Bank of Cyprus AGM highlights record profits and dividends in 2025

The Bank of Cyprus (BoC) held its annual general meeting on Friday, bringing together shareholders to review a year marked by strong financial performance, rising dividends, and continued strategic investment in digital banking, while also assessing a global environment increasingly shaped by geopolitical instability.

Group chief executive officer Panicos Nicolaou said 2025 represented another strong year for the bank, pointing to €481 million in profitability and a return on tangible equity of 18.6 per cent supported by a CET1 capital ratio of 21 per cent.

He highlighted that this performance enabled the bank to raise its shareholder payout ratio to 70 per cent, at the top end of its distribution policy, resulting in a total dividend of €305 mn or 70 cents per share from 2025 earnings.

Nicolaou underlined the scale of returns delivered in recent years, stating that “we have now paid almost €550 mn of cumulative distributions over the last two financial years”.

He added that the group remains committed to delivering attractive and sustainable shareholder returns, subject to market conditions.

Furthermore, he stressed that the bank’s ability to combine strong profitability with capital strength sets it apart in Europe, describing the Bank of Cyprus as one of the most highly capitalised banks in the euro area.

The chief executive attributed this performance to a diversified business model spanning banking, insurance and payments, alongside what he described as a strong position in Cyprus’ growing economy.

He also emphasised the importance of the domestic economic environment, noting that Cyprus continues to demonstrate resilience and growth despite external shocks.

Turning to the broader economy, Nicolaou said Cyprus recorded GDP growth of 3.8 per cent in 2025, significantly above the euro area average of 1.5 per cent.

He added that growth was supported by tourism, technology, low unemployment and low inflation, while public finances strengthened further with a budget surplus of 3.4 per cent of GDP and public debt declining to 55 per cent of GDP, well below the euro area average.

He also pointed to Cyprus’ sovereign credit strength, noting that ratings remain three notches above investment grade.

Despite the positive macroeconomic backdrop, Nicolaou warned that geopolitical tensions, particularly in the Middle East, continue to pose risks to global and European growth, especially through tourism and energy markets.

The Bank of Cyprus CEO explained that the full impact remains uncertain and depends on how events evolve, but stressed that Cyprus has repeatedly shown resilience, referencing past shocks including the pandemic, the war in Ukraine and previous regional instability.

He also highlighted the government’s response to rising energy costs, referring to a support package exceeding €200 mn, aimed at assisting households and businesses, particularly in tourism.

Looking ahead, he said forecasts still indicate GDP growth of between 2.7 and 2.9 per cent for 2026, slightly lower than earlier estimates due to geopolitical pressures, but still consistent with a manageable outlook for the economy.

“Nevertheless, geopolitical uncertainty remains high and the extent of the impact on the Cypriot economy is unclear,” Nicolaou said.

“The actions we have taken in recent years, coupled with our strong performance in 2025, mean that the Bank of Cyprus is well positioned to deal with the current uncertainty,” he added. 

“However, to the extent that the economic environment in which we operate changes, so our plans will evolve,” the CEO continued. 

Nicolaou also stated that the Bank of Cyprus delivered across all key financial metrics in 2025, including net profit after tax of €481 mn, basic earnings per share of €1.10, and strong growth in lending.

He noted that new lending reached €3 billion, up 23 per cent year on year, while gross performing loans increased 8 per cent to €10.9 billion.

He added that asset quality remained strong, with the non-performing exposure ratio falling to 1.2 per cent, while capital and liquidity ratios remained among the highest in Europe.

The group reported retail deposits rising 8 per cent to €22.2 bn, reinforcing what management described as a strong funding base.

Nicolaou also highlighted record organic capital generation of more than 400 basis points before distributions, well above target levels.

The chief executive said 2025 results enabled a 25 per cent year-on-year increase in total distributions, and confirmed the bank paid an interim dividend of €87 mn for the first time since 2011, followed by a further €218 mn cash dividend scheduled for June 2026 subject to shareholder approval.

He added that the total dividend per share of 70 cents represented a yield of about 9 per cent based on the share price at the end of 2025.

Nicolaou said the bank met or exceeded all targets for 2025, including resilient net interest income of €731 mn, a cost to income ratio of 37 per cent, and a cost of risk below 40 basis points.

He also pointed to continued investment in digital banking, describing the Bank of Cyprus as the country’s leading digital bank.

He said customers can now access services ranging from mortgages and loans to insurance and buy now pay later products through fully digital channels, with automated credit decisions and expanded financial services across all life stages.

The group also highlighted recognition from Global Finance, which awarded the Bank of Cyprus the title of World’s Best Digital Bank in Cyprus for seven consecutive years.

Turning to early 2026 performance, Nicolaou said the bank recorded €121 mn profit after tax in the first quarter, with return on tangible equity at 18 per cent.

He added that lending continued to expand, with performing loans rising 7 per cent year on year to €11.1 bn, supported by €829 mn in new lending.

Deposit growth continued, increasing 8 per cent year on year to €22.3 bn, while the CET1 ratio stood at 20.7 per cent and total capital ratio at 25.5 per cent, including first quarter profits net of dividend accruals.

Nicolaou said the strong start to 2026 reinforced confidence in the bank’s ability to meet its targets for the year.

Looking further ahead, he referenced the group’s strategic plan for 2026 to 2028, presented earlier in Athens, and said the priorities remain unchanged.

He defined these as generating sustainable and resilient profitability and attractive and sustainable shareholder returns, stressing that sustainability remains central to management strategy.

He said the bank expects mid-teens return on tangible equity over the period, supported by strong capital levels and organic capital generation of 350 to 400 basis points per year.

He also confirmed ongoing investment in technology and artificial intelligence, alongside continued focus on cost discipline, with the cost to income ratio expected to remain around 40 per cent.

Asset quality is expected to remain strong, with the cost of risk projected at the lower end of its long-term guidance range of 40 to 50 basis points.

Nicolaou also announced an enhanced distribution policy, including top-up dividends, with payouts expected to reach up to 90 per cent in 2026 and up to 100 per cent in 2027 and 2028, subject to conditions.

He said the bank would remain disciplined in its approach, with distributions dependent on market conditions and capital planning.

What is more, Nicolaou described 2025 as a milestone year that enabled record shareholder returns and reinforced the bank’s strong position in Cyprus and Europe.

He said that the Bank of Cyprus remains the leading financial institution in Cyprus with strong customer relationships and a dominant digital offering, operating in an economy that consistently outperforms the euro area.

He also emphasised the bank’s social role, highlighting long-standing support for initiatives such as the Bank of Cyprus Oncology Centre and the Bank of Cyprus Cultural Foundation.

On his part, group chairman Takis Arapoglou focused his remarks on the wider geopolitical environment, warning that global instability is becoming more complex and difficult to predict.

He said conflicts, strategic rivalries and shifting regulatory frameworks are reshaping global trade, energy markets and supply chains, with direct implications for banking and investment conditions.

“These dynamics also influence capital flows, investor sentiment and the operating conditions for banks worldwide,” Arapoglou said.

“In such an environment, stability, risk discipline and long-term thinking are essential,” he added.

Arapoglou suggested that inflationary pressures in Europe may delay expected interest rate cuts, while oil prices could remain elevated due to sustained demand and supply constraints.

He said Cyprus faces similar risks through tourism and energy costs but remains well positioned due to its resilient economy and strong fiscal fundamentals.

He stressed that Cyprus has historically outperformed the euro area and is well placed to manage external shocks.

The chairman said the bank’s strong 2025 performance enabled it to meet all targets and increase its payout ratio to the top end of its policy.

He also referenced the rise in the share price during the year as evidence of market confidence in the bank’s strategy.

Looking ahead, Arapoglou said the group will continue to focus on sustainable profitability, higher shareholder returns, digital transformation and selective inorganic growth through acquisitions aligned with strict criteria.

“Our robust capital and liquidity positions provide us with a strong foundation to handle foreseeable challenges and execute our strategic plan,” Arapoglou said.