar 1 and Pillar 2 Requirement) plus
combined buffer requirements (capital conservation buffer, countercyclical buffer and systemic buffers)
5. Calculations on a pro forma basis assume completion of the transaction
+50
bps
Group Financial Results for the six months ended 30 June 2020
RWA intensity1 reduced to 55%, pro forma for Helix 23
RWA intensity1 reduced to 55% in 2Q2020, pro forma for Helix 23
22
• RWA intensity1 reduced to 56%, down 6 p.p. qoq,
on lower RWAs and higher Total Assets,
following €1 bn utilisation of TLTRO III
• RWA intensity1 decreased to 55% pro forma for
Helix 23, as the RWA release will be largely offset
by the RWA of the Deferred Purchase Price2
• Upon payment of the DPP2, RWA intensity will
decrease to 54%
Dec 18
56%
62%
Dec 14
85%
Jun 20
pro forma
Helix 2
Dec 19Dec 15 Dec 16 Jun 20Mar 20Dec 17
85% 85%
73%70%
61%
55% -6 p.p.
RWAs reduced by >€10 bn since peak 2014
RWAs Dec 19 Mar 20 Jun 20 Helix 2Helix 2
DPP2
Jun 20
Pro forma for
Helix 23
€ mn 12,890 12,599 11,960 (370) 258 11,848
(1) Risk Weighted Assets over Total Assets
(2) Deferred Purchase Price: 65%of consideration without any conditions attached, payable in three broadly equal instalments over 48 months from completion
(3) Calculations on a pro forma basis assume completion of the transaction
3
• c.€640 mn RWA relief qoq
- c.€380 mn (SME factor)
- c.€260 mn balance sheet de-risking
Group Financial Results for the six months ended 30 June 2020
(1) Servicing exclusively international activity companies registered in Cyprus and abroad and not residents
(2) Origin is defined as the country of the passport of the Ultimate Beneficial Owner
(3) The NSFR has not yet been introduced. The NSFR is calculated as the amount of “available stable funding” (ASF) relative to the amount
of “required stable funding” (RSF), on the basis of Basel III standards. Its calculation is a SREP requirement. The EBA NSFR will be
enforced as a regulatory ratio under CRR II in 2021
Deposits at €16.3 bn, broadly flat qoq
23
€ bn
Liquidity ratioMinimum
required30 Jun 2020 Surplus
LCR (Group) 100% 257% €3,949 mn
NSFR3 100% 134% €4,248 mn
1
16.69
3.70
13.14 12.98
Dec 18 Mar 20
3.46
Jun 19
12.92
3.49
Sep 19
3.54
13.15
Dec 19
3.31
12.94
3.32
12.98
Jun 20
16.84 16.38 16.47 16.25 16.30
Cyprus IBU Cyprus non-IBU
67%
20%
3%
4%6%Cyprus
Other EU
Russia
Other European countries, excl. Russia
Other countries
Cyprus deposits by passport origin2
• Significant surplus liquidity of €3.9 bn, up 32% qoq, reflecting €1 bn utilisation
of TLTRO III
• Strong deposit market share of 35.0%
• Flexibility to operate below 100% LCR limit at least until end 2021
Significant surplus liquidity of €3.9 bn
Group Financial Results for the six months ended 30 June 2020
0.46
31 March 2020
Non-legacy net loans
REMU properties
Legacy net loans
30 June 2020
Other assets(including HFS)
Securities
Due from banks
2.00
Cash and balanceswith Central Banks
20.43
21.37
1.46
8.93
4.40
1.95
8.92
1.68
1.48
1.54
5.28
0.62
1.17
1.91
(1) AIEA: Average Interest earning assets. Please refer to slide 75 for the definition
(2) Debt securities, treasury bills and equity investments
(3) Gross loans as at 30 June 2020 of Corporate (incl. IB and W&M and Global Corporate), SME, Retail, Insurance and H/O
Balance sheet composition
24
Total assets
51%
9%
40%
Non- legacy
net loans
Legacy
net loans
Liquids
31 March 2020
1.28
0.390.26
Equity
0.41
Other
16.30
0.26
30 June 2020
WholesaleFunding from Central Bank
2.24
Due to banks
Customerdeposits
20.43
21.37
16.25
1.29
1.00
2.12
Total equity & liabilities
AIEA Mix
2Q2020
AIEA:
€17.7 bn
€ bn € bn
1
1
2
3
3
Group Financial Results for the six months ended 30 June 2020
Profitability
25
Group Financial Results for the six months ended 30 June 2020
(1) The interest income, non-interest income, staff costs, other operating expenses and loan credit losses related to Project Helix are disclosed under ‘Provisions/net loss relating to NPE sales, including restructuring expenses’ since they are considered one-off items
(2) ‘Provisions/net loss relating to NPE sales including restructuring expenses’ refer to the net loss on transactions completed during each period, net loan credit losses on transactions under consideration and for potential further sales at each reporting date, as well as the restructuring
costs relating to these trades
Income Statement
26
€ mn 1H2020 1H20191 2Q2020 1Q20201,2 qoq% yoy%
Net Interest Income 168 170 83 85 -2% -1%
Non interest income 120 163 60 60 0% -26%
Total income 288 333 143 145 -1% -13%
Total expenses (180) (208) (87) (93) -6% -14%
Operating profit 108 125 56 52 7% -13%
Loan credit losses (87) (87) (23) (64) -63% 1%
Impairments of other financial and non-financial assets (29) (10) (25) (4) - -
(Provisions)/reversal of provisions for litigation, claims,
regulatory and other matters(4) 3 (2) (2) 10% -
Total loan credit losses, impairments and provisions (120) (94) (50) (70) -28% 27%
Advisory and other restructuring costs-organic (6) (10) (3) (3) 0% -39%
(Loss)/profit after tax-Organic (attributable to the
owners)(19) 19 4 (23) - -
Provisions/net loss relating to NPE sales, including
restructuring expenses2 (107) (2) (104) (3) - -
Net loss of remeasurement of investment in associate
(CNP) classified as held for sale- (21) - - - -
Reversal of impairment of DTA and impairment of other
tax receivables- 101 - - - -
(Loss)/profit after tax-attributable to owners (126) 97 (100) (26) - -
Net Interest margin (annualised) 1.90% 1.88% 1.88% 1.95% -7 bps +2 bps
Cost to income ratio 62% 63% 61% 64% -3 p.p. -1 p.p.
Cost to income ratio adjusted for the
special levy and contributions to SRF and DGF 57% 59% 57% 58% -1 p.p. -2 p.p.
Cost of Risk (annualised) 1.39% 1.34% 0.76% 2.00% -124 bps +5 bps
EPS – Organic (€ cent) -4.3 4.0 0.8 -5.1 +5.9 -8.3
• NII decreased to €83 mn in 2Q2020, mainly due
to higher cash collections on interest not
previously recognized in 1Q2020, offset by lower
cost of deposits
• Non-interest income of €60 mn for 2Q2020, flat
qoq
• Total expenses reduced to €87 mn in 2Q2020,
compared to €93 mn in 1Q2020, due to COVID-
19 related lower staff costs and seasonality of
Deferred Guarantee Fund contribution
• C/I ratio at 57%, broadly flat qoq
• Loan credit losses of €23 mn in 2Q2020,
reflecting cost of risk of 76 bps
• Other impairments of €25 mn for 2Q2020, on
specific, large, illiquid REMU properties
• Provisions/net loss relating to NPE sales of €104
mn for 2Q2020, including Helix 2 loss of €68 mn
and loan credit losses of €21 mn for potential
future NPE sales
• Profit after tax-organic of €4 mn in 2Q2020
• Loss after tax of €100 mn for 2Q2020 and €126
mn for 1H2020
Group Financial Results for the six months ended 30 June 2020
(1) Cash, placements with banks, balances with central banks and bonds
(2) Other includes funding from central banks and deposits by banks and repurchase agreements. For further details, please see slide 67
(3) Effective yield of liquid assets: Interest income on liquids after hedging, over average liquids (Cash and balances with central banks, placements with banks and bonds)
(4) Effective yield of cost of funding: Interest expense of all interest bearing liabilities after hedging, over average interest bearing liabilities (customer deposits, funding from the central bank, interbank funding, subordinated liabilities)
Drivers of NIM
27
Composition of NII Effective yield on assets & cost of funding
74 76 75 72 75
27 2923 24 18
6
3Q2019
5
2Q2019
110
Non-Legacy
4
4Q2019
Liquids4
1Q2020
2
2Q2020
Legacy
107102 100
95
-3 -3 -3
-3 -3
-6 -6-6 -6 -6
-10 -8-8
-5-3
Net derivative -1-2-2
Subordinated
loan stock
-2 -1Other
Customer
deposits-15
-22-20
-18
-12
335 338 330 324 338
530576
485
560
452
17 7 6 8 4
-43 -39 -38 -30 -25
2Q2019 3Q2019 4Q2019 1Q2020 2Q2020
Non-Legacy Legacy Liquids Cost of funding
2
43
189 199 187 195NIM
(bps)85 90 84 85NII (€ mn)
1
83 188• €5 mn annual potential NII benefit from the
take up of €1 bn TLTRO III
• Challenging interest rate outlook continues to
put pressure on the effective yield of liquids
Loan yields:
• Non-Legacy book yields remain under
pressure mainly due to the continued lower
interest rate environment and intense
competition pressure
• Despite competitive pressures, efforts to
improve credit spreads are underway
• Higher-yielding, higher-risk legacy loans are
reducing as we successfully exit NPEs
• Legacy book yields remain volatile
Cost of funding:
• The reduction of cost of deposits continues
• Cost of deposits reduced by 3 bps in 2Q2020
and by 68 bps since year end 2017
Group Financial Results for the six months ended 30 June 2020
38 36 39 3833
1812
1611 18
12
106 10
24
14 11
10
1Q20202Q2019
(1)
3Q2019 4Q2019
1
60
92
2Q2020
72 72
60
(1) Net FX gains/(losses & Net gains/(losses) on financial instruments, and other income
(2) Gains/(losses) from revaluation and disposal of investment properties and on disposal of stock of properties
(3) The interest income, non-interest income, staff costs, other operating expenses and loan credit losses related to Project Helix are disclosed under ‘Provisions/net loss relating to NPE sales, including restructuring expenses’ since they are considered one-off items
Non interest income flat qoq, despite COVID-19 lockdown
28
Analysis of Non Interest Income (€ mn) – Quarterly
48 5556
Net FX and other income Insurance income net of insurance claimsREMU Net fee & commission Recurring income1 2
Net fee & Commission % of total income
22% 23% 25% 26% 23%
49
3
51
Net fee &
commission (€ mn)
1Q2020 2Q2020
Transactional fees 16 12
Non transactional
fees
22 21
Total 38 33
• Net fee and commission income of €33 mn for
2Q2020, down 13% qoq, negatively impacted by
COVID-19 lockdown
• Transactional fees of €12 mn for 2Q2020, down
22% qoq, mainly due to lower volume of
transactions; transactional fee volumes expected to
recover to pre COVID-19 levels, as the Cypriot
economy continues to recover
• Non transactional fees of €21 mn for 2Q2020, down
5% qoq due to the reduced Project Helix servicing
fee as a result of the transfer of c.100 employees to
the buyer in 1Q2020
• Net Insurance income of €18 mn for 2Q2020,
compared to €11 mn for 1Q2020, primarily due to
the change in the valuation rate and lower motor
vehicle insurance claims
• Recurring income of €51 mn for 2Q2020, compared
to €49 mn in 1Q2020, as the higher Net insurance
income offset the reduction in Net fees and
commission income
• Introduction of liquidity fees to a broader group of
corporate customers that was delayed due to
COVID-19, is under consideration, once market
conditions allow this
• Fees and commission charges review underway
Group Financial Results for the six months ended 30 June 2020
Recurring fees from insurance business
29
• Leading life insurer in Cyprus
• 24% market share2 (Life & Health regular)
• Gross Written Premiums (GWP) up 4% yoy
Product Mix by premium
• Leading non-life insurer in Cyprus
• 17.7% market share2 (excl. motor)
• GWP down 1% yoy
Product Mix by premium
GWP evolution (€ mn) GWP evolution (€ mn) Group Insurance income net of claims (€ mn)
57 59 62
1H2018 1H2019 1H2020
+5% +4%
26 27 26
1H2018 1H2019 1H2020
+4% -1%
25 30 29
1Q2018 1H2019 1H2020
• Comprehensive insurance business package
providing coverage for all financial needs
• Stable contributor to the Bank’s profitability
• Well positioned for growth over medium term
Eurolife
key metrics
1H2020
GWP (€ mn) 62
GWP Investments & Pensions
(€ mn)
6
PAT (€ mn) 9
AUM1 (€ mn) 447
61%21%
18%Unit-linked
Accident &Health
Traditional Life52%
29%
13%
6%
Motor
Property
Liability
Other
GIC
key metrics
1H2020
GWP (€ mn) 26
PAT (€ mn) 6
Contribution
to BOCH
% of total
1H2020
Non interest income 24%
(1) Assets under management
(2) Data based on statistics published on IAC website as at 31 December 2019
Group Financial Results for the six months ended 30 June 2020
Total Operating Expenses down by 18% yoy
30
Cost to Income Ratio (C/I ratio)1
Total operating expenses (€ mn)
FY2019 1Q2020FY2018 1H2019 1H20202Q2020
56%59% 59% 58% 57% 57%
56 56 55 53 49 47
41 43 38 4335 34
8496
1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020
97 99 9381
-18% yoy
Other operating expenses Staff costs
6 6 6 7 96
2Q20201Q20201Q2019 3Q20192Q2019 4Q2019
Special Levy and contributions to SRF and DGF (€ mn)
• Cost to income ratio1 at 57%, broadly flat qoq
• Total operating expenses of €81 mn for 2Q2020, down 3% qoq and
18% yoy
• Staff costs reduced to €47 mn in 2Q2020 relating to mostly one-off cost
savings from special annual leaves to vulnerable groups and the
suspension of the NHS contribution during the COVID-19 lockdown
• Operating expenses for 2Q2020 amounted to €34 mn, broadly flat qoq
• Special levy and contributions to SRF and DGF for 2Q2020 reduced to
€6 mn, due to the seasonality of Deposit Guarantee Fund (DGF)
contribution2
(1) Excluding Special Levy and contributions to SRF and DGF
(2) The interest income, non-interest income, staff costs, other operating expenses and loan credit losses related to Project Helix are disclosed under ‘Provisions/net loss relating to NPE sales, including restructuring expenses’ since they are considered one-off items
2
Group Financial Results for the six months ended 30 June 2020
Asset Quality
31
Group Financial Results for the six months ended 30 June 2020
Dec
2019
Mar
2020
Jun
2020
Jun2020
pro forma for
Helix 21
Stage 1 1.2% 1.5% 1.5% 1.5%
Stage 2 2.5% 2.8% 2.7% 2.5%
Stage 3 50.6% 52.0% 54.4% 52.1%
3,468
Dec 19
Stage 3
Stage 1
Mar 20
6,673
Jun 2020pro forma for Helix 2
2,582
Jun 20
Stage 2 1,998
12,822 12,709 12,491
3,880
11,593
1,733
7,209 7,025
3,738
2,298
1,989
7,022
Gross loans and coverage by IFRS 9 staging
32
Gross loans by IFRS 9 stage (€ mn)
101104
104
2,096 2,043
1,344
Dec 19
9044
1,962
63
49
Jun 20pro forma for Helix 2
2,109
1,497
54
1,8851,945
Jun 20Mar 20
Allowance for expected loan credit losses (€ mn) Coverage ratio
• Migration of c.€360 mn gross loans from Stage 2 to Stage 1 during 2Q2020, due to enriched data availability
• Coverage for Stage 3 loans maintained post Helix 2 (52.1%)
• Individual assessment of businesses under moratorium was initiated in May 2020, with an initial focus on high risk customers
• Largest 30 businesses under moratorium amount to €1.7 bn or nearly half of all business loans under moratorium; over 70% has been reviewed
without triggering a change in UTP
• Individual assessments of private individuals under moratorium has also commenced with priority to individuals with low credit scoring and
employed in high risk industries, such as tourism
(1) Calculations on a pro forma basis assume completion of the transaction
1 1
61%
17%
22%
% of gross loans
Group Financial Results for the six months ended 30 June 2020
Cost of risk1 reduced to 76 bps for 2Q2020
33
(1) Loan credit losses on customer loans including off-balance sheet exposures, net of gains/(losses) on derecognition of loans and advances to customers and change in expected cash flows over average gross loans
• Cost of risk of 139 bps for 1H2020, of which 59 bps (€38 mn) reflect the initial
impact of IFRS 9 Forward Looking Information (FLI) driven by deterioration of
macroeconomic outlook recognised in 1H2020
• COVID-19 related charge of 30 bps (€10 mn) in 2Q2020
• Cost of risk of 105 bps for 2Q2020, when excluding one-off reversal of 59 bps
and COVID-19 related charge of 30 bps
• In addition,
• Helix 2 loss of €68 mn and loan credit losses of €21 mn for potential
future NPE sales recorded in 2Q2020
• Other impairments of €25 mn on specific, large, illiquid REMU properties
recorded in 2Q2020
• Interest on Net NPEs not received in cash, fully provided (€18 mn in 2Q2020)
bps 123 90 89 200 76
FY2017FY2014 FY2016FY2015
2.80%
FY2018 FY2019
0.80%
1H2020
0.59%
4.30%
1.70%
4.00%
1.00% 1.12%1.39%
Mainly impact of
deterioration of
macro- economic
outlook in 1H2020
29 48
116
5829 40
56
55
5858 53
3088
7
2Q2019
7
3Q2019 4Q2019
2
5
14
1Q2020
6
2Q2020
152
123111
173200
New lendingCOVID-19
Stage 3Interest on net NPEs not received in cash
Stage 1 & 2
-21
-84 -76
Update of IFRS 9 macroeconomic assumptions for the Bank driving increase in COR
by 59 bps in 1H2020
Base Scenario GDP Unemployment rate
1Q2020 2Q2020 1Q2020 2Q2020
2020 -6.9% -6.3% 9.1% 9.2%
2021 5.4% 5.6% 7.6% 8.0%
Group Financial Results for the six months ended 30 June 2020
Clear strategy for residual NPEs
34
Group NPEs (€ bn)
2.04
0.35
2.58
30 Jun 2020
Corporate
30 Jun 2020
pro forma for Helix 2
SME
Re-performing
NPEs
Retail
3.47
0.47
0.61
0.35
0.37
1.56
0.30
€2.28 bn
• Close monitoring of redefaults & quality of restructurings
• c.€275 mn re-performing NPEs applied to the loan moratorium scheme, extending
their exit date
• Sale of €886 mn mainly Retail and SME secured NPEs (Helix 2) expected to be
completed in 1H2021
• Completion of sale of €133 mn retail unsecured NPEs (Velocity 2) in 2Q2020
• Following COVID-19 outbreak, focus on arresting any potential asset quality
deterioration and early managing of arrears
• Continue to seek organic solutions, including the realisation of collateral via
consensual and non consensual foreclosures
• Remain committed to assessing the potential to accelerate the decrease in NPEs
through additional sales of NPEs in the future
Core NPEs : €2.28 bn21
Re-performing NPEs1: €0.30 bn2
2
(1) In pipeline to exit NPEs subject to meet all exit criteria; the analysis is performed on a customer basis (formerly called Non-core NPEs)
(2) Calculations on a pro forma basis assume completion of the transaction
Group Financial Results for the six months ended 30 June 2020
-65 -72 -59 -42
-107 -89
-71 -84
-87-54 -133
-22-18-5
-23
-17
-2
-886
-158
Curing of restructuring
DFAs & DFEs
Write-offs
Other
-277
-1,164
-237
Net organic
outflows (€ mn)
(1) Other includes interest, cash collections and changes in balances
€145 mn organic NPE outflows in 2Q2020, leading to €137 mn organic NPE reduction
35
Sales of NPEs
1
• €145 mn organic outflows, maintained at similar
levels to 1Q2020, despite COVID-19
• Helix 2 reduces NPEs by €886 mn
• Completion of Velocity 2 reduced NPEs by €133
mn
-227 -205 -142 -137
8 8
33
17
9
69 7
32
3Q2019 4Q2019
43
1Q2020 2Q2020
2
New inflows
Redefaults
Unlikely to pay
50
16
8
Helix 2
SPA Signed
Velocity 2
-€145 mn
Inflows (€ mn)
Outflows (€ mn)
Group Financial Results for the six months ended 30 June 2020
124%
Dec 17
52%
68%
41% 48%
Dec 16
128%
67%70%
Dec 18
68%
59%54%
Dec 19
68%
56%
Mar 20
69%
Jun 20
67%
58%
Jun 20
pro forma
for Helix 2
109%115%
122% 122% 125%
58%
Re-performing NPEs 23%
63%
Jun 20
pro forma
for Helix 2
Core NPEs
(1) Restricted to Gross IFRS balance
(2) Calculations on a pro forma basis assume completion of the transaction
(3) In pipeline to exit NPEs subject to meet all exit criteria; the analysis is performed on a customer basis (formerly called Non-core NPEs)
(4) Based on EBA Risk Dashboard as at 31 March 2020
Coverage and collateral maintained post Helix 2
36
NPE total coverage at 125% when collateral included pro forma for Helix 22
58%
PT
51%
BOC
54% 51%
IT CY
46%
ESEU Average
45%
GR
43%
NPE coverage remains above EU average4
• Cash coverage increased to 58% pro forma for Helix 22
• Cash coverage of Core NPEs at 63%, pro forma for Helix 22
• Collateral coverage at 67%
1
3
Tangible collateral Allowance for expected loan credit losses
30 Jun 2020
pro forma for
Helix 2
2 2
2
Group Financial Results for the six months ended 30 June 2020
Lower REMU sales due to COVID-19 lockdown
37
280 265
625 619
269 268
183 182
103 98
Mar
2020
Dec
2018
Jun
2020
1,456
Residential
24
Dec
2019
Hotels24
Greece & Romania
Commercial properties
Land & plots
Golf
1,4841,530 1,490
Group BV (€ mn)
Evolution of REMU stock1
27
9
5
13
Total Sales 1H2020 ResidentialCommercial Land
91% 90% 91% 90%
116% 109% 124% 110%
Net Proceeds / BV Gross Proceeds / OMV
• Temporary slowdown of REMU sales due to COVID-19 lockdown
• Visible pipeline for €53 mn (SPAs signed)
• Offers accepted for €15 mn
• Regulatory approval received for the setup of an Additional Investment
Fund (AIF) consisting of properties of up to €45 mn GBV
€27 mn sales in 1H2020
Sales contract prices2 – Organic (€ mn)
(1) In addition to assets held by REMU, properties classified as “Investment properties” with carrying value of €23 mn as at 30 June 2020
relate to legacy properties
(2) Amounts as per Sales purchase Agreements (SPAs)
(3) Based on data from Land of Registry- Sales contracts
766 714896739742766
Jan
825834
Feb
510
Mar
646
1.057
216
Apr
1.423
419
May Jun Jul
-80%-8%
2019
2020
Property market starting to recover post lockdown
Sale contracts (excluding DFA’s)3
Group Financial Results for the six months ended 30 June 2020
Key takeaways
38
Group Financial Results for the six months ended 30 June 2020
Key highlights
39
Continue to deliver on strategic priorities, while supporting customers, colleagues and
communities through COVID-19
Continue to support the recovery of the Cypriot economy via prudent new lending1
Improvement of asset quality
• Arrest asset quality deterioration after the end of the moratorium, monitor and manage early arrears
• Continue the NPE reduction via organic and non organic solutions
2
Further improvement of operating efficiency supported by on-going digital transformation3
Group Financial Results for the six months ended 30 June 2020
Key Information and Contact Details
40
Contacts
Investor RelationsTel: +35722122239, Email: [email protected]
Annita Pavlou Investor Relations Manager
Tel: +357 22 122740, Email: [email protected]
Elena Hadjikyriacou ([email protected]),
Marina Ioannou ([email protected])
Andri Rousou ([email protected]),
Stephanie Koumera ([email protected])
Executive Director Finance
Eliza Livadiotou, Tel: +35722 122128, Email: [email protected]
Visit our website at: www.bankofcyprus.com
Credit Ratings
Standard & Poor’s Global Ratings:
Long-term issuer credit rating: Affirmed at “B+” on 16 July 2020 (stable outlook)
Short-term issuer credit rating: Affirmed at “B” 16 July 2020
Fitch Ratings:
Long-term Issuer Default Rating: Affirmed at “B-" on 29 November 2019 (outlook revised to
negative on 7 April 2020)
Short-term Issuer Default Rating: Affirmed at “B" on 29 November 2019
Viability Rating: Affirmed at “b-” on 29 November 2019
Moody’s Investors Service:
Baseline Credit Assessment: Affirmed at “caa1” on 24 January 2019
Short-term deposit rating: Affirmed at "Not Prime" on 14 June 2019
Long-term deposit rating: Affirmed to “B3” on 14 June 2019 (positive outlook)
Counterparty Risk Assessment: Affirmed at B1(cr) / Not-Prime (cr) on 14 June 2019
Listing:
LSE – BOCH, CSE – BOCH/ΤΡΚΗ, ISIN IE00BD5B1Y92
Group Financial Results for the six months ended 30 June 2020
APPENDIXMacroeconomic overview
41
Group Financial Results for the six months ended 30 June 2020
SOURCE: Statistical Service of Republic of Cyprus; Bloomberg
(1) Normalised against Germany Government bond with maturity 15/8/2025 except Greece
(2) Due to the Debt swap of the Hellenic Republic, from November 2017 onwards data for the new Hellenic Republic Bond with maturity
30/01/2028 was used and normalised against the closest maturity of German Government bond (DBR) 15/08/2027
Cypriot economy dropped by 11.9% in 2Q2020 reflecting COVID-19 lockdown
42
CY GDP declined 11.9% y-o-y vs 15% decline in Euro Area
COVID-19 pandemic poses serious challenges to sovereign ratings
Dec 1
2
Mar
13
May 1
3
Au
g 1
3
Oct
13
Ja
n 1
4
Mar
14
Ju
n 1
4
Au
g 1
4
Nov 1
4
Ja
n 1
5
Ap
r 15
Ju
n 1
5
Se
p 1
5
Nov 1
5
Ja
n 1
6
Ap
r 16
Ju
n 1
6
Se
p 1
6
Nov 1
6
Feb
17
Ap
r 17
Ju
l 1
7
Se
p 1
7
Dec 1
7
Feb
18
May 1
8
Ju
l 1
8
Oct
18
Dec 1
8
Feb
19
May 1
9
Ju
l 1
9
Oct
19
Dec 1
9
Mar
20
May 2
0
Au
g 2
0
Cyprus Portugal Italy Spain Greece Ireland
0
0.1
0.2
0.3
0.4
0.5
0.6
Ja
n 2
01
8
Feb
20
18
Apr
20
18
May 2
01
8
Ju
l 20
18
Aug
2018
Sep
2018
No
v 2
018
De
c 2
018
Feb
20
19
Mar
20
19
May 2
01
9
Ju
n 2
01
9
Aug
2019
Sep
2019
No
v 2
019
De
c 2
019
Feb
20
20
Mar
20
20
May 2
02
0
Ju
n 2
02
0
Aug
2020
Cyprus - maturity 4/11/2025 Portugal - maturity 15/10/2025 Spain - maturity 31/10/2025
Italy - maturity 01/12/2025 Greece - maturity 30/01/2028
1 1
1
1
2
Unemployment rate increased steeply in 2Q2020
Tightening of spreads post COVID-19 lockdown
BBB-
AA-
BB-
A
BBB
S&
P c
red
it r
ati
ng
s
Sp
read
s (
%)
7.37.7
6.5
9.6
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Euro Area Cyprus
-15
-10
-5
0
5
3Q2017
-11.9
2Q2017 4Q20184Q2017 1Q2018 3Q2182Q2018 1Q2019 2Q2019 3Q2019 4Q2019
-3.1
1Q2020
-15.0
2Q2020
0.8
Cyprus Euro area
Group Financial Results for the six months ended 30 June 2020
SOURCES; Statistical Service of Republic of Cyprus, Eurostat; Calculations by BOC Economic Research
Economy deeply impacted by Covid-19 in the second quarter
43
Economic sentiment dropped steeply in the second
quarter as Covid-19 infections peaked
Leading indicators reflect the steep decline of 2Q2020 Support from key business enablers
Corporate tax rates - 2019
40.2%
38.5%
21.3%
Upper and post-
secondary, non-
tertiary
Less than
Upper secondary
Tertiary
Level of education 2019, age 15-64
Cyprus has the highest number of
university graduates in the population
in the EU after Ireland, at par with UK
31.0%
30.0%
28.0%
25.0%
24.0%
21.0%
19.0%
12.5%
12.5%
Tourism arrivals for 1H2020 down 84% yoyTourism: % changes yoy
201820172016 2020
Jun yoy
-84.0
19.8
-91.0
11.9
14.6
11.7
7.8
2.7
Total arrivals (% change)
Total receipts (% change)
-0.3
-29.6
-5.4
-33.2-40.0
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
40.0Economic Sentiment Indicator (ESI) - % change y-o-y
Cyprus Euro Area
-80.0
-60.0
-40.0
-20.0
0.0
20.0
40.0
60.0
80.0
100.0
12
.11
03
.12
06
.12
10
.12
12
.12
03
.13
06
.13
09
.13
12
.13
03
.14
06
.14
10
.14
12
.14
03
.15
06
.15
10
.15
12
.15
03
.16
06
.16
09
.16
12
.16
03
.17
06
.17
09
.17
12
.17
03
.18
06
.18
09
.18
12
.18
03
.19
06
.19
09
.19
12
.19
03
.20
06
.20
Leading indicators: 3 month moving averages % changes y-o-y
New vehicles Non-food sales Property sales Building permits vol
20122011 2013
3.2
2018
3.9
2014 2015 2016 2017 2019 1H
2019
1H
2020
2.4 2.5 2.4 2.42.7
3.74.0
1.6
0.3
-84%
(mn)
Group Financial Results for the six months ended 30 June 2020
Covid-19 Recent Developments
44
Group Financial Results for the six months ended 30 June 2020
Timely and strong response by the Government of Cyprus
45
(1) For further information, please refer to the Market Update published by the Ministry of Finance: https://www.mof.gov.cy/mof/pdmo/pdmo.nsf/6B8C5026F3AE168BC2258345003BAFEF/$file/Market%20Communication%2006%20April%202020.pdf
(2) For tax periods ending February, March and April, 2020. It involves all companies, without imposing any charges or additional tax. It is noted that arrangements will be made so that the debts will be paid progressively until November 10, 2020 with the exception of companies that do not
have liquidity problems such as pharmacies, supermarkets, etc.
• Immediate introduction of fiscal measures1
• Liquidity support to businesses and households
• Prevention of sharp rise in unemployment
• A large and wide-ranging package of financial
measures
• €3.0 bn of funding raised in April 2020; vote of
confidence to the Cypriot economy
• Issuance of €1.75 bn of 7 year and 30 year Eurobonds
• Issuance of €1.25 bn of 52-week treasury bills
Measures announced in March 2020 include:
• Moratorium of loan instalments for 9 months
• Capital and interest
• Available for all customers (businesses and private
individuals) with less than 30 days past due as at 29
Feb 2020
• Temporary suspension of VAT payments for 3 months2
• Suspension of the added contribution to the National Health System
for 3 months
• Employment compensation schemes for businesses impacted by
COVID-19, to protect jobs and avoid layoffs
• >50% of private sector employees (220,000) and c.40,000 self-
employed workers expected to benefit
Additional measures announced in May 2020 include:
• Liquidity support to small business and self employed
• covering part of the operating expenses like rent, supplier
payments, etc
• >36,000 small businesses and self employed expected to benefit
• Tax incentives for the reduction of rent, on a voluntary basis
• Liquidity support to agricultural businesses
Key Highlights:
Group Financial Results for the six months ended 30 June 2020
Subsidy of interest rate on new business and housing loans
46
• Subsidy of interest rate for new loans to self employed and
businesses that were not “problematic”1 as at 31 December
2019 and were negatively impacted by COVID-19
• Subsidised new loans for working capital needs and
investments only (not be used to repay existing ones)
• Subsidy of interest rate for 4 years as follows:
o up to 3.5% in the first two years
o 2% for SMEs and 1.5% for large corporates in years 3-4
• Restriction so that staff reduction shall not exceed 2% of total
employees as at the date of the Plan announcement (28 May
2020)
• Total aid per business must not exceed €800,000
• No ceiling on the loan amount
• Loan amount for which interest rate is subsidized cannot
exceed:
o The double of the annual wage bill of the business or
o 25% of the total turnover of the business in 2019
1. Subsidy of interest rate of new Business Loans
2. Subsidy of interest rate of new Housing Loans
• Government subsidy of interest for 4 years up to 1.5%
• Loan amount for which interest rate is subsidized cannot exceed
€300,000
• Applicable to new housing loans granted between 1 March 2020 and 31
December 2020
• New housing loans cannot be used to repay existing ones
• Applicable to new business loans granted between 1 March 2020 and 31
December 2020
• Scheme subject to approval by European Commission
1) As defined in Article 2 (18) of the Commission Regulation (EU) No 651/2014; Please refer to https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0651
Group Financial Results for the six months ended 30 June 2020
Additional governmental measures to enhance liquidity
47
3. Pan-European Guarantee Fund
• Liquidity support to businesses that employ up to 3,000 employees,
through the Pan-European Guarantee Fund of EIB Group for an amount
up to €300 mn- €400 mn1
• Fund guarantee to the banks of up to 80%1
• The Fund will become operational once the Member States of EU
accounting for at least 60% of the total EIB capital (€25 bn) have signed
their contribution agreements
5.Government Guarantee to EIB
• Plan already in place since 2014
• Injection for an additional funding of €500 mn
• Businesses with up to 3,000 employees, registered and operating in Cyprus
are eligible
• Reduction of interest rates by at least 0.5% due to EIB participation
• Additional 0.5% reduction in interest rate for businesses in compliance with
“jobs for youth” criteria
• Loan duration of up to 12 years
4. Financing of SMEs through CYPEF2
• Liquidity support of up €800 mn to SMEs via 50%-50% risk sharing
between the Government and the participating banks
• Eligible businesses are SMEs with up to 250 employees
• Loan amount should not exceed €1.5 mn and duration of loan should not
exceed 12 years
• Low Interest rates will vary subject to the risk profile of client:
o 2.55%-3.85% for low risk clients
o 3.375%-4.5% for high risk clients
1) In accordance with the press release of Ministry of Finance dated 28 May 2020
2) The Cyprus Enterprise Fund
Group Financial Results for the six months ended 30 June 2020
APPENDIXAdditional asset quality slides
48
Group Financial Results for the six months ended 30 June 2020
(1) In pipeline to exit NPEs subject to meet all exit criteria; the analysis is performed on a customer basis (formerly called Non-core NPEs)
(2) The difference between the contractual balance and the GBV relates to IFRS adjustments/unrecognised income and non-contractual write-offs
(3) DFAs and cash already received by 30 June 2020
€0.9 bn NPE Trade Delivers Accelerated Risk Reduction
49
€898 mn Helix 2 portfolio (€ mn)
• Contractual balance2 of €1.48 bn as at 30 June 2020
• Portfolio comprises 22,224 loans, mainly to Retail and SME clients, secured over 5,616 real estate collaterals
• Completion remains subject to a number of customary regulatory and other approvals, currently estimated to occur in the 1H2021
102
259
475
50
SMEs
12
Retail
Jun 20
Re-performing NPEs
Performing
Corporate
898
€886 mn
NPEs
30 June 2020
Assets sold € mn Receipts € mn
Contractual Loans2 1.478 Consideration 422
Gross Loans 898 of which:
of which NPEs 886 - Cash 148
Provisions Held (479) - Deferred Purchase Price 274
Other3 34 Transaction Costs and other adjustments (37)
Carrying Value of assets being sold 453Consideration net of transaction costs and
other adjustments385
P/L Impact: (68)
1
Group Financial Results for the six months ended 30 June 2020
Foreclosures resume on 1 September 2020
50
• Following COVID-19 outbreak, foreclosure process suspended until 31 August 2020, in line with the latest decision of the Association of Cyprus Banks
• In July 2019 the Parliament has voted through certain changes to the foreclosure law which, in the most part, seek to:
– Provide additional checks and balances where banks are seeking to foreclose small loans (<€350k) secured by a Principal Primary Residence, and
– Extend the foreclosure timetable by extending various notice periods
• These amendments were passed into law in June 2020
• The amendments extend the foreclosure process by c.1 month to c.9 months
Cumulative
2016 – 20181 FY2019 1H2020
Foreclosures
commenced2 1,437 1,829 5933
Auctions held 470 807 1643
1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020
330 527 436 536 5933 -
82 163 189 373 1643 -
(1) Excluding Helix
(2) The foreclosure process is considered to have commenced upon serving notice to the mortgagor
(3) Foreclosures commenced and auctions held up to ACB announcement suspending foreclosures until 31 August 2020
Group Financial Results for the six months ended 30 June 2020
ESTIA- Government scheme for the resolution of NPEs backed by primary residence
51
• Clear definition of socially protected borrowers
• Resolution part of ESTIA- eligible1 portfolio
• Identification of non-viable (vulnerable) customers
• Facilitates resolution of remaining customers mainly through consensual and
non consensual foreclosures
• Application period ended 31 July 2020
Non applicants
330Estia
eligible471
Applicants
€ mn
• Restructured loans will exit NPE definition in accordance with the NPE exit
criteria2
• Government solution under consideration
• Covered by 60% by allowance for expected loan credit losses
• Enforcement measures initiated for non Estia applicants
• Focus on realizing collateral via consensual and non-consensual
foreclosures
• On-board assets in REMU at conservative c.25%-30% discount to open
market value
Participants: €61 mn3
Non viable: €45 mn3
Other: €695 mn3
6145
Participants
224
Incomplete/Under review Non viable
€801 mn
1
Coverage: 60%
(1) ESTIA-eligible portfolio refers to the potentially eligible portfolio based on the Bank’s available data
(2) Please refer to slide 78 for the NPE forborne exit criteria
(3) Data available as at 24 August 2020
Group Financial Results for the six months ended 30 June 2020
(1) In pipeline to exit NPEs subject to meet all exit criteria; the analysis is performed on a customer basis (formerly called Non-core NPEs)
(2) Calculations on a pro forma basis assume completion of the transaction
Core NPE risk reduced to €2.28 bn pro forma for Helix 22; 63% cash covered
52
Core NPEs reduced to €2.28 bn pro forma for Helix 22
Dec 15 Jun 20
0.43
0.30
Mar 20
3.45
Dec 19
0.36 0.35
Jun 20
pro forma for Helix 2
Core NPEs
Re-performing NPEs
13.97
3.88 3.74 3.472.58
11.36
3.123.38
2.61
2.28
5.70
Retail
3.07Corporate
2.59
SMEs
1
€ bn
Retail
SMEs0.66
0.47
Corporate
2.25
11.36
Core NPEs € bn
2.04
0.47
SMEs
Corporate
Retail
0.61
0.37
Corporate
0.35 SMEs
1.56
Retail
2
3.123.38 2.28
Group Financial Results for the six months ended 30 June 2020
Continuous progress across all segments
53
Focus shifts to Retail and SME after intense Corporate attention
477
258
151
64
461
2,582
Terminated Retail
Corporate
Jun 2020pro forma for Helix 2
Terminated Corporate
SME
Terminated SMEs
Retail
1,171
€1,648 mn
€409 mn
€525 mn
Retail
SME
Corporate
722
639
525
Helix 2
Dec 19
4Inflows
Jun 20
(87)Exits
(114)Pro-forma for
Helix 2
727
689
409
Helix 2
(44)
Dec 19
6Inflows
Exits
Jun 20
(280)
Pro forma forHelix 2
Dec 19
14
(172)
Velocity 2
Inflows
(492)
Exits
(133)
Jun 20
Helix 2
1,648Pro forma for
Helix 2
2,431
2,140
Jun 2020
Pro forma1
NPE ratio 11%
NPE coverage 58%
NPE total coverage 112%
Jun 2020
Pro forma1
NPE ratio 26%
NPE coverage 58%
NPE total coverage 124%
Jun 2020
Pro forma1
NPE ratio 31%
NPE coverage
➢ Retail Housing 53%
➢ Retail Other 66%
NPE total coverage 130%
€ mn
(1) Calculations on a pro forma basis assume completion of the transaction
1
1
1
1
Group Financial Results for the six months ended 30 June 2020
(1) Calculations on a pro forma basis assume completion of the transaction
Gross loans and NPEs by Customer Type
54
Gross loans by customer type (€ mn)
Dec 18
12,709
Dec 19
1,508
11,59312,822
2,739
Mar 20
15,900
Jun 20
pro forma for Helix 2
1,875
Jun 20
12,491
2,541
1,710
7,060
2,671
4,068
1,795
2,209
4,077
1,922
2,186
1,914
4,068
2,203
1,870
2,655
2,203
1,863
3,7624,060
1,579
2,977
Retail other CorporateSMEsRetail Housing Global Corporate
558 503 492 378
727 724 689
982
970
878
678
409
Mar 20 Jun 20Dec 18
1,326
164
Dec 19
159 147
3,880
147
1,262
Jun 20
pro forma for Helix 2
7,419
3,738
2,582
3,4681,759
3,188
1,490
1,388
1,043 1,026
NPEs by customer type (€ mn)
1
1
1
Group Financial Results for the six months ended 30 June 2020
Tangible Collateral
Allowance for expected loan credit losses
(1) Restricted to Gross IFRS balance
(2) Calculations on a pro forma basis assume completion of the transaction
NPE Coverage and Total coverage by segment
55
Coverage and collateral maintained post Helix 22
1
Total €2,582 mnCorporate €378 mn SME €409 mn Retail-Housing €970 mn Retail-Other €678 mnGlobal Corporate: €147 mn
134%
Mar 20
53%
51%
54%
52%
Dec 19
124%
Dec 19
53%
83%
Jun 20
64%
54%
53%
Jun 20
69%71%
79%
50%
Jun 20
pro
forma
63%
Dec 19 Jun 20
pro
forma
65%
69%
Mar 20
63%
79%
107%
Jun 20 Jun 20
70%
63%
68%
53%
Dec 19
54%
Mar 20
54%58%
66%
58%66%
53%
Jun 20
pro
forma
Dec 19
48%
82%
51%
Mar 20
58%
83%
54%
81%
Jun 20
pro
forma
54%
Jun 20
pro
forma
64% 65%
Mar 20
59%
Jun 20
57%
66%
Dec 19
68%
56%
Mar 20
69%
59%50%
Jun 20
67%
Jun 20
pro
forma
104% 106%100%
127%134%
142% 142%
124%118%
124%131% 133%
137%
118%125% 123% 122% 124%
128% 125%127%
2 2 2 2 22
Group Financial Results for the six months ended 30 June 2020
Asset quality- NPE analysis
56
(€ mn) Jun-20 Mar-20 Dec-19 Sep-19 Jun-19 Mar-19 Dec-18
A. Gross Loans after Residual Fair value adjustment on
initial recognition12,243 12,457 12,551 12,757 12,782 15,437 15,438
Residual Fair value adjustment on initial recognition 248 252 271 278 290 445 462
B. Gross Loans 12,491 12,709 12,822 13,035 13,072 15,882 15,900
B1. Loans with no arrears 8,954 8,706 8,820 8,794 8,565 8,402 8,260
B2. Loans with arrears but not NPEs 69 265 122 156 195 207 221
1-30 DPD 54 209 88 119 150 138 166
31-90 DPD 15 56 34 37 45 69 55
B3. NPEs 3,468 3,738 3,880 4,085 4,312 7,273 7,419
With no arrears 603 601 722 802 949 1,356 1,482
Up to 30 DPD 28 52 54 69 89 108 136
31-90 DPD 39 72 76 86 125 183 231
91-180 DPD 48 79 121 159 149 240 178
181-365 DPD 178 255 263 251 225 316 393
Over 1 year DPD 2,572 2,679 2,644 2,718 2,775 5,070 4,999
NPE ratio (NPEs / Gross Loans) 28% 29% 30% 31% 33% 46% 47%
Allowance for expected loan credit losses (including
residual fair value adjustment on initial recognition1)2,043 2,109 2,096 2,086 2,145 3,846 3,852
Gross loans coverage 16% 17% 16% 16% 16% 24% 24%
NPEs coverage 59% 56% 54% 51% 50% 53% 52%
(1) Comprise (i) loan credit losses for impairment of customer loans and advances, (ii) the residual fair value adjustment on initial recognition of loans acquired from Laiki Bank and on loans classified at FVPL, and (iii) loan credit losses on off-balance sheet exposures disclosed on the
balance sheet within other liabilities
Group Financial Results for the six months ended 30 June 2020
Analysis of gross loans and NPE ratio by Economic activity
57
Gross loans by economic activity (€ bn)
2.0
4
0.6
6
1.3
9
2.3
4
3.2
0
6.7
7
1.3
1
1.0
4 1.8
5
0.6
4
1.2
7
1.9
5
1.6
1
6.4
7
1.2
0
0.9
1
1.3
6
0.4
7
1.0
8
0.8
5
1.2
9
6.0
2
1.0
0
0.7
5
1.3
8
0.4
6
1.1
0
0.8
3
1.2
8
6.0
1
0.8
9
0.7
6
1.3
1
0.4
5 1.1
3
0.8
2
1.2
8
5.8
9
0.8
6
0.7
5
Trade Manufacturing Hotels & Restaurant Construction Real Estate Private Individuals Professional andother services
Other sectors
31.12.17 31.12.18 31.12.19 31.03.20 30.06.20
10%11% 47% 7% 6%7%9%3%
NPE ratio by economic activity
45
% 53
%
32
%
76
%
33
%
45
% 52
%
51
%
49
%
52
%
28
%
68
%
53
%
43
%
46
%
34
%
31
%
27
%
7%
34
%
23
%
37
%
31
%
17
%
31
%
27
%
7%
33
%
22
%
36
%
32
%
15
%
31
%
26
%
6%
31
%
21
%
34
%
31
%
14
%
Trade Manufacturing Hotels and Catering Construction Real estate Private individuals Professional and other services
Other sectors
31.12.17 31.12.18 31.12.19 31.03.20 30.06.20
% of total
Group Financial Results for the six months ended 30 June 2020
Balance sheet de-risking results in a smaller but safer loan book
58
Net Loans: Non-legacy2 vs Legacy
• Lower but higher quality income resulting from balance sheet de-risking
• Interest Income of non-legacy book increased by €3 mn qoq, despite the sustained low interest rate environment
• Interest Income of legacy book decreased by €6 mn qoq mainly due to increased cash collections of €4 mn not previously recognized in 1Q2020
• Interest on Net NPEs not received in cash, fully provided
• Lending rates remain under pressure due to the sustained low interest rate environment
Interest Income on Loans: Non-legacy2 vs Legacy
Jun 20Dec 16
10.10
Dec 17 Dec 18 Dec 19
5.64
Mar 20 Jun 20
pro forma
for Helix 2
8.938.92 8.93
10.73
15.6214.55
12.04
10.60
1.17
10.45
9.98 10.15
1.79
4.40
8.65
3.39
8.94
1.68 1.52
36%
88%64%
12%
Legacy Non-legacy
74 76 75 72 75 75
27 29 23 24 18 12
105
2Q2019 3Q2019
98
4Q2019 1Q2020 2Q2020 2Q2020
pro forma
for Helix 2
10196 93
87
€ mn€ bn
Legacy Non-legacy
(1) Calculations on a pro forma basis assume completion of the transaction
(2) Gross loans as at 30 June 2020 of Corporate (incl. IB and W&M and Global Corporate), SME, Retail, Insurance and H/O
11
Group Financial Results for the six months ended 30 June 2020
Non-
LegacyLegacy Group
1H2020 1H2020 1H2020
Pro
fita
bil
ity
Interest Income on loans (€ mn) (pre
FTP)147 42 189
Loan credit losses (€ mn) (10) (77) (87)
Interest Income net of loan credit
losses (€ mn)137 (35) 102
Cost of Risk 0.23% 4.39% 1.39%
Effective Yield 3.31% 5.09% 3.59%
Risk adjusted Yield1 3.07% (4.23%) 1.93%
Cap
ita
l &
ba
lan
ce
Sh
ee
t Average Net Loans (€ mn) 8,930 1,661 10,591
RWA Intensity2 48% 106% 56%
(1) Interest Income on loans net of allowance for expected loan credit losses/ Average Net Loans
(2) Risk Weighted Assets over Total Assets
Risk adjusted yield will rise as Legacy book reduces
59
• Non-Legacy Book is expected to grow and to
increasingly drive Group results
• Legacy book revenues predominantly driven
by loan credit losses unwinding (but offset via
loan credit losses)
• Interest on Net NPEs not received in cash,
fully provided (€18 mn in 2Q2020)
• As Legacy book reduces:
• Group risk adjusted yield expected to
rise
• Group Risk intensity expected to fall
supporting CET1 ratio build
RRD
Overseas non
core
REMU
Global corporate,
Corporate
IB, W&M
SME and
Retail Banking
Insurance and
H/O
Group Financial Results for the six months ended 30 June 2020
Rescheduled Loans
60
Rescheduled loans by customer type (€ bn)
0.270.45
Dec 19
0.52
Dec 18
0.47
0.34
Jun 20
2.73
0.16
Mar 20
0.42
4.89
2.58
0.380.50
0.43
2.35
0.532.24
1.01
1.17
0.97
0.44
0.43
0.94 0.88
Retail housing CorporateRetail other Global CorporateSMEs
Rescheduled loans % gross loans by customer type
RetailConsumer
16
%
Corporate
31
%
28
%
GlobalCorporate
SMEs
27
%
RetailHousing
17
%
12
%16
%
15
%
7%
23
%
34
%
27
%
22
%
29
%
26
%
24
%
22
%
23
%
23
%
Dec 18
Dec 19 Jun 20
Mar 20
Rescheduled loans-Asset Quality
30 June 2020 € ‘000
Stage 1 235,719
Stage 2 304,376
Stage 3 1,486,455
POCI 200,944
FVPL 117,543
Total 2,345,037
Group Financial Results for the six months ended 30 June 2020
REMU: €1.28 bn sales of 1,754 properties across all property classes since set-up in Jan 2016
61
(1) Amounts as per Sales purchase Agreements (SPAs)
(2) Number of properties sold include 21 properties from the disposal of Cyreit and 23 properties from NPE sale (Helix)
(3) Legacy properties relate to properties that were on-boarded before REMU set-up in January 2016
(4) The BV of the properties disposed at the date of disposal as a proportion of the: BV of the properties disposed at the time of the disposal
plus the BV of the residual properties managed by REMU as at 30 Jun 2020
Sales since Real Estate Management Unit set-up
Sales contract prices1 (€ mn)
# 99 # 331 # 575 # 5792
179
330
238
345
27
160
20192016 2017
505
2018 1H2020
Cyreit Sales # properties
Sales €1.28 bn
Breakdown of cumulative sales1
by on-boarding year (€ mn)
296 555 326 99 3
2017 201920182016Legacy
€1,279
% Sales
of vintage stock
(BV)458% 46% 49% 28%
36%
23%
11%
10%
13%
7%
Land
CyreitCommercial
Hotels
Residential
Overseas
by property type
• Asset disposal strategy tackles both value and volume of assets
• Asset disposals across all property classes
• 58% of Legacy3 and 46% of 2016 book assets now sold
• 36% of sales (by value) relate to land
3
# 170
Group Financial Results for the six months ended 30 June 2020
REMU – the engine for dealing with foreclosed assets
62
Total Book Value Sales of €10 mn for 2Q2020
Encouraging trends in Real Estate Market;
property prices up 1.8% in 1Q20203
62 6748
160
88
14 10
Nicosia Mall
2Q2019 4Q20193Q2019 Cyreit 1Q2020 2Q2020
112112
Impairment loss &
fair value losses
SalesAdditions
30
Properties
managed by REMU
as at 01 Jan 2020
(24)(29)
(11)
Transfer to non-
current assets and
disposal groups
held for sale
Properties
managed by REMU
as at 30 Jun 2020
1,4901,456
1,378 1,344
Investment Properties
REMU focuses now on sales
78.3 78.6
2.2 1.8
-4.0
-2.0
0.0
2.0
4.0
30.0
50.0
70.0
90.0
110.0
Q42015 Q22016 Q42016 Q22017 Q42017 Q42018 Q22019 Q42019
Central Bank Residential Property Price index
Residential Propert Price index (2010Q1=100) % change y-o-y (RHS)
Sales contracts (excl. DFAs) in 1H2020 down 41% yoy4 reflecting COVID-19 lockdown
2008 20122009 2010 2013 20142011
9.242
2015 2016 2017 2018
5.885
4.481
2019 1H20191H2020
8.734
10.366
5.560
3.272
-41%
Sales to Cypriots Sales to non-Cypriots
BV € mn
(1) In addition to assets held by REMU, properties classified as “Investment properties” with carrying value of €23 mn as at 30 June 2020
relate to legacy properties
(2) Stock of property with a carrying value of €11 mn as at 30 June 2020 was transferred to non-current assets and disposal groups held for
sale as it was included in the Helix 2 portfolio
(3) Based on Residential price index published by Central Bank, dated 19 August 2020
(4) Based on data from Land of Registry- Sales contracts
1
€ mn
2
Group Financial Results for the six months ended 30 June 2020
63
APPENDIXAdditional financial information
Group Financial Results for the six months ended 30 June 2020
Liability and Equity (€ mn) 30.06.2020 31.12.2019
%
change
Deposits by banks 406 533 -24%
Funding from Central Bank 1,000 - -
Repurchase agreements 123 168 -27%
Customer deposits 16,303 16,692 -2%
Subordinated loan stock 261 272 -4%
Other liabilities 1,158 1,169 -1%
Total liabilities 19,251 18,834 2%
Shareholders’ equity 1,875 2,040 -8%
Other equity instruments 220 220 -
Total equity excluding non-
controlling interests2,095 2,260 -7%
Non controlling interests 25 29 -13%
Total equity 2,120 2,289 -7%
Total liabilities and equity 21,371 21,123 1%
Consolidated Balance Sheet
64
Assets (€ mn) 30.06.2020 31.12.2019
%
change
Cash and balances with Central Banks 5,276 5,060 4%
Loans and advances to banks 622 321 94%
Debt securities, treasury bills and equity
investments1,999 1,906 5%
Net loans and advances to customers 10,104 10,722 -6%
Stock of property 1,344 1,378 -2%
Investment properties 134 136 -2%
Other assets 1,519 1,574 -4%
Non current assets and disposal groups
classified as held for sale373 26 -
Total assets 21,371 21,123 1%
Group Financial Results for the six months ended 30 June 2020
Core Cypriot business
65
Average contractual interest rates (bps) (Cy)
37.5% 37.1%
45.4%41.3% 41.1% 41.0% 41.7%
31.1%32.8%
36.0% 34.7%35.1% 34.8% 35.0%
Dec 16 Dec 17 Dec 18 Jun 19after Helix
Dec 19 Mar 20 Jun 20
Loans Deposits
Strong market shares in resident and non-resident deposits
29.5% 31.5% 34.1% 35.3% 34.6% 34.9% 34.7% 34.8%
35.8% 37.3% 38.8% 38.3% 34.7% 35.8% 35.3% 35.7%
Dec 16 Dec 17 Jun 18 Dec 18 Sep 19 Dec 19 Mar 20 Jun 20
Residents Non-residents
7758
4739 33
24 19
1 1 1 11 1 0
4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020
Time & Notice accounts Savings and Current accounts
475 468 460413 402 396 392 384
41 32 24 24 19 16 11 8
434 436 436389 383 380 381 376
4Q2018 1Q2019 2Q2019 2Q2019(excluding
Helix)
3Q2019 4Q2019 1Q2020 2Q2020
Yield on Loans Cost of Deposits Customer spread
Market shares1
Customer deposit rates decline further (bps) (Cy)
(1) The market share on loans was affected as from 30 September 2018 following a decrease in total loans in the banking sector, mainly attributed to €6 bn non-performing loans of Cyprus Cooperative Bank (CyCB) which remained to SEDIPES (a legal entity without license to operate as
a credit institution) as a result of the agreement between CyCB and Hellenic Bank
3241 24 19
Cost of deposits
16 11 8
Group Financial Results for the six months ended 30 June 2020
Income Statement bridge1 for 1H2020
66
€ mnUnderlying
basisNPE sales Other Statutory Basis
Net interest income 168 - - 168
Net fee and commission income 71 - - 71
Net foreign exchange gains and net gains on financial instrument transactions and disposal/dissolution of subsidiaries and associates 12 - 3 15
Insurance income net of claims and commissions 29 - - 29
Net gains from revaluation and disposal of investment properties and on disposal of stock of properties 0 - - 0
Other income 8 - - 8
Total income 288 - 3 291
Total expenses (180) (16) (10) (206)
Operating profit 108 (16) (7) 85
Loan credit losses (87) (91) (3) (181)
Impairments of other financial and non-financial instruments (29) - - (29)
Provisions for litigation, claims, regulatory and other matters (4) - 4 -
Loss before tax and non-recurring items (12) (107) (6) (125)
Tax (5) - - (5)
Profit attributable to non-controlling interests 4 - - 4
Loss after tax and before non-recurring items (attributable to the owners of the Company) (13) (107) (6) (126)
Advisory and other restructuring costs - organic (6) - 6 -
Loss after tax – Organic (attributable to the owners of the Company) (19) (107) - (126)
Provisions/net loss relating to NPE sales, including restructuring expenses (107) 107 - -
Loss after tax - attributable to the owners of the Company (126) - - (126)
(1) Please refer to section B1 “Reconciliation of income statement between statutory and underlying basis of the Group Financial Results for the six months ended 30 June 2020
Group Financial Results for the six months ended 30 June 2020
Analysis of Interest Income and Interest Expense
67
(1) The interest income, non-interest income, staff costs, other operating expenses and loan credit losses related to Project Helix are disclosed under ‘Provisions/net loss relating to NPE sales, including restructuring expenses’ since they are considered one-off items
Analysis of Interest Income (€ mn) 2Q20191 3Q2019 4Q2019 1Q2020 2Q2020
Loans and advances to customers 101 105 98 96 93
Loans and advances to banks and central banks 2 1 1 0 0
Investment at amortised costs 3 3 3 3 2
Investments FVOCI 5 6 5 5 4
Investments classified as loans and receivables - - - - -
111 115 107 104 99
Trading Investment - - - - -
Derivative financial instruments 9 9 10 9 9
Other investments at fair value through profit or loss - - - - -
Total Interest Income 120 124 117 113 108
Analysis of Interest Expense (€ mn)
Customer deposits (10) (8) (8) (5) (3)
Funding from central banks and deposits by banks (1) (1) (0) (0) (0)
Subordinated loan stock (6) (6) (6) (6) (6)
Repurchase agreements (2) (2) (2) (1) (1)
Negative interest on loans and advances to banks and central
banks(4) (5) (5) (4) (4)
(23) (22) (21) (16) (14)
Derivative financial instruments (12) (12) (12) (12) (11)
Total Interest Expense (35) (34) (33) (28) (25)
Group Financial Results for the six months ended 30 June 2020
Income Statement by business line for 1H2020
68
€ mnConsumer
Banking
SME
Banking
Corporate
Banking
Global
corporate
International
Banking
Wealth &
MarketsRRD REMU Insurance Treasury Other Overseas Total
Net interest income/(expense) 63 18 31 36 11 1 15 (7) - 0 (1) 1 168
Net fee & commission income (expense) 19 4 5 5 23 1 4 - (3) 1 12 - 71
Other income 1 - - - 3 2 - 4 28 6 6 (1) 49
Total income 83 22 36 41 37 4 19 (3) 25 7 17 0 288
Total expenses (78) (10) (8) (6) (14) (3) (21) (4) (9) (7) (16) (4) (180)
Operating profit/(loss) 5 12 28 35 23 1 (2) (7) 16 0 1 (4) 108
Loan credit losses of customer loans net of
gains/(losses) on derecognition of loans and
changes in expected cash flows
2 (1) (6) (15) 10 - (66) - - - - (11) (87)
Impairment of other financial and non financial
instruments- - - - - - - (26) - - - (3) (29)
Provision for litigation, claims, regulatory and
other matters- - - - - - - - - - (4) - (4)
Profit/(loss) before tax 7 11 22 20 33 1 (68) (33) 16 0 (3) (18) (12)
Tax (1) (1) (3) (3) (4) - 8 4 (2) - (3) - (5)
Profit attributable to non controlling interest - - - - - - - - - - 3 1 4
Profit/(loss) after tax – organic (attributable to
the owners of the Company)16 10 19 17 29 1 (60) (29) 14 0 (3) (17) (13)
(1) Profit/(loss) after tax-organic (attributable to the owners of the Company) does not include provisions/net loss relating to NPE sales, including restructuring expenses (attributable to owners of the Company)
Group Financial Results for the six months ended 30 June 2020
Risk Weighted Assets – Regulatory Capital
69
Risk weighted assets by type of risk (€ mn)
Reconciliation of Group Equity to CET1 Risk weighted assets by Geography (€ mn)
Equity and Regulatory Capital (€ mn)
(1) Allowing for IFRS 9 transitional arrangements
(2) Calculations on a pro forma basis assume completion of the transaction
€ mn 30.06.20
Group Equity per financial statements 2,120
Less: Intangibles (48)
Less: Deconsolidation of insurance and other entities (201)
Add: Regulatory adjustments (IFRS 9 and other items) 85
Less: Revaluation reserves and other unrealised items (249)
CET11 1,707
Risk Weighted Assets 11,960
CET1 ratio1 14.3%
CET1 ratio pro forma for Helix 22 14.4%
31.12.2019 31.03.2020 30.06.20
Total equity excl. non-controlling interests 2.260 2,207 2,095
CET1 capital 1,909 1,807 1,707
Tier I capital 2,129 2,027 1,927
Tier II capital 190 201 199
Total regulatory capital (Tier I + Tier II) 2,319 2,228 2,126
31.12.18 31.12.19 31.03.20 30.06.20 Helix 230.06.20
pro forma2
Cyprus 15,070 12,678 12,395 11,765 (112) 11,653
Russia 24 8 2 5 - 5
United Kingdom 84 48 48 48 - 48
Romania 38 29 28 21 - 21
Greece 144 121 120 115 - 115
Other 13 6 6 6 - 6
Total RWA 15,373 12,890 12,599 11,960 (112) 11,848
RWA intensity 70% 61% 62% 56% 55%
31.12.18 31.12.19 31.03.20 30.06.20 Helix 230.06.20
pro forma2
Credit risk 13,833 11,547 11,256 10,617 (112) 10,505
Market risk 2 - - - -
Operational risk 1,538 1,343 1,343 1,343 - 1,343
Total 15,373 12,890 12,599 11,960 (112) 11,848
Group Financial Results for the six months ended 30 June 2020
SREP requirement for 2020 at 9.7%, post ECB’s capital relaxations for COVID-19
70
SREP requirements for 2020 : Total Capital ratio at 14.5%SREP requirements for 2020: CET1 ratio at 9.7%
• Per EBA final guidelines on SREP and supervisory stress testing and the Single Supervisory Mechanism’s (SSM) 2018 SREP methodology own funds held for the purposes of Pillar
II Guidance cannot be used to meet any other capital requirements (Pillar 1, Pillar II requirement or the combined buffer requirements), and therefore cannot be used twice4
• In May 2020, the Bank received formal notification from the CBC in its capacity as National Resolution Authority, of the final decision by the Single Resolution Board (SRB), for the
binding minimum requirement for own funds and eligible liabilities (MREL) for the Bank, determined as the preferred resolution point of entry. The MREL requirement has been set at
28.36% of risk weighted assets as of 30 June 2019 and must be met by 31 December 2025. This MREL requirement would be equivalent to 18.54% of total liabilities and own funds
(TLOF) as at 30 June 2019. The MREL requirement is in line with the Bank’s expectations, and largely in line with its funding plans5
• The MREL ratio of the Bank as at 30 June 2020, calculated according to SRB’s eligibility criteria currently in effect, and based on our internal estimate stood at 18.21% of RWAs
0.5%
4.5%
2.5%2.5%
1.0%
3.0%
1.0%
3.0%
10.5%
4.5%
2019 2020
2.5%
9.7%
1.7%
4.5%
2020
post ECB
announcement
O-SII
CCB
Pillar 2R
Pillar 1
11.0%
3.0%
2019
0.5%
4.5%
1.5%
2.5%
1.0%
2.0%
2.5%
3.0%
2.0%
14.0%
1.5%
4.5%
Tier 2
2020
O-SII
CCB
Pillar 2R
AT1
Pillar 1
14.5%
Total
Pillar 1
of 8%
1
3
2
1
2
(1) The Central Bank of Cyprus (CBC) set the O-SII buffer for the Group at 2%. This buffer will be phased-in gradually, having started from 1
January 2019 at 0.5% and increasing by 0.5% every year thereafter, until being fully implemented (2.0%) on 1 January 2022. In April 2020
the CBC, as part of the COVID measures, decided to delay the phasing-in by 12 months (1 January 2023). As a result, the phasing-in of
0.5% on 1 January 2021 has been delayed for 12 months
(2) In accordance with the legislation in Cyprus which has been set for all credit institutions the applicable rate of the CCB was fully phased in
at 2.5% in 2019
(3) Additional Tier 1 Capital
(4) The new provisions are effective from January 2020
(5) This decision is based on the current legislation, it is expected to be updated annually and could be subject to subsequent changes by the
resolution authorities, especially considering the developments of the Bank Recovery and Resolution Directive (BRRD) and its
transposition into the local legislation
Group Financial Results for the six months ended 30 June 2020
Buffer to MDA Restrictions Level & Distributable Items1
71
Maximum Distributable Amount for BOCH
• The Bank and BOCH will proceed with a capital reduction process
which will result in the reclassification of up to c.€619 mn and €700 mn
of share premium to distributable reserves respectively
• Subject to approvals by ECB, Cyprus and Irish High Court
• No prohibition applies to the payment of coupons on any AT1 capital
instruments issued by the Company and the Bank2
• Significant CET1 MDA buffer3 (30 Jun 2020) : ~425 bps (~€508 mn)
• ECB frontloaded the ability to use AT1 and T2 to meet P2R
requirement; increases CET1 and MDA buffer by c.131 bps
11.0%
0.3%
14.3%
CET1 30 Jun 2020 30 Jun 20203
MDA Threshold
CET1 Ratios
Unfilled
AT1 + T2
capacity
425 bps
[ ] bpsDistance
to MDACET1Ratio (%)
CET1Req
Unfilled AT1 &
T2 Bucket
c.10.0%
9.7%
(1) Distributable Items definition per CRR
(2) Based on the SREP decisions of prior years, the Company and the Bank were under a regulatory prohibition for equity dividend distribution and therefore no dividends were declared or paid during years 2019 and 2018. Following the 2019 SREP decision, the Company and the
Bank are still under equity dividend distribution prohibition. This prohibition does not apply if the distributions are made via the issuance of new ordinary shares to the shareholders which are eligible as CET1 capital
(3) Including phasing in of O-SII buffer (+50 bps). The Central Bank of Cyprus (CBC) set the O-SII buffer for the Group at 2%. This buffer will be phased-in gradually, having started from 1 January 2019 at 0.5% and increasing by 0.5% every year thereafter, until being fully implemented
(2.0%) on 1 January 2022. In April 2020 the CBC, as part of the COVID measures, decided to delay the phasing-in by 12 months (1 January 2023). As a result, the phasing-in of 0.5% on 1 January 2021 has been delayed for 12 months
Group Financial Results for the six months ended 30 June 2020
(1) The reduction relates to the sale of BOC UK in Sep 18
Analysis of Deposits
72
Deposits by Currency (€ bn)
Deposits by customer Sector (€ bn)
Deposits by Type (€ bn)
0.22
Dec 16
16.300.29
1.29
Dec 17
1.31
Dec 18
16.250.29
Dec 19
14.62
0.291.28
16.84
Mar 20
14.96
0.27
Jun 20
16.5117.85
0.10
16.69
12.40
2.201.69
13.83
0.11
1.742.11
1.48
15.01
0.10
14.58
0.100.17
1.35
6.31
1.06
Dec 16
1.54
Dec 17 Dec 18
7.16
1.57
Dec 19
7.53
1.65
16.30
Mar 20
6.18
1.76
Jun 20
16.5117.85
16.2516.84 16.69
9.27 10.00 8.78
6.71 7.59 7.44
6.92
7.62
16.25
4.79
0.80
0.69
Dec 16
0.83
Dec 17
0.91
Dec 18
0.80
10.05
Dec 19
0.77
0.71
8.98
16.51
Mar 20
0.79
0.68
Jun 20
17.85
5.05
16.84 16.69 16.30
6.73 6.63
10.31
5.96
10.15 9.98
4.68
10.15
1
1
1
Current & demand accounts
Savings accounts
Time deposits
Other Currencies
GBP
USD
EUR
Retail
SME
Corporate
Global Corporate
90%
8%2%
11%
42%47%
5%
29%
62%
4%
Jun 20
Group Financial Results for the six months ended 30 June 2020
Reduction in Overseas Non-Core Exposures
73
Overseas non-core exposures (€ mn)
• The Group continues its efforts for further
deleveraging and disposal of non-essential assets and
operations in Greece, Romania and Russia
• In addition as at 30 June 2020, there were €269 mn of
overseas exposures in Greece (€265 mn at 31 March
2020) not identified as non-core exposures
283
193164
139 137 135
42
24 23
149
79
35
25
44
31
23
199
Dec 16
16
Dec 17
174
11
7
Dec 18 Dec 19 Mar 20
16
Jun 20
518
312
240
183 177
Greece UKSerbia Romania Russia
Group Financial Results for the six months ended 30 June 2020
APPENDIXGlossary & Definitions
74
Group Financial Results for the six months ended 30 June 2020
Glossary & Definitions
75
Allowance for expected loan credit
losses (previously ‘Accumulated
provisions’)
Comprises (i) allowance for expected credit losses (ECL) on loans and advances to customers (including allowance for expected credit losses on loans and advances to customers held for sale),
(ii) the residual fair value adjustment on initial recognition of loans and advances to customers, (iii) allowance for expected credit losses for off-balance sheet exposures (financial guarantees and
commitments) disclosed on the balance sheet within other liabilities, and (iv) the aggregate fair value adjustment on loans and advances to customers classified and measured at FVPL.
Advisory and other restructuring costs Comprise mainly: fees of external advisors in relation to: (i) disposal of operations and non-core assets, and (ii) customer loan restructuring activities.
AIEA
This relates to the average of ‘interest earning assets’ as at the beginning and end of the relevant quarter. Average interest earning assets exclude interest earning assets of any discontinued
operations at each quarter end, if applicable. Interest earning assets include: cash and balances with central banks, plus loans and advances to banks, plus net loans and advances to customers
(including loans and advances to customers classified as non-current assets held for sale), plus investments (excluding equities and mutual funds).
AT1 AT1 (Additional Tier 1) is defined in accordance with Articles 51 and 52 of the Capital Requirements Regulation (EU) No 575/2013, as amended by CRR II applicable as at the reporting date.
Average contractual interest rates
Interest rates on cost of deposits were previously calculated as the Interest Expense over Average Balance. The current calculation which the Bank considers more appropriate is based on the
weighted average of the contractual rate times the balance at the end of the month. The rates are calculated based on the month end contractual interest rates. The quarterly rates are the average
of the three quarter month end contractual rates
Book Value BV= book value = Carrying value prior to the sale of property
CET1 capital ratio (transitional basis) CET1 capital ratio (transitional basis) is defined in accordance with the Capital Requirements Regulation (EU) No 575/2013, as amended by CRR II applicable as at the reporting date.
CET1 fully loaded (FL) The CET1 fully loaded (FL) ratio is defined in accordance with the Capital Requirements Regulation (EU) No 575/2013, as amended by CRR II applicable as at the reporting date.
Cost of FundingEffective yield of cost of funding: Interest expense of all interest bearing liabilities after hedging, over average interest bearing liabilities (customer deposits, funding from the central bank, interbank
funding, subordinated liabilities). Historical information has been adjusted to take into account hedging.
Contribution to DGF Relates to the contribution made to the Deposit Guarantee Fund.
Contribution to SRF Relates to the contribution made to the Single Resolution Fund.
Cost to Income ratio Cost-to-income ratio comprises total expenses (as defined) divided by total income (as defined).
Cost of RiskLoan credit losses charge (cost of risk) (year to date) is calculated as the annualised ‘loan credit losses’ (as defined) divided by average gross loans (the average balance is calculated as the
average of the opening balance and the closing balance).
CRR DD Default Definition.
DFAs Debt for Asset Swaps.
DFEs Debt for Equity Swaps.
DTA Deferred Tax Assets.
Group Financial Results for the six months ended 30 June 2020
Glossary & Definitions
76
Digitally engaged customers ratio
This is the ratio of digitally engaged individual customers to the total number of individual customers. Digitally engaged customers are the individuals who use the digital channels of the Bank (mobile
banking app, browser and ATMs) to perform banking transactions, as well as digital enablers such as a bank-issued card to perform online card purchases, based on an internally developed
scorecard.
Digital transactions ratio This is the ratio of the number of digital transactions performed by individuals and legal entity customers to the total number of transactions. Transactions include deposits, withdrawals, internal and
external transfers. Digital channels include mobile, browser and ATMs.
DTC Deferred Tax Credit
EBA European Banking Authority
ECB European Central Bank
Effective yield Interest Income on Loans/Average Net Loans
Effective yield of liquid assetsInterest Income on liquids after hedging, over average liquids (Cash and balances with central banks, placements with banks and bonds). Historical information has been adjusted to take into
account hedging
ESMA European Securities and Markets Authority
Foreclosures Value of on-boarded assets is set at a conservative 25%-30% discount from open market valuations, by two independent sources; Includes consensual and non consensual DFAs and DFEs
FTP Fund transfer pricing methodologies applied between the business lines to present their results on an arm’s length basis
GBV Gross Book Value
Gross Loans
Gross loans are reported before the residual fair value adjustment on initial recognition relating to loans acquired from Laiki Bank (calculated as the difference between the outstanding contractual
amount and the fair value of loans acquired) amounting to €248 mn at 30 June 2020 (compared to €252 mn at 31 March 2020 and €271 mn at 31 December 2019).
Additionally, gross loans include loans and advances to customers classified and measured at fair value through profit and loss adjusted for the aggregate fair value adjustment of €331 mn at 30
June 2020 (compared to €328 mn at 31 March 2020 and €427 mn at 31 December 2019).
Gross Sales Proceeds Proceeds before selling charge and other leakages
GVA Gross Value Added
Group The Group consists οf Bank of Cyprus Holdings Public Limited Company, “BOC Holdings” or the “Company”, its subsidiary Bank of Cyprus Public Company Limited, the “Bank” and the Bank’s
subsidiaries.
H/O Head Office
IB, W&M International Banking, Wealth and Markets
Group Financial Results for the six months ended 30 June 2020
Glossary & Definitions
77
IBU Servicing exclusively international activity companies registered in Cyprus and abroad and not residents
Legacy exposures Legacy exposures are exposures relating to (i) Restructuring and Recoveries Division (RRD), (ii) Real Estate Management Unit (REMU), and (iii) non-core overseas exposures
Loan credit losses (PL) (previously
‘Provision charge’)
Loan credit losses comprise: (i) credit losses to cover credit risk on loans and advances to customers, (ii) net gains on derecognition of financial assets measured at amortised cost and (iii) net gains
on loans and advances to customers at FVPL.
Loan to Value ratio (LTV) Loan to Value (LTV) is calculated as the Gross IFRS Balance to the indexed market value of the property. Under Pillar 3 disclosures LTV is calculated as the Gross IFRS Balance to the indexed
market value of collateral. Collateral takes into consideration the mortgage amount registered in the land registry plus legal interest from registration date to the reference date
Market shares
Both deposit and loan market shares are based on data from the CBC.
The Bank is the single largest credit provider in Cyprus with a market share of 41.7% at 30 June 2020, compared to 41.0% at 31 March 2020, 41.1% at 31 December 2019, 40.8% at 30 September
2019, 41.3% at 30 June 2019, 46.7% at 31 March 2019, 45.4% at 31 December 2018 and as at 30 September 2018, 38.6% at 30 June 2018 and 37.4% at 31 March 2018.
The market share on loans was affected as at 30 June 2019 following the derecognition of the Helix portfolio upon the completion of Project Helix announced on 28 June 2019.
The market share on loans was affected during the quarter ended 31 March 2019 following a decrease in total loans in the banking sector of €1 bn, mainly attributed to reclassification, revaluation,
exchange rate and other adjustments (CBC).
The market share on loans was affected as at 30 September 2018 following a decrease in total loans in the banking sector, mainly attributed to €6 bn non-performing loans of Cyprus Cooperative
Bank (CyCB) which remained to SEDIPES as a result of the agreement between CyCB and Hellenic Bank.
The market share on loans was affected as at 30 June 2018 following a decrease in total loans in the banking sector of €2.1 bn, due to loan reclassifications, revaluations, exchange rate or other
adjustments (CBC).
Net Proceeds Proceeds after selling charges and other leakages
Net fee and commission income over
total incomeFee and commission income less fee and commission expense divided by total income (as defined).
Net interest margin (NIM) Net interest margin is calculated as the net interest income (annualised) divided by the ‘quarterly average interest earning assets’ (as defined).
Net loans and advances to
customersComprise gross loans (as defined) net of allowance for expected loan credit losses (as defined, but excluding credit losses on off-balance sheet exposures).
Net loan to deposit ratio Net loan to deposit ratio is calculated as gross loans (as defined) net of allowance for expected loan credit losses (as defined) divided by customer deposits
New lending New lending includes the average YTD change (if positive) for overdraft facilities.
Group Financial Results for the six months ended 30 June 2020
Glossary & Definitions
78
Non-interest income
Non-interest income comprises Net fee and commission income, Net foreign exchange gains and net gains on financial instrument transactions and disposal/dissolution of subsidiaries and associates
(excluding net gains on loans and advances to customers at FVPL), Insurance income net of claims and commissions, Net gains/(losses) from revaluation and disposal of investment properties and
on disposal of stock of properties, and Other income.
Non-recurring items
Non-recurring items as presented in the ‘Consolidated Condensed Interim Income Statement – Underlying basis’ relate to the following items, as applicable: (i) advisory and other restructuring costs -
organic, (ii) restructuring costs – Voluntary Staff Exit Plan (VEP), (iii) Provisions/net loss relating to NPE sales, including restructuring expenses, (iv) Loss on remeasurement of investment in associate
upon classification as held for sale (CNP) net of share of profit from associates, and (v) Reversal of impairment of DTA and impairment of other tax receivables.
NPEs
According to the EBA standards and ECB’s Guidance to Banks on Non-Performing Loans (published in March 2017), NPEs are defined as those exposures that satisfy one of the following conditions:
(i) the borrower is assessed as unlikely to pay its credit obligations in full without the realisation of the collateral, regardless of the existence of any past due amount or of the number of days past due,
(ii) defaulted or impaired exposures as per the approach provided in the Capital Requirement Regulation (CRR), which would also trigger a default under specific credit adjustment, distress
restructuring and obligor bankruptcy, (iii) material exposures as set by the CBC , which are more than 90 days past due, (iv) performing forborne exposures under probation for which additional
forbearance measures are extended, and (v) performing forborne exposures under probation that present more than 30 days past due within the probation period. When a specific part of the
exposures of a customer that fulfils the NPE criteria set out above is greater than 20% of the gross carrying amount of all on balance sheet exposures of that customer, then the total customer
exposure is classified as non-performing; otherwise only the specific part of the exposure is classified as non-performing. The NPEs are reported before the deduction of allowance for expected loan
credit losses (as defined).
The exit criteria of NPE forborne are the following:
1. The extension of forbearance measures does not lead to the recognition of impairment or default
2. One year has passed since the forbearance measures were extended
3. There is not, following the forbearance measures, any past due amount or concerns regarding the full repayment of the exposure according to the post forbearance conditions
NPE coverage ratio (previously
‘NPE Provisioning coverage ratio’)The NPE coverage ratio is calculated as the allowance for expected loan credit losses (as defined) over NPEs (as defined).
NPE ratio NPEs ratio is calculated as the NPEs as per EBA (as defined) divided by gross loans (as defined).
NPEs salesNPE sales refer to sales of NPE portfolios completed in each period and contemplated sale transactions, as well as potential further NPE sales, at each reporting date, irrespective of whether or not
they met the held for sale classification criteria at the reporting dates. They include both Project Helix and Project Helix 2, as well as other portfolios.
NSFRThe NSFR is calculated as the amount of “available stable funding” (ASF) relative to the amount of “required stable funding” (RSF), on the basis of Basel III standards. Its calculation is a SREP
requirement. The EBA NSFR will be enforced as a regulatory ratio under CRR II in 2021.
OMV Open Market Value
Operating profit Comprises profit before Total loan credit losses, impairments and provisions (as defined), tax, (profit)/loss attributable to non-controlling interests and non-recurring items (as defined).
p.p. percentage points
Non-legacy Relates to all business lines excluding Restructuring and Recoveries Division (“RRD”), REMU and non-core overseas exposures
Phased-in Capital Conservation
Buffer (CCB)In accordance with the legislation in Cyprus which has been set for all credit institutions, the applicable rate of the CCB is 1.25% for 2017, 1.875% for 2018 and 2.5% for 2019 (fully phased-in).
Group Financial Results for the six months ended 30 June 2020
Glossary & Definitions
79
Loan credit losses for impairment of
customer loans Credit losses for impairment of customer loans and gains/(losses) on derecognition of loans and changes in expected cash flows on acquired loans
Profit/(loss) after tax and before non-
recurring items (attributable to the
owners of the Company)
This refers to the profit or loss after tax (attributable to the owners of the Company), excluding any ‘non-recurring items’ (as defined).
Profit/(loss) after tax – organic
(attributable to the owners of the
Company)
This refers to the profit or loss after tax (attributable to the owners of the Company), excluding any ‘non-recurring items’ (as defined, except for the ‘advisory and other restructuring costs – organic’).
Project Helix 2Project Helix 2 refers to the portfolio of loans with a gross book value of €898 mn as at 30 June 2020 for which an agreement for sale was reached on 3 August 2020. For further information please
refer to section B.2.5 Loan portfolio quality of the press release.
qoq Quarter on quarter change
Restructured loans Restructuring activity within quarter as recorded at each quarter end and includes restructurings of NPEs, performing loans and re-restructurings
Risk adjusted yield Interest Income on Loans net of allowance for expected loan credit losses/Net Loans
RRD Restructuring and Recoveries Division
RWA Risk Weighted Assets
RWA Intensity Risk Weighted Assets over Total Assets
Special levy Relates to the special levy on deposits of credit institutions in Cyprus
Stage 2 & Stage 3 Loans Include purchased or originated credit-impaired
Tangible Collateral Restricted to Gross IFRS balance
Total Capital ratio Total capital ratio is defined in accordance with the Capital Requirements Regulation (EU) No 575/2013, as amended by CRR II applicable as at the reporting date.
Total expenses
Total expenses comprise staff costs, other operating expenses and the special levy and contributions to the Single Resolution Fund (SRF) and Deposit Guarantee Fund (DGF). It does not include
‘advisory and other restructuring costs-organic’, or any restructuring costs relating to the Voluntary Staff Exit Plan, or any restructuring costs relating to NPE sales. ‘Advisory and other restructuring
costs-organic’ amounted to €3 mn for 2Q2020 (compared to €3 mn for 1Q2020 and €8 mn for 4Q2019). Restructuring costs relating to NPE sales amounted to €1 mn for 2Q2020 (compared to €3
mn for 1Q2020 and €10 mn for 4Q2019). Restructuring costs relating to the Voluntary Staff Exit Plan amounted to nil for 2Q2020 and 1Q2020, compared to €81 mn for 4Q2019.
Group Financial Results for the six months ended 30 June 2020
Glossary & Definitions
80
Total income Total income comprises net interest income and non-interest income (as defined).
Total loan credit losses, impairments
and provisions
Total loan credit losses, impairments and provisions comprises loan credit losses (as defined), plus impairments of other financial and non-financial assets, plus (provisions)/reversal of provisions for
litigation, claims, regulatory and other matters.
T2 Tier 2 Capital
Underlying basis This refers to the statutory basis after being adjusted for certain items as explained in the Basis of Presentation.
Write offs
Loans together with the associated loan credit losses are written off when there is no realistic prospect of future recovery. Partial write-offs, including non-contractual write-offs, may occur when it is
considered that there is no realistic prospect for the recovery of the contractual cash flows. In addition, write-offs may reflect restructuring activity with customers and are part of the terms of the
agreement and subject to satisfactory performance.
yoy Year on year change
Group Financial Results for the six months ended 30 June 2020
Disclaimer
81
This document contains certain forward-looking statements which can usually be identified by terms used such as “expect”, “should be”, “will be” and similarexpressions or variations thereof or their negative variations, but their absence does not mean that a statement is not forward-looking. Examples of forward-lookingstatements include, but are not limited to, statements relating to the Group’s near term and longer term future capital requirements and ratios, intentions, beliefs orcurrent expectations and projections about the Group’s future results of operations, financial condition, expected impairment charges, the level of the Group’s assets,liquidity, performance, prospects, anticipated growth, provisions, impairments, business strategies and opportunities. By their nature, forward-looking statementsinvolve risk and uncertainty because they relate to events, and depend upon circumstances, that will or may occur in the future. Factors that could cause actualbusiness, strategy and/or results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statementsmade by the Group include, but are not limited to: general economic and political conditions in Cyprus and other European Union (EU) Member States, interest rateand foreign exchange fluctuations, legislative, fiscal and regulatory developments and information technology, litigation and other operational risks. Should any one ormore of these or other factors materialise, or should any underlying assumptions prove to be incorrect, the actual results or events could differ materially from thosecurrently being anticipated as reflected in such forward looking statements. The forward-looking statements made in this document are only applicable as from thedate of publication of this document. Except as required by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to releasepublicly any updates or revisions to any forward looking statement contained in this document to reflect any change in the Group’s expectations or any change inevents, conditions or circumstances on which any statement is based.