Thursday, February 25, 2016
Bank of Cyprus reports 2015 year end results
Statement by John Patrick Hourican, Bank of Cyprus Group CEO:
“The Group continues to make good progress against its strategic objectives. During the fourth quarter, the Group’s operating performance was strong. We made very good progress in reducing the stock of loans with arrears greater than 90 days by €668 mn or 6% during the quarter and we expect to continue this progress into 2016. Our funding position continues to improve, with customer deposits in Cyprus growing by €533 mn in the fourth quarter and our ELA reliance reduced to a current €3,5 bn, almost €8 bn lower than the peak of €11,4 bn in April 2013. In the fourth quarter, cognizant of our on-going regulatory dialogue, we made certain changes to the Bank’s provisioning methodology. These changes increased the level of provisions against delinquent exposures and brought coverage levels against our stock of 90+ DPD exposures to near 50%. Due to the elevated provisions for the quarter, the Group reported a loss after tax of €438 mn for the year. Nevertheless, the Group continues to have a strong capital position. The CET1 ratio was 14,0% at 31 December 2015. The Group does not expect to need to raise capital to complete its journey back to strength.”
The bank continues to improve on all metrics.This is the thesis that we are speculating on which is that the country of Cyprus already went through a banking crisis and is now on the road to recovery. I also like the involvement of noted turnaround expert Wilbur Ross. Patience will be required but the bank is in no danger of failing and now we will see what it is really worth over the next few years. The price has fallen recently and you can now buy the stock at around a 33% discount to what Mr. Ross paid.