Group Financial Results for the quarter ended 31 March 2020 Bank of Cyprus Group Group Financial Results For the quarter ended 31 March 2020
Group Financial Results for the quarter ended 31 March 2020 DISCLAIMER This presentation has not been audited by the Group’s external auditors. Important Notice Regarding Additional Information Contained in the Investor Presentation This financial information is presented in Euro (€) and all amounts are rounded as indicated. A The presentation for the Group Financial Results for the quarter ended 31 March 2020 (the “Presentation”), available on https://www.bankofcyprus.com/en-GB/investor-relations-new/reports- comma is used to separate thousands and a dot is used to separate decimals. presentations/financial-results/, includes additional financial information not presented within the Group Financial Results Press Release (the “Press Release”), primarily relating to (i) NPE analysis (movements by segments and customer type), (ii) rescheduled loans analysis, (iii) details of historic restructuring activity including REMU activity, (iv) analysis of new lending, (v) Income statement by business line, (vi) NIM and interest income analysis and (vii) Loan portfolio analysis in accordance with the three-stages model for impairment of IFRS 9. Except in relation to any non- IFRS measure, the financial information contained in the Investor Presentation has been prepared in accordance with the Group’s significant accounting policies as described in the Group’s Annual Financial Report 2019. The Investor Presentation should be read in conjunction with the information contained in the Press Release and neither the financial information in the Press Release nor in the Investor Presentation constitutes statutory financial statements prepared in accordance with International Financial Reporting Standards. 2
Group Financial Results for the quarter ended 31 March 2020 1Q2020 - Highlights • Safeguarding health of staff and customers, while ensuring operational resilience of the Bank • Supporting both customers affected by COVID-19 and wider Cypriot economy • Gradual relaxation of restrictive measures; currently in second phase COVID-19 • Additional 88 bps of cost of risk (€28 mn) for 1Q2020 reflecting deterioration of macroeconomic outlook • NPE portfolio sale delayed due to prevailing market and operational conditions • Current focus on proactively assessing the impact of COVID-19 on loan portfolio Total Capital ratio of 17.7% 1 and CET1 ratio of 14.3% 1 • Good Capital and Liquidity • Significant surplus liquidity of € 3.0 bn Position • Organic NPE reduction of € 142 mn for 1Q2020, despite COVID-19 lockdown in March 2020 • NPEs reduced to € 3.7 bn (€ 1.6 bn net) Continued Balance Sheet • Gross NPE ratio reduced to 29% (net NPE ratio at 15%) Repair in 1Q2020 • Coverage increased to 56%; total coverage at 124% when including collateral • Sale of € 133 mn NPEs (Velocity 2) completed in May 2020; capital neutral Cost to income ratio 2 reduced to 58%, following the successful completion of Voluntary Staff Exit Plan in 4Q2019 • Total operating expenses 2 reduced to € 84 mn for 1Q2020, down by 14% qoq • Operational efficiency • 70% of customers currently digitally engaged 3 • New lending of € 451 mn for 1Q2020 (up 2% qoq) • Total Income of € 145 mn, Operating profit of € 52 mn in 1Q2020 Performance • Loan credit losses of € 64 mn in 1Q2020 (cost of risk at 200 bps), including COVID-related charge of € 28 mn in 1Q2020 • Underlying result of a loss after tax from organic operations of € 23 mn for 1Q2020 • Loss after tax of € 26 mn in 1Q2020 (1) Allowing for IFRS 9 transitional arrangements (2) Excluding Special Levy and contributions to SRF and DGF (3) Digitally engaged individual customers to the total number of individual customers as per the engagement scorecard. Digital channels include mobile, browser and ATMs. It also captures access to a card as well as online card purchases 3
Group Financial Results for the quarter ended 31 March 2020 Covid-19 Recent Developments 4
Group Financial Results for the quarter ended 31 March 2020 Ongoing slowdown of new cases following government’s swift reaction Total sample testing per 100,000 population per country 1 Cumulative cases per 100,000 population 2 per country 496 500 Fast escalation of measures in Cyprus Fast escalation of measures in Cyprus Luxemburg 656 11,144 All schools closed All schools closed 1 1 375 400 Cyprus 78 8,386 374 Travel ban & country lockdown 2 2 297 Portugal 6,708 Stricter lockdown measures 3 286 300 Gradual relaxation of measures 4 Spain 504 7,611 212 Ireland 507 6,090 200 Italy 380 5,704 100 Germany 215 4,335 77 66 26 216 2,067 France 1 1 2 3 4 0 10 20 30 40 50 60 70 80 90 100 110 Greece 26 1,435 Days since first case Confirmed cases Tests Cyprus UK Portugal Italy Greece Spain Germany • Swift government reaction following the outbreak of COVID-19 in Cyprus in mid-March 2020 for the containment of the pandemic spread • COVID-19 sample testing per 100,000 population amongst the highest within EU • Confirmed cases per 100,000 population amongst the lowest within EU • Gradual relaxation of containment measures commenced on 4 May 2020; currently in phase 2 (1) According to the information provided by University of Cyprus as at 25 May 2020 - https://covid19.ucy.ac.cy (2) Based on information up to 20 May 2020 provided by https://www.ecdc.europa.eu/en/publications-data/download-todays-data-geographic-distribution-covid-19-cases-worldwide 5
Group Financial Results for the quarter ended 31 March 2020 Lifting of restrictions in a gradual and controlled manner Cypriot Government roadmap for reopening the Cypriot society and economy ✓ Phase 1 ✓ Phase 2 Phase 4 Phase 3 4 May- 20 May 21 May- 8 Jun 9 Jun- 13 Jul 14 Jul-onwards • Opening of small work • Opening of restaurants • Opening of shopping • Opening of Casinos sites that are open air and cafes (outdoor) malls such as construction • Opening of theatres, • Opening of restaurants premises • Opening of museums cinemas, festivals etc and cafes (indoor & • Opening of shops and and libraries outdoor) other small businesses such as clothing and • Return of students to • Opening of airports and footwear primary schools ports • Small retail shops and travel agencies open • Lifting of nighttime • Opening of Hotels • Return of students to curfew high-schools • Lifting of lockdown restrictions The relaxation of measures is conditional on no material increase in COVID-19 incidents 6
Group Financial Results for the quarter ended 31 March 2020 Protection of staff and customers’ health is the key priority, while ensuring operational resilience of the Bank Measures to Safeguard Health & Safety Ensuring Operational Resilience • Establishment of a committee to monitor COVID-19 measures, • Activation of the Pandemic Plan to ensure operational trace incidents and to provide regular updates to staff resilience and no disruption of the day-to-day activities • Implementation of Health & Safety measures in line with the • Splitting the operations of critical units to separate locations guidelines and recommendations issued by Ministry of Health and provision of remote access availability • Special purpose leave for employees that belong to vulnerable • 28% of staff (excluding branches) currently work remotely, groups compared to 44% during the lockdown period • Enhanced intensive clean-ups , a precautionary disinfection • Digital service channels provide alternative solutions for procedure is in place throughout the Bank carrying out daily banking transactions online • Shipment of masks and gloves and sanitisers to branches • 70% of customers are currently digitally engaged 1 • Participation in government’s COVID-19 testing schemes (1) Digitally engaged individual customers to the total number of individual customers as per the engagement scorecard. Digital channels include mobile, browser and ATMs. It also captures access to a card as well as online card purchases 7
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