ECONOMY

Bank of Cyprus posts 88 pct rise in 2005 profit, outlook solid

NICOSIA (Reuters) – The Bank of Cyprus, Cyprus’s largest financial group, made 88 percent more after-tax profit in 2005 and said cost containment, a growing market for consumer credit and an improvement in net interest margins would boost profits further in 2006. The group, which has a rapidly expanding presence in neighboring Greece, said yesterday that after-tax earnings rose 88 percent in 2005 to 72 million Cyprus pounds ($150 million), and said it anticipated a further 65 percent increase in 2006. Pretax profit rose 78 percent to 91 million pounds. The group said it recommended shareholders get a 7-cent dividend per share. Profitability was rising on the back of a resurgence in consumer credit and particularly home mortgages, and in its insurance divisions, and due to lower bad debt provisions and cost containment. There was also an increase in net interest income from better pricing and more efficient management of foreign deposits, which have surged across the banking sector since Cyprus joined the ERM-2 currency mechanism last year. «We have boosted our market share, particularly among private consumers,» said Group Finance Manager Yiannis Kypri. «There was also cost containment, and in Cyprus there is still a freeze on new recruitment,» he said. After-tax profit for the fourth quarter of 2005 rose 15 percent compared with the third quarter of the year. «Based on the group’s financial results to date, the indications for their further development, as well as the current conditions in the market in which the group operates, it is expected that the group profit after tax will reach 120 million for 2006,» the bank said. The forecast represents a tripling of profits within two years. The group made an after-tax profit of 39 million in 2004. Reflecting a more aggressive marketing strategy, targeting homebuyers in particular, Bank of Cyprus said its market share in the domestic consumer lending sector rose to 25.6 percent at the end of December 2005 from 24.3 percent the year before. Loans registered an annual increase of 10 percent. In early 2005 the bank wrote off loans totaling 130 million pounds. They represented amounts outstanding for years and had been accounted for by provisions, Kypri said. In Greece, the annual rate of increase of loans was 21 percent, higher than the 17 percent of the total market, while its market share was 3.86 percent. The bank’s share of the Greek loan market in 2004 was 3.67 percent.