Saturday, July 29, 2017

Moody's rating agency says bank of Cyprus recovery continuing



In a report on the Bank of Cyprus the international credit rating agency notes that "Bank of Cyprus` continued recovery after a bailout four years ago will depend on the bank`s ability to significantly clean-up its loan book from legacy bad loans." 

"Non performing loans (NPLs) fell to 40% of the loan book in March 2017 (equal to €8 billion) from a peak of 53% in December 2014, driven by loan restructurings, debt for asset swaps and write-offs," it notes.


The report points out that "progress on restructuring has led to large volumes of performing loans."

Management, it adds, "expects another €1.6 billion loans approximately to be reclassified as performing by 2019."

The management of the bank keeps doing what I thought they would do which is to deal with the backlog of non-performing loans. 

As this gets dealt with over time the market should revalue the stock higher to reflect the better performance of the bank and the strengthening of the balance sheet. 

The Cyprus economy is performing nicely and should be a tailwind for the bank. 

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