20th Feb 2023 09:35
(Alliance News) - Bank of Cyprus Holdings PLC on Monday said the foundations to begin "meaningful dividend distributions" have been laid, as profit trebled in 2022 amid helpful interest rate hikes.
The Nicosia-based lender said revenue in 2022 rose 20% to EUR904.2 million from EUR754.6 million in 2021. Net interest income increased 25% to EUR370.3 million from EUR296.3 million. The bank noted it has "positive gearing to rising interest rates". It has a liquidity position of EUR7.6 billion placed at the European Central Bank and is poised to benefit from further interest rate increases.
Last week, ECB Chief Christine Lagarde confirmed the ECB plans to raise its interest rates by half a percentage point at its next policy meeting in March, which would be the sixth increase since July 2022. As of Monday, ECB interest rates stand at 3% for main refinancing, 3.25% for marginal lending and 2.5% for deposit.
Bank of Cyprus's pretax profit trebled to EUR109.8 million in 2022 from EUR36.1 million in 2021.
It reported "record new lending" of EUR2.1 billion in 2022, up 17% from 2021.
Chief Executive Panicos Nicolaou said: "Against the backdrop of the challenging global and European economic environment, the Cypriot economy is proving resilient and is delivering strong growth notwithstanding headwinds. In the fourth quarter, GDP increased by 4.4% in Cyprus and is forecast to grow by [around] 3.0% in 2023, according to the ministry of Finance, outperforming the eurozone average."
Bank of Cyprus said recurring return on tangible equity beat guidance, rising to 11.3% in 2022 from 5.5% in 2021. It had been expected to land at 10%. Bank of Cyprus lifted its return on tangible equity guidance for 2023 to "over 13%" from "over 10%" previously.
Nicolaou said: "The ROTE target upgrade is facilitated by our positive gearing to rising interest rates, the significant contribution from non-interest income whilst maintaining cost discipline, a healthy loan portfolio and solid capital position."
The ROTE guidance upgrade lays "the foundations to commence meaningful dividend distributions from 2023 onwards, subject to regulatory approval and market conditions", the CEO said.
Bank of Cyprus hasn't paid a dividend since listing in London in early 2017.
Bank of Cyprus shares were 0.2% higher at 209.45 pence each in London on Monday morning.
By Tom Budszus, Alliance News reporter
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