As per its earlier announcement
of 16 November, on 28 November the largest commercial bank in Cyprus, Bank of Cyprus Public Co. Ltd. (Τράπεζα Κύπρου Δημόσια Εταιρία Λτδ), published
its financial results for the first nine months of 2012. The following is an excerpt from the English
version of the management’s 11-page announcement summarizing the results
(emphasis as per original):
Further deterioration in loan
portfolio quality led to a significant increase in provisions for impairment of
loans (€822 mn in the nine months of 2012, compared with €295 million for the
nine months of 2011), resulting to losses after tax, excluding the
impairment of Greek Government Bonds (GGBs) and the change in fair value of
related hedging derivatives as well as the related deferred tax, of €291 mn compared
to a profit of €254 mn for the nine months of 2011. Losses after tax and
including the impairment of GGBs for the nine months of 2012 reached €211
mn compared to €793 mn in the nine months of 2011, which included significant
losses from the GGBs impairment of about €1.046 mn.
As with the anticipatory
“profit warning” announcement that the bank issued on 9 November, in the
present document there is a fair amount of craftiness in the wording regarding
the impact of Greek Government bonds (GGBs – Ομολόγων Ελληνικού Δημοσίου (ΟΕΔ))
on the results for the period. The
document insists on frequently lumping together impairment losses on GGBs and
general provisions for impaired loans, at times giving the impression that a
significant share of the huge leap in provisions for impaired loans/assets that
took place in 9M2012 compared to 9M2011 (€295 mln → € 822 mln, an increase of €
527 mln or about 2% of the GDP of Cyprus) arose from continuing provisions for
GGBs. But an examination of the details
shows that in 9M2012 bad GGBs did not increase the bank’s overall provisions
but instead reduced them slightly, by € 80 mln:
Provisions for impairment of loans and advances (Προβλέψεις
για απομείωση δανείων και απαιτήσεων):
Other countries: (€ 25,771,000)
Total: (€ 821,664,000)
Impairment of GGBs and change in fair value of related
hedging instruments after tax (Απομείωση ΟΕΔ και μεταβολή στην εύλογη αξία
σχετικών παραγώγων αντιστάθμισης μετά τη φορολογία):
€ 80,134,000
Without the
contribution of GGBs, the bank’s provisions for other impaired loans/assets
would not be € 822 mln but € 902 mln.
And not all of the bank’s impaired-asset problems are due to Greece Cyprus
Loss before tax (Ζημιές πριν τη φορολογία):
Other countries: (€ 1,830,000)
Total: (€ 305,049,000)
Clearly the bank’s
problems are much broader than just Greece Cyprus
Sources:
Bank of Cyprus website: Οικονομικά
στοιχεία
Athens Stock Exchange filings: Παρουσίαση
οικονομικών αποτελεσμάτων εννιαμήνου 2012 (2012-11-28 18:05 )
Cyprus Stock Exchange filings: Οικονομικά
Αποτελέσματα Συγκροτήματος για το Eννιάμηνο που έληξε στις 30 Σεπτεμβρίου 2012
(2012-11-28 17:27 )
In other news, on
29 November a press briefing was held in Washington , D.C. Cyprus
QUESTION: The second question was about Cyprus
MR. RICE: You may have seen the joint statement from the E.U., the ECB,
and the IMF that we issued last Friday, about productive discussions with the authorities
on policy building blocks of the macroeconomic adjustment program. These
include policies to strengthen public finances, restore the health of the
financial system, and strengthen competitiveness so as to pave the way for the
economy to return to sustained growth and financial stability. What I can tell
you further is that these discussions are continuing with the authorities and
our European partners on financing solutions consistent with debt
sustainability. I do not have detail for you on further timing at this stage.
QUESTION: I have a follow-up on Cyprus
MR. RICE: The preliminary estimate of banking capital needs is expected
from PIMCO during the first week of December and these results will be
instrumental in determining the financing envelope that would underpin a
potential program with Cyprus
QUESTION: So we have to wait to next year for the program on Cyprus
MR. RICE: I do not have a date for you. As I say, we are in discussions.
We have had the mission. We are in discussions. There is now this banking due
diligence exercise and so we will be taking all that under consideration.
QUESTION: And the last question on Cyprus Cyprus
MR. RICE: I will get back to you on that if we can.
Source: Transcript of a
press briefing by Gerry Rice, Director, External Relations Department, International
Monetary Fund (2012-11-29)
Mark Pleas
[contact]
