Ms. Livadiotou, Bank of Cyprus made its competitors... "jealous". What does the unnecessary supervisory approval of dividend policy decisions mean and how does the Bank interpret this fact?  You also write in the presentation that from 1 January 2025, supervisory approval will no longer be required for dividend payments. 

Yes, indeed, from 1 January 2025, no supervisory approval will be required for the payment of dividends by Bank of Cyprus, and we interpret this as a vote of confidence by the supervisor in the Bank.  Bank of Cyprus is the first financial institution in Cyprus and in Greece to have proceeded with a dividend distribution of 14% of profits from the financial year 2022, after 12 years of not paying dividends to shareholders. The following year, in 2023, the dividend distribution rate more than doubled to 30% of profits, the highest rate in Cyprus and Greece for the financial year 2023. For the financial year 2024, we have proposed and announced a dividend distribution of 50% of profits, the maximum of our payout ratio, which represents a significant increase in both the payout ratio and the total dividend amount compared to the previous year. Our dividend policy is the result of a stronger balance sheet, strong capital, the very strong financial position of Bank of Cyprus and the Group's commitment to providing high returns to its shareholders.  

The Bank's strong financial position is the reason why the supervisory authorities have approved dividends in previous years. Of course, as you have rightly pointed out, the requirement for supervisory approval of dividend distributions has been lifted as of 1 January 2025. Therefore, from this year onwards, dividend distribution will be decided by the Bank's Board of Directors and approved by the shareholders at the General Meeting. The removal of this requirement confirms the confidence that Bank of Cyprus now enjoys, including outside Cyprus, due to its image.   

Is there a "secret" behind the payout, which is already higher than the eurozone average? 50% for 2024 and ? 70% for 2025?

Last February, the Board of Directors, in assessing the Bank's future dividend policy, decided to set the payout ratio for the future at between 50% and 70% of profitability. The level of our primary capital (CET1), which stands at 19.2%, as well as strong performance indicators, played a decisive role in this decision. We have also taken into account the data applicable to the eurozone banking sector.

As you know, we have taken difficult decisions in recent years to deal effectively with problems such as non-performing loans, the reduction of our workforce and the general reorganisation of the Bank of Cyprus Group. This is why, for the second year in a row, we have managed to achieve a return on equity of more than 20%, one of the highest in the euro area.

We also aim to provide a good dividend yield on our shares. Overall, the distribution from profitability in 2024 represents a double-digit dividend yield (based on the share price on 31 December 2024), which is higher than the average for the eurozone banking system.

What is the rationale for the combined value return, cash and buyback programme?

The share buyback was requested by some of our shareholders who believed that this programme would have a positive impact on the marketability of our shares and on trading volumes. As the Board of Directors, we have tried to strike a balance between paying a larger amount of dividend in cash and at the same time allocating a smaller amount, this year in the order of €30 million, to the share buyback programme. We successfully implemented a similar programme last year, with positive results in terms of the marketability of the Bank's shares on the stock exchange.  

You believe in the importance of interim dividends. Is this something that shareholders are asking for? 

Before the crisis, Bank of Cyprus always paid an interim dividend. It is true that some of our shareholders had asked for an interim dividend, but for us it also had a semantic value as it marked our full return to normality. In essence, shareholders receive a percentage of the annual dividend early and can use that money as they wish or reinvest it and get a higher return on their shares. 

Despite the falling interest rate environment, you expect organic growth. What are you counting on to make up for the revenue losses in NII? And if you like, tell us about the EUR 1 billion from hedging in treasury.

The growth of the Cypriot economy also contributes to the expansion of our loan portfolio, as we are the largest financial institution in Cyprus and actively participate in financing growth. However, our growth strategy is not limited to Cyprus. We are looking outwards and aim to further increase our international loan portfolio from € 1 billion today to € 1.5 billion in the next 2-3 years.

In addition, the growth of our bond portfolio acts as a hedge against income losses due to the downward trend in the interest rate environment. Deposits also have a positive impact, growing by 6% in 2024 and currently being at their highest level ever.

Finally, our hedging strategy has significantly reduced the sensitivity of the Bank's results to changes in interest rates. The Bank's interest rate hedging strategy is an important tool for us. We have about € 9 billion in various forms of hedging, and we intend to increase this amount this year through € 1 billion of additional treasury hedging and also by increasing our bond portfolio.

In addition, in a normalised interest rate environment, the Group aims to strengthen its diversified business model by increasing its non-interest income, with a focus on fee and commission income and income from its insurance companies.

The digital customer-oriented platform 'Jinius', which provides services related to B2B transactions, i.e. business-to-business and consumer services, is one of the Group's initiatives to optimise its non-interest income, mainly by leveraging its broad digital capabilities and strong customer base.

At the same time, we will continue to invest in cutting-edge technologies, as our digital channels are already very sophisticated and offer innovative products and services to our customers, both individuals and businesses.

Under what conditions will value be returned to shareholders through acquisitions and strategic partnerships? Is it possible to respond to possible opportunities?

We always review and evaluate all opportunities for acquisitions and strategic partnerships in the best interests of our shareholders. But let me be clear. Acquisitions or strategic partnerships are not an end in themselves. In order to decide to proceed, we need to be sure that our moves will be profitable, that they will benefit our shareholders, either because there are strategic partnerships with the Group, or because the performance of a company we acquire is at least equal to, if not better than, that of the Group. We therefore proceed very cautiously and evaluate each prospect with the seriousness it deserves. Our priority is not to compromise our ability to pay dividends to our shareholders, based on the dividend policy I have outlined. 

Insurance market. An area that seems to interest you the most. What are the objectives?

Yes, we are very interested in the insurance market. We could not be less interested considering that we own two very large Cypriot insurance companies, Eurolife and General Insurance. These two companies have consistently performed well and, for 2023, are the most profitable companies in the life and general insurance sectors respectively. In particular, in 2024, Eurolife and General Insurance recorded a return on equity of 20% and 16% respectively. In addition, our insurance companies remain important to the Group's profitability as they provide recurring income, representing 17% of the Group's non-interest income. Accordingly, the Bank of Cyprus Group is investing in these businesses to further increase their market share and profitability.

Would you be interested in acquisitions in this sector?

We are certainly interested in acquisitions in this sector, taking into account the fact that the insurance market in Cyprus is fragmented into a large number of companies. Any acquisition would be in line with the Group's strategic objective to expand its insurance activities and further strengthen its already established presence in the market.

You see Greek businesses as a help in developing your loan portfolio. How do you intend to proceed? Which businesses are you interested in?

As I mentioned earlier, as of 31 December 2024, international loans amounted to € 1 billion, including loans to the Greek economy. We are interested in growing our loan portfolio in the international business sector, mainly in Greece, and we have set specific targets to achieve this. In addition to the shipping sector, which is of interest to us as we lend to Cypriot and Greek shipowners, we are leveraging our International Business Centre ("IBU") customer base and targeting selective sectors and large, profitable and healthy businesses that are compatible with the Bank's risk profile.

Return to Athens. Science fiction scenario, or at least theoretical thoughts, in a second phase?

The first decision to return to Athens was the listing on the Athens Stock Exchange, which has now proved to be absolutely correct and beneficial for the Bank of Cyprus Group. In a short period of time, we have achieved the objectives we set ourselves, with our shares being included in the General Price Index and our participation currently standing at 4.1%. Trading volumes in our shares have almost tripled and we have started to be covered by analysts who cover Greek companies and banks.

But beyond that, at least at this stage, our thoughts on Greece are limited to what I mentioned earlier, which is our interest in increasing international lending.

What are your goals for the future?

Our goal is to continue to deliver strong and stable returns, even in a normalised interest rate environment of around 2%. As you know, the Bank is now rated investment grade by the international rating agencies Standard & Poor's, Moody's and Fitch, reflecting its total return to strong fundamentals.

We maintain our target for a high-teens return on tangible equity (ROTE) of 15% on CET1 fixed capital, and also aim to maintain our cost-income ratio at 40% and our provisioning costs at the lower end of the 40-50 basis point range, so that we can continue to apply our dividend policy and deliver stable value to our shareholders.