BoC share drop sparks huge market downturn

Cyprus stock exchange general index hits six-month low

THE Cyprus Stock Exchange (CSE) general index plummeted 9.7 per cent yesterday to its lowest level in six months, brought down by a massive drop in Bank of Cyprus (BoC) stocks.

Yesterday’s CSE plunge was the fourth and biggest this week and followed BoC’s fall on the Athens Stock Exchange (ASE) earlier in the day.

According to Reuters, BoC shares were losing more than 14 per cent on the Athens bourse on what analysts said was weak 2008 earnings growth guidance.

On Wednesday the bank announced a hike in net profits of 55 per cent to €485 million, and forecast net earnings of €540 million for 2008.

“Guidance for 2008 profit was lower than what we expected and 2007 results were slightly lower than what we were looking for,” Panagiotis Kladis, an analyst at National-P&K Securities told Reuters in Athens.

“The 2008-2010 business plan is ambitious, which I think will be difficult to achieve.”

Reuters added: “Earnings guidance for 2008 appears a bit weaker than our and consensus estimates – it was 4.0 per cent below our estimates and 5.6 per cent below consensus,” another analyst Sophia Skourti of HSBC said in a note to investors.

On the CSE yesterday BoC shares closed at €8.26, a fall of 12.13 per cent after reaching a low of €7.90 during trading. Over €7.1 million worth of BoC shares were traded on the CSE yesterday.

In addition to the poor reception from analysts towards the bank’s results,

Deutsche Bank and KBW reduced their price target on BoC shares from €17 to €12 per share, while Citigroup and JP Morgan left their price targets unchanged at €17 and €18 respectively, the Financial Mirror reported.

The BoC nose-dive brought the entire CSE banking sector down 10.24 per cent yesterday.

Marfin Laiki shares joined the fray with a fall of 8.33 per cent to close at €6.30 and Hellenic Bank fell 7.77 per cent to €3.46.

Hellenic announced yesterday that the bank’s net profit for 2007 was €133 million, nearly a 130 per cent increase.

Overall yesterday, 55 CSE titles slipped downwards compared to only seven that recorded gains. Volume for the day was €24 million.