Bank of Cyprus sees profit climb as loan book expands

The Bank of Cyprus (BoC) on Tuesday reported profit after tax of €252 million for the first six months of 2026, a 7 per cent increase year-on-year.

It also announced a 20 per cent higher interim dividend, with the lender pointing to strong lending growth, resilient asset quality and a robust capital position.

Specifically, the bank said it will pay an interim dividend of €0.24 per ordinary share, equivalent to approximately €105m, reflecting a 44 per cent payout ratio on first-half earnings and marking a significant increase from the previous year.

“We delivered excellent financial results in the first half of 2026, reflecting our diversified and efficient business model and continued strong performance,” group chief executive Panicos Nicolaou said.

The bank generated €131m in profit during the second quarter alone, while its return on tangible equity (ROTE) reached 18.8 per cent for the first half of the year, remaining comfortably above its full-year target of the mid-teens.

Basic earnings per share stood at €0.58, while the cost-to-income ratio remained at 36 per cent, underlining what the bank described as continued cost discipline.

“Cost management remained disciplined, evidenced by a cost to income ratio of 36 per cent,” Nicolaou stated.

The bank also reported strong business growth, with gross performing loans increasing to €11.4 billion, representing growth of 5 per cent since the beginning of the year and 8 per cent compared with a year earlier.

Its predominantly retail-funded deposit base rose to €22.8bn, up 3 per cent year-to-date and 9 per cent year-on-year.

“Our strategy execution drove solid lending and deposit growth,” the CEO stressed.

He added that “our loan book expanded by 8 per cent year-on-year and by 5 per cent year-to-date, driven both by domestic and international demand.”

Nicolaou also said that “our predominantly retail-funded deposit base increased by 9 per cent year-on-year and by 3 per cent year-to-date to €22.8bn as at June 30, 2026.”

The bank continued to strengthen its balance sheet during the period, reporting a net release of 12 basis points in cost of risk, reflecting customer-specific reversals, while its non-performing exposure (NPE) ratio fell further to just 1 per cent.

“Asset quality continued to be healthy with the NPE ratio declining to 1 per cent,” Nicolaou said.

Bank of Cyprus also highlighted its strong capital position, reporting a Common Equity Tier 1 (CET1) ratio of 20.9 per cent and a total capital ratio of 25.8 per cent.

Organic capital generation reached 225 basis points during the first half of the year.

“Our business continued to deliver strong organic capital generation of 225 basis points in the first half of 2026, supporting our balance sheet position,” Nicolaou explained.

He added that “after accruing an ordinary distribution at a 70 per cent payout ratio, at the top end of our distribution policy, our CET1 ratio and total capital ratio stood at 20.9 per cent and 25.8 per cent respectively.”

Looking ahead, the bank said it remains committed to its shareholder distribution policy for 2026.

“Today, we are pleased to announce an interim dividend of €0.24 per ordinary share, equivalent to a 44 per cent payout ratio from first-half 2026 earnings, representing an increase of 20 per cent year-on-year,” Nicolaou said.

He added that “we remain committed to our distribution target for 2026 for an ordinary dividend of 70 per cent payout ratio at the top end of our distribution policy and a top-up dividend of up to 20 per cent.”

The bank also expressed confidence that its financial performance will remain strong for the rest of the year.

“Capitalising on the strength of our performance in the first half of 2026, as well as higher interest rate expectations, we are confident in achieving a return on tangible equity towards the upper end of our mid-teens range target in 2026,” Nicolaou said.

Commenting on the wider economic environment, Nicolaou said Cyprus continued to demonstrate resilience despite international uncertainty.

“The Cypriot economy remains robust despite ongoing global uncertainty, with tourism in June 2026 recovering gradually to 2025 record levels,” he said.

He continued by saying that “recent official forecasts suggest GDP growth of around 2.5 per cent for 2026, well ahead of average eurozone growth expectations.”

Nicolaou also reaffirmed the bank’s broader strategy. “Our commitment remains unchanged, to support our customers and the broader Cypriot economy, while continuing to deliver attractive and sustainable returns and creating value for our shareholders,” he said.

The board of directors approved the interim dividend on August 3, 2026.

The dividend will be paid in cash on October 21, 2026, to shareholders on the register as of September 22, 2026, with the ex-dividend date set for September 21, 2026.

The bank said shareholders wishing to receive the dividend must hold ordinary shares on the record date.

It explained that payment arrangements will differ according to how shares are held, with distributions made electronically for holders through the Cyprus Stock Exchange (CSE), Euronext Athens and Euroclear systems, while registered shareholders will receive payment either by cheque, warrant or electronic transfer.

Bank of Cyprus also announced that depositary interest holders will no longer receive dividend payments by cheque.

The lender urged shareholders who have not yet provided valid bank account details to do so before the record date, warning that dividend amounts may otherwise be retained by the company for up to six years until payment instructions are received.

The bank added that eligible 1bank subscribers can update their dividend payment instructions through Internet Banking, the BoC Mobile app, or secure messaging within the digital banking platform.