Bank of Cyprus Group Preliminary Financial Results* for the year ended 31 December 2013 Preliminary Financial Results FY2013 Highlights Income Statement Review Balance Sheet Review Restructuring Appendices * The Preliminary Financial Results have not been audited by the Group s external auditors 28 February 2014 1
Disclaimer Certain statements, beliefs and opinions in this presentation are forward-looking. Such statements can be generally identified by the use of terms such as believes, expects, may, will, should, would, could, plans, anticipates and comparable terms and the negatives of such terms. By their nature, forward-looking statements involve risks and uncertainties and assumptions about the Group that could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. We have based these forwardlooking statements on our current expectations and projections about future events. Any statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which are based on facts known to and/ or assumptions made by the Group only as of the date of this presentation. We assume no obligation to update such forward -looking statements or to update the reasons that actual results could differ materially from those anticipated in such forward-looking statements. This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any security in any jurisdiction in the United States, to United States Domiciles or otherwise. The delivery of this presentation shall under no circumstances imply that there has been no change in the affairs of the Group or that the information set forth herein is complete or correct as of any date. This presentation shall not be used in connection with any investment decision regarding any of our securities, which should only be made based on expressly authorised materials from us identified as such, nor in connection with any decision whether or how to vote on any matter submitted to our stockholders. The securities issued by Bank of Cyprus Public Company Ltd have not been, and will not be, registered under the US Securities Act of 1933 ( the Securities Act ), or under the applicable securities laws of Canada, Australia or Japan. Following the Eurogroup decisions to recapitalise Bank of Cyprus (Bank) via a bail-in of depositors, the Bank was placed under resolution from 25 March 2013 until 30 July 2013, a period during which it was recapitalised and restructured in accordance with the decrees issued by the Central Bank of Cyprus in its capacity as Resolution Authority. In this context, the banking and leasing operations of the Bank in Greece were sold to Piraeus Bank S.A. as per the Sale of Greek Operations of Bank of Cyprus Public Company Ltd Decree of 2013. Hence, the financial results of the Greek operations are presented as discontinued operations. The Bank acquired the operations of Cyprus Popular Bank Public Co Ltd (Laiki Bank) in Cyprus as per the Sale of certain operations of Cyprus Popular Bank Public Co Ltd Decree of 2013. Hence the financial results of Laiki Bank are fully consolidated as from the date of the transfer, 29 March 2013. It is noted that the fair value of the transferred assets and liabilities for the purposes of accounting for the business combination of the Group is provisional in accordance with IFRSs. 2
Preliminary Financial Results FY2013 Highlights Preliminary Financial Results FY2013 Highlights Income Statement Review Balance Sheet Review Restructuring Appendices Following the Eurogroup decisions to recapitalise Bank of Cyprus via a bail-in of depositors, the Bank was placed under resolution from 25 March 2013 until 30 July 2013, a period during which it was recapitalised and restructured in accordance with the decrees issued by the Central Bank of Cyprus in its capacity as Resolution Authority. Due to the corporate actions that took place during this period, it is not possible to compare figures and results of the Group with past financial periods. 3
Preliminary Financial Results FY2013 Highlights Loss from continuing operations 77 mn for 4Q2013; including restructuring costs of 16 mn, loss attributable to shareholders 93 mn Loss from continuing operations 426 mn for FY2013; including restructuring costs of 158 mn and 1.456 mn losses from discontinued operations and from disposal of Greek operations, loss attributable to shareholders 2.040 mn Profit before impairments, restructuring costs and discontinued operations 184 mn for 4Q2013 ( 622 mn for FY2013) Net interest income 274 mn for 4Q2013 ( 999 mn for FY2013) and Net Interest Margin 3,87% for 4Q2013 (3,62% for FY2013) Cost to income ratio at 47% for FY2013 Deposit base showing signs of stabilisation during 4Q2013, with deposits in Cyprus reduced by 2% (compared to a 10% reduction during 3Q2013) ELA funding reduced to 9,56 bn; ECB funding at 1,40 bn 90+ DPD* showing signs of stabilisation, with growth rate contained to 0,2% for 4Q2013 (compared to growth rate of 18% during 3Q2013) Core tier 1 capital ratio sustained at 10,2%; Ratio affected negatively by a 2% reduction in core tier 1 capital (a negative impact of 0,2 percentage points) and benefited by a 2% reduction in RWA (a positive impact of 0,2 percentage points) * 90+ DPD are loans with a specific provision (i.e. impaired loans) and loans past-due for more than 90 days as per IFRS. 4
Recent Developments Integration of ex-laiki business on track Branches in Cyprus reduced to 130 from 203 in May 2013; another 3 branches to be closed during 2014 Next milestone for integration process is the IT banking system unification scheduled to be completed by end of 1H2014 Implementation of new organisational structure for simplification and for organising along functional, domestic, international and restructuring lines Establishment of Restructuring and Recoveries Division to focus management on collections and recovery efforts in line with the recent Directive on Arrears Management Improving liquidity position and stabilizing signs of deposit base allowed the release of the 6-month blocked deposits maturing end-january 2014 Deleveraging progressing well with the sale of the Ukrainian business; though a negative impact of 0,3% on Core tier 1 capital ratio, the transaction facilitates the de-risking of balance sheet and eliminates future potential risks relating to the Group s investment in Ukraine given political and economic conditions in the country 5
Income Statement Review Preliminary Financial Results FY2013 Highlights Income Statement Review Balance Sheet Review Restructuring Appendices 6
Income Statement Review Selected lines from Income Statement ( mn ) FY2013 FY2012 Change 4Q2013 3Q2013 Change Net Interest income 999 702 +42% 274 296-8% Net fee & commission income 169 173-2% 43 41 +6% Other income 6 45-87% (3) 24-113% Total income 1.174 920 +28% 314 361-13% Total expenses (552) (545) +2% (130) (137) -5% Profit before impairments, restructuring costs and discontinued operations 622 375 +66% 184 224-18% Provisions for impairment of loans and advances (1.067) (1.339) -20% (268) (261) +3% Share of profit/(loss) from associates 2 - - - (1) - Tax 5 88-2 1 - Loss attributable to non-controlling interests 12 9-5 2 - Loss after tax and before restructuring costs and discontinued operations (426) (867) -51% (77) (35) +118% Restructuring costs (158) (10) - (16) (107) - Loss from discontinued operations, on disposal of Greek operations, impairment and tax on GGBs and impairment of goodwill (1.456) (1.337) - - - - Loss after tax (2.040) (2.214) -8% (93) (142) -34% Net interest margin 3,62% 2,94% +68 b.p. 3,87% 4,02% -15 b.p. Cost-to-Income (%)* 47% 59% -12 p.p. 41% 38% +3 p.p. b.p. = basis points, p.p. = percentage points ; 100 b.p. = 1 p.p. *Excluding the restructuring costs, the losses from discontinued operations and from the disposal of the Greek operations. 7
Net Interest Income (NII) and Net Interest Margin (NIM) Net Interest Income ( mn) 429 296 274 4Q2013 NII at 274 mn (compared to 296 mn for 3Q2013), mainly due to lower customer spread (i.e. lower yield on loans); FY2013 NII at 999 mn 4Q2013 Group NIM at 3,87% (compared to 4,02% for 3Q2013) due to lower net interest income; FY2013 NIM at 3,62% 1H2013* 3Q2013 4Q2013 NII and NIM continue to be affected by conditions in Cyprus and by the fact that 36% of assets is funded by ELA and ECB funding Net Interest Margin (bp) 317 402 387 FY2013: 362 1H2013* 3Q2013 4Q2013 * Information for 1Q2013 and 2Q2013 is not available as it has not been possible to publish the financial results for the three months ended 31 March 2013. 8
Analysis of Non Interest Income Non Interest Income ( mn) Other income/(expense) Insurance income FX income & Net income from financial instruments Fee and commission Income 218 175 63 65 5 173 169-15 FY2012-3 -64 FY2013 Quarterly Non Interest Income ( mn) Other income/(expense) Insurance income FX income & Net income from financial instruments Fee and commission Income 65 40 14 12 3 23 9 41 43 FY2013 Non interest income of 175 mn 4Q2013 Non interest income of 40 mn compared to 65 mn for 3Q2013 6% increase in fee and commission income during 4Q2013 relating to higher commissions in Cyprus due to seasonality Recurring income from insurance business reflecting the Group s leading position in the insurance business in Cyprus FY2013 other income negatively affected by losses of 78 mn on the revaluation of investment properties (primarily repossessed assets) 3Q2013-40 4Q2013 9
Total expenses Total expenses ( mn ) Quarterly Total expenses ( mn ) Other operating expenses Staff costs Other operating expenses Staff costs 545 552-5% 137 130 251 230 54 64 294 322 83-21% 66 FY2012 FY2013 3Q2013 4Q2013 Group Cost to income ratio 57% 49% 47% 1H2013* 9M2013 FY2013 4Q2013 Total expenses of 130 mn compared to 137 mn for 3Q2013; 5% reduction reflecting primarily the impact of the VRS, with staff costs reduced by 21% during 4Q2013 to 66 mn Taking into account the impact of the VRS and salary cuts, the cost-to-income ratio has been reduced to 47% for FY2013 (about 40% for the 2H2013 compared to 57% for 1H2013) * Information for 1Q2013 and 2Q2013 is not available as it has not been possible to publish the financial results for the three months ended 31 March 2013. 10
Income Statement Highlights Income Statement Highlights ( mn ) 429 296 274 70 65 40 499 361 314 214 224 184 1H2013* 3Q2013 4Q2013-285 -137-130 -261-268 -314-35 -77 Net interest income Non interest income Total income Total expenses Profit before impairments -538 Provisions for impairments Loss from continuing operations 4Q2013 Total income of 314 mn, compared to 361 mn for 3Q2013; negatively affected by reduced net interest income and by the losses related to the revaluation of investment properties 4Q2013 Profit before impairments of 184 mn, compared to 224 mn for 3Q2013 4Q2013 Loss from continuing operations of 77 mn, compared to a loss of 35 mn for 3Q2013 * Information for 1Q2013 and 2Q2013 is not available as it has not been possible to publish the financial results for the three months ended 31 March 2013. 11
Balance Sheet Review Preliminary Financial Results FY2013 Highlights Income Statement Review Balance Sheet Review Restructuring Appendices 12
Funding Structure Analysis of Liabilities and Equity ( bn) Total equity Other liabilities ELA Funding from Central Banks ECB funding ( bn) ELA funding ( bn) ECB + ELA funding % Total assets ECB funding Customer deposits 34% 36% 36% 31,03 32,96-5% 31,40-3% 30,36 11,11 11,16 10,96 1,30 1,40 11,11 9,86 9,56 16,97-9% 15,47-3% 14,97 30.06.13 30.09.13 31.12.13 28,44 1,30 1,40 11,11-11% 9,86-3% 9,56 1,96 1,98 1,68 2,25 0,34 2,92 2,79 2,75 31.12.12 30.06.13 30.09.13 31.12.13 Funding structure dented by the bail-in and the acquisition of Laiki Deposits accounted for 49% of total assets at 31 December 2013, compared to 92% a year earlier At 31 December 2013 Eurosystem funding at 10,96 bn, comprising ELA of 9,56 bn and ECB funding of 1,4 bn; Between April 2013 and 31 December 2013, the Bank reduced the Eurosystem funding by 450 mn from 11,4 bn (comprising solely ELA) to 10,96 bn and at the same time managed to absorb a significant reduction in its deposit base 13
Customer Deposits Deposits by Geography ( mn ) Cyprus Russia UK Other 16.970-9% 105 1.295 15.468-3% 14.971 103 1.153 1.285 103 1.244 1.078 918 Loans to deposits ratio Net loans ( bn) Loans to deposits ratio Customer deposits ( bn) 140% 146% 145% 23,8 22,6 21,8 17,0 15,5 15,0 30.06.13 30.09.13 31.12.13 14.417-10% -2% 13.002 12.706 30.06.13 30.09.13 31.12.13 During 4Q2013, the Cypriot operations experienced customer inflows and the deposit base showed signs of stabilisation, with the deposit reduction contained to 2% during the quarter, compared to a 10% reduction in 3Q2013 Overall, Group deposits declined by 3% during 4Q2013, compared to a reduction of 9% during 3Q2013 Loans to deposits ratio at 145% at 31 December 2013 14
Loan Quality Problem Loans ( bn) NPLs (Old definition) NPLs (New definition) 90+ DPD 11,01 qoq:+29% 13,13 qoq:+7% 14,04 12,98 13,00 4,97 5,07 5,13 6,45 7,69 6,66 10,21 8,25 qoq:+18% qoq:+0,2% 2,95 3,43 4,05 4,82 31.12.11 31.03.12 30.06.12 30.09.12 31.12.12 30.06.13 30.09.13 31.12.13 Quarterly change in problem loans ( bn) 1,97 3Q2013 2,92 90+ DPD NPLs (New definition) 0,02 4Q2013 0,91 Loan quality challenges continued in 4Q2013. 90+ DPD* show signs of stabilisation, but newdefinition NPLs continue to rise as restructured loans remain classified as NPLs for longer 90+ DPD totalled 13.003 mn at 31 December 2013 (vs. 12.983 mn at 30 September 2013), with 4Q2013 growth rate contained to a mere 0,2% (vs. 3Q2013 growth rate of 18%) NPLs growth rate decelerated to 7% for 4Q2013 (vs. 3Q2013 growth rate of 29%) * 90+ DPD are loans with a specific provision (i.e. impaired loans) and loans past-due for more than 90 days as per IFRS. 15
Loan Quality Group loan quality indicators 90+ DPD ratio at 49% 90+ DPD provision coverage** 90+ DPD ratio* 27% 23% 17% 18% 18% 39% 47% 49% 90+ DPD provision coverage improved to 38%; Taking into account tangible collateral the 90+ DPD are fully covered Accumulated provisions at 4,98 bn or 18,6% of gross loans 30% 31% 40% 35% 48% 42% 37% 38% 31.12.11 31.03.12 30.06.12 30.09.12 31.12.12 30.06.13 30.09.13 31.12.13 Accumulated provisions 6 5 4 3 2 1 0 5,2% 5,5% 1,5 1,6 Accumulated provisions ( bn) Provisions % Gross loans 7,1% 8,0% 2,0 2,2 13,1% 3,7 16,2% 17,6% 18,6% 4,6 4,8 5,0 31.12.11 31.03.12 30.06.12 30.09.12 31.12.12 30.06.13 30.09.13 31.12.13 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Conservative provisioning assessment took into consideration the further expected decline in collateral values following March 2013 events Assumptions have been made about the future changes in property values in Cyprus, as well as the timing for the realisation of the collateral and for taxes and expenses on the repossession and subsequent sale of the collateral * 90+ DPD ratio is the ratio of 90+ DPD over gross loans. ** 90+ DPD provision coverage is defined as accumulated provisions as a percentage of 90+ DPD. 16
Loan Quality New definition of NPLs Loans restructured and less than 90 days past due Loans more than 90 days past due or Loans restructured and more than 90 days past due New definition Old definition 53% 53% 48% 48% 6% 4% 36% 29% 44% 47% 30.06.13 30.09.13 30.09.13 31.12.13 31.12.13 New definition of NPLs as from 1 July 2013; new definition NPLs ratio at 53% at 31 December 2013 With restructured loans remaining classified as NPLs for a longer period, there will be a growing difference between 90+ DPD and NPLs in the future NPLs provisioning coverage ratio at 35% at 31 December 2013; taking into account tangible collateral, NPLs are fully covered At 31 December 2013, the NPLs ratio comprises Loans restructured and less than 90 days past due (6% of gross loans) and Loans more than 90 days past due or Loans restructured and more than 90 days past due (47% of gross loans) 17
Capital position Capital adequacy ratios 30.06.13 30.09.13 31.12.13 10,5% 10,2% 10,2% 10,5% 10,2% 10,2% 10,7% 10,4% 10,6% Analysis of Risk weighted assets (RWA) ( bn) Credit risk Market risk Operational risk 23,51-2% 22,97-2% 22,48 1,84 1,84 2,06 0,55 0,08 0,01 21,12 21,05 20,41 Core tier 1 capital ratio Tier 1 capital ratio Total capital ratio 30.06.13 30.09.13 31.12.13 ( mn) 30.06.13 30.09.13 31.12.13 Shareholders equity 2.838 2.690 2.671 Core tier I capital* 2.478 2.334 2.296 Hybrid capital (Tier I) 0 0 0 Tier I capital 2.478 2.334 2.296 Tier II capital 42 59 76 Total regulatory Capital 2.520 2.392 2.372 *Including 60 mn of shares subject to interim orders Core tier 1 capital ratio sustained at 10,2%, at the same level as at 30 September 2013. Although negatively affected by a 2% reduction in the core tier 1 capital during the fourth quarter of 2013, the core tier 1 capital ratio was sustained at 10,2% due to a 2% decrease in RWA. Aiming to preserve and enhance capital adequacy by retaining internally generated capital, while the activity for restructuring and disposal of non-core assets will be driven by risk mitigation and capital considerations 18
Evolution of Core tier 1 capital ratio in 4Q2013 Risk weighted Assets mn Core tier 1 capital ratio 22.970-2% 22.478 10,2% -0,4% -0,1% +0,3% +0,2% 10,2% +184-268 -16 +62 4Q2013 Loss from 2.334 continuing operations before 2.296 tax and noncontrolling interest 84 mn Core tier 1 capital mn 30.09.13 Profit before impairments mn Impairments mn Restructuring costs mn Other items** mn RWA reduction* Core tier 1 capital mn 31.12.13-2% * Reduction in Risk weighted assets due to deleveraging and optimisation of risk weighted assets ** Mainly due to other equity movements. 19
Restructuring Preliminary Financial Results FY2013 Highlights Income Statement Review Balance Sheet Review Restructuring Appendices 20
Restructuring Plan charts the future strategic direction Restructuring Plan defines actions to create a safer, smaller, more focused institution capable of supporting the recovery of the Cypriot economy Rebuilding trust and confidence of both depositors and investors Preserving the Bank s status as the cornerstone of the domestic economy, continuing to support both businesses and households Building a resilient institution, able to effectively manage its portfolio of assets and withstand further external shocks and economic turbulence Smoothly integrating Laiki s operations, maximising impact on profitability for the combined entity through the realisation of synergies Enhance the capital adequacy of the Group by internally generating capital through profitability, deleveraging and disposal of non-core assets 21
May-13 Jun-13 Sep-13 Nov-13 Dec-13 Feb-14 During 2014 Restructuring of Cypriot operations Branch rationalisation (branch numbers) Integration of ex-laiki business on track 203 190-36% 158 142 133 130 127 Branch network in Cyprus reduced to 130 branches from 203 branches in May 2013; 3 branches expected to close during 2014. Next milestone for the integration process is the unification of the IT banking system (by end of the first half of 2014). This will facilitate the further utilisation of synergies and cost minimisation Cost to income ratio of Cyprus operations Staff costs reduced through salary cuts and a Voluntary Retirement Scheme (VRS). FT Employee reduction by 24% and staff costs by 35% on an annual basis Cost to income ratio of the Cyprus operations at 38% for FY2013 50% 43% 38% Changes in organisational structure for simplification and for organising along functional, domestic, international and restructuring lines 1H2013* 9M2013 FY2013 Establishment of Restructuring and Recovery Division to focus management on collections and recovery efforts * Information for 1Q2013 and 2Q2013 is not available as it has not been possible to publish the financial results for the three months ended 31 March 2013. 22
New organisational structure STRUCTURE CHART BANK OF CYPRUS GROUP REMUNERATION & HUMAN RESOURCES COMMITTEE BOARD OF DIRECTORS NOMINATIONS & CORPORATE GOVERNANCE COMMITTEE RISK COMMITTEE STRATEGY & RESTRUCTURING COMMITTEE AUDIT COMMITTEE DIRECTOR INTERNAL AUDIT DIRECTOR OF COMPLIANCE GROUP CHIEF EXECUTIVE ASSET & LIABILITY COMMITTEE EXECUTIVE COMMITTEE Chief Risk Officer Finance Director Chief Operating Officer HR Director Head of Restructuring & Recoveries Director Consumer & SME Banking Director Wealth, Asset Mgt & Brokerage Director Corporate Banking Director International Banking Services Insurance Director International Operations FUNCTIONS RESTRUCTURING DOMESTIC CORE INTERNATIONAL 23
Creation of Restructuring and Recoveries Division (RRD) Division handles delinquent customers in all sectors Most significant change is the establishment of a strong restructuring and recovery area. The Bank had a fragmented approach to the management of stressed, distressed and delinquent clients A structure that houses these clients under one umbrella unit, creating a centralized arrears management area that allows the Bank to manage clients in a much more robust, focused and logical manner The creation of the Restructuring and Recoveries Division (RRD) is a major step in the Bank s recovery path, as swiftly and professionally addressing problem lending positions is absolutely critical The Special Project Division (as per the Restructuring Plan) has evolved into the Major Corporate Management Department and is now part of the RRD. Hence, the RRD handles all activity relating to (a) Exposures greater than 100 mn, (b) debt restructuring and (c) debt collection. This Division will become very much the high powered engine room of the recovery, driving down NPL levels within the Bank and removing provisions from its balance sheet. The RRD has developed end to end strategies and responsibility for managing delinquent customers in each business line. Delinquent portfolio segments based on risk profile and exposure and tailored strategies for collections and restructurings have been defined accordingly. The establishment of a centralised arrears management unit is in line with the recently issued Directive on Arrears Management of 2013 issued by the Central Bank of Cyprus. The Directive includes inter alia a Code of Conduct on the handling of borrowers in financial difficulties, the development of a robust arrears management strategy, the utilisation of relevant, effective and sustainable debt restructuring techniques and options. Effective NPL recovery and management is vital for the Bank s future 24
Main Challenges Managing loan quality deterioration Recovery of NPLs Integrating Laiki Bank Achieving operational efficiencies Enhance capital position while making progress on non-core disposals Managing liquidity Defending deposit franchise Regaining trust Exogenous factors such as the failure to implement the policy reforms requested by Troika that could affect and/or delay the disbursement of the financial assistance to Cyprus, a deeper and prolonged economic recession, further significant increase in unemployment, a sharper reduction in real estate prices, as well as factors that could dent the fragile confidence of customers and delay the return of confidence to the Cyprus banking system could derail and affect the execution of the Restructuring Plan 25
Key information and contact details Credit Ratings: Fitch: Restricted Default (from 26 March 2013) Moody s : Ca / NP / E (from 22 March 2013) Listing: ATHEX BOC CSE BOCY ISIN CY0000100111 Since 19 March 2013, the shares of the Bank have been suspended from trading on ATHEX and CSE Contacts Investor Relations Constantinos Pittalis, Investor Relations Manager, Tel: +35722122466, Email: constantinos.pittalis@bankofcyprus.com Irene Constantinou, Investor Relations, Tel: +35722122121, Email: irene.constantinou@bankofcyprus.com Elena Hadjikyriacou, Investor Relations, Tel: +35722122239, Email: elena.hadjikyriacou@bankofcyprus.com Chief Financial Officer Eliza Livadiotou, Tel: +35722122344, Email: eliza.livadiotou@bankofcyprus.com Group Finance Director Dr. Chris Patsalides, Tel: +35722122456, Email: christakis.patsalides@bankofcyprus.com www.bankofcyprus.com 26
Appendices Preliminary Financial Results FY2013 Highlights Income Statement Review Balance Sheet Review Restructuring Appendices 27
Group Income Statement ( mn) FY2013 FY2012 yoy % 4Q2013 3Q2013 qoq% Net interest income 999 702 +42% 274 296-8% Net fee & commission income 169 173-2% 43 41 +6% Net foreign exchange income and gains/(losses) from financial instruments 5 (3) - 23 9 +169% Insurance income net of insurance claims 65 63 +3% 14 12 +19% Other (expenses)/income (64) (15) +326% (40) 3 - Total income 1.174 920 +28% 314 361-13% Staff costs (322) (294) +10% (66) (83) -21% Other operating expenses (230) (251) -8% (64) (54) +18% Total expenses (552) (545) +2% (130) (137) -5% Profit before impairments, restructuring costs and discontinued operations 622 375 +66% 184 224-18% Provisions for impairment of loans and advances (1.067) (1.339) -20% (268) (261) +3% Share of profit/(loss) from associates 2 - - - (1) - Loss before tax, restructuring costs and discontinued operations (443) (964) -54% (84) (38) +122% Tax 5 88-2 1 - Loss attributable to non-controlling interests 12 9-5 2 - Loss after tax and before restructuring costs and discontinued operations (426) (867) -51% (77) (35) +118% Restructuring costs (158) (10) - (16) (107) - Loss from discontinued operations (90) (789) - - - - Loss on disposal of the Greek operations (1.366) - - - - - Impairment of GGBs net of tax and impairment of goodwill - (548) - - - - Loss after tax (2.040) (2.214) -8% (93) (142) -34% 28
Consolidated Balance Sheet mn % yoy 31.12.13 31.12.12 mn % yoy 31.12.13 31.12.12 Cash and balances with Central Banks -3% 1.240 1.272 Placements with banks -27% 1.290 1.769 Debt securities, Treasury bills and equity investments Net loans and advances to customers +89% 3.537 1.870-11% 21.764 24.375 Other assets +45% 2.526 1.746 Total assets -2% 30.357 31.032 Amounts due to banks -42% 196 341 Funding from Central Banks - 10.956 - Repurchase agreements -2% 594 608 Customer deposits -47% 14.971 28.442 Debt securities in issue -98% 1 45 Other liabilities -21% 889 1.128 Subordinated loan stock -96% 5 133 Total liabilities -10% 27.612 30.697 Share capital +161% 4.684 1.795 Shares subject to interim orders - 59 - Share premium - - 428 CECS* - - 429 Revaluation and other reserves - 66 106 Accumulated losses - (2.138) (2.500) Shareholders equity +935% 2.671 258 Non controlling interests -4% 74 77 *Convertible Enhanced Capital Securities Total equity +719% 2.745 335 Total liabilities and equity -2% 30.357 31.032 29
Loans and Deposits by Geography Gross Loans by Geography Deposits by Geography mn 30.06.13 30.09.13 31.12.13 mn 30.06.13 30.09.13 31.12.13 Cyprus 24.219 23.540 23.192 UK 1.527 1.451 1.351 Russia 1.794 1.620 1.429 Other countries* 809 791 771 Group 28.349 27.402 26.743 As % of Group Cyprus 85,4% 85,9% 86,7% UK 5,4% 5,3% 5,1% Russia 6,3% 5,9% 5,3% Other countries* 2,9% 2,9% 2,9% Cyprus non-ibu 9.665 8.948 8.658 Cyprus IBU 4.752 4.054 4.047 Cyprus Total 14.417 13.002 12.706 UK 1.295 1.285 1.244 Russia 1.153 1.078 918 Other countries* 105 103 103 Group 16.970 15.468 14.971 As % of Group Cyprus non-ibu 57,0% 57,8% 57,8% Cyprus IBU 28,0% 26,3% 27,1% Cyprus Total 85,0% 84,1% 84,9% UK 7,6% 8,2% 8,3% Russia 6,8% 7,0% 6,1% Other countries* 0,6% 0,7% 0,7% * Other countries: Romania and Ukraine 30
Analysis of Gross Loans by Geography and customer Type Gross loans by geography *Other countries: Romania and Ukraine Other countries* Russia UK Cyprus 28,35 27,40 26,74 0,81 0,79 1,53 1,79 1,45 1,62 0,77 1,35 1,43 24,22 23,54 23,19 Total ( bn) 30.06.13 30.09.13 31.12.13 Gross loans by customer type Consumer Credit Housing SMEs Corporate 28,35 27,40 26,74 3,44 3,35 3,01 5,44 5,30 5,37 6,37 6,24 6,12 13,10 12,51 12,24 Total ( bn) 30.06.13 30.09.13 31.12.13 31
Analysis of Deposits by Geography and by Type Deposits by geography * Other countries: Romania and Ukraine 16,97 Other countries* 1,15 0,1 15,47 14,97 Russia 1,30 1,08 0,1 0,92 0,1 1,29 4,75 1,24 UK 4,05 4,05 Cyprus IBU Cyprus non-ibu 9,67 8,95 8,66 Total ( bn) 30.06.13 30.09.13 31.12.13 Deposits by type of deposit Current & demand accounts Savings accounts Time deposits 16,97 3,42 0,83 15,47 14,97 3,32 3,49 0,88 0,93 Total ( bn) 12,72 11,27 10,55 30.06.13 30.09.13 31.12.13 32
Cyprus: Summary income statement and key indicators ( mn) FY2013 FY2012 yoy (%) 4Q2013 3Q2013 qoq (%) Net interest income 834 514 +62% 240 254-6% Net fee & commission income 132 133-1% 35 31 +12% Net foreign exchange income and gains/(losses) from financial instruments 21 (13) -264% 36 11 +249% Insurance income net of insurance claims 57 53 +7% 12 11 +22% Other (expenses)/income (19) - - (17) 3 - Total income 1.025 687 +49% 306 310-1% Staff costs (247) (205) +21% (48) (66) -27% Other operating expenses (147) (172) -15% (38) (38) +2% Total expenses (394) (377) +5% (86) (104) -16% Profit before provisions 631 310 +104% 220 206 +7% Provisions for impairment of loans and advances (856) (1.186) -28% (159) (240) -34% Share of profit/(loss) from associates 2 - - (1) (0) - (Loss)/profit before tax (223) (876) -75% 60 (34) +278% Tax 3 43 - - (1) - Loss/(profit) attributable to non-controlling interests 1 2 - (1) 0 - (Loss)/profit after tax and before restructuring costs and discontinued operations (219) (831) -74% 59 (35) +270% Cost to income ratio 38% 55% -17 p.p. 28% 33% -5 p.p. b.p. = basis points, p.p. = percentage points ; 100 b.p. = 1 p.p. 33
Loans and Deposits in Cyprus Cyprus Loans by customer type ( bn) 24,22 23,54 23,19 Consumer Credit Housing SMEs Corporate 2,99 2,91 2,60 5,33 5,20 5,28 5,35 5,28 5,20 10,55 10,15 10,11 30.06.13 30.09.13 31.12.13 Cyprus Deposits ( bn) IBUs Non-IBUs 14,42 4,75 13,00 12,71 4,05 4,05 9,67 8,95 8,66 30.06.13 30.09.13 31.12.13 34
Russia: Summary income statement and key indicators ( mn) FY2013 FY2012 yoy (%) 4Q2013 3Q2013 qoq (%) Net interest income 97 120-19% 22 23-6% Net fee & commission income 28 33-16% 7 7-3% Net foreign exchange income and gains/(losses) from financial instruments 4 6-33% 0 1 - Other income/(expenses) - 1 - (1) 0 - Total income 129 160-20% 28 31-13% Staff costs (51) (62) -17% (12) (11) -1% Other operating expenses (50) (52) -5% (14) (11) +30% Total expenses (101) (114) -11% (26) (22) +14% Profit before provisions 28 46-41% 2 9-83% Provisions for impairment of loans and advances (79) (89) -11% (27) (17) +62% Loss before tax (51) (43) +21% (25) (8) +216% Tax 7 1-2 1 - Loss attributable to non-controlling interest 11 7-6 1 - Loss after tax and before restructuring costs and discontinued operations (33) (35) -4% (17) (6) +234% Cost to income ratio 79% 71% +8 p.p. 95% 73% +22 p.p. b.p. = basis points, p.p. = percentage points ; 100 b.p. = 1 p.p. 35
Russian operations Russian Loans ( bn) Loans by sector 1,89 2,00 2,02 1,79 1,62 1,43 Consumer Credit 25% Mortgages 3% Corporate 54% 31.12.10 31.12.11 31.12.12 30.06.13 30.09.13 31.12.13 SMEs 18% Russian Deposits ( bn) 1,12 1,29 1,25 1,15 1,08 0,92 31.12.10 31.12.11 31.12.12 30.06.13 30.09.13 31.12.13 36
UK: Summary income statement and key indicators ( mn) FY2013 FY2012 yoy (%) 4Q2013 3Q2013 qoq (%) Net interest income 29 22 +30% 5 10-54% Net fee & commission income 5 4 +8% 1 1-27% Net foreign exchange income and gains/(losses) from financial instruments 1 2-68% (2) 2 - Other income 0 0 - (0) 0 - Total income 35 28 +20% 4 13-74% Staff costs (10) (10) - (3) (3) -11% Other operating expenses (14) (9) +47% (2) (3) -34% Total expenses (24) (19) +22% (5) (6) -23% Profit before provisions 11 9 +16% (1) 7-112% Provisions for impairment of loans and advances (21) (12) +70% (5) 1-698% (Loss)/profit before tax (10) (3) +213% (6) 8-167% Tax (1) 1 - (0) 0 - Loss after tax and before restructuring costs and discontinued operations (11) (2) +442% (6) 8-174% Cost to income ratio 69% 68% +1 p.p. 127% 43% +84 p.p. b.p. = basis points, p.p. = percentage points ; 100 b.p. = 1 p.p. 37
UK operations UK Loans ( bn) Loans by sector ex-laiki UK loans 1,08 1,04 1,08 1,04 1,53 1,45 1,35 0,83 0,79 0,72 0,63 0,83 0,74 0,73 0,72 SMEs 44% Consumer Credit Mortgages 2% 2% Corporate 52% 31.12.10 31.12.11 31.12.12 30.06.13 30.09.13 31.12.13 UK Deposits ( bn) 1,26 1,21 1,22 1,30 1,29 1,24 31.12.10 31.12.11 31.12.12 30.06.13 30.09.13 31.12.13 38
Other countries*: Summary income statement ( mn) FY2013 FY2012 yoy (%) 4Q2013 3Q2013 qoq (%) Net interest income 39 46-12% 7 8-9% Net fee & commission income 4 3 +54% 1 2-53% Net foreign exchange income and gains/(losses) from financial instruments (21) 2 - (11) (5) - Insurance income net of insurance claims 8 10-20% 1 1 - Other expenses (45) (16) +197% (23) 0 - Total income (15) 45-134% (25) 6-517% Staff costs (14) (17) -28% (3) (3) 1% Other operating expenses (19) (18) +16% (9) (2) +233% Total expenses (33) (35) -7% (12) (5) +119% Profit before provisions (48) 10-608% (37) 1 - Provisions for impairment of loans and advances (111) (52) +114% (77) (5) - Share of profit from associates - - - 1 (0) - Loss before tax (159) (42) +275% (113) (4) - Tax (4) 44-111% 0 1 - Loss after tax and before restructuring costs and discontinued operations (163) 2 - (113) (3) - * Other countries: Romania, Ukraine, Greece 39
16,4% 25,6% 28,9% 23,9% 31,7% 28,5% 40,9% 48,8% 49,8% 50,4% 57,3% 60,5% 90+ DPD by Geography 90+ DPD by Geography ( bn) Cyprus Russia UK Other countries* 90+ DPD ratios by Geography Cyprus Russia UK Other countries* 12,98 13,00 11,01 0,39 0,25 0,46 0,44 0,46 0,35 0,47 0,45 0,39 9,91 11,72 11,70 30.06.13 30.09.13 31.12.13 30.06.13 30.09.13 31.12.13 * Other countries: Romania and Ukraine. 40
Analysis of loans and 90+ DPD ratios by customer type Gross loans by customer type ( bn) 30.06.13 30.09.13 31.12.13 13,10 12,51 12,24 6,37 6,24 6,12 5,44 5,30 5,37 3,44 3,35 3,01 Corporate SMEs Housing Consumer Credit 90+ DPD ratios by customer type 30.06.13 30.09.13 31.12.13 47,6% 57,9% 58,6% 40,9% 52,2% 54,5% 20,8% 24,3% 24,0% 30,1% 35,7% 39,9% Corporate SMEs Housing Consumer Credit 41
25,6% 40,7% 37,6% 30,3% 32,1% 47,0% 44,1% 46,4% 40,1% 46,0% 40,8% 41,1% 49,7% 53,6% 51,1% 54,8% 52,7% 51,7% 52,3% 56,8% 56,1% 67,8% 69,6% 64,7% 1,11 1,06 1,00 1,93 1,92 1,89 3,12 2,78 1,92 2,99 2,44 1,90 2,83 2,31 1,73 4,15 4,06 4,25 4,61 4,54 4,20 8,73 8,49 8,54 Analysis of Loans and 90+ DPD ratios by economic activity Gross loans by economic activity ( bn) 30.06.13 30.09.13 31.12.13 Trade Manufacturing Hotels & Restaurants Construction Real estate Private Individuals Professional & other services Other sectors 90+ DPD ratios by economic activity 30.06.13 30.09.13 31.12.13 Trade Manufacturing Hotels & Restaurants Construction Real estate Private Individuals Professional & other services Other sectors 42