The Bank of Cyprus Group announced losses after tax of €2.214 mln in 2012, compared to €1.359 mln in 2011.

According to the Group’s Financial Results for the year that ended 31 December 2012, released on Friday, the Bank’s profit before impairments and restructuring costs reached €620 mln, noting a decline of 22% compared to 2011.

Provisions for impairment of loans and advances have increased significantly, to €2.306 mln in 2012, compared with €426 mln in 2011, reflecting the deterioration in the quality of the loan portfolio and the declining collateral values.

The non-performing loans ratio at 31 December 2012 reached 23.7%, compared to 10.2% at 31 December 2011.

Taking into account the deterioration of its loan portfolio and the declining collateral values, the Group recorded significantly higher levels of provisions for impairment of loans, with accumulated provisions for impairment of loans reaching €3.7 bln and the provision coverage ratio of non-performing loans amounting to 55%.
The total deposits of the Group as at 31 December 2012 amounted to €28,4 bln, declining by 4% on an annual basis.

As at 31 December 2012, the Group’s net loans to deposits ratio stood at 86%, while the Group had no Eurosystem funding.

At 31 December 2012, the Group’s equity amounted to €258 mln, while the Group had Tier 1 capital ratio of 0.6% and a negative Core Tier 1 capital ratio of -1.9%.

It is added that following the Eurogroup decisions on Cyprus, the Bank was placed under Resolution, from 25 March 2013 to 30 July 20133, and was recapitalised via a bail-in of depositors and restructured in accordance with the decrees issued by the Central Bank of Cyprus in its capacity as Resolution Authority.

According to the Resolution Authority the Bank has been recapitalised to a level which can sustain possible future losses on its loan portfolio.

Concerning the Group’s prospects for 2013, it is noted that “faced with an unprecedented and intensifying economic crisis, the consequences of the Eurogroup decisions and the events after the balance sheet date” the Bank “will define its strategy, business model and risk appetite, via a restructuring plan as per the requirements of the Memorandum of Understanding (MoU) between the Republic of Cyprus and the Troika”.
The plan, which is in the process of being finalised, will be submitted to the Central Bank of Cyprus for approval in October 2013.

It is also noted that the recapitalisation of the Bank, and the restructuring currently in progress “aim to create a healthy financial institution, able to best serve client needs and contribute to the recovery of the Cyprus economy

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