bank of cyprus group€¦ · investor presentation april 2016 . 49 133 156 world class board 255...

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Bank of Cyprus Group

Investor presentation

April 2016

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• CET1 ratio (transitional basis) at 14,0%

• World-class board with significant financial services management expertise; Experienced

management with proven track record of delivering results

(1) Adjusted for the disposal of the Russian operations

(2) Loans in arrears for more than 90 days (90+ DPD) are defined as loans with a specific provision and loans past-due for more than 90 days.

• Total assets €23,3 bn; loan market share at c.40%; deposit market share at c.30%

• New lending of €0,6 bn during 2015 to support economic recovery and promising sectors

• Cypriot economy growing faster than expected; exited Troika MoU in March 2016

• ELA reduction of €8,1 bn since peak

• Customer deposits1 increased by €1,6 bn (12%) in FY2015, to 61% of total assets

• Loans to Deposits (L/D) ratio improved to 121%

• 90+ DPD down by €1,3 bn (10%) during FY2015; 90+ DPD ratio at 50%

• 90+ DPD provision coverage boosted by 7 percentage points to 48%

• Set up of Real Estate Management Unit (REMU) to take ownership of, manage and

monetise real estate assets in settlement of customer obligations

• Group profitability driven by core Cypriot operations

• Recurring pre-provision profitability stabilising, though elevated provisions burden bottom-

line profitability for FY2015

Bank of Cyprus overview

Dominant position in a recovering

Cypriot economy

Strong capital position with a

world class Board of Directors

Improving funding structure;

Significant reduction of ELA

Improving asset quality with

declining 90+ DPD2

Clear strategic focus – profitable

core businesses in Cyprus

2

• Currently listed on the Cyprus Stock Exchange (CSE) and the Athens Exchange (ATHEX)

• The proposed premium listing in London and the potential inclusion in FTSE indices is in

line with the Bank‟s strategy to seek a listing on a major European exchange

• New listing to increase profile with the analyst community and to result in higher levels of

liquidity

London listing will enhance

visibility and stock liquidity

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The journey so far… Decisive actions and deleveraging have put the Bank on a firm path to normalisation

March 2013:

• Sale of Greek

operations

• Placed under

Resolution:

– absorption of

Laiki Bank

– bail-in of

uninsured

depositors

• Suspension of

trading on CSE

and ATHEX

Sep 2013:

• AGM and election of new BoD

Nov 2013:

• Appointment of new CEO

Nov 2015:

• Extension of CEO appointment

Dec 2014:

• Relisting in Cyprus and Greece

Sep 2014:

• €1,0 bn share capital increase

Nov 2014:

• Election of new BoD

• Sale of UK loan book 1

Source: Company filings

Apr 2016:

• Agreement for the sale of Kermia Hotels for €26,5 mn

Mar 2016:

• Announcement of intention to list on the premium segment of LSE

Dec 2015:

• Changes to ECB provisioning assumptions leading to enhanced coverage

Sep 2015:

• Sale of Uniastrum and other Russian assets

Jun 2014:

• Laiki integration completion

Sep 2014:

• Sale of various Romanian assets

May 2014:

• Sale of Serbian exposure

Apr 2015:

• Sale of 95% stake in Marfin Diversified Strategy Fund

Apr 2014:

• Sale of Ukrainian operations

• Sale of 10% stake in Banca Transilvania

Oct 2013:

• Sale of Kyprou Asset Management

2013 2014 2015 2016

Jan 2015:

• Share capital increase: completion of Retail Offer

• Listing of the Retail Offer Shares and commencement of trading

Oct 2015:

• Covered bond become eligible assets for Eurosystem credit operations; ELA reduced to €4,5 bn

Oct 2014:

• Successfully passes the 2014 ECB Comprehensive Assessment

3 (1) Ex Laiki UK Loan portfolio

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The journey so far… Significant progress made on KPIs and clear strategy to meet new Medium Term Targets

Category Key performance indicators Dec-2013 Dec-2014 Dec-2015 Medium term

targets

Asset quality

90+ DPD ratio 49% 53% 50% <30%

90+ DPD coverage 38% 41% 48% >50%

Provisioning charge1 4,0% 3,6% 4,3% <1,0%

Funding

ELA % assets; € bn 31%;

€9,6 bn

28%;

€7,4 bn

16%;

€3,8 bn Fully repay

Net loans % deposits 145% 141% 121% 100%-120%

Capital CET1 (transitional) ratio 10,4% 14,0% 14,0% >15%

Margins and

efficiency

Net interest margin 3,5% 3,9% 3,8% ~3,00%

Fee and commission income/

total income 14% 13% 15% >20%

Cost to income ratio 43% 37% 40% 40%-45%

Balance sheet Total assets € bn €30,3 bn €26,8 bn €23,3 bn >€25 bn

Source: Company information

(1) IFRS9 impact, which is effective as from 1 January 2018, has not been taken into account for the purpose for the targets. Targets are set on the basis of the present regulatory

environment.

4

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114 Strengthened capital position

c.€10 bn (or c.30%) balance sheet

deleveraging Improving funding structure

The journey so far… Turnaround has translated into improving financial indicators


(1) Pre CRD IV

(2) Proforma CRD IV

(3) Ratio of ELA Funding % total assets for 31 March 2016 is based on total assets at 31 December 2015

(4) Based on EBA Risk Dashboard Report, Data as at 31 December 2015

33,0

30,3 26,8

23,3

23,5 23,5 22,7 19,7

Jun 2013 Dec 2013 Dec 2014 Dec 2015

Total assets (€ bn) RWA (€ bn)

140% 145% 141%

121%

51% 49% 49% 61%

121%

Jun 2013 Dec 2013 Dec 2014 Dec 2015

Loans to deposits ratio

Customer deposits % total assets

EBA average L/D

ELA funding reduced by €8,1 bn

since peak 90+ DPD formation reversed Improving asset quality and coverage

0,9 1,3 1,4

2,7

5,3

(0,4)

(1,3)

FY09 FY10 FY11 FY12 FY13 FY14 FY15

38,8% 48,6%

53,2% 50,1%

41,6% 38,3%

40,6%

48,1%

Jun 2013 Dec 2013 Dec 2014 Dec 2015

90+ DPD ratio

90+ DPD provision coverage

11,4 11,1 9,6

7,4

3,8 3,3

34% 31%

28%

16% 14%

Apr2013

Jun2013

Dec2013

Dec2014

Dec2015

31 Mar2016

ELA (€ bn) ELA % total assets

3

10,5% 10,4% 14,0% 14,0%

8,4% 8,6%

12,5% 12,6%

Jun 2013 Dec 2013 Dec 2014 Dec 2015

CET1 ratio Leverage ratio

RWA Intensity

1 2

Change in 90+ DPD (€ bn)

71%

%

78% 85% 85%

4

5

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The journey so far… Significantly reduced reliance on ELA funding …


(1) Ratio of ELA funding % total assets for 31 March 2016 is based on total assets at 31 December 2015

11,4 11,1

9,9 9,6 9,5

8,8

7,7 7,4

6,9

5,9

4,9

3,8

3,3

34%

31% 31% 32%

31%

28% 28%

26%

23%

20%

16%

14%

Apr 2013 Jun 2013 Sep 2013 Dec 2013 Mar 2014 Jun 2014 Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015 31 Mar 2016¹

ELA (€ bn) ELA % total assets

Reduction achieved through:

• deleveraging actions

• deposit inflows

• share capital increase

• bond repayment by the Republic of Cyprus

The target is to fully repay ELA by end of 2017

6

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The journey so far…

… and improving funding structure


(1) Annualised; calculated as quarterly interest income / expense over average interest earning assets (interest earning assets defined as loans and advances to banks

and customers and debt portion of investments (for interim periods, debt is assumed to fill the same proportion of investments as at year end)

Improving L/D ratio and increasing Deposits to Assets

49% 48% 48% 49% 49% 51% 54% 56% 61%

145% 151% 148% 148% 141% 138% 136% 132%

121%

Dec 2013 Mar 2014 Jun 2014 Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015

Deposits to total assets Loans to deposits ratio (net)

Funding composition (€ bn) and interest margins

Interest income as % of interest earning assets1 Interest expense as % of interest earning assets1

Reduced reliance on ELA funding

15,0 14,1 13,8 13,3 13,2 13,6 13,6 13,6 14,2

9,6 9,5 8,8 7,7 7,4 6,9 5,9 4,9 3,8

1,4 1,4

1,4 0,9 0,9 0,8

0,5 0,5 0,7

1,7 1,6 1,8

1,8 1,8 1,9 1,9

1,7 1,5

2,7 2,8 2,8

3,8 3,5 3,5 3,5

3,5 3,1

6,3%

5,3% 5,4% 4,8%

4,6% 4,5% 4,2%

4,1% 3,9%

2,2% 1,6% 1,4% 1,4%

1,3% 1,1% 1,0% 1,1% 0,9%

4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Customer deposits ELA funding ECB funding Other liabilities Total equity

Lifting of

capital controls

in April 2015

7

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BOC is well positioned to benefit from the Cypriot economic recovery

• Cypriot economic recovery exceeding expectations supported by a broad base

growth

• Improved credit rating allows the Government to refinance its debt with lower

yielding and longer term debt

Cypriot economic recovery 1

• Remains the engine of growth of the Cypriot economy given its dominant position

with c.40% market share of gross loans and c.30% of deposits

BOC on strong footing to benefit from

recovery 2

• World-class board with significant financial services expertise

• Present management has accomplished several key milestones and has a clear

agenda to create value for all stakeholders

Experienced management and board and

a more diversified shareholding structure 3

• Focus on core Cypriot business

• Intention to grow in the UK

Two-pronged

strategy articulated

around core Cypriot

bank and problematic

loans reduction

4

• Implementation of key pillars and plan of action Clear path to meeting medium term targets 5

Cyprus is the core

engine of growth

of the Bank

a

Significant

additional upside

from

management and

recovery of the

problematic loans

stock

• Additional provisions (booked in 4Q2015) brings the cash coverage ratio close to

50% (>100% including value of collateral)

• Restructuring of top exposures and problematic loans largely completed by the

RRD1 thus reducing delinquency ratios

• Recently passed foreclosure and loan sale legislation should help drive

repayments, refinancing and recovery

b

(1) Restructuring and Recoveries Division

8

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1 Cypriot economic recovery…

Cyprus Portgual Italy

Spain Greece Ireland

Baa1

Baa3

Ba2

B1

B3

Ca

Baa1

B1

Baa2

Ba1

Baa2

Caa3

Real GDP growth (%) Moody’s credit ratings

Source: EIU, credit ratings agencies, CBC

Caa2

Economic growth gaining momentum Credit ratings improving faster than peers

Improved rating and credit outlook reflected in reducing government bonds spreads

1,4% 0,3%

(2,4%)

(5,4%)

(2,5%)

1,6% 2,2% 2,5%

(3,4%)

(8,7%)

(3,9%)

2010 2011 2012 2013 2014 2015 2016E 2017E

Real GDP growth - Actual Initial Projections (EC)

Yield (%)

0

0,02

0,04

0,06

0,08

0,1

0,12

0,14

0,16

0,18

Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16

Cyprus 2019 (issued 06/2014) Cyprus 2022 (issued 04/2015) Cyprus 2025 (issued 11/2015) Cyprus 2020 (issued 02/2010)

9

Mar-16

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…driven by strong fundamentals

• Tourism and business

services sectors less

dependent on credit

provision

• Growth in manufacturing

and construction activity

• Construction activity

increased in 2Q2015.

Property prices showing

signs of stabilisation

• Potential for development of

energy / hydrocarbon

industry

Sector growth

• Corporate tax rate (12,5%)

• High levels of education

• Investment opportunities

from privatisation projects

• Strong institutional

framework and

effectiveness

Business enablers

• Strategic location –

crossroads of EMEA and

Asia

• Essential part of the

security dynamic in the

Eastern Mediterranean

region

• Potential resolution of the

Cyprus political problem

Geopolitical importance

• Small, flexible economy

• Recovery well under way

• Strong fiscal policy results

• Declining unemployment

• Negative inflation, reflecting

energy prices decline and

internal devaluation of the

economy

Economic adjustment

Tourism revenues (% of GDP)

Source: KPMG, PwC, Statistical Service of Republic of Cyprus, research reports, European Commission

40,6%

37,3%

22,1%

Upper secondary

Less than

Upper Secondary

Tertiary

Level of education, age 20-64 (2015)

Cyprus has the highest number of

university graduates per capita in Europe

33,3%

31,4%

29,7%

29,0%

28,0%

21,0%

20,0%

12,5%

12,5%

Corporate tax rate (2015)

Double taxation

avoidance

treaties with

c.50 countries

8,1% 8,1%

9,1%

9,9%

11,5% 11,6%

12,1%

2009 2010 2011 2012 2013 2014 2015

(6%) (5%)

(0%) (1%)

0% 0,4%

79%

103% 108% 109%

100% 95%

2012 2013 2014 2015 2016E 2017E

Government budget balance (% of GDP)

Gross public debt (% of GDP)

Government budget and debt

1

10

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11%

15%

74%

General Insurance of Cyprus

CNP Cyprialife¹

Other

A privileged position in the Cypriot market

Dominant franchise in a recovering economy

38%

62%

Cyprus gross loans

(31 December 2015):

€58,4 bn

Source: Company information, Cyprus Ministry of Finance

(1) 49,9% owned by BoC

(2) Gross Written Premiums

BOC Other

28%

72%

27%

24%

49%

Eurolife

CNP Cyprialife¹

Other

Cyprus deposits

(31 December 2015):

€45,9 bn

Cyprus life insurance GWP2

(31 December 2015):

€307 mn

Cyprus non-life insurance GWP2

(31 December 2015):

€425 mn

2

Position is holding up well with selective market share gains

24,8% 25,3% 25,7% 26,5%

28,2% 28,2% 27,9%

38,8% 37,7% 38,5% 39,3%

37,9% 40,0% 40,1%

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Jan-16 Feb-16

Deposits Loans

New lending of €0,6 bn during 2015 to support

economic recovery and promising sectors

51%

26%

Customer deposits in Cyprus increased by

€1,4 bn in 2015

11

Cyprus market share evolution

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114 Current shareholding of BOC (Dec-2015) Current Board composition

9,6%

7,2%

5,2%

5,0%

1,6%

59,2%

12,2%

Cyprus Popular Bank Public Co Ltd

Lamesa Holding S.A. (an affiliate of Renova Group)

TD Asset Management S.A.

EBRD

WL Ross

Other: Institutional investors and legal persons

Other: Individuals

Name Designation

Dr. Josef Ackermann Chairman

Independent

Mr. Wilbur Ross Vice Chairman

Independent

Mr. Maksim Goldman Vice Chairman

Not Executive

Mr. John Patrick Hourican Chief Executive Officer

Executive

Dr. Christodoulos Patsalides Finance Director

Executive

Mr. Arne Berggren Board member

Independent

Mr. Marios Kalochoritis Board member

Independent

Mr. Michalis Spanos Board member

Senior Independent

Mr. Ioannis Zographakis Board member

Independent

Mr. Michael Heger Board member

Nominated Independent1

Share capital increase - attracted high quality investors & world class Board 3

12 (1) Subject to ECB approval

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(1) Profit before provisions and impairments, gains on derecognition and changes on expected cash flows on acquired loans, restructuring costs and discontinued operations

High NIM in Cyprus operations

384

423

354

379 386 369 367 366

1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

788 1.017

(383)

634

54 23

(33) (10)

842 1.040

(416)

624

Net interest income Total income Total expenses Profit before provisions andimpairments¹, restructuring

costs and discontinuedoperations

Cyprus operations

Rest of operations

Group

Cyprus operations driving Group performance - FY2015 (€ mn)

88% 85% 87% 84% 87% 86% 85%

12% 15% 13% 16% 13% 14% 15%

2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Other income Fee and commission income

Steady fee and commission income in

Cyprus operations

Total income (€ mn) (bps)

Attractive and profitable core Cypriot business 4a

Growing customer deposit base in

Cyprus

12,7 11,7 11,3 11,6

12,7

Dec 2013 Jun 2014 Dec 2014 Jun 2015 Dec 2015

303 246 267 262 250 254 251

FY2015: 373 FY2014: 385

Contribution of Cyprus

operations %

Customer deposits in Cyprus (€ bn)

94% 98% 92% 102% 58%

13

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Gross loans and customer deposits (€ bn) Loans by sector as at 31 December 2015

0,91

1,03

1,13 1,14 1,21

1,30 1,36 1,39

1,45 1,49

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Gross loans Customer deposits

Intention to grow the UK operations

76%

21%

2% 1%

Corporate

SMEs

Consumer credit

Housing

4a

• BoC UK has a branch in North London and business centres in Central London, South London and Birmingham.

• Focuses on meeting the needs of entrepreneurs and owner-managed businesses and is primarily funded by retail deposits.

• Intends to grow its lending business to take advantage of its capital and liquidity position in order to improve its profitability.

• A new CEO was appointed in December 2015 to lead the Bank into the next phase of its development. Previously with Westpac,

Western Australia, (General Manager for Retail and Business) and with Bank of Ireland UK (Post office j.v.)

UK P&L Highlights (€ mn) FY2015

Net interest income 29

Fees and commission income 5

Total income 34

Total expenses (30)

Profit before provisions and impairments 4

Profit before tax 12

Profit after tax 11

14

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Evidence of progression across all asset quality metrics


(1) Loans in arrears for more than 90 days (90+ DPD) are defined as loans with a specific provision and loans past-due for more than 90 days

(2) As per EBA definition

15,0 15,2 14,8 14,2 14,0

62,9% 63,0% 61,9% 62,2% 61,8%

Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015

NPEs² (€ bn) NPE² ratio

Improved provision coverage

38% 39% 39% 38%

41% 42% 43% 41%

48%

35% 35% 33% 34% 34% 35% 36% 35%

39%

Dec 2013 Mar 2014 Jun 2014 Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015

90+ DPD¹ provision coverage NPE² provision coverage

Increasing momentum in reduction of 90+ DPD1 vs lagging NPEs2 reduction due to definition

12,7 12,8 12,6 12,0

11,3

53,2% 53,1% 52,9% 52,5%

50,1%

Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015

90+ DPD¹ (€ bn) 90+ DPD¹ ratio

4b

Evolution of 90+ DPD (€ mn)

945 1.329 1.399

2.723

5.311

(247) (164)

386

(325)

136

(143) (649) (668)

FY09 FY10 FY11 FY12 FY13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

FY14:

-350

FY15:

-1.324

15

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Unprovided 90+ DPD exposure fully covered by tangible collateral

• For Cyprus operations, 90+

DPD provision coverage

increased to 46% at 31

December 2015,

• Overall coverage of 90+ DPD

loans increased to 115% at

31 December 2015

• Puts BOC in a strong position

to explore market based

solutions for parts of the

problematic loan book

41% 43% 51%

77% 72% 68%

118% 115% 119%

Corporate

32% 33% 39%

79% 75% 73%

111% 108% 112%

SME

26% 25% 31%

81% 81% 79%

107% 106% 110%

Retail

(Housing)

49% 51% 57%

56% 53% 49%

105% 104% 106%

Retail

(Other)

38% 39% 46%

76% 72% 69%

114% 111% 115%

Total BOC

Cyprus

Dec-14 Sep-15 Dec-15

Loan loss reserve coverage Tangible coverage


4b

16

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New legislation is helping in a number of important areas

• Insolvency framework enacted in May 2015

• Introduction of Examinership provides creditor „cram down‟ mechanism for the first time

• Regulation of insolvency practitioners introduced in 4Q2015

• Foreclosure law enacted in September 2014, in force in August 2015, 1St auctions end of June 2016

• Sale of loans bill approved

• Tax incentives for customers to agree to consensual solutions

• Tax incentives including exemption from CGT1 and transfer fees in sale of property to the Bank

• Ongoing passport scheme for international investors is driving cash collections from property developers

• Securitisation law expected to be passed in 2016

The toolkit to

support debt

restructuring is

now largely in

place…

…delivering a

number of

important

benefits for the

Bank

Incentivises faster

consensual solutions

Reduced time to

execute non

consensual solution

Reduces cost of

restructurings

Provides greater

options to deleverage

Supports and

incentivises faster

cash collection

Improved quality and

regulation of

insolvency

practioners

17

4b


(1) Capital Gains Tax

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RRD is driving rapid and sustainable asset quality improvements

Bespoke tactical plans are in place for each segment within RRD, delivering asset quality improvements across the book…

• 23 connections

• >€100 mn debt

• Large diversified

groups

Major

Corporate

Management

Business unit summary Key management actions Progress

18

4b

Corporate

management

SME

Recoveries

Gross debt 90+ DPD

€2,9 bn

€2,0 bn

• c200 connections

• €6-100 mn debt

• Mid market

businesses Gross debt 90+ DPD

€1,8 bn

€1,0 bn

• c.1900

connections

• <€6 mn debt

• Small OMBs Gross debt 90+ DPD

€1,4 bn

€1,0 bn

• Retail €1,4 bn,

21k customers

• SME €1,5 bn,

4k customers

• Corporate €2,4 bn

c.250 connections Gross debt 90+ DPD

€5,3 bn €5,3 bn

• c. 94 experienced restructuring officers

• Portfolios assigned based on size/complexity

• Sustainable solutions using (amongst others):

- Debt:Equity & Debt:Asset swaps

- Re-tranching, including „equity like‟ PIK

• Support from internationally experienced

restructuring specialists

• External lawyers (UK & CY) used extensively

• Comprehensive improvements to lending

documents, security, step in rights, monitoring

& covenants

• 8 specialist geographically spread BU‟s

• New team added in 1Q2016 to drive pace

• Portfolio analysis with targeted campaigns

• Product range enhanced e.g. split & freeze

• Close monitoring & clearing of early arrears

• International specialists added 4Q2015

• Skills/experience transfer from other teams

• Increased focus on quicker consensual deals

• Step up aggressive actions for non co-

operative borrowers

Good progress

• Active negotiations ongoing with

all major borrower

• Good prospects to conclude and

execute deals

Good progress

• Active negotiations ongoing with

all major borrower

• Good prospects to conclude and

execute deals

Rapidly improving progress

• New team and approach

delivering results

• Underlying economic

improvements helping

Slower but improving progress

• Refreshed approach in corporate

is starting to deliver results

• Foreclosure actions are important

to building & maintaining pace

49

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127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Results are being improved by rigorous monitoring and oversight

• Department „stretch‟ targets, focused on materially outperforming budget for all key asset quality metrics,

are set at the outset of each quarter

• Stretch targets are supported by specifically identified and measurable actions

• Star chamber sessions are held by the CEO, GCRO and D-RRD with all departments fortnightly

• Performance continuously assessed with immediate corrective actions taken

Star chamber

sessions

RRD asset quality

benefits tracking

A results focused culture continues to be driven top down throughout the organisation via a number of important actions…

• Quarterly asset quality „stretch‟ targets embedded in a benefits tracker update daily – deal by deal

granularity

• Provides continuous visibility on expected quarterly results, with „gap‟ analysis identifying urgent action

areas

RRD weekly

pipeline calls

• Weekly pipeline calls are held by D-RRD with all team leaders across SME, Recoveries Retail/SME and

Recoveries Corporate

• Provides visibility on weekly applications, approvals and deal executions over the entire „small ticket‟ book

and the strategically important large ticket Corporate Recoveries book

• Weekly „promises‟ are closely monitored driving „results focused‟ behavior across the book

Daily monitoring

of early arrears

• Risk lead a continuous review of early arrears and redefaults across the book allowing issues to be

identified early

• Corrective actions immediately taken where relevant

19

4b

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0

127

127

127

0

153

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191

191

191

203

224

230

234

234

234

0

97

114

Performance of restructured loans

0,44

0,08 0,27

0,17

0,38

0,15 0,29

0,82

0,09 0,11 0,11 0,09 0,20 0,24

0,32 0,33 0,34

0,64

0,23

0,42 0,44

0,69

0,56

0,73

1,35

0,63

1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015

Corporate SMEs Retail Total restructuring Average restructuring

FY2014:

€1,73 bn

Increased restructuring activity with high success rates

79%

4% 3%

14%

64%

9% 7%

20%

65%

5% 4%

26%

73%

13%

7% 7%

78%

12%

4% 6%

73%

16%

6% 5%

79%

12%

5% 4%

No arrears 1-30 dpd 31-90 dpd Over 90 dpd

1Q2014 2Q2014 3Q2014

4Q2014 1Q2015 2Q2015

3Q2015

12%

Average

0.09 0.04 0.06 0.07 0.07 0.11 0.19

FY2015:

€3,33 bn

73%

(1) The performance of loans restructured during 4Q2015 is not presented in this graph as it is too early to assess it

4b

Restructuring activity by quarter (€ bn)

As at 31 December 20151 • Stalled restructuring negotiations lead to foreclosure or insolvency

• This drives increased costs and delays in realising collateral

• The Bank is achieving an accelerated and cheaper foreclosure

process via the execution of consensual debt:asset swaps

• A new division of the Bank, led by a Director on the executive

Board, has now been established (REMU) to:

a) on board assets acquired either consensually or non

consensually through debt:asset swaps,

b) manage assets, including selective investment

c) develop and execute exit strategies to monetise assets

Set up of Real Estate Management Unit (REMU)

20

On average 73% of loans restructured

post 31 December 2013 have no arrears

49

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0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Source: Company reports

(1) IFRS9 impact, which is effective as from 1 January 2018, has not been taken into account for the purpose for the targets. Targets are set on the basis of the present regulatory

environment

Clear path to meeting medium term targets 5

Category

Key

performance

indicators

Dec

2014

Dec

2015

Targets

2017

Medium

term

targets

Asset

quality

90+ DPD ratio 53% 50% <30%

90+ DPD

coverage 41% 48% 40%-50% >50%

Provisioning

charge1 3,6% 4,3% <1,0% <1,0%

Funding

ELA % Assets; €

bn

28%;

€7,4 bn

16%;

€3,8 bn

Fully

repay

Net loans %

deposits 141% 121%

100%-

120%

Capital CET1 (transitional)

ratio 14,0% 14,0% >12% >15%

Margins

and

efficiency

Net interest

margin 3,9% 3,8% ~3,25% ~3,00%

Fee and

commission

income/ total

income

13% 15% Increase >20%

Cost to income

ratio 37% 40% 40%-45% 40%-45%

Balance

sheet Total assets € bn €26,8 bn €23,3 bn >€25 bn

Key pillars & plan of action

• Intensify restructuring and workout activities of delinquent

borrowers

• Increase pace of restructurings and focus on more complex

and older cases on the back of the foreclosure law

• REMU to on-board, manage and dispose of properties

acquired

• Boost deposit franchise, leveraging on increasing customer

confidence and improving macroeconomic conditions

• Access Debt Capital Markets on the back of improved ratings,

stronger financial soundness and better prospects

• Access ECB funding

• Direct lending into promising sectors to fund the recovery of

the Cypriot economy

• Diversify income stream by boosting fee income from

international business, wealth, and insurance

• New loan origination, while maintaining lending yields

• Expand the UK franchise by leveraging the UK subsidiary

• Tangible savings through a targeted reduction program for

operating expenses

• Introduce appropriate technology/processes to enhance

product distribution channels and reduce operating costs

• Introduce HR policies aimed at enhancing productivity

• Deliver appropriate medium-term risk-adjusted returns

1. Drastically

reduce

problem

loans

2. Normalise

funding

structure;

Eliminate

ELA

3. Focus on

core

markets

4. Achieve a

lean

operating

model

5. Deliver

returns

21

49

133

156

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192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Macro and

geo-political

factors

• Slower economic recovery or regress into recession

• Failure of Government to cover future funding needs post the

end of ESM/IMF funding program (March 2016)

Asset quality • Credit risk concentration – large corporate exposures

• High concentration of collaterals in real estate

• Success in restructuring/addressing large

problematic exposures

• Debt for asset swaps, debt for equity swaps,

sale of loans

Funding & capital

External challenges – limited influence

• Further deterioration of the Russian economy

• Proposed tax reform in other jurisdictions (e.g. Russia

deoffshorisation)

Internal challenges – able to mitigate Action plan

• Continued reliance on Eurosystem funding

• Cypriot deposit base growing

• ELA funding being reduced fast

• Available contingent liquidity of €2,2 bn can be

derived from the €2,9 bn government

guaranteed bonds

• Gradual return to wholesale funding markets

Litigation • Pending legal claims including CySEC1 investigations and

bail-in related litigations among others

• Appropriate provisions have been made in

respect of pending legal proceedings

• Diversification of business model away from

Russia / Ukraine geographies

Action plan

• Stronger Bank is better able to stimulate the

economy

• Economic uncertainty in Greece and potential impact to the

periphery • Minimum direct exposure in Greece

Main challenges

(1) Cyprus Securities and Exchange Commission 22

49

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156

255

192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Improve visibility and share liquidity by way of a London listing

Low levels of liquidity of c.€0,2 mn ADTV

Low levels of research coverage – only covered by HSBC

No index inclusion

Athens listing no longer suitable given lack of Greek banking

operations

Potential inclusion in FTSE 250 index series

Greater visibility and likely increased analyst coverage…

… is expected to lead to greater stock liquidity

A more natural location for the Bank‟s profile

Current listing New listing (in 2H2016)

CSE ATHEX CSE LSE

23

49

133

156

255

192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114 • Unrivalled franchise in an economy that is gaining momentum

• CET1 ratio (transitional) at 14,0%, leverage ratio at 12,6%, one of the highest ratios among EU peers

• Improving funding structure with an increasing deposit base in Cyprus; L/D ratio at 121% and

customer deposits at 61% of total assets

• ELA reduced by EUR8,1 bn or 71% to EUR3,3bn; To fully repay by end-2017

• 90+ DPD down by EUR1,3 bn or 10% during FY2015; 90+ DPD provision coverage improved by 7

percentage points to 48% at 31 December 2015

• Foreclosure legislation and insolvency framework can now be used as one of the tools for the effective

management of problem loans

• Set-up of REMU to take ownership of, manage and monetise real estate assets in settlement of customer

obligations

• Recurring pre-provision profitability stabilising

• The proposed premium listing in London will enhance the Group‟s visibility and stock liquidity

Key takeaways

24

49

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156

255

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0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Appendix – Financial overview

49

133

156

255

192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Income statement review

€ mn FY2015 FY20143 yoy % 4Q2015 3Q20154 qoq %

Net interest income 842 969 (13%) 198 205 (4%)

Fees and commission income 154 152 1% 38 36 7%

Insurance income net of insurance claims 48 46 5% 16 12 39%

Core income 1.044 1.167 (11%) 252 253 -

Other income (4) 1 - 1 (2) 141%

Total income 1.040 1.168 (11%) 253 251 1%

Total expenses (416) (427) (3%) (119) (102) 16%

Profit before provisions and impairments1 624 741 (16%) 134 149 (10%)

Provisions for impairment of customer loans net of gain on derecognition of loans

and changes in expected cash flows on acquired loans (959) (770) 25% (630) (96) 560%

Impairments of other financial and non financial assets (62) (90) (31%) (24) (6) 313%

Share of profit from associates 6 5 22% 2 1 -

(Loss)/profit before tax, restructuring costs and discontinued operations (391) (114) 244% (518) 48 -

Tax (9) (11) (15%) 8 (8) -

Loss attributable to non-controlling interests 6 19 (64%) 1 5 -

(Loss)/profit after tax from continuing operations2 (394) (106) 271% (509) 45 -

Restructuring costs (43) (36) 20% (16) (5) 205%

Loss from disposal group held for sale/discontinued operations (38) (166) (77%) 0 (9) (100%)

Net gain/(loss) on disposal of non-core assets 37 47 (22%) 13 (18) (177%)

(Loss)/profit after tax (438) (261) 68% (512) 13 -

Net interest margin 379 bps 394 bps (15) bps 369 bps 370 bps (1) bp

Cost-to-Income ratio 40% 37% +3 p.p. 47% 41% +6 p.p.

(1) Profit before provisions and impairments, gains on derecognition and changes on expected cash flows on acquired loans, restructuring costs and discontinued

operations.

(2) (Loss)/profit after tax and before restructuring costs, discontinued operations and net profit on disposal of non-core assets.

(3) The FY2015 is not comparable to the FY2014 given the significant deleveraging completed since then, including, among others, the partial repayment of the

sovereign bond held by the Bank, by the Republic of Cyprus on 1 July 2014, and the disposal of the majority of the Russian operations during 3Q2015.

(4) As from 4Q2014, the Group‟s operations in Russia are treated as disposal group held for sale and results have been presented accordingly as discontinued

operations according to IFRS5. In September 2015, the Bank completed the sale of the majority of its Russian operations. The part of the operations not disposed of,

has ceased to be classified as held for sale and its results are presented as part of the continuing operations. 26

49

133

156

255

192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Balance sheet review

€ mn % change 31.12.15 31.12.14

Deposits by banks 49% 242 162

Funding from central banks (46%) 4.453 8.284

Repurchase agreements (36%) 368 580

Customer deposits 12% 14.181 12.624

Debt securities in issue 2% 1 1

Other liabilities (9%) 948 1.046

Non current liabilities and disposal groups

classified as held for sale (100%) 0 611

Total liabilities (13%) 20.193 23.308

Share capital 0% 892 892

Capital reduction reserve and share

premium 0% 2.505 2.505

Revaluation and other reserves 76% 259 147

Accumulated losses 661% (601) (79)

Shareholders’ equity (12%) 3.055 3.465

Non controlling interests 44% 23 16

Total equity (12%) 3.078 3.481

Total liabilities and equity (13%) 23.271 26.789

€ mn % change 31.12.15 31.12.14

Cash and balances with Central Banks 24% 1.423 1.139

Loans and advances to banks (20%) 1.314 1.647

Debt securities, treasury bills and equity

investments (60%) 1.009 2.541

Net loans and advances to customers (5%) 17.192 18.168

Other assets (4%) 2.284 2.378

Non current assets and disposal groups

classified as held for sale (95%) 49 916

Total assets (13%) 23.271 26.789

Note: As from 4Q2014, the Group‟s operations in Russia are treated as disposal group held for sale and results have been presented accordingly as discontinued

operations according to IFRS 5. In September 2015, the Bank completed the sale of the majority of its Russian operations. The part of the operations not disposed of,

has ceased to be classified as held for sale and its results are presented as part of the continuing operations. 27

49

133

156

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192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

31-Dec-15 Ratios Group FY2015

Performance

ROAA (1,7%)

ROAE (12,9%)

Net Interest Margin 3,79%

Cost to income ratio 40%

Loans to deposits 121%

Asset Quality

90+ DPD/ 90+ DPD ratio €11.329 mn (50,1%)

90+ DPD coverage 48%

Cost of risk 4,3%1

Provisions / Gross Loans 24,1%

Capital

Transitional Common Equity Tier 1 capital €2,748 mn

CET1 ratio (transitional basis) 14,0%

Total Shareholder‟s Equity / Total Assets 13,1%

BOC – Main performance indicators

Shareholder's equity

(€ mn) Intangible assets (€ mn) # shares (mn) Book value per share

Tangible book value

per share

31/03/2014 2.689 130 4.700 0,57 0,54

30/06/2014 2.748 135 4.756 0,58 0,55

30/09/2014 3.728 135 8.922 0,42 0,40

31/12/2014 3.465 127 8.922 0,39 0,37

31/03/2015 3.502 130 8.923 0,39 0,38

30/06/2015 3.506 128 8.923 0,39 0,38

30/09/2015 3.518 131 8.923 0,39 0,38

31/12/2015 3.055 134 8.923 0,34 0,33

(1) Calculated as the provisions for impairment of customer loans, including provisions of discontinued operations, (in total €1.307 mn) net of

gains on derecognition and changes in expected cash flows on acquired loans (totalling €305 mn) over average gross loans 28

49

133

156

255

192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Overseas non-core exposures (€ mn)

Recent balance sheet deleveraging focused on non-core exposures

The non-core overseas exposures at 31 December 2015

were as follows:

Greece: The net exposure comprised:

(a) Net on-balance sheet exposures (excluding foreclosed

properties) totalling €22 mn;

(b) 641 foreclosed properties with a book value of €173 mn;

(c) off-balance sheet exposures totalling €131 mn; and

(d) lending exposures to Greek entities in the normal

course of business in Cyprus totalling €70 mn, and

lending exposures in Cyprus with collaterals in Greece

totalling €81 mn.

Romania: The overall net exposure is €312 mn

Russia: Following the disposal of Uniastrum Bank and

certain other Russian assets the remaining net exposure

(on and off balance sheet) in Russia is €114 mn

164 155 155 120 114

520 439

368 354

312

179

200

199 192

173

97

76

56 49

22

185

154

133

132

131

166

155

140

139

151

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Greece other¹

Greece net off balance sheet exposure

Greece net on balance sheet exposure

Greece Foreclosed Properties

Romania: Net exposure

Russia: Net exposure

1.311

1.179

1.051

477

986

31%

512

528

585

627

903

(1) Lending exposures to Greek entities in the normal course of business in Cyprus and lending exposures in Cyprus with collaterals in Greece 29

49

133

156

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0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Strong capital position above regulatory minimum and European peer

average

• CET1 ratio of 14,0% (transitional) and 13,1% (fully-loaded), well ahead of regulatory minimum of 11,75%1 and European peer average2 of 13%

• Leverage ratio of 12,6%, stronger than European peers2

• The Bank maintains a strong CET1 and leverage ratio position despite elevated provisions in 4Q2015 due to assumption changes in the Bank‟s provisioning

methodology in compliance with ECB/SERP

Ahead of European peers and regulatory minimum


1. CBC prescribed minimum of 11,75%

2. Peer group consists of large European banks

16,8

%

16,6

%

16,5

%

16,1

%

16,0

%

15,5

%

15,5

%

14,9

%

14,5

%

13,1

%

13,1

%

13,1

%

13,0

%

12,4

%

12,0

%

11,9

%

11,6

%

11,4

%

11,4

%

11,4

%

11

,1%

10,9

%

10,9

%

10,9

%

10,7

%

10,3

%

10,1

%

Pe

er

1

Pe

er

2

Pe

er

3

Pe

er

4

Pe

er

5

Pe

er

6

Pe

er

7

Pe

er

8

Pe

er

9

Bo

C

Pe

er

10

Pe

er

11

Pe

er

12

Pe

er

13

Pe

er

14

Pe

er

15

Pe

er

16

Pe

er

17

Pe

er

18

Pe

er

19

Pe

er

20

Pe

er

21

Pe

er

22

Pe

er

23

Pe

er

24

Pe

er

25

Pe

er

26

Peer average2: 13,0%

Regulatory minimum: 11,8%

CET1 ratio fully loaded (2015)

Leverage ratio fully loaded (2015)

12,6

%

12,1

%

10,7

%

9,0

%

6,8

%

6,3

%

6,0

%

5,6

%

5,3

%

5,3

%

5,2

%

5,0

%

4,8

%

4,7

%

4,7

%

4,6

%

4,6

%

4,5

%

4,5

%

4,5

%

4,5

%

4,2

%

4,1

%

4,0

%

4,0

%

3,8

%

3,5

%

Bo

C

Pe

er

5

Pe

er

2

Pe

er

11

Pe

er

10

Pe

er

8

Pe

er

25

Pe

er

7

Pe

er

1

Pe

er

9

Pe

er

19

Pe

er

15

Pe

er

12

Pe

er

13

Pe

er

26

Pe

er

3

Pe

er

24

Pe

er

14

Pe

er

17

Pe

er

18

Pe

er

21

Pe

er

4

Pe

er

16

Pe

er

22

Pe

er

23

Pe

er

6

Pe

er

20

Peer average2: 5,5%

30

49

133

156

255

192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Movement of capital and equity dominated by one-off higher provisions

taken at the end of 2015

The Bank continues to be well capitalised…

14,0%

2,7%

0,8% 14,0% 13,1%

(3,5%)

(0,9%)

CET1 ratio 2014(transitional)

Profit before provisions Provisions¹(post-tax)

RWAs change CET1 ratio 2015(transitional)

Deferred tax asset CET1 ratio 2015 (fullyloaded)


(1) Including gain on derecognition

…despite high 2015 provisioning in compliance with ECB/SREP

CET1 ratio evolution

Equity evolution (€ mn)

3.481

884

68 3.078

(22) (1.317)

(16)

Total equity 2014 Continuing operations Discontinuedoperations

Provisions(post-tax)

Other comprehensiveincome

Other Total equity 2015

Profit before provisions net of

impairments

31

49

133

156

255

192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Analysis of Liabilities and Equity (€ bn)

2,7 2,8 2,8 3,8 3,5 3,5 3,5 3,5 3,1 1,7 1,6 1,8

1,8 1,8 1,9 1,9 1,7 1,5

9,6 9,5 8,8 7,7 7,4 6,9 5,9 4,9 3,8

1,4 1,4 1,4 0,9 0,9 0,8 0,5

0,5 0,7

15,0 14,1 13,8 13,3 13,2 13,6 13,6

13,6 14,2

Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Total equity Other liabilities ELA ECB funding Customer deposits

30,4 29,4 28,6 27,5 26,8 26,7

Funding structure

25,4 24,2 23,3

Analysis of Liabilities and Equity (%)

9% 9% 10% 14% 13% 13% 14% 15% 13% 6% 6% 6%

6% 7% 7% 7% 7% 7%

31% 32% 31% 28% 28% 26% 23% 20% 16%

5% 5% 5% 3% 3% 3% 2% 2% 3%

49% 48% 48% 49% 49% 51% 54% 56% 61%

Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Total equity Other liabilities ELA ECB funding Customer deposits

32

49

133

156

255

192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Deposits by geography

9,67 8,66 8,20 8,09 7,79 7,85 8,07 8,42 8,76 8,94

4,75 4,05

3,79 3,59 3,46 3,47 3,57 3,21 3,40 3,75

1,30

1,24 1,25 1,25 1,29 1,30 1,36 1,39 1,45 1,49

1,25

1,02 0,83 0,87 0,79 0,55 0,61 0,61

Jun-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Cyprus non-IBU Cyprus IBU¹ UK Russia & other countries²

16,97 14,97 14,07 13,80 13,33 13,17

Analysis of Deposits by Geography and by Type

13,61 13,63 13,61 14,18

Deposits by type

12,72 10,55 9,59 9,13 8,53 7,88 8,16 8,14 7,97 8,16

0,83

0,93 0,95 0,95

0,84 0,96 0,97 1,02 1,01 1,03

3,42

3,49 3,53 3,72

3,96 4,33 4,48 4,47 4,63 4,99

Jun-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Time deposits Savings accounts Current & demand accounts

16,97 14,97 14,07 13,80 13,33 13,17 13,61 13,63 13,61 14,18

31 December 2015 (%)

63%

26%

11% Cyprus – non IBU

Cyprus – IBU¹

UK

58%

7%

35%

Timedeposits

Savingsaccount

Currentanddemandaccount


Total Cyprus 89%

(1) IBU- Division servicing exclusively international activity companies registered in Cyprus and abroad and non-residents

(2) Other countries: Romania and Ukraine (until March 2014)

(€ bn)

(€ bn)

Total

Total

33

49

133

156

255

192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Gross loans by geography

22,02 21,72 21,20 21,32 21,19 20,98 20,66

1,17 1,11 0,91 1,03 1,13 1,14 1,21

1,30 1,21 0,97 1,07 1,03 0,26 0,25

0,80 0,70 0,69 0,67 0,58

0,49 0,48

Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Cyprus UK Russia Other countries¹

25,30 24,74 23,77 24,09

Gross loans by Geography and by Customer Type

23,93 22,86 22,59

Gross loans by customer type


91,4%

5,3% 1,2%

2,1%

Cyprus

UK

Russia

Othercountries¹

50,6%

20,7%

19,0%

9,7%

Corporate

SME

Retailhousing

Retailother


(1) Other countries: Greece and Romania

(€ bn)

(€ bn)

Total

Total

12,61 12,17 11,83 12,10 12,03 11,56 11,42

5,50 5,54 5,09 5,02 4,99 4,75 4,68

4,67 4,61 4,41 4,43 4,39 4,35 4,31

2,52 2,42 2,44 2,54 2,52 2,20 2,18


Corporate SMEs Retail housing Retail other

25,30 24,74 23,77 24,09 23,93 22,86 22,59

34

49

133

156

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192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

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114

Asset quality

NPEs are focused in the core Cypriot business…

…mostly in large corporates and SMEs

94,9%

0,5% 1,8% 2,8%

Cyprus

UK

Russia

Othercountries¹

51,5%

24,6%

14,1%

9,8% Corporate

SME

Retail housing

Retail other

(1) Other countries: Greece and Romania

13,33 13,75 13,86 13,59 13,49 13,26

0,26 0,11 0,11

0,10 0,08

0,07

0,57 0,52 0,64

0,65 0,26

0,25

0,57 0,58

0,56 0,47

0,39 0,39

14,73 14,96 15,17

14,81

14,22 13,97

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Cyprus UK Russia Other countries¹ Total

NPEs by geography (€ bn)

7,98 8,17 8,18 7,75 7,37 7,19

3,64 3,53 3,57 3,60 3,51 3,44

1,66 1,82 1,93 1,95 1,98 1,97

1,45 1,44 1,49 1,51 1,36 1,37

14,73 14,96 15,17 14,81 14,22 13,97

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

Corporate SMEs Retail housing Retail other Total

NPEs by customer type (€ bn)

As of December 2015

As of December 2015

NPE reduction across all parts of the business over the past year

35

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127

127

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191

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Asset quality

(€ mn) Dec-15 Sep-15 Jun-15 Mar-15 Dec-14

A. Gross Loans after Fair value on Initial recognition 21.385 21.597 22.575 22.540 22.206

Fair value on Initial recognition 1.207 1.266 1.351 1.545 1.566

B. Gross Loans 22.592 22.863 23.926 24.085 23.772

B1. Loans with no arrears 10.443 9.925 10.178 10.038 10.065

B2. Loans with arrears but not impaired 3.049 3.611 4.105 4.627 4.413

Up to 30 DPD 469 585 668 662 562

31-90 DPD 351 355 435 596 492

91-180 DPD 144 200 227 344 440

181-365 DPD 259 374 529 758 926

Over 1 year DPD 1.826 2.097 2.246 2.267 1.993

B3. Impaired Loans 9.100 9.327 9.644 9.420 9.294

With no arrears 876 848 969 1.006 1.153

Up to 30 DPD 78 66 91 68 149

31-90 DPD 24 60 121 275 142

91-180 DPD 65 152 167 181 143

181-365 DPD 310 464 489 445 685

Over 1 year DPD 7.747 7.737 7.807 7.445 7.022

(90+ DPD)1 11.329 11.998 12.646 12.789 12.653

90+ DPD ratio (90+ DPD / Gross Loans) 50,1% 52,5% 52,9% 53,1% 53,2%

Accumulated provisions 5.445 4.933 5.381 5.354 5.140

Gross loans provision coverage 24,1% 21,6% 22,5% 22,2% 21,6%

90+ DPD provision coverage 48,1% 41,1% 42,5% 41,9% 40,6%

+

+

+

+

=

(1) Loans in arrears for more than 90 days (90+ DPD) are defined as loans with a specific provision and loans past-due for more than 90 days 36

49

133

156

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192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

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0

97

114

Asset quality

90+ DPD by Geography (€ bn) 90+ DPD ratios by Geography

11,28 11,60 11,47 11,53 11,48 11,27 10,63

0,51 0,55 0,51 0,60 0,61

0,26

0,25

0,28 0,26 0,09 0,11 0,09

0,08

0,07

0,52 0,57

0,58 0,55 0,47

0,39

0,38


Cyprus UK Russia Other countries¹

12,59 12,98 12,65 12,79 12,65 12,00 11,33

51%

53%

54%

54%

54%

54%

51%

39%

46%

52%

56%

59%

100%

100%

24%

23%

10%

11%

8%

7%

6%

65%

80%

84%

82%

83%

80%

80%


Cyprus Russia UK Other countries¹

(1) Other countries: Romania and Greece

37

49

133

156

255

192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Asset quality

90+ DPD inflows – Cyprus operations (€ bn) 90+ DPD inflows – Corporate Loans (€ bn)

90+ DPD inflows – SMEs Loans (€ bn)

0,68

0,60

0,34 0,36

0,22

0,11

0,39

3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015

90+ DPD inflows Average quarterly inflows

90+ DPD inflows in the Cyprus operations have been significantly reduced

90+ DPD inflows – Retail (€ bn)

0,29

0,37

0,14 0,20

0,09 0,02

0,18

3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015

Corporate 90+ DPD inflows Average quarterly inflows

0,17

0,10 0,09 0,08 0,06 0,04 0,09

3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015

SMEs 90+ DPD inflows Average quarterly inflows

0,22

0,13 0,11 0,08 0,07 0,05

0,11

3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015

Retail 90+ DPD inflows Average quarterly inflows

38

49

133

156

255

192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

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114

Asset quality

90+ DPD (€ bn) and Quarterly change of 90+ DPD (€ mn)

321 380 329

(85)

265 410

558

96 232

156

402

609

100 64

1.319 1.240

3.319

1.972

20

(247) (164)

386

(325)

136

(143)

(649) (668)

1,3 1,6 2,0 2,3 2,2 2,5

2,9 3,5 3,6 3,8 4,0

4,4 5,0 5,1 5,1

6,5

7,7

11,0

13,0 13,0 12,8 12,6 13,0 12,7 12,8 12,6

12,0 11,3

12-2

008

03-2

009

06-2

009

09-2

009

12-2

009

03-2

010

06-2

010

09-2

010

12-2

010

03-2

011

06-2

011

09-2

011

12-2

011

03-2

012

06-2

012

09-2

012

12-2

012

06-2

013¹

09-2

013

12-2

013

03-2

014

06-2

014

09-2

014

12-2

014

03-2

015

06-2

015

09-2

015

12-2

015

Quarterly change of 90+ DPD (€ mn)

90+ DPD (€ bn)

FY 2009

€945 mn

FY 2010

€1.329 mn

FY 2011

€1.399 mn

FY 2012

€2.723 mn

FY 2013

€5.311 mn

FY 2014

-€350 mn

FY 2015

-€1.324 mn

(1) Information for 1Q2013 and 2Q2013 is not available as it has not been possible to publish the financial results for the three months ended 31 March 2013

90+ DPD

annual change

39

49

133

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0

127

127

127

0

153

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191

191

191

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234

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234

0

97

114 Group 90+ DPD by Customer type (€ bn)

90+ DPD inflows by customer type - Cyprus operations (€ bn)

90+ DPD inflows – Cyprus operations (€ bn)

7,19 7,18 7,10 6,75 6,25

3,07 3,14 3,13 3,03 2,90

1,22 1,26 1,18 1,14 1,08

1,17 1,21 1,24 1,08

1,10

12,65 12,79 12,65 12,00

11,33

31.12.14 31.03.15 30.06.15 30.09.15 31.12.15

Corporate SMEs Retail other Retail housing

0,68

0,60

0,34 0,36

0,22

0,11

0,39

3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015

90+ DPD inflows Average quarterly inflows

Asset quality

0.37

0,29

0,17

0,22

0,14

0,09 0,11

0,20

0,08 0,08 0,09 0,06 0,07

0,02 0,04 0,05

Corporate SMEs Retail

3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015

0.10

0.13

0,18

0,09 0,11

Average

• Most of the 90+ DPD reduction for FY2015 relates to Corporate

loans, accounting for about 70% of the reduction

• 90+ DPD inflows (Cyprus operations) have been reduced

significantly, totalling €0,11 bn for 4Q2015, compared to an

average of €0,39 bn for the last six quarters

• Although there was as reduction in 90+ DPD inflows across all

types of loans, 90+ DPD inflows for Corporate loans have

exhibited the most improvement

90+ DPD inflows in the Cypriot operations have been reduced significantly

40

49

133

156

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0

127

127

127

0

153

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191

191

191

203

224

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0

97

114 Total Bank – Cyprus

79%

4% 3%

14%

64%

9% 7%

20%

65%

5% 4%

26%

73%

13% 7% 7%

78%

12%

4% 6%

73%

16%

6% 5%

79%

12%

5% 4%

0%

20%

40%

60%

80%

100%


1Q2014 2Q2014 3Q2014 4Q2014

1Q2015 2Q2015 3Q201573%

95%

2% 1% 2%

83%

3% 7% 7%

67%

1% 2%

30%

97%

2% 0% 1%

88%

7%

0% 5%

86%

5% 0%

9%

92%

1% 0% 7%

0%

20%

40%

60%

80%

100%


Corporate

SMEs

33%

12% 4%

51% 46%

13%

7%

34%

58%

10% 9%

23%

65%

13% 9% 13%

68%

18%

5% 9%

66%

20%

11% 3%

69%

20%

7% 4%

0%

20%

40%

60%

80%

100%


Retail

12%

87%

9%

58%

19%

55%

9% 8%

28%

56%

13% 6%

25%

66%

14%

4%

16%

57%

22%

10% 11%

65%

19%

10% 6%

68%

19%

8% 5%

71%

19%

8% 2%

0%

20%

40%

60%

80%

100%

No arrears 1-30 dpd 31-90 dpd Over 90 dpd.

63%

13%

Quarterly average

Performance of restructured loans (post-31 December 2013, by quarter) as at 31 December 2015 1

• An analysis performed as at 31 December 2015 indicates that on average 73% of the loans restructured post 31 December

2013 (restructurings performed in 4Q2015 were excluded) for Cyprus operations, have no arrears; The average percentage

of restructured loans with arrears more than 90 days stands at 12%

• Corporate restructured loans exhibit the best performance with an average percentage of restructured

loans with no arrears of 87%

Asset quality

(1) The performance of loans restructured during 4Q2015 is not presented in this graph as it is too early to assess it.

41

49

133

156

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192

0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

90+ DPD ratios by business line

Gross loans by business line (€ bn) 3

2%

24

%

16

%

31

%

69

%

81

% 10

0%

29

%

27

%

16

%

31

%

68

%

81

% 10

0%

27

%

26

%

15

%

30

%

70

%

80

% 10

0%

22

%

22

%

14

%

25

%

71

%

79

% 10

0%

21

%

20

%

13

%

23

%

63

%

74

% 1

00

%

Corporate SMEs Housing Consumer Credit RRD-Mid andLarge Corporates

RRD-SMEs RRD-Recoveries

31.12.14 31.03.15 30.06.15 30.09.15 31.12.15

4,3

4

2,3

0

3,8

5

1,7

5

5,3

3

1,4

0

4,7

8

4,5

3

2,2

0

3,8

5

1,8

3

5,3

7

1,3

9

4,9

1

4,5

9

2,1

4

3,8

0

1,8

0

5,2

0

1,3

8

5,0

2

4,3

8

1,8

3

3,7

5

1,4

8

4,8

7

1,4

1

5,1

3

4,2

9

1,7

8 3,6

8

1,4

3

4,7

3

1,3

8

5,3

1

Corporate SMEs Housing Consumer Credit RRD-Mid andLarge Corporates

RRD-SMEs RRD - Recoveries

31.12.14 31.03.15 30.06.15 30.09.15 31.12.15

% of total

(1) As part of the restructuring of the Group, management is currently monitoring the loan portfolio of the Group using new business line definitions. An important component of the Group’s new operational structure is the establishment of the RRD for the purposes of centralising and streamlining the management of its delinquent loans.

19% 8% 16% 7% 21% 23% 6%

Analysis of Loans and 90+ DPD ratios by Business Line1

42

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156

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0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

90+ DPD ratios by economic activity

50

%

54

%

59

%

79

%

48

%

38

%

54

% 67

%

48

%

54

%

62

% 7

7%

48

%

38

%

55

% 67

%

48

%

54

%

57

%

80

%

48

%

38

%

57

%

64

%

49

%

54

%

59

%

79

%

48

%

36

%

62

%

57

%

48

%

54

%

46

%

76

%

47

%

36

%

57

%

56

%

31.12.14 31.03.15 30.06.15 30.09.15 31.12.15

2,4

7

0,8

9

1,5

0 3,9

6

3,1

2

7,8

5

1,8

6

2,1

2

2,4

8

0,9

1

1,5

7 4,0

4

3,1

7

7,9

2

1,8

9

2,0

9

2,5

0

0,9

2

1,6

4 4,1

9

3,2

0

7,8

6

2,0

7

1,5

5

2,3

8

0,8

5

1,6

2 4,1

4

3,3

8

7,4

1

1,8

4

1,2

4

2,3

6

0,8

3

1,5

7 4,0

7

3,4

2

7,3

3

1,7

9

1,2

1

31.12.14 31.03.15 30.06.15 30.09.15 31.12.15

Trade Manufacturing Hotels & Restaurants

Construction Real estate Private Individuals

Professional & other services

Other sectors

Gross loans by economic activity (€ bn)

Trade Manufacturing Hotels & Restaurants

Construction Real estate Private Individuals

Professional & other services

Other sectors

15% 10% 32% 8% 5% % of

total 18% 7% 4%

Analysis of Loans and 90+ DPD ratios by Economic Activity

43

49

133

156

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0

127

127

127

0

153

204

191

191

191

203

224

230

234

234

234

0

97

114

Disclaimer

This presentation has been prepared for information and background purposes only. It is confidential and neither it nor any part of it may be

reproduced (electronically or otherwise) or redistributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person

(excluding the recipient's professional advisers) or published in whole or in part for any purpose without the prior written consent of the Bank of

Cyprus Public Company Ltd (the "Bank"). This presentation does not purport to be all-inclusive or to contain all of the information that a person

considering the purchase of any securities of the Bank may require to make a full analysis of the matters referred to herein. Certain statements,

beliefs and opinions in this presentation are forward-looking. Such statements can be generally identified by the use of terms such as “believes”,

“expects”, “may”, “will”, “should”, “would”, “could”, “plans”, “anticipates” and comparable terms and the negatives of such terms. By their nature,

forward-looking statements involve risks and uncertainties and assumptions about the Group that could cause actual results and developments to

differ materially from those expressed in or implied by such forward-looking statements. These risks, uncertainties and assumptions could adversely

affect the outcome and financial effects of the plans and events described herein. We have based these forward-looking statements on our current

expectations and projections about future events. Any statements regarding past trends or activities should not be taken as a representation that

such trends or activities will continue in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which are

based on facts known to and/ or assumptions made by the Group only as of the date of this presentation. The Bank's ability to achieve its projected

results depends on many factors which are outside management's control. Actual results may differ materially from those contained or implied in the

forward-looking statements. We assume no obligation to update such forward-looking statements or to update the reasons that actual results could

differ materially from those anticipated in such forward-looking statements. This presentation does not constitute an offer to sell, or a solicitation of

an offer to buy, any security in the United States, or any other jurisdiction. The delivery of this presentation shall under no circumstances imply that

there has been no change in the affairs of the Group or that the information set forth herein is complete or correct as of any date. This presentation

shall not be used in connection with any investment decision regarding any of our securities, which should only be made based on expressly

authorised materials from us identified as such, nor in connection with any decision whether or how to vote on any matter submitted to our

stockholders. The securities issued by the Bank have not been, and will not be, registered under the US Securities Act of 1933 (“the Securities

Act”), or under the applicable securities laws of any other jurisdiction.

44

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