By a Staff Reporter
THE ISLAND’S two biggest banks, both anchors of the Cyprus Stock Exchange, yesterday announced painful annual results for 2002.
Bank of Cyprus reported a 70.1 per cent slump in pre-tax profit to £17.5 million due to higher provisions and investment write-downs, the bank said.
Laiki revealed a £48.1 million pre-tax loss for the year, down from a profit in 2001 of £2.09 million; the loss was down to the slump in the stock market and an increase in its bad-debt provision, the bank said.
Bank of Cyprus said its “core” profits, before provisions for bad debts, write-downs and before a one-off charge for retirement benefits, reached £97.6 million for the year, a 6.6 per cent increase over 2001.
The bank said it had transferred £23.6 million, which reflected unrealised losses on equity investments, onto the profit and loss account and said it would not be paying a dividend to shareholders for 2002. Bad debt provisioning for the period rose 142 per cent to £80.1 million.
“The year 2002 was a very difficult year for the banking sector in Cyprus as well as internationally,” a statement from BoC said. “Despite these adverse conditions, the Group’s core profit was improved and will continue to improve during 2003.”
Earlier this month, Fitch Ratings, the international rating agency, downgraded BoC’s Long-term rating to ‘A-‘ from ‘A’. The rating action reflected concerns over BoC’s high costs, its asset quality indicators and loan loss reserve coverage levels as well as uncertainty regarding the economic outlook.
Laiki also said 2002 had been a “particularly difficult year” for the sector, but said underlying operational profits had grown 7.3 per cent to £64.9 million during the year.
Reports from Athens said the unit of Bank of Cyprus operating in Greece announced that its net profit in 2002 grew 4.5 per cent to €20.1 million without including a one-off gain from the sale of its stake in ABC Factors.
The Bank of Cyprus subsidiary said it expanded its network in Greece to 75 branches last year from 60 in 2001, and contributed 34.1 per cent of the group’s total operational profit in 2002.
Greek operations accounted for 33 per cent of the Cypriot banking group’s total loans and made up 27 per cent of deposits.
Net interest income from the group’s operations in Greece rose 30.3 per cent to €96.5 million with the net interest margin improving to 2.57 per cent in the last quarter of 2002 from 2.28 per cent in the first.
“The objective of the group in Greece is to increase its market share to about 5.0 per cent by 2007 and continue to grow profitably,” Bank of Cyprus-Greece said in a statement.
The Bank of Cyprus, with a current market value of €988 million, is listed on the Athens and Cyprus stock exchanges.
The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.
