ECONOMY

Bank of Cyprus results hit by WTC attacks

The Bank of Cyprus said yesterday that falling interest rates, costs related to new branches and the fall-out from the September 11 events dented group profits in the first nine months of the year. Pretax consolidated profits fell by 8.8 percent to 36.29 billion drachmas (106.5 million euros) from 39.8 billion drachmas (116.8 million euros) in the same period in 2000. After-tax consolidated profits were down by 10.2 percent to 24.5 billion drachmas (71.9 million euros) from 27.26 billion drachmas (80 million euros) previously. The bank said that external factors, namely the series of interest rate cuts implemented this year in combination with the US events had had a negative impact on results. Revenues from foreign exchange transactions and commission income plunged following Greece’s entry into the eurozone at the beginning of the year. The continuing stock market downturn in Cyprus and Greece also put the squeeze on profits. The Bank of Cyprus paid a high price for its expansion drive into the Greek and Australian markets. It said that the costs of setting up a subsidiary banking operation in Australia and 29 branches in Greece weighed down on nine-month earnings. The bank embarked on an aggressive drive into the Greek market this year, opening 19 branches to date. It plans to have a total 60 branches operating by the end of the year. Results from the Greek division, however, appeared to justify the bank’s decision to reinforce its presence in Greece. In the year to September, deposits from the Greek operation soared by 73 percent to 818 billion drachmas (2.4 billion drachmas) and loans by 26 percent to 750 billion drachmas (2.2 billion euros). Assets were up by 35 percent to 1.16 trillion drachmas (3.4 billion euros). Group assets in the nine-month period rose by 16.2 percent since the beginning of the year to 4.33 trillion drachmas (12.7 billion euros), while deposits increased by 16.6 percent. The Bank of Cyprus said overall year results will hinge largely on international developments. It said the acquisition of a 275-million-euro loan in June together with an equity issue worth 348.9 million euros last year has significantly reinforced its capital base, enabling it to withstand unfavorable market conditions.