Bank of Cyprus Expects to Outperform 2024 Targets

Bank of Cyprus Holdings Plc expects to outperform its 2024 targets as it looks to potentially move its share listing to improve liquidity, Chief Executive Officer Panicos Nicolaou said.

The Mediterranean island’s largest lender has looked at a number of options for its stock, with a move from London among the possibilities, Nicolaou said in an interview. No decisions have been taken yet, the CEO said.

The bank delisted in Greece in 2016, after it was forced sell its operations in the country as part of the conditions for Cyprus’s international aid package following the Greek debt restructuring around a decade ago. It’s listed on the London Stock Exchange and the Cyprus Stock Exchange. 

Nicolaou was speaking after the bank last week reported a 40% rise in first-quarter net income to €133 million ($415 million) and net interest income of €213 million that beat analyst estimates.

While the lender plans to review its full-year financial targets at the time of its first-half results, “based on what we see today, we are currently tracking ahead of our targets for 2024,” he said.

“Bank of Cyprus has one of the highest return on tangible equity in the euro area and in the fastest growing economy of the euro area,” Nicolaou said, with the lender reporting a ROTE of 23.6% for the first quarter.

New lending reached €676 million, a rise of 46% from the last quarter and up 8% on the prior year. The lender is currently targeting a ROTE rate of above 17% in 2024 with net interest income exceeding €670 million.

Geopolitical Risk

Cyprus is outperforming the euro-area average and grew 3.3% annually in the first quarter, on a seasonably-adjusted basis. The economy is “resilient, flexible and doing well,” with strong consumption, almost full employment, and most sectors expanding “despite the perception of geopolitical risk,” said Nicolaou, whose bank makes 90% of its earnings locally.

Cyprus has a positive reputation in the Middle East as a safe European hub, leading companies from the region to relocate to the island, according to the CEO.  

The bank has potential to grow in areas such as insurance and international banking through Cyprus, in particular syndication, shipping lending and wealth management, Nicolaou said.

The lender would consider “any inorganic add-ons if it makes sense financially and  strategically either in Cyprus or cross border as long as such a move wouldn’t change the risk profile of the group,” he said. “Remunerating our shareholders will continue to be our priority.”

Green Bond

Bank of Cyprus issued its first ever green bond in April, in a four-times oversubscribed offer that helped the firm meet its MREL capital targets ahead of schedule.

“The objective was MREL compliance, but we also wanted to build a capital buffer and we’re there now,” Executive Director of Finance Eliza Livadiotou said. The proceeds will be used mainly to fund sustainable building projects, she said.

While Bank of Cyprus already has green loans on its books, this bond will enable it to quicken the pace of environmentally- sound lending, she added.