Bank Of Cyprus Reports 172% Increase in Profits

by Lorys Charalambous, Tax-News.com, Cyprus

31 July 2006

The Bank of Cyprus has announced a huge 172% increase in its first half profits compared with before-tax earnings in the first six months of 2005.

The bank has attributed its impressive first half performance to the reorganisation and development of the Group’s business in Cyprus, combined with the cost containment and income enhancement plans, the positive course of the Group’s insurance operations, the continuation of its dynamic expansion in Greece and the positive results from the sale and change in fair value of financial instruments.

Group profit after tax in the first half reached CYP85 million (EUR148 million, US$189 million), which compares with a profit of CYP31 million (EUR54 million) in the first half of 2005. As a result of the significant increase in the Group’s profitability, the Group's return on equity increased by 10.6% compared to the first half of 2005, reaching 21.5%.

Profit before provisions reached CYP135 million (EUR235 million), recording an annual increase of 68%.

The cost to income ratio improved to 47.1% compared to 59.1% for H1 in 2005.

According to the bank, the results reflect: improvement of income (24% increase in net interest income, 14% increase in commission income and 12% increase in income from insurance operations); containment of the rate of increase of expenses to 3% compared to the rate of increase of deposits and loans of 15% and 19%, respectively; and increase of loans (annual increase of 19%).

The bank also reported a "remarkable" improvement in profitability in its Cyprus operations, where profit increased by 90% before provisions to CYP89 million (EUR155 million) and 277% after provisions to CYP17 million (EUR29 million).

The contribution of the Greek operations to Group profitability continues to be noteworthy, with profits up before provisions by 47% to CYP42 million (EUR73 million) and after provisions by 60% to EUR17 million (EUR29 million).

It is expected that the Group profit after tax for the full year of 2006 will reach CYP160 million (EUR278 million) compared to the previous target of CYP120 million (EUR209 million). The expected profit is positively compared to the profit of CYP72 million (EUR126 million) for 2005, an expected increase of 122%.

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