Bank of Cyprus Group Corporate presentation December 2019 The Bank - PowerPoint PPT Presentation

Bank of Cyprus Group Corporate presentation December 2019

The Bank of Cyprus Group is the leading banking and financial services group in Cyprus, providing a wide range of financial products and services which include retail and commercial banking, finance, factoring, investment banking, brokerage, fund management, private banking, life and general insurance. The Bank of Cyprus Group operates through a total of 108 branches in Cyprus, of which 11 operate as cash offices. Bank of Cyprus also has representative offices in Russia, Ukraine and China. The Bank of Cyprus Group employs 4,134* staff worldwide. At 30 September 2019, the Group’s Total Assets amounted to € 21.1 bn and Total Equity was € 2.5 bn. The Bank of Cyprus Group comprises Bank of Cyprus Holdings Public Limited Company, its subsidiary Bank of Cyprus Public Company Limited and its subsidiaries. *The Bank of Cyprus Group employed 4,134 staff worldwide as at 30 September 2019. The number of staff has been reduced by c.470 employees following the completion of a voluntary staff exit plan in October 2019.

Investment highlights Leading financial hub in Cyprus  Market leader in both loans and deposits 1 Well positioned to capitalise on growth opportunities  Highly correlated with the Cyprus economy which is expected to grow twice as fast as the euro area 2 average in the next three years Significantly de-risked balance sheet profile  Successful execution of decisive strategic actions in reducing NPEs 3 Creating a  Funding structure normalised  Good capital position Stronger, Safer and future Clear focus on strategic priorities… focused Bank …to manage the residual legacy portfolio and…  4 …to further improve efficiency supported by on-going digital transformation  …whilst maintaining good capital position  Strong leadership team… 5 …with an excellent track -record of delivery against strategic objectives  Pathway to sustainable returns profile via the core Cypriot bank  Finish the task of balance sheet de-risking 6  Further improve efficiencies in operating model  Revenue stabilisation and diversification  Medium Term Guidance to be communicated with FY2019 FR 3

1 Leading financial hub in Cyprus Positioning against market players Market share 1 Hellenic Bank 41% 22% 11% 5% Gross loans 13.0 € bn 7.5 3.7 1.8 35% 30% 5% 11% 16.5 14.8 Deposits € bn 5.6 2.2 Branch network 129 # branches 97 22 8  Market leading full service bank in Cyprus Source: CBC, company disclosure as of 30 September 2019 4 1) Hellenic Bank Data as of 30 June 2019

2 Cyprus now one of the fastest growing economies in Europe Cyprus economy expected to grow twice as fast as the euro area average in the next three years Real GDP growth (%) – 2019e 1 Real GDP SA annualised % change y-o-y 8.0 6.0 4.1 4.0 3.2 2.0 0.0 4.9% -2.0 3.2% -4.0 2.0% 1.8% -6.0 1.7% 1.1% 0.1% -8.0 2011 2012 2013 2014 2015 2016 2017 2018 3Q2019 Ireland Cyprus Spain Portugal Greece Euro area Italy average Reduction in spreads following reduction in government bond Unemployment rate dropped to 7.3%, the lowest since 2013 yields Spreads (%) 16.6 16.5 0.9 17.0 460 0.8 15.0 440 0.7 13.3 13.2 13.0 0.6 13.0 420 0.5 10.3 11.0 400 9.5 0.4 0.3 9.0 380 7.6 7.5 7.3 0.2 7.0 360 0.1 0 5.0 340 Apr 2016 Jul 2016 Sep 2016 Nov 2016 Jan 2017 Apr 2017 Jun 2017 Aug 2017 Oct 2017 Jan 2018 Mar 2018 May 2018 Jul 2018 Oct 2018 Dec 2018 Feb 2019 Apr 2019 Jun 2019 Sep 2019 Nov 2019 2011Q4 2012Q2 2012Q4 2Q2013 4Q2013 2Q2014 4Q2014 2Q2015 4Q2015 2Q2016 4Q2016 2Q2017 4Q2017 2Q2018 4Q2018 2019Q1 2019Q2 1 Unemployment rate SA (%) 2 Cyprus - maturity 4/11/2025 Portugal - maturity 15/10/2025 2 2 Spain - maturity 31/10/2025 2 Italy - maturity 01/12/2025 Source: Statistical Service of Republic of Cyprus; Bloomberg (1) SA: Seasonally Adjusted 3 Greece - maturity 30/01/2028 (2) Normalised against Germany Government bond with maturity 15/8/2025 except Greece (3) Due to the Debt swap of the Hellenic Republic, from November 2017 onwards data for the new Hellenic Republic Bond 5 with maturity 30/01/2028 was used and normalised against the closest maturity of German Government bond (DBR) 15/08/2027

3 Substantial improvement on key Balance Sheet metrics > € 5.5 bn balance sheet c. € 9 bn reduction in RWAs Funding structure normalised deleveraging Customer deposits as % of total assets € bn € bn - € 5.7 bn 49% 78% - € 8.9 bn 26.8 -75 p.p. 22.7 21.1 141% 13.8 Total assets RWAs 66% L/D ratio Dec Sep Dec Sep Dec Sep 2014 2019 2014 2019 2014 2019 Good capital position above c. € 11 bn reduction in NPEs regulatory requirements 3 € bn NPE ratio Min . regulatory requirements 63% 31%  NPEs reduced by 73% since 2014 14.9% 14.0% -73%  Funding stack normalisation with a 10.5% 15.0 deposit funded asset base  Strengthened capital position relative CET1 to balance sheet risk profile NPEs 4.1 Dec Sep Dec Sep 1 1,2 2014 2019 2014 2019 (1) Allowing for transitional arrangements (2) Pro-forma for the disposal of the investment CNP and Voluntary Staff Exit Plan completed in October 2019 6 (3) OCR(SREP)- Overall Capital Requirement comprises the Total SREP Capital Requirement (Pillar 1 and Pillar 2 Requirement) plus combined buffer requirements (capital conservation buffer, countercyclical buffer and systemic buffers) (4)

…with consequences for Profit and Loss metrics 3 Smaller yet safer loan book led by B/S de- risking… … resulting in lower but higher quality income… Legacy Net loans ( € bn) Interest Income on loans and Non Interest Income ( € mn) Performing Non Interest Income % of Total Interest Income on Loans 15.8 844 Legacy 5.9 37% 320 49% 10.9 Performing 545 2.0 18% 83 27% 51% 331 227 73% 63% 9.9 82% 8.9 235 193 Sep Sep 9M2016 9M2019 2016 2019 … impacting C/I ratio Cost of risk normalisation following B/S de-risking Cost management remains a key focus going forward completion 4.3% 62% 4.0% 2.8% 36% 1.7% 1 2 1.2% COR 1.0% C/I ratio FY2014 9M2019 FY2014 FY2015 FY2016 FY2017 FY2018 9M2019 (1) C/I ratio: Cost-to-income ratio (2) COR: Cost of risk ratio 7 F or calculations please refer to “Glossary & Definitions”

4 CEO Priorities Focused on further improving efficiency Fully committed to Maintaining to reflect our smaller accelerate de-risking Good Capital revenue base, organically & Position supported by on- non-organically going digital transformation 8

4 Strategic priorities - manage the residual legacy portfolio Accelerate de-risking, organically and non-organically to tackle remaining € 4.1 bn NPEs and € 1.5 bn REOs • De-risking In an advanced preparation phase of reviewing NPE reduction structures expected to be finalised in > € 2 bn acceleration 1H2020 1 • Estia scheme resulting in clear distinction of eligible borrowers in 3 categories:  Scheme participants  487 applications (c. € 120 mn) received until 22 November 2019 Estia eligible 2 € 0.83 bn  Non viable  Alternative restructuring solutions considered portfolio  Remaining  Focus mainly on realising collateral via consensual & non consensual foreclosures Organic de- • Net organic reduction of € 227 mn in 3Q2019 and of € 684 mn for 9M2019 € 0.8 bn risking • Ahead of target of c. € 200 mn per quarter in 2019 for 2019 continues • € 0.53 Close monitoring of redefaults & quality of restructurings Non-Core 3 NPEs bn • c.75% available for NPE exit by end 2020, subject to continuing to meet all relevant exit criteria • € 1.10 bn sales 5 of 1,459 properties since set-up in Jan 2016 Real Estate € 1.5 bn • Management On board assets in REMU at conservative c.25%-30% discount to open market value (OMV) REOs 4 Unit (REMU) • REMU sales achieved comfortably above Book Value (1) NPE reduction structures under review include outright sales. The Group is not committed to any outcome arising from this preparation phase ESTIA- eligible portfolio refers to the potentially eligible portfolio based on the Bank’s available data. Further, eligibility w ill be assessed on an individual level and borrowers will be eligible if they apply and (2) meet the specific criteria of the Scheme as announced by the Government (3) NPEs that have been restructured, have no arrears and are in the pipeline to exit NPE definition subject to meeting the relevant exit criteria 9 Real – estate-owned properties (4) (5) Sales contract prices