Bank of Cyprus (BoC) on Monday reported a 13 percent drop in first-quarter net profit to 71 million euros, hurt by rising provisions for bad loans and a special tax slapped on Cypriot lenders.
The figure, however, beat analysts expectations, as they were expecting net earnings of around 62 million euros.
The bank, which is also present in Russia, Australia, Ukraine, Romania and the UK, said that nonperforming loans rose to 7.6 percent at the end of March, up from 6 percent in the same period a year earlier.
?Markets continue to face uncertainty but, despite this, the group has managed to achieve profitability with a positive contribution coming from all markets,? Andreas Iliadis, Bank of Cyprus CEO, said in a statement.
A recent issue of convertible capital securities has boosted BoC?s capital adequacy to 12.3 percent, helping boost liquidity and secure further growth, it added.
Looking ahead, the Nicosia-based lender expects net earnings this year to be at 2010 levels despite worsening economic conditions in Greece, which accounted for 35 percent of its loan book at the end of March. Growth is seen coming from the Russian market after it boosted its presence in the country through the acquisition of Uniastrum Bank in the middle of 2008.
?Regarding operations in Russia, the group expects consistent business expansion and improvement in profitability, resulting in a higher contribution to group profitability,? the bank added.
Seven percent of total loans, nearly 2 billion euros, comes from Russia, while Cyprus accounts for 49 percent of the bank?s total 29.1-billion-euro loan book.