Bank of Cyprus Group. Preliminary Group 1 Financial Results for the year ended 31 December March 2017

Transcription

1 Bank of Cyprus Group Preliminary Group 1 Financial Results for the year ended 31 December March 2017 The Preliminary Group Financial Results have not been audited by the Group s external auditors (1) The Preliminary Group Financial Results referred to in this Presentation relate to the Bank of Cyprus Public Company Limited, the Bank, and together with its subsidiaries, the Group, which was listed on the Cyprus Stock Exchange (CSE) and the Athens Exchange as at 31 December On 18 January 2017, Bank of Cyprus Holdings Public Limited Company (BOC Holdings) became the new parent company of the Bank. On 19 January 2017 BOC Holdings was admitted to listing and trading on the London Stock Exchange and the CSE.

2 FY2016 Financial Results - Highlights Key Milestones Achieved in January 2017 Seven consecutive quarters of NPL improvement Listing on LSE Trading of shares on the LSE and the CSE commenced on 19 January 2016 ELA fully repaid Another significant milestone in journey back to strength Successful issuance of 250 mn Tier 2 Notes 90+ DPD 1 down by 459 mn or 5% qoq; down by 3,0 bn or 27% in FY2016 NPEs down by 867 mn or 7% qoq; down by 2,9 bn or 21% in FY2016 Loan restructurings of 6,2 bn 2 in FY2016 Normalising liability stack Deposits up by 867 mn or 6% qoq; up by 2,3 bn or 16% in FY2016 Ratio of Loans to Deposits (L/D) improved to 95% Maintaining Strong Capital Position Total Capital ratio c.16% (pro forma 3 ) CET1 ratio at 14,7%; 70 basis points added during FY2016; RWA intensity at 85%; Conservative leverage ratio 4 of 13,2% Operating profitability directed to de-risk balance sheet Leading market Position in a Recovering Economy Modest profitability of 64 mn for FY2016; 2 mn for 4Q2016 Strong pre provision operating profitability of 148 mn for 4Q2016 and 566 mn for FY2016 Sustained NIM at 3,47% Healthy C/I ratio of 41% for FY2016 Loan market share 5 at 39,4%; Deposit market share 5 at 31,1%; Economy growing for a second consecutive year at 2,8% yoy (compared to 1,7% in 2015) New lending of c. 1,5 bn, in 2016 (1) Problem loans (90+ DPD) are loans in arrears for more than 90 days (90+ DPD) and are defined as loans past-due for more than 90 days and those that are impaired (impaired loans are those which are not considered fully collectable and for which a provision for impairment has been recognised on an individual basis or for which incurred losses exist at their initial recognition or customers in Debt Recovery). (2) Including Debt for asset swaps, write offs & non contractual write offs (3) Adjusted for the issuance of 250 mn Tier 2 Notes in January 2017 based on the preliminary Group financial results as at and for the year ended 31 December (4) Leverage ratio = Tangible Total Equity over Total Assets (5) As at 31 December

3 11,3% 14,0% 14,2% 15,6% 14,9% 15,0% 14,0% 14,1% 14,4% 14,5% 14,7% 14,8% 14,7% c. 16% Mar 15 Jun 15 Sept 15 Dec 15 Mar 16 Jun 16 Sept 16 Dec H2014 2H2014 1H2015 2H2015 1H2016 2H2016 At a glance- Significant Improvement in all Financial Indicators 3,0 bn reduction in 90+DPD in FY2016; Down by 36% since peak 2,9 bn reduction in NPEs in FY2016; Down by 27% since peak Rising coverage ratios Change in 90+ DPD 1 ( bn) 5,3 2014: ( 0,4 bn) 2015: ( 1,3 bn) 2016: ( 3,0 bn) Change in NPEs ( bn) 2015: ( 1,0 bn) 2016: ( 2,9bn) 90+DPD ratio 90+DPD provision coverage NPEs provision coverage NPE ratio 0,9 1,3 1,4 2,7 0,0 0,2 62,9% 61,9% 61,8% 59,3% 54,8% 53% 54% 48% 38% 39% 41% 43% (0,4) (0,0) (1,3) (2,0) (1,0) (0,4) (0,6) (0,2) (0,6) (0,8) (0,6) (0,9) 35% 33% 34% 36% 39% 39% 41% 49% 50% 53% 53% 50% 44% 41% Dec 2013 Jun 2014 Dec 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Full repayment of ELA Loan to Deposit Ratio at 95% Strong Capital Position ELA ( bn) ELA as % of total assets Loan to deposit ratio (L/D) CET 1 transitional Total Capital Ratio 11,4 11,1 Apr % 31% 31% 28% Jun ,6 Dec ,8 Jun ,4 Dec % 5,9 Jun % 3,8 Dec % 2,4 1,3 Jun % Sep % 0% 0,2 Dec 0,0 Jan % 148% Dec 2013 Jun % Dec % Jun % Dec 2015 EBA average L/D 2 : 120% 110% Jun % Dec ,4% Jun ,5% 12,5% 12,6% 13,0% 13,2% Dec 2014 Leverage ratio 3 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Dec 2016 pro forma 4 (1) Mainly attributable to loan restructuring activity and slower formation of new problem loans (2) Based on EBA Risk Dashboard Report, data as at 30 September 2016 (3) Leverage ratio defined as tangible equity over total assets (4) Adjusted for the issuance of 250 mn Tier 2 Notes in January 2017 based on the preliminary Group financial results as at and for the year ended 31 December

4 1, , , ,2 (85) 2, , , , , , , , , , , , , , , ,8 (247) ,6 (164) , ,7 (325) , ,6 (143) ,0 (649) ,3 (668) ,3 (1.041) (1.020) , ,8 (501) (459) ,3 Seven consecutive quarters of material improvement in 90+DPD High correlation between formation of problem loans & economic cycle Quarterly change of 90+ DPD ( mn) 90+ DPD ( bn) Slow deterioration Economic crisis Stabilisation Recovery 90+ DPD Reduction FY2016: 17% of Cyprus GDP 3,0 bn or 27% drop in 90+DPDs in FY ,8% 48,6% 48,6% 47,4% 52,5% 53,2% 53,1% 52,9% 52,5% 50,1% 47,1% 44,0% 42,6% 41,3% 90+DPD ratio 13,0 13,0 12,8 12,6 13,0 12,7 12,8 12,7 12,0 11,3 10,3 9,3 8,8 8,3 Sep 2013 Dec DPD ( bn) Mar 2014 Jun 2014 Sep DPD ratio 36% drop since peak Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec bn/ (27%) drop Mar 2016 Jun 2016 Sep 2016 Dec DPD % of total assets 90+DPD ( bn) Provision coverage ratio 48,7% 37,5% 11,3 8,3 FY2015 FY ,1% 41,3% 48,1% 54,4% Progress on asset quality underpinned by: Robust strategy Relentless execution Economic improvement Legal improvements (1) Information for 1Q2013 and 2Q2013 is not available as it was not possible to publish the financial results for the three months ended 31 March 2013 (2) Percentage points 4

5 Seven consecutive quarters of material improvement in NPEs 4,0 bn drop since Dec-2014; 867 mn drop in 4Q2016 NPEs ( bn) 62,9% 63,0% NPE ratio 61,9% 62,2% 61,8% NPEs with forbearance measures no impairments, no arrears 1,9 61,0% 59,3% 57,8% 15,0 15,2 14,8 14,2 14,0 13,3 12,5 11,9 11,0 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec ,2 4,0 bn or ( 26%) drop since Dec 14 2,4 2,3 867 mn or (7%) drop qoq 2,0 54,8% Forborne NPEs with no impairments or arrears 1 ( bn) in pipeline to exit NPEs subject to meeting all exit criteria 2 1,5 0,5 0,3 0,7 0,3 0,2 0,1 0,0 0,1 0,1 0, Corporate SME Retail NPEs reduced by 2,9 bn or 21% in FY2016 NPEs % of total assets 60,0% 49,8% NPEs ( bn) NPE ratio Provision coverage ratio 13,97 11,03 FY2015 FY ,8% 54,8% 39,0% 41,0% NPEs reduction FY2016: 17% of Cyprus GDP NPEs reduced for 7 consecutive quarters For a second consecutive quarter reduction of NPEs exceeds reduction of 90+ DPD (1) Analysis provided on account basis. Accounts will not exit NPE status if not all exit criteria are met (2) Curing period of the NPEs with forbearance measures, but no impairments and no arrears, assuming no re-default (3) Percentage points 5

6 Dec-15 Dec-16 Dec-15 Dec-16 Dec-15 Dec-16 Dec-15 Dec 16 Dec-15 Dec-16 68% 61% 73% 67% 49% 48% 79% 78% 69% 63% 57% 59% 51% 60% 39% 48% 31% 35% 46% 53% 119% 121% 112% 115% 110% 113% 106% 107% 115% 116% 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q DPD provision coverage ratio at 54%; Total Coverage (Cy) at 116% 16 p.p. 1 coverage ratio increase; 1,7 bn additional provisions since Sep-14 Cost of risk 3 : PPI 4 directed to de-risk balance sheet Quarterly Provisions for impairment of customer loans² ( mn) 90+ DPD coverage ratio Cost of Risk - Cyprus Cost of Risk - Group 38% 39% 39% 38% 41% 42% 43% 41% 48% 49% % 54% 54% 3,6% 4,3% 4,0% ,4% 2,1% 2,2% 2,1% 1,5% 1,7% 1,6% 1,1% 1,4% 1,6% 1,7% 1,3% 1,5% 1,6% FY2014 1Q2015 1H2015 9M2015 FY2015 1Q2016 1H2016 9M2016 FY DPD fully covered by Provisions and Tangible Collateral (Cyprus Operations) Total Tangible Coverage Corporate 3,4 bn Total-LLR SME 2,3 bn 90+ DPD Retail-Housing Retail-Other Total BoC Cyprus 1,1 bn 1,0 bn 7,8 bn (1) p.p. = percentage points (2) Provisions for impairment of customer loans and gains/(losses) on derecognition of loans and changes in expected cash flows on acquired loans over 90+ DPD (3) Provisions for impairment of customer loans and gains/(losses) on derecognition of loans and changes in expected cash flows on acquired loans over average gross loans (4) Pre-provisioning income 6

7 Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16 71% 67% 76% 72% 53% 52% 85% 84% 73% 69% 44% 45% 33% 37% 17% 45% 47% 21% 37% 39% 115% 112% 109% 109% 102% 105% 98% 99% 110% 108% NPE provision coverage ratio at 41%; Total Coverage (Cy) at 108% 7 p.p. 1 coverage ratio increase; 1,7 bn additional provisions since Sep-14 Quarterly Provisions for impairment of customer loans² 39% 38% 39% 40% 41% 34% 34% 35% 36% 35% Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q % 40% 35% 30% 25% 20% 15% 10% 5% 0% NPEs provision coverage increases significantly when adjusted for NPEs with forbearance measures no impairments or arrears 2 Adequate NPE total coverage when collateral is included(cyprus operations) Total Tangible Coverage Total-LLR NPEs Corporate SME Retail-Housing Retail-Other Total BoC Cyprus 4,5 bn 3,0 bn 1,8 bn 1,2 bn 10,5 bn (1) p.p. = percentage points (2) Analysis provided on account basis. Accounts will not exit NPE status if not all exit criteria are met 7

8 90+ DPD and NPE outflows significantly exceed inflows 90+DPD inflows in Cyprus operations ( bn) arrested 0,68 0,60 0,34 0,36 Close monitoring to arrest deterioration of portfolio 0,22 0,11 0,13 0,14 0,14 0,14 Average: 0,29 Ramp up in restructuring efforts 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Significant increase in NPE outflows in 4Q2016 ( bn) Inflows Total outflows Cured restructured NPEs & collections Outflows-other 0,27 0,17 0,19 0,22 (0,58) (0,68) (0,30) (0,26) (0,88) (0,94) (0,53) (0,45) (0,23) (0,58) (0,76) (1,03) 2 Strict monitoring of restructurings to arrest redefaults 1Q2016 2Q2016 3Q2016 4Q2016 8

9 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q % 65% 70% 76% 82% 75% 70% 88% 84% 85% 81% 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Total 6,2 bn of restructurings 1 in 2016 Quarterly evolution of restructuring activity ( bn) 3 4 Restructured loans Write offs & non contractual write offs DFAS FY : 6,2 bn Average 2 : c.1,0 0,8 0,7 0,84 0,69 0,8 0,81 1,3 1,33 2,2 0,3 0,4 1,50 2,0 0,4 0,3 1,26 1,1 0,9 0,2 0,2 0,2 0,2 0,68 0,53 81% of restructured loans 5 have no arrears 6 (Cyprus operations) % of restructured loans with no arrears Average: 81% 81% of restructured loans 5,6, have no arrears (1) Total restructured loans is equal to restructured loans plus write offs & non contractual write offs and debt for asset swaps for FY2016 (2) Average restructured loans excluding write offs & non contractual write offs and DFAS (3) Loans together with the associated provisions are written off when there is no realistic prospect of future recovery. Partial write-offs, including non-contractual write-offs, may occur when it is considered that there is no realistic prospect for the recovery of the contractual cash flows. In addition, write-offs may reflect restructuring activity with customers and are part of the terms of the agreement and subject to satisfactory performance. (4) Debt for asset swaps (5) Restructured loans post 31 December 2013 excluding write offs, set offs and DFAs (6) The performance of loans restructured during 4Q2016 is not presented in this graph as it is too early to assess 9

10 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16 4Q-16 25% 23% 26% 41% 37% 45% 45% 55% 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16 4Q-16 10% 17% 15% 14% 13% 15% 19% 27% 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16 4Q-16 28% 37% 32% 28% 49% 61% 62% 59% Good progress across all segments (Cy operations) Corporate NPEs ( bn) 6,6 Recoveries Corporate 2,4 Corporate 4,2 4,5 Recoveries Corporate 1,9 Corporate 2,6 6,6 NPE ratio Net drop ( 2,1 bn) 0,4 (2,5) 4,5 Dec-15 Inflows Exits Dec-16 57,1% Restructurings as % of total restructurings 2 Average 45% Restructuring of corporate clients materially progressed 544 mn of portfolio transferred back to Corporate 93% of restructured loans have no arrears 1 Dec-15 Dec-16 Provision Coverage ratio 44,7% Product range enhanced, e.g. split & freeze, DFAs and DFEs Total Coverage 112,1% SMEs 3,4 Recoveries SMEs 1,5 SMEs 1,9 Dec-15 3,0 Recoveries SMEs 1,5 SMEs 1,5 Dec-16 0,1 (0,5) 3,4 3,0 Dec-15 Inflows Exits Dec-16 NPE ratio Provision Coverage ratio Total Coverage Net drop ( 0,4 bn) 72,2% 37,2% 108,6% 16% Restructuring pace increased qoq Re-defaults confined to small amounts Product range enhanced e.g. split & freeze Implement process for monitoring client and transfers to/from RRD Underlying economic macro improvements supportive Retail 3,3 Recoveries Retail 1,3 Retail 2,0 Dec-15 3,0 Recoveries Retail 1,4 Retail 1,6 Dec-16 Net drop ( 0,3 bn) 0,4 (0,7) 3,3 3,0 Dec-15 Inflows Exits Dec-16 NPE ratio Provision Coverage ratio Total Coverage 48,3% 32,1% 102,3% 21,3% 47,3% 37% Focus area for 2017 Increase pace of restructuring qoq Create a clear strategy to ensure early and continuous engagement with clients Flexible products to manage specific segments Sustainable solutions (1) Restructured loans post 31 December The performance of loans restructured during 4Q2016 is not taken into account as it is too early to assess (2) Excluding DFAs, write offs and non-contractual write offs 10

11 Good progress across all segments (Cy operations) Recoveries From inefficient legacy operations Rigid legal framework with very long execution timelines Inefficient processes with significant time wasted To improved operating model... Client negotiation and client management teams Tools to support negotiations and decision making Training for all bankers on new tools and restructurings Introduce new teams to specialize on receivership and foreclosure International specialists added to teams across recoveries Results being delivered, but ongoing focus area 823 mn of NPEs deleverage in FY2016 Refreshed approach in corporate contributed to 17% of NPE reduction for FY2016 (Cy operations) Retail/ SME showing slower but improving progress, next quarters important in keeping momentum Foreclosure auctions important to building and maintaining pace Foreclosures Private foreclosures commenced in late June auction events conducted relating to 76 assets 13 assets have been sold in total with total proceeds of 2,4 mn Foreclosure teams are up and running, aiming to boost foreclosure volumes Actions have been taken to improve awareness of auction events (flyers and mailing distribution lists) Servicing either completed or in progress for over 400 assets TIMEFRAME Foreclosure Decision Service time of Notices Servicing Time + 40 days Valuations days Service Announcement 3-5 days + Servicing Time + 30 days Auction Property transfer & Distribution of proceeds 1-50 days immediately after auction TOTAL TIME UP TO AUCTION: ~ 8 MONTHS (1) Additional valuations required if the valuations are not timely prepared or if values differ by >25% 11

12 2016 movement in 90+ DPD 3x that of 2015 as momentum builds Introducing additional tools to resolve long outstanding loan portfolios (90+ DPD Cyprus operations) FY2015 Net reduction : c. 0,9 bn FY 2016 Net reduction: c. 2,8 bn 0,2 (0.9 ) (0.1 ) (0.0) 0,6 (1.5 ) (1.1) 11,5 11,5 10,6 (0.8) 7,8 Jun 2015 Inflows Restructurings / Collections Write-offs Consensual foreclosures1 Dec 2015 Inflows Restructurings / Collections Write-offs Consensual 1 foreclosures Dec 2016 Reduction of 90+ DPD in FY2016 involved application of more complex solutions, as focus shifts towards tackling the recoveries portfolio (1) Value of on-boarded assets is set at a conservative 25%-30% discount from open market valuations, by two independent sources 12

13 Peer 1 Peer 2 Peer 3 Peer 4 BoC Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 BoC Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 BoC Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 1 Peer 2 Peer 3 BOC Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 BoC compares favourably vs. peer 1 Highest reduction of NPE as % of nominal GDP vs peer Strong progress on NPE coverage Change in NPE as % of nominal GDP since (22,2%) NPE coverage progress since ,3 11% 1 9% 9% (1,6%) 7% 7% 6% 4% 4% 4% Average: 5,50% (0,9%) (0,7%) (0,4%) (0,3%) (0,1%) (0,0%) 0,2% 0,4% 1 2% 2% 1% 1 1,5% 2,0% Good collateral coverage NPE Total coverage 2,4 (Q2 16) BoC valuation against peers 5 Valuation benchmarks: On a P/B basis 5 157% 60% 97% Provision coverage Tangible coverage 121% 113% 112% 108% 100% 94% 92% 89% 84% 83% 48% 59% 38% 69% 50% 47% 43% 53% 37% 31% 73% 54% 74% 39% 50% 47% 49% 36% 47% 52% 0,84x 0,82x 0,81x 0,69x 0,67x 0,54x 0,40x 0,31x 0,31x 0,29x Average: 0,51x 0,24x 0,20x 1 Source: Company reports (1) The charts are not adjusted for market share (2) Based on the preliminary Group financial results as at and for the year ended 31 December 2016 for BOC and on latest available for peer. (3) For Greek banks, NPE total coverage for Greece only (4) Calculated using NPE provisions coverage (latest available) and collateral coverage amount (as reported by EBA Transparency Exercise with reference date 30 June 2016). For BOC tangible collateral is calculated based on FY2016 preliminary results (5) Share price as at 24 February

14 Cyprus NPL framework proving effective Robust foreclosure legal framework adopted in Cyprus in April 2015 Enables the enforcement of mortgages as security rights against debtors through foreclosure Minimises the involvement of the Land Registry Office and procedure is driven by the secured creditors in order to expedite property foreclosures Ability to initiate foreclosure proceedings once the loan is terminated / repayments & instalments are overdue for over 120 days Access to purchase the mortgaged property after 12 months since the for-sale process begins Cross country comparison of NPL supervisory framework Cyprus Italy Spain Greece Ireland Portugal NPL governance / workout Guidance on NPL workout practices / arrears management Guidance requiring banks to have NPL strategies / action plans Guidance requiring a dedicated arrears / NPL unit Guidance requiring banks to have NPL operational targets Debt enforcement / foreclosures Legal techniques to enable out-of-court enforcement of collateral Bilateral sales of repossessed assets permitted Blanket bans (moratoria) on sales/auctions/foreclosures Household insolvency and restructuring framework Out-of-court mechanism Bankruptcy regime for consumers/households Insolvency/bankruptcy discharge period (years) Collateral valuation Guidance of specific rules on valuation methods Guidance on valuation frequency for NPL collateral Requirements for appraisers Requirements for data collection on collateral Source: European Central Bank Stocktake of national supervisory practices and legal framework related to NPLs, September

15 REMU: 170 mn sales agreed; 155 mn executed on average at 104% of Book value (Cy) 1 Property stock (31 Dec 2016) 2 Stock movement (Group) ( mn) Group: 1,4 bn 2,3% 10,7% 87,0% Cyprus Greece Others Cyprus: 1,2 bn 0,2% 3,8% 26,3% 24,1% 34,8% 10,8% Nicosia Larnaca Limassol Paphos Famagusta Other 3 Sales (Cyprus) ( mn) # Sale price % Book Value 6 Total assets 160% 5 104% 101% 99% 117% 110% 90 65,5 39,5 22,5 Total Sales FY2016 Hotels Commercial Residential Land % 120% 100% 80% 60% 40% 20% 0% # Stock as at 01 Jan 16¹ (166) (35) Additions Sales¹ Impairment loss Stock as at 31 Dec 2016² Sales dynamics (Cyprus) for FY mn Residential Commercial Land Hotel/Touristic 2 mn mn mn 11 5 Total sale agreements 170 mn mn Offers accepted Under negotiation SPA in preparation SPA signed Sold Assets stock split (carrying value, Dec 2016 mn) Cyprus: mn Greece & Romania Total #739 #2 #149 #227 #7 Land & plots Golf Commercial buildings³ Residential buildings Hotels Other⁴ (1) Includes Kermia Hotels Limited where disposal completed in June 2016 (2) Total Stock as at 31 December 2016 excludes investment properties and investment properties held for sale (3) Includes manufacturing, industrial and under construction (4) Relates to Greece and Romania (5) Number of assets shown for Cyprus only (6) Carrying value prior to the sale of property and before any tax charge # assets 5 15 #

16 Deposit growth of 16% in FY2016 Deposits up by 867 mn in 4Q2016 and by 2,3 bn in FY2016; L/D ratio improved to 95% 16,5 13,6 13,6 13,3 13,6 13,2 0,61 0,61 0,80 0,56 1,4 1,3 1,3 1,4 1,4 11,2 11,3 11,6 11,6 12,2 14,2 14,1 1,5 1,4 12,7 12,7 15,6 14,8 0,01 1,4 0,011,4 14,2 13,3 1,5 15,0 148% 124% 125% 125% 123% 121% 122% 121% 141% 138% 136% 132% 121% 119% 110% 120% 102% 95% Sep 14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Cyprus UK Other Loans to deposits 1 EU average Loans to deposits ratio Increasing market share in resident and non-resident deposits 35,2% 32,2% 30,8% 31,1% 32,9% 34,1% 34,6% 35,8% 25,6% 25,5% 28,4% 24,6% 24,3% 27,5% 26,7% 26,9% 26,7% 25,3% 23,7% 24,1% 24,6% 27,5% 26,1% 27,0% 26,5% 27,2% 28,8% 29,5% Sep 2013 Dec 2013 Mar 2014 Jun 2014 Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Residents Non-residents (1) Based on EBA Risk Dashboard Report, Data as at 30 September 2016 (2) Percentage Points 16

17 Adequately capitalised relative to risk profile CET1 ratio (transitional) of 14,7% compares favorably with EU average of 13,6% 13,4% 13,4% 14,4% 15,1% 13,1% 13,5% 13,6% 13,8% 13,9% 14,0% 13,9% 14,9% 15,6% 14,0% 14,3% 14,4% 14,6% 14,7% 12,5% 12,4% 12,8% 13,0% 13,5% 13,4% 13,6% 14,1% Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 CET1 ratio (transitional) 1 1 Average EU CET1 ratio (transitional) CET1 ratio (fully loaded) Evolution for CET1 ratio 2 during 4Q2016 CET1 ratio vs SREP 5 minimum requirement 0,8% (0,5%) (0,1%) 14,6% (0,1%) 14,7% P&L impact of 0,3% (0,8%) 13,9% 14,70% 1,25% 3,75% 4,50% 9,50% Minimum CET1 Requirement 6 CCB 3 (phased-in) Pillar 2R 4 Pillar 1 CET1 ratio (transitional) Profit before provisions Provisions Other RWAs Change CET1 ratio (transitional) 7 DTA CET1 ratio (fully loaded) CET1 transitional SREP CET1 requirement (1) Based on EBA Risk Dashboard Report, Data as at 30 September 2016 (2) Transitional basis; includes unaudited profits for the year ended 31 December 2016 (3) In accordance with the legislation in Cyprus which has been set for all credit institutions through the requirements of Capital Requirement Directive (CRR)/CRD IV. The applicable rate of the CCB is 1,875% for 2018 and 2,5% for 2019 (fully phased-in). (4) Pillar 2 requirement in the form of CET1 (5) Since 2015, the Bank has been designated as an Other Systemically Important Institution (O-SII). The Central Bank of Cyprus set the O-SII buffer for the Group at 2%. This buffer will be phased-in gradually, starting from 1 January 2019 at 0.5% and increasing by 0.5% every year thereafter, until being fully implemented (2.0%) on 1 January 2022 (6) Minimum CET1 Requirement reduced from 10,75% to 9,50% following amendments in the Cypriot Banking Law on 3 February 2017 allowing the gradual phase-in of the Capital Conservation Buffer (CCB) (7) The DTA adjustments relate to Deferred Tax Assets totalling 450 mn and recognised on tax losses totalling 3,6 bn and can be set off against future profits of the Bank until 2028 at a tax rate of 12,5%. Furthermore, there are tax losses of c. 8,5 bn for which no deferred tax asset has been recognised. The recognition of deferred tax assets is supported by the Bank s business forecasts and takes into account the recoverability of the deferred tax assets within their expiry period. 17

18 Total Capital position c. 16% (pro forma) Total Capital Adequacy Ratios 15,5% 14,2% 14,1% 15,0% 15,7% 14,1% 14,4% 14,5% 14,7% 14,8% Issuance of Tier 2 Notes c.16% Total Capital Requirement vs SREP 6 minimum requirement c. 16% 1,25% 3,75% 13,00% Overall Total Capital 7 Requirement CCB 2 (CET1) Pillar 2R 3 11,3% 10,8% Total Pillar 1 of 8% 2,00% 1,50% 4,50% T2 capital 4 AT1 capital 5 Pillar 1 (CET1) Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Dec-16 pro forma 1 Pro forma Total Capital Ratio SREP total capital requirement Clean Fully Loaded CET1 ratio 8,9 Leverage ratio 10,11 25% 20% 15% 10% 5% 0% 'Clean' Fully Loaded CET1 ratio (LHS) RWA % Total Assets (RHS) 13,6% 42% BOC CET1 FL 13,9% RWA intensity 85% Average 'Clean' Fully Loaded CET1 ratio Average (RWA % Total Assets) 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 20% 15% 10% 5% 0% BOC Leverage ratio 13,2% Tangible Total Equity % Total Assets (1) The pro forma is based on the preliminary Group financial results as at and for the year ended 31 December (2) Pillar 2 requirement in the form of CET1 (3) In accordance with the legislation in Cyprus which has been set for all credit institutions through the requirements of Capital Requirement Directive (CRR)/CRD IV. The applicable rate of the CCB is 1,875% for 2018 and 2,5% for 2019 (fully phased-in). (4) Tier 2 capital (5) Additional Tier 1 capital (6) Since 2015, the Bank has been designated as an Other Systemically Important Institution (O-SII). The Central Bank of Cyprus set the O-SII buffer for the Group at 2%. This buffer will be phased-in gradually, starting from 1 January 2019 at 0.5% and increasing by 0.5% every year thereafter, until being fully implemented (2.0%) on 1 January 2022 (7) The Group s overall Total Capital Requirement for 2017 has been reduced to 13,00% from 14,25% following amendments in the Cypriot Banking Law on 3 February 2017 allowing the gradual phase-in of the Capital Conservation Buffer (8) As per SNL Financial Database, Clean Fully Loaded CET1 ratio as 31 December 2016, excludes Deferred Tax Credits, AFS and Danish Compromise Estimated Impact (9) The data used is based on FY2016 financial results for 24 out of 37 EU Banks, including Bank of Cyprus, the data for the rest of the banks is based on 9M2016 financial results (10) Leverage ratio is defined as Tangible Total Equity over Total Assets (11) The data used is based on FY2016 financial results for 28 out of 44 EU Banks, including Bank of Cyprus, the data for the rest of the banks are based on 9M2016 financial results Average 18 6,6%

19 Modest profitability of 64 mn for FY2016 mn FY2016 FY2015 yoy % 4Q2016 3Q2016 qoq % Total income % % Total expenses (397) (408) -3% (98) (97) 1% Profit before provisions and impairments % % Provisions for impairment of customer loans net of gains/(losses) on loan derecognition and changes in expected cash flows Impairments of other financial and non financial assets (370) (959) -61% (103) (109) -5% (47) (62) -23% (13) (12) 12% Provision for litigation and regulatory matters (18) (8) 135% (18) - - Share of profit from associates and joint ventures % % Profit/(loss) before tax, restructuring costs, discontinued operations and net profit on disposal of non-core asset 139 (391) % Tax (16) (9) 84% (1) (4) -87% (Loss)/profit attributable to non-controlling interests (4) Profit/(loss) after tax and before restructuring costs, discontinued operations and net profit on disposal of non-core asset 119 (394) % Advisory, VEP and other restructuring costs 2 (114) (43) 165% (16) (11) 47% Loss from disposal groups held for sale/discontinued operations - (38) Key Highlights QoQ change NIM at 3,47% for FY2016 compared to 3,51% for 9M2016 reflecting reduction in customer loan balance due to elevated loan restructuring activity, including DFAs 3 Total Income up by 5% qoq due to increase by 43% of fee and commission income, favourably affected by both new and increased charges, as well as with non-recurring fees of c. 7 mn. Strong operating profitability of 148 mn for 4Q2016, up by 8% qoq, a net increase in non interest income Provision for litigation and regulatory matters for 4Q2016 were 18 mn primarily affected by legal and regulatory one off redress charges for UK operations Modest Profit after tax of 2 mn for 4Q2016 and 64 for FY2016 Net gain on disposal of non-core assets % Profit/(loss) after tax 64 (438) % Net interest margin 3,47% 3,79% -32 bps 3,37% 3,35% +2 p.p. Return on tangible equity (annualised) 2,2% -15,0% 17,2 p.p. 0,3% 0,7% -0,4 p.p. Return on Average Assets (annualised) 0,3% -1,7% +2 p.p. 0,0% 0,1% -0,1 p.p. Cost-to-Income ratio 41% 39% +2 p.p. 40% 41% -1 p.p. (1) Profit before provisions and impairments, gains/(losses) on derecognition and changes on expected cash flows, restructuring costs and discontinued operations. (2) Advisory, VEP and other restructuring costs comprise mainly: 1) fees of external advisors in relation to: (i) disposal of operations (ii) customer loan restructuring activities which are not part of the effective interest rate and (iii) the contemplated listing on the London stock exchange and 2) voluntary exit plan cost. (3) Debt for Asset swaps 19

20 Stable NIM despite negative interest rate environment Net Interest Income and Net Interest Margin Interest income from Republic of Cyprus bond ( mn) Net interest income ( mn) NIM (bps) FY2015: NIM 379 bps bn Interest bearing assets 1 23,9 22,8 21,8 20,8 20,1 19,7 19,3 18, FY2016: NIM 347 bps Net Interest Income (NII) at 162 mn, compared to 164 mn for 3Q2016, reflecting the reduction in customer loan balance primarily as a result of the elevated loan restructuring activity, including debt for property swaps (DFAs) Net Interest Margin (NIM) was marginally reduced to 3,47% for FY2016 compared to 3,51% for 9M2016 mainly due to DFAs Interest bearing assets of 18,9 bn as at 31 December Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Yield on Loans and Cost of Deposits in Cyprus 2 (bps) Yield on Loans Cost of Deposits Customer spread Customer spread increased to 421 bps in 4Q2016 mainly due to the repricing of deposits at lower deposits rates in 4Q2016 New lending of over 1 bn, since the beginning of the year, to promising sectors of the domestic economy. 43% of new lending in Cyprus relates to corporate loans, 33% to retail loans and 15% to SME loans 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 (1) Interest bearing assets include placements with banks and central banks, reverse repurchase agreements and net loans and advances to customers and investments excluding equity and mutual funds. (2) Includes all currencies 20

21 Increased Non Interest Income as % of Total Income Analysis of Non Interest Income ( mn) Quarterly 1 Net fee and commission income Insurance income net of insurance claims Other 14% 15% % 16% 16% 20% % Net fee and commission income % Total income x Non interest income ( mn) x Recurring non- interest income ( mn) -2 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Fee & commission income 2 in Cyprus by business line International Banking Services Consumer SME Corporate RRD Wealth and Management Other 6% 7% 33% 8% 1% 3% 41% One third of IBS fee & commission income is driven by Payment Transactions Payment Transactions are increasing Average Number of Payment Transactions per month (thousands) pre-bailin Incoming Payment Orders post-bailin Outgoing Payment Orders (1) Comprising (a) Net FX gains / (losses) & Net gains/(losses) on other financial instruments, (b) Losses from revaluation and disposal of investment properties and (c ) other income. (2) Excluding non-recurring fees of approximately 7 mn 21

22 Costs under control Total expenses ( mn) Staff costs Operating expenses Total expenses for 4Q2016 were 98 mn, in line with the previous quarter Staff costs for 4Q2016 were 53 mn, down by 2% qoq mainly due to the VEP completed in 2Q Operating expenses were 45 mn broadly in line with the previous quarter Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Cost to Income Ratio Group 61% 59% 60% 37% 36% 38% EU average 66% 63% 40% 40% 1 63% 63% 42% 42% 41% Cost to income ratio at 41% for FY2016 Actions for focused, targeted cost containment: Tangible savings through a targeted cost reduction program for operating expenses Introduction of appropriate technology/ processes to enhance product distribution channels and reduce operating costs Introduction of HR policies aimed at enhancing productivity 1Q2015 1H2015 9M2015 FY2015 1Q2016 1H2016 9M2016 FY2016 (1) Based on EBA Risk Dashboard Report, Data as at 30 September

23 Profitable Core Cypriot business 4Q2016 Cyprus Vs Group performance ( mn) % 94% 88% 98% 245% % % contribution of Cyprus operations Net interest income Total income Total expenses Profit before provisions and impairments, restructuring costs and discontinued operations Profit after tax and before one off items Cyprus operations Rest of operations Group Stable NIM in Cyprus operations (bps) FY15: FY16: 344 Healthy Cost to Income ratio for Cyprus operations 35% 35% 35% 38% 40% 41% 40% 39% Improving fee income as a % of revenues % of total income 4% 16% Net interest income Fee and commission income Other income 10% 13% 11% 8% 8% 14% 12% 13% 14% 15% 15% 17% 16% 20% 80% 77% 73% 74% 77% 75% 70% 68% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q15 1H15 9M15 FY15 1Q16 1H16 9M16 FY16 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 2 (1) Profit before provisions and impairments, gains/(losses) on loan derecognition and changes on expected cash flows, restructuring costs and discontinued operations. (2) Excluding non-recurring fees of approximately 7 mn. 23

24 Expansion of BOC UK operations Gross loans and customer deposits Loans by sector as at 31 December 2016 Gross loans ( bn) 0,67 0,74 0,78 0,83 0,88 0,93 1,01 1,09 17% 81% 1% 1% Corporate SMEs Consumer credit Housing Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Customer deposits ( bn) 1,26 1,19 1,13 1,00 1,04 1,08 0,92 0,93 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Core operating profitability is rising Operating profit ( mn) Profit/(loss) after tax ( mn) 3,6 Profit after tax negatively affected by 6,0 (9,0) legal and regulatory 3,9 one off redress FY2015 FY2016 provision charges FY2015 FY2016 Gross loans and customer deposits in the UK increased by 32% and 21% yoy to 1,09 bn and to 1,26 bn, respectively New lending of 370 mn during 2016 Core operating profitability is rising, 54% increase yoy Loss after tax of 9,0 mn for the FY2016 primarily driven by legal and regulatory one off redress provision charges 24

25 Significant Progress made on Group KPIs Well on track to meet targets set in 2016 A clear plan of action to achieve new Medium Term Targets Category Key performance indicators Dec Dec Medium Term Targets set in 2016 New Medium Term Targets 90+ DPD ratio 50% 41% <30% <20% 1. Significantly reduce problem loans Key Pillars & Plan of action Sustain momentum in restructuring Focus on recoveries portfolio accelerated consensual foreclosures Real estate management via REMU Asset quality NPEs ratio 62% 55% <30% NPEs coverage 39% 41% >50% Provisioning charge 1 4,3% 1,7% <1,0% <1,0% 2. Further improveme nt funding structure; Continue expansion of deposit franchise Increase loan pool for the Additional Credit Claim framework of ECB Further diversify funding sources Funding Net Loans % Deposits 121% 95% 100%-120% 90%-110% Capital Total Capital ratio 14,1% 14,8% >15% 3. Focus on core markets Targeted lending in Cyprus into promising sectors to fund recovery New loan origination, while maintaining lending yields Revenue diversification via fee income from international business, wealth, and insurance Carefully expand UK franchise by leveraging the UK subsidiary Margins and efficiency Net interest margin 3,8% 3,5% ~3,00% ~3,00% Fee and commission income/total income 15% 17% 3 >20% >20% 4. Achieve a lean operating model Tangible savings through a targeted reduction program Introduce technology/processes to improve distribution channels and reduce costs HR policies aimed at enhancing productivity Cost to income ratio 39% 41% 40%-45% 40%-45% 5. Deliver returns Deliver appropriate medium-term risk-adjusted returns Balance Sheet Total assets 23,3 bn 22,2 bn > 25 bn > 25 bn (1) Post IFRS 9 impact (2) That is Provisions for impairment of customer loans and gains /(losses) on derecognition of loans and changes in expected cash flows on acquired loans over average gross loans (3) Excluding non-recurring fees of approximately 7 mn 25

26 Key Takeaways Key Milestones Achieved in January 2017; Listing on LSE and CSE, ELA fully repaid, successful issuance of 250 mn Tier 2 Notes Satisfactory results this quarter reflecting our strategy of continued de-risking Leading position in a recovering economy 90+ DPD down by 459 mn or 5% qoq; down by 3,0 bn or 27% in FY2016 Further NPE reduction of 867 mn or 7% qoq; 2,9 bn or 21% reduction during FY2016; Reduction in NPEs in 4Q2016 quarter of 867 mn was nearly double the in-quarter reduction of 459 mn in 90+ DPD Strong restructuring momentum continues with 6,2 bn 1 of restructurings in FY2016 Loans to Deposits ratio (L/D) at 95%; Customer deposits increased by 867 mn or 6% qoq and 16% yoy Pro forma Total Capital Ratio at c.16% 2 Strong operating profitability of 148 mn for 4Q2016 directed at increased provisions and impairment charges to faster de-risk balance sheet Modest profitability of 64 mn for FY2016; 2 mn for 4Q2016 (1) Including Debt for asset swaps, write offs & non-contractual write offs (2) Adjusted for the issuance of 250 mn Tier 2 Notes in January 2017 based on the preliminary Group financial results as at and for the year ended 31 December

27 Key Information and Contact Details Credit Ratings: Fitch Ratings: Long-term Issuer Default Rating: upgraded to B-" on 25 April 2016 (stable outlook) Short-term Issuer Default Rating: upgraded to B" on 25 April 2016 Viability Rating: upgraded to b- on 25 April 2016 Moody s Investors Service: Baseline Credit Assessment: Upgraded to caa2 on 14 December 2016 (positive outlook) Short-term deposit ratings: Affirmed at "Not Prime" on 14 December 2016 Long-term deposit ratings: Upgraded to Caa2 on 14 December 2016 (positive outlook) Counterparty Risk Assessment: Assigned at B2(cr) / Not-Prime (cr) on 14 December 2016 Listing: LSE BOCH, CSE BOCH/ΤΡΚΗ, ISIN IE00BD5B1Y92 Contacts Investor Relations Tel: , investors@bankofcyprus.com Annita Pavlou, Investor Relations Manager, Tel: , annita.pavlou@bankofcyprus.com Elena Hadjikyriacou, (elena.hadjikyriacou@bankofcyprus.com) Marina Ioannou, (marina.ioannou@bankofcyprus.com) Styliani Nicolaou, (styliani.nicolaou@bankofcyprus.com) Andri Rousou, (andri.rousou@bankofcyprus.com) Finance Director Eliza Livadiotou, Tel: , eliza.livadiotou@bankofcyprus.com Visit our website at: 27

28 Appendix Macroeconomic overview 28

29 /01/16 24/02/16 28/03/16 28/04/16 31/05/16 01/07/16 03/08/16 05/09/16 06/10/16 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016-5,1% -6,6% -6,9% -5,8% -4,5% 1-3,1% -3,1% -0,6% -0,4% -1,3% -2,8% -1,4% -1,2% -0,7% -0,1% 1,4% 1,7% 2,2% 2,9% 2,9% 2,8% 2,9% 2,8% Growth accelerated with broad sector participation Real GDP (SA) continued to expand in 2016 registering a yearly growth of 2,8% (1,7% in 2015)... with broad sector participation particularly from trade, tourism, and professional services, whilst. Contribution to growth in percentage points 0,2 0,2 0,1 0,4-0,1 0,4 0,2 1,3 0,6 0,5 Agriculture Construction Professional & business 0,3 0,2 0,0-0,5 Financial 2015 (growth 1,7%) 2016Q1-Q3 (growth 2,9%) 0,4 0,3 0,1 0,1 Other... on the expenditure side growth came from both domestic demand and net exports Contribution to growth by category of expenditure in percent points 4,7-0,1-2,8-1,6 1,1 1,1-1,3 3,9-5,4-4,1-2,1-2,3 2,2-1,0-2,7-0,1 0,3 1,5 1,5 1,2 1,9-1,3 1,4-1, q1-q32016 Consumption Fixed Investment Inventories Net Exports Improved rating and credit outlook, demonstrated by benchmark sovereign bond yields The gov t budget has been essentially balanced since 2014 following significant consolidation On an annual basis public debt peaked in 2015 and started to decline in 2016 relative to GDP 6,0 5,0 4,0 3,0 2,0 1,0 Yields on Cyprus government bonds In % of GDP, excl. recapitalisation costs 2,6 2,7 2,6 0,1-0,2-0, ,5 107,5 107,1 19,0 19, CY Feb 20 CY May 22 CY Nov Gov't budget Primary balance (RHS) Gross debt in billion euro (RHS) in % of GDP 7 SOURCE: Statistical Service of Republic of Cyprus; Bloomberg; European Commission Winter Forecasts 2017; Calculations by BOC Economic Research 29

30 Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016Q1 2016Q3 Key economic sectors are performing well The unemployment rate peaked in 2013Q4 at 16,6% SA and dropped to 12,8% in 2016Q2 rising to 14,1% in 2016Q4 In construction the main frequency indices have turned up in ,0 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2,0 0,0 100,0 16,6 16,5 102,0 14,1 100,0 13,1 96,2 98,0 10,3 12,8 96,0 94,0 6,6 91,7 90,3 92,0 90,0 88,0 86,0 84,0 Index 100=2008Q3 of 4Q moving averages/sums 120,0 100,0 100,0 80,0 60,0 40,8 36,1 40,0 29,9 20,0 21,3 23,4 27,7 0,0 Employment Index 4Q averages SA 2011Q2=100 (RHS) Unemployment rate SA % Industrial production bottomed in February 2014 on a 12 month basis, from a peak in 2008, and has been rising since... Production Index Local sales of cement Volume of building permits... were the rebound has been relatively uniform across sectors with the total production index up by 8,4% year-on-year in January-November Total Industrial production ,6 7, , , =Oct 2008 of 12 m. Av. (RHS) % change y-o-y 12 month averages Industrial production by sector: % change year-on-year 24,3 12,3 8,4 7,2 6,6 3,4 3,6 4,0 1,0-0,1-1,2-4,2-2,0-10,1-10,3-9,2-13,4-15,2-14,1-12, Jan-Nov Total Industry Manufacturing Electricity Water SOURCES: Statistical Service of Republic of Cyprus, Eurostat; Calculations by BOC Economic Research 30

31 Q3.08 Q4.08 Q1.09 Q2.09 Q3.09 Q4.09 Q1.10 Q2.10 Q3.10 Q4.10 Q1.11 Q2.11 Q3.11 Q4.11 Q1.12 Q2.12 Q3.12 Q4.12 Q1.13 Q2.13 Q3.13 Q4.13 Q1.14 Q2.14 Q3.14 Q4.14 Q1.15 Q2.15 Q3.15 Q4.15 Q1.16 Q2.16 Q Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 Tourism is expanding & Residential Property Index is stabilising Tourist activity accelerated in 2016 with total arrivals up 19,8% in the year driven by a 48,9% increase from Russia and 11,2% from the UK Arrivals: % change year-on-year The distribution of tourist arrivals has been shifting over time with the UK now at 36,3% and Russia at 24,5% of total arrivals 5,3 6,6 7,8 9,2 9,6 3,0 3,2 42,0 28,3 8,7 8,0 1,5 0,2 4,6 8,9 7,2 19,5 4,4 48,9 19,8 19,4 11,2 12,3 21,2 22,6 22,8 22,4 20,7 4,8 4,6 5,6 4,4 4,1 5,2 5,0 25,3 26,1 19,7 24,5 4,1 3,5 4,2 3,9 58,5-2,4-3,0-6,0-7,1-2,2-2,8 37,1 35,7 39,2 36,3-17, Total Arrivals Europe UK Russia Receipts UK Germany Russia Greece Other Europe Non-Europe Residential property prices declined by a cumulative 32% from their peak in 2008Q3 and started to stabilise from the second half of 2015 Residential property prices have started to rise year-on-year in some index series CBC Residential Property Price Index (Rebased to 2008Q3) 100,0-1,3-1,8-1,7 68,0 68,0 110,0 105,0 100,0 95,0 90,0 85,0 80,0 75,0 70,0 65,0 60,0 25,0 20,0 15,0 10,0 5,0 0,0-5,0-10,0-15,0-20,0 Residential property prices: RPPI (CBC); HPI (Eurostat); RICS RPPI HPI RICS-Apartments RICS-Houses 1,1 0,5-1,3-3,3 100=2008Q4 of 4Q moving averages (RHS) RPPI % change y-o-y SOURCES: Statistical Service of Republic of Cyprus; Central Bank of Cyprus; Eurostat; RICS-Cyprus; Calculations by BOC Economic Research 31

32 Consumer prices continued to drop in 2016 while on the demand side of the economy, retail trade volumes continued to increase Following three consecutive years of decline, consumer prices dropped 1,4% in 2016 and rose by 0,5% in January driven mainly by housing and transport expenditures which are energy related. 4,0 Consumer Price Index: % changes year-on-year 3,3 3,0 2,4 2,4 2,0 Increase in the CPI by category in percentage points 0,15 0,05-0,01-0,04 0,01-0,24 1,0 0,0-1,0-2,0-3,0-0,4-1,4-2,1-1,6-1,4-2,1-2,3-0,4-1,0 0,5-1,11-0,63-0,69-0,07-0,04-0,15-0,22-0,74-0,75-0,21-0,01-0, Food Housing Furnishings Transport Education Other The volume index of retail trade peaked in Oct on a 12 month basis and dropped by about 15% by the first half of 2014 and has been rising since Volume of retail trade 78, , , , , Regarding vehicle registration, after a 73% drop from their peak in late 2008 to early 2014, they started to rebound sharply in ,0 40,0 20,0 0,0-20,0-40,0-60,0-80,0 Registration of motor vehicles 27,2 42,6 44,745, , ,3 47, =2008M10 of 12 month moving averages (RHS) % change y-o-y SOURCES: Statistical Service of Republic of Cyprus; Calculations by BOC Economic Research 100=2008M10 of 12 month moving averages (RHS) % changes y-o-y 32

33 Appendix Additional financial information 33

34 Consolidated Balance Sheet mn % change mn % change Cash and balances with Central Banks Loans and advances to banks Debt securities, treasury bills and equity investments 6% % % Deposits by banks 80% Funding from central banks -81% Repurchase agreements -30% Customer deposits 16% Debt securities in issue Net loans and advances to customers -9% Other assets 42% Non current assets and disposal group held for sale -76% Total assets -5% Other liabilities 7% Non current liabilities and disposal group held for sale Total liabilities -6% Share capital 0% Capital reduction reserve and share premium 0% Revaluation and other reserves -6% Accumulated losses -5% (570) (601) Shareholders equity 1% Non controlling interests 56% Total equity 1% Total liabilities and equity -5%

35 Income Statement Review mn FY2016 FY2015 yoy +% Net interest income % % Net fee and commission income % % Insurance income net of insurance claims % % Core income % % Other income 66 (4) % 14 9 Total income % % Total expenses (397) (408) -3% (98) (97) 1% (101) (101) Profit before provisions and impairments % % Q2016 3Q2016 qoq +% 2Q2016 1Q2016 Provisions for impairment of customer loans net of gains/(losses) on derecognition of loans and changes in expected cash flows (370) (959) -61% (103) (109) -5% (96) (62) Impairments of other financial and non financial assets (47) (62) -23% (13) (12) 12% (14) (8) Provision for litigation and regulatory matters (18) (8) 135% (18) - - (2) 2 Share of profit from associates and joint ventures % % 1 1 Profit/(loss) before tax, restructuring costs and discontinued operations 139 (391) % Tax (16) (9) 84% (1) (4) -87% (4) (8) (Loss)/profit attributable to non-controlling interests (4) (5) (1) Profit/(loss) after tax from continuing operations (394) % Advisory, VEP and other restructuring costs 3 (114) (43) 165% (16) (11) 47% (70) (17) Loss from disposal group held for sale/discontinued operations - (38) Net gain on disposal of non-core assets % Profit/(loss) after tax 64 (438) % 6 50 Net interest margin 3,47% 3,79% -32bps 3,37% 3,35% +2bps 3,55% 3,63% Cost-to-Income ratio 41% 39% +2p.p. 40% 41% -1p.p. 43% 41% 4 (1) Profit before provisions and impairments, gains/(losses) on derecognition and changes on expected cash flows, restructuring costs and discontinued operations. (2) Profit after tax and before restructuring costs, discontinued operations and net profit on disposal of non-core assets. (3) Advisory, VEP and other restructuring costs comprise mainly: 1) fees of external advisors in relation to: (i) disposal of operations (ii) customer loan restructuring activities which are not part of the effective interest rate and (iii) the contemplated listing on the London stock exchange and 2) voluntary exit plan cost. 35