Bank of Cyprus, the east Mediterranean island’s largest lender, on Tuesday posted a €554 million loss for the first six months as it increased buffers for bad debt.
Profit after tax of the Bank for January to June totalled €554 million compared to a €56 million profit for the same period in 2016.
BoC chief executive John Patrick Hourican said in a statement that the heavy losses were part of the bank’s drive to provide cover for non-performing loans.
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“The Bank’s first half results reflect the Bank’s previous policy of absorbing all its operating profitability in further de-risking the balance sheet,” said Hourican.
“The Board also made a deliberate decision to allocate a further €500 million of the Bank’s capital, through increased provisioning, to further accelerate risk reduction,” he added.
Losses before provisions and impairments and restructuring costs were €467 million, compared to a €102 million profit in the same six month period last year.
Hourican said the bank was focused on derisking of the balance sheet, through increased provisions.
“We expect to continue to utilise the operating profit of the Bank in the remainder of 2017 for further balance sheet de-risking…”
On an upbeat note the bank said it was fuelling economic activity with Cyprus’ 3.5 percent growth rate in Q2 the second fastest in Europe.
“New lending of the Group in the six months was €1.1 billion, more than double the new lending in the corresponding period in the previous year,” said Hourican.
In March 2013, Cyprus clinched a 10-billion-euro loan from the European Union and International Monetary Fund to bail out its troubled economy and oversized banking system.
Under the terms of the deal, the government was required to close the island’s second-largest bank, Laiki, and impose a 47.5 percent haircut on deposits above €100,000 at BoC.
The bank has since undergone major restructuring, which included absorbing the good assets of the former Laiki Bank and selling assets.
Underlining its comeback, the bank has listed on the London Stock exchange.