BANK of Cyprus (BoC) and Marfin Laiki yesterday said 2010 profits had fallen but both banks still reported millions in net profits for the year.
Net profit at Bank of Cyprus fell 2 per cent last year to €306 million after a jump in loan provisions and is likely to be at a similar level in 2011, the bank said while Marfin Laiki said its full year net profit fell 49.9 per cent to €87.1 million.
In the case of BoC, the bank reported that group net interest income last year rose 23 per cent to €1.04 billion. The net profit is at the lower end of earlier bank guidance for between €300 million and €400 million in net gains. Pretax profit fell 5 per cent to €348 million.
Provisioning costs were up 51 per cent, while the bank registered declines in foreign exchange income, its insurance divisions and in financial instruments, reflecting challenging conditions in markets.
The bank said it would propose a “reduced” final dividend of 0.03 euros per share in cash. The total of the proposed dividend, including a 0.06 euro per share interim payout in November, would total €73.5 million, the bank said.
Marfin Popular sustained much bigger drop in profits. Adjusted for a one-off tax charge in Greece, where it also operates, the bank said net profit attributable to shareholders was €95.3 million, a 45.2 per cent drop compared to 2010.
Net interest income was up 11.6 per cent to €709.5 million the group said in a statement. Pretax profit came in 47.3 per cent lower to €114.7 million.
Central Bank governor Athanasios Orphanides recently recommended that Cypriot banks not pay dividends in a bid to further strengthen their capital adequacy levels.
Last Friday, speaking after a meeting of Central Bankers from South East Europe, he said he was perturbed that the island’s fiscal problems were casting the island’s banking sector in a bad light.
BoC also said yesterday it planned an issue of up to €1.34 billion-worth of Convertible Enhanced Capital Securities to meet tighter capital rules.
Existing shareholders will have priority rights to subscribe, the bank said.
Bank of Cyprus’s total capital adequacy ratio stood at 11.9 per cent of assets on December 31, its core tier 1 ratio was 8.1 per cent and the tier 1 ratio stood at 11 per cent.
The issue would strengthen its capital adequacy, with its pro-forma capital adequacy ratio reaching 14 per cent and its Tier 1 ratio reaching 12.7 per cent, the bank said. That was based on the assumption that all eligible securities, worth €818 million, were exchanged for the new enhanced capital securities.
