Bank of Cyprus, the Mediterranean island’s largest lender, on Tuesday posted net losses of 554.3 million euros for 2017 as it increased buffers for bad debt. Cyprus is recovering from a financial crisis that left a number of its top banks insolvent and forced it to negotiate a painful bailout with international creditors in 2013. BoC said it had set aside total provisions for bad loans of 942 million euros in 2017, resulting in a 554.3 million euro loss after tax compared with a 67 million euro profit in 2016.
Chief executive John Patrick Hourican said the bank was focused on reducing risk in its balance sheet and quickly returning to profit. “In 2018 we expect a normalised cost of risk that should result in a return to profitability and allow an organic rebuild of capital,” Hourican said in a statement. “We are proud that we have maintained and grown our leading lending position in the fast-growing Cyprus economy that expanded by 3.9 percent during 2017. New lending in 2017 was 2.2 billion euro, exceeding new lending in 2016 by 53 percent,” he added.
On an upbeat note, the bank saw its deposits increase by eight percent over the year to 17.8 billion. Non-performing loans fell to 8.8 billion euros, a 41 percent drop since December 2014, but the bank’s bad loan ratio is at 47 percent. In March 2013, Cyprus clinched a 10 billion euro loan from the European Union and International Monetary Fund to bail out its troubled economy and oversized banking system.
Under the terms of the deal, the government was required to close the island’s second-largest bank, Laiki, and impose a 47.5 percent haircut on deposits above 100,000 euros at BoC. The bank has since undergone a major restructuring, which included absorbing the good assets of the former Laiki Bank and selling assets. It is also listed on the London Stock Exchange.