Annual Financial Report 2024
BANK OF CYPRUS GROUP
Annual Financial Report 2024
Annual Financial Report
for the year ended 31 December 2024
Contents
Board of Directors and Executives
1
Forward Looking Statements and Notes
2
Management Report of Bank of Cyprus Public Company Limited
3
Risk and Capital Management Report
33
Sustainability Statement
69
Independent Auditor’s Report to the Members of Bank of Cyprus Public Company Limited on the Consolidated Financial
Statements
247
Consolidated Financial Statements of Bank of Cyprus Group
258
Independent Auditor’s Report to the Members of Bank of Cyprus Public Company Limited on the Separate Financial
Statements
447
Financial Statements of Bank of Cyprus Public Company Limited
457
Alternative Performance Measures Disclosures
596
Additional Information – EU Taxonomy Disclosure Tables
613
Page
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Board of Directors and Executives
as at 26 March 2025
Board of Directors of Bank of Cyprus
Public Company Limited
Efstratios-Georgios Arapoglou
CHAIRMAN
Lyn Grobler
VICE-CHAIRPERSON
Panicos Nicolaou
Eliza Livadiotou
Monique Eugenie Hemerijck
Adrian John Lewis
Christian Philipp Hansmeyer
William Stuart Birrell
Executive Committee
Panicos Nicolaou
CHIEF EXECUTIVE OFFICER
Dr. Charis Pouangare
DEPUTY CHIEF EXECUTIVE OFFICER & CHIEF OF BUSINESS
Eliza Livadiotou
EXECUTIVE DIRECTOR FINANCE
Demetris Th. Demetriou
CHIEF RISK OFFICER
Irene Gregoriou Pavlidi
EXECUTIVE DIRECTOR PEOPLE & CHANGE
George Kousis
EXECUTIVE DIRECTOR TECHNOLOGY & OPERATIONS
Company Secretary
Katia Santis
Legal Advisers as to matters of Irish
Law
Arthur Cox
Legal Advisers as to matters of
English and US Law
Sidley Austin LLP
Legal Advisers as to matters of
Cypriot Law
Chryssafinis & Polyviou LLC
Legal Advisers as to matters of Greek
Law
Potamitis Vekris
Independent Statutory Auditors
PricewaterhouseCoopers
43 Demostheni Severi Avenue
1080 Nicosia
Cyprus
Registered Office
51 Stasinou Street
Ayia Paraskevi, Strovolos
CY 2002, Nicosia
Cyprus
1
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Forward Looking Statements and Notes
This document contains certain forward-looking statements which can usually be identified by terms used
such as 'expect', 'should be', 'will be' and similar expressions or variations thereof or their negative
variations, but their absence does not mean that a statement is not forward-looking. Examples of forward-
looking statements include, but are not limited to, statements relating to the Bank of Cyprus Group's (the
'Group') near term and longer term future capital requirements and ratios, intentions, beliefs or current
expectations and projections about the Group’s future results of operations, financial condition, the level of
the Group’s assets, liquidity, performance, return of tangible equity, projected levels of growth, capital
distributions (including policy on dividends and share buybacks) prospects, anticipated growth, provisions,
impairments,
business
strategies
and
opportunities,
any
commitments
and
targets
(including
environmental, social and governance (ESG) commitments and targets). By their nature, forward-looking
statements involve risk and uncertainty because they relate to events, and depend upon circumstances,
that will or may occur in the future. Factors that could cause actual business, strategy and/or results to
differ materially from the plans, objectives, expectations, estimates and intentions expressed in such
forward-looking statements made by the Group include, but are not limited to: general economic and
political conditions in Cyprus and other European Union (EU) Member States, interest rate and foreign
exchange rate fluctuations, legislative, fiscal and regulatory developments and information technology,
litigation and other operational risks, adverse market conditions, the impact of outbreaks, epidemics or
pandemics, and geopolitical developments as well as uncertainty over the scope of actions that may be
required by us, governments and other to achieve goals relating to climate, environmental and social
matters, as well as the evolving nature of underlying science and industry and governmental standards and
regulations. This creates significantly greater uncertainty about forward-looking statements. Should any one
or more of these or other factors materialise, or should any underlying assumptions prove to be incorrect,
the actual results or events could differ materially from those currently being anticipated as reflected in
such forward-looking statements. Further, forward-looking statements may be affected by changes in
reporting frameworks and accounting standards, including practices with regard to the interpretation and
application thereof and emerging and developing ESG reporting standards. The forward-looking statements
made in this document are only applicable as at the date of publication of this document. Except as required
by any applicable law or regulation, the Group expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statement contained in this document to reflect any
change in the Group’s expectations or any change in events, conditions or circumstances on which any
statement is based.
Non-IFRS performance measures
Bank of Cyprus Public Company Limited's (the Company) management believes that the non-IFRS
Accounting Standards performance measures included in this document provide valuable information to the
readers of the Annual Financial Report as they enable the readers to identify a more consistent basis for
comparing the Group’s performance between financial periods and provide more detail concerning the
elements of performance which management are directly able to influence or are relevant for an
assessment of the Group. They also reflect an important aspect of the way in which the operating targets
are defined and performance is monitored by the Group’s management. However, any non-IFRS Accounting
Standards performance measures in this document are not a substitute for IFRS Accounting Standards
measures and readers should consider the IFRS Accounting Standards measures as the key measures of the
31 December position. Refer to ‘Alternative Performance Measures Disclosures’ on pages 596 to 612 of the
Annual Financial Report for the year ended 31 December 2024 for further information and calculations of
non-IFRS Accounting Standards performance measures included throughout this document and their
reconciliation to the most directly comparable IFRS Accounting Standards measures included in the
Consolidated Financial Statements.
The Annual Financial Report for the year ended 31 December 2024 is available on the Group’s website
www.bankofcyprus.com (Group/Investor Relations) (the Group's website).
2
MANAGEMENT REPORT
FOR THE YEAR
2024
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
4
The Board of Directors submits to the shareholders of Bank of Cyprus Public Company Limited (the ‘Company’ or
‘BOC PCL’ or ‘the Bank’) their Management Report together with the audited Consolidated Financial Statements
(‘Consolidated Financial Statements’) and Financial Statements of the Company for the year ended 31 December
2024.
The Annual Financial Report relates to the Company and together with its subsidiaries the Group.
Activities
The principal activities of BOC PCL and its subsidiary companies involve the provision of banking, financial, and
insurance services and the management and disposal of property predominately acquired in exchange of debt.
All Group companies and branches are set out in Note 50 to the Consolidated Financial Statements. The Group
has established branches in Greece. There were no acquisitions of subsidiaries and no material disposals of
subsidiaries during the year ended 31 December 2024. Information on Group companies and acquisitions and
disposals during the year are detailed in Note 50 to the Consolidated Financial Statements.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
5
Group financial results on the underlying basis
Commentary on underlying basis
The financial information presented in this section provides an overview of the Group financial results for the year
ended 31 December 2024 on the ‘underlying basis’, which management believes best fits the true measurement
of the performance and position of the Group, as this presents separately any non-recurring items and also
includes certain reclassifications of items, other than non-recurring items, which are done for presentational
purposes under the underlying basis for aligning their presentation with items of a similar nature.
Reconciliations between the statutory basis and the underlying basis to facilitate the comparability of the
underlying basis to the statutory information, are included in section ‘Reconciliation of the Consolidated Income
Statement for the year ended 31 December 2024 between the statutory basis and the underlying basis’ and
‘Alternative Performance Measures Disclosures’ of the Annual Financial Report 2024.
The main financial highlights for the year ended 31 December 2024 are set out below:
Consolidated Income Statement on the underlying basis
€ million
20241
20231
Net interest income
822
793
Net fee and commission income
177
181
Net foreign exchange gains and net gains/(losses) on financial instruments
36
37
Net insurance result
46
54
Net (losses)/gains from revaluation and disposal of investment properties and
on disposal of stock of property
(1)
10
Other income
14
18
Total income
1,094
1,093
Staff costs
(203)
(192)
Other operating expenses
(161)
(156)
Special levy on deposits and other levies/contributions
(39)
(43)
Total expenses
(403)
(391)
Operating profit
691
702
Loan credit losses
(30)
(63)
Impairments of other financial and non-financial assets
(56)
(53)
Provisions for pending litigation, claims, regulatory and other matters (net
of reversals)
(12)
(28)
Total loan credit losses, impairments and provisions
(98)
(144)
Profit before tax and non-recurring items
593
558
Tax
(81)
(73)
Profit attributable to non-controlling interests
(1)
(2)
Profit after tax and before non-recurring items (attributable to the
owners of the Company)
511
483
Advisory and other transformation costs - organic
-
(2)
Profit after tax (attributable to the owners of the Company)
511
481
1.
The financial information is derived from and should be read in conjunction with the accompanied Consolidated Financial
Statements.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
6
Group financial results on the underlying basis (continued)
Consolidated Income Statement on the underlying basis (continued)
Key Performance Ratios
2024
2023
Net interest margin
3.53%
3.42%
Net interest margin excluding TLTRO III
3.61%
3.74%
Cost to income ratio
37%
36%
Cost to income ratio excluding special levy on deposits and other
levies/contributions
33%
32%
Operating profit return on average assets
2.7%
2.7%
Basic earnings per share attributable to the owners of the Company (€)1
0.05
0.05
Return on tangible equity (ROTE)
21.5%
24.5%
Return on tangible equity (ROTE) on 15% CET1 ratio2
27.8%
27.04%
Tangible book value per share3 (€)
0.27
0.23
Tangible book value per share excluding the cash dividend (€)
0.24
0.22
1.
The diluted earnings per share attributable to the owners of the Company as at 31 December 2024 amounted to €0.05.
2.
Calculated as Profit after tax (attributable to the owners of the Company), divided by the quarterly average of Shareholders’
equity minus intangible assets and after deducting the excess CET1 capital on a 15% CET1 ratio from the tangible shareholders’
equity and the amount approved/recommended for distribution in respect of earnings of the relevant year the distribution relates
to.
3.
Tangible book value per share is calculated based on number of shares in issue at the end of the period, excluding treasury shares.
Consolidated Balance Sheet on the underlying basis
€ million
20241
20231
Cash and balances with central banks
7,601
9,615
Loans and advances to banks
821
385
Reverse repurchase agreements
1,010
403
Debt securities, treasury bills and equity investments
4,358
3,695
Net loans and advances to customers
10,114
9,822
Net loans and advances to Group companies2
3
1
Stock of property
649
826
Investment properties
36
62
Other assets
1,871
1,821
Non-current assets and disposal groups held for sale
23
-
Total assets
26,486
26,630
Deposits by banks
364
472
Funding from central banks
-
2,044
Customer deposits
20,529
19,339
Debt securities in issue
989
672
Subordinated liabilities
308
308
Other liabilities
1,463
1,306
Total liabilities
23,653
24,141
Shareholders’ equity
2,593
2,248
Other equity instruments
220
220
Total equity excluding non-controlling interests
2,813
2,468
Non-controlling interests
20
21
Total equity
2,833
2,489
Total liabilities and equity
26,486
26,630
1.
The financial information is derived from and should be read in conjunction with the accompanied Consolidated Financial
Statements.
2.
Net loans and advances to Group companies of €3 million as at 31 December 2024 (2023: €1 million) have been separately
presented on the Consolidated Balance Sheet on the underlying basis since they relate to balances with Group companies
and thus are not taken into consideration in the calculation of the relevant key ratios and metrics referring to loans and
advances with customers throughout this Management Report.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
7
Group financial results on the underlying basis (continued)
Consolidated Balance Sheet on the underlying basis (continued)
Key Balance Sheet figures and ratios
2024
Pro forma1
2024
2023
Gross loans (€ million)
10,320
10,374
10,070
Allowance for expected loan credit losses (€ million)
223
254
267
Customer deposits (€ million)
20,529
20,529
19,339
Loans to deposits ratio (net)
49%
49%
51%
NPE ratio
1.9%
2.5%
3.6%
NPE coverage ratio
111%
100%
73%
Leverage ratio
10.4%
10.4%
9.1%
Capital ratios and risk weighted assets
2024
(Regulatory)2
2023
(Regulatory)3
Common Equity Tier 1 (CET1) ratio (transitional)
19.2%
17.4%
Total capital ratio (transitional)
24.1%
22.4%
Risk weighted assets (RWAs) (€ million)
10,836
10,343
1. References to pro forma figures as at 31 December 2024 refer to the agreement for the sale of two non-performing loan portfolios, which
is expected to be completed in the first half of 2025 subject to necessary approvals. The portfolios are classified as non-current assets
held for sale with a net book value of €23 million as at 31 December 2024. Numbers on a pro forma basis are based on 31 December
2024 underlying basis figures and assume completion of the sale.
2. Includes profits for the year ended 31 December 2024 net of a deduction for the distribution in respect of 2024 earnings, following
relevant recommendation by the Board of Directors to the shareholders for a final cash dividend of €241 million.
3. Includes profits for the year ended 31 December 2023 net of a deduction for the distribution in respect of 2023 earnings following
approval received by the ECB in March 2024 and relevant recommendation by the Board of Directors to the shareholders for a final cash
dividend of €137 million.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
8
Group financial results on the underlying basis (continued)
Reconciliation of the Consolidated Income Statement for the year ended 31 December 2024 between
the statutory basis and the underlying basis
€ million
Underlying
basis
Other
Statutory
basis
Net interest income
822
-
822
Net fee and commission income
177
-
177
Net foreign exchange gains and net gains on financial
instruments
36
2
38
Net gains on derecognition of financial assets measured at
amortised cost
-
-
-
Net insurance result*
46
-
46
Net loss from revaluation and disposal of investment properties
and on disposal of stock of properties
(1)
-
(1)
Other income
14
-
14
Total income
1,094
2
1,096
Total expenses
(403)
(12)
(415)
Operating profit
691
(10)
681
Loan credit losses
(30)
30
-
Impairment of other financial and non-financial assets
(56)
56
-
Provisions for pending litigation, claims, regulatory and other
matters (net of reversals)
(12)
12
-
Credit losses on financial assets and impairment net of
reversals of non-financial assets
-
(88)
(88)
Profit before tax and non-recurring items
593
-
593
Tax
(81)
-
(81)
Profit attributable to non-controlling interests
(1)
-
(1)
Profit after tax (attributable to the owners of the
Company)
511
-
511
* Net insurance result per underlying basis comprises the aggregate of captions ‘Net insurance finance
income/(expense) and net reinsurance finance income/(expense)’, ‘Net insurance service result’ and ‘Net
reinsurance service result’ per the statutory basis.
The reclassification differences between the statutory basis and the underlying basis are explained below:
Net gains on loans and advances to customers at FVPL of €1 million included in ‘Loan credit losses’ under
the underlying basis are included in ‘Net gains on financial instruments’ under the statutory basis. Their
classification under the underlying basis is done to align their presentation with the loan credit losses on
loans and advances to customers at amortised cost.
‘Net gains on derecognition of financial assets measured at amortised cost’ is nil under the statutory basis
and comprises the below items which are reclassified accordingly under the underlying basis as follows:
-
€0.3 million net gains on derecognition of loans and advances to customers included in ‘Loan
credit losses’ under the underlying basis as to align their presentation with the loan credit losses
arising from loans and advances to customers.
-
Net losses on derecognition of debt securities measured at amortised cost of approximately €0.3
million included in ‘Net foreign exchange gains and net gains on financial instruments’ under the
underlying basis in order to align their presentation with the net gains on financial instruments.
‘Provisions for pending litigation, claims, regulatory and other matters (net of reversals)’ amounting to €12
million presented within ‘Operating profit before credit losses and impairment' under the statutory basis,
are presented under the underlying basis in conjunction with loan credit losses and impairments.
‘Credit losses on financial assets' and 'Impairment net of reversals on non-financial assets’ under the
statutory basis include: i) credit losses to cover credit risk on loans and advances to customers of €32
million, which are included in ‘Loan credit losses’ under the underlying basis, and ii) net reversal of credit
losses of other financial assets of a €0.1 million and impairment net of reversals on non-financial assets of
€56 million, which are included in ‘Impairment of other financial and non-financial assets’ under the
underlying basis, as to be presented separately from loan credit losses.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
9
Group financial results on the underlying basis (continued)
Balance Sheet Analysis
Capital Base
Total equity excluding non-controlling interests totalled €2,813 million as at 31 December 2024 compared to
€2,468 million as at 31 December 2023. Shareholders’ equity totalled to €2,593 million as at 31 December 2024
compared to €2,248 million as at 31 December 2023.
The regulatory Common Equity Tier 1 capital (CET1) ratio on a transitional basis stood at 19.2% as at 31
December 2024 compared to 17.4% as at 31 December 2023. Throughout the Management Report, the capital
ratios as at 31 December 2024 include profits for the year ended 31 December 2024, net of a deduction for the
distribution in respect of 2024 earnings, following relevant recommendation by the Board of Directors to the
shareholders for a final cash dividend of €241 million. During the year ended 31 December 2024, the CET1 ratio
was positively affected by profit after tax and partially decreased by the distribution accrual at 50% payout ratio,
as well as the increase in operational RWAs primarily driven by the inclusion of higher 2024 income compared to
2021. Since September 2023, a charge is deducted from own funds in relation to the ECB prudential expectations
for NPEs, which amounted to 26 basis points as at 31 December 2024, compared to 32 basis points as at 31
December 2023. A prudential charge in relation to an onsite inspection on the value of the Group’s foreclosed
assets is being deducted from own funds since June 2021, the impact of which was 3 basis points on Group’s
CET1 ratio as at 31 December 2024 (compared to 12 basis points on Group’s CET1 ratio as at 31 December
2023). In addition, the Group is subject to increased capital requirements in relation to its real estate repossessed
portfolio which follow a SREP provision to ensure minimum capital levels retained on long-term holdings of real
estate assets, with such requirements being dynamic by reference to the in-scope REMU assets remaining on the
balance sheet of the Group and the value of such assets. As at 31 December 2024, the impact of these
requirements was 51 basis points on Group’s CET1 ratio, compared to 24 basis points as at 31 December 2023.
The above-mentioned requirements are within the capital plans of the Group and incorporated within its capital
projections.
The regulatory Total Capital ratio on a transitional basis stood at 24.1% as at 31 December 2024 compared to
22.4% as at 31 December 2023.
The Group’s capital ratios are above the Supervisory Review and Evaluation Process (SREP) requirements.
As at 31 December 2024, the Group’s minimum phased-in CET1 capital ratio requirement was set at 11.34%,
comprising a 4.50% Pillar I requirement, a 1.55% Pillar II requirement, the Capital Conservation Buffer of 2.50%,
the O-SII Buffer of 1.875% and CcyB of approximately 0.92%. Likewise, the Group’s minimum phased-in Total
Capital ratio requirement was set at 16.05%, comprising an 8.00% Pillar I requirement, of which up to 1.50%
can be in the form of AT1 capital and up to 2.00% in the form of T2 capital, a 2.75% Pillar II requirement, the
Capital Conservation Buffer of 2.50%, the O-SII Buffer of 1.875% and the CcyB of approximately 0.92%. For the
year ended 31 December 2024, the ECB had also provided revised lower non-public guidance for an additional
Pillar II CET1 buffer (P2G) compared to 2023.
The Central Bank of Cyprus (‘CBC’), following the revised methodology described in its macroprudential policy,
decided to set the CcyB to 1.00% of the total risk exposure in Cyprus for each licensed credit institution
incorporated in Cyprus, effective from June 2024. As a result, the CcyB for the Group as at 31 December 2024
amounted to approximately 0.92%. In January 2025, CBC, based on its macroprudential policy, decided to
increase the CCyB from 1.00% to 1.50% of the total risk exposure amount in Cyprus, for each licensed credit
institution incorporated in Cyprus, effective from January 2026.
The Bank has been designated as an Other Systemically Important Institution (O-SII) by CBC in accordance with
the provisions of the Macroprudential Oversight of Institutions Law of 2015 and the relevant buffer stood at
1.875% on 1 January 2024. In April 2024, following a revision by the CBC of its policy for the designation of
credit institutions that meet the definition of O-SII institutions and the setting of O-SII buffer to be observed, the
Group’s O-SII buffer has been reduced to 2.00% on 1 January 2026 (from the previous assessment of 2.25% on
1 January 2025) to be phased by 6.25 basis points annually, to 1.9375% on 1 January 2025 and 2.00% as of 1
January 2026.
Own funds held for the purposes of P2G cannot be used to meet any other capital requirements (Pillar I, Pillar II
requirements or the combined buffer requirement), and therefore cannot be used twice.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
10
Group financial results on the underlying basis (continued)
Balance Sheet Analysis (continued)
Capital Base (continued)
Following the annual SREP performed by the ECB in 2024 and based on the final SREP decision received in
December 2024, effective from 1 January 2025, the Group’s minimum phased-in CET1 capital ratio and Total
Capital ratio requirements remain unchanged from prior year, when disregarding the phasing in of the O-SII
buffer. On 1 January 2025 the Group’s minimum phased-in CET1 capital ratio is set at 11.40%, comprising a
4.50% Pillar I requirement, a 1.55% Pillar II requirement, the Capital Conservation Buffer of 2.50%, the O-SII
Buffer of 1.9375% and CcyB of approximately 0.92%. Likewise, on 1 January 2025 the Group’s minimum phased-
in Total Capital ratio requirement is set at 16.11%, comprising an 8.00% Pillar I requirement, of which up to
1.50% can be in the form of AT1 capital and up to 2.00% in the form of T2 capital, a 2.75% Pillar II requirement,
the Capital Conservation Buffer of 2.50%, the O-SII Buffer of 1.9375% and CcyB of approximately 0.92%. The
non-public guidance for an additional Pillar II CET1 buffer (P2G) remains unchanged compared to 2024. Based
on the final SREP decision, the requirement for prior regulatory approval for the declaration of dividends has been
lifted, effective from 1 January 2025.
Other equity instruments
At 31 December 2024, the Group’s other equity instruments relate to Additional Tier 1 Capital Securities (the
‘AT1 securities’) and amounted to €220 million, at the same levels as at 31 December 2023.
The Fixed Rate Reset Perpetual Additional Tier 1 Capital Securities constitute unsecured and subordinated
obligations of the Company, are perpetual and are issued at par. They carry an initial coupon of 11.875% per
annum, payable semi-annually and resettable on 21 December 2028 and every 5 years thereafter.
The Company will have the option to redeem these capital securities from, and including, 21 June 2028 to, and
including, 21 December 2028 and on each interest payment date thereafter, subject to applicable regulatory
consents and the relevant conditions to redemption.
Legislative amendments for the conversion of DTA to DTC
Legislative amendments allowing for the conversion of specific deferred tax assets (DTA) into deferred tax credits
(DTC) became effective in March 2019. The legislative amendments cover the utilisation of income tax losses
transferred from Laiki Bank to the Bank in March 2013. The introduction of the Capital Requirements Regulation
(CRR) and Capital Requirements Directive (CRD) IV in January 2014 and its subsequent phasing-in led to a more
capital-intensive treatment of the DTA arising from tax losses. With this legislation, institutions are allowed to
treat such DTAs as ‘not relying on future profitability’, according to CRR/CRD IV and as a result not deducted
from CET1, hence improving a credit institution’s capital position. They also provide that a guarantee fee on
annual tax credit is payable annually by the credit institution to the Government.
Following certain modifications to the relevant law in May 2022, the annual guarantee fee is to be determined by
the Cyprus Government on an annual basis, providing however that such fee to be charged is set at a minimum
fee of 1.5% of the annual instalment and can range up to a maximum amount of €10 million per year.
The Group estimates that such fees could range to approximately €5 million per year (for each tax year in scope
i.e., since 2018), although the Group understands that such fee may fluctuate annually as to be determined by
the Ministry of Finance. An amount of €5.4 million was recorded as an expense in the year ended 31 December
2024.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
11
Group financial results on the underlying basis (continued)
Balance Sheet Analysis (continued)
Regulations and Directives
The 2021 Banking Package (CRR III and CRD VI and BRRD)
In October 2021, the European Commission adopted legislative proposals for further amendments to the Capital
Requirements Regulation (CRR), CRD and the BRRD (the ‘2021 Banking Package’). Amongst other things, the
2021 Banking Package would implement certain elements of Basel III that have not yet been transposed into EU
law. In the case of the proposed amendments to CRD and the BRRD, their terms and effect will depend, in part,
on how they are transposed in each member state. In December 2023, the preparatory bodies of the Council and
European Parliament endorsed the amendments to the CRR and the CRD and the legal texts were published on
the Council and the Parliament websites. In April 2024, the European Parliament voted to adopt the amendments
to the CRR and the CRD; Regulation (EU) 2024/1623 (known as CRR III) and Directive (EU) 2024/1619 (known
as CRD VI) were published in the EU's official journal in June 2024, with entry into force 20 days from the date
of the publication. Most amended provisions of the CRR III have become effective on 1 January 2025 with certain
measures subject to transitional arrangements or to be phased-in over time. Member states shall adopt and
publish, by 10 January 2026, the laws, regulations and administrative provisions necessary to comply with CRD
VI and shall apply most of those measures by 11 January 2026. The implementation of CRR III is estimated to
have a positive impact of approximately 1% on the CET1 ratio (transitional) of the Group on initial application on
1 January 2025. However, during 2025 the publication of ECB guidelines on options and discretions and EBA
mandates could result in additional impacts on CET1 ratios across the industry.
Bank Recovery and Resolution Directive (BRRD)
Minimum Requirement for Own Funds and Eligible Liabilities (MREL)
The Bank Recovery and Resolution Directive (BRRD) requires that from January 2016, EU member states shall
apply the BRRD’s provisions requiring EU credit institutions and certain investment firms to maintain a minimum
requirement for own funds and eligible liabilities (MREL), subject to the provisions of the Commission Delegated
Regulation (EU) 2016/1450. On 27 June 2019, as part of the reform package for strengthening the resilience and
resolvability of European banks, the BRRD ΙΙ came into effect and was required to be transposed into national
law. BRRD II was transposed and implemented in Cyprus law in May 2021. In addition, certain provisions on
MREL have been introduced in CRR ΙΙ which also came into force on 27 June 2019 as part of the reform package
and were immediately effective.
In January 2024, the Bank received final notification from the SRB regarding the 2024 MREL decision, by which
the MREL requirement was set at 25.00% of risk weighted assets (or 30.30% of risk weighted assets taking into
account the prevailing CBR as at 31 December 2024 which needs to be met with own funds on top of the MREL)
and 5.91% of Leverage Ratio Exposure (‘LRE’ as defined in the CRR) and had to be met by 31 December 2024.
In January 2025, the Bank received final notification from the SRB regarding the 2025 MREL decision, by which
the MREL requirement is now set at 23.85% of risk weighted assets (or 29.21% of risk weighted assets taking
into account the prevailing CBR as at 1 January 2025 which needs to be met with own funds on top of the MREL)
and 5.91% of LRE. The revised MREL requirements became binding with immediate effect.
The Bank must comply with the MREL requirement at the consolidated level, comprising the Bank and its
subsidiaries.
The regulatory MREL ratio as at 31 December 2024, calculated according to the SRB’s eligibility criteria currently
in effect, stood at 33.7% of RWAs (including capital used to meet the CBR) and at 13.9% of LRE (based on the
regulatory Total Capital as at 31 December 2024), demonstrating that the Bank finalized its MREL build-up and
created a comfortable buffer over the MREL requirements.
The CBR stood at 5.30% as at 31 December 2024, higher compared to 4.48% as at 31 December 2023, reflecting
the increase of the CcyB and O-SII buffer by approximately 50 basis points and 37.5 basis points respectively.
The CBR is expected to increase further as a result of the phasing in of O-SII buffer from 1.875% to 1.9375% on
1 January 2025 and to 2.00% on 1 January 2026 as well as of the expected increase of CcyB from 1.00% to
1.50% in January 2026.
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Annual Financial Report 2024
Management Report
12
Group financial results on the underlying basis (continued)
Balance Sheet Analysis (continued)
Regulations and Directives (continued)
Bank Recovery and Resolution Directive (BRRD) (continued)
Minimum Requirement for Own Funds and Eligible Liabilities (MREL) (continued)
Throughout the Management Report, the MREL ratios as at 31 December 2024 include profits for the year ended
31 December 2024 net of a deduction for the distribution in respect of 2024 earnings, following relevant
recommendation by the Board of Directors to the shareholders for a final cash dividend of €241 million.
Funding and Liquidity
Funding
Funding from Central Banks
Following the repayment of €1.7 billion under the seventh TLTRO III operation in March 2024 and €0.3 billion
under the eighth TLTRO III operation in June 2024, the funding from Central Banks was nil as at 31 December
2024, compared to €2,044 million as at 31 December 2023.
Deposits
Customer deposits totalled €20,529 million at 31 December 2024, compared to €19,339 million at 31 December
2023. Customer deposits are mainly retail-funded and approximately 55% of deposits are protected under the
deposit guarantee scheme as at 31 December 2024.
The Bank’s deposit market share in Cyprus reached 37.2% as at 31 December 2024, compared to 37.7% as at
31 December 2023. Customer deposits accounted for 77% of total assets and 87% of total liabilities at 31
December 2024, compared to 73% of total assets and 80% of total liabilities as at 31 December 2023. The
increase in the share of total assets and liabilities since the beginning of the year relates mainly to the repayment
of €2.0 billion TLTRO.
The net loans to deposits (L/D) ratio stood at 49% as at 31 December 2024, compared to 51% as at 31 December
2023 on the same basis.
Subordinated liabilities
At 31 December 2024, the carrying amount of the Group’s subordinated liabilities amounted to €308 million,
compared to €308 million at 31 December 2023, and relate to unsecured subordinated Tier 2 Capital Notes (‘T2
Notes’).
The T2 Notes were priced at par with a fixed coupon of 6.625% per annum, payable annually in arrears and
resettable on 23 October 2026. The maturity date of the T2 Notes is 23 October 2031. The Company will have
the option to redeem the T2 Notes early on any day during the six-month period from 23 April 2026 to 23 October
2026, subject to applicable regulatory approvals.
Debt securities in issue
At 31 December 2024, the carrying value of the Group’s debt securities in issue amounted to €989 million,
compared to €672 million at 31 December 2023 and relate to senior preferred notes. The increase of 47% since
the beginning of the year relates to the issuance of €300 million green senior preferred notes (‘Green Notes’) in
April 2024.
In April 2024, the Bank successfully launched and priced an issuance of €300 million green senior preferred notes.
The Green Notes were priced at par with a fixed coupon of 5% per annum, payable in arrear, until the Option
redemption date, i.e., 2 May 2028. The maturity date of the Green Notes is 2 May 2029; however, the Bank may,
at its discretion, redeem the Green Notes on the Optional Redemption Date subject to meeting certain conditions
(including applicable regulatory consents) as specified in the Terms and Conditions.
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Annual Financial Report 2024
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Group financial results on the underlying basis (continued)
Balance Sheet Analysis (continued)
Funding and Liquidity (continued)
Funding (continued)
Debt securities in issue (continued)
If the Green Notes are not redeemed by the Bank, the coupon payable from the Optional Redemption Date until
the Maturity Date will convert from a fixed rate to a floating rate and will be equal to 3-month Euribor plus 197.1
basis points, payable quarterly in arrear. The transaction represents the Bank's inaugural green bond issuance in
line with the Group’s Beyond Banking approach, aimed at creating a stronger, safer and future-focused Βank and
leading the transition of Cyprus to a sustainable future. An amount equivalent to the net proceeds of the Green
Notes will be allocated to Eligible Green Projects as described in the Bank's Sustainable Finance Framework, which
include Green Buildings, Energy Efficiency, Clean Transport and Renewable Energy.
In July 2023, the Bank successfully launched and priced an issuance of €350 million of senior preferred notes
(the ‘Notes’). The Notes were priced at par with a fixed coupon of 7.375% per annum, payable annually in arrear,
until the Optional Redemption Date, i.e., 25 July 2027. The maturity date of the Notes is 25 July 2028; however,
the Bank may, at its discretion, redeem the Notes on the Optional Redemption Date subject to meeting certain
conditions (including applicable regulatory consents) as specified in the Terms and Conditions. If the Notes are
not redeemed by the Bank, the coupon payable from the Optional Redemption Date until the Maturity Date will
convert from a fixed rate to a floating rate and will be equal to 3-month Euribor plus 409.5 basis points, payable
quarterly in arrear.
In June 2021, the Bank executed its inaugural MREL transaction issuing €300 million of senior preferred notes
(the ‘SP Notes‘). The SP Notes were priced at par with a fixed coupon of 2.50% per annum, payable annually in
arrears and resettable on 24 June 2026. The maturity date of the SP Notes is 24 June 2027, and the Bank may,
at its discretion, redeem the SP Notes on 24 June 2026, subject to meeting certain conditions as specified in the
Terms and Conditions, including applicable regulatory consents.
All issuances of senior preferred notes comply with the criteria for the Minimum Requirement for Own Funds and
Eligible Liabilities (‘MREL’) and contribute towards the Bank’s MREL requirements.
Liquidity
At 31 December 2024, the Group Liquidity Coverage Ratio (LCR) stood at 309%, compared to 359% at 31
December 2023, well above the minimum regulatory requirement of 100%. The LCR surplus as at 31 December
2024 amounted to €8.1 billion, compared to €9.1 billion at 31 December 2023.
At 31 December 2024, the Group Net Stable Funding Ratio (NSFR) stood at 162%, compared to 158% at 31
December 2023, well above the minimum regulatory requirement of 100%.
Loans
Group gross loans totalled €10,374 million at 31 December 2024, compared to €10,070 million at 31 December
2023.
New lending in the year ended 31 December 2024 reached €2,435 million, compared to €2,025 million in the
year ended 31 December 2023, driven mainly by business demand.
At 31 December 2024, the Group net loans and advances to customers totalled €10,114 million, compared to
€9,822 million at 31 December 2023.
The Bank is the largest credit provider in Cyprus with a market share of 43.0% at 31 December 2024, compared
to 42.2% at 31 December 2023.
In December 2023, the Bank entered into an agreement with Cyprus Asset Management Company (‘KEDIPES’)
to acquire a portfolio of performing and restructured loans with gross book value of approximately €58 million
with reference date 31 December 2022 (the ‘Transaction’). The Transaction was broadly neutral to the Group’s
income statement and capital position. The Transaction was completed in March 2024.
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Annual Financial Report 2024
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14
Group financial results on the underlying basis (continued)
Balance Sheet Analysis (continued)
Loan portfolio quality
The Group has continued to make steady progress across all asset quality metrics. The Group’s priorities focus
mainly on maintaining high quality new lending with strict underwriting standards and preventing asset quality
deterioration.
The loan credit losses totalled €30 million for the year ended 31 December 2024. Further details regarding loan
credit losses are provided in Section ‘Profit before tax and non-recurring items’.
Non-performing exposures
Non-performing exposures (NPEs) as defined by the European Banking Authority (EBA) were reduced to €255
million at 31 December 2024, compared to €365 million at 31 December 2023. As a result, the NPEs reduced to
2.5% of gross loans as at 31 December 2024, compared to 3.6% of gross loans as at 31 December 2023.
The NPE coverage ratio stands at 100% at 31 December 2024, compared to 73% at 31 December 2023.
Agreement for the sale of NPEs
In September 2024, the Bank entered into an agreement with funds associated with Cerberus Global Investments
B.V. to sell a non-performing loan portfolio of mainly corporate secured exposures. In December 2024 the Bank
entered into an additional agreement with funds associated with Cerberus Global Investments B.V. for the sale
of a non-performing loan portfolio of mainly retail and SME exposures.
Both transactions are expected to be broadly neutral to both the income statement and to capital on completion,
are subject to the necessary approvals and completion is expected during the first half of 2025. The portfolios
are classified as non-current assets held for sale and as at 31 December 2024 the gross book value and net book
value amounted to €55 million and €23 million respectively. Pro forma for the NPE sale agreements, the NPE ratio
is reduced further to 1.9%, whilst the NPE coverage increased to 111%.
Mortgage-To-Rent Scheme (‘MTR’)
In July 2023, the Mortgage-to-Rent Scheme (‘MTR’) was approved by the Council of Ministers and aims for the
reduction of NPEs backed by primary residence and simultaneously protect the primary residence of vulnerable
borrowers. The eligible criteria include:
Borrowers that were non-performing as at 31 December 2021, remained non-performing as at 31
December 2022 and who also received government allowances during the period January 2021 to
December 2022, with facilities backed by primary residence with Open Market Value up to €250k;
Borrowers that had a fully completed application to Estia Scheme and were assessed as eligible but not
viable with a primary residence of up to €350k Open Market Value; and
all applicants that were approved under Estia Scheme but their inclusion was terminated.
Under the MTR, eligible property owners will voluntarily surrender ownership of their residence to Cyprus Asset
Management Company (‘KEDIPES’) which has been approved by the Government to provide and manage social
housing and will be exempted from their mortgage loan, as the state will be covering fully the required rent on
their behalf. KEDIPES will carry out a new valuation and a technical due diligence for the eligible applicants’
property and if satisfied will approve the application and pay to the banks an amount equal to 65% of the Open
Market Value of the primary residence in exchange for the mortgage release, the write off of the NPE loan and
the transfer of the property title deeds.
The eligible applicants will be able to acquire the primary residence after 5 years at a favourable price, below the
Open Market Value.
The scheme has been launched in December 2023; it is expected to act as another tool to address NPEs in the
Retail sector.
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Annual Financial Report 2024
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15
Group financial results on the underlying basis (continued)
Balance Sheet Analysis (continued)
Fixed income portfolio
Fixed income portfolio amounts to €4,212 million as at 31 December 2024, compared to €3,548 million as at 31
December 2023, increased by 19% on prior year. As at 31 December 2024, the portfolio represents 16% of total
assets and comprises €3,806 million (90%) measured at amortised cost and €406 million (10%) at fair value
through other comprehensive income (‘FVOCI’).
The fixed income portfolio measured at amortised cost is held to maturity and therefore no fair value gains/losses
are recognised in the Group’s income statement or equity. This fixed income portfolio has high average rating at
Aa2. The amortised cost fixed income portfolio as at 31 December 2024 has an unrealised fair value gain of €32
million.
Reverse repurchase agreements
Reverse repurchase agreements amount to €1,010 million as at 31 December 2024, compared to €403 million
as at 31 December 2023. The increase since the beginning of the year related to the hedging activities the Group
is carrying out in order to reduce its net interest income sensitivity. The average yield of reverse repurchase
agreements is approximately 3.0% p.a. and the remaining average duration is estimated at approximately 2.1
years.
Real Estate Management Unit (REMU)
The Real Estate Management Unit (REMU) is focused on the disposal of on-boarded properties resulting from debt
for asset swaps.
REMU completed disposals of €175 million in the year ended 31 December 2024, resulting in a gain on disposal
of €1 million, compared to €172 million disposals in the year ended 31 December 2023 at a profit of approximately
€11 million. Asset disposals are across all property classes, with 44% of sales in gross sale value in the year
ended 31 December 2024 relating to land.
REMU on-boarded €30 million of assets in the year ended 31 December 2024, compared to additions of €21
million in the year ended 31 December 2023, via the execution of debt for asset swaps and repossessed
properties.
As at 31 December 2024, repossessed properties held by REMU had a carrying value of €660 million, compared
to €862 million as at 31 December 2023 and remain on track to achieve its target of reducing this portfolio to
approximately €0.5 billion by end-2025.
Income Statement Analysis
Total income
Net interest income (NII) for the year ended 31 December 2024 amounted to €822 million, compared to €793
million for the year ended 31 December 2023. The annual increase is mainly attributed to higher interest rates
on liquid assets and loans and higher liquidity compared to prior year, partially offset by a moderate increase in
the deposit and funding costs as well as the cost of hedging.
Quarterly average interest earning assets (AIEA) for the year ended 31 December 2024 amounted to €23,273
million, compared to €23,217 for the year ended 31 December 2023.
Net interest margin (NIM) for the year ended 31 December 2024 amounted to 3.53% (compared to 3.42% for
the year ended 31 December 2023), up 11 basis points year-on-year, supported by the higher interest rates
compared to prior year.
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Group financial results on the underlying basis (continued)
Income Statement Analysis (continued)
Total income (continued)
Non-interest income for the year ended 31 December 2024 amounted to €272 million, compared to €300 million
for the year ended 31 December 2023. Non-interest income for the year ended 31 December 2024 comprises net
fee and commission income of €177 million, net foreign exchange gains and net gains/(losses) on financial
instruments of €36 million, net insurance result of €46 million, net loss from revaluation and disposal of
investment properties and on disposal of stock of properties of €1 million and other income of €14 million. The
year-on-year reduction is mainly due to lower net insurance result as well as net losses from revaluation and
disposal of investment properties and on disposal of stock of properties.
Net fee and commission income for the year ended 31 December 2024 amounted to €177 million compared to
€181 million in prior year, primarily due to lower transactional fees.
Net foreign exchange gains and net gains/(losses) on financial instruments amounted to €36 million for the year
ended 31 December 2024, compared to €37 million for the year ended 31 December 2023, and comprise of net
foreign exchange gains of €27 million and net gains on financial instruments of €9 million. The year-on-year
reduction is mainly due to lower net foreign exchange income through FX swaps. Net foreign exchange gains and
net gains/(losses) on financial instruments are considered volatile profit contributors.
Net insurance result amounted to €46 million for the year ended 31 December 2024, compared to €54 million for
the year ended 31 December 2023, impacted partially by negative claim experience in the non-life insurance
business, arising from the severe weather-related events that occurred in 2024, as well as models’ recalibration
in the life insurance business.
Net gains/(losses) from revaluation and disposal of investment properties and on disposal of stock of properties
amounted to a net loss of €1 million for the year ended 31 December 2024, compared to a net profit €10 million
for the year ended 31 December 2023, and comprise of €1.2 million gain on disposal of stock of properties and
investment properties, and net loss from revaluation of investment properties of approximately €2.4 million.
REMU profits remain volatile.
Total income amounted to €1,094 million for the year ended 31 December 2024, compared to €1,093 million for
the year ended 31 December 2023.
Total expenses
Total expenses for the year ended 31 December 2024 were €403 million, compared to €391 million for the year
ended 31 December 2023, of which 50% related to staff costs (€203 million), 40% to other operating expenses
(€161 million) and 10% to special levy on deposits and other levies/contributions (€39 million).
Total operating expenses amounted to €364 million for the year ended 31 December 2024, compared to €348
million for the year ended 31 December 2023, reflecting both higher staff costs and other operating expenses.
Staff costs for the year ended 31 December 2024 were €203 million, compared to €192 million for the year ended
31 December 2023, and include €11 million performance-related pay cost and approximately €9.5 million
termination cost (compared to €12 million performance-related pay cost and approximately €7.5 million
termination cost in the year ended 31 December 2023). Net of the performance-related pay cost and termination
cost, staff costs increased by 6% year-on-year, reflecting salary increments and higher cost of living adjustments
(COLA) as well as higher employer’s contributions. During the year ended 31 December 2024 a small-scale,
targeted Voluntary Exit Plan (‘VEP’) took place, by which 57 full-time employees were approved to leave the
Group at a total cost of approximately €9.5 million.
The performance-related pay cost relates to the Short-Term Incentive Plan (‘STIP’) and the Long-Term Incentive
Plan (‘LTIP’). The Short-Term Incentive Plan involves variable remuneration to selected employees and driven by
both, delivery of the Group’s strategy as well as individual performance. The LTIP is a share-based compensation
plan and provides for an award in the form of ordinary shares of Bank of Cyprus Holding Public Limited Company
(‘BOCH’) based on certain non-market performance and service vesting conditions. Additional information on the
LTIP is provided in section ‘Share based payments – share awards’ further below.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
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17
Group financial results on the underlying basis (continued)
Income Statement Analysis (continued)
Total expenses (continued)
As at 31 December 2024, the Group employed 2,880 persons compared to 2,830 persons as at 31 December
2023.
Other operating expenses for the year ended 31 December 2024 amounted to €161 million, compared to €156
million for the year ended 31 December 2023, impacted by inflationary pressures, higher marketing expenses
due to various campaigns carried out in the year ended 31 December 2024, higher technology and system costs
and higher professional fees for ATHEX listing.
Special levy on deposits and other levies/contributions for the year ended 31 December 2024 amounted to €39
million compared to €43 million for the year ended 31 December 2023. The year-on-year decrease reflects mainly
lower contribution of the Bank to paying contributions to the Deposit Guarantee Fund (‘DGF’). As from 2020 to
end-June 2024 the Bank was subject to DGF contributions on a semi-annual basis and calculated on the covered
deposits of all authorised institutions with the target level expected to reach at least 0.8% of the covered deposits
by 3 July 2024. The management committee of the Deposit Guarantee and Resolution of Credit and Other
Institutions Schemes can decide to collect additional ex-ante contributions to achieve a higher return.
The cost to income ratio excluding special levy on deposits and other levies/contributions for the year ended 31
December 2024 was 33% compared to 32% for the year ended 31 December 2023.
Profit before tax and non-recurring items
Operating profit for the year ended 31 December 2024 amounted to €691 million, compared to €702 million for
the year ended 31 December 2023, down by 3% year-on-year due to the higher total operating expenses.
Loan credit losses for the year ended 31 December 2024 were €30 million compared to €63 million for the year
ended 31 December 2023, down by 52% year-on-year, supported by the continued robust performance of the
credit portfolio and improved macroeconomic assumptions, partially offset by charges on IFRS9 model
calibrations.
Cost of risk for the year ended 31 December 2024 is equivalent to 30 basis points, compared to a cost of risk of
62 basis points for the year ended 31 December 2023, as in prior year there were higher credit losses on specific
customers with idiosyncratic characteristics assessed as ‘Unlikely to pay’ (‘UTPs’).
At 31 December 2024, the allowance for expected loan credit losses, including residual fair value adjustment on
initial recognition and credit losses on off-balance sheet exposures (please refer to ‘Alternative Performance
Measures Disclosures’ of the Annual Financial Report 2024 for definition) amounted to €254 million, including the
portfolio held for sale, compared to €267 million at 31 December 2023, and accounted for 2.5% of gross loans
(compared to 2.7% as at 31 December 2023, calculated on the same basis). Pro forma for the held for sale, the
allowance for expected loan credit losses, including residual fair value adjustment on initial recognition and credit
losses on off-balance sheet exposures, amounted to €223 million and accounted for 2.2%.
Impairments of other financial and non-financial assets for the year ended 31 December 2024 amounted to €56
million, compared to €53 million for the year ended 31 December 2023 and relate mainly to REMU stock of
property.
Provisions for pending litigation, claims, regulatory and other matters (net of reversals) for the year ended 31
December 2024 amounted to €12 million, compared to €28 million for the year ended 31 December 2023. The
charge for the year mainly relates to the resolution of cases on existing litigation and claims arising from legacy
matters, thereby further reducing the exposure from such legacy matters, which was partially offset by the
progress and conclusion of other items relating to other matters.
Profit before tax and non-recurring items for the year ended 31 December 2024 totalled to €593 million, compared
to €558 million for the year ended 31 December 2023 and was positively impacted by lower loan credit losses
and provisions for pending litigation, claims and other matters (net of reversals).
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Annual Financial Report 2024
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Group financial results on the underlying basis (continued)
Income Statement Analysis (continued)
Profit after tax (attributable to the owners of the Company)
The tax charge for the year ended 31 December 2024 amounted to €81 million compared to €73 million for the
year ended 31 December 2023.
On 22 December 2022, the European Commission approved Directive 2022/2523 which provides for a minimum
effective tax rate of 15% for the global activities of large multinational groups (Pillar Two tax). The Directive
follows closely the OECD Inclusive Framework on Base Erosion and Profit Shifting. In December 2024, the Cyprus
Parliament voted to transpose the Directive (EU) 2022/2523 into Law 151(Ι)/2024 (the 'Cyprus Pillar Two Law'),
which introduces an Income Inclusion Rule (IIR), effective for financial years starting from 31 December 2023.
The Group is in scope of the Cyprus Pillar Two Law for the year ended 31 December 2024. The BOCH Group is
eligible for the transitional provision under Article 55 of the Cyprus Pillar Two Law which results in zeroing any
top-up tax computed in accordance with the rules laid out in the Cyprus Pillar Two Law for the year ended 31
December 2024.
Profit after tax and before non-recurring items (attributable to the owners of the Company) for the year ended
31 December 2024 is €511 million, compared to €483 million for the year ended 31 December 2023.
Advisory and other transformation costs – organic for the year ended 31 December 2024 are nil, compared to €2
million for the year ended 31 December 2023.
Profit after tax attributable to the owners of the Company for the year ended 31 December 2024 amounts to
€511 million corresponding to a ROTE of 21.5%, compared to €481 million for the year ended 31 December 2023
(and a ROTE of 24.5%). ROTE on 15% CET1 ratio for the year ended 31 December 2024 increases to 27.8%,
compared to 27.04% for the year ended 31 December 2023, calculated on the same basis. The adjusted recurring
profitability used for the Group’s distribution policy (i.e. defined as the Group’s profit after tax before non-
recurring items (attributable to the owners of the Company) taking into account distributions under other equity
instruments such as the annual AT1 coupon which is paid semi-annually) amounted to €484 million for the year
ended 31 December 2024, compared to €449 million for the year ended 31 December 2023.
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Annual Financial Report 2024
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19
Operating Environment
The Cypriot economy has demonstrated remarkable resilience and growth in recent years, navigating through
global uncertainties and regional challenges. In 2024, the economy achieved an estimated growth rate of 3.4%,
in line with the projections by the Ministry of Finance. Growth in 2024 was driven by rising exports and strong
economic activity in key sectors, primarily the information and communications sector, business and professional
services, tourism and construction. The growth of the information and communications services was driven by
computer software and consulting services, thus increasing economic diversification. In 2025 GDP is forecasted
to continue to grow by 3.3% in real terms, outpacing the Eurozone average.
The recent sovereign rating upgrades by the major rating agencies to 'A-' or equivalent, 3 notches above
investment grade are the recognition of the robust growth performance, the strong fiscal dynamics and declining
public debt, and the improved stability in the financial system.
Employment growth averaged 2.0% and labour productivity growth averaged 1.4% in 2024. Labour productivity
growth remains a strong contributor to overall growth in the economy with efficiency improving, demonstrated
by the increased ability to generate output per worker. The unemployment rate, after rising in 2020 and the first
half of 2021, has been declining in the period since, dropping to 5.8% in 2023 and to 4.9% in 2024, on average,
and to 4.6% in the fourth quarter, seasonally adjusted. The unemployment rate in Cyprus is expected to average
4.8% for 2025 as per latest projections by the Ministry of Finance.
Inflation measured by the Harmonised Index of Consumer Prices, has been declining since the peak in July-
August 2022 – 10.6% for headline and 7.2% for core inflation. Harmonised inflation dropped to 3.9% in 2023
and dropped further to 2.3% in 2024 and is expected to remain broadly flat at 2.0% for 2025. Core inflation,
which is headline inflation excluding energy and food, was a little stickier at 2.8% in the year. Services inflation
– all items excluding goods – was up 4.2% in the year, compared with 3.6% in 2023.
Cyprus’ fiscal performance remains robust. Following a general government budget surplus of 2% of GDP in 2023
and 4.5% of GDP in 2024, fiscal developments have continued to be favourable, with government revenues
increasing at a higher rate than public spending. Total general government revenues rose by 7.8% year-on-year
in 2024 and by 15.3% in 2023. Over the next few years, government accounts are likely to continue benefiting
from strong, albeit decelerating revenue growth due to the favourable economic outlook. This will help manage
moderate budgetary pressures.
General government debt metrics have significantly improved. The government debt-to-GDP ratio decreased to
65.4% in December 2024 from 73.6% in 2023 and 113.6% at the end of 2020. Looking ahead, continued
budgetary surpluses and favourable debt dynamics are expected to further reduce the debt ratio, potentially
dropping below 60% by 2026.
Reduction in financial system risks is reflected in the continuous improvement of the private and banking sectors’
financial position. Private sector debt in active banks' balance sheets has more than halved over the past decade
and is now among the lowest in Europe.
Total domestic loans excluding the government were €20.2 billion at the end of December 2024 or 60% of GDP.
Loans to non-financial companies were about 26% of GDP and loans to households about 32%, where housing
loans were about 25% of GDP.
The non-performing exposures ratio in the Cyprus banking sector dropped to 6.6% of gross loans or €1.6 billion,
at the end of November 2024, while the coverage ratio of provisions, accounted for 61.6% of the non-performing
loans. At the same time about 44% of non-performing loans consisted of restructured facilities. This steady
progress in the banking sector continues to strengthen the sector’s shock absorption capacity.
The Cypriot economy is largely constrained by structurally large current account deficits, reflecting high imports
and low savings relative to domestic investment. The large current account deficits are driven by primary income
imbalances, reflecting high repatriation of profits by foreign-owned enterprises.
Short-term risks are mostly external and skewed to the downside, including a downturn in key tourism markets,
an escalation of regional conflicts, and delays in the implementation of the Recovery and Resilience Plan. Medium-
term risks stem from climate change and a possible further deterioration in the global geopolitical outlook. The
digital and green transitions remain key challenges in the medium term. The implementation of the Recovery and
Resilience Plan requires structural reforms to further strengthen governance and economic resilience.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
20
Operating Environment (continued)
Sovereign ratings
The sovereign risk ratings of the Cypriot government have improved significantly in recent years, reflecting
reduced banking sector risks, improved economic resilience and consistent fiscal outperformance. Cyprus has
demonstrated policy commitment to correcting fiscal imbalances through reform and restructuring of its banking
system.
In December 2024, S&P Global Ratings upgraded Cyprus’ long-term local and foreign currency sovereign credit
ratings to A- from BBB+ and revised its outlook in Cyprus to stable. This one-notch upgrade of Cyprus’ rating
reflects the third consecutive solid annual fiscal surplus as well as the capital and labour inflows from nearby
conflict zones amid rising geopolitical developments.
Additionally, in December 2024, Fitch Ratings upgraded Cyprus' long-term foreign currency issuer default rating
to A- from BBB+ and revised its outlook on Cyprus to stable. The one notch upgrade relates mainly to the rapid
decline in public debt, strong fiscal surpluses and strong growth momentum.
In November 2024, Moody's Investors Service upgraded the long-term issuer and senior unsecured ratings of the
Government of Cyprus to A3 from Baa2. The outlook was revised to stable from positive. The upgrade of Cyprus
ratings reflects the material improvement in fiscal and debt metrics, the reduced government debt ratio and the
solid medium-term economic outlook driven by the steady expansion of high-productivity services sectors
supported by headquartering of companies, significant foreign direct investments as well as reforms and
investments related to Cyprus’ National Recovery and Resilience Plan.
In October 2024, Scope Ratings GmbH upgraded the Cyprus’ long-term issuer and senior unsecured debt ratings
to A- from BBB+ in local and foreign currency and maintained the Stable Outlooks. The upgrade was driven by
the strong fiscal outlook characterised by sustained primary surpluses and declining general government debt.
DBRS Ratings GmbH (DBRS Morningstar) confirmed Cyprus’ Long-Term Foreign and Local Currency – Issuer
Ratings at BBB (high) in September 2024. The trend was revised from stable to positive reflecting the view that
public debt metrics are likely to continue to improve and that economic growth is likely to continue to benefit
from robust private consumption, rising service exports and strong construction investment over the next few
years.
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Annual Financial Report 2024
Management Report
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Business Overview
Credit ratings
The Group’s financial performance is highly correlated to the economic and operating conditions in Cyprus. In
March 2025, Fitch Ratings upgraded the long-term issuer default rating to the investment grade BBB- from BB+,
whilst maintaining the positive outlook. The one-notch upgrade reflects BOC PCL’s strengthened capitalisation
and reduced stock of legacy problem assets, as well as the structurally sound profitability which is expected to
remain satisfactory despite the declining interest rate environment. In February 2025, S&P Global Ratings
upgraded the long-term issuer credit rating of the Bank to the investment grade BBB- from BB+ and revised the
outlook to stable from positive. The upgrade by one notch was driven on the improved funding profile of the
banking sector in Cyprus and the supportive economic environment. Additionally, in December 2024, Moody’s
Investors Service affirmed the Bank’s long-term deposit rating at Baa1 and revised the outlook to positive from
stable. The affirmation reflects the Bank’s strong domestic franchise and solid financial fundamentals, supported
by the stable economic environment. The change in the outlook reflects the expectations of a solid medium-term
economic outlook for Cyprus, which will support further reductions in the Bank’s foreclosed assets, sustained
asset quality improvements and solid profitability. This is the highest long-term deposit rating for the Bank since
2011.
Financial performance
The Group is the leading, financial and technology hub in Cyprus, with a diversified and sustainable business
model. The Group’s financial performance for the year ended 31 December 2024 remained strong, benefitting
from the high-interest rate environment and recorded a profit after tax of €511 million, 6% higher compared to
prior year. As a result, the Group has successfully exceeded its financial targets for 2024 across all metrics,
generating a ROTE of 21.5% (compared to a ROTE of 24.5% for the year ended 31 December 2023). This strong
financial performance in 2024 facilitated further the rapid build-up of equity base, with tangible book value per
share growing by 17% on prior year.
Following the Group’s ongoing commitment to providing sustainable returns to shareholders, the Group has
proposed to make distributions out of 2024 earnings. The distribution comprises a cash dividend of €241 million.
Interest rate environment
The structure of the Group’s balance sheet remains highly liquid. As at 31 December 2024, cash balances with
ECB amounted to €7.6 billion and 43% of the Group’s loan portfolio is Euribor based. Net interest income for the
year ended 31 December 2024 amounted to €822 million, up 4% year-on-year due to higher interest income on
loans and liquid assets, underpinned by high interest rates and increased liquidity, all of which served to more
than offset the higher cost of deposits and funding costs and the continued hedging activity to reduce NII
sensitivity.
The Group used hedging activities in the year ended 31 December 2024 in order to reduce the sensitivity of net
interest income. The hedging tools include receive fixed interest rate swaps, further investment in fixed rate
bonds, additional reverse repos and continuing offering of fixed rate loans.
During 2024, the Group carried out additional hedging activities of €4.5 billion, totaling €9.0 billion by year end,
representing 37% of interest earning assets. The average yield of receive fixed interest rate swaps and reverse
repos is 2.9%. Additionally, about a quarter of the Group’s loan portfolio is linked with the Bank’s base rate which
provides a natural hedge against the cost of deposits of household time and notice deposit accounts. Overall,
these actions have led to a reduction in the net interest income sensitivity (to a parallel shift in interest rates by
100 basis points) by €43 million since 31 December 2022.
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Annual Financial Report 2024
Management Report
22
Business Overview (continued)
Growing revenues in a more capital efficient way
The Group remains focused on growing revenues in a more capital efficient way through growth of high-quality
new lending and the growth in areas, such as insurance and digital products that provide further market
penetration and diversify through non-banking operations.
The Group has continued to provide high quality new lending in the year ended 31 December 2024. Growth in
new lending in Cyprus has been focused on selected industries in line with the Bank’s target risk profile. During
the year ended 31 December 2024, the Group granted new lending of €2.4 billion, up 20% on prior year, driven
mainly by business demand. Gross performing loan book increased by 4% since the beginning of the year to
approximately €10.2 billion, in line with the 2024 target of low-single digit growth on an annual basis.
Fixed income portfolio continued to grow in the year ended 31 December 2024 to €4,212 million, and represents
16% of total assets. The portfolio is mostly measured at amortised cost and is highly rated with average rating
at Aa2. The amortised cost fixed income portfolio as at 31 December 2024 has an unrealised fair value gain of
€32 million.
Separately, the Group focuses to continue improving revenues through multiple less capital-intensive initiatives,
with a focus on fees and commissions, insurance and non-banking opportunities, leveraging on the Group’s digital
capabilities.
During the year ended 31 December 2024, non-interest income stood at €272 million, down 9% on prior year,
mainly due to higher claims and recalibration of models in insurance business as well as subdued transactional
fees. Despite this, non-interest income remains an important profit contributor to the Group, covering almost
75% of the Group’s total operating expenses.
In 2024, net fee and commission income amounted to €177 million and was down by 2% compared to the
previous year, primarily due to lower transactional fees. Net fee and commission income is enhanced by
transaction fees from the Group’s subsidiary, JCC Payment Systems Ltd (JCC), a leading player in the card
acquiring and processing business and payment solutions, 75% owned by the Bank. JCC’s net fee and commission
income contributed 10% of total non-interest income and amounted to €28 million for the year ended 31
December 2024, down 4% year-on-year, primarily reflecting increased fee and commission expense due to higher
third-party commissions absorbed internally. Following a strategic review the Board of Directors concluded that
in line with the Group’s strategy and capital allocation policy, there is greater value to stakeholders through
retaining JCC as part of the Group.
The Group’s insurance companies, EuroLife and GI are respectively key market players in the life and general
insurance business in Cyprus, and have been providing recurring income, and generate the highest profitability
in the sector. The net insurance result for the year ended 31 December 2024 contributed 17% of non-interest
income and amounted to €46 million for the year ended 31 December 2024, down 14% on prior year impacted
by high claims and the recalibration of models. The insurance companies remain valuable and sustainable
contributors to the Group’s profitability.
Finally, the Group through the Digital Economy Platform (Jinius) (‘the Platform’) aims to support the national
digital economy by optimising processes in a cost-efficient way, allow the Bank to strengthen its client
relationships, create cross-selling opportunities as well as to generate new revenue sources over the medium
term, leveraging on the Bank’s market position, knowledge and digital infrastructure. Jinius is expected to
contribute to the Group by enhancing further the Group’s non-interest income through transaction and merchant
fees and enhance the Group’s digital footprint connecting e-commerce to financial services.
The first Business-to-Business services are already in use by clients and include invoice, remittance, tender,
ecosystem management and advertising. Currently, approximately 2,450 companies are registered in the
platform and approximately €1.1 billion cash were exchanged via the platform in 2024 and through invoicing and
remittance services. In February 2024, the Business-to-Consumer service was launched, a Product Marketplace
aiming to increase the touch points with customers. Currently approximately 200 retailers were onboarded in
fashion, technology, beauty, small appliances, personal care devices, home & garden, DIY, toys and bookstore
sectors and around 270 thousand products were embedded in the Marketplace.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
23
Business Overview (continued)
Lean operating model
Striving for a lean operating model is a key strategic pillar for the Group in order to deliver shareholder value,
without constraining investment in the business and funding in its digital transformation.
In 2024, the Group completed a small-scale, targeted VEP through which 57 full-time employees were approved
to leave at a total cost of approximately €9.5 million, recorded in staff costs in the year ended 31 December
2024. Since the beginning of the year, there was further branch footprint rationalization as the Group reduced
the number of branches by 5 to 55, a reduction of 8%.
The Group’s total operating expenses for the year ended 31 December 2024 amounted to €364 million, up 5%
on prior year, impacted by inflationary pressures mainly on staff costs, as well as higher professional fees for
ATHEX listing and higher marketing expenses on various campaigns. The cost to income ratio excluding special
levy on deposits and other levies/contributions for the year ended 31 December 2024 remained low at 33%.
Transformation plan
The Group‘s focus continues on deepening the relationship with its customers as a customer centric organisation.
The Group aims to enable the shift to modern banking by digitally transforming customer service, as well as
internal operations. The holistic transformation aims to (i) shift to a more customer-centric operating model by
defining customer segment strategies, (ii) redefine distribution model across existing and new channels, (iii)
digitally transform the way the Group serves its customers and operates internally, and (iv) improve employee
engagement through a robust set of organisational health initiatives.
Digital transformation
In the dynamic world of banking, the Group is a key player in digital banking innovation in Cyprus, reshaping the
banking experience into something more intuitive, more responsive, and more aligned with the contemporary
needs of its customers, consistently pushing the boundaries to offer unparalleled banking services. The Group
aims to continue to innovate, and simplify the banking journey, providing a unique and personalised experience
to each of its customers.
The Group’s digital channels continue to grow. As at 31 December 2024, the Group’s digital community has
increased to 480 thousand active subscribers, across Internet Banking and the BoC Mobile App, improving by 7%
year-on-year. Likewise, the BoC Mobile App, had 447 thousand active subscribers as at 31 December 2024, an
increase of 9% year-on-year.
During the year ended 31 December 2024, the Group continued to enrich and improve its digital portfolio with
new innovative services to its customers. During the first quarter of 2024, two new QuickPay features ‘Split the
Bill’ and ’Request Payments’ were launched in the BoC Mobile App, empowering users to share the cost with
others or request payments by adding just the contact number and the relevant amount. Additionally, the ability
to get a Car Loan for used cars has been added in QuickCar Loans. In the second quarter of 2024, the Bank’s
loyalty scheme ‘Pronomia’ was launched rewarding customers with several benefits, such as additional Antamivi
points, lower interest rates and no initial bank fees on new loans, and discounts on new insurance policies.
Furthermore, the ability to provide the beneficiary details for dividend payments was given to the Bank’s
shareholders. In July 2024, Bank of Cyprus was the first bank in Cyprus that enabled instant payments via digital
channels, providing the ability to the customer to make credit transfers in Euros, making the funds available in
the beneficiary customer’s account within ten seconds within Cyprus and outside Cyprus (to 36 countries in the
SEPA Zone) (limits for amounts for instant transfers apply). During the third quarter of 2024, the Bank’s Junior
App ‘Joey’ was launched, a banking app for kids and teens from 9-17 years old, providing autonomy in a secure
environment that enables them to develop money management skills and guardians to maintain control and
oversight. During the fourth quarter of 2024, the new QuickAccount Foreign currency was launched available in
Pound Sterling (GBP) and US Dollar (USD), offering customers a preferential FX pricing with live rates and without
any FX commission through BoC eFX Convert. A new innovative micro lending product ‘Fleksy’ was launched to
selected customer segments in BoC Mobile App enabling customers to apply for up to €3 thousand in credit to
use for online and in-store purchases, allowing them to repay in 3, 6 or 9 month instalments. Finally, the Digital
Housing Loan was launched to selected customer segments in Internet Banking, providing customers the ability
to apply for a Housing Loan digitally, recommending repayment options based on customers credit profile and
getting an instant decision. Both lending digital initiatives will be widely available in the first quarter of 2025.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
24
Business Overview (continued)
Lean operating model (continued)
One of the Group’s digital innovations, Quickloans, accessible through both the BoC Mobile App and Internet
Banking, has transformed the traditional loan process, enabling customers to obtain a credit facility instantly,
without the need to visit a branch. Since the beginning of the year 2024, over 15.3 thousand applications were
disbursed, granting €107 million new digital loans and quick loans in the year ended 31 December 2024.
In collaboration with Genikes Insurance, the ability to purchase insurance policies is integrated into the BoC
Mobile App and was also made available via Internet Banking during the fourth quarter of 2024, enabling
customers to access car or home insurance plans through digital channels at preferential rates. Digital insurance
sales for the year ended 31 December 2024 amounted to €613 thousand, compared to €415 thousand for the
year ended 31 December 2023, reflecting 1,969 policies in the year ended 31 December 2024, compared to
1,410 policies for the year ended 31 December 2023.
Lastly, digital account openings increased by 68% in the year ended 31 December 2024 to 21,500 from 12,780
in the year ended 31 December 2023 and new debit cards more than doubled year-on-year to 23,380 in the year
ended 31 December 2024, compared to 11,530 in 2023.
Asset quality
As at 31 December 2024 the Group’s NPE ratio stood at 1.9% (pro-forma for held for sale) achieving its 2024
NPE ratio target early. This incorporates two agreements the Group entered into with a third party, in September
and December 2024, for the sale of NPEs with total net book value of approximately €23 million as at 31 December
2024. Completion is expected within the first half of 2025, subject to necessary approvals. The Group’s priorities
remain intact, maintaining high quality new lending with strict underwriting standards and preventing asset
quality deterioration.
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Annual Financial Report 2024
Management Report
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Strategy and Outlook
As the Group navigates through the cycle of widening of the monetary policy, it has established key priorities
going forward to maintain a strongly capitalised and highly profitable organisation delivering attractive returns to
shareholders, while simultaneously supporting the Group’s stakeholders and the broader economic environment.
These priorities are set below:
Driving new growth initiatives in both banking and non-banking areas (such as international and digital
respectively) to complement the strength of the domestic franchise whilst managing the current interest
rate headwinds
Maintaining a lean operating model via ongoing cost management discipline while continuing to re-invest
in the business
Protecting the quality of the balance sheet with continuous meticulous underwriting standards to ensure
asset quality in line with European sector
Providing attractive shareholder returns in line with European sector with focus on prudent management
of surplus capital and value creation
Leading the transition of Cyprus to a sustainable future and building a forward-looking organisation
embracing ESG in all aspects
During the year ended 31 December 2024 the Group continued to deliver compelling financial results, generating
a ROTE of over 20% for the second consecutive year, underpinned mainly by interest rate tailwinds. Embarking
into the cycle of interest rate normalisation towards 2%, the Group reiterates its target for the year ending 31
December 2025 of delivering high-teens ROTE on 15% CET1 ratio and mid-teens ROTE on reported equity,
corresponding to organic capital generation of approximately 300 basis points, which will support attractive
shareholder remunerations in the future.
This ROTE target factors in the current market expectations of the evolution of interest rates with ECB deposit
facility rate and six-month Euribor averaging to 2.3% each for the year ending 31 December 2025, compared to
3.7% and 3.5% respectively for the year ended 31 December 2024. As a result, the net interest income guidance
is updated and is expected to be below €700 million for the year ending 31 December 2025, reflecting mainly the
current forward curves. Other main assumptions incorporated to net interest income target for the year ending
31 December 2025 include:
Loan book to grow by approximately 4% in 2025 supported by domestic economic growth and expansion
of international lending
Deposit volumes to remain broadly stable at current levels (i.e. approximately €20 billion)
Cost of deposits to remain broadly flat on an annual basis, reflecting the time lag in deposit repricing
Fixed income portfolio to grow to approximately 18% of total assets by end-2025 and approximately 20%
in the medium-term, subject to market conditions
Hedging activity to continue to reduce further NII sensitivity
Higher wholesale funding costs in 2025, reflecting the full year impact of the 2024 senior preferred
issuance (coupon of €15 million p.a.)
Based on the average market forward rates for January 2025, interest rates are expected to reduce to
approximately 2% by June 2025 and remain broadly stable during 2026. Therefore, the net interest income for
2026 is expected to stabilise above €650 million.
Going forward, the Group aims to improve its net interest income through the growth of performing loan book by
approximately 4% per annum in the medium-term. The Group places emphasis on expanding its international
loan book; a portfolio comprising international, shipping and syndicated loans, by approximately 50% in the
medium-term to approximately €1.5 billion (from approximately €1.0 billion as at 31 December 2024),
capitalising on the customer base of IBU overseas and targeting selective industries in line with the Bank’s target
risk profile. Simultaneously, domestic loan portfolio is expected to grow supported by economic growth as well
as the gradual slowdown of loan repayments in a normalised interest rate environment.
Separately the Group aims to grow its non-interest income through less capital-intensive initiatives, with a focus
on fees and commission income and insurance. In the year ended 31 December 2024 the Group’s non-interest
income experienced a moderate drop of 9% on a yearly basis, mainly due to the high claims, recalibrations of
models of the insurance business and subdued transactional fees. Despite this, non-interest income remains an
important contributor to the Group profitability and covered almost 75% of its total operating expenses during
2024.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
26
Strategy and Outlook (continued)
For 2025 and beyond the Group targets net fees and commission income to grow by approximately 4% per
annum. The growth in net fee and commission income is expected to be supported by economic growth and
increased volume of transactions, whilst there are initiatives underway to enhance and diversify further this
revenue stream, mainly via Jinius, the customer-centric digital platform, leveraging mainly on the Group’s strong
digital capabilities and strong customer base. The Group aims to improve further the visibility of Marketplace,
enhance user experience, introduce new lifestyle products and facilitate in streamlining business operations
further. As a result of these actions, it is expected to enhance its Marketplace fees. Additionally, the Group aims
to offer high-quality, financial solutions to high-net worth customers with investible capital with the aim of growing
the assets under management of Private and Affluent Banking to €1.2 billion in the medium-term (from the
current €0.5 billion level).
Growth in the insurance income is expected to be driven by continuing strengthening the agency force, leveraging
on the bancassurance model potential, enhancing digital sales further and optimizing synergies between the life
and non-life insurance business. In this respect, total regular income for the life insurance business is expected
to rise by over 6% in the medium-term, whilst premium income for the non-life insurance business is expected
to rise by approximately 6% for the same period.
Maintaining cost discipline remains an ongoing focus for the Group. The cost to income ratio excluding special
levy on deposits or other levies/contributions is expected at approximately 40% for the year ending 31 December
2025, as the Group navigates to approximately 2% normalised interest rate environment. This will be facilitated
via ongoing staff optimisation to mitigate payroll cost inflation and staff reward schemes aiming to incentivize
individual performance. Simultaneously, the Group will continue reinvesting in the business and digital
transformation to support expansion of digital offering, improve customer experience and acceleration of sales.
Lastly, the use of AI technology aims to improve efficiency and enhance customer experience further.
In terms of asset quality, given the fact that the balance sheet de-risking is completed with the NPE ratio reduced
to below 2%, the cost of risk is expected towards the lower-end of the normalised levels of 40-50 basis points
for 2025.
Since 2019, the Real Estate Management Unit (REMU) repossessed stock has been consistently reducing, with
properties sold exceeding the book value of properties acquired, while inflows remain substantially reduced
following balance sheet derisking. Going forward, REMU sales are expected to continue, with expected inflows to
remain at limited levels. Therefore, the target of REMU portfolio to reduce to approximately €0.5 billion by end-
2025 is reiterated and the Group is well on track to achieve this target.
The Group aims to provide a sustainable return to shareholders. The distribution policy is upgraded in order to
reflect the steady sustained progress achieved over the last years, the profitability profile and medium-term
outlook of the Group. Ordinary distributions are expected to be in the range of 50-70% payout ratio of the BOCH
Group’s adjusted recurring profitability through a combination of cash dividends and share buybacks. Additionally,
the Board of Directors will also consider the introduction of interim distributions if it considers it appropriate to
do so.
Overall, the Group reiterates its confidence of delivering high-teens ROTE on 15% CET1 ratio for 2026 and
beyond.
Targets and guidance are based on management’s current expectations as to the macroeconomic environment
and the business and are subject to change.
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Annual Financial Report 2024
Management Report
27
Going concern
The Directors have made an assessment of the ability of the Group and the Company to continue as a going
concern for a period of 12 months (the period of assessment) from the date of approval of the Consolidated
Financial Statements.
The Directors have concluded that there are no material uncertainties which would cast a significant doubt over
the ability of the Group and the Company to continue to operate as a going concern for a period of 12 months
from the date of approval of the Consolidated Financial Statements and the Financial Statements of the Company.
In making this assessment, the Directors have considered a wide range of information relating to present and
future conditions, including projections of profitability, cash flows, capital requirements and capital resources,
liquidity and funding position, taking also into consideration the Group’s Financial Plan 2025-2028 approved by
the Board in February 2025 (the ‘Plan’) and the operating environment (as set out in section ‘Operating
Environment’ in the Management Report’). The Group has sensitised its projection to cater for a downside scenario
and has used reasonable economic inputs to develop its medium-term strategy.
Capital
The Directors and Management have considered the Group’s forecasted capital position, including the potential
impact of a deterioration in economic conditions. The Group has developed capital projections under a base and
an adverse scenario and the Directors believe that the Group has sufficient capital to meet its regulatory capital
requirements throughout the period of assessment.
Funding and liquidity
The Directors and Management have considered the Group’s funding and liquidity position and are satisfied that
the Group has sufficient funding and liquidity throughout the period of assessment. The Group continues to hold
a significant liquidity buffer at 31 December 2024 that can be easily and readily monetised in a period of stress.
Principal risks and uncertainties - Risk management and mitigation
As part of its business activities, the Group faces a variety of risks. The Group identifies, monitors, manages and
mitigates these risks through various control mechanisms. Credit risk, liquidity and funding risk, market risk
(arising from adverse movements in interest rates, foreign currency exchange rates, security prices and property
prices), insurance and re-insurance risk and operational risk, are some of the principal risks the Group faces. In
addition, principal risks facing the Group include geopolitical risk, legal risk, regulatory compliance risk,
information security and cyber risk, digital transformation and technology risks, climate related and
environmental risks, and business model and strategic risk.
Information relating to the principal risks the Group faces and risk management is set out in Notes 44 to 47 of
the Consolidated Financial Statements and in the ‘Risk and Capital Management Report’, both of which form part
of the Annual Financial Report for the year ended 31 December 2024. In addition, in relation to legal risk arising
from litigation, investigations, claims and other matters, further information is disclosed in Note 38 of the
Consolidated Financial Statements.
Additionally, the Group is exposed to the risk of changes in the value of property which is held either for own use
or as stock of property or as investment property. Stock of property is predominately acquired in exchange for
debt and is intended to be disposed of in line with the Group’s strategy. Further information is disclosed in Note
27 of the Consolidated Financial Statements.
As the war in Ukraine and the military conflict in the Middle east continue, considerable uncertainly is added to
the outlook for the global economy and the impact will largely depend on how these conflicts evolve. The Group
has limited direct exposure to both Ukraine and Russia as well as to Israel, and is continuously monitoring the
current affairs and remains vigilant to take precautionary measures as required.
The risk factors discussed above and in the reports referenced above should not be regarded as a complete and
comprehensive statement of all potential risks and uncertainties. There may be risks and uncertainties of which
the Group is not aware of, or which the Group does not consider significant, but which may become significant.
There are challenging conditions in global markets due to the high interest rate environment, inflationary
pressures, the geopolitical developments, the growing threat from cyberattacks and other unknown risks. As a
result the precise nature of all risks and uncertainties that the Group faces cannot be predicted with accuracy as
many of these risks are outside of the Group’s control.
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Annual Financial Report 2024
Management Report
28
Events after the reporting date
Distribution in respect of 2024 earnings
The Board of Directors of the Company has resolved to propose to the AGM that will be held on 16 May 2025 for
approval, a final cash dividend of €0.03 per ordinary share in respect of earnings for the year ended 31 December
2024 which amounts to an aggregate distribution of €241 million.
No other significant non-adjusting events have taken place since 31 December 2024.
Capital base
Total equity excluding non-controlling interests totalled €2,813 million at 31 December 2024, compared to €2,468
million at 31 December 2023. The regulatory CET1 ratio on a transitional basis stood at 19.2% at 31 December
2024 and at 17.4% at 31 December 2023. The regulatory Total Capital ratio on a transitional basis at 31
December 2024 stood at 24.1%, compared to 22.4% at 31 December 2023.
Additional information on the regulatory capital is disclosed in the 'Risk and Capital Management Report' which
forms part of this Annual Financial Report and in the Pillar III Disclosures Report, which is published on the
Group’s website.
Share capital
As at 31 December 2024, there were 9,597,944,533 ordinary shares in issue, of a nominal value of €0.10 each.
Additional information about the authorised and issued share capital during 2024 and 2023 is disclosed in Note
34 of the Consolidated Financial Statements.
Share-based payments - share awards
Long-term incentive award
During BOCH’s AGM which took place on 20 May 2022, a special resolution was approved for the establishment
and implementation of the share-based Long-Term Incentive Plan of Bank of Cyprus Holdings Public Limited
Company (the ‘LTIP’), which is effective for ten years from the date of its adoption.
The LTIP is a share-based compensation plan for executive directors and senior management of the Group. The
LTIP provides for an award in the form of ordinary shares of BOCH based on certain non-market performance
and service vesting conditions. Performance will be measured over a 3-year period. The performance conditions
are set by the Human Resources & Remuneration Committee (HRRC) each year and may be differentiated to
reflect the Group’s strategic targets and employee's personal performance, at its discretion. Performance will be
assessed against an evaluation scorecard consistent with the Group’s Medium Term Strategic Targets containing
both financial and non-financial objectives, and including targets in the areas of: (i) Profitability; (ii) Asset quality;
(iii) Capital adequacy; (iv) Risk control & compliance; and (v) Environmental, Social and Governance ('ESG')
targets and (iv) Customer Experience (targets in the area of Customer Experience have been introduced for non-
control functions from 2024). The awards ordinarily vest in six tranches, with 40% vesting in the year following
the year the performance period ends and the remaining 60% vesting in five equal tranches (12%), on each
annual anniversary following the first vesting date. For any award to vest the employee must be in employment
of the Group up until the date of the vesting of such an award. Awards are subject to potential forfeiture under
certain leaver scenarios. Under certain circumstances the HRRC has the discretion to determine whether the
award will lapse and/or the extent to which the award will be vested.
The maximum number of shares that may be issued pursuant to the LTIP until the tenth anniversary of the
relevant resolution shall not exceed 5% of the issued ordinary share capital of BOCH, as at the date of the
resolution (being 22,309,996 ordinary shares of €0.10 each), as adjusted for any issuance or cancellation of
shares subsequently to the date of the resolution (excluding any issuances of shares pursuant to the LTIP). The
awards are not entitled to dividend equivalents in accordance with regulatory requirements.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
29
Share-based payments - share awards (continued)
Under the LTIP, share awards were granted by BOCH in December 2022 (subject to a three-year performance
period 2022-2024), in October 2023 (subject to a three-year performance period 2023-2025) and in April 2024
(subject to a three-year performance period 2024-2026). Each award vests in six tranches and vesting is subject
to service conditions. At 31 December 2024 the performance period for 2022 LTIP (performance period 2022-
2024) was concluded and the Board of Directors has approved in early 2025 the amounts of shares to be awarded
under the 2022 LTIP to eligible participants including the Executive Directors. The award will vest in accordance
to the vesting schedule set out above and is subject to continued service employment. The award is also subject
to malus and claw back conditions. Information on number of shares awarded is included in Note 49 of the
Consolidated Financial Statements.
Short-term incentive award
Short-term incentive award refers to a Short-Term Incentive Plan established by BOCH in 2023. This is an annual
incentive which involves variable remuneration in the form of cash to selected employees and is driven by both
delivery of the Group's Strategy, as well as individual performance, in the relevant year. Executive Management
are also eligible to be considered for the short-term incentive award. The short-term incentive award is generally
paid in cash and is non-deferred. However, in cases where the total variable remuneration amount for an
employee in a year (i.e., including amounts under both STIP and LTIP) exceeds a specified threshold as per
regulatory guidelines, at least 50% of the total variable remuneration for this employee is awarded in shares and
is deferred. In such cases, the award vests similarly to LTIP vesting, i.e. 40% vests in the year of the grant i.e.
following the performance year to which the incentive award relates to and the remaining 60% vests in tranches
(12%) over five years.
Shares vesting as part of the short-term incentive award are subject to one year retention period and 100% of
the award is subject to clawback provisions.
Further information on the long-term incentive and short-term incentive awards for the performance year 2024
in disclosed in Note 14 of the Consolidated Financial Statements and information for awards to Executive Directors
and Other Key Management personnel is disclosed in Note 49 of the Consolidated Financial Statements. The
Short-Term Incentive Plan award for the performance year 2024 will be in the form of cash.
Change of control
There are no significant agreements to which the Company is a party and which take effect following a change of
control of the Company following a bid, but the Company is a party to a number of funding agreements that may
allow the counterparties to alter or terminate the agreements following a change of control. As at 31 December
2024, these agreements were not deemed to be significant in terms of their potential effect on the Group as a
whole given the liquidity position of the Group at the time, but the extent of their significance could vary
depending on the liquidity position at the time of the change of control.
The Group also has agreements which provide for termination if, upon a change of control of the Company, the
Company’s creditworthiness is materially worsened.
Other information
During 2024 and 2023 there were no restrictions on the transfer of the Company’s ordinary shares or securities
and no restrictions on voting rights other than the provisions of the Banking Law of Cyprus which requires
regulatory approval prior to acquiring shares of the Company in excess of certain thresholds, and the generally
applicable provisions including those of the Market Abuse Regulation and applicable takeover legislation. From
time to time, specific shareholders may have their rights in shares restricted in accordance with sanctions,
anti-corruption, anti-money laundering and/or anti-terrorism compliance, including sanctions relating to events
in Ukraine as applicable. The Group’s policy is to comply with all applicable laws, including sanctions and other
restrictive measures that apply at all times, and the Group may from time to time request individual shareholders
to refrain from exercising certain rights to facilitate compliance with such measures or related compliance issues.
Shares of BOCH held by the life insurance subsidiary of the Group as part of its financial assets which are invested
for the benefit of insurance policyholders carry no voting rights, pursuant to the insurance law. The Company
does not have any shares in issue which carry special control rights.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Management Report
30
Distributions
Based on the relevant SREP decisions in the years 2023 and 2024, any equity dividend distribution was subject
to regulatory approval, both for the Company and BOCH. The requirement for approval did not apply if the
distributions were made via the issuance of new ordinary shares to the shareholders which were eligible as
Common Equity Tier 1 Capital nor to the payment of coupons on any AT1 capital instruments issued by the
Company or BOCH. Based on the SREP decision for 2024, effective from 1 January 2025, the requirement for
prior regulatory approval for the declaration of dividends is no longer required.
Distribution in respect of 2024 earnings
The Board of Directors of the Company has resolved to propose to the AGM that will be held on 16 May 2025 for
approval, a final cash dividend of €0.03 per ordinary share in respect of earnings for the year ended 31 December
2024 which amounts to an aggregate distribution of €241 million. The financial statements for the year ended 31
December 2024 do not reflect this dividend, which will be accounted for in shareholders’ equity as an appropriation
of retained earnings in the year ending 31 December 2025.
Distributions in respect of 2023 and 2022 earnings
In March 2024, the Company obtained the approval of the ECB to pay a cash dividend in respect of earnings for
the year ended 31 December 2023. The Distribution amounted to €137 million in total, comprising a cash dividend
of €0.01 per ordinary share (approved at the Company’s AGM held on 17 May 2024).
In April 2023, the Company obtained the approval of the ECB to pay a dividend in respect of earnings for the
year ended 31 December 2022. The shareholders at the Company’s AGM, held on 26 May 2023 declared a final
cash dividend of €0.002 per ordinary share in respect of earnings for the year ended 31 December 2022. The
dividend amounted to €22 million in total.
Dividends are funded out of distributable reserves.
Research and development
In the ordinary course of business, the Group develops new products and services within its business lines.
Additional information is disclosed in the 'Business Overview' section of this Management Report.
Preparation of periodic reporting
The Board is responsible for ensuring that management maintains an appropriate system of internal controls
which provides assurance of effective operations, internal financial controls and compliance with rules and
regulations. It has the overall responsibility for the Group and approves and oversees the implementation of the
Group’s strategic objectives, ESG and risk strategy and internal governance.
The Group has appropriate internal control mechanisms, including sound administrative and accounting
procedures, Information Technology (IT) systems and controls. The governance framework is subject to review
at least once a year.
Policies and procedures have been designed in accordance with the nature, scale and complexity of the Group’s
operations in order to provide reasonable but not absolute assurance against material misstatements, errors,
losses, fraud or breaches of laws and regulations.
The Board, through the Audit Committee and the Risk Committee, conducts reviews on a frequent basis, regarding
the effectiveness of the Group’s internal controls and information systems, as well as in relation to the procedures
used to ensure the accuracy, completeness and validity of the information provided to investors. The reviews
cover all systems of internal controls, including financial, operational and compliance controls, as well as risk
management systems. The role of the Audit Committee is inter alia to ensure the financial integrity and accuracy
of the Company’s financial reporting.
The Group’s financial reporting process is controlled using documented accounting policies and procedures
supported by instructions and guidance on reporting requirements, issued to all reporting entities within the
Group in advance of each reporting period. The submission of financial information from each reporting entity is
subject to sign off by the responsible financial officer.
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31
Preparation of periodic reporting (continued)
Further analytical review procedures are performed at Group level. The internal control system also ensures that
the integrity of the accounting and financial reporting systems, including financial and operational controls and
compliance with legal and regulatory requirements and relevant standards, is adequate.
Where occasionally areas of improvement are identified these become the focus of management’s attention in
order to resolve them and thus strengthen the procedures that are in place. Areas of improvement may include
the formalisation of existing controls and the introduction of new information technology controls, as dependency
on information technology is ever increasing.
The Annual Financial Report in advance of its submission to the Board is reviewed and approved by the Executive
Committee. The Board, through the Audit Committee, scrutinises and approves the financial statements, results
announcements and the Annual Financial Report and ensures that appropriate disclosures have been made. This
governance process ensures that both management and the Board are given sufficient opportunity to challenge
the Group’s financial statements and other significant disclosures before their publication.
Service agreements termination
The service contract of one of the Executive Directors in office as at 31 December 2024 includes a clause for
termination, by service of six months’ notice to that effect by the Executive Director but provided there is a
change of control of BOC PCL as this is defined in the service agreement. In such an event, the Executive Director
will be entitled to compensation as this is determined in the service contract. The terms of employment of the
other Executive Director are mainly based on the provisions of the collective agreement in place, which provides
for notice or compensation by BOC PCL based on years of service and for a four-month prior written notice by
the Executive Director, in the event of a voluntary resignation.
Board of Directors
The members of the Board of Directors of the Company as at the date of this Management Report are listed on
page 1. All Directors were members of the Board throughout the year and up to the date of this Management
Report except as disclosed below.
On 26 September 2023 the Board of Directors nominated Mr William Stuart Birrell as a new member to the Board
of Directors. On 29 April 2024 ECB approved the appointment of Mr William Stuart Birrell as a member of the
Board of Directors and during the AGM on 17 May 2024, he was appointed to the Board of Directors.
On 30 August 2023 the Board of Directors nominated Mr Christian Philipp Hansmeyer as a new member to the
Board of Directors. On 29 April 2024 ECB approved the appointment of Mr Christian Philipp Hansmeyer as a
member of the Board of Directors and during the AGM on 17 May 2024, he was appointed to the Board of
Directors.
On 17 June 2024 the Board of Directors announced the death of Mr Constantine (Dinos) Iordanou, who had
served as a member of the Board of Directors since 29 November 2021 and also served as Senior Independent
Director.
In accordance with the Articles of Association, the Directors are subject to re-election at the AGM of the Company
every three years from the date of their appointment.
The remuneration of the Board of Directors is disclosed in Note 49 of the Consolidated Financial Statements.
Auditors
The Auditors, PricewaterhouseCoopers (‘PwC’) Chartered Accountants and Statutory Audit Firm, were
re-appointed as Auditors at the last AGM of the Company held on 17 May 2024.
The Group commenced an external tender process for the Group’s statutory auditor. This process is being led by
the Audit Committee, and supported by management who will have an advisory role only. The Audit Committee
will make its recommendation to the Board for selection of the preferred firm. The successful firm will commence
the provision of services for the financial year ending 31 December 2027.
Risk and Capital Management Report
2024
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The Group’s approach to risk management
One of the Group’s main priorities is to continually improve its risk management framework to be able to respond
to the everchanging environment in an appropriate manner. Effective risk management is critical to the success
of the Group, and as such the Group maintains a risk management framework designed to ensure the safety
and soundness of the institution, protect the interests of depositors and shareholders and comply with regulatory
requirements. Clearly defined lines of authority and accountability are in place as well as the necessary
infrastructure and analytics to allow the Group to identify, assess, monitor and control risk.
1.
Risk Management Framework (RMF)
The Board of Directors, through the Risk Committee (RC), is responsible to ensure that a coherent and
comprehensive Risk Management Framework (the ‘Framework’ or ‘RMF’) is in place, for the identification,
assessment, monitoring and controlling of all risks. The Framework ensures that there is proper governance and
process for the identification of material and emerging risks, including, but not limited to, risks that might
threaten the Group’s business model, future performance, liquidity and solvency. Such risks are taken into
consideration in defining the Group’s risk appetite, ensuring that the Group’s overall business strategy aligns
with the Group’s risk appetite and remains within the Group’s risk bearing capacity, always maintaining
appropriate capital and liquidity levels.
The RMF is supported by a strong governance structure and is comprised of several components that are
analysed in the sections below. The RMF is reviewed, updated and approved by the Board at least annually to
reflect any changes to the Group’s business or to take into consideration external regulations, corporate
governance requirements and industry best practices.
1.1
Risk Governance
The responsibility for the governance of risk at the Group lies with the Board of Directors (the ‘Board’) which is
ultimately accountable for the effective management of risks and for the system of internal controls in the Group.
The Board is assisted in its risk governance responsibilities by the Board Risk and Board Audit Committees (RC
and AC respectively) and at executive management level by the Executive Committee (EXCO), Asset and Liability
Committee (ALCO), Asset Disposal Committee (ADC), Technology Committee (TC), Sustainability Committee
(SC), Data Quality & Governance committee and the Credit Committee.
The RC supports the Board on risk oversight matters including the monitoring of the Group’s risk profile and of
all risk management activities whilst the AC supports the Board in relation to the effectiveness of the system of
internal controls. In addition, discussion and escalation processes are in place through both the Board
Committees and executive level committees that provide for a consistent approach to risk management and
decision-making.
Discussion around risk management is supported by the appropriate risk information submitted by the Risk
Management Division (RMD) and Executive Management. The Chief Risk Officer (CRO) or his representatives
participate in all such key committees to ensure that the information is appropriately presented, and that RMD’s
position is clearly articulated.
Furthermore, the roles of the CEO and the Group CRO are critical as they carry specific responsibilities with
respect to risk management. These include:
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1.
Risk Management Framework (RMF) (continued)
1.1
Risk Governance (continued)
Chief Executive Officer (CEO)
The CEO is accountable for leading the development of the Group’s strategy and business plans in a manner
that is consistent with the approved risk appetite and for managing and organising executive management to
ensure these are executed. It is the CEO’s responsibility to manage the Group’s financial and operational
performance within the approved risk appetite.
Chief Risk Officer (CRO)
The CRO leads an independent RMD across the Group including its subsidiaries. The CRO is responsible for the
execution of the Risk Management Framework and the development of risk management strategies. The CRO is
expected to challenge business strategy and overall risk taking and risk governance within the Group and
independently submit his findings, as necessary, to the RC. The CRO reports to the RC and for administrative
purposes has a dotted line to the CEO, as presented in the organizational diagram below.
1.2
Organisational Model
The RMD is responsible for the risk identification and risk management of the Group on a day-to-day basis. The
risk management process is integrated into the Group’s internal control system. The RMD is organized into
several departments, each of which is specialized in one or several categories of risks. The organization of RMD
reflects the types of risks inherent in the Group.
*The Data Quality and Governance Unit of the Data Office & Risk Analytics Department directly reports through its manager
to the Data Quality & Governance committee chaired by the Executive Director People & Change.
RMD organisational model
The RMD operates independently through:
-
Organisational independence from the controlled activities;
-
Unrestricted and direct access to executive management and the Board, either through the RC or directly;
-
Direct and unconditional access to all business lines that have the potential to generate material risk to
the Group. Front line managers are required to cooperate with the RMD managers and provide access to
all records and files of the Group, as well as any other information necessary;
-
A separate and independent budgeting process whereby the RMD’s budget is submitted to the RC for
approval;
-
The CRO is a member of the EXCO and holds voting as well as veto rights in key executive and operational
committees.
Furthermore, this independence is also ensured as:
-
The CRO is assessed annually by the RC that is jointly responsible with the Human Resources &
Remuneration Committee;
-
The CRO maintains a close working relationship with both the RC and its Chairperson which includes
regular and frequent direct communication both during official RC meetings, as well as unofficial meetings
and discussions.
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1.
Risk Management Framework (RMF) (continued)
1.2
Organisational Model (continued)
The RMD organisational model is structured so as to:
-
Define risk appetite and report regularly on the status of the risk profile;
-
Ensure that all material and emerging risks have proper ownership, management, monitoring and clear
reporting;
-
Promote proper empowerment in key risk areas that will assist in the creation of a robust risk culture;
-
Provide tools and methodologies for risk management to the business units;
-
Report losses from risks identified to the EXCO, the RC and the Board and, where necessary, to the
Regulatory Authorities;
-
Collect and monitor Key Risk Indicators (KRIs).
1.3
Risk Identification
The risk identification process is comprised of two simultaneous but complementary approaches, namely, the
top-down and the bottom-up approaches. The top-down process is led by Senior Management and focuses on
identifying the Group’s material risks, whilst in the bottom-up approach risks are identified and captured through
several methods such as the Risk and Control Self-Assessment (RCSA) process, incident capture, fraud events
capture, regulatory audits, direct engagement with specialized units and other. The risks captured by these
processes are compiled during the annual ICAAP process and its quarterly updates and form the Groups’ material
risks.
To ensure a complete and comprehensive identification of risks the Group has integrated several key processes
into its risk identification process, including the:
-
Internal Capital Adequacy Assessment Process (ICAAP);
-
Internal Liquidity Adequacy Assessment Process (ILAAP);
-
Stress testing;
-
Group Financial Plan compilation process;
-
Regulatory, internal and external reviews and audits.
1.4
Three Lines of Defence
The Group complies with the regulatory guidelines for corporate governance and has established the "Three
Lines of Defence" model as a framework for effective risk and compliance management and control. The three
lines of defence model defines the responsibilities in the risk management process ensuring adequate
segregation in the oversight and assurance of risk.
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1.
Risk Management Framework (RMF) (continued)
1.4
Three Lines of Defence (continued)
First Line of Defence
The first line of defence includes functions that own and manage risks as part of their responsibility for achieving
objectives and are responsible for implementing corrective actions to address, process and control deficiencies
identified in their processes. It comprises of the management and staff of business lines and support functions
who are directly responsible for the delivery of products and/or services. Support functions include but are not
limited to the human resources, legal services, information technology, central operations, etc. The first line of
defence ensures that controls are designed into systems and processes under the guidance of the second line
of defence.
Second Line of Defence
The second line of defence includes functions that oversee the compliance of the first line management and staff
with the regulatory framework and risk management principles. It comprises of the RMD, Information Security
and Compliance functions. The second line of defence sets the corporate governance framework of the Group
and establishes policies and guidelines that the business lines and support functions, Group entities and staff
should operate within. The second line of defence also provides support, as well as independent oversight of the
risk profile and risk framework.
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1.
Risk Management Framework (RMF) (continued)
1.4
Three Lines of Defence (continued)
Third Line of Defence
The third line of defence is the Internal Audit Division (IA) which provides independent assurance to the Board
and the EXCO on the design adequacy and operating effectiveness of the Group’s internal control framework,
corporate governance and risk management processes, including the manner in which the first and second lines
of defence achieve risk management and control objectives. Findings are communicated to the Board through
the committees and senior management and other key stakeholders, with remediation plans monitored for
progress against agreed completion dates.
1.5
Risk Appetite Framework (RAF)
The objective of the Risk Appetite Framework (RAF) is to set out the level of risk that the Group is willing to
take in pursuit of its strategic objectives, outlying the key principles and rules that govern the risk appetite
setting. It comprises the Risk Appetite Statement (RAS), the associated policies and limits where appropriate,
as well as the roles and responsibilities for the implementation and monitoring of the RAF.
The RAF has been developed in order to be used as a key management tool to better align business strategy
(financial and non-financial targets) with risk management, and it should be perceived as the focal point for all
relevant stakeholders within the Group, as well as the supervisory bodies, for the assessment of whether the
undertaken business activities are consistent with the set risk appetite.
The RAF is one of the main elements of the Risk Management Framework which includes, among others, a
number of frameworks, policies and circulars that address the principal risks of the Group.
Risk Appetite Statement (RAS)
The RAS is the articulation, in written form, of the aggregate level and types of risk that the Group is willing to
accept in the course of executing its business objectives and strategy. It includes qualitative statements as well
as quantitative measures expressed relative to Financial, Non-Financial and Strategic risks. As part of the overall
framework for risk governance, it forms a boundary condition to strategy and guides the Group in its risk-taking
and related business activities.
Risk appetite and Financial Plan interaction
The Group’s Financial Plan is integral to how the Group and the Company manages its business and monitors
performance. It informs the delivery of the Group’s strategy and is aligned to the Risk Appetite Statement. The
RAS is subject to an annual review process during the period in which the Group Financial Plan as well as the
divisional strategic plans are being formulated. The interplay between these processes provides for a cycle of
feedback during which certain RAS indicators (such as the ones related to minimum regulatory requirements)
act as a backstop to the Group’s Financial Plan, while for other indicators the Group Financial Plan provides input
for risk tolerance setting. Furthermore, the Group Financial Plan is tested against the RAS indicators to ensure
it is within the Group’s risk appetite.
Risk Appetite monitoring
To ensure that the risk profile of the Group is within the approved risk appetite, a consolidated risk report and
a risk appetite profile report are regularly reviewed and discussed by the Board and the RC.
Where a breach of a RAS indicator occurs, the Risk Appetite Framework provides the necessary escalation
process to analyse the materiality and nature of the breach, notify the appropriate authorities and decide the
necessary remediation actions.
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1.
Risk Management Framework (RMF) (continued)
1.6
Risk Taxonomy
In order to ensure that all risks the Group may face are identified and managed, a risk taxonomy is in place
which is a key component of the Internal Capital Adequacy Assessment Process (ICAAP) and the Internal
Liquidity Adequacy Assessment Process (ILAAP). The taxonomy ensures that the coverage of risks is
comprehensive and identifies potential linkages between risks.
The risk taxonomy provides a categorisation of different risk types/factors enabling the Group to assess,
aggregate and manage risks in a consistent way through a common risk language and mapping. It comprises
of several levels of risks in increasing granularity and supports a multi-level tree categorization to enhance the
overall risk classification. This risk categorization is also used to accommodate additional regulatory compliance
requirements and internal risk analysis and reporting needs.
1.7
Risk measurement and reporting
The RMD uses several systems and models to support key business processes and operations, including stress
testing, credit approvals, fraud risk and financial reporting. The RMD has established a model governance and
validation framework to help address risks arising from model use.
Additionally, the RMD:
-
Maintains a categorization and definitions of risks and terminologies used throughout the Group;
-
Collates reports of Key Risk Indicators (KRIs) and other relevant risk information. When limit violations
occur, escalation and reporting procedures are in place;
-
Checks that risk information provided by management is complete and accurate and management has
made all reasonable endeavour to identify and assess all key risks;
-
Ensures that the risk information submitted to the RC and the Board by RMD and management is
appropriate and enables monitoring and control of all the risks faced by the Group;
-
Discloses risk information externally and prepares reports on significant risks in line with internal and
external regulatory requirements.
Stress testing
Stress testing is a key risk management tool used by the Group to provide insights on the behaviour of different
elements of the Group in a crisis scenario and to assess the Group’s resilience and capital and liquidity adequacy.
To make this assessment, a range of scenarios is used, based on variations of market, economic and other
operating environment conditions. Stress tests are performed for both internal and regulatory purposes and
serve an important role in:
-
Understanding the risk profile of the Group;
-
Evaluating whether there is sufficient capital or adequate liquidity under stressed conditions (ICAAP and
ILAAP) so as to put in place appropriate mitigants;
-
Evaluating of the Group’s strategy;
-
Establishing or revising limits;
-
Assisting the Group to understand the events that might push the Group outside its risk appetite.
The Group carries out the stress testing process through a combination of bottom-up and top-down approaches.
Scenario and sensitivity analysis follows a bottom-up approach, whereas reverse stress testing follows a top-
down approach.
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1.
Risk Management Framework (RMF) (continued)
1.7
Risk measurement and reporting (continued)
If the stress testing scenarios reveal vulnerability to a given set of risks, management makes recommendations
to the Board, through the RC, for remedial measures or actions.
The Group’s stress testing programme embraces a range of forward-looking stress tests and takes all the Group’s
material risks into account. These key internal exercises include:
Stress testing undertaken in support of the Internal Capital Adequacy Assessment Process (ICAAP);
Stress testing applied to the funding and liquidity plan in support of the Internal Liquidity Adequacy
Assessment Process (ILAAP) to formally assess the Group’s liquidity risks;
Annual recovery stress tests which use scenarios to assess the adequacy of recovery indicators of both
capital and liquidity in identifying the recovery plan options used to exit that stress;
Ad hoc stress testing as and if required, including in response to regulatory requests.
Other business and specific risk type stress tests
The Market and Liquidity Risk Department performs additional stress tests, which include the following:
-
Monthly stress testing for interest rate risk (2% shock on Economic Value (EV));
-
Quarterly stress testing for interest rate risk (2% shock on Net Interest Income (NII));
-
Quarterly stress testing for interest rate risk (based on the six predefined Basel interest rate scenarios
which involve flattening, steepening, short up, short down, parallel up, parallel down shocks);
-
Quarterly stress testing on items that are marked to market: impact on profit/loss and reserves is
indicated from changes in interest rates and prices of bonds and equities.
ICAAP
The ICAAP is a process whose main objective is to assess the Group’s capital adequacy in relation to the level
of underlying material risks that may arise from pursuing the Group’s strategy or from changes in its operating
environment. More specifically, the ICAAP analyses, assesses and quantifies the Group’s material risks,
establishes the current and future capital needs for the material risks identified, and assesses the Group’s capital
adequacy under both the baseline scenario and stress testing conditions, aiming to assess whether the Group
has sufficient capital, under both the base and stress scenarios, to support its business and achieve its strategic
objectives as per the Board approved Risk Appetite and Strategy.
The Group undertakes quarterly reviews of its ICAAP results as well as on an ad-hoc basis if needed, which are
submitted to the ALCO and the RC, taking into consideration the latest actual and forecasted information. During
the quarterly review, the Group’s risk profile is reviewed and any material changes/developments since the
annual ICAAP exercise are assessed in terms of capital adequacy.
The 2024 annual ICAAP package will be submitted to the ECB on 31 March 2025, indicating that the Group has
sufficient capital and available mitigants to support its risk profile and its business and to enable it to meet its
regulatory requirements, both under baseline and stressed conditions.
ILAAP
The ILAAP is a process whose main objective is to assess whether the volume and capacity of liquidity resources
available to the Group are adequate to support its business model, to achieve its strategic objectives under both
the base and severe stress scenarios, and to meet regulatory requirements, including the LCR and the NSFR.
The Group undertakes quarterly reviews of its ILAAP results through quarterly liquidity stress tests which are
submitted to the ALCO and the RC, where actual and forecasted information is considered. Any material changes
since the annual ILAAP exercise are assessed in terms of liquidity and funding.
The 2024 annual ILAAP package will be submitted to the ECB on 31 March 2025, indicating that the Group
maintains liquidity resources which are adequate to ensure its ability to meet obligations as they fall due under
ordinary and stressed conditions.
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1.
Risk Management Framework (RMF) (continued)
1.8 The Group participated in the Fit-for-55 exercise.
During 2024, the Group participated in the European Banking Authority (“EBA”) “Fit-for-55” climate risk scenario
analysis exercise. The exercise was part of the new mandates received by the EBA in the scope of the European
Commission's Renewed Sustainable Finance Strategy. Under the European Green Deal, all 27 EU Member States
committed to turning the EU into the first climate-neutral continent by 2050 and pledged to reduce emissions
by at least 55% by 2030, compared to 1990 levels. The one-off Fit-for-55 climate risk scenario analysis aimed
at assessing the resilience of the financial sector in line with the Fit-for-55 package and to gain insights into the
capacity of the financial system to support the transition to a lower carbon economy under conditions of stress.
1.9
The Group participated in the ECB Cyber Resilience Stress Test
The Group participated in the cyber resilience stress test exercise conducted by the ECB in the first half of 2024.
The aim was to assess the cyber-resilience posture for all SSM Significant Institutions. In more detail, the
objective of the exercise was to assess how banks respond to and recover from a cyberattack, rather than their
ability to prevent it. The findings and lessons learned were discussed as part of the 2024 Supervisory Review
and Evaluation Process.
1.10
2025 EU wide stress test
The Group is participating in the 2025 EU-wide stress test exercise. Balance sheets are assumed to remain
constant with reference date 31 December 2024, with the primary focus being the evaluation of the impact of
adverse shocks on solvency. The exercise is designed to provide valuable input for assessing the resilience of
the European banking sector in a hypothetical adverse macroeconomic scenario. The exercise was launched in
January 2025 and the results will be published in August 2025. The stress test results will be used to update
each bank’s Pillar 2 guidance in the context of the Supervisory Review and Evaluation Process
(SREP). Qualitative findings on weaknesses in banks’ stress testing practices could also affect banks’ scores
related to risk data aggregation capabilities and thus their Pillar 2 requirements.
2.
Recovery and resolution planning
The Group’s recovery plan sets out the arrangements and measures that the Group could adopt in the event of
severe financial stress to restore the Group to long term viability. A suite of indicators and options are included
in the Group’s recovery plan, which together present the identification of stress events and the tangible
mitigating actions available to the Group to restore viability. The Group’s recovery plan is approved by the Board
on the recommendation of the RC and ALCO.
The Group resolution plan is prepared by the Single Resolution Board in cooperation with the National Resolution
Authority (Central Bank of Cyprus). The resolution plan describes the Preferred Resolution Strategy (PRS), in
addition to ensuring the continuity of the Group’s critical functions and the identification and addressing of any
impediments to the Group’s resolvability. The PRS for the Group is a single point of entry bail-in via BOC PCL.
The resolution authorities also determine the Minimum Requirements for own funds and Eligible Liabilities
(MREL) corresponding to the loss absorbing capacity necessary to execute the resolution.
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3.
Risk Culture
A robust risk culture is a substantial determinant of whether the Group will be able to successfully execute its
strategy within its defined risk appetite. The RMD is committed to fostering a robust governance and risk culture
that aligns with the Group's strategic objectives and risk appetite. This includes ensuring that risk management
practices are integrated into all aspects of the business, promoting a culture of risk awareness, and maintaining
effective communication and accountability across the Group.
An action plan towards the implementation of a firm-wide risk culture is in place across the Group involving
various stakeholders including all the control functions, human resources, legal services, Company’s secretary
office and other. The action plan is under the auspices of the Chief Risk Officer and the Executive Director People
and Change and the Board retains close oversight through Mr Adrian John Lewis, Senior Independent Director.
The RMD has a leading role in the action plan which includes, among other actions, the measurement of risk
culture, both at Bank wide and divisional level, through a specific Risk Culture Dashboard, the communication
of a series of topics aiming at re-enforcing risk culture and the provision of specific training for areas such as
credit underwriting and other risk management related topics.
Other actions include the introduction and formalisation of the role of the ‘Business Risk and Control Officers’,
dedicated control functions liaisons for non-financial risks, within the business lines.
4.
Principal Risks
As part of its business activities, the Group faces a variety of risks. The principal and other risks faced by the
Group are described below as well as the way these are identified, assessed, managed and monitored by the
Group, including the available mitigants. The risks described below, should not be regarded as a complete and
comprehensive statement of all potential risks, uncertainties or mitigants as other factors either not yet
identified or not currently material, may also adversely affect the Group.
4.1
Credit Risk
Credit risk is defined as the current or prospective risk to earnings and capital arising from an obligor’s failure
to meet the terms of any contract with the Group (actual, contingent or potential claims both on and off balance
sheet) or failure to perform as agreed. Within the general definition of credit risk, the Group identifies and
manages the following types of risk:
Counterparty credit risk (CCR): the Group’s credit exposure with other counterparties. The risk of
losses arising as a result of the counterparty not meeting their contractual obligations in full and on
time.
Settlement risk: the risk that a counterparty fails to deliver the terms of a contract with the Group.
Issuer risk: the risk of losses arising from a credit deterioration of an issuer of instruments in which
the Group has invested.
Concentration risk: the risk that arises from the uneven distribution of exposures (i.e. credit
concentration) to individual borrowers or by industry, collateral, product, currency, economic sector or
geographical region.
Country risk: the Group’s credit exposure arising from lending and/or investments or the presence of
the Group in a specific country.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
43
4.
Principal Risks (continued)
4.1
Credit Risk (continued)
In order to manage these risks, the Group has a Credit Risk Management function within RMD that:
-
Develops policies, guidelines and approval limits necessary to manage and control or mitigate the
credit and concentration risk in the Group. These documents are reviewed and updated at least
annually, or more frequent if deemed necessary, to reflect any changes in the Group’s risk appetite
and strategy and consider the market environment or any other major changes from external or
internal factors that come into effect;
-
Evaluates credit applications from an independent credit risk perspective before submission for
approval to Credit Committee 3, the RC, or the Board. This ensures compliance with the Group’s risk
appetite, policies, and guidelines, supporting the role of the observer who holds veto rights;
-
Participates as an observer in the Credit Committee 3 and in specific cases that fall under the approving
authority of Corporate Sanctioning as delegated by the CRO;
-
Sets KRIs for monitoring the loan portfolio quality and adopts a proactive monitoring approach for such
risks;
-
Measures the expected credit losses in an appropriate way in order to have a fair representation of the
loan book in the financial statements of the Group.
The Group sets and monitors risk appetite limits relating to credit risk. Furthermore, a limits framework is in
place in relation to the credit granting process and also the general rules are documented in the Group’s Lending
Policy. Relevant circulars and guidelines are in place that provide parameters for the approval of credit
applications and related credit limits. The Group has established credit approving authorities, which are
authorised to approve the granting, review and restructuring of credit facilities in the Bank, including the Credit
Sanctioning Department and the Credit Committee 3. Credit Committee 3 is comprised of members from various
Group divisions outside RMD to ensure independence of opinion. Applications falling outside the approval limits
of Credit Committee 3 are submitted to the RC or the Board, depending on the total exposure of the customer
group.
The Group has adopted methodologies and techniques for credit risk identification. These methodologies are
revised and modified whenever deemed necessary to reflect changes in the financial environment and adjusted
to be in line with the Group’s overall strategy and its short-term and long-term objectives.
The Group dedicates considerable resources to assess credit risk and to correctly reflect the value of its on-
balance and off-balance sheet exposures in accordance with regulatory and accounting guidelines. This process
can be summarised in the following stages:
Analysing performance and asset quality
Measuring exposures and concentrations
Raising allowances for impairment
Furthermore, post-approval monitoring is in place to ensure adherence to both terms and conditions set in the
approval process and credit risk policies and procedures. A key aspect of credit risk is credit risk concentration
which is defined as the risk that arises from the uneven distribution of exposures to individual borrowers, specific
industry or economic sectors, geographical regions, product types or currencies. The monitoring and control of
concentration risk is achieved by limit setting (e.g. sector and name limits) and reporting them to senior
management.
Approved policies and procedures are in place for the approval of credit and settlement limits per counterparty
based on the business needs, current exposures and investment plans. Counterparty credit and settlement limits
for Treasury transactions are monitored real-time through the Treasury front to back system.
With the aim of identifying credit risk at an early stage, a number of key reports are prepared for the EXCO
and/or the Board. Indicatively, these include a credit quality dashboard which analyses, among others, the
overall loan book performance, forborne facilities, the performance of new lending, specific products or
portfolios, new forbearances and modifications and other portfolio quality KPIs.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
44
4.
Principal Risks (continued)
4.1
Credit Risk (continued)
Country Risk
Country Risk refers to the possibility that borrowers of a particular country may be unable or unwilling to fulfil
their foreign obligations for reasons beyond the usual risks which arise in relation to all lenders. Country risk
affects the Group via its operation in other countries and also via investments in other countries (Money Market
(MM) placements, bonds, shares, derivatives, etc.). In addition, the Group is indirectly affected by credit facilities
provided to customers for their international operations or due to collateral in other countries. In this respect,
country risk is considered in the risk assessment of all exposures, both on-balance sheet and off-balance sheet.
Country risk exposures are the aggregation of the various on-balance sheet and off-balance sheet exposures
including investments in bonds, money market placements, loans or guarantees to residents of a
country/companies incorporated in a country, letters of credit, properties etc.
The Group monitors country risk and on a quarterly basis reports to ALCO exposures by country and compares
these against approved country limits. The Board, through the RC is also informed on a regular basis and at
least annually. Any limit breaches are included in the regular reporting to ALCO, EXCO and RC. The country
limits are allocated based on the CET1 capital of the Group, the country's credit rating and internal scoring.
Credit Risk Mitigation
The fundamental lending principle of the Group is to approve applications and provide credit facilities only when
the applicant has the ability to pay and where the terms of these facilities are consistent with the customers’
income and financial position, independent of any collateral that may be assigned as security and in full
compliance with all external laws, regulations, guidelines, internal codes of conduct and other internal policies
and procedures. The value of collateral is not a decisive factor in the Group’s assessment and approval of any
credit facility, since collaterals may only serve as a secondary source of repayment in case of default.
Collaterals are used for risk mitigation. Collaterals are considered as an alternative means of debt recovery in
case of default. Collateral by itself is not a predominant criterion for approving a loan, except when the loan
agreement envisages that the repayment of the loan is based on the sale of the property pledged as collateral
or liquid collateral provided (e.g. cash). The Group’s requirements around completion, valuation and
management of collateral are set out in appropriate Group policies.
Credit risk mitigation is also implemented through a number of policies, procedures, guidelines circulars and
limits. Policies are approved by the RC/Board and include the:
Lending Policy
Write-off policy
Concentration Risk Policy
Valuation Policy
Credit Risk Monitoring Policy
Environmental & Social Policy
Asset Acquisition and Disposal Policy for Debt Settlement
Loan Syndication Policy
Green Lending Policy
Shipping Finance Policy
Early Warning Policy
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
45
4.
Principal Risks (continued)
4.1
Credit Risk (continued)
Systems
The effective management of the Group’s credit risk is achieved through a combination of training and
specialisation as well as appropriate credit risk assessment (risk rating) systems. The Group continuously
upgrades the systems and models used in assessing the creditworthiness of Group customers. Additionally, the
Group continuously upgrades the systems and models for the assessment of credit risk so as to correctly reflect
the value of its on-balance and off-balance sheet exposures in accordance with regulatory and accounting
guidelines.
The analysis of loans and advances to customers in accordance with the EBA standards is presented
below.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
46
4.
Principal Risks (continued)
4.1
Credit Risk (continued)
The tables below present the analysis of loans and advances to customers in accordance with the EBA standards.
Gross loans and advances to customers
Accumulated impairment, accumulated negative changes in fair value due to
credit risk and provisions
31 December 2024
Group gross
customer
loans and
advances1,2
Of which:
NPEs
Of which exposures with
forbearance measures
Accumulated
impairment,
accumulated
negative changes in
fair value due to
credit risk and
provisions
Of which:
NPEs
Of which exposures with forbearance
measures
Total exposures
with forbearance
measures
Of which:
NPEs
Total exposures
with forbearance
measures
Of which:
NPEs
€000
€000
€000
€000
€000
€000
€000
€000
Loans and advances to customers
General governments
68,892
-
-
-
3
-
-
-
Other financial corporations
296,345
545
34,871
475
3,904
377
1,297
308
Non-financial corporations
5,033,827
75,589
209,835
57,040
58,681
36,952
33,041
29,324
Of which: Small and Medium sized
Enterprises3 (SMEs)
2,900,947
62,950
113,932
46,764
35,447
26,482
20,551
19,208
Of which: Commercial real estate3
3,463,617
66,202
188,182
54,506
46,462
30,978
31,142
27,954
Non-financial corporations by sector
Construction
483,832
1,862
9,069
Wholesale and retail trade
891,437
16,086
8,565
Accommodation and food service activities
1,149,973
1,614
3,002
Real estate activities
892,563
21,252
12,666
Transport and storage
551,168
194
1,131
Other sectors
1,064,854
34,581
24,248
Households
4,862,349
125,955
122,133
52,747
84,431
57,501
24,152
19,055
Of which: Residential mortgage loans3
3,761,702
94,107
107,516
44,065
53,360
36,164
19,172
14,554
Of which: Credit for consumption3
638,798
24,218
13,526
7,304
20,278
14,643
3,967
3,404
10,261,413
202,089
366,839
110,262
147,019
94,830
58,490
48,687
Loans and advances to customers
classified as held for sale
54,921
54,921
15,221
15,221
31,778
31,778
7,562
7,562
Total on-balance sheet
10,316,334
257,010
382,060
125,483
178,797
126,608
66,052
56,249
1Excluding loans and advances to central banks and credit institutions and reverse repurchase agreements (including an amount of €6.865 thousand cash collateral placed).
2The residual fair value adjustment on initial recognition (which relates mainly to loans acquired from Laiki Bank and is calculated as the difference between the outstanding contractual amount and the fair value of loans acquired and
bears a negative balance) is considered as part of the gross loans, therefore decreases the gross balance of loans and advances to customers.
3The analysis shown in lines ‘non-financial corporations’ and ‘households’ is non-additive across all categories as certain customers could be in both categories.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
47
4.
Principal Risks (continued)
4.1
Credit Risk (continued)
Gross loans and advances to customers
Accumulated impairment, accumulated negative changes in fair value due to
credit risk and provisions
31 December 2023
Group gross
customer
loans and
advances1,2
Of which:
NPEs
Of which exposures with
forbearance measures
Accumulated
impairment,
accumulated
negative changes in
fair value due to
credit risk and
provisions
Of which:
NPEs
Of which exposures with forbearance
measures
Total exposures
with forbearance
measures
Of which:
NPEs
Total exposures
with forbearance
measures
Of which:
NPEs
€000
€000
€000
€000
€000
€000
€000
€000
Loans and advances to customers
General governments
35,249
-
-
-
6
-
-
-
Other financial corporations
253,077
805
1,201
448
4,247
378
308
305
Non-financial corporations
4,931,801
155,212
258,469
95,156
91,640
61,097
37,355
33,472
Of which: Small and Medium sized
Enterprises3 (SMEs)
3,017,909
125,600
161,086
69,551
66,104
48,370
25,743
22,814
Of which: Commercial real estate3
3,567,684
136,152
228,516
90,842
66,458
50,862
33,774
31,716
Non-financial corporations by sector
Construction
484,893
24,873
8,585
Wholesale and retail trade
869,753
37,739
22,936
Accommodation and food service activities
1,169,399
14,310
9,657
Real estate activities
1,019,544
40,296
23,461
Manufacturing
359,874
3,852
4,589
Other sectors
1,028,338
34,142
22,412
Households
4,781,114
207,883
196,070
96,019
83,560
58,962
30,330
25,227
Of which: Residential mortgage loans3
3,726,056
169,734
173,407
83,445
52,863
39,732
25,119
20,849
Of which: Credit for consumption3
590,945
29,347
21,312
12,704
21,108
13,357
4,897
4,157
Total on-balance sheet
10,001,241
363,900
455,740
191,623
179,453
120,437
67,993
59,004
1Excluding loans and advances to central banks and credit institutions.
2The residual fair value adjustment on initial recognition (which relates mainly to loans acquired from Laiki Bank and is calculated as the difference between the outstanding contractual amount and the fair value of loans acquired and
bears a negative balance) is considered as part of the gross loans, therefore decreases the gross balance of loans and advances to customers.
3The analysis shown in lines ‘non-financial corporations’ and ‘households’ is non-additive across all categories as certain customers could be in both categories.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
48
4.
Principal Risks (continued)
4.2
Market Risk
Market Risk is defined as the current or prospective risk to earnings and capital arising from adverse movements
in interest rates, currency/foreign exchange rates and from any other changes in market prices. The main types
of market risk to which the Group is exposed, are listed below:
a. Interest Rate Risk in the Banking Book (IRRBB);
b. Currency/foreign exchange rates risk;
c.
Securities price risk (bonds, equities);
d. Properties price risk.
Each of the risks above is defined and further analysed in the subsections below. Furthermore, additional
information relating to Market risk is set out in Note 45 of the Consolidated Financial Statements.
The management of market risk in the Group is governed by the Group’s Risk Appetite Statement and by the
Market Risk Policy, approved by the Board. These are supplemented by a range of approved limits and controls
also approved by the Board. The Group has an established governance structure for market risk. Market risk is
measured using portfolio sensitivity analysis, Value at Risk (VaR’), scenario analysis and stress testing
measures. Measurement and reporting to the committees is performed on a frequent basis.
Interest Rate Risk in the Banking Book
Interest rate risk in the banking book (‘IRRBB’) is the current or prospective risk to both the earnings and capital
of the Group as a result of adverse movements in interest rates. The four components of interest rate risk are:
repricing risk, yield curve risk, basis risk and option risk. Repricing risk is the risk of loss of net interest income
or economic value as a result of timing mismatch in the repricing of assets, liabilities and off-balance sheet
items. Yield curve risk arises from changes in the slope and the shape of the yield curve. Basis risk is the risk
of loss of net interest income or economic value as a result of imperfect correlation between different reference
rates. Option risk arises from options, including embedded options, e.g. consumers redeeming fixed rate
products when market rates change.
The Group does not operate a trading book and thus all interest rate exposure arises from the banking book.
In order to manage interest rate risk, the Group sets a one-year limit on the maximum reduction of the net
interest income. Limits are set as a percentage of Group Tier 1 capital and as a percentage of Group annual net
interest income (when positive). Whilst limit breaches must be avoided at all times, any such occurrence is
reported to the relevant authorities (ALCO and/or the RC) following relevant escalation process and mitigating
actions are put in place. Regular update is provided to the ALCO/ the EXCO/ the RC.
Treasury Division is responsible for managing the interest rate exposure of the Group. Corrective actions are
taken by Treasury Division to minimize the risk exposure and in any event to restrict exposure within limits.
Currency/Foreign Exchange Rates Risk
Currency/foreign exchange rates risk is the risk that the fair value of future cash flows of a financial instrument
will fluctuate because of changes in foreign exchange rates.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
49
4.
Principal Risks (continued)
4.2
Market Risk (continued)
Currency/Foreign Exchange Rates Risk (continued)
In order to limit the risk of loss from adverse fluctuations in foreign exchange rates, overall Intraday and
Overnight open currency position limits have been set. These internal limits are lower compared to the maximum
permissible by the regulator. Internal limits serve as a trigger to management for avoiding regulatory limit
breaches. Due to the fact that there is no Foreign Exchange Trading Book, VaR (Value at Risk) is calculated on
a quarterly basis on the position reported to the CBC. Intraday and overnight FX position limits are monitored
daily and the open foreign currency position or any breaches follow the escalation process and are reported to
the ALCO and to the RC through regular reporting.
Treasury Division is responsible for managing the foreign currency open position of the Group emanating from
its balance sheet. The foreign currency position emanating from customer transactions is managed by the Global
Markets & Treasury Sales Department. Treasury Division is also responsible for hedging the foreign currency
open positions of the foreign non-banking units of the Group.
Equities Price Risk
Equities Price Risk is the risk of loss from changes in the price of equity securities when there is an unfavorable
change in the prices of equity securities held by the Group as investments.
The Group holds equity and fund investments on its balance sheet. The equity portfolio mainly relates to certain
legacy positions acquired through loan restructuring activity and specifically through debt for equity swaps,
whereas the fund portfolio mainly relates to investments held by the insurance operations of the Group. The
policy is to manage the current equity portfolio with the intention to reduce it by selling positions for which there
is a market. No new purchases of equities are allowed without ALCO approval. Analysis of equity and fund
holdings are reported to ALCO on a quarterly basis. Analysis of the positions the Group maintains as at 31
December 2024 is presented in Note 20 of the Consolidated Financial Statements.
Debt Securities Price Risk
Debt securities price risk is the risk of loss as a result of adverse changes in the prices of debt securities held
by the Group. Debt security prices change as the credit risk of the issuers changes and/or as the interest rates
of fixed rate securities change.
The Group invests a significant part of its liquid assets in debt securities. Changes in the prices of debt securities
classified as investments at FVPL, affect the profit or loss of the Group, whereas changes in the value of debt
securities classified as FVOCI affect directly the equity of the Group. Debt securities classified as HTC are
measured at amortised cost.
Debt security investment limits exist at RAS level governing the level of riskiness of the overall portfolio. Credit
limits per issuer as well as concentration limits are also in place. Limit monitoring is performed on a daily basis
by the Market & Liquidity Risk Unit. Any breaches are reported following an established escalation process by
reference to the limit breach.
The debt security portfolio is managed by the Treasury Division and governed by the Bond Investment Policy.
The annual bond investment strategy is proposed by Treasury and approved by ALCO and ultimately by the
Board as part of the approval of the Group Financial Plan. Treasury proceeds with the approved bond investments
which are within the Bond Investment Policy and within limits and parameters set in the various policies and
frameworks. Analysis of the positions the Group maintains as at 31 December 2024 is presented in Note 20 of
the Consolidated Financial Statements.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
50
4.
Principal Risks (continued)
4.2
Market Risk (continued)
Property Price Risk
Property price risk is the risk that the value of property will decrease, either as a result of:
˗
Changes in the demand for, and prices of, real estate; or
˗
Regulatory requests which may increase the capital requirements for stock of property.
The Group is exposed to the risk of negative changes in the fair value of property which is held either for own
use, as stock of property or as investment property. Stock of property has been predominately acquired in
exchange of debt with a strategy and intention to be disposed of in line with the Group’s strategy.
The Group has in place a number of actions to manage and monitor the exposure to property price risk as
indicated below:
˗
It has an established Real Estate Management Unit (REMU), a specialised division to manage, promote
and monetise the repossessed portfolio, including other non-core assets, through appropriate real estate
disposal initiatives;
˗
It has placed great emphasis on the efficient and quick disposal of on-boarded properties and in their
close monitoring and regular reporting. RAS indicators and other KPIs are in place monitoring REMU
properties in terms of value, aging, and sales levels;
˗
It assesses and quantifies property price risk as one of the material risks for ICAAP purposes under both
the normative and economic perspective;
˗
It monitors the changes in the market value of the collateral and, where necessary, requests the pledging
of additional collateral in accordance with the relevant agreement;
˗
As part of the valuation process, assumptions are made about the future changes in property values, as
well as the timing for the realisation of collateral, taxes and expenses on the repossession and subsequent
sale of the collateral as well as any other applicable haircuts;
˗
For the valuation of properties owned by the Group, judgement is exercised which takes into account
available reference points, such as comparable market data, expert valuation reports, current market
conditions and application of appropriate illiquidity haircuts where relevant.
4.3
Liquidity and Funding Risk
Liquidity risk is the risk that the Group does not have sufficient financial resources to meet its commitments as
they fall due. This risk includes the possibility that the Group may have to raise funding at high cost or sell
assets at a discount to fully and promptly satisfy its obligations.
Funding risk is the risk that the Group does not have sufficiently stable sources of funding or access to sources
of funding may not always be available at a reasonable cost and thus the Group may fail to meet its obligations,
including regulatory requirements (e.g. MREL).
Further information relating to Group risk management in relation to liquidity and funding risk is set out in Note
46 of the Consolidated Financial Statements. Additionally, information on encumbrance and liquidity reserves is
provided below.
4.3.1
Encumbered and unencumbered assets
Asset encumbrance arises from collateral pledged against secured funding and other collateralised obligations.
An asset is classified as encumbered if it has been pledged as collateral against secured funding and other
collateralised obligations and, as a result, it is no longer available to the Group for further collateral or liquidity
requirements. The total encumbered assets of the Group amounted to €3,566,251 thousand as at 31 December
2024 (2023: €3,681,929 thousand).
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
51
4.
Principal Risks (continued)
4.3
Liquidity and Funding Risk (continued)
4.3.1
Encumbered and unencumbered assets (continued)
An asset is classified as unencumbered if it has not been pledged as collateral against secured funding and other
collateralised obligations. Unencumbered assets are further analysed into those that are available and can
potentially be pledged and those that are not readily available to be pledged. As at 31 December 2024, the
Group held €20,119,123 thousand (2023: €20,640,651 thousand) of unencumbered assets that can potentially
be pledged and can be used to support potential liquidity funding needs and €1,167,169 thousand (2023:
€717,575 thousand) of unencumbered assets that are not readily available to be pledged for funding
requirements in their current form.
The table below presents an analysis of the Group’s encumbered and unencumbered assets and the extent to
which the unencumbered assets can be potentially pledged for funding or other purposes. The carrying amount
of such assets is disclosed below:
31 December 2024
Encumbered
Unencumbered
Total
Pledged as
collateral
Which can
potentially
be pledged
Which are not
readily available
to be pledged
€000
€000
€000
€000
Cash and other liquid assets
55,434
8,373,595
1,002,441
9,431,470
Investments
39,958
4,298,155
20,230
4,358,343
Loans and advances to customers
3,470,859
6,536,252
107,283
10,114,394
Non-current assets and disposed
groups held for sale
-
-
23,143
23,143
Property
-
911,121
14,072
925,193
Total on-balance sheet
3,566,251
20,119,123
1,167,169
24,852,543
31 December 2023
Cash and other liquid assets
72,800
9,890,350
439,353
10,402,503
Investments
260,011
3,419,445
15,953
3,695,409
Loans and advances to customers
3,349,118
6,229,383
243,287
9,821,788
Property
-
1,101,473
18,982
1,120,455
Total on-balance sheet
3,681,929
20,640,651
717,575
25,040,155
Encumbered assets primarily consist of loans and advances to customers and investments in debt securities.
These are mainly pledged for any potential use of the funding facilities of the European Central Bank (ECB) and
for the covered bond (Notes 29 and 46 of the Consolidated Financial Statements for the year ended 31 December
2024 respectively). Encumbered assets include cash and other liquid assets placed with banks as collateral
under ISDA agreements which are not immediately available for use by the Group but are released once the
transactions are terminated. Cash is mainly used to cover collateral required for (i) derivatives and (ii) trade
finance transactions and guarantees issued. It may also be used as part of the supplementary assets for the
covered bond.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
52
4.
Principal Risks (continued)
4.3
Liquidity and Funding Risk (continued)
4.3.1
Encumbered and unencumbered assets (continued)
BOC PCL maintains a Covered Bond Programme set up under the Cyprus Covered Bonds legislation and the
Covered Bonds Directive of the Central Bank of Cyprus (CBC). Under the Covered Bond Programme, BOC PCL
has in issue covered bonds of €650 million secured by residential mortgages originated in Cyprus. The covered
bonds have a maturity date on 12 December 2026 and interest rate of 3-months Euribor plus 1.25% payable
on a quarterly basis. On 9 August 2022, BOC PCL proceeded with an amendment to the terms and conditions
of the covered bonds following the implementation of Directive (EU) 2019/2162 in Cyprus. The covered bonds
are listed on the Luxemburg Bourse and have a conditional Pass-Through structure. All the bonds are held by
BOC PCL. The covered bonds are eligible collateral for the Eurosystem credit operations and are placed in the
ECB pool providing access to funding from the ECB.
Unencumbered assets which can potentially be pledged include debt securities and Cyprus loans and advances
which are less than 90 days past due. Balances with central banks are reported as unencumbered and can be
pledged, to the extent that there is excess available over the minimum reserve requirement. The minimum
reserve requirement is reported as unencumbered not readily available to be pledged.
Unencumbered assets that are not readily available to be pledged primarily consist of loans and advances which
are prohibited by contract or law to be encumbered or which are more than 90 days past due or for which there
are pending litigations or other legal actions against the customer, a proportion of which would be suitable for
use in secured funding structures but are conservatively classified as not readily available to be pledged as
collateral. Properties whose legal title has not been transferred to the Company or a subsidiary are not
considered to be readily available to be pledged as collateral.
Insurance assets held by Group insurance subsidiaries are not included in the table above or below as they are
primarily due to the insurance policyholders.
The carrying and fair value of the encumbered and unencumbered investments of the Group as at 31 December
2024 and 31 December 2023 are as follows:
31 December 2024
Carrying value
of encumbered
investments
Fair value of
encumbered
investments
Carrying value of
unencumbered
investments
Fair value of
unencumbered
investments
€000
€000
€000
€000
Equity securities
-
-
135,464
135,464
Debt securities
39,958
40,870
4,182,921
4,214,146
Total investments
39,958
40,870
4,318,385
4,349,610
31 December 2023
Equity securities
-
-
144,016
144,016
Debt securities
260,011
250,480
3,291,383
3,303,818
Total investments
260,011
250,480
3,435,399
3,447,834
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
53
4.
Principal Risks (continued)
4.3
Liquidity and Funding Risk (continued)
4.3.2
Liquidity regulation
The Group is required to comply with provisions on the Liquidity Coverage Ratio (LCR) under CRD IV/CRR (as
supplemented by Delegated Regulations (EU) 2015/61), with the limit set at 100%. The Group must also comply
with the Net Stable Funding Ratio (NSFR) calculated as per the Capital Requirements Regulation II (CRR II),
with the limit set at 100%.
The LCR is designed to promote the short-term resilience of a Group’s liquidity risk profile by ensuring that it
has sufficient high-quality liquid resources to survive an acute stress scenario lasting for 30 days. The NSFR has
been developed to promote a sustainable maturity structure of assets and liabilities.
As at 31 December 2024, the Group was in compliance with all regulatory liquidity requirements. As at 31
December 2024, the Group’s LCR stood at 309% (compared to 359% at 31 December 2023) and the Group’s
NSFR stood at 162% (compared to 159% at 31 December 2023).
4.3.3
Liquidity reserves
The below table sets out the Group’s liquidity reserves:
Composition of the
liquidity reserves
31 December 2024
31 December 2023
Internal
Liquidity
Reserves
Liquidity reserves as
per LCR Delegated
Regulation (EU)
2015/61 LCR eligible
Internal
Liquidity
Reserves
Liquidity reserves as
per LCR Delegated
Regulation (EU)
2015/61 LCR eligible
Level 1
Level
2A & 2B
Level 1
Level
2A & 2B
€000
€000
€000
€000
€000
€000
Cash and balances with
central banks
7,341,141
7,341,141
-
9,428,052
9,428,052
-
Placements with banks
658,154
-
-
214,588
-
-
Liquid investments
4,787,396
4,206,223
377,572
3,299,967
2,801,667
354,128
Available ECB Buffer
1,999,540
-
-
92,088
-
-
Total
14,786,231 11,547,364
377,572
13,034,695
12,229,719
354,128
Internal Liquidity Reserves present the internally defined liquid buffer of the Bank. Liquidity reserves as per LCR
Delegated Regulation (EU) 2015/61 present the liquid assets as per the definition of the aforementioned
regulation i.e., High-Quality Liquid Assets (HQLA).
Balances in Nostro accounts and placements with banks are not included in Liquidity reserves as per LCR, as
they are not considered HQLA (they are part of the LCR Inflows).
Liquid investments under the Liquidity reserves as per LCR are shown at market values reduced by standard
weights as prescribed by the LCR regulation. Liquid investments under Internal Liquidity Reserves include
additional unencumbered liquid bonds which are shown at market values net of haircuts based on the ECB
methodology and haircuts for the ECB eligible bonds, while for the non-ECB eligible bonds, a more conservative
internally developed haircut methodology is used.
Currently available ECB buffer is not part of the Liquidity reserves as per LCR.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
54
4.
Principal Risks (continued)
4.4
Operational Risk
Operational risk is defined as the risk of direct or indirect impact/loss resulting from inadequate or failed internal
processes, people, systems or from external events. The Group includes in this definition compliance, legal and
reputational risk.
The Group recognises that the control of operational risk is directly related to effective and efficient management
practices and high standards of corporate governance. To that effect, the management of operational risk is
geared towards maintaining a strong internal control governance framework and managing operational risk
exposures through a consistent set of management processes that drive risk identification, assessment, control
and monitoring.
The Group also maintains adequate insurance policies to cover for unexpected material operational losses.
Operational Risk Management (ORM) Framework
The Group has established an Operational Risk Management Framework which addresses the following
objectives:
-
Raising operational risk awareness and building the appropriate risk culture;
-
Providing effective risk monitoring and reporting to the Group’s management at all levels in relation to
the operational risk profile, so as to facilitate decision making for risk control activities;
-
Mitigating operational risk to ensure that operational losses do not cause material damage to the Group’s
franchise and that the impact on the Group’s profitability and corporate objectives is contained; and
-
Maintaining a strong system of internal controls to ensure that operational incidents do not cause material
damage to the Group’s franchise and have a minimal impact on the Group’s profitability and reputation.
Operational risks can arise from all business lines and from all activities carried out by the Group and are thus
diverse in nature.
To enable effective management of all material operational risks, the operational risk management framework
adopted by the Group is based on the three lines of defence model, through which risk ownership is dispersed
throughout the organisation.
The key components of the Operational Risk Management Framework include the following:
Operational Risk Appetite
A defined Operational RAS is in place, which forms part of the Group RAS. Thresholds are applied for conduct
and other operational risk related losses.
Risk Control Self-Assessment (RCSA)
An RCSA methodology is established across the Group. According to the RCSA methodology, business owners
are requested to identify risks that arise primarily from the risk areas under the Group’s Risk Taxonomy.
Updating/enriching the risk register in terms of existing and potential new risks identified and their mitigation
is an on-going process, sourced from RCSA, but also from other Risk and Control Assessments (RCAs)
performed.
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55
4.
Principal Risks (continued)
4.4
Operational Risk (continued)
Operational Risk Management (ORM) Framework (continued)
Incident recording and analysis
An operational risk event is defined as any incident where through the failure or lack of a control, the Group has
incurred an actual or potential loss/gain, or could have had a negative reputational or regulatory impact.
Operational risk loss events are classified and recorded in the Group’s Risk and Compliance Management System
(RCMS), which serves as an enterprise tool integrating all risk-control data (e.g. risks, loss incidents, KRIs) to
provide a holistic view with regards to risk identification, corrective action and statistical analysis.
Key Risk Indicators (KRIs)
These are operational or financial variables, which track the likelihood and/or impact of a particular operational
risk. KRIs serve as a metric, which may be used to monitor the level of particular operational risks.
Operational Risk Capital Requirements and ICAAP
Regulatory and economic capital requirements for operational risk are calculated using the Standardised
Approach. Additional Pillar II Regulatory capital is calculated for operational risk on a scenario-based approach.
Scenarios are built after taking into consideration the Key Risk Drivers, which are identified using a combination
of methods and sources, through top-down and bottom-up approaches.
Training and awareness
The Group strives to continuously enhance its risk control culture and increase the awareness of its employees
on operational risk issues through ongoing staff training (both through physical workshops and through e-
learning).
Reporting
Important operational risks identified and assessed through the various tools/methodologies of the Operational
Risk Management Framework, are regularly reported to top management, as part of overall risk reporting.
Specifically, the CRO reports on risk to the EXCO and the RC on a monthly basis, while annual risk reports are
submitted to the Regulators. Ad-hoc reports are also submitted to management, as needed.
4.4.1
Fraud Risk Management
The Group has a dedicated unit under the ORM Function, the Fraud Risk Management (FRM) unit, which is
responsible for the oversight of internal and external fraud by:
˗
Developing and maintaining a framework and supporting policies for the management of internal and
external fraud risks;
˗
Undertaking Specialised Fraud Risk Assessments and ensuring that divisions and business departments
have a sound process for identifying new and emerging fraud risks;
˗
Promoting and adopting automated/alert-based systems and controls for the prevention and early
detection of external and internal fraud;
˗
Establishing structured fraud incident response management processes and plans;
˗
Analysing data and emerging fraud trends for the proactive management of emerged fraud;
˗
Providing direction through policy, education, tools and training;
˗
Ensuring compliance with relevant regulations and assessing new regulations or amendments to existing
ones with regards to fraud related issues, by performing regulatory gap analysis in cooperation with other
related stakeholders.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
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56
4.
Principal Risks (continued)
4.4
Operational Risk (continued)
4.4.1
Fraud Risk Management (continued)
Ongoing activities/initiatives towards further enhancements of FRM involved inter alia, the provision of fraud
risks and emerged frauds awareness seminar to Group’s staff and top-management, and the further
strengthening of external fraud prevention controls and framework, as a result of the customers’ accelerated
shift towards digital channels and digital banking.
4.4.2
Third-Party Risk Management
Third-party risk is defined as the risk brought on to the organisation by external parties in its ecosystem or
supply chain. Such parties include vendors, suppliers, partners, contractors or service providers who have access
to internal company or customer data, systems, processes or other privileged information. Third Party Risk,
remains of significant importance, and this is primarily due to the existence of outsourcing engagements and
the risks identified through the Third-Party risk assessments.
To mitigate this risk, a number of controls are in place which include regular third-party risk assessments on
outsourcing/intragroup and strategic contracts, third-party performance assessments, and established third
party risk trainings to ensure third-party risk awareness by the Group’s staff. The outsourcing contracts of the
Group should be fully aligned with the EBA Guidelines on Outsourcing Arrangements and/or the Third-Party &
Outsourcing Risk Management Policy. In cases where the arrangements in scope are not aligned with the EBA
Guidelines and/or policies of the Group, risks are identified, and mitigating controls are put in place. Examples
of potential risks include inadequate contract clauses, third-party resilience/inadequate due diligence, and over-
reliance on third parties.
4.4.3
Business Continuity Risk Management (BCRM)
The Group has a dedicated unit under the ORM Function, the Business Continuity Risk Management unit, which
provides direction and sets the overall framework to individual business units to mitigate business continuity
risks and minimize the impact of severe disruptive incidents such as natural disasters, loss of Information
Technology Center, loss of electricity, pandemics etc.
5.
Other principal risks and uncertainties
In addition to the risks described in section 4 above, further principal risks are also faced by the Group. These
risks are described below as well as the way these are identified, assessed, managed and monitored by the
Group, including the available mitigants.
Emerging risks are defined as new risks or existing risks that may escalate in a different way, with the potential
to threaten the execution of the Group’s strategy or operations over a medium-term horizon. The Group is
forward-looking in its risk identification processes to ensure emerging risks are identified. The internal and
external risk environment of the Group as well as macro-themes are assessed to identify such emerging risks
that may require escalation and implementation of suitable mitigation actions. Reporting of emerging risks to
the RC and the EXCO is performed on a bi-annual basis to ensure all significant risks are escalated effectively
for discussion and action. The main emerging risks currently considered by the Group are Geopolitical, Digital
Transformation and Climate and Environment Risks all of which are also principal risks and are further described
below.
The risks described, should not be regarded as a complete and comprehensive statement of all potential risks,
uncertainties or mitigants, as other factors either not yet identified or not currently material, may also adversely
affect the Group.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
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57
5.
Other principal risks and uncertainties (continued)
5.1
Business Model and Strategic Risks
Business model and strategic risks refer to the uncertainty in implementing the Group’s strategy and achieving
its business targets. Such risks can arise from changes in the external environment, including economic trends,
competition, geopolitics, and regulatory changes, or due to operational factors, such as inadequate planning or
implementation. The Group faces competition from banks, financial institutions, insurance and financial
technology companies operating locally or abroad. Also, deterioration of the macroeconomic environment can
lead to adverse impacts in the financial performance impacting the Group’s profitability, asset quality or capital
resources.
Furthermore, the Group's business environment and operational performance are heavily dependent on the
current and future economic conditions and prospects in Cyprus, where the Group's operations are based, and
earnings are predominantly generated. The Group is also dependent on the economic conditions and prospects
in the countries of the main counterparties it conducts business with.
The Group has a clear strategy with key objectives to enable delivery and operates within defined risk appetite
limits which are calibrated considering the Group’s risk bearing capacity. The strategy is closely monitored on a
regular basis. Furthermore, the Group remains ready to explore opportunities that complement its strategy
including diversification of income.
The Group monitors and manages business model risk within its Risk Appetite Framework, by setting limits in
respect of measures such as financial performance, portfolio performance, concentration and capital levels. At
a more operational level, the risk is mitigated by monitoring deviations from the Group Financial Plan, while
during the year, periodic reforecast updates of the financial plan are prepared. The frequency of reforecast
updates during each year is determined by the prevailing business and economic conditions. Performance
against the plan is monitored on a monthly basis, both at Group and Business Line levels, and reported to the
EXCO and the Board.
The Group also closely monitors the risks and impact of changing macroeconomic conditions on its lending
portfolio, strategy and objectives, considering mitigating actions where necessary. An internal stress testing
framework as part of the Group’s ICAAP is in place to provide insights and to assess capital resilience to shocks.
5.2
Geopolitical Risk
Cyprus is a small, open, services-based economy, with a large external sector and high reliance on tourism and
international business services. As a result, external factors such as economic and geopolitical events that are
beyond the control of the Group can have a significant impact on domestic economic activity. A number of macro
and market related risks, including weaker economic activity, a volatile interest rate environment for longer,
and higher competition in the financial services industry, could negatively affect the Group’s business
environment, results, and operations.
Geopolitical tensions remain high because of the continuing war in Ukraine and the military conflict in the Middle
East. The continuation of these conflicts adds considerable uncertainty to the outlook for the global economy
with the impact dependent on how these conflicts are resolved.
A change in the US approach may drive changes in global trade. The potential for the introduction of a higher
tariff regime by the US administration may result in inflationary and monetary policy reactions with the trading
partners of the US.
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5.
Other principal risks and uncertainties (continued)
5.2
Geopolitical Risk (continued)
Up until now, the Cyprus economy has proved robust and flexible to withstand external shocks and has displayed
the ability to sufficiently diversify income in order to maintain GDP growth and suppress unemployment.
These factors, as well as the current political context in the United States and Europe, increase the uncertainty
about the evolution of the global economy. The Group closely monitors these events and their impact on the
economy and the business and remains vigilant to take any precautionary measures as required.
Although, there have been distinct improvements in Cyprus’ risk profile after the banking crisis, risks do remain
given the open structure of the Cypriot economy.
The Group continuously monitors current affairs, the impact of forecasted macroeconomic conditions and
geopolitical developments on the Group’s strategy to proactively manage emerging risks. Where necessary,
bespoke solutions are offered to affected exposures and close monitoring on those is maintained. Furthermore,
the Group includes related events in its stress testing scenarios in order to gain a better understanding of the
potential impact.
5.3
Legal Risk
The Group may, from time to time, become involved in legal or arbitration proceedings which may affect its
operations and results. Litigation risk arises from pending or potential legal proceedings and regulatory
investigations against the Group. In the event that legal issues are not properly dealt with by the Group, this
may result in financial and/or reputational loss to the Group. Information on pending litigation, claims, regulatory
and other matters is disclosed in Note 38 of the Consolidated Financial Statements.
The Group has procedures in place to ensure effective and prompt management of legal risk including, among
others, the risk arising from regulatory developments, new products and internal policies.
The Legal Services Department (LSD) monitors the pending litigation against the Group and assesses the
probability of loss for each legal action against the Group based on IFRS Accounting Standards. It also estimates
the amount of potential loss where it is deemed as probable. Additionally, it reports pending litigation and latest
developments to the Board.
5.4
Technology Risk
Technology risk arises from system downtimes impacting business operations and/or customer service.
Downtimes may be caused by hardware or software failures due to malfunctions, failed processes, human error,
or cyber incidents. The use of outdated, obsolete and unsupported systems increases this risk.
The Group has in place a Technology Strategy designed to support business strategy and a customer centric
view. The strategy includes investments in skills and technology to minimize system downtimes and security
risks, modernization of legacy applications, a risk-based approach to leverage the benefits of Cloud technologies
and investments in new and innovative applications to support business requirements. The Group implements
a collaborative operating model to implement the technology initiatives that support business strategy and its
digital agenda. The Operating Model involves setting up cross-functional teams that combine technical, business
and risk skills for accelerated results. Where necessary, the Group engages with appropriate external experts
to augment capacity and meet peak demand for technical initiatives while always maintaining good levels of
internal skills and capacity.
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5.
Other principal risks and uncertainties (continued)
5.4
Technology Risk (continued)
The Group’s policies, standards, governance and controls undergo ongoing review to ensure continued alignment
with the Group’s Technology Strategy, compliance with regulation and effective management of the associated
risks.
5.5
Digital Transformation Risk
Digital transformation risk continues to be a principal and emerging risk, as banking models are rapidly evolving
both locally and globally as available technologies have resulted in the customers’ accelerated shift towards
digital channels. Money transmission, data driven integrated services and Digital Product Sales are rapidly
evolving. How the Group adapts to these emerging developments could impact the realisation of its market
strategies and financial plans.
In the context of the overall business strategy, the Group assesses and develops its Digital Strategy and
maintains a clear roadmap that provides for migration of transactions to the Digital Channels, full Digital and
Digital Assisted Product Sales, embedded banking and self-service banking support services. The Group’s
emphasis on the Digital Strategy is reflected in the operating model with a designated Chief Digital Officer
supported by staff with the appropriate skills that work closely with Technology and Control functions to execute
the strategy.
The Group’s policies, standards, governance and controls undergo ongoing review to ensure continued alignment
with the Group’s strategy for digital transformation and effective management of the associated risk.
5.6
Information Security and Cyber Risk
Information security and cyber-risk is a significant inherent risk, which could cause a material disruption to the
operations of the Group. The Group’s information systems have been and will continue to be exposed to an
increasing threat of continually evolving cybercrime and data security attacks. Customers and other third parties
to which the Group is significantly exposed, including the Group's service providers (such as data processing
companies to which the Group has outsourced certain services), face similar threats.
Current geopolitical tensions have also led to increased risk of cyber-attack from foreign state actors.
The Group has an internal specialized Information Security team which constantly monitors current and future
cyber security threats (either internal or external, malicious or accidental) and invests in enhanced cyber security
measures and controls to protect, prevent, and appropriately respond against such threats to Group systems
and information. The Group maintains an approved Group Information Security Policy that provides a set of
standards, guidelines, controls, measures designed to achieve a desired level of information security.
The Group also collaborates with industry bodies, the National Computer Security Incident Response Team
(CSIRT) and intelligence-sharing working groups to be better equipped to face the growing threat from cyber
criminals. In addition, the Group maintains insurance coverage which covers certain aspects of cyber risks.
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5.
Other principal risks and uncertainties (continued)
5.7
Regulatory Compliance Risk
The Group conducts its business subject to on-going regulations and the associated regulatory risks, including
the effects of changes in laws, regulations, policies, codes of conduct etc. Regulatory compliance risk is the risk
of impairment to the organization’s business model, reputation and financial condition from failure to meet laws
and regulations, internal standards and policies, and expectations of key stakeholders such as shareholders,
regulators, customers, employees and society. Failure to comply with regulatory framework requirements or
identify and plan for emerging requirements could lead to, amongst other things, increased costs for the Group,
regulatory fines, limitation on BOC PCL’s capacity to lend and could have a material adverse effect on the
business, financial condition and results, operations and prospects of the Group.
The Group's management maintains continuous and transparent communication with its Regulators (including
the ECB, the CBC, and others, such as the CySec, the CSE and the LSE/ATHEX). The Regulatory Steering Group,
led by the CEO and composed of executive management, receives regular updates on Regulatory Compliance
Risk issues via the Regulatory Affairs Department. The Group Compliance monitors the status of upcoming new
laws and amendments to existing laws, to ensure that all regulatory developments and requirements are
promptly addressed by the Group.
Regulatory compliance risks are identified and assessed using diverse methods as outlined in the Group
Compliance Policy. This policy details the compliance framework for the Group, covering their business and legal
environment, and assigning compliance responsibilities at both Group and entity levels. Additionally, it ensures
BOC PCL adheres to CBC Internal Governance Directive and EBA Guidelines on Internal Governance.
The Compliance Risk Assessment Methodology outlines how to evaluate compliance risks. The Compliance team
identifies and informs business areas about new or updated regulations, enabling them to conduct impact
assessments or regulatory gap analyses, while the Compliance function reviews and challenges as the second
line of defence.
Tools and mechanisms are in place for identifying, assessing, monitoring, escalating and reporting compliance
risks which, inter alia, include:
˗
The assessment of periodic reports submitted by the network of compliance liaisons;
˗
The use of aggregated risk measurements such as compliance risk indicators;
˗
Overseeing and challenging regulatory risks identified by compliance liaisons and subsidiary officers
through
gap
analysis
of
new
or
amended
regulations,
processes,
procedures,
projects,
products/services, and other assessments, to ensure effective management of compliance risks within
the Group and recommending additional controls and corrective actions as necessary;
˗
Supervising the compliance risk assessment procedures conducted by the compliance liaisons and
subsidiary compliance officers, as well as overseeing the implementation of mitigation efforts to manage
identified risks;
˗
Overseeing the complaints process and utilising customer complaints as a source of relevant information
in the context of its general monitoring responsibilities;
˗
Collaborating and sharing information with other internal control and risk management teams on
compliance issues, evaluating regulatory incidents, monitoring mitigating actions to avoid recurrence,
managing the risk, and reporting non-compliance incidents to competent authorities in accordance with
relevant regulations;
˗
Conducting periodic onsite/offsite reviews with applicable laws, rules, regulations and standards and
providing recommendations/advice to management on measures to be taken to ensure compliance;
˗
Investigating potential breaches of compliance policy and regulations, and conducting these
investigations as requested by relevant authorities, with the assistance of internal experts like those
from Internal Audit, Legal Services, Information Security, or Fraud Risk Management if needed.
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61
5.
Other principal risks and uncertainties (continued)
5.7
Regulatory Compliance Risk (continued)
Regulatory compliance risks are reported promptly to senior management and the Board in accordance with the
guidelines of the CBC Internal Governance Directive.
5.8
Insurance risk and re-insurance risk
The Group, through its subsidiaries, EuroLife Ltd (‘EuroLife’) and General Insurance of Cyprus Ltd (‘Genikes
Insurance’), provides life insurance and non-life insurance services, respectively, and is exposed to certain risks
specific to these businesses. Insurance events are unpredictable and the actual number and amount of claims
and benefits will vary from year to year from the estimate established using actuarial and statistical techniques.
Insurance risk therefore is the risk that an insured event under an insurance contract occurs and uncertainty
over the amount and the timing of the resulting claim exists.
The above risk exposure is mitigated by the Group through the diversification across a large portfolio of
insurance contracts. The variability of risks is also reduced by careful selection and implementation of
underwriting strategy guidelines, as well as the use of reinsurance arrangements. Although the Group has
reinsurance coverage, it is not relieved of its direct obligations to policyholders and is thus exposed to credit
risk with respect to ceded insurance, to the extent that any reinsurer is unable to meet the obligations assumed
under such reinsurance arrangements.
The creditworthiness of reinsurers is evaluated by considering their solvency and credit rating and reinsurance
arrangements are monitored and reviewed to ensure their adequacy as per the reinsurance policy. In addition,
counterparty risk assessment is performed on a frequent basis.
Both EuroLife and Genikes Insurance perform their annual stress tests (ORSA) which aim to ensure, among
others, the appropriate identification and measurement of risks, an appropriate level of internal capital in relation
to each company’s risk profile, and the application and further development of suitable risk management and
internal control systems.
5.9
Climate Related & Environmental Risks
Climate and environmental matters is a growing agenda for financial institutions given the increasing effects of
climate change globally and the sharp regulatory focus on addressing the resultant risks. The Group’s
businesses, operations and assets could be affected by climate-related and environmental (C&E) risks over the
short, medium and long term. The Group is committed to integrate C&E risk considerations into all relevant
aspects of the decision-making, governance, strategy and risk management and has taken the necessary steps
to achieve this.
The Group applies the definition used in the Task Force on Climate-related Financial Disclosures (TCFD) for C&E
risks whereby climate-related risks are divided into two major categories: (1) risks related to the transition to
a lower-carbon economy (transition risks) and (2) risks related to the physical impacts of climate change
(physical risks).
˗
Physical risk refers to the financial impact of a changing climate, including more frequent extreme
weather events and gradual changes in climate, as well as of environmental degradation, such as air,
water and land pollution, water stress, biodiversity loss and deforestation. Physical risk is categorised
as “acute” when it arises from extreme events, such as droughts, floods and storms, and “chronic” when
it arises from progressive shifts, such as increasing temperatures, sea-level rises, water stress,
biodiversity loss, land use change, habitat destruction and resource scarcity. Physical risk can directly
result in, for example, damage to property or reduced productivity, or indirectly lead to subsequent
events, such as the disruption of supply chains.
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5.
Other Principal Risks and uncertainties (continued)
5.9
Climate Related & Environmental Risks (continued)
˗
Transition risk refers to an institution’s financial loss that can result, directly or indirectly, from the
process of adjustment towards a lower-carbon and more environmentally sustainable economy. This
could be triggered, for example, by a relatively abrupt adoption of climate and environmental policies,
technological progress or changes in market sentiment and preferences.
Accelerating climate change could lead to sooner than anticipated physical risk impacts to the Group and the
wider economy and there is uncertainty in the scale and timing of technology, commercial and regulatory
changes associated with the transition to a low carbon economy.
The Group has put in place targets which set transparent ambitions on its climate strategy and decarbonization
of its operations and portfolio. An overall ESG strategy and working plan is thus in place to facilitate these
ambitions and address ECB expectations.
The Group also acknowledges the growing importance of environmental / nature-related risks which, as per the
Task Force for Nature-related Financial Disclosures (TNFD), are defined as those potential threats posed to an
organization arising from its own and the wider society’s dependencies and impacts on nature.
Dedicated teams both within Risk Management and Investor Relations & ESG Department, as well as other
resources, have been mobilised across the Group and are engaged in various streams of work such as the
measuring of own and financed emissions, the integration of C&E risk in the risk management framework and
the enhancement of green products offering.
Further information on C&E risks and their risk management is provided in the Sustainability Statement,
prepared in accordance with the European Sustainability Reporting Standards, that form part of the Group’s 20
24 Annual Financial Report.
6.
Capital management
The primary objective of the Group’s capital management is to ensure compliance with the relevant regulatory
capital requirements and to maintain healthy capital adequacy ratios to cover the risks of its business, support
its strategy and maximise shareholders’ value.
The capital adequacy framework, as in force, was incorporated through the Capital Requirements Regulation
(CRR) and Capital Requirements Directive (CRD) which came into effect on 1 January 2014 with certain specified
provisions implemented gradually. The CRR and CRD transposed the new capital, liquidity and leverage
standards of Basel III into the European Union’s legal framework. CRR establishes the prudential requirements
for capital, liquidity and leverage for credit institutions. It is directly applicable in all EU member states. CRD
governs access to deposit-taking activities and internal governance arrangements including remuneration, board
composition and transparency. Unlike the CRR, member states were required to transpose the CRD into national
law and national regulators were allowed to impose additional capital buffer requirements.
On 27 June 2019, the revised rules on capital and liquidity (Regulation (EU) 2019/876 (CRR II) and Directive
(EU) 2019/878 (CRD V)) came into force. As an amending regulation, the existing provisions of CRR apply,
unless they are amended by CRR II. Certain provisions took immediate effect (primarily relating to Minimum
Requirement for Own Funds and Eligible Liabilities (MREL)), but most changes became effective as of June 2021.
The key changes introduced consist of, among others, changes to qualifying criteria for Common Equity Tier 1
(CET1), Additional Tier 1 (AT1) and Tier 2 (T2) instruments, introduction of requirements for MREL and a binding
Leverage Ratio requirement (as defined in the CRR) and a Net Stable Funding Ratio (NSFR).
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
63
6.
Capital management (continued)
The amendments that came into effect on 28 June 2021 are in addition to those introduced in June 2020
through Regulation (EU) 2020/873, which among others, brought forward certain CRR II changes in light of the
COVID-19 pandemic. The main adjustments of Regulation (EU) 2020/873 that had an impact on the Group’s
capital ratio relate to the acceleration of the implementation of the new SME discount factor (lower RWAs),
extending the IFRS 9 transitional arrangements and introducing further relief measures to CET1 allowing to
fully add back to CET1 any increase in ECL recognised in 2020 and 2021 for non-credit impaired financial assets
and phasing-in this starting from 2022 (phasing-in at 25% in 2022, 50% in 2023 and 75% in 2024) and
advancing the application of prudential treatment of software assets as amended by CRR II (which came into
force in December 2020).
In October 2021, the European Commission adopted legislative proposals for further amendments to the CRR,
CRD and the BRRD (the ‘2021 Banking Package’). Amongst other things, the 2021 Banking Package would
implement certain elements of Basel III that had not yet been transposed into EU law. The 2021 Banking
Package included:
a proposal for a Regulation (‘CRR III’) to make amendments to CRR with regard to (amongst other
things) requirements on credit risk, credit valuation adjustment risk, operational risk, market risk
and the output floor;
a proposal for a Directive (‘CRD VI’) to make amendments to CRD with regard to (amongst other
things) requirements on supervisory powers, sanctions, third-country branches and ESG risks; and
a proposal for a Regulation to make amendments to CRR and the BRRD with regard to (amongst
other things) requirements on the prudential treatment of G-SII groups with a multiple point of
entry resolution strategy and a methodology for the indirect subscription of instruments eligible
for meeting the MREL requirements.
In December 2023 the preparatory bodies of the Council and European Parliament endorsed the amendments
to the CRR and the CRD and the legal texts were published on the Council and the Parliament websites. In April
2024, the European Parliament voted to adopt the amendments to the CRR and the CRD; Regulation (EU)
2024/1623 (the ‘CRR III’) and Directive (EU) 2024/1619 (the ‘CRD VI’) were published in the EU's official journal
in June 2024, with entry into force 20 days from the date of the publication. Most provisions of the CRR III have
become effective on 1 January 2025 with certain measures subject to transitional arrangements or to be phased-
in over time. Member states shall adopt and publish, by 10 January 2026, the laws, regulations and
administrative provisions necessary to comply with CRD VI and shall apply most of those measures by 11
January 2026. The implementation of CRR III is estimated to have a positive impact of approximately 1% on
the CET1 ratio (transitional) of the Group on initial application on 1 January 2025. However, during 2025 the
publication of ECB guidelines on options and discretions and EBA mandates could result in additional impacts on
CET1 ratios across the industry.
The Regulatory CET1 ratio of the Group as at 31 December 2024 stands at 19.2% and the Total Capital ratio at
24.1%. The ratios as at 31 December 2024 include profits for the year ended 31 December 2024 and a deduction
for the distribution in respect of 2024 earnings as described in Section ‘Distributions’ in the Directors Report
included within the Annual Financial Report.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
64
6.
Capital management (continued)
The Group’s minimum capital requirements are presented below:
Minimum CET1 Regulatory Capital Requirements
2024
2023
Pillar I – CET1 Requirement
4.50%
4.50%
Pillar II – CET1 Requirement
1.55%
1.73%
Capital Conservation Buffer (CCB)*
2.50%
2.50%
Other Systematically Important Institutions (O-SII) Buffer**
1.875%
1.50%
Countercyclical Buffer (CcyB)
0.92%
0.48%
Minimum CET1 Regulatory Capital Requirements
11.34%
10.72%
* Fully phased in as of 1 January 2019
** Increasing by 0.0625% every year thereafter, until being fully implemented on 1 January 2026 at 2.00%.
Minimum Total Capital Regulatory Requirements
2024
2023
Pillar I – Total Capital Requirement
8.00%
8.00%
Pillar II – Total Capital Requirement
2.75%
3.08%
Capital Conservation Buffer (CCB)*
2.50%
2.50%
Other Systematically Important Institutions (O-SII) Buffer**
1.875%
1.50%
Countercyclical Buffer (CcyB)
0.92%
0.48%
Minimum Total Capital Regulatory Requirements
16.05%
15.56%
* Fully phased in as of 1 January 2019
** Increasing by 0.0625% every year thereafter, until being fully implemented on 1 January 2026 at 2.00%.
The minimum Pillar I total capital requirement ratio of 8.00% may be met, in addition to the 4.50% CET1
requirement, with up to 1.50% by AT1 capital and with up to 2.00% by T2 capital.
The Group is also subject to additional capital requirements for risks which are not covered by the Pillar I capital
requirements (Pillar II add-ons). Applicable Regulation allows a part of the said Pillar II Requirements (P2R) to
be met also with AT1 and T2 capital and does not require solely the use of CET1.
The capital position of the Group and BOC PCL as at 31 December 2024 exceeds both their Pillar I and their
Pillar II add-on capital requirements. However, the Pillar II add-on capital requirements are a point-in-time
assessment and therefore are subject to change over time.
The CBC, in accordance with the Macroprudential Oversight of Institutions Law of 2015, sets, on a quarterly
basis, the CcyB rates in accordance with the methodology described in this law.
On 30 November 2022, the CBC, following the revised methodology described in its macroprudential policy,
decided to increase the CcyB rate from 0.00% to 0.50% of the total risk exposure amount in Cyprus of each
licensed credit institution incorporated in Cyprus effective from 30 November 2023. Moreover, on 2 June 2023,
the CBC, announced its decision to raise the CcyB rate to 1.00% of the total risk exposure amount in Cyprus,
effective from 2 June 2024. The CcyB for the Group as at 31 December 2024 has been calculated at
approximately 0.92% (2023: 0.48%). In January 2025, the CBC, based on its macroprudential policy, decided
to increase the CcyB rate from 1.00% to 1.50% of the total risk exposure amount in Cyprus effective from
January 2026. Based on the above, the CcyB for the Group is expected to increase further.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
65
6.
Capital management (continued)
In accordance with the provisions of this law, the CBC is also the responsible authority for the designation of
banks that are Other Systemically Important Institutions (O-SIIs) and for the setting of the O-SII Buffer
requirement for these systemically important banks. BOC PCL has been designated as an O-SII. The O-SII
Buffer as at 31 December 2023 stood at 1.50% and increased by 37.5 bps to 1.875% on 1 January 2024,
following a revision of the O-SII buffer by the CBC in October 2023. In April 2024, following a revision by the
CBC of its policy for the designation of credit institutions that meet the definition of O-SII institutions and the
setting of an O-SII buffer to be observed, the Group’s O-SII buffer has been set to 2.00% from 1 January 2026
(from the previous assessment carried out in October 2023 of 2.25% from 1 January 2025) to be phased-in by
6.25 bps annually to 1.9375% on 1 January 2025 and 2.00% as of 1 January 2026.
The ECB also provides non-public guidance for an additional Pillar II CET1 buffer (P2G) to be maintained.
Following the annual SREP performed by the ECB in 2024 and based on the final SREP decision received in
December 2024, effective from 1 January 2025, the Group’s minimum phased-in CET1 capital ratio and Total
Capital ratio requirements are expected to remain unchanged, when disregarding the phasing-in of the O-SII
buffer. The non-public guidance P2G is also expected to remain unchanged compared to 2024. Furthermore,
based on the final SREP decision, the requirement for prior regulatory approval for the declaration of dividends
is lifted, effective from 1 January 2025.
The Group is subject to a 3% Pillar I Leverage Ratio requirement.
The above minimum ratios apply for both BOC PCL and the Group.
The EBA final guidelines on SREP and supervisory stress testing and the Single Supervisory Mechanism’s (SSM)
2018 SREP methodology provide that the own funds held for the purposes of Pillar II Guidance (P2G) cannot
be used to meet any other capital requirements (Pillar I requirement, P2R or the Combined Buffer Requirement
(CBR)), and therefore cannot be used twice.
The regulatory capital position of the Group and BOC PCL as at the reporting date (after applying the transitional
arrangements) is presented below:
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
66
6.
Capital management (continued)
Regulatory capital
Group
BOC PCL
31
December
20241
31 December
20232
31
December
20241
31 December
20232
€000
€000
€000
€000
Common Equity Tier 1 (CET1)3
2,079,320
1,799,068
2,015,685
1,766,707
Additional Tier 1 capital (AT1)
220,000
220,000
220,000
220,000
Tier 2 capital (T2)
307,955
300,000
307,955
300,000
Transitional
total
regulatory
capital
2,607,275
2,319,068
2,543,640
2,286,707
Risk weighted assets – credit risk4
9,172,706
9,013,412
9,228,404
9,005,552
Risk weighted assets – market risk
-
-
-
-
Risk weighted assets – operational risk
1,663,258
1,329,223
1,601,470
1,292,350
Total risk weighted assets
10,835,964
10,342,635
10,829,874
10,297,902
Transitional
%
%
%
%
Common Equity Tier 1 (CET1) ratio
19.2
17.4
18.6
17.2
Total capital ratio
24.1
22.4
23.5
22.2
Leverage ratio
8.8
7.7
8.5
7.5
1.Includes profits for the year ended 31 December 2024 net of a deduction for the distribution in respect of 2024
earnings, following relevant recommendation by the Board of Directors to the shareholders for a final cash dividend
of €241 million.
2. Includes profits for the year ended 31 December 2023 net of a deduction for the distribution in respect of 2023
earnings following approval received by the ECB in March 2024 and relevant recommendation by the Board of
Directors to the shareholders for a final cash dividend of €137 million.
3. CET1 includes regulatory deductions, comprising, amongst others, intangible assets amounting to €25,231
thousand for the Group and €16,039 thousand for BOC PCL as at 31 December 2024 (31 December 2023: €24,337
thousand for the Group and €16,861 thousand for BOC PCL).
4. Includes Credit Valuation Adjustments (CVA).
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
67
6.
Capital management (continued)
The capital ratios of the Group and BOC PCL as at the reporting date on a fully loaded basis are presented below:
Fully loaded
Group
BOC PCL
31 December
20241,3
31 December
20232,3
31 December
20241,3
31 December
20232,3
%
%
%
%
Common Equity Tier 1 ratio
19.2
17.3
18.6
17.1
Total capital ratio
24.0
22.4
23.5
22.2
Leverage ratio
8.8
7.6
8.5
7.5
1. Includes profits for the year ended 31 December 2024 net of a deduction for the distribution in respect of 2024
earnings, following relevant recommendation by the Board of Directors to the shareholders for a final cash dividend
of €241 million.
2. Includes profits for the year ended 31 December 2023 net of a deduction for the distribution in respect of 2023
earnings following approval received by the ECB in March 2024 and relevant recommendation by the Board of
Directors to the shareholders for a final cash dividend of €137 million.
3. IFRS 9 fully loaded as applicable.
During the year ended 31 December 2024, the regulatory CET1 ratio was mainly affected by pre-provision
income, provisions and impairments, the payment of AT1 coupon, other movements and the movement in risk-
weighted assets. The CET1 ratio is also impacted by the deductions for distribution in respect of 2024 earnings
and charges in line with the applicable framework as set out above. As a result, the CET1 ratio (on a transitional
and on a fully loaded basis) has increased by approximately 180 bps during the year ended 31 December 2024.
A charge, which amounted to 26 bps as at 31 December 2024, is deducted from own funds in relation to ECB
expectations for NPEs. In addition, a prudential charge in relation to the onsite inspection on the value of the
Group’s foreclosed assets is being deducted from own funds since June 2021, the impact of which is 3 bps on
the Group’s CET1 ratio as at 31 December 2024. Furthermore, the Group is subject to increased capital
requirements in relation to its real estate repossessed portfolio which follow a SREP provision to ensure minimum
capital levels retained on long-term holdings of real estate assets, with such requirements being dynamic by
reference to the in-scope REMU assets remaining on the balance sheet of the Group and the value of such
assets. As at 31 December 2024 the impact of these requirements was 51 bps on the Group’s CET1 ratio
compared to 24 bps as at 31 December 2023. The above-mentioned requirements are within the capital plans
of the Group and incorporated within its capital projections.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Risk and Capital Management Report
68
6.
Capital management (continued)
Capital requirements of subsidiaries
The insurance subsidiaries of the Group, the General Insurance of Cyprus Ltd and Eurolife Ltd, comply with the
requirements of the Superintendent of Insurance including the minimum solvency ratio. The regulated Cyprus
Investment Firm (CIF) of the Group, The Cyprus Investment and Securities Corporation Ltd (CISCO), complies
with the minimum capital adequacy ratio requirements. In 2021 the new prudential regime for Investment Firms
(‘IFs’) as per the Investment Firm Regulation (EU) 2019/2033 (‘IFR’) on the prudential requirements of IFs and
the Investment Firm Directive (EU) 2019/2034 (‘IFD’) on the prudential supervision of IFs came into effect.
Under the new regime CISCO has been classified as a Non-Systemic ‘Class 2’ company and is subject to the
new IFR/IFD regime in full. The payment services subsidiary of the Group, JCC Payment Systems Ltd, complies
with the regulatory capital requirements under the Provision and Use of Payment Services and Access to
Payment Systems Laws of 2018 to 2023.
Minimum Requirement for Own Funds and Eligible Liabilities (MREL)
The Bank Recovery and Resolution Directive (BRRD) requires that from January 2016 EU member states shall
apply the BRRD’s provisions requiring EU credit institutions and certain investment firms to maintain a Minimum
Requirement for Own Funds and Eligible Liabilities (MREL), subject to the provisions of the Commission
Delegated Regulation (EU) 2016/1450. On 27 June 2019, as part of the reform package for strengthening the
resilience and resolvability of European banks, the BRRD ΙΙ came into effect and was required to be transposed
into national law. BRRD II was transposed and implemented in Cyprus law in May 2021. In addition, certain
provisions on MREL have been introduced in CRR ΙΙ which also came into force on 27 June 2019 as part of the
reform package and were immediately effective.
In January 2024, BOC PCL received final notification from the SRB regarding the 2024 MREL decision, by which
the final MREL requirement was set at 25.00% of risk weighted assets (30.30% of risk-weighted assets when
taking into account the prevailing CBR as at 31 December 2024 which needs to be met with own funds on top
of the MREL) and 5.91% of Leverage Ratio Exposure (LRE) (as defined in the CRR) and must be met by 31
December 2024.
In January 2025, ΒOC PCL, received final notification from the SRB regarding the 2025 MREL decision, by which
the final MREL requirement is now set at 23.85% of risk weighted assets (or 29.21% of risk weighted assets
taking into account the prevailing CBR as at 1 January 2025 which needs to be met with own funds on top of
the MREL) and 5.91% of Leverage Ratio Exposure. The revised MREL requirements became binding with
immediate effect.
BOC PCL must comply with the MREL requirement at the consolidated level, comprising BOC PCL and its
subsidiaries.
The MREL ratio as at 31 December 2024, calculated according to the SRB’s eligibility criteria currently in effect
and based on internal estimate, stood at 33.7% of RWAs (including capital used to meet the CBR) and at 13.9%
of LRE (based on the regulatory Total Capital as at 31 December 2024) demonstrating that the Bank finalized
its MREL build-up and created a comfortable buffer over the final requirements. The CBR stood at 5.30% as at
31 December 2024, compared to 4.48% as at 31 December 2023, reflecting the increase of the CcyB and O-SII
buffer by approximately 50 bps and 37.5 bps respectively. The CBR is expected to increase further as a result
of the phasing-in of O-SII buffer from 1.875% to 1.9375% on 1 January 2025 and to 2.00% on 1 January 2026
as well as the expected increase of the CcyB rate as of January 2026 as aforementioned.
Sustainability Statement
2024
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
70
Contents
Page
Sustainability Statement - Summary
71
ESRS 2 - General Disclosures
74
Environmental Section
ESRS E1 - Climate Change
102
ESRS E2 - Pollution
148
ESRS E3 - Water and Marine resources
154
ESRS E5 - Resource Use and Circular Economy
158
Social Section
ESRS S1 - Own Workforce
163
ESRS S4 - Consumers and End Users
182
Governance Section
ESRS G1 - Business Conduct
206
Sustainability Statement - Additional Information
221
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
71
Sustainability Statement – Summary
As part of its vision to be the leading financial hub in Cyprus, the Group is determined to be a leader in Cyprus
towards sustainable future. The Group systematically moves forward to the alignment with sustainable banking
and continues to embed Environmental, Social and Governance (ESG) in its infrastructure, strategies, risk
management practises, governance arrangements and policies. Corporate Sustainability Reporting Directive
(CSRD), coming into force in 2024, acts as a turning point in the sustainability reporting landscape in the European
Union (EU). This is the first Sustainability Statement, based on CSRD, published by the Group, representing a
step change in corporate reporting reflecting disclosures on impacts, risks and opportunities that are of material
importance to our stakeholders on sustainability matters.
Environment
Climate change is one of the biggest challenges that humanity faces.
The World
Meteorological Organization (WMO) declared that 2024 is the warmest year on record, with
the global average surface temperature being approximately 1.55°C above the pre-industrial
level, breaching the 1.5 °C global warming level for the first time. Global Greenhouse Gas
(GHG) emissions continue to increase, and extreme climate events are more frequent than
ever. This means GHG emissions need to decline now. Consequently, the Group continues to
be committed, through its ESG Strategy, to lead the transition of Cyprus to a sustainable
future by aligning its own operations, supply chain and portfolios with the transition to a
sustainable economy. Group’s commitment is enforced through the Group’s ESG primary
ambitions:
1.
Reduction by 42% of GHG emissions from own operations by 2030;
2.
Become Net Zero by 2050;
3.
Steadily increase Green Asset Ratio (GAR);
4.
Steadily increase Green Mortgage Ratio.
The Group leads by example by decarbonizing its own operations. The Group has developed
a decarbonisation plan to reduce its own carbon footprint relating to Scope 1 and Scope 2
GHG emissions, and ultimately achieve the interim target to decrease emissions from own
operations by 42% (absolute target) by 2030, compared to the baseline of 2021. The Group
managed to reduce its Scope 1 and Scope 2 GHG emissions by 25% between the start of
2022 and the end of 2024.
In line with its Net Zero ambition by 2050, the Group, in 2023, set its first decarbonisation
target on its loan portfolio, aiming to reduce the carbon intensity metric of its mortgage
portfolio by 43% by 2030 compared to the baseline of 2022, by directing its new lending
towards more energy efficient residential properties. In that respect, the Group launched a
Green Housing product to support the green transition and ensure reaching the
decarbonisation target set. The Group managed to reduce the carbon intensity metric of
Mortgage portfolio by 12% as at 31 December 2024 compared to 31 December 2022.
Additionally, by taking into account the regulatory, policy and macroeconomic developments
in the climate and environmental area, the Group has set green new lending internal KPIs on
Business Lines so as to mobilise and incentivise the green transition of its customers and
effectively help to manage the risks to which its customers might be exposed. The Group’s
Gross environmentally friendly loans as at 31 December 2024 reached €355mn, 90% higher
compared to 31 December 2023. In line with Beyond Banking approach, the Group
proceeded, in 2024, with the issuance of its inaugural €300mn green bond, the proceeds of
which will be allocated to green eligible projects under the Sustainable Finance Framework.
During 2024, the Group made progress in integrating climate-related and environmental
(C&E) risks into risk management approach and risk culture. The Group established and
enhanced the C&E risks identification and materiality assessment process (RIMA). The Group
carried out a comprehensive identification and assessment of C&E risks as drivers of existing
financial and non-financial risks considering its business profile, loan portfolio composition
and other. In addition, the Group through a combination of sensitivity analysis and stress
testing approaches, including scenario analysis, ensures the Group has the adaptive capacity
to respond to the material C&E physical and transition risks. The Group established policies
to support its ESG strategy, manage material C&E risks and impacts and grasp material
opportunities.
Key Highlights
25%
reduction
in Group’s Scope 1
and Scope 2 GHG
emissions, in 2024
compared to 2021
baseline
12%
reduction
in kgCO2/m2 of
Mortgage portfolio
between
December 2022 to
December 2024
2,893,635
(tCO2eq)
GHG
emission
inventory in 2024
355mn
Gross
environmentally
friendly loans as
at 31 December
2024
(90%
increase
compared to 31
December 2023)
3.9% Gross loans
exposures to coal,
oil and gas related
economic
activities
300mn inaugural
green
bond
issuance in 2024
0.6% GAR as at
31
December
2024 compared to
0%
as
at
31
December 2023
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
72
Sustainability Statement – Summary (continued)
Social
The Group embraces a broad approach to sustainability, from how we take care of our
employees, to how we advise and work together with our customers and partners on
sustainable choices. The Group respects human rights and integrates them into
operational policies and procedures. The Group’s Code of Ethics and Code of Conduct
outline defined standards for behaviour, responsibilities, and ethical practices applicable
to all employees. These frameworks are supported by reporting mechanisms and
investigation procedures to address issues and ensure equitable treatment. The Group
engages with its workforce and customers through channels designed to promote
accountability and inclusion, supporting a culture aligned with these principles.
The health and safety (H&S) of our own workforce and other stakeholders remains a top
priority, reflecting Group’s dedication to a culture that puts people first. The Group
implements a Health and Safety management system (HSMS) designed to identify and
address hazards across all operations. 94.65% of Group’s own workforce is covered by
the Group’s HSMS. The Group implements actions such as incident investigation,
emergency response, H&S inspections and H&S risk assessment studies to manage the
H&S risks associated with own workforce. The Group recorded 3 work related injuries, in
2024, and the rate of recordable work-related injuries remains low at 0.65. The HSMS
covers customers, suppliers and visitors.
The Group prioritises the protection of data and personal data. The Group has
implemented measures to mitigate the negative impact on privacy as well as the identified
risks associated with cyber-attacks and data breaches, reflecting its compliance with
applicable data protection regulations and its commitment to the secure handling of
employee and customer information. The Group maintains a strict no-tolerance policy for
any non-compliance with GDPR and expects full adherence to legal and regulatory
requirements across all operations. The Group has zero tolerance towards data leakage.
The Group constantly strives to become an even more client-centric organization
supporting the accessibility to products and services. A targeted digital transformation
program is already underway, with the goal of facilitating the shift to a more modern way
of conducting business, enhancing the digitisation of services provided to our clients, as
well as the digitisation of our internal operations. The percentage of the Group’s digital
transactions in its total portfolio was 95.54% in 2024 with key digital features such as
digital deposits, QuickLoans, QuickCards, digital accounts and digital housing being
introduced. In addition, the Group through the implementation of Business Continuity
Management system manages the risk of system downtimes impacting customers
accessibility to products and services and customer service.
The Group, though its Digital Economy Platform (Jinius), is leading the efforts underway
to digitise and technologically upgrade the Cypriot economy and to facilitate
entrepreneurship. Jinius platform shapes the digital ecosystem of the Cypriot economy,
bringing together businesses, organisations, suppliers, and customers in a single digital
environment. Jinius through Business-to-Business Services offer tender management,
ecosystem management, invoice management and remittance management services.
At the centre of positive impact lies our contribution to the Bank of Cyprus Oncology
Centre which represents a partnership between the public and the private sector in Cyprus
serving cancer patients and the society at large. Around €2mn was contributed to the
Centre in 2024.
Key Highlights
58.8%
of
own
workforce is female
98.7%
of
own
workforce
is
permanent
94.65%
of
own
workforce
is
covered
by
the
undertaking’s HSMS
3
work-related
injuries
95.54%
Digital
transaction
ratio
(total portfolio)
€491mn
new
lending
on
retail
housing
2mn
contribution
to the BOC Oncology
Center in 2024
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
73
Sustainability Statement – Summary (continued)
Governance
The Group recognises that responsible business conduct is the cornerstone to sustainability
and ethical business practices. Group’s approach to business conduct is guided by its core
values of integrity, reliability, collaboration, professionalism and innovation, ensuring that
every decision reached aligns with our ethical standards and stakeholder expectations.
The Group believes that a culture of ethical behaviour and strong governance is essential
for long-term success and trust-building with our customers, partners, and communities.
Our business conduct framework encompasses comprehensive policies, procedures, and
training programs designed to promote responsible practices across all levels of our
organization. The Board of Directors (Board) provides ethical leadership and promote the
Group’s vision, values, culture, and behaviour, within a framework of prudent and effective
controls, which enables risk to be identified, assessed, measured, and managed. The Board
sets the Group's corporate values and high ethical standards of business conduct for itself
and all members of the Group and ensures that its obligations to its shareholders and
others are understood and met. The Group implements a Whistleblowing system offering
accessible, confidential channels for employees to report violations, unethical behaviour,
or improper practices.
Expanding sustainable practices towards the supply chain, the Group implements
Sourcing, Procurement & Vendor Management Policy which establishes clear expectations
for suppliers to operate responsibly and sustainably, aligning with the Group's dedication
to ethical and responsible business practices. The Group implements various actions and
procedures to ensure long-term relationship with suppliers and adherence to ethical labor,
human rights, working conditions and H&S principles. The Group is in the process to
implement vendor ESG Due Diligence process, using structured ESG questionnaires, which
will facilitate assessing vendors’ performance towards ESG as well as their exposure to
ESG risks.
The Group has no tolerance to facilitating any sort of Financial crime/ terrorism financing
therefore, implements appropriate Due Diligence procedures to ensure that the Group’s
systems and processes are not used by money launderers or anyone involved in criminal
and illegal activities. In addition, the Group is exposed to material risk of external fraud
given the nature of its business model, therefore a set of actions, procedures and internal
controls are implemented to identify, prevent, detect and respond to fraud.
Conflicts of interest and compliance with laws and regulations are fundamental to business
conduct and sustainable business practices. The Group established a compliance
framework that encompasses a set of policies, procedures, and controls designed to ensure
that all our operations and activities align with applicable laws and regulations and conflicts
of interest are identified and managed. The Group’s conflict of interest registry reports
zero conflict of interests assessed as High in 2024.
Key Highlights
Zero conflict of
interests classified
as High
1,576.5 training
hours on
Antibribery and
Whistleblowing
system
1,732.3
training
hours on prevention
of money laundering
and
terrorism
financing
1,558.5
training
hours on Fraud risk
awareness
No
tolerance
to
financial
crime/terrorism
financing
No tolerance to acts
of
bribery
and
corruption
No tolerance with
regards
to
non-
compliance
with
regulatory, legal and
compliance
requirements
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
74
ESRS 2 – General Disclosures
1. General Basis for Preparation
The Sustainability Statement of Bank of Cyprus Public Company Ltd (‘BOC PCL’ or ‘the Bank’) for the year ended
31 December 2024 has been prepared, on a consolidated basis, in accordance with the European Sustainability
Reporting Standards (ESRS) as the reporting framework for the purpose of preparing Annual Non-Financial
Results pursuant to the provisions of section 151B of the Companies Law, Cap. 113. The reporting period and the
scope of consolidation of the Sustainability Statement is consistent with the consolidated financial statements of
BOC PCL. The Sustainability Statement relates to the BOC PCL and together with its subsidiaries the Group.
In 2024, the Group conducted its first Double Materiality Assessment (DMA) to set the basis of the Sustainability
Statement. This analysis identifies the Group’s material impacts, risks and opportunities (IROs) across its
operations, upstream and downstream value chain considering all time horizons; short, medium and long-term.
The Group’s policies, actions, targets, and metrics to address the material IROs identified as part of the DMA
have been disclosed in the respective topical sections, including those associated with the broader value chain.
The methodology and reporting criteria for the DMA process are outlined in 4. Impacts, Risks and Opportunities
under ESRS 2 – General Disclosures in page 95. The results of the DMA are reflected in 4. Impacts, Risks and
Opportunities under ESRS 2 – General Disclosures in page 99. The DMA supports to inform the Group's potential
strategic choices and shapes its ESG data collection. The Group aims to support a deeper integration of
sustainability across its operations and this includes influencing decision making at every level.
The Group has not omitted any specific information on the basis of intellectual property, know-how, or innovation
results, or the basis of negotiation. Disclosures in the Sustainability Statement refer to the Group, except for
disclosures associated with material impacts, risks and opportunities of banking activities of the Group in which
reference to Bank of Cyprus Public Company Ltd (‘BOC PCL’ or ‘the Bank’) is made.
Key estimates and judgment
The Group’s presentation of sustainability information may be subject to measurement uncertainty due to
limitations in methodologies and data, including reliance on third-party data for GHG emissions estimation. The
Group uses judgments and estimates for reporting towards Scope 3 GHG emissions. The Group has used
estimates based on recognised frameworks available at this time. The Group will continue to monitor
methodologies and data availability, and update as appropriate. Refer to Reporting Principles under the
Sustainability Statement - Additional Information in page 239.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
75
ESRS 2 – General Disclosures (continued)
2. Governance
The role of the administrative, management and supervisory bodies
The Board has ultimate oversight of the identification, assessment and integration of ESG impacts, risks and opportunities throughout the organisation. The Board has
delegated authority to Board Committees to support the ESG oversight. These committees play a role in identifying, managing, and reporting material ESG impacts,
risks, and opportunities as well as oversight the content, scope and reporting process of the CSRD Sustainability Statement. The Terms of Reference of each committee
dictate the responsibilities regarding ESG matters. The following sustainability governance diagram illustrates how the Group’s governance is currently structured
towards sustainability.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
76
ESRS 2 – General Disclosures (continued)
2. Governance (continued)
Sustainability Oversight at Board Level
Group Board
Committees
Role and Responsibilities
Risk
Committee
The main purpose of the Risk Committee (RC) is to review, on behalf of the Board, the
aggregate Risk Profile of the Group, including performance against Risk Appetite for all risk
types and ensure both Risk Profile and Risk Appetite remain appropriate. The RC is
responsible for the following:
i.
Oversee the identification, assessment, control and monitor of financial/economic
risks and non-financial risks (including operational, technological, tax, legal,
reputational, compliance, and ESG including C&E risks) which the Group faces in
cooperation with the responsible Board Committees.
ii.
Ensure that the Group's overall Risk Profile and Risk Appetite remain appropriate
given the evolving external environment, the Group’s character and the internal
control environment.
iii.
Ensure effective and on-going monitoring and review of the Group's management
or mitigation of risk, including the Group's control processes, training and culture,
information and communication systems and processes for monitoring and
reviewing their continuing effectiveness.
iv.
Report to the Board any current or emerging topics relating to ESG risks and
matters, including C&E risks and matters, that are expected to materially affect the
business, operations, performance, or public image of the Group or are otherwise
pertinent to it and its stakeholders and if appropriate, detail actions taken in relation
to the same.
v.
Determine the principles that should govern the management of risks (including ESG
and C&E risks), through the establishment of appropriate Risk Policies.
vi.
Review and monitor key enterprise wide ESG, including C&E, metrics, targets, Key
Performance Indicators (KPIs), Key Risk Indicators (KRIs) and related goals and
monitor the progress towards achieving targets and benchmarks.
vii.
Receive and review periodic reports from management on ESG and climate trends,
issues, and risks, including developments in applicable regulations, as well as the
corresponding mitigation initiatives and controls.
Nominations
and Corporate
Governance
Committee
The Nominations and Corporate Governance Committee (NCGC) has been delegated
authority by the Board to provide oversight to the Group’s sustainability strategy aimed at
achieving present and future economic prosperity, environmental integrity, climate stability
and social equity for the Group and its stakeholders. The NCGC is responsible for the
following:
i.
Oversight the development of the strategy for ESG including C&E matters focusing
on Environmental, Climate, Ethical, Social, and Economic pillars and ensure it is
embedded throughout the operations of the Group.
ii.
Advise, support and guide the Chief Executive Officer (CEO) and Executive
Management Team in formulating and implementing a business strategy geared to
the sustainable development of the Group taking into account ESG, including C&E
impacts.
iii.
Oversee the Sustainability Committee’s (SC) implementation and progress
regarding the ESG working plan.
iv.
Review the institution’s response and plan of action to the objectives set out under
international agreements.
v.
Review and recommend to the Board for approval the ESG targets and KPIs,
including C&E targets and KPIs, and monitor their performance.
vi.
Review and recommend to the Board for approval the non-financial disclosures
presented by the SC, including CSRD Sustainability Statement in accordance with
ESRS.
vii.
Review and recommend to the Board for approval the ESG and Environmental Policy
and Sustainable Finance Framework which enables BOC PCL to issue Green/Social
or Sustainable bonds.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
77
ESRS 2 – General Disclosures (continued)
2. Governance (continued)
Sustainability Oversight at Board Level (continued)
Group Board
Committees
Role and Responsibilities
Human
Resources and
Remuneration
Committee
The Human Resources and Remuneration Committee (HRRC) has been delegated authority
by the Board to oversee the implementation of Strategic HR initiatives which promote and
are aligned with the Group’s ESG ambition, strategy and objectives. The HRRC reviews at
least annually the appropriate structure of the remuneration system and whether the total
amount of variable compensation has been set in accordance with the Remuneration
Framework of the Central Bank Directive on Governance. Any enhancements to the
Remuneration Policy to incorporate ESG and climate criteria are recommended to the Board
for approval by the HRRC.
Audit
Committee
The Audit Committee (AC) has been delegated authority by the Board to assess the
soundness of the methodologies and policies that the management of the Group uses to
develop ESG, including C&E metrics and other disclosures and to assess the key vendors’
plans about sustainability.
The AC is responsible for the following:
i.
Ensure the ESG frameworks/standards, including C&E frameworks/standards, used
are proper and relevant climate-related financial disclosures are investor grade.
ii.
Consider materiality in terms of how ESG issues, including C&E issues, impact the
Group’s financial performance and ability to create long-term value (Financial
materiality) and how the Group’s actions impact people and the planet (Impact
materiality).
iii.
Review other material public disclosures with respect to ESG, including C&E matters
and discuss with management the Group’s engagement with stakeholders on key
ESG matters, including C&E matters, including in response to any proposals or other
concerns that have been submitted to BOC PCL or the Board.
iv.
Ensure that Internal audit incorporates ESG, including C&E risks, in its Risk and
Audit Universe.
v.
Overseeing all matters relating to the relationship between the Group and the
external auditors. This also includes overseeing the external audit activities in
relation to the limited assurance over the Sustainability Statement.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
78
ESRS 2 – General Disclosures (continued)
2. Governance (continued)
Sustainability Oversight at Management level
The Group has set certain roles and responsibilities for the Group’s Management Committees to provide oversight
related to ESG impacts, risks, opportunities, goals and disclosures. Refer below to the roles and responsibilities
associated with the Group Executive Committee and Group Sustainability Committee.
Role and Responsibilities – Group Sustainability Committee
The Sustainability Committee (SC) is an executive level committee chaired by the CEO and has as a primary
role the oversight of the ESG agenda of the Group aiming to lead the Group towards a cleaner, fairer, healthier,
and safer world by helping its customers manage risks in a long term sustainable and equitable way, and to
be the employer of choice. The SC is responsible for the following:
i.
Monitor and review the development of the Group's ESG strategy including the management of ESG
risks, including C&E risks and recommend to EXCO for approval. Following EXCO approval then it is
recommended to the Board for consideration and approval through NCGC.
ii.
Oversee the implementation of the Group's ESG & Climate strategy.
iii.
Review the institution’s response and plan of action to the objectives set out under international
agreements and makes recommendations for the plan of actions to the EXCO for approval. Following
EXCO approval then is recommended to the Board for consideration and approval through NCGC.
iv.
Review the ESG including C&E targets and KPIs and recommends to EXCO for approval. Following EXCO
approval then is recommended to the Board for consideration and approval through NCGC. Monitor the
performance of the targets and KPIs set.
v.
Review the incorporation of ESG including C&E targets, KPIs and KRIs in the business strategy and risk
appetite.
vi.
Monitor progress against the Group’s ESG working plan on a quarterly basis including the implementation
of the ECB Guide on C&E risks.
vii.
Monitor progress on KPIs set to manage C&E risks and the performance against wider ESG targets, on
a quarterly basis, through the Sustainability Performance Report. The Sustainability performance report
is monitored by the EXCO and NCGC on a quarterly basis.
viii.
Request from the relevant departments to submit proposals and recommendations of corrective actions
whenever a KPI to manage C&E risks is not aligned with the thresholds set.
ix.
Monitor KRIs set to manage C&E risks, through the Climate Risk report, on a quarterly basis. The Climate
Risk Report is also monitored by the EXCO and RC on a quarterly basis.
x.
Oversee the degree of the Group’s alignment with regulatory ESG including C&E related guidance, rules
(such as EU Taxonomy, SFDR and CSRD) and ECB expectations.
xi.
Oversee the establishment of environmentally friendly products and Sustainable Finance Framework.
xii.
Review policies relating to ESG matters, including C&E matters, to ensure that they are in line with the
needs of the Group and the Group’s ESG strategy and that they comply with applicable legal and
regulatory requirements. Monitors the implementation of policies relating to ESG including C&E matters
(excluding ESG and C&E risks related policies).
xiii.
Review and challenge Risk Management Division (RMD) regarding ESG matters and policies, including
C&E risks related matters and policies, such as ESG and C&E risk identification, quantification, materiality
assessment (MA) and establishment of ESG and C&E criteria in the loan origination process. RMD
subsequently submits to the Board for consideration and approval through RC for approval of ESG and
C&E risks related matters and policies, also notifying EXCO.
xiv.
Review non-financial disclosures and recommends to the Board for consideration and approval through
NCGC and EXCO.
xv.
Monitor the external ESG and C&E trends affecting the formulation of ESG policies, strategies and
objectives
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
79
ESRS 2 – General Disclosures (continued)
2. Governance (continued)
Sustainability Oversight at Management level (continued)
Role and Responsibilities – Group Executive Committee
The EXCO is responsible for the following:
i.
Consider the overall financial performance and progress of the Group per line of business, including,
but not limited to, the Group’s capital and liquidity position, the Group profitability, the Non-Performing
Exposures (NPE) and the REMU portfolio.
ii.
Consider the market conditions and strategic initiatives.
iii.
Monitor the recovery and early warning indicators and assess the need to escalate for further action to
the RC and the Board.
iv.
Consider the Risk Report.
v.
Consider and approve budgets, business strategies/risk strategy to be presented to the Board for
approval.
vi.
Consider and approve the Group’s Risk Appetite Statement to be presented to the RC and Board for
approval.
vii.
vii. Consider and approve the Group’s Capital Plan to be presented to the RC and the Board for approval.
viii.
Consider the Compliance Reports/Matters and progress.
ix.
Consider the Internal Audit Reports/Matters and progress.
x.
Consider the HR/People Management/Matters and progress.
xi.
Consider the Corporate Affairs Report/Matters and progress.
xii.
Approve all matters escalated to EXCO within its delegated authorities and/or recommend matters
requiring escalation to the Board.
xiii.
Consider all other matters escalated for discussion by any member of the EXCO or any other
Committee/Forum.
xiv.
Monitor the Board and Board Committees pending decision lists.
xv.
Note the minutes of the Acquisition & Disposal Committee (ADC), Group Asset & Liability Committee
(ALCO), the Regulatory Steering Group (RSG) and the Business Development Committee (BDC).
Internal controls and procedures in place for Management Committees and Board to monitor the management of
impacts, risks and opportunities are described in pages 76-79, 80, 83-84 and 96.
Following the compilation of the ESG strategy in 2021, and the ESG working plan in 2022 - 2024, specific
accountabilities are assigned to the Group’s Executives and Directors. The ESG responsibilities assigned to key
Executives and Directors of the Group are summarised in the table below:
Chief
Executive
Officer
The CEO governs the sustainability performance of the Group, driving focus on ESG and climate
stewardship and tracking progress made across the business to meet the Group’s ESG and climate
ambitions through the long-term ESG working plan. The CEO is involved in the identification of
sustainable finance growth opportunities for the Group and promoting the development of these
in tackling climate change.
Executive
Director
Finance
The Executive Director of Finance is responsible for the successful integration of ESG into the
Group’s core business operations, in cooperation with business lines Directors, and long-term
business strategy as well as the oversight of the progress of the ESG working plan for the
implementation of ESG and climate strategy and sustainability reporting including Sustainability
Statement under CSRD. In addition, the Executive Director of Finance is responsible for the
oversight of the estimation of Scope 1, Scope 2 and Scope 3 GHG emissions of the Group and the
establishment of C&E decarbonisation targets and strategy, in cooperation with Deputy CEO and
Chief Risk Officer.
Chief
Risk
Officer
The Chief Risk Officer (CRO) is responsible and accountable for the process of effectively managing
ESG, including the C&E, risks of the Group. This includes the responsibility of overseeing the
implementation of the ESG working plan which supports the C&E risk identification, measurement,
assessment, stress-testing and limit setting, as well as the supporting governance. The role
further encompasses the responsibility of reviewing risk appetite and C&E risk appetite metrics.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
80
ESRS 2 – General Disclosures (continued)
2. Governance (continued)
Sustainability Oversight at Management level (continued)
The Group, in 2024, further enhanced the ESG working plan, compiled in 2022, which is monitored by Investor
Relations & ESG Department (IR&ESG), RMD, the SC, the EXCO and ultimately by NCGC and RC. The ESG working
plan is structured in workstreams which are designed to articulate delivery of Group’s ESG strategic objectives
and are aligned with ECB expectations and other regulatory disclosure requirements. Each workstream is
associated with specific activities designed to meet relevant reporting and regulatory requirements and achieve
the Group’s targets and objectives. For the successful delivery of the Group’s ESG strategic objectives the Group
has formed an ESG working group comprising of experts from various departments assigned with specific
activities under the ESG working plan. Each activity completed by the ESG working group, is reviewed by the
IR&ESG and RMD. The progress, status and output of activities is following the relevant governance arrangements
as described above. In addition, the Group has assigned roles and responsibilities on ESG to the Business Lines,
Compliance Division (CD) and Internal Audit Division (IAD).
Sustainability related skills and expertise
At Board level, the NCGC assesses periodically, and at least annually, the structure, size, composition, and
succession plan of the Board (including skills, knowledge, experience, independence and diversity) and
recommends to the Board the skills and experience required to provide sound governance oversight. Following
2023 review of knowledge, experience and skills in the Board, the NCGC concluded that the Board's skills profile,
both academic and professional, aligns with the diverse needs of the Group's business. However, it was identified
that the area of ESG require further strengthening to align with the Group's strategic direction. The Group, on
May 2024, appointed Mr. Christian Philipp Hansmeyer as an independent non – executive director with significant
experience in sustainable finance, ESG and impact investing to enhance further the ESG expertise in the Board.
NCGC, in 2024, concluded that the Board's skills profile, both academic and professional, aligns with the diverse
needs of the Group's business. All members of the Board, as well as the Executive and Supervisory Committees,
possess an appropriate level of understanding of sustainability matters. To ensure its administrative and
supervisory bodies collectively maintain the necessary skills and expertise, the Group engages internal and
external sustainability experts and provides dedicated training programs.
In support of the Group’s sustainability strategy and to meet regulator, investor, customer and colleague
expectations, the Group develops on an annual basis a Board training plan which includes trainings associated
with sustainability. In addition, all employee training on climate concepts and processes as well as job specific
training supports the development of skills and expertise across the Group.
2024 Sustainability Trainings
Trainings
No. of participants
Training
attendance (Hours)
Relevance to IROs
Board
Embedding Climate Risk
in Business Strategy &
Execution
8
9
Climate
Change
-
Climate
Change Mitigation & Climate
Change Adaptation & Energy
EXCO and SC
Embedding Climate Risk
in Business Strategy &
Execution
22
30
Climate
Change
-
Climate
Change Mitigation & Climate
Change Adaptation & Energy
All staff
E-learning
on
Green
Transition
2,561
1,280.5
Climate
Change
-
Climate
Change Mitigation & Climate
Change Adaptation & Energy
The Board, during the Board offsite in 2024, received training associated with CSRD. For trainings conducted at
Board, Senior Management level and individual contributors on Business Conduct IROs refer to 5. Training on
Business Conduct under ESRS G1 – Business Conduct in page 208.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
81
ESRS 2 – General Disclosures (continued)
2. Governance (continued)
Board’s Composition
As at 31 December 2024, the Board comprised of eight (8) members (2023: nine (9)), the Group’s Chairperson,
who was independent at the time of appointment and remains independent, alongside two (2) executive directors
(2023: two (2)) and five (5) non-executive directors (2023: six (6)). The Board comprises of six (6) non-executive
directors (including the Chairperson) as at 31 December 2024 (2023: seven (7)). 75%ii. (2023: 66.7%ii.) of Board
members have the status of independent as at 31 December 2024.
Board of Directors Composition – 31 December 2024
Position in Board
Name
Independence Status
Chairperson
Efstratios-Georgios Arapoglou, (Non-Executive Member)
Independent
Vice-Chairperson
Lyn Grobler (Non-Executive Member)
Independent
Executive Members
Panicos Nicolaou
Non-independent
Eliza Livadiotou
Non-independent
Non-Executive
Members
Adrian John Lewis
Independent
Monique Eugenie Hemerijck
Independent
Christian Philipp Hansmeyer
Independent
William Stuart Birrell
Independent
Note:
i.
The Chairperson, Mr. Arapoglou, was independent on appointment and continues to operate in a manner that is
independent in character and remains objective in his opinions having no other relationship or circumstances to affect
his judgement. He commits the appropriate time for the Group’s business, which is slightly more than the other non-
executive directors, and it approximately amounts between 60-70 days per year. He has no other remuneration from
the Group other than as Chairperson of the Board and chairperson of the NCGC, and member of the HRRC.
ii.
The ratio includes the Chairperson both in the numerator and denominator.
Topical details on the role of Administrative, management and supervisory bodies are described in the following
sections.
GOV – 1 – Topical ESRS
ESRS
Page
G1 - Business conduct
206
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
82
ESRS 2 – General Disclosures (continued)
2. Governance (continued)
Board’s Diversity
Female representation on the Board is a key aspect of diversity, with three (3) women and five (5) men, resulting
in an average female-to-male ratio of 0.6:1 as at 31 December 2024 (2023: 0.8:1). The Group has a strategic
objective to include diverse perspectives, and this is assessed through the at least annual assessment performed
by the NCGC on structure, size, composition and succession plan of the Board. For further information on the
Group’s approach to Board diversity, refer to the Board Nominations and Diversity Policy which is available on
the Group’s website.
In the 2024 review of knowledge, experience, and skills, the NCGC concluded that the Board's skills profile, both
academic and professional, aligns well with the diverse needs of the Group's business. This includes sectors such
as banking, insurance, audit and accounting, risk management, interactions with competent authorities, strategy
and business modelling, capital markets, information technology, ESG and human resource management.
35%
22%
26%
17%
Industry Skills/ Experience
Banking
Insurance
Digital/ Tech/ IT
Other Industry
9%
11%
6%
8%
6%
11%
7%
8%
9%
11%
11%
3%
Functional Skills/Experience/Knowledge
Accounting & Audit
Risk/ Compliance Management
Consumer Banking
Investment Banking
Corporate Banking
Capital Markets
Human Resources/ Remuneration
Digital / Tech/ Cybersecurity
ESG
Governance
Strategy/ Transformation
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
83
ESRS 2 – General Disclosures (continued)
2. Governance (continued)
Sustainability matters addressed by the Board and Management Committees
All ESG matters that are submitted to the Board and Management Committees are in the form of formal documentation describing the purpose and scope of the paper,
the methodology applied, any considerations conducted during the process, any assumptions made, and the conclusions/results reached. The papers are presented to
the Board and Management Committees by the responsible Division/Department. The relevant Board and Management Committee enquires and challenges the
responsible Division/Department in order to approve the relevant paper. The Group has introduced frequent reporting to administrative, management and supervisory
bodies around sustainability matters, predominantly climate, as follows:
Reporting
Frequency
Committee
Material Impacts, Risks and Opportunities
Progress update to the ESG
working plan
Quarterly
1.
SC/EXCO
2.
NCGC/RC
1.
Progress update on the ESG Working plan designed to articulate delivery of Group’s ESG
strategic objectives and is aligned with ECB expectations and other regulatory disclosure
requirements
Sustainability performance report
Quarterly
1.
SC/EXCO
2.
NCGC
1.
Progress update on Climate change mitigation GHG emission reduction targets (42%
reduction of Scope 1 and Scope 2 GHG emissions by 2030 compared to 2021 and 43%
reduction in carbon intensity metric of mortgage portfolio by 2030 compared to 2022)
2.
Progress update on Climate change mitigation new lending internal KPIs
Climate risk report
Quarterly
1.
SC/EXCO
2.
RC
1.
Update on exposure to C&E risks
2.
Progress on Climate change mitigation KRIs
3.
Progress on Climate change adaptation KRIs
4.
Update on implementation of ESG Due Diligence on loan Origination process
5.
Update on Energy Performance Certificates (EPC)
Risk appetite framework (RAS)
dashboard
Quarterly
1.
EXCO
2.
RC
1.
Climate change mitigation and climate change adaptation update on KRIs
Business environment scan (BES)
preliminary impact assessment on
C&E updates and developments
Quarterly
1.
SC/EXCO
1.
Identification of C&E related updates and developments impacting Business Strategy and
Risk assessment of the Group (Climate Change ROs).
BES final impact assessment on
C&E updates and developments
Annually
1.
SC/EXCO
2.
NCGC/RC
1.
Identification of C&E risk related updates and developments and integration to the Business
Strategy and Risk assessment of the Group (Climate Change ROs).
Double materiality assessment
Annually
1.
SC/EXCO
2.
NCGC/AC
1.
Approach towards DMA
2.
Approach to the Group’s Business segments on DMA
3.
Impacts identified and threshold applied
4.
Risks and opportunities identified and threshold applied
5.
Key assumptions used in the DMA and procedures performed to support the assumptions
6.
Material IROs identified and comparison of IROs with best practices
7.
Results of stakeholder validation and consultation procedures
Green new lending internal KPIs
Monthly
1.
BDC/EXCO
1.
Progress update on energy, climate change mitigation and adaptation new lending internal
KPIs
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
84
ESRS 2 – General Disclosures (continued)
2. Governance (continued)
Sustainability matters addressed by the Board and Management Committees (continued)
The Board, through Board committees engaged in a broad range of matters associated with sustainability IROs
in 2024, including:
Updates to Group’s policies
Corruption and bribery
Financial crime and fraud
Compliance with laws and regulations including occupational safety
Information security
Privacy matters
Grievance mechanisms
Double materiality assessment in accordance with ESRS
Sustainability and C&E risks
Green new lending internal KPIs embedded in Group’s Financial Plan
Strategic GHG emissions reduction targets
Operational limits on C&E physical and transition risks
Remuneration policy
Digital transformation
Integration of sustainability in Business Strategy
The Group enhanced the Group Financial and Business Plan manual to ensure the incorporation of considerations
on ESG including C&E impacts, risks and opportunities in the Business Strategy. Specifically, during the planning
phase of new lending the RMD and IR&ESG provide the sectors associated with C&E risks, the preliminary impact
assessment derived from BES process, science-based targets (GHG emission reduction targets aligned with a
climate scenario) set and the direction of Green/Transition new lending based on BES. In addition, each Division,
taking into account the preliminary impact assessment (performed by RMD, IR & ESG and Strategy) on risk profile
and strategy arising from the BES on C&E risks as well as the MA on C&E risks, identifies which are the material
C&E risks over the Financial plan period and defines the actions, strategies and products to mitigate the C&E risks
identified. IR&ESG department is responsible for the adequacy, relevance and reasonableness of the business
lines strategies to manage material C&E risks on the main portfolios.
Integration of sustainability-related performance in incentive schemes
The Group has taken necessary steps in embedding its ESG strategic goals within its remuneration policy, to
connect the performance of its personnel to ESG and climate matters. The remuneration policy promotes sound
and effective risk management, in line with the Group’s ESG and climate strategy and does not encourage
excessive risk taking that exceeds the level of risk tolerated by the Group. Remuneration structure of the Group
typically consists of fixed plus variable pay. Fixed remuneration does not embed any ESG incentive considerations.
Variable remuneration1 is based on a combination of the performance of the employee, the overall performance
of the business unit the individual belongs to, and the Group’s consolidated financial results.
Regarding variable remuneration, performance criteria (financial and/or not financial), set to measure the
performance of Senior Management, contain KPIs that relate to the implementation of the Group's ESG strategy,
reflecting the Group’s emphasis on achieving its sustainability related objectives, in accordance with the role and
responsibility of each Senior Manager in relation to the ESG Strategy. These KPIs are used to evaluate the
performance of Senior Management, when the distribution of a Short-Term Incentive Plan (STIP) is activated.
Specifically, the percentage of the salary to be paid as STIP for Senior Management is adjusted in accordance
with Group’s performance and individual performance. The KPIs embedded in the performance criteria of Senior
Management are primarily qualitative (Oversee the ESG Working Plan, effective implementation of
decarbonisation activities on own operations etc.) but certain quantitative KPIs are included as well, such as
annual Green new lending internal KPIs for Business Lines. The weight of ESG related KPIs on individual Senior
Management’s performance appraisal is between 3%-15%. Senior Management’s KPIs for individual performance
appraisal are approved annually by HRRC. The Board should annually approve a proposal for the implementation
of a Short-Term Incentive Plan (STIP) across the organisation. The allocation criteria are to be decided on an
annual basis by the HRRC.
1 Additional discretionary remuneration paid to an individual as an incentive for increased productivity and competitiveness.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
85
ESRS 2 – General Disclosures (continued)
2. Governance (continued)
Integration of sustainability-related performance in incentive schemes (continued)
The annual bonus pool will vary in accordance with the Group’s performance/profitability for each financial year.
Performance will typically be assessed based on a one-year performance period.
The Long-Term Incentive Plan (LTIP) was approved by the 2022 AGM, which took place on 20 May 2022. The
LTIP involves the granting of share awards and is driven by scorecard achievement, with measures and targets
set to align pay outcomes with the delivery of the Group’s strategy. Currently, under the plan, the employees
eligible for LTIP awards are the members of the Extended EXCO, including the executive directors. The LTIP
stipulates that performance will be measured over a 3-year period and sets financial and non-financial objectives
to be achieved. At the end of the performance period, the performance outcome will be used to assess the
percentage of the awards that will vest. The AGM resolution, approved by the shareholders in May 2024, gave
the Group the flexibility to increase the ratio of variable to fixed remuneration to up to a maximum of 100% for
Material Risk Takers. Up to 100% of the awards will be subject to malus and clawback provisions in accordance
with applicable legislation and regulations.
The applicable scorecard under the LTIP include a KPI on external ESG rating score with a target being an AA
ESG rating for the Group, and this outcome has a 5% weight in the LTIP. Topical details on the integration of
sustainability-related performance in incentive schemes is described in the ESRS E1 - Climate Change in page
110.
Statement on due diligence
The following table provides a mapping of how the Group applies the core elements of due diligence for people
and the environment and where they are presented in this Sustainability Statement:
Core elements of Due
Diligence
ESRS
Does the disclosure
relate to people and/or
the environment?
Page
Embedding due
diligence in governance,
strategy and business
model
ESRS 2 GOV-2
People and Environment
75
ESRS 2 GOV-3
People and Environment
84
ESRS 2 SBM-3
People and Environment
87
Engaging with affected
stakeholders
ESRS 2 GOV-2
People and Environment
83
ESRS 2 SBM-2
People and Environment
91
ESRS 2 IRO-1
People and Environment
97
identifying and
assessing negative
impacts on people and
the environment
ESRS 2 IRO-1
People and Environment
95
ESRS 2 SBM-3
People and Environment
94
taking action to address
negative impacts on
people and the
environment
ESRS – E1
People and Environment
124
ESRS – E2
People and Environment
150
ESRS – E3
People and Environment
156
ESRS – E5
People and Environment
160
ESRS – S1
People and Environment
168, 171, 176
ESRS – S4
People and Environment
185, 187, 191,195, 197, 201, 202,
203, 205
ESRS – G1
People
209, 210, 211, 214,216, 218, 219
tracking the
effectiveness of these
efforts
ESRS – E1
People and Environment
124
ESRS – E2
People and Environment
153
ESRS – E3
People and Environment
157
ESRS – E5
People and Environment
158
ESRS – S1
People and Environment
168, 172, 176, 179
ESRS – S4
People and Environment
185, 187, 189, 192, 195, 197,
199,201, 202, 203, 205
ESRS – G1
People
209, 211, 214, 215, 216, 218, 219
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
86
ESRS 2 – General Disclosures (continued)
2. Governance (continued)
Risk management and internal controls over sustainability reporting
The Group identified the operational risks in respect of sustainability reporting, which are similar to existing risks
of the Group's Annual Report. This enabled the Group to leverage the existing suite of controls around the Annual
Report and have applied those controls to the Sustainability Statement where appropriate. Key risks in
sustainability reporting include inaccurate and/or incomplete reporting due to human error and failure to deliver
the Sustainability Statement on time, due to system failure or manual processes.
Internal controls in place to mitigate those risks include:
Responsible team comprises of properly qualified, well trained, experienced and competent staff.
Automations to the extent possible are made (e.g. data automatically extracted from/uploaded in
systems/files).
Files are reconciled with Group’s systems and/or other financial information.
Four eyes principle in place.
Monitoring arrangements towards Sustainability Statement:
Development and monitoring of work plan and deliverables ensures adherence to deadlines.
The Sustainability Statement is reviewed by the relevant content owners (Senior Management), the
Manager of the IR&ESG Department, Group’s Deputy Chief Financial Officer and the Executive Director
Finance.
The Sustainability Statement is prepared with the support of external advisors.
The Sustainability Statement is reviewed and recommended by the SC and EXCO to the Board for
consideration and approval through NCGC, RC and AC. Detailed papers are prepared for review and
approval by the Management and Board Committees covering all sustainability issues including
presentations and disclosures.
Monthly update performed to the AC regarding the Sustainability Statement in accordance with ESRS.
The Group has developed an Integrated Risk Identification Framework which provides for the identification,
evaluation and management of the principal risks the Group faced. Risks on sustainability reporting are currently
captured under the Key Risk Matrix, which is updated and is approved by the Board through RC, under the risk
for Statutory reporting. The group will continue to enhance the procedures and controls as the reporting matures.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
87
ESRS 2 – General Disclosures (continued)
3. Strategy, Business Model, Value Chain and Stakeholder Engagement
Strategy, business model and value chain
Strategy
The Group’s strategy is guided by the mission statement “Our organisation exists to support our clients in their
most important life events as well as in their daily needs. To achieve this, we invest capital and effort to ensure
that our services are provided by top quality professionals and the usage of cutting-edge technology and uphold
sound and ethical practices. We will continue to be not only a systemic bank driving growth and shareholder value
but also a key driver of progress in our community.”
The Group, as enforced by the ESG strategy, is determined to play a leading role in the transition of Cyprus into
a sustainable future. During 2024, the Group has made significant progress in enhancing its ESG agenda in its
portfolio and operations. The Group continues its “Beyond Banking” strategic approach to sustainability and
established ESG as one of its four strategic pillars, with a special focus on the fight against climate change and
its ambition to Net Zero by 2050. The Group’s ESG strategy, formulated in 2021, is continuously expanding
ensuring the Group maintains its leadership role in the Social and Governance pillars while accelerating efforts to
address critical environmental challenges. In 2024, the Group continues to be committed towards its primary
ESG ambition:
Own operations
42% GHG
emission
reduction by
2030
The Group aims to become carbon-neutral in own operations by 2050, by gradually
eliminating its scope 1 and 2 GHG emissions. The Group has estimated the Scope 1 and
Scope 2 GHG emissions of 2021 relating to own operations in order to set the baseline for
carbon neutrality target in own operations by 2050. The Group has estimated Scope 1 and
Scope 2 GHG emissions for 2024 to monitor the progress on carbon neutrality target in
own operations. The Group has set an interim target in line with carbon-neutrality ambition
in own operations to reduce Scope 1 and Scope 2 GHG emissions by 42% (absolute target)
by 2030 compared to the baseline of 2021.
Become Net
Zero by 2050
The Group’s ambition to become Net Zero, by reducing its Scope 1, Scope 2 and Scope 3
emissions through its supply chain (i.e. third-party providers) and its financing activities,
which also entails the alignment and commitment of our customers towards this goal.
Steadily
increase Green
Asset Ratio
(GAR)
The Group aims to increase GAR. The GAR indicates the degree of alignment with the EU
Taxonomy, such as showing the proportion of the share of credit institution’s assets
financing and invested in EU Taxonomy-aligned economic activities as a share of total
covered assets, such as those consistent with the European Green Deal and the Paris
agreement goals.
The Group’s GAR as at 31 December 2024 was 0.6% (Turnover based) and 0.3% (CapEx
based) as at 31 December 2023 was 0% (Turnover based) and 0.01% (CapEx based).
Steadily
increase Green
Mortgage Ratio
In accordance with the Green Asset Ratio, the numerator consists of mortgages used only
for sustainable activities related to the construction of new buildings and renovation of
buildings, while the denominator includes all mortgages. The Group has not yet developed
EU taxonomy aligned Mortgages, however, aims to launch such an offering in upcoming
years.
The aspiration to achieve a representation of at least 30% women in Group’s management bodies (Defined as
the EXCO and the Extended EXCO) by 2030, has been reached earlier with 33% representation of women, as at
31 December 2023 and 31 December 2024.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
88
ESRS 2 – General Disclosures (continued)
3. Strategy, Business Model, Value Chain and Stakeholder Engagement (continued)
Strategy, business model and value chain (continued)
Business Model
Input
How we operate
How we add value
Outputs and Impacts
Financial Capital
1.
Total Assets
2.
Cost
(staff
costs,
other
operating
expenses,
Special
levy on deposits and
other
levies/contributions):
€406mn
3.
Customer
deposits:
€20,519mn
Group products and services
1.
Retail Banking
2.
SME Banking
3.
Corporate Banking & Large Corporate Banking
4.
International Business Unit & International Banking
5.
Brokerage Services
6.
Asset Management
7.
Finance
8.
Affluent Banking
9.
Custody and Depositary Services
10. Global Markets execution services
11. Factoring
12. Investment Banking
13. Life Insurance
14. General Insurance
Group’s significant products and services and
customer group applying AR13 ESRS 2 SBM 1, are
the following:
1.
Retail Banking
2.
SME Banking
3.
Corporate Banking & Large Corporate Banking
4.
International Business Unit & International Banking
Group’s significant geographical area is Cyprus.
1.
Net profit: €508mn
2.
Total
Operating
income: €1,096mn
3.
Tax: €81mn
4.
Gross
loans:
€10,114mn
5.
Net Interest Income:
€822mn
Social
and
Relationship Capital
1.
€1mn
social
responsibility budget
to support society
2.
€2mn in 2024 for
Oncology Centre
1.
Oncology
Centre
reinforced
medical
education
and
research
through
collaborations
with
the
University
of
Cyprus
and
St.
George’s University of
London
Intellectual
and
industrial Capital
1.
Digital
transformation
2.
Internet Banking
3.
BoC
Mobile
App
(Group’s
mobile
application)
4.
GIC customer portal
The Group stands as a pioneer of digital banking
innovation in Cyprus, reshaping the banking experience
into something more intuitive, more responsive, and more
aligned with the contemporary needs of its customers,
consistently pushing the boundaries to offer unparalleled
banking services. The Group aims to continue to innovate
and simplify the banking journey, providing a unique and
personalised experience to each of its customers. The
Internet Banking and BoC Mobile App are central part of
the ongoing ambition to refine, expand and elevate digital
services.
1.
Quick
loans
and
eloans: €106.7mn
2.
Non-life
insurance
digital sales: €613k
3.
Digital cards: 23k
4.
Digital Deposit ratio:
92.2%
5.
Digital
Transaction
ratio: 95.54%
6.
Digital Accounts: 22k
Human Capital
1.
Employee
costs:
€203mn
2.
Strong team of data
scientists, engineers
and analysts
3.
Health
&
Safety
Management System
The Group employed on head count basis as at 31
December 2024 2,872 (2023: 2,819) employees in
Cyprus, 8 (2023: 11) employees abroad.
1.
94.65%
of Group’s
employees
covered
under HSMS
2.
3 recordable work-
related injuries
3.
0.65 rate of work
related injuries
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
89
ESRS 2 – General Disclosures (continued)
3. Strategy, Business Model, Value Chain and Stakeholder Engagement (continued)
Strategy, business model and value chain (continued)
Business Model
Input
How we operate
How we add value
Outputs and Impacts
Natural Capital
1.
ESG strategy
2.
ESG
working
plan
designed to deliver
the ESG agenda of
the Group
3.
ESG working group
4.
Investment in energy
saving activities
5.
Set Green/Transition
new lending internal
KPIs
6.
Established
a
structured
and
detailed BES process
7.
Set
the
first
decarbonisation
target on Mortgage
portfolio aligned with
climate scenario
8.
Launhed
Green
Housing product
9.
Fil-eco
Product
Scheme
The Group in its ESG Strategy is committed to increase
positive impacts on the Environment by transforming not
only its own operations, but also the operations of its
customers. A key part of the Group's commitment is to
develop financial products that support the transition
which aligns with the Group's commitments under the
United Nations Environment Programme Finance Initiative
(UNEP FI) Principles for Responsible Banking (PRB).
Group’s Environmentally friendly and green products
offerings include:
1.
Energy Loans (Solar panels, energy efficiency actions,
energy upgrade and other systems)
2.
Green Housing
3.
Green Car
4.
Renewable energy projects
5.
Green lending to Corporate & SME customers under
the Green lending policy
At the end of 2024, the Group announced the following to
support Cypriot economy:
1.
Reward programme for performing housing loan
borrowers
2.
Provision of interest rate subsidies for young couples
and Cypriots in designated or mountain areas
3.
5-year fixed rate business loan to microbusiness (Line
1) and small SMEs (Line 2) at preferential fixed
interest rate for energy and digital upgrade
1.
25%
reduction
in
Group’s Scope 1 and
Scope
2
GHG
emissions,
achieved
by 2024 compared to
baseline of 2021
2.
12%
reduction
achieved in carbon
intensity metric on
Mortgage
portfolio
between
2024
and
2022 baseline
3.
€355mn gross loan
amount
for
environmentally
friendly products and
Green Housing as at
31 December 2024
4.
17,412 MWh energy
consumed
5.
Solar
Energy
Production 408 MWh
6.
Established an ESG
Due Diligence process
in the loan origination
process
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
90
ESRS 2 – General Disclosures (continued)
3. Strategy, Business Model, Value Chain and Stakeholder Engagement (continued)
Strategy, business model and value chain (continued)
Value Chain
The concept of the value chain takes into account the entire spectrum of activities, resources, and relationships that are part of the Group's business model and its
interaction with the external environment. This includes the Group's internal operations and its interactions with suppliers, partners, and customers. It is a
comprehensive view of how the Group operates within its ecosystem:
1.
an entity is considered downstream from the Group when it receives products or services from the Group.
2.
an entity is considered upstream from the Group when it provides products or services that are used by the Group.
3.
Group's own operations comprise the Group's properties, branches and its internal functions.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
91
ESRS 2 – General Disclosures (continued)
3. Strategy, Business Model, Value Chain and Stakeholder Engagement (continued)
Interests and views of stakeholders
The Group’s approach to sustainability is rooted in regular, transparent, and trust-based dialogue with its stakeholders. This engagement helps identify, evaluate, and
prioritise the most significant impacts of the Group’s activities on the environment, people, and the economy.
Stakeholders are defined as individuals or groups whose interests are affected or could be affected by the Group’s activities or those who may reasonably influence the
Group’s ability to implement its strategies and achieve its objectives for building an inclusive and sustainable community. In 2024, the Group reaffirmed the stakeholder
groups identified in its 2023 sustainability report, ensuring consistency and relevance in its engagement efforts. While no direct consultations with external stakeholders
were conducted, the Group leveraged the expertise of its internal management members who are in frequent communication with the external stakeholder groups and
have a deep understanding of their expectations.
Stakeholders
Type of stakeholder
engagement /
Engagement Channels
Purpose
Outcome
Board
1.
Meetings
2.
AGMs
3.
Ask the Board
4.
Trainings
1.
Drive accountability and transparency in decision-
making processes
2.
Provide strategic direction for achieving long-term
value creation
1.
Update the ESG Working Plan
2.
Enhance Sustainability Statement
3.
Product/service improvements
4.
Improvements in the distribution channels
5.
Improvements in the loan origination process
6.
Establish GHG emission reduction targets
Employees
1.
Personal/Group meetings
2.
Internal workshops
3.
Employee opinion survey
4.
Management practices
survey
5.
Ask the CEO / Extended
Leadership Team
6.
Ask the Board
1.
Foster a strong, engaged, and informed workforce
2.
Improve job satisfaction and morale through
feedback mechanisms
3.
Enhance skills and knowledge
4.
Build a culture of collaboration and innovation
1.
Improved workplace morale reflected in
employee engagement metrics
2.
Update Organisation Health initiatives
3.
Update employee training programme
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
92
ESRS 2 – General Disclosures (continued)
3. Strategy, Business Model, Value Chain and Stakeholder Engagement (continued)
Interests and views of stakeholders (continued)
Stakeholders
Type of stakeholder
engagement /
Engagement Channels
Purpose
Outcome
Investors and
Shareholders
1.
Investor meetings,
emails, conference calls
2.
Annual and Extraordinary
general meetings
3.
Conferences and
roadshows
1.
Ensure transparency on financial and non-financial
performance, including ESG disclosures
2.
Demonstrate commitment to long-term value
creation and risk management
3.
Attract responsible investment aligned with
sustainability goals
4.
Address investor concerns and align with
shareholder expectations
1.
Update the ESG Working Plan
2.
Enhance Sustainability Statement
3.
Adapt internal communication on
sustainability practices
4.
Responses to investor queries
Customers
1.
Phone access to one’s
personal banker
2.
Personal meetings
3.
Teams or teleconference
4.
Focus groups and surveys
5.
SupportCY2 network
6.
ESG Due Diligence
1.
Understand and address customer needs and
preferences through offering transparent, ethical,
and innovative financial products and services.
2.
Enhance customer loyalty through tailored
solutions and strengthening customer
relationships through clear communication and
value-added services
3.
Assess customers’ performance and risk exposure
against ESG criteria
1.
Product/service improvements
2.
Improvements in the distribution channels
3.
Improvements in the loan origination process
4.
Adaptation of marketing strategies
5.
Customer ESG score and high-level action
plan to improve the ESG score
6.
Support customer’s decarbonisation through
environmentally friendly and green solutions
Civil Society and
Non-governmental
organizations
(NGOs)
1.
Regular direct contact
and honest cooperation
2.
Partnerships with NGOs
3.
Contributions to research
projects
4.
Interviews, press releases
5.
Advertising campaigns
6.
Content creation and
support on non-banking
issues
7.
SupportCY2 network
1.
Contribute to community well-being through
education, health and environmental initiatives,
and social development programs.
2.
Addressing concerns of communities
3.
Strengthen relationships with local communities
and NGOs to address societal needs effectively.
4.
Collaborate to address environmental and social
challenges, leveraging NGOs’ expertise.
1.
Specific initiatives on education, health and
environmental pillars
2.
Develop new initiatives based on society’s
needs
2 The SupportCY network was created in March 2020 by BOC PCL for immediate support to frontline professionals working in the battle against COVID-19, by forming a unique chain of supporters, receivers and
enablers, and creating Social Capital. SupportCY also offers further assistance during other national and international crises and disasters, such as fires, earthquakes, etc. Furthermore, SupportCY focuses on
meeting the various needs of the Cypriot society and has become a central point of response and assistance, not only for NGOs but also for governmental services.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
93
ESRS 2 – General Disclosures (continued)
3. Strategy, Business Model, Value Chain and Stakeholder Engagement (continued)
Interests and views of stakeholders (continued)
Stakeholders
Type of stakeholder
engagement / Engagement
Channels
Purpose
Outcome
Government and
Regulators
1.
Meetings
2.
Public consultations
3.
SupportCY network
4.
Feedback letter
1.
Ensure compliance with regulatory frameworks, such as
the CSRD, EU Taxonomy, and other financial and
environmental regulations
2.
Support national and EU-level climate, economic, and
sustainability goals
3.
Embedding C&E risks in Governance, Business Model
and Strategy, Risk Management and Disclosures
1.
Aligning business model and strategy
2.
Value creation and risk mitigation from
compliance
3.
Updating ESG Working Plan to address
regulator’s feedback
Business Partners
1.
Contact via telephone, email
2.
Personal meetings
3.
Vendor assessments
4.
SupportCY network
1.
Foster collaboration to promote responsible supply chain
practices and shared ESG objectives
2.
Ensure mutual alignment on sustainability goals and
ethical business conduct
3.
Strengthen partnerships to drive innovation and shared
growth
1.
Streamlined supplier expectations
2.
Vendor improvement plans
3.
Informed selection of vendor
Business
Community
1.
SupportCY network
2.
Telephone
3.
Email
4.
Personal meetings
5.
Media campaigns
6.
Focus groups and surveys
1.
Promote sustainable and ethical business practices
within the broader business ecosystem.
2.
Foster innovation and entrepreneurship in collaboration
with peers and institutions.
1.
Product/service improvements
2.
Improvements in the distribution
channels
Peers/Competitors
1.
Personal meetings
2.
Association of Cyprus Banks
1.
Share best practices and collaborate on common
challenges, such as ESG data transparency and climate
resilience
2.
Improve industry-wide sustainability performance and
standards
3.
Foster healthy competition to drive innovation and
accountability within the banking sector
1.
Common ESG Due Diligence solution
across Cyprus Banking industry
Nature
1.
Updates and developments
obtained BES process on
C&E risks
1.
Inform the Business Strategy and Risk assessment
1.
Updates and developments from BES
are incorporated in the Group’s
Financial Plan and Materiality
Assessment on C&E risks
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
94
ESRS 2 – General Disclosures (continued)
3. Strategy, Business Model, Value Chain and Stakeholder Engagement (continued)
Interests and views of stakeholders (continued)
Key Stakeholders
How Administrative, management and supervisory bodies
are informed about sustainability impacts
Board
1.
Refer to 2. Governance under ESRS 2 – General Disclosures in
page 75.
Employees
1.
Through the Complaints Resolution Process. Refer to page 168.
2.
Through Whistleblowing system. Refer to page 209.
For more details on the employee engagement refer to ESRS S1 in
page 166.
Investors and Shareholders
1.
Through the monthly Market Update & Share Trading Activity
report of IR&ESG to EXCO and Board.
Customers
1.
Through the Complaints Management process. Refer to page
185.
2.
Through Customer survey submitted to EXCO and BDC.
Civil Society and Non-governmental
organizations (NGOs)
1.
Through the Complaints Management process. Refer to page
185. For positive impacts through the six-monthly Corporate
Social Responsibility Update Report to EXCO.
Government and Regulators
1.
Regulatory Steering Group (RSG3) update on bi-weekly basis.
2.
Updates on major correspondence to Board Chairman and CEO
on bi-weekly basis.
3.
Regulatory engagement update to Board through RC on a
quarterly basis.
Business Partners
1.
Through the Complaints Management process. Refer to page
185.
Business Community
1.
Through the Complaints Management process. Refer to page
185.
Peers/Competitors
1.
The Group CEO is the chairman of the Association of Cyprus
Banks informing EXCO and Board accordingly on any significant
matters.
Nature
1.
Preliminary impacts assessment report from BES is presented
to SC, EXCO on a quarterly basis and annually to the Board
through NCGC and RC.
Topical details on the interest and views of stakeholders are described in the following sections.
SBM – 2 – Topical ESRS
ESRS
Page
S1 – Own workforce
163
S4 – Consumers and end-users
182
3 A forum of Senior Executives of the Group chaired by the Group CEO which was established to ensure proper procedures are
in place for managing regulatory risk and to oversee Group’s regulatory obligations.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
95
ESRS 2 – General Disclosures (continued)
4. Impacts, Risks and Opportunities
Identification and assessment of material impacts, risks and opportunities
The Group employs a Double Materiality Assessment (DMA) to determine the basis of the disclosures included in
the Group’s Sustainability Statement. The Group, through the DMA process, is identifying and assessing the
material impacts, risks and opportunities (IROs) which are considered significant in achieving its long-term
objectives and strategic plans. The scope of this assessment extends beyond the operational activities of the
Group, covering its entire value chain, from upstream to downstream, as well as any external parties affected by
the Group’s operations. The DMA was carried out in three distinct phases: value chain analysis, IRO identification,
assessment and mapping, and stakeholder validation.
1.
Value chain analysis
As part of the value chain analysis, the Group has identified the related activities, business relationships and
geographies that are considered more relevant to the identification and assessment of IROs. The assessment
incorporated information from all the business segments of the Group (i.e. Corporate, SME, Retail, International
Corporate, Restructuring & Recoveries, Wealth Management, REMU, Treasury, Insurance and Payments services).
In terms of geographical scope, the Group’s activities are mainly concentrated in Cyprus; therefore, the
assessment has been focused on activities in Cyprus. The Group have not identified any material IROs from the
Group’s overseas activities, namely Greece, Romania and Russia, given the size of these operations which are in
a run-down mode and relate to legacy operations of the Group. The assessment considered the value chain of
the Group’s vendors through impacts identified and assessed at the loan portfolio, given the close alignment of
sector exposures. Risks and opportunities associated with the Group’s vendors were identified and assessed
accordingly based on the approach described in the 4. Financial Materiality section below. Following detailed
analysis of the underlying portfolio and consideration of the nature of these investments, the Group made the
judgement that Impacts associated with direct or indirect exposures to mutual funds do not give rise to material
IROs given the fact that the exposures to mutual funds include numerous underlying assets of small individual
size within several jurisdictions and are associated with various industries. This results in multiple impacts
fragmented across several sectors, jurisdictions and asset types which are not considered material.
2.
IRO identification, assessment and mapping
The IROs identified and assessed through the DMA, embed considerations resulting from a range of Group’s
products and services, as well as from its operations. The scope of the assessment also considered the internal
mechanisms of the Group, including legal reviews, anti-corruption compliance systems, occupational health and
safety inspections, as well as shareholder filings. The dependencies between the Group’s impacts with risks and
opportunities were taken into account throughout the identification and assessment process of IROs, especially
when assessing loan and investment portfolios. The most significant impacts of the Group are indirect impacts
arising by financing industries that are impacting people and the environment. When assessing risks and
opportunities the dependencies of our customers’ impacts were assessed, through the transmission channels.
The Group ensured that the identified and assessed IROs are clearly distinguished and pragmatically mapped to
the relevant ESRS Topics/Sub-topics/Sub-sub-topics before proceeding to the validation phase. For additional
details on the process used to identify, assess, prioritise and monitor impacts, risks and opportunities refer to
section 3. Impact Materiality and 4. Financial Materiality below.
3.
Impact materiality
In order to assess the Group’s Impact Materiality, internal stakeholders from various departments were requested
to identify actual and potential operational impacts, including both positive and negative effects mapped to the
impact areas and topics outlined in the UNEP FI Impact Radar. With regards to the impacts arising from loan and
owned investment portfolios, the Group identified the actual and potential positive and negative impacts using
UNEP FI PRB Impact Analysis (Institutional Banking, Consumer Banking and Investment Portfolio Impact Analysis
Tools). The identified impacts were incorporated into an e-survey, requesting from the Group’s Management and
Senior Management to prioritise and score them based on scale and scope (+ irremediability for the negative
Impacts) (+ likelihood for the potential Impacts). Group’s Management and Senior Management was informed
during prioritization sessions that in the case of a potential negative human rights impact, the severity of the
impact takes precedence over its likelihood. The results from the stakeholder prioritisation exercise were
aggregated leading to a score between 1-5 for actual and potential, positive and negative impacts for each UNEP
FI Impact Radar topic. Refer to the table below for the scoring approach:
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
96
ESRS 2 – General Disclosures (continued)
4. Impacts, Risks and Opportunities (continued)
Identification and assessment of material impacts, risks and opportunities (continued)
3.
Impact materiality (continued)
Grading scales
1
2
3
4
5
Scale
Minimal
Low
Medium
High
Absolute
Scope
Limited
Concentrated
Medium
Widespread
National-wide
Irremediability
Relatively
easy to
remedy
short-term
Remediable with
effort (time and
cost to society)
Difficult to
remedy or
mid-term
Very difficult to
remedy or
long-term
Non-
remediable or
irreversible
Likelihood
Unlikely
Possible
Likely
Very Likely
Almost
guaranteed
The UNEP FI – ESRS AR 16 Topics Mapping tool was utilized to associate the identified impacts and their scores
to the relevant ESRS sub-sub-topics. For those ESRS topics, sub-topics and sub-sub-topics not addressed by the
UNEP FI - ESRS AR 16 Topics Mapping tool, an independent impact identification and assessment exercise was
conducted by the Group. This process led to the identification of specific impacts from Group’s operations and
loan and investment portfolios, at the sub-sub-topic level of ESRS 1 AR 16, including the scores derived from the
e-survey, the impacted time horizons, and their association with relevant value chain activities.
The results of the Impact materiality assessment were aggregated at ESRS topic level, using the maximum score
assigned at each sub-sub-topic level, to identify the material topics to be discussed and reported in the
Sustainability Statement of the Group. The impact materiality threshold set is greater or equal to 3.9, which
corresponds to the average score of each aggregated score at ESRS topic level. The Group performed
corroborative procedures to support the impact materiality threshold set. Specifically, the Group utilised the
average scoring approach rather that the maximum approach to aggregate the scores at ESRS topic level, using
again the average score as threshold, leading to the same material topics with the threshold set. In addition, the
Group considered the outcome of a range of sensitivities to support threshold set.
4.
Financial Materiality
To assess Financial materiality, the Group utilized its existing risk assessment processes and frameworks. The
Group continuously monitors external developments, issues and events affecting its business model, integrating
ESG considerations into these existing steering and risk management processes at different maturity levels. The
Financial Materiality assessment involved the evaluation of the Group's business profile and the composition of
its loan portfolio, further examining associated risk drivers, including credit risk, liquidity risk, market risk,
operational risk, strategic risk, reputational risk and legal risk.
The Group has leveraged internal risk exercises, such as the Risk Identification Materiality Assessment (RIMA)
and the Key Risk Matrix (KRM), which are designed to identify relevant financial and non-financial risks. RIMA
has been used for the identification and assessment of the C&E risks related to the ESRS topics, as it combines
qualitative and quantitative approaches, using both the Group’s specific internal data and external sources to
assess exposures related to C&E risks. KRM was the source of data regarding Social and Governance risks
identification, which follows a similar assessment methodology as RIMA. Any additional risks, associated with
ESRS sub-sub-topics identified were assessed independently by the Group.
Financial opportunities have been identified using the Group’s Financial Plan which highlights the strategic
orientation of the Group, and is complemented by forecasts and industry research, as well as the BES process on
C&E risks which informs the Group’s risk and strategic profile. Financial opportunities were individually assessed
taking into account qualitative and quantitative aspects of their Magnitude and Likelihood.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
97
ESRS 2 – General Disclosures (continued)
4. Impacts, Risks and Opportunities (continued)
Identification and assessment of material impacts, risks and opportunities (continued)
4.
Financial Materiality (continued)
The financial risks and opportunities were assessed for likelihood and magnitude based on the approach already
applied under existing KRM and RIMA processes:
Impact
(1-5)
Critical (5)
H
H
H
C
C
High (4)
M
M
H
H
C
Moderate
(3)
L
M
M
H
H
Low (2)
L
L
M
M
M
Minimal (1)
L
L
L
L
L
Remote (1)
Unlikely (2)
Likely (3)
Highly likely
(4)
Expected (5)
Likelihood (1 – 5)
The threshold applied to identify material financial risks and opportunities as per scoring approach mentioned
above, is greater or equal to 4 which correlates with the abovementioned risk management processes. Risk
assessment tools are regularly enhanced to capture aspects of risks, including the latest CSRD requirements.
5.
Stakeholder validation
The final DMA phase involves the validation of the results by internal stakeholders through workshops, round
tables and interviews with the outcome of these validations being considered as part of the final DMA decisions.
Engaging with key stakeholders who have expertise in their relevant topic is essential for achieving the
appropriate prioritization of IROs. Stakeholder engagement was conducted in several stages of the assessment
to ensure appropriate identification and validation of sustainability matters. While no direct consultations with
external stakeholders were conducted, the Group leveraged the expertise of its internal management members
who are in frequent communication with the external stakeholder groups and have a deep understanding of their
expectations. By utilizing these internal proxies, the Group has ensured that the insights, perspectives and
expectations of external stakeholders are incorporated in the DMA results and reflected in the Group’s
Sustainability Statement.
6.
DMA Governance
The IR&ESG Department of the Group documented the DMA outcome and a summary of the process performed
was submitted to the SC, EXCO, NCGC, AC and ultimately the Board, for consideration and approval. The paper
included the following to provide adequate detail to the Management and Board Committees to review, challenge
and approve the DMA:
1.
Approach followed to identify and assess IROs under DMA.
2.
External and internal tools utilised on the identification and assessment process.
3.
The approach and rational behind setting materiality thresholds to determine which IROs are material.
4.
The corroborative assessments performed to support the Impact materiality threshold set.
5.
Detailed DMA results embedding scores of positive and negative impacts as well as risks and opportunities,
at a sub-sub-topic level.
6.
Peer benchmarking on material topics identified.
7.
Detailed explanation on how affected stakeholders were engaged in the process.
8.
Mapping exercise between the material topics identified in previous Sustainability Statement (GRI) compared
to material topics identified under the DMA.
9.
Key assumptions and judgments along with relevant procedures performed to corroborate those assumptions
and judgments.
10. Detailed definitions of sustainability topics under ESRS.
11. Detailed substantiations of positive and negative impacts as well risks and opportunities
12. Detailed Impact scores as derived from Management and Senior Management e-survey
13. Subsidiary scoping exercise
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
98
ESRS 2 – General Disclosures (continued)
4. Impacts, Risks and Opportunities (continued)
Identification and assessment of material impacts, risks and opportunities (continued)
6.
DMA Governance
14. Detailed mapping between UNEP-FI and ESRS Topics
15. DMA Handbook which provides a detailed guidance on how the DMA was conducted.
This paper was discussed, challenged and reviewed by the Board through the SC, EXCO, AC and NCGC, reaching
an approval on the DMA and the material IROs disclosed in the Sustainability Statement and highlight the Group’s
strategic priorities.
7.
Conclusion
To achieve its ambitions, the Group established, an ESG working plan, in 2021 which was further enhanced in
2024. This plan is designed to articulate the delivery of the Group’s ESG strategic objectives and considered ECB
expectations, and other regulatory disclosure requirements.
The working plan will be further enhanced to reinforce the Group's commitment to comprehensive and dynamic
ESG practices based on DMA results. The Group understands that the incorporation of material IROs in the overall
risk profile and risk management processes is an evolving process. Certain impacts and risks are reflected in the
Risk Appetite Statement (RAF) through key risk indicators, and various risk policies. Opportunities identified
across the Group’s various business segments are assessed and embedded into the Group’s Financial Plan
following consultation, validation and authorisation from relevant Management and Board Committees, as
required by the Group’s Governance arrangements.
Topical details on the identification and assessment of material IROs are described in the following sections.
IRO – 1 – Topical ESRS
ESRS
Page
E1 – Climate Change
114
E2 – Pollution
148
E3 - Water and marine resources
154
E5 - Resource use and circular economy
158
G1 - Business conduct
207
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
99
ESRS 2 – General Disclosures (continued)
4. Impacts, Risks and Opportunities (continued)
Identification and assessment of material impacts, risks and opportunities (continued)
8.
DMA results – ESRS Sub-Topic
The table shall be read in conjunction with the detailed IROs in the topical sections.
ESRS
Material Topic
Material Sub-topics
I
R
O
Non -
Material
E
E1
Climate change
Climate change adaptation
n/a
Climate change mitigation
Energy
E2
Pollution
Pollution of air
Pollution of
water,
Substances of
concern,
Substance of
very high
concern,
Microplastics
Pollution of soil
Pollution of living organisms and
food resources
E3
Water and marine
resources
Water
Marine
resources
E5
Circular economy
Resources inflows, including
resource use
Waste
Resource outflows related to
products and services
S
S1
Own workforce
Working conditions
Equal
treatment and
opportunities
for all
Other work-related rights
S4
Consumers and
end-users
Information-related impacts for
consumers and/or end users
n/a
Personal safety of consumers
and/or end-users
Social inclusion of consumers
and/or end-users
G
G1
Business conduct
Corporate culture
Protection of
whistle-
blowers
Animal
welfare³
Political
engagement
Corruption
and bribery
Management of relationships with
suppliers including payment
practices
Entity specific
Information
Security
n/a - Entity specific
Financial Crime
and Fraud
Conflict of Interest
Compliance with
laws are
Regulations
Reputational risk
Digitalisation
BOC Oncology
Centre
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
100
ESRS 2 – General Disclosures (continued)
4. Impacts, Risks and Opportunities (continued)
Identification and assessment of material impacts, risks and opportunities (continued)
9.
Time Horizons
The time horizons used by the Group on the identification and management of sustainability IROs deviate from
those prescribed by ESRS, except for short-term time horizon, in order to be aligned with the time-horizons
applied by the Group when developing and formulating the strategy and risk management processes.
Time
horizon
label
Start
Year
End
Year
Rationalisation
Short-
term (1
years)
2024
2025
The Group is committed to become carbon neutral in own operations by 2050
with interim target to reduce Scope 1 and Scope 2 GHG emissions from own
operations by 42% by 2030 compared to 2021 baseline. The Group has focused
its main decarbonisation actions in the short-term up to 2026 in order to lead
the decarbonisation efforts, lead by example and also to benefit from any
government subsidies that will be announced as part of the Recovery and
Resilience Facility (RRF) of the EU. Taking also into account the CSRD which is
a milestone for sustainability activation effective for FY2024 for EU listed
companies, and every year thereafter up until 2028 to include certain SMEs and
large companies, the Group decided to set short-term time horizon at 1 year as
of the end of the reporting date.
Medium
-term
(2-6
years)
2026
2030
The Group is committed to become carbon neutral in own operations by 2050
with interim target to reduce Scope 1 and Scope 2 GHG emissions from own
operations by 42% by 2030 compared to 2021 baseline, therefore sustainability
IROs should be identified and managed in a horizon of 2-6 years. As 2030 is
the year set by the EU for the goal of “Fit for 55” (i.e., a 55% reduction of GHG
emissions below 1990 levels), the Group has also set 2030 as the medium-term
risk horizon for the identification and management of sustainability IROs.
Therefore, the time horizon for medium term is between 2-6 years.
Long-
term
(>6
years)
2031
n/a
The Group considers a time horizon of more than 6 years. The Group has set
its ambition to become net zero by 2050, which indicates that Scope 1, Scope
2 and Scope 3 GHG emissions should be reduced by 2050 to net zero. The
climate related risks associated with Financed Scope 3 GHG emissions depend
also on the useful life of the assets, which for the majority of the current loan
portfolio of the Group this translates to a maturity beyond 7 years. As such a
long-term time horizon has been set of over > 6 years to cover both the risks
as well as the strategic aspects of climate-related risks within the organisation.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
101
ESRS 2 – General Disclosures (continued)
4. Impacts, Risks and Opportunities (continued)
Identification and assessment of material impacts, risks and opportunities (continued)
10. Key assumptions in the DMA
DMA area
Assumption/Judgement
Corroborative
procedures
UNEP – FI PRB
tools
PRB’s impact analysis tools are input and output models
associating NACE codes (statistical classification of
economic activities) or products (i.e. Housing, credit cards
etc.) with actual and potential positive and negative
impacts on Impact radar’s topics (i.e. climate stability,
education, finance etc.). Positive and negative impacts
(loans and investment portfolios) are assumed based on
the association between NACE/Product codes and impacts.
UNEP-FI PRB tools are
used by more than 345
Financial
Institutions
globally
for
the
identification of impacts
and is considered a best
practice approach.
Mapping between
UNEP-FI
topics
and ESRS topics
In
certain
instances,
the
mapping
of
impact’s
substantiations, at the Impact radar’s topic level, was not
fully aligned with the ESRS topics/sub-topics/sub-sub-
topics. Therefore, during the scoring exercise we utilised
the most appropriate Impact radar topic to score the
relevant ESRS sub-sub topic substantiation.
Mapping is aligned with
UNEP-FI guidance.
Impact materiality
threshold
Impact materiality threshold was set as the average of
scores associated with each Topical ESRS. The aggregated
scoring at Topical ESRS level was based on the maximum
impact score of the underlying sub-sub-topic.
Corroborative procedures
(Sensitivity,
average
scoring approach) were
performed to ensure the
threshold
selected
was
appropriate.
Financial
materiality
threshold
Financial materiality threshold was set at level to be
aligned with existing Group’s risk processes like Key Risk
Matrix and RIMA at >=4.
The approach is consistent
with
current
Group’s
processes.
Mapping of RIMA
and KRM to ESRS
sub-sub topics
Risks identified through the RIMA and KRM process were
mapped with ESRS sub-sub topic level and used the
existing score based on existing methodology.
The
mappings
were
confirmed
with
the
relevant
internal
risk
owners.
Mapping
of
Financial Plan and
BES to ESRS sub-
sub topics
Opportunities identified through Financial Plan and BES
process were mapped with ESRS sub-sub-topic level and
scored based on impact and likelihood using judgment.
The mappings and scoring
was reviewed and agreed
by external sustainability
experts.
Use
on
internal
proxies
on
consultation
&
validation
The
Group
performed
consultation
and
validation
procedures on DMA using internal proxy stakeholders
BOC PCL considered that
given the maturity in the
market,
limited
value
would have been added to
the
DMA
if
external
stakeholders
were
engaged.
11. Non-Material topics
The environmental topics ESRS E4 (Biodiversity and Ecosystems), ESRS S2 (Workers in the value chain) and
ESRS S3 (Affected communities) were assessed as 'Non-Material', through both the financial and impact
materiality lens. This is closely aligned with the Group's internal expectations, strategic objectives, industry trends
and in particular, with the specifics of the Group's portfolio. However, the Group acknowledges that the integration
of these considerations into business practices is evolving and the Group plans to revisit these topics as well as
the associated IROs, as part of the annual DMA refresh. For more details on the Biodiversity IROs refer to ESRS
E1 – Climate Change in page 110.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
102
ESRS E1 - Climate Change
This section outlines the Group’s policies, actions, metrics and targets in addressing material climate change
negative impacts and risks as well as policies, actions, metrics and targets designed to further enhance material
positive impacts and exploring material opportunities.
1.
Integration of Sustainability-Related Performance in Incentive Schemes
In terms of climate-related considerations, the Group integrates sustainability factors into its remuneration
process. Senior Management (EXCO and Extended EXCO) KPIs are linked to actions for the reduction of GHG
emissions from own operations and the green lending associated with the decarbonisation of the mortgage
portfolio. Specifically, the Director of Operations & Chief Cost Officer includes actions to reduce Scope 1 and
Scope 2 emissions, while the Deputy CEO and Director of Consumer Banking have KPIs tied to Green Housing
metrics aligned with the mortgage decarbonisation strategy.
For Senior Management, C&E KPIs, aligned with the Group’s ESG strategy, are factored into Directors’ variable
remuneration as part of the performance appraisal cycle. These climate KPIs account for less than 15% of total
Director KPIs and percentage weight vary for each Director. Specific details on Directors’ C&E KPIs have not yet
been disclosed.
The Group’s Long-Term Incentive Plan (LTIP 2022), approved by shareholders, incorporates ESG objectives within
its evaluation scorecard, which measures performance against the Group’s Medium-Term Strategic Targets. The
scorecard includes KPIs on external ESG ratings, based on independent external assessments of the Group’s ESG
performance. For more details on the integration of sustainability-related performance in incentive schemes refer
to ESRS 2 - General Disclosures in page 84.
2.
Transition plan for climate change mitigation
2.1
Introduction
As a signatory to the UN PRB, the Group aims to align its own operations, supply chain and portfolios with the
transition to a sustainable economy. This commitment was enforced through the Group’s ESG primary ambitions,
as determined in the ESG strategy, which was formulated in 2021. The Group’s primary ESG ambitions are:
Group’s ESG Primary ambitions
Ambition
Description
Own operations
42% GHG
emission
reduction by
2030
The Group aims to become carbon-neutral in own operations by 2050, by gradually
eliminating its scope 1 and 2 GHG emissions. The Group has set an interim target in line
with carbon-neutrality ambition in own operations to reduce Scope 1 and Scope 2 GHG
emissions by 42% (absolute target) by 2030 compared to the baseline of 2021.
Become Net
Zero by 2050
The Group’s ambition to become Net Zero, by reducing its Scope 3 emissions through its
supply chain (i.e. third party providers) and its financing activities, which also entails the
alignment and commitment of its clients towards this goal.
Steadily
increase GAR
The GAR indicates the degree of alignment with the EU Taxonomy, such as showing the
proportion of the share of credit institution’s assets financing and invested in EU
Taxonomy-aligned economic activities as a share of total covered assets, such as those
consistent with the European Green Deal and the Paris agreement goals.
Steadily
increase Green
Mortgage Ratio
In line with the Green Asset Ratio, the numerator consists of mortgages used only for
sustainable activities related to the construction of new buildings and renovation of
buildings, while the denominator includes all mortgages.
While the Group has established GHG emissions reduction targets in certain emission categories and asset classes,
based on data and methodologies available (Refer to 7. Climate Change Metrics & Targets in page 131), and
implements climate change mitigation actions to be aligned with those targets (Refer to 6. Policies and Actions
related to Energy, Climate Change Mitigation and Adaptation in page 124), it has not yet established a
comprehensive transition plan for climate change mitigation. The establishment of GHG emission reduction
targets and climate change mitigation actions to meet those targets were reviewed, discussed and approved by
the Board through the SC, EXCO and NCGC. The Group will perform reasonable efforts to establish a
comprehensive climate change mitigation transition plan in order to be aligned with limiting the global warming
to 1.5 °C by 31 December 2026. The Group’s climate change mitigation transition plan will be reviewed and
approved by the SC, EXCO and the Board through the NCGC.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
103
ESRS E1 - Climate Change (continued)
2.
Transition plan for climate change mitigation (continued)
2.2
Strategy integration of climate transition plan
The Group updated its Group Financial and Business Plan manual to incorporate considerations on C&E risks in
the Business Strategy. Specifically, during the planning phase for new lending the RMD and IR&ESG provide the
sectors associated with C&E risks, the preliminary impact assessment derived from the BES, the science-based
targets set (GHG emission reduction targets aligned with a climate scenario) and the direction of Green/Transition
new lending based on BES. In addition, each Division, considers the preliminary impact assessment (performed
by RMD, IR & ESG and Strategy) on the risk profile and strategy arising from the BES and the RIMA on C&E risks.
Based on this, the Division identifies which are the material C&E risks over the Financial plan period and defines
the actions, strategies and products to mitigate them. The IR&ESG reviews the adequacy, relevance and
reasonableness of the business lines strategies to manage material C&E risks in key portfolios.
The Group’s approach to climate action is evolving over time and has progressively been embedded into the
Group’s activities, actions and strategies. Consequently, the Group focuses on creating lifelong partnerships with
customers, as well as guiding and supporting them in a changing world by financing projects which bear a positive
climate impact. Underpinning the Group’s Climate Strategy (a pillar within its ESG strategy), there are three
strategic areas where, moving forward, the Group will focus its climate action:
i.
Reinforcing the impact of climate financing;
ii.
Building resilience to climate change; and
iii.
Further integrating climate change considerations across all of Group’s standards, methods and
processes.
2.3
Emission reduction targets
The Group aims to work with its customers, colleagues and communities to support their transition to a resilient,
low carbon 1.5°C aligned economy by 2050, in line with Cyprus governments' ambitions and actions.
The Group, taking into account the maturity of the market in Cyprus regarding climate change, the available
methodologies for setting GHG emission reduction targets and the limited climate data, decided to set its GHG
emission reduction targets by applying the International Energy Agency’s Below 2 °C climate scenario (IEA B2DS),
aiming to limit global warming to 1.75 °C. However, as methodologies evolve and more reliable climate data
becomes available, the Group is committed to adjusting its targets to align with the 1.5°C goal. The Group utilized
the Science Based Targets Initiative (SBTi) tools to set the GHG emission targets however, these targets are not
externally validated by any global climate body. The Group has committed to reducing its scope 1, 2 and 3 GHG
emissions to meet its stated targets below:
1.
42% reduction in GHG emissions (Scope 1 and 2) by 2030 compared to a 2021 base year;
2.
43% reduction in residential mortgage portfolio GHG emissions per square metre by 2030 from a 2022
base year.
For more details on GHG emission reduction targets refer to 7. Climate Change Metrics & Targets in page 131.
2.4
Sustainable finance metrics
The Group is providing customers with sustainable products, such as green housing, green car, energy loans,
renewable energy financing and green lending for Corporate & SME under the Green lending policy, supported by
green bond issuance under the Sustainable Finance Framework, and is continuing to develop its suite of green
finance products offered to customers. The Group is taking these actions because it understands the significant
role it can play in facilitating the transition to a low-carbon economy. The Group as at 31 December 2024,
following the launch of Green housing product, reached €355mn gross environmentally friendly loans. For more
details on Sustainable finance metrics refer to 7. Climate Change Metrics & Targets in page 136.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
104
ESRS E1 - Climate Change (continued)
2.
Transition plan for climate change mitigation (continued)
2.5
Locked-in GHG emissions
The Group under the current risk assessment framework, considers that changes in climate change mitigation
and adaptation policies and regulations could lead in asset stranding or assets becoming locked-in to GHG
emissions especially for organisations that operate in carbon intensive industries (i.e. oil and gas industry). The
Group currently assesses the risk of stranded and locked-in assets qualitatively, however it will perform a detailed
identification and quantification exercise during 2025 on stranded assets associated with the assets financed or
assigned as collaterals. The Group’s own assets are not considered to be locked-in to GHG emissions or stranded
by nature as the vast majority relates to office buildings and branches. The Group’s exposure to carbon intensive
sectors, which are considered high risk of stranding or locked-in, is immaterial. Therefore, the risk of stranding
and locked-in is low. Refer to the table below indicating Group’s gross loan and corporate bond exposures to
carbon intensive sectors as per ESRS E1-1 Paragraph 16(f).
Gross loans exposure to coal, oil and gas related economic activities
Gross Loans
(€mn) - 2023
Gross Loans
(€mn) – 2024
B.05 Mining of coal and lignite
-
-
B.06 Extraction of crude petroleum and natural gas (limited to
crude petroleum)
-
-
B.09.1 Support activities for petroleum and natural gas
extraction (limited to crude petroleum)
0.2
-
C.19 Manufacture of coke and refined petroleum products
2.0
1.4
D.35.1 - Electric power generation, transmission and
distribution
40.1
52.9
D.35.3 - Steam and air conditioning supply (limited to coal-
fired and oil-fired power and/or heat generation)
0.4
0.4
G.46.71 - Wholesale of solid, liquid and gaseous fuels and
related products (limited to solid and liquid fuels)
139.1
142.5
Total
181.8
197.2
% to total Non – Financial Corporation Gross Loans
3.7%
3.9%
Corporate Bonds exposure to coal, oil and gas related economic activities (excluding Green
Bonds)
Corporate Bonds
(€mn) - 2023
Corporate Bonds
(€mn) – 2024
B.05 Mining of coal and lignite
-
-
B.06 Extraction of crude petroleum and natural gas (limited to
crude petroleum)
-
-
B.09.1 Support activities for petroleum and natural gas
extraction (limited to crude petroleum)
4.9
15.2
C.19 Manufacture of coke and refined petroleum products
-
-
D.35.1 - Electric power generation, transmission and
distribution
-
-
D.35.3 - Steam and air conditioning supply (limited to coal-
fired and oil-fired power and/or heat generation)
-
-
G.46.71 - Wholesale of solid, liquid and gaseous fuels and
related products (limited to solid and liquid fuels)
-
-
Total
4.9
15.2
% to total Non – Financial Corporation Corporate Bonds
4.5%
10.2%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
105
ESRS E1 - Climate Change (continued)
2.
Transition plan for climate change mitigation (continued)
2.5
Locked-in GHG emissions (continued)
The Group is not excluded from the EU Paris-aligned Benchmarks but maintains exposures to certain sectors
within its portfolio that are classified as excluded under the EU Paris-aligned Benchmarks framework (Articles
12.1(d) and (g) and 12.2 of (EU) 2020/1818).
These exposures relate to economic activities that currently do not meet Paris-aligned benchmarks but are
important to the market and transition efforts. Refer to the table below for details on financing exposure to
excluded sectors:
Financing exposure to sectors excluded from EU Paris-aligned Benchmarks (Articles 12.1 (d) and
(g) and 12.2 of (EU) 2020/1818
2023
2024
Gross carrying
amount (€mn)
Of which exposures
towards companies
excluded from EU
Paris aligned
Benchmarks
Gross
carrying
amount
(€mn)
Of which exposures
towards companies
excluded from EU
Paris aligned
Benchmarks
D - Electricity, gas,
steam
and
air
conditioning supply
57
27
121
46
G - Wholesale and
retail trade; repair
of motor vehicles
and motorcycles
881
54
908
67
H.52
-
Warehousing
and
support
activities
for transportation
47
19
162
49
Total
985
100
1,191
162
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
106
ESRS E1 - Climate Change (continued)
3.
Material impacts, risks and opportunities and their interaction with strategy and business model
Material IROs - Climate Change (E1)
ESRS Topic/Sub-Topic
IRO
Type
Description
Climate Change - Climate
Adaptation, Climate
Mitigation and Energy
Impact
Actual and potential
positive
The Group's decarbonisation plan on own operations to reduce Scope 1 and Scope 2 GHG emissions
create actual positive impact to climate change adaptation, through increase in renewable energy
utilisation, climate change mitigation, through reduction of GHG emissions, and energy consumption,
through energy efficiency measures implemented
Time Horizons
Value Chain
Originate or connected to
strategy
Business
relationship
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
Originate from strategy
Own Operations
ESRS Topic/Sub-Topic
IRO
Type
Description
Climate Change - Climate
Adaptation, Climate
Mitigation and Energy
Impact
Actual and potential
positive
Financing activities to certain NACE sectors (i.e. Electric power generation, transmission and
distribution) with total portfolio exposure of 1.44% out of €5bn exposures assessed under PRB
institutional banking impact analysis of 2024, create key/direct actual positive impacts to climate
stability. In addition, the Group implemented various actions in the downstream value chain which
create positive impacts on climate change mitigation (sector limits, GHG emission reduction targets,
ESG Due Diligence, Green lending internal KPIs). The Group is in the process to design the strategy to
manage material physical risks through adaptation measures in the underwriting process associated
with loan exposures, REMU portfolio and insurance contracts. Currently, the Group has positive impact
to climate change adaptation through insurance contracts covering weather perils.
Time Horizons
Value Chain
Originate or connected to
strategy
Business
relationship
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
Connected to strategy through
provision of finance
Customers
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
107
ESRS E1 - Climate Change (continued)
3.
Material impacts, risks and opportunities and their interaction with strategy and business model (continued)
Material IROs - Climate Change (E1) (continued)
ESRS Topic/Sub-Topic
IRO
Type
Description
Climate Change - Climate
Mitigation and Energy
Impact
Actual and potential
negative
The Group produce Scope 1, 2 and 3 GHG emissions through operations and across the value chain.
Time Horizons
Value Chain
Originate or connected to
strategy
Business
relationship
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
Connected to strategy
Own operations,
vendors and
customers
ESRS Topic/Sub-Topic
IRO
Type
Description
Climate Change - Climate
Adaptation, Climate
Mitigation and Energy
Impact
Actual and potential
negative
Financing activities to certain NACE sectors (i.e. Rental and operating of own or leased real estate,
development of building projects, buying and selling of own real estate) with total portfolio exposure
of 36.55% out of €5bn exposures assessed under PRB institutional banking impact analysis of 2024,
create key/direct actual negative impacts to climate stability. The fact that the Group has not yet
implemented sufficient risk management practises on climate change adaptation indicates that the
Group negatively impacts climate change adaptation. The Group has not yet launched innovative
solutions on climate change adaptation leading to a negative impact on climate change adaptation.
Time Horizons
Value Chain
Originate or connected to
strategy
Business
relationship
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
Connected to strategy through
provision of finance
Customers
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
108
ESRS E1 - Climate Change (continued)
3.
Material impacts, risks and opportunities and their interaction with strategy and business model (continued)
Material IROs - Climate Change (E1) (continued)
ESRS Topic/Sub-Topic
IRO
Type
Description
Climate Change - Climate
Adaptation
Risk
Climate -
Physical - Acute
Wildfire risk as a driver of credit risk, liquidity risk, market risk, operating risk and strategic risk has been
identified as material. All acute hazards combined have been assessed as material as drivers to strategic
risk (Extreme heat, Drought, High intensity / duration precipitation events, Landslide, River flood, Storms)
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
No material current financial effects. Anticipated
financial effects include the increase in probability of
default (PD) and loss-given-default (LGD) of clients
and counterparties, depositors might simultaneously
withdraw deposits to address increased operational
costs, devaluation of REMU portfolio, disruption and
increased cost on owned buildings and branches and
reduction in profitability for strategic sectors of the
Group.
ESRS Topic/Sub-Topic
IRO
Type
Description
Climate Change - Climate
Adaptation
Risk
Environmental -
Physical - Acute
Earthquake risk as a driver of credit risk, liquidity risk, market risk and operating risk has been identified
as material
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
No material current financial effects. Anticipated
financial effects include the increase in PD and LGD
of clients and counterparties, depositors might
simultaneously
withdraw
deposits
to
address
increased operational costs, devaluation of REMU
portfolio, disruption and increased cost for owned
buildings and branches.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
109
ESRS E1 - Climate Change (continued)
3.
Material impacts, risks and opportunities and their interaction with strategy and business model (continued)
Material IROs - Climate Change (E1) (continued)
ESRS Topic/Sub-Topic
IRO
Type
Description
Climate Change - Climate
mitigation and energy
Risk
Climate - Transition
Transition risk as a driver of credit and liquidity risks arising from low emission alternative products
and business models as well as increased costs of energy and raw materials.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
No material current financial effects. Anticipated
financial effects include lagging behind competitors
in terms of required technological change (shifts to
low-carbon technologies) may affect clients and
counterparties, retail customers might be vulnerable
to increasing energy costs / dependence on single
energy provider. Corporate clients might be affected
by increasing energy costs as well as by carbon
pricing on carbon intensive materials, which may
result in increased cost of raw components such as
steel, concrete, plastic, agricultural products, fuels
etc., leading to increased PD and LDG.
ESRS Topic/Sub-Topic
IRO
Type
Description
Climate Change - Climate
mitigation and energy
Opportunities
Green finance
Opportunity to provide Green lending so to finance the transition to low carbon economy and manage
climate risks.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
Increase profitability and mitigate the possibility of
increased credit risk.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
110
ESRS E1 - Climate Change (continued)
4.
Resilience to Climate Change
The concept of climate resilience requires that organisations develop the adaptive capacity to respond to climate
change, leveraging opportunities and managing the associated transition and physical risks. The Group
established and evolves climate risk stress testing and sensitivity practices to ensure climate resilience.
a.
Climate Risk Sensitivity and Stress Testing
BOC PLC has a risk-based approach for the management of climate-related transition and physical risks in
lending.
i.
Stress Testing for ICAAP Quantification
Transition Risk Quantification
BOC PCL developed a Framework to quantify transition risk for the purposes of stress-testing within the context
of ICAAP, under the normative perspective. The framework addresses all sectors of the BOC PCL’s portfolio, but
dedicated models were created for those sectors that are more susceptible to transition risks, based on their
inherent activities and their exposures. Such sectors include Construction, Hotels, Real Estate and Mortgages
whilst the remainder of BOC PCL’s portfolio is catered through a generic model.
The approach builds on the risk quantification methodology that BOC PCL has put in place. The main elements of
the approach are described below.
The overall approach regarding Climate Stress Testing (CST) design is structured into three layers:
i.
Scenario Layer: This layer encompasses scenario variables, which are divided into macroeconomic
variables and climate risk parameters. It is essential that the macroeconomic variables remain
internally consistent with the climate risk parameters.
ii.
Climate Risk Layer: The climate risk parameters are utilized to adjust the customer’s rating
components through transition risk models.
iii.
Quantification Layer: The macroeconomic variables are used to estimate IFRS 9 PD and LGD based
on a forward-looking approach.
For the preliminary Stress Test run the following Network for Greening the Financial System (NGFS) scenarios
have been selected:
i.
NDCs (Nationally Determined Contributions), which for the case of Cyprus, almost coincides with the
“Below 2°C” scenario given the EU Members’ aspiration for climate Policies. “Below 2°C” scenario
gradually increases the stringency of climate policies, giving a 67% chance of limiting global warming to
below 2°C.
ii.
Current – Current Policies scenario assumes that only currently implemented policies are preserved,
leading to high physical risks.
iii.
Delayed Transition – Delayed Transition scenario is under the Disorderly scenario category. It assumes
annual emissions do not decrease until 2030. In addition, it requires strong policies to limit warming to
below 2°C and negative emissions are limited.
The results of the above-mentioned approach are expected to be disclosed in the 2025 Sustainability Statement.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
111
ESRS E1 - Climate Change (continued)
4.
Strategy resilience to Climate Change (continued)
a.
Climate Risk Sensitivity and Stress Testing (continued)
i.
Stress Testing for ICAAP Quantification (continued)
Physical Risks on Collateral Portfolio
In terms of physical risks, efforts were focussed on estimating the impact on property value from the potential
materialisation of climate-related physical risks. This is considered relevant to BOC PCL, given the concentration
to clients in activities relating to immovable properties such as Construction, Accommodation & Food Service,
Real Estate, Mortgages as well as the fact that a significant portion of BOC PCL’s collaterals are real estate assets.
To that end, granular data were obtained from an external vendor, providing granular, location level information.
Based on existing literature, only five physical hazards are considered as having impact on immovable properties
and these were analysed further. These include wildfire, landslide, wind gust, flood and sea level rise. For the
purposes of the analysis which was also used as part of its RIMA process, the NGFS scenarios were employed and
used as a reference. In particular, the following scenarios were used and projected up to 2050:
i.
Orderly transition: assume that climate policies are introduced early and gradually become more stringent.
Physical and transition risks are relatively small.
ii.
Disorderly transition: explore higher transition risk due to delayed or divergent policies across countries
and sectors.
iii.
Hot House World: assume that some climate policies are being implemented in some jurisdictions, but
that global efforts are insufficient to halt significant global warming. These scenarios pose serious physical
risks.
The analysis of the data allowed BOC PCL to gain an understanding of the assets vulnerable to the various physical
risks, their level of riskiness as well as potential concentrations across the island. Furthermore, following the
identification of physical risks, the monetary impact (damage function) for each combination of property, hazard,
scenario, and year was estimated. This monetary impact considered not only the geo-localisation features, but
also the asset-specific characteristics, i.e., commercial, industrial, residential and other use.
Focusing on the most conservative climate scenario (Hot House World) the data indicated that only three physical
hazards, namely wildfire, landslide and flood could potentially impact collaterals’ market value. The impact of
these physical hazards on the collateral portfolio was quantified in the 2024 year-end ICAAP as well as in the
subsequent quarterly updates both from an economic and a normative perspective. The wildfire hazard was
chosen, as the analysis indicated that it can potentially affect the largest amount of collaterals.
For the purposes of the quantification and taking a worst-case scenario perspective, BOC PCL considered the
effectiveness of insurance contracts as mitigants of wildfire as well as the below factors:
i.
Macro-economic conditions: Economic downturns could increase insurance lapses.
ii.
Severe economic depression: This could challenge insurers' financial stability and ability to pay claims.
iii.
Climate change: Increasingly severe wildfires may lead insurers to limit coverage.
iv.
Limited coverage: Standard policies might not cover all wildfire damages.
Economic Perspective:
Conclusively, based on the revised reduced market value of collaterals, the economic capital requirement add-on
for the impact on Physical Risk for the four-year period of the financial plan (2025 – 2028) was calculated to c.
€3mn. The presence of insurance contracts as mitigant was considered in the calculation.
Normative Perspective:
For the normative perspective, three different potential scenarios were considered for each of the ICAAP horizon
based on once-off event impact for wildfires in 2025, floods in 2026 and landslides in 2027.
Based on the revised reduced market value of the selected collaterals and the presence of insurance contracts as
mitigant for both wildfire and flood, the impact was calculated at c.€0.4mn.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
112
ESRS E1 - Climate Change (continued)
4.
Strategy resilience to Climate Change (continued)
a.
Climate Risk Sensitivity and Stress Testing (continued)
i.
Stress Testing for ICAAP Quantification (continued)
Physical Risks on Non-Financial Corporations (NFCs)
BOC PCL is in the process of estimating the impact of physical risks on Non-Financial Corporations (NFCs) credit
risk profiles. This project involves geolocating companies and their units to map and measure physical risks such
as floods, heatwaves, and other hazards. The mapping process assigns risk levels to different locations based on
the likelihood and severity of these hazards, and the potential financial impacts on companies are assessed by
focusing on key financial metrics like revenue and operating costs.
The final output of this process will show the potential financial losses for each company due to various hazards,
helping to understand the vulnerability of NFCs to these risks. This information will enable the Bank to adjust risk
drivers in the rating model and calculate climate-adjusted ratings under different climate scenarios and time
horizons.
ii.
Sensitivity Analysis
Scenario analysis and climate risk stress testing are methods which assist in evaluating and managing the possible
effects of C&E risks, to the Group’s business strategy and financial planning decisions. By nature, this analysis is
of an informative nature and focuses on the planning horizon of the Group’s Financial plan. The sensitivity analysis
carried out on physical and transition risks are described below.
Transition risks
To assess the potential impact of transition risks on the Business Model, a sensitivity analysis was carried out on
portions of the corporate and mortgage portfolios that were identified as being exposed to transition risks. The
analysis related to the Financial Plan for the period between 2025 – 2028 and reflected the potential impact of a
short-term disorderly scenario according to which a set of climate related policies are implemented at the
beginning of 2024.
Estimation of impact was done on a top-down basis considering the outcome of regulatory climate stress tests,
and specifically the outcome of the Bank of England Climate Biennial Exploratory Scenario. Considering the
specific composition of BOC PCL’s portfolio, such climate related policies would most likely affect customers in
the sectors identified as vulnerable to transition risks as well as customers with mortgage loans granted prior to
2009, implying thus a less-energy efficient property. These sectors account for c.49% of the BOC PCL’s total loan
portfolio as at September 2024. The outcome of the analysis thus provided a magnitude of losses BOC PCL might
face if both BOC PCL and its customers do not respond effectively to climate risks.
The analysis indicated that over the period of the next financial plan (2025 – 2028), an average decrease of the
Group’s profitability of €19mn per year was estimated, aggregated to €75mn for the period. This is an adverse
sensitivity scenario and given the energy strategy of Cyprus, this is not considered a likely outcome.
Physical risks
This sensitivity analysis is designed to evaluate the financial implications of climate-related physical risks on the
real estate assets held as collateral within the four-year timeframe of the Financial Plan. It focuses on three risks,
namely wildfire, landslide and flood. The analysis utilised the concept of damage functions. The analysis assumes
that climate-related risks will gradually materialize through market pricing mechanisms, even before physical
damage occurs. This assumption reflects growing market awareness of climate risks and their incorporation into
property valuations. The transmission channels through which these risks affect property values could include:
i.
Insurance premium adjustments reflecting increased risk exposure
ii.
Market participants' risk perception and preference shifts
iii.
Regulatory changes affecting building requirements and land use
iv.
Adaptation costs necessary to protect properties
v.
Changes in local economic conditions due to climate vulnerabilities
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
113
ESRS E1 - Climate Change (continued)
4.
Strategy resilience to Climate Change (continued)
a.
Climate Risk Sensitivity and Stress Testing (continued)
Physical risks (continued)
While actual climate impacts may materialize over longer timeframes, it is possible that market pricing
mechanisms will begin to incorporate these risks more rapidly as climate risk awareness increases.
Scenarios
The NGFS scenarios considered for this assessment were the Hot House World and the Orderly Transition. The
former scenario is more appropriate for wildfires and floods as it implies that physical risks increase the further
you move into the future. On the other hand, the Orderly Transition scenario is more appropriate for landslide as
the particular risk requires the additional element of heavy rain to act as a trigger. Heavy rain is not assumed in
the Hot House World scenario. The damage functions resulting from each scenario up to the year of 2034 were
thus compared. No significant differences were observed between the two scenarios given the rather short time
frame examined and therefore the Hot House World scenario was used to run the sensitivity analysis which aligns
with the scenario used for physical risks in the RIMA process.
Results
The sensitivity analysis results indicate a collective charge of €3.5mn and €6.8mn, assuming that prices are
reduced equally to the calculated damage functions for the years 2028 and 2034 respectively. Both charges are
not deemed material.
Employing the damage functions over a longer term would yield additional provisions as per the logic embedded
in the climate scenarios which provide for increasing impacts as you move further into the future. However, that
would ignore both the dynamic nature of the balance sheet and the mitigating actions that the BOC PCL can put
in place in the interim. Furthermore, the precise timing and magnitude of any climate impact on property prices
remain uncertain.
b.
Resilience of Strategy and Business Model
The Group has embedded climate resilience into its strategic planning. ESG is a core pillar of the Group’s long-
term strategy, with the ambition to achieve Net Zero by 2050. In line with this commitment, a decarbonisation
target has been established for the mortgage portfolio, aligned with the IEA’s B2DS. The lending strategy has
been adjusted to support this target, with integration into the Financial Plan for 2025-2028. Multiple scenario-
based sensitivity tests have been conducted to ensure alignment with climate targets and resilience under varying
transition risk scenarios.
The overall resilience of the Group’s business model is reinforced by a relatively low exposure to carbon-intensive
sectors, such as coal, oil, and gas. Further mitigating measures include the introduction of new lending sector
limits to carbon-intensive industries. These restrictions do not apply to green or transition financing or to entities
operating in carbon-intensive sectors with an externally validated transition plan, thereby incentivising customers
to transition toward a low-carbon economy.
The current assessment indicates that the Group’s business model remains resilient under a 2°C or lower climate
scenario, supported by a risk assessment framework, portfolio management, and the integration of climate risk
considerations into financial planning. Additional details on sectoral loan and investment exposures are provided
in 7. Climate Change Metrics & Targets in pages 141 and 143.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
114
ESRS E1 - Climate Change (continued)
5.
Description of the processes to identify and assess material climate-related impacts, risks and
opportunities
C&E Risks Identification & Materiality Assessment (RIMA) process
The Group while conducting the DMA, utilised the results derived from the RIMA process in regards to C&E risks.
In 2023, the Group has refined its MA of C&E risks as drivers of existing financial and non-financial risks, namely
Credit risk, Liquidity risk, Market risk, Operational risk, Strategic risk as well as Reputational and Legal risk, taking
into consideration its business profile and loan portfolio composition.
As part of the RIMA process, the Group has enhanced the following steps to ensure a comprehensive and
structured MA process, having due consideration on the specificities of its business model, operating environment
and risk profile:
i.
Identification and documentation of C&E risk drivers
ii.
Definition of transmission channels for C&E risks
iii.
Assessment of materiality of C&E risk drivers
Specifically, the Group has conducted an assessment of the following C&E risks, as drivers of existing risks:
i.
Climate-related physical risk drivers
ii.
Climate-related transition risk drivers
iii.
Environmental transition risk drivers (other than climate risks)
iv.
Environmental physical risk drivers (other than climate risks)
The assessment has been conducted using both quantitative and qualitative methods. For data driven methods,
a combination of internally collected Group specific data and external data have been used.
In summary, as a first step, a more granular list of potential C&E risk drivers has been identified through the
enhancement of the inventory of C&E risks already developed by the Group in the course of the previous C&E
risk assessment exercises. In particular, the Group has proceeded with an additional classification and
categorisation of the C&E risks across four levels of granularity as per the following example:
i.
Climate-related risk (Level-1)
ii.
Physical risk (Level-2)
iii.
Acute risk (Level-3)
iv.
Wildfire (Level-4).
As a second step, the C&E risks have been mapped, by RMD, to the existing financial and non-financial risks
through respective transmission channels. For transmission channels refer to page 117.
As a third step, a combination of qualitative and quantitative methods has been utilised for the purpose of the
performance of the MA of C&E risks using various materiality parameters and thresholds, depending on the
method and data used for the assessment. In addition, the evolution of C&E risks has been considered over the
short, medium and long-term time horizons. For the time horizons considered refer to 9. Time Horizons in page
100.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
115
ESRS E1 - Climate Change (continued)
5.
Description of the processes to identify and assess material climate-related impacts, risks and
opportunities (continued)
C&E Risks Identification & Materiality Assessment (RIMA) process (continued)
An overview of the steps followed for the performance of the MA is presented in the following figure:
Figure 1: Overview of BoC’s C&E MA 2023 stages
The following table (Table 2), provides an overview of the Group’s C&E risks inventory, which includes all C&E
risks considered as part of the MA performed. A further break down of C&E risks has been considered accordingly
by defining thirty (30) underlying risk types.
ID
C&E risk
C&E risk
sub-type
C&E risk
sub-type
C&E risk sub-type
[Level 1]
[Level 2]
[Level 3]
[Level 4]
1
Climate-
related
Physical
Acute
(Extreme) Heat
2
Drought (increased frequency, intensity, duration)
3
High intensity / duration precipitation events (increase; causing
flooding)
4
Landslide
5
River flood
6
Storms (increased activity and/or intensity)
7
Wildfire
8
Chronic
Desertification
9
Ocean acidity
10
Precipitation (decreased average precipitation)
11
Sea level rise (increasing risk from coastal flood)
12
Temperature (increase of average temperature)
13
Transition
Policy and
Regulation
Failure to comply with climate (ESG) disclosures and GHG
reporting obligations
14
Risks from litigation
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
116
ESRS E1 - Climate Change (continued)
5.
Description of the processes to identify and assess material climate-related impacts, risks and
opportunities (continued)
C&E Risks Identification & Materiality Assessment (RIMA) process (continued)
ID
C&E risk
C&E risk
sub-type
C&E risk
sub-type
C&E risk sub-type
[Level 1]
[Level 2]
[Level 3]
[Level 4]
15
Climate-
related
Transition
Technology
Transition to low-emission alternative products and
services/business models
16
Market
Increased energy costs and costs of raw materials
17
Increased stakeholder concern or negative stakeholder feedback
/ markets sentiment and preferences
18
Environmental
Physical
Acute
Earthquake
19
Tsunami
20
Chronic
Air pollution
21
Soil pollution
22
Water pollution
23
Biodiversity loss (incl. species extinction)
24
Deforestation (incl. habitat destruction) and land use change
25
Water scarcity
26
Pests (increased prevalence)
27
Transition
Policy and
Regulation
Circular economy & waste management
28
Environmental protection requirement
29
Technology
Environmentally friendly technologies
30
Market
Environmentally driven consumer behaviour
Each C&E risk has been individually assessed as a driver of Credit risk, Liquidity risk, Market risk and Operational
risk, and individual risk scores have been assigned. For these categories of existing risks, the results of the
assessment have been aggregated at the level of physical and transition risks sub-types. The assessment of C&E
risks as drivers of Strategic risk, Reputational risk and Legal risk has been performed at the abovementioned
granularity level.
C&E Transmission Channels
C&E risks are recognized as drivers of the existing risks and may impact the Group directly or indirectly through
counterparties, assets (microeconomic channels) or the broader economy in which the relevant clients and the
Group operates (macroeconomic channels). The Group has defined the transmission channels through which the
C&E risks can influence each of its existing risk categories, the Table below provides a non-exhaustive list of
transmission channels and is not limited to the C&E risks identified as material. A more detailed description of
each of the C&E risk transmission channels regarding the principal risks and the arising impact on the Group is
provided in Table 3 below.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
117
ESRS E1 - Climate Change (continued)
5.
Description of the processes to identify and assess material climate-related impacts, risks and opportunities (continued)
C&E Transmission Channels (continued)
C&E Risk
Drivers
Transmission Channels
(Non-exhaustive List)
Potential Impact on the Group
Affected
Financial and
Non-Financial
Risk Types
Climate
related and
Environmental
Transition
Risks
i.
Impact on repayment ability of clients through:
i.
Increased operating costs for compliance
and/or lower revenues
ii.
Increased capital expenditures to comply
with regulatory standards
iii.
Closure of business lines or facilities due to
transition to greener economies and public
sentiment
Increased Probability of Default (‘PD’) and Loss Given Default
(‘LGD’)
Credit Risk4
i.
Impact on the price of marketable instruments
(bonds/equity) and to Real Estate assets
ii.
Impact on BOC PCL’s valuation if it does not reduce
its emissions and/ or increase its GAR
i.
Decrease in value of the REMU portfolio due to increase in
operational costs and decrease in the value of the assets
ii.
Large/ small sell-off (of High Quality Liquid Assets
(‘HQLA’)) against reduced prices and/ or potential
difficulty to liquidate
iii.
Interest rate and FX shocks, credit spreads changes
Market Risk5
i.
Inability to raise funding due to lack of climate
change action by the organisation
ii.
Depletion of deposits to address increase operational
costs or mitigate transition risks
i.
Rapid withdrawal of customer deposits
ii.
Unexpected significant expenses or charges that may
influence liquidity position and net outflows
iii.
Lack of funding sources / negative changes in funding
structure
iv.
Lower demand for BOC PCL’s capital issuance
v.
Difficulties in selling assets / selling of assets with a
discount
Liquidity Risk6
Table 3: Overview of the key transmission channels and potential impact on the Group through C&E risks
4 Including Counterparty risk, Settlement risk, Issuer risk, Concentration risk and Country risk.
5 Including Interest rate risk, FX risk, Real Estate risk, Credit Spread risk and Equity risk.
6 Including Liquidity risk and Funding risk.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
118
ESRS E1 - Climate Change (continued)
5.
Description of the processes to identify and assess material climate-related impacts, risks and opportunities (continued)
C&E Transmission Channels (continued)
C&E Risk
Drivers
Transmission Channels (Non-exhaustive List)
Potential Impact on the Group
Affected
Financial and
Non-Financial
Risk Types
Climate
related and
Environmental
Transition
Risks
Socio-economic changes (e.g. changing consumption
patterns / customer preferences)
i.
Losses due to physical damages or shutdowns
ii.
Increased operational costs for the buildings of BOC PCL
iii.
Losses from lower productivity
iv.
Losses from wrong decisions/ process issues
v.
Additional significant operating or capital expenses
Operational
Risk7
i.
Inability to meet stakeholders' demands as a result
of changing market sentiment
ii.
Reputational damage due to the financing of
environmentally harmful projects
i.
Limited business opportunities/ lessened expansion potential
ii.
Workforce fluctuations
iii.
Client withdrawal
iv.
Additional investments to improve internal processes and
comply with expectations
Reputational
Risk
Litigation risks due to financing of environmentally harmful
projects
i.
Litigation costs may reduce the value of the REMU portfolio
ii.
Non-compliance with regulation and policy measures
iii.
Investments in carbon intensive and unsustainable projects,
buildings or similar
iv.
Misalignment of communicated targets and reality
Legal/Litigation
Risk
i.
Additional costs and regulatory repercussions
relating to, for example, exposure to real estate
portfolio without adequate EPC labels, or exposure
to high emitting/ polluting sectors
ii.
Regulatory and / or market developments in
relation to financial institutions offering 'green'
products impacting BOC PCL's competitiveness
i.
Loss of revenues due to strategic reorientation (e.g. loss of
profitable business line)
ii.
Inadequate definition and execution of the strategy (e.g.
incorrect or faulty assumptions, poor implementation)
iii.
Expenses for the implementation of upcoming C&E regulatory
requirements / changes
iv.
Limited business opportunities/ lessened expansion potential
Strategic Risk
Table 3: Overview of the key transmission channels and potential impact on the Group through C&E risks (continued)
7 Including Regulatory Compliance/Conduct risk, FEC risk, Internal/ External Fraud risk, People risk, BC risk, IT/ Cyber Risk, Technology risk, Data Accuracy and Integrity risk, Physical Security
and Safety risk, Statutory Reporting and Tax risk, Transaction Processing and Execution risk, Project risk, Model risk and Third Party risk.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
119
ESRS E1 - Climate Change (continued)
5.
Description of the processes to identify and assess material climate-related impacts, risks and opportunities (continued)
C&E Transmission Channels (continued)
C&E Risk
Drivers
Transmission Channels (Non-exhaustive List)
Potential Impact on the Group
Affected
Financial and
Non-Financial
Risk Types
Climate
related and
Environmental
Physical Risks
i.
Increased operating costs due to retrofitting and/or
damage / substitution of assets
ii.
Increase in insurance costs
iii.
Lower revenues due to reduced productivity or
damage in value chain operations
iv.
Decrease in value of property collateral
Increased PD and LGD
Credit Risk
i.
Impact on the price of marketable instruments
(bonds/equity) and to Real Estate assets
ii.
Impact on BOC PCL’s valuation if it does not reduce
its emissions and/ or increase its GAR
i.
Decrease in value of the REMU portfolio due to increase in
operational costs and decrease in the value of the assets
ii.
Large / small sell-off (of HQLA) against reduced prices and/
or potential difficulty to liquidate
iii.
Interest rate and FX shocks, credit spreads changes
Market Risk
Depletion of deposits to address increase operational costs or
address or mitigate physical risks (e.g. to finance damage
repairs)
i.
Rapid withdrawal of customer deposits
ii.
Unexpected significant expenses or charges that may
influence liquidity position and net outflows
iii.
Lack of funding sources / negative changes in funding
structure
iv.
Lower demand for Bank's capital issuance
v.
Increase in funding costs
vi.
Difficulties in selling assets/ selling of assets with a discount
Liquidity Risk
Table 3: Overview of the key transmission channels and potential impact on the Group through C&E risks (continued)
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
120
ESRS E1 - Climate Change (continued)
5.
Description of the processes to identify and assess material climate-related impacts, risks and opportunities (continued)
C&E Transmission Channels (continued)
C&E Risk
Drivers
Transmission Channels (Non-exhaustive List)
Potential Impact on the Group
Affected
Financial and
Non-Financial
Risk Types
Climate
related and
Environmental
Physical Risks
Increased operating costs due to damage on premises,
operating locations and other facilities
i.
Losses due to physical damages or shutdowns
ii.
Increased operational costs for the buildings of BOC PCL
(e.g. to comply with energy efficiency standards)
iii.
Losses from lower productivity
iv.
Losses from wrong decisions/ process issues
v.
Unplanned or additional significant operating or capital
expenses
Operational
Risk
Increased operating costs arising from the management
of C&E risks
i.
Limited business opportunities/ lessened expansion potential
(including respective operating losses)
ii.
Workforce fluctuations (including respective operating
losses)
iii.
Client withdrawal (including respective operating losses)
iv.
Additional investments to improve internal processes and
comply with expectations
Reputational
Risk
Litigation risks arising from BOC PCL's exposure to
physical climate-related and/ or environmental damages
i.
Litigation costs may reduce the value of the REMU portfolio
ii.
Non-compliance with regulation and policy measures
iii.
Investments in carbon intensive and unsustainable projects,
buildings or similar (knock on effects from reputational loss)
iv.
Misalignment of communicated targets and reality
Legal/Litigation
Risk
Inadequacies in BOC PCL’s product offerings without
factoring in the potential damages resulting from physical
risks associated with climate change; this could result in
increased defaults on loans and negatively impact BOC
PCL's asset quality.
i.
Loss of revenues due to strategic reorientation (e.g. loss of
profitable business line)
ii.
Inadequate definition and execution of the strategy (e.g.
incorrect or faulty assumptions, poor implementation)
iii.
Expenses for the implementation of upcoming C&E
regulatory requirements / changes
iv.
Limited business opportunities
Strategic Risk
Table 3: Overview of the key transmission channels and potential impact on the Group through C&E risks (continued)
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
121
ESRS E1 - Climate Change (continued)
5.
Description of the processes to identify and assess material climate-related impacts, risks and
opportunities (continued)
Assessment of C&E risks as drivers of financial and non-financial risks
Following the mapping of C&E risks as potentially relevant or not-relevant drivers of the principal risks through
the transmission channels, follows the assessment of the C&E risks and their relevant impact based on the
principal risks. The Group has applied a combination of both qualitative and quantitative methods. The following
methodologies have been applied:
a.
Quantitative Geographic Assessment
This assessment is applicable to C&E physical risks as drivers of Credit, Market, Liquidity and Operational risks.
Specific physical climate-related hazards, namely Wildfire, Landslide, River Flood, Wind Gusts (Storms), and Sea
Level Rise have been considered using geolocation data (i.e. coordinates, postal codes, municipalities) with
respect to the following:
i.
Credit risk: borrowers’ collateralized (secured) portfolio (geolocation coordinates of collateral properties)
and unsecured portfolio (postal codes or municipalities of borrowers’ location);
ii.
Market risk: properties of the Group’s REMU portfolio (geolocation coordinates of collateral properties);
iii.
Liquidity risk: deposits held by Cyprus residents (postal codes or municipalities of deposit holders’
locations);
iv.
Operational risk: Group’s physical locations (postal codes or municipalities of Bank’s facilities).
Furthermore, specific environmental hazards, namely Air Pollution, Soil Pollution and Earthquake have been
considered with respect to the following:
i.
Property collateral for Credit risk secured portfolio (geolocation coordinates of collateral properties) - with
respect to Air pollution, Soil pollution and Earthquake;
ii.
Borrowers for Credit risk unsecured portfolio (postal codes or municipalities of borrowers’ location) - with
respect to Air pollution, Soil pollution and Earthquake;
iii.
Property collateral for the REMU portfolio for Market risk (geolocation coordinates of collateral properties)
- with respect to Earthquake;
iv.
Deposits held by Cyprus residents for Liquidity risk (postal codes or municipalities of deposit holders’
locations) - with respect to Earthquake;
v.
BOC PCL’s physical locations for Operational risk (postal codes or municipalities of BOC PCL’s facilities) -
with respect to Earthquake.
To further analyze the materiality of risk exposures to both physical and environmental hazards, a distribution
analysis of underlying credit exposures (for both secured and unsecured portfolios), deposit amounts and
employees count across risk scores (1-Low, 2-Medium, 3-High, 4-Critical) is performed. To conclude on the
materiality of a specific hazard based on the distribution analysis across risk scores, a decision tree logic has been
applied leading to one resulting risk score per hazard.
b.
Quantitative Country Heatmaps
To inform the MA process, the Group has performed a heatmapping exercise to determine how physical and
transition risks affect certain industries that the Group is exposed to, and subsequently to determine the impact
on the overall Group’s risk profile and operations. The following heatmaps were constructed to assess specific
risks and segments as described below.
Country climate transition risk heat map
The heatmap was used to assess:
i.
Liquidity risk: deposits held by non-Cyprus residents (foreign deposit amounts)
ii.
Market risk: HQLA Bond portfolio (corresponding Conditional Value at Risk (CvaR))
A corresponding risk score from the heat map has been assigned to foreign deposit holders based on the
underlying country of residence, and to bonds based on the underlying country of the issuer. As a next step, a
distribution analysis of deposit amounts and CVaR across risk scores has been performed.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
122
ESRS E1 - Climate Change (continued)
5.
Description of the processes to identify and assess material climate-related impacts, risks and
opportunities (continued)
Assessment of C&E risks as drivers of financial and non-financial risks (continued)
b.
Quantitative Country Heatmaps (continued)
Country climate physical risk heat map
The heatmap was used to assess:
i.
Market risk and Liquidity risk: HQLA Bonds portfolio
ii.
Operational risk: Foreign locations of BOC PCL’s third party outsourcing/ providers
A corresponding risk score from the heat map has been assigned to bonds based on the country of issuer and to
third party providers based on country of location. As a next step, a distribution analysis of HQLA balances (CVaR
for Market risk and market value for Liquidity risk) and number of employees (per country of third-party provider
location) across risk scores has been performed.
In order to conclude on the materiality of climate transition and physical risks based on the distribution analysis
described above, the same logic as described in the quantitative geolocation methodology (decision tree) has
been applied, leading to a single resulting risk score (consistently, the same 4-level unique risk scale has been
applied).
c.
Qualitative analysis based on Expert Judgement
Expert judgement has been also employed to assess certain risk drivers including those for Strategic, Reputational
and Legal risks. Expert judgement includes additional external sources and publicly available statistical data such
as consultation reports, scientific publications and other sources featuring Cyprus-specific data from Eurostat,
World Resource Institute, Climate Analytics, Climate Vulnerability Monitor etc.
d.
Sectoral Analysis
For transition risks, the Group has used an industry heatmap with GHG emissions intensity as the indicator of the
sectors’ sensitivity to transition risks (the higher the GHG intensity, the higher exposure to transition risks). As a
next step, a distribution of the credit exposures to these emissions categories has been allocated and an overall
score for transition related risks was determined.
e.
Determination of materiality
Different types of scores have been considered during the MA depending on the type of risks analysed and
methods considered. Determination of materiality was concluded at C&E Risks Level 3, i.e., at the level of chronic,
acute etc. risks sub-types, utilizing the Group’s existing Risk and Control Self-Assessment methodology and thus
assessing Magnitude and Likelihood on a scale from one (1) to five (5), to ensure consistency.
The definitions of each Magnitude and Likelihood scores have been formulated, taking into account the nature of
C&E risks and encompassing different characteristics of the physical and transition risks, as well as the acute and
chronic drivers in a harmonised way. Thus, for the purposes of this MA, the definitions of Impact and Likelihood
have been tailored to describe the occurrence of severe C&E events or circumstances, since these are typically
responsible for the great majority of the potential risk. Following the assessment, score levels “High” and “Critical”
have been considered as “material” for the purposes of the MA, whilst “Low’ and “Medium” scores as “non-
material”.
Reperformance of MA for 2024
In November 2024, the Bank reperformed the MA using identical methodologies to establish whether new risks
must be considered as material. More specifically, Credit, Liquidity, Market and Operational risk analysis was
reperformed with revised data and for the rest of prudential risks that were critically assessed based on expert
judgement, the assessment has been revisited to ensure its validity. The outcome of this analysis did not yield
any changes in the material risks. The RIMA process will be performed at least on an annual basis, or ad-hoc, if
necessary.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
123
ESRS E1 - Climate Change (continued)
5.
Description of the processes to identify and assess material climate-related impacts, risks and
opportunities (continued)
The process to identify and assess climate-related impacts, using UN PRB impact analysis tools, is described in
the 4. Impacts, Risks and Opportunities in page 95. The Group identifies climate-related opportunities through
the BES process and Group’s Financial Plan.
The Group, established and implements a structured and detailed process, with clear roles and responsibilities,
to gather a broad range of updates and developments, both internal and external, and link them with
sectors/industries and products/services so to assess their impact, across different time horizons, and identify
C&E risks emerging from these updates and developments and inform Group’s risk and strategic profile.
The BES process facilitates the ongoing monitoring of potential impacts of C&E risks on its business environment
across short-, medium- and long-term time horizons. This process involves the systematic monitoring of various
news, updates, and developments, including regulatory developments, macroeconomic trends, competitive
landscape, technological trends, as well as societal demographic developments and geopolitical updates. As part
of the process, the Group collects external information, on a monthly basis, from various sources, such as news
articles, publications, policy and regulatory updates, as well as internal information such as strategy updates,
process changes and other relevant internal documentation.
The identified developments are then mapped to the relevant business lines, sectors/industries and portfolios
that might be impacted, as well as to specific products/services, where applicable. Developments are further
assessed in terms of their relevance across the various time horizons, and preliminary impact scores are assigned
based on the expected effect on the Group’s risk and strategic profile. Scores range from 0 (No impact) to 5
(Critical impact).
The Group has established a dynamic interaction between the BES and the RIMA to ensure that the insights from
both exercises continually inform each other. The results of the BES, for 2024, have been considered and informed
the RIMA and Business Strategy, particularly developments which have been classified as having a “High” or
“Critical”. The results of BES have been utilized to identify climate related opportunities as part of the DMA
process.
The preliminary impact assessment of key updates and developments on risk profile and strategy is conducted
and reported to the SC and EXCO on a quarterly basis. The final impact assessment of key updates and
developments on risk profile and strategy is conducted and presented to the SC, EXCO, NCGC and RC on an
annual basis.
The Group established also a BES working group with specific responsibilities assigned to Compliance Division,
RMD and Strategy Department so to collectively perform the impact assessment arising from key updates and
developments on risk profile and strategy.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
124
ESRS E1 - Climate Change (continued)
6.
Policies and Actions Related to Energy, Climate Change Mitigation and Adaptation
The Group has developed a set of policies, embedding recurring actions, to effectively manage its material
impacts, risks, and opportunities related to climate change mitigation, energy and adaptation.
Environmental and Social (E&S) Policy
The Group’s E&S Policy aims to address E&S responsibilities by establishing an E&S management framework,
fostering a culture of E&S responsibility, managing E&S risks in lending activities, training staff for policy
implementation, and supporting customers address E&S matters. The policy guides departments involved in credit
granting process and applies to granting new facilities to physical persons or legal entities secured by mortgage
on immovable property and granting of new funded facilities to legal entities (excluding credit cards). The Policy
does not apply to activities outside of Cyprus nor to restructuring cases unless new facilities are also requested
with the restructuring.
Lending applications associated with activities included in the policy’s Exclusion Sectors / Prohibited Activities
(i.e. Thermal coal mining, upstream oil exploration etc.) are rejected and reported to RMD. For activities that are
classified as low risk by EBRD’s E&S Risk Categorization assessment a written customer confirmation for proper
business conduct, relevant licenses and work permits must be obtained. For activities that are classified as
Medium / High risk by EBRD’s E&S Risk Categorization assessment a written customer confirmation for proper
business conduct, relevant licenses and work permits must be obtained and an E&S study by external expert
should be performed. In addition, other E&S checks should be performed, such as investigations into penalties,
public complaints, adverse media reports, accidents / incidents, regulatory investigations and legal actions as
well as site visits. The findings of the above actions must be stated in the credit application together with any
corrective measures for the mitigation of the E&S risk.
The approving authority decides whether the E&S risk is acceptable and set specific terms and covenants to
control any E&S risks as well as decides the frequency of future E&S studies (at least every 3 years for High-Risk
E&S ratings).
E&S risks associated with a facility are monitored throughout its lifetime:
1.
As part of the normal monitoring of the facility (i.e. customer’s credit review)
2.
When certain events qualify for re-evaluation of the E&S risks, such as change in business activity, expiry
of operating permits, regulatory investigations, company investments / improvements, public complaints
or adverse media reports, changes to environmental legislation, accidents / incidents and legal actions.
The Board bears the ultimate responsibility for the effective implementation of the Policy and for setting the right
tone from the top. Credit Risk Control & Monitoring (CRC&M) reviews the Policy for proper governance and is
responsible to examine adherence to policy and report divergence to guidelines, as part of on-going monitoring,
through the review of credit applications on a sample basis, at regular intervals, as described in the Credit
Monitoring Policy and CRC&M operations manual. Monitoring compliance with this Policy, on a regular basis, is a
key factor in minimizing E&S risks. This is achieved through quality checks from CRC&M, which indicate the level
of adherence to the Policy in order to take corrective action. Findings are communicated to Chief Risk Officer
(CRO), and recommendations are made for enhancing compliance. RMD performs periodic (at least on an annual
basis) monitoring on the E&S management procedures, to inform management and other stakeholders if policies
and procedures have been implemented and are functioning as expected or if improvements or revisions are
required. An annual report is submitted by CRM to the EBRD, covering the previous financial year and confirming
that the Group is in full compliance with EBRD’s E&S requirements. The Board approves the Policy, RC reviews
and recommends the Policy prior to the submission to the Board for approval, making sure, that sufficient,
dependable, and secure internal procedures are in place to ensure that the Group complies with the Policy and
monitoring the effective implementation of the Policy via the Control Functions. The policy is available for all
employees through internal portal.
Details on the E&S Policy are provided directly to customers through Business lines as part of the loan origination
process.
The above-mentioned actions are not associated with any capital or operating expenditure as are allocated on
existing resources of the Group including Consumer Banking Division, Corporate & SME Division, International
Banking Division, Credit Risk Control & Monitoring, Corporate & SME Credit Risk and Credit Sanctioning.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
125
ESRS E1 - Climate Change (continued)
6.
Policies and Actions Related to Energy, Climate Change Mitigation and Adaptation (continued)
Lending Policy
The Group’s Lending Policy underpins its efforts to manage environmental and social risks associated with
financing activities, focusing also on minimising climate change mitigation, energy and adaptation impacts and
risks. The Policy sets the standards and effective guidelines to be used during the credit granting process which
is aligned with the Group’s risk tolerance and approved limits and guides individuals involved in the credit granting
process on effective credit granting standards and sound evaluation of credit risk, including ESG Due Diligence in
the loan origination process for legal entities and its interaction with credit risk.
The Group, considering the ESG Framework and the C&E risks, which might impact credit risk and repayment
ability, has established an ESG Due Diligence process applied during credit granting and review process. The ESG
Due Diligence process is applicable to customers that meet specific thresholds / criteria. Specifically, the ESG
Due Diligence is applied on legal entities under Corporate & SME Division, within Cyprus, with new lending amount
over €250,000 (direct facilities) and Group’s exposure over €3,000,000 or new lending amount over €1,000,000
(direct facilities).
ESG Due Diligence process – Roll out plan
2025
2026
2027
1.
Amend eligibility criteria (Group exposure
thresholds) to increase the number of
entities from the SME Business Line
2.
Initiate data collection for the Shipping
portfolio
3.
Include large customer groups from the
International Corporate Banking (exact
criteria to be determined)
4.
Initiate
data
collection
from
existing
international
syndicated
loans.
The
majority of these loans have external ESG
reports which will be used by the Group for
the data collection.
1.
Further
amend
eligibility
criteria
(Group
exposure
thresholds) to increase
the number of entities
from Corporate and the
SME Business Line
1.
Include
selected
legal
entities
of
the
Retail
Division
ESG Due Diligence is not applied for dormant companies, start-ups, holding companies, management companies,
companies with total exposure less than €250,000 and Group’s exposure over €3,000,000, special purpose
vehicles and Governmental authorities. During the credit application assessment process, that falls under specific
thresholds / criteria, for granting new and/or reviewing existing credit facilities, Business Units must identify,
evaluate and assess ESG matters that are relevant to the borrower. ESG Due Diligence includes the following:
1.
ESG questionnaires (applicable for new lending and review): The questionnaires must be completed by
the customer, in order to collect relevant quantitative and qualitative information, identify and assess
ESG matters that are relevant to the borrower and derive an ESG score which reflects the performance
of the customer towards ESG factors and exposure of customers towards ESG risks.
2.
Scenario Analysis (applicable for new lending): The repayment ability of the borrower is evaluated under
certain negative Environmental (E) scenarios, to assess the extent to which environmental risks affect
the borrower’s financial position and repayment ability.
3.
Assessments under (1) and (2) above are evaluated and, where necessary, recommendations to
borrowers in aligning with regulations and existing best practices are made, (depending on the ESG
questionnaires results) and/or specific covenants will be set for monitoring (depending on the joint
assessment of (1) and (2) above).
RMD is authorized to set thresholds and criteria through detailed guidelines, for the application of the above
process to the Business Lines and to issue guidelines as to how the findings of the assessment under (1) and (2)
may impact the cost of the borrower (refer to Lending Pricing Policy below) and/or whether any issues identified
should be resolved before disbursement.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
126
ESRS E1 - Climate Change (continued)
6.
Policies and Actions Related to Energy, Climate Change Mitigation and Adaptation (continued)
Lending Policy (continued)
The relevant ESG questionnaire incorporates specific questions relating climate change mitigation, adaptation
and energy. Depending on the customer’s response and the associated weight of the Environmental (E) score,
the customer’s aggregated score derives. The above-mentioned process develops also a high-level roadmap for
the customer under assessment in order to improve the ESG score and mitigate potential ESG risks. The ESG
questionnaire, Synesgy solution, takes into account Global Reporting Initiative (GRI) and ESRS metrics in order
to assess customer’s performance on ESG spectrum.
Investment cost for the implementation of ESG Due Diligence process (Synesgy Questionnaire & Data Lake)
solution for the FY2024 was €62k. The budgeted cost included in the Financial Plan period 2025-2028, for the
ESG Due Diligence, is €420k. Therefore, the above-mentioned actions are not associated with any significant
capital or operating expenditure.
In addition, through this policy the Group mandates the collection of Energy Performance Certificates, in loan
origination process, for properties financed or assigned as collaterals (building or planning permit after
01/01/2010) which indicate the exposure to climate transition risk. Currently, mandatory collection of EPCs has
been instructed for better quality of data in assessing Group’s exposure to climate transition risks, and classify
Housing loans, with EPC Category A and meeting certain criteria, as Green, in accordance with the decarbonization
strategy of Residential mortgage portfolio. Further details on EPC gathering in loan origination process are
included in relevant procedure manuals and circulars.
The Board approves this Policy and bears the ultimate responsibility for the effective implementation of the Policy
and for setting the right tone from the top.
High-level information on the Lending policy is available on the Group’s website and further details at product or
service level are provided to customers either through direct communication with the Business Lines or through
Group’s website.
The Group follows the three lines of defence model, each performing certain duties in relation to credit risk
exposure, namely front line, RMD and IAD.
CRC&M reports are used to monitor and assess Asset quality, examine Lending Policy compliance and identify
any Policy deviations. This is achieved through:
1.
identification of areas of risk and establishing if the risk / return relationship is within the appetite of the
Group;
2.
discussing and analysing possible risk scenarios and risk gaps;
3.
assessing and reviewing the credit application and granting process;
4.
identification of early warning signs in aggregated portfolio and separate sub portfolios and provision of
information so that remedial actions are made.
Green Lending Policy
The Group’s Green Lending Policy, which is based on Green Loan Principles (GLP) of Loan Market Association
(LMA), actively promotes financing towards projects with tangible environmental benefits, including projects
aiming to mitigate climate change mitigation, adaptation and energy impacts and risks. In addition, the policy
enables the Group to grasp green lending opportunities in the market. The policy establishes the criteria to classify
a loan as ‘green’, focusing, among others, on projects such as renewable energy, energy efficiency, clean
transportation, green technologies, climate change adaptation and Green buildings. By providing Green lending
the Group effectively manages the material negative impacts and risks associated with energy, climate change
mitigation and climate change adaptation. the Group is in the process of preparing the relevant guidelines, which
will provide further guidance on the specific procedures to be followed for the complete operationalisation of the
Green Lending Policy.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
127
ESRS E1 - Climate Change (continued)
6.
Policies and Actions Related to Energy, Climate Change Mitigation and Adaptation (continued)
Green Lending Policy (continued)
Following the BES process on C&E risks, the Group incorporates Green new lending internal KPIs to Business
Lines in order to promote Green lending practices and effectively manage climate change adaptation, climate
change mitigation and energy impacts and risks as well as grasp available opportunities in the market. For more
details on the Green new lending internal KPIs refer to page 136.
The Board bears the ultimate responsibility for the effective implementation of the Policy and for setting the right
tone from the top. Monitoring of green loans is performed by CRC&M and control functions. More details on Green
lending policy at product or service level can be provided to customers through direct communication with the
Business Lines during the loan origination process.
The above-mentioned actions are not associated with any significant capital or operating expenditure. The
resources allocated relate to existing resources including Consumer Banking Division, Corporate & SME Division,
International Banking Division, CRC&M, Corporate & SME Credit Risk and Credit Sanctioning.
Sustainable Finance Framework
The Group established a Sustainable Finance Framework (SFF) aiming to improve disclosure and transparency
on sustainability and to bring to international investors more opportunities to invest in sustainable developments
in Cyprus. The SFF is designed to support the management of climate change mitigation, adaptation and energy
impacts and risks and grasp opportunities through sustainable financing. The Group has set up a SFF which
facilitate the issuance of:
i.
Green Bonds/Loans – for which the funds raised are exclusively allocated to Eligible Green Projects;
ii.
Social Bonds/Loans – for which the funds raised are exclusively allocated to Eligible Social Projects;
iii.
Sustainability Bonds – whereby the funds raised are exclusively allocated to Eligible Green Projects
and to Eligible Social Projects.
The SFF is aligned with the Green Bond Principles and defines the following core elements:
i.
Use of Proceeds;
ii.
Process for Project Evaluation and Selection;
iii.
Management of Proceeds;
iv.
Reporting.
For Use of Proceeds an amount at least equivalent to the net proceeds of any Sustainable Financing Instrument
issued by the Group will be allocated to finance new or re-finance, in whole or in part sustainable projects which
meet the eligibility criteria of the following Eligible Green and/or Social Project categories.
The Project Evaluation and Selection Process ensures that the proceeds of any of the Group’s Sustainable
Financing Instruments are allocated to new lending or existing projects that meets the criteria set out under the
SFF. The Group has established a Sustainable Financing Working Group (SFWG) to carry out the evaluation and
selection process.
In addition, it is Group’s intention to maintain an aggregate amount of Eligible Sustainable Projects that are at
least equal to the aggregate net proceeds of all the Group’s Sustainable Financing Instrument issuances that are
concurrently outstanding under this Framework. In the event that the aggregate value of Eligible Sustainable
Projects in the Group’s Eligible Asset Portfolio is less than the total outstanding amount of the Group’s Sustainable
Financing Instrument(s), the unallocated surplus funds will be held in line with the Group’s general liquidity
management guidelines until allocated to Eligible Sustainable Projects. Eligible projects are:
a)
Renewable Energy (Environmental)
b)
Energy Efficiency (Environmental)
c)
Clean transportation (Environmental)
d)
Green Buildings (Environmental)
e)
Access to Essential Services – Healthcare
f)
Employment Generation and SME financing
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
128
ESRS E1 - Climate Change (continued)
6.
Policies and Actions Related to Energy, Climate Change Mitigation and Adaptation (continued)
Sustainable Finance Framework (continued)
For all Sustainable Financing Instrument issuances under this Framework, the Group is committed to providing
investors with transparent reporting on the allocation of proceeds towards Eligible Sustainable Projects (Allocation
Reporting), as well as to report on the positive environmental and social impacts of those projects (Impact
Reporting). The Sustainable Financing Instrument Report will be updated annually, until full allocation of the
proceeds of the issued Sustainable Financing Instrument(s).
Following the setup of the SFF in 2023, BOC PCL, in 2024, issued a €300mn green senior preferred notes under
the EMTN programme in line with the Group’s Beyond Banking approach, aimed at creating a stronger, safer and
future-focused bank and leading the transition of Cyprus to a sustainable future. An amount equivalent to the
net proceeds of the Notes will be allocated to eligible green projects as described in the SFF.
Concentration Risk Policy
The Concentration Policy applies at Group level and defines limits and the methodology for setting limits towards
exposures in specific assets, liabilities and off-balance sheet items to ensure that concentration risk is within the
Risk Appetite. The Concentration Risk Policy complements the efforts of managing negative impacts and risks
associated with energy, climate change adaptation and climate change mitigation by restricting lending to carbon-
intensive sectors, including oil, gas, manufacturing of cement, manufacturing of Iron & Steel & Aluminium and
non-renewable power generation. Financing in these sectors is only permitted for carbon-intensive NACE sectors
subject to a total (cumulative) exposure of €100m as per the provisions of this policy and for transition or green
projects that align with the Group’s sustainability objectives, subject to approval by its highest credit committees.
The Board approves the Policy and bears the ultimate responsibility for the effective implementation of the Policy
and for setting the right tone from the top. Monitoring of Concentration Risk Policy is performed by:
1.
CRC&M through monitoring of:
1.
Large exposures on a monthly basis.
2.
Credit risk concentration limits through semi-annual quality assurance reviewed.
2.
Market & Liquidity Risk Department is responsible for monitoring country, counterparty risks, funding sources,
derivatives and brokers.
3.
Credit Risk Management Department is responsible for monitoring sector, collateral and name concentration.
In general, monitoring is performed at least on a monthly basis and more frequently as required by the type
of limit and Business Lines are informed accordingly, in order to ensure real time monitoring. As part of this
process, data is sourced from the Data Warehouse system. Such data is governed by data quality rules put
in place by the Data Quality & Governance department. RC is informed about the outcome of this monitoring.
The above-mentioned actions are not associated with any significant capital or operating expenditure. The
resources allocated relate to existing resources including Consumer Banking Division, Corporate & SME Division,
International Banking Division, Credit Risk Control & Monitoring, Corporate & SME Credit Risk and Credit
Sanctioning.
Lending Pricing Policy (LPP)
The purpose of LPP is to define the principles of pricing new loans and overdrafts. The Group is recognising the
important of promoting sustainability in its lending practises so it has developed a comprehensive plan aiming to
integrate ESG and climate factors into its loan pricing framework to ensure a long-term sustainable growth.
The Group performed market research to identify the best practices to incorporate ESG and climate considerations
in the loan pricing. Following the market research, the Group introduced margin discounts by taking into account
the customer’s ESG score and the transaction eligibility under Green Lending Policy. A margin discount, based on
the client’s ESG and climate impact, has been implemented for both new and existing clients on new lending
requests, for all clients (all sectors) under Corporate Division, differentiating however between carbon-intensive
vs. non-carbon intensive sectors. The Group linked the margin discount at the client level to the borrower's “E”
scoring (extracted from borrower’s ESG score). In addition, the margin discount is linked at the transaction level
(i.e. whether lending is green or not) utilizing the provisions of the Green Lending Policy. This approach aims to
incentivize customers to have a better ESG score and obtain Green lending in order to be exposed to lower level
of energy, climate change transition and adaptation impacts and risks.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
129
ESRS E1 - Climate Change (continued)
6.
Policies and Actions Related to Energy, Climate Change Mitigation and Adaptation (continued)
Lending Pricing Policy (LPP) (continued)
CRC&M currently monitors the implementation of the LPP through a sample review of new lending cases approved
for a reduction in pricing on a semi-annual basis.
Treasury monitors pricing deviations (related to customer-based lending or to pre-priced products or to any other
lending of which pricing has already been approved by ALCO) below Directors’ discretionary limits (as per relevant
ALCO approval) on a quarterly basis through a centralised ex-post reporting procedure. All pricing deviations per
business line are reported to ALCO quarterly. In case pricing deviations exceed 10% of new lending in the
respective reporting period (in terms of amount per business line), ALCO is informed accordingly. All pricing
deviations below Director’s discretionary limits should be agreed with the relevant line Director and approved by
Deputy Chief Executive Officer.
LPP is reviewed and revised at least on an annual basis (or more frequently if deemed necessary), by Treasury,
after considering the input provided by each stakeholder. The policy is subject to approval by the Board, following
Asset & Liability Committee (ALCO) and RC recommendation and is subject to review at least on an annual basis
or more frequently if deemed necessary.
The policy is made available through detailed circulars and procedures and is readily available in the Employee
Internal Portal. More details on LPP at product or service level can be provided to customers through direct
communication with the Business Lines during the loan origination process or through Group’s website.
The above-mentioned actions are not associated with any significant capital or operating expenditure. The
resources allocated relate to existing resources including Consumer Banking Division, Corporate & SME Division,
International Banking Division, Credit Risk Control & Monitoring, Treasury, Corporate & SME Credit Risk and
Credit Sanctioning.
Collateral Valuation Policy
The purpose of the policy is to set the guidelines on how collaterals obtained by the Group are valued at origination
and how such value is monitored and reviewed at regular intervals, to ensure:
a)
that they provide adequate coverage for the credit facilities granted by BOC PCL and an accurate picture
of the value of collateral in case of enforceability, provisioning, or capital calculations.
b)
valuation risk is prevented and deterred and, where it does occur, it is addressed in a timely and
expeditious manner.
The Policy guides relevant departments involved in the credit process, regarding collateral valuation and
monitoring. All departments involved in the credit process must be aware and comply with this policy and related
policies and circulars which are adopted in conjunction with the policy.
Furthermore, BOC PLC’s collateral, REMU and own property valuation process involves several significant
valuation parameters and considerations. The existing valuation templates include among other a section on
environmental risks, which valuers must assess to determine the market value.
BOC PCL through a specific circular, during 2023, emphasised to the valuers the importance of considering certain
physical risks during the valuation process. The following risks must be considered in the valuation process are
listed below although the list is not considered as exhaustive.
a)
Ground Geological Suitability (identifying and reporting the zone and its characteristics)
b)
Area seismicity around the property (identifying and reporting the zone and intensity)
c)
Risk of flooding (identifying and reporting the zone and intensity)
It is also mandatory, during the valuation of collaterals, to request EPC of the collateral and to be adequately
captured in the valuation report. It is also mandatory for valuers to include adequate commentary on the presence
of contamination and hazardous substances deriving from current or past activities on the property or its location.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
130
ESRS E1 - Climate Change (continued)
6.
Policies and Actions Related to Energy, Climate Change Mitigation and Adaptation (continued)
Collateral Valuation Policy (continued)
The Property Valuation System has been enhanced to record the above information about physical risks and EPC.
The above-mentioned process mitigates the exposure of the Group towards energy, climate change mitigation
and adaptation impact and risks. On a quarterly basis, a Quality Assurance Report, is submitted to the SC, by
Premises & Valuations Department, indicating the percentage of valuation reports obtained that are full compliant
with the new requirements, partial compliance or major deviations observed, on a sample basis. The SC
determines the actions to be followed by the Valuations Department.
External valuations are reviewed on a regular and sample basis as appropriate, by Premises & Valuations
Department, to confirm that the external valuer has complied with BOC PCL’s valuation requirements. For all
cases above, Premises & Valuations Department submits an annual report to the CRO with relevant information
and suggestions. In addition, as part of on-going monitoring, CRC&M reviews credit applications on a sample
basis, to ensure adherence to policy.
The Board approves the Policy and bears the ultimate responsibility for the effective implementation of the Policy
and for setting the right tone from the top. RC reviews and recommends, the Policy, for approval to the Board,
making sure, that sufficient, dependable, and secure internal procedures are in place to ensure that the Group
complies with the Policy and monitoring the effective implementation of the Policy via the Control Functions. The
above-mentioned action is not associated with any capital or operating expenditure. The resources allocated
relate to existing resources including Consumer Banking Division, Corporate & SME Division, International
Banking Division, Credit Risk Control & Monitoring, Treasury, Corporate & SME Credit Risk and Credit Sanctioning.
Group’s Own Operations and Decarbonisation Levers
The Group, even with no established policy yet associated with energy, climate change mitigation and adaptation
on own operations, has implemented and plans to implement several actions, on owned buildings and branches,
aiming to mitigate material negative impacts on climate change mitigation, climate change adaptation, energy
efficiency and renewable energy deployment.
The Group plans to establish an Environmental Management Policy on own operations within 2025 in order to
provide guidance to the Group on how to actively promote environmental sustainability in own operations through
ongoing identification, management and improved efficiency of environmental impacts associated with the
Group's business activities, namely: energy management, adaptation measures, use of resources, renewable
energy, recycling and waste management and procurement decisions. The decarbonisation activities conducted
the last two years are depicted in the following table. Group’s own funds are supporting the implementation of
decarbonisation actions. The Group’s Financial Plan embeds actions associated with the decarbonization plan for
2025-2028.
Group’s Decarbonisation Actions – Own Operations
2023
2024
(€ 000)
Installation of electric chargers for cars
3
88
Air-conditioning systems replacements
42
107
Roof insulation
88
Solar Panels
132
38
Plug in hybrid vehicles
139
Electric vehicles
139
Lighting replacement
27
55
Total
204
654
In addition, Branch rationalisation associated with the Digital Transformation programme is considered a
decarbonization lever as well. The Group is considering the implementation of a large project which is expected
to reduce Scope 1 and Scope 2 GHG emissions between 10%-20% compared to 2024 emissions inventory.
Resources allocated towards implementation of the above-mentioned actions are the existing employees under
the Administrative operations Department of the Group. The above-mentioned investment costs are reflected as
additions in the Note 25 Property and equipment of the Consolidated Financial Statements.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
131
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
GHG Emission Reduction Targets – Own Operations – Scope 1 and Scope 2
The Group has estimated the Scope 1 (Mobile Combustion, Stationary Combustion and Fugitive Emissions) and
Scope 2 GHG emissions of 2021 relating to own operations in order to set the baseline for carbon neutrality target
in own operations, given this was the year the Group’s decarbonisation efforts were initiated. For the Group to
meet the carbon neutrality target by 2050, the Group has set an interim target to reduce Scope 1 and Scope 2
GHG emissions by 42% (absolute target) by 2030. The absolute reduction target has been set following the IEA’s
B2DS and sectoral decarbonisation approach using Science Based target initiative’s (SBTi) tool. The
decarbonisation target has not been externally assured by relevant climate global bodies, such as SBTi. The target
is directly linked with the Group’s ESG strategy until the Group’s Environmental policy becomes effective by the
end of 2025.
The Group’s decarbonisation efforts, including actions described in section Group’s Own Operations and
Decarbonisation Levers, lead to the reduction in Scope 1 and Scope 2 GHG emissions by 3,431 tCO2e in 2024
compared to 2021 which represents c.25% reduction. The Group should perform additional decarbonisation
actions to reduce Scope 1 and Scope 2 GHG emissions by c.17% to achieve the interim target of 2030.
The Group’s own carbon footprint will continue to be calculated on an annual basis which will enable comparisons
to be made and progress against decarbonisation target to be monitored.
The energy efficiency actions conducted in 2024 were netted off with the increased electricity consumption due
to cooling needs associated with summer heatwaves, leading to stable Scope 2 GHG emissions between 2023
and 2024.
Metric
2021
Base
line
Target
year
Target
Target
reduction
Performance
as at 31
December 2024
Figure as at
31 December
2024
Methodology
Benchmark
1.5 °C
Scenario
tCO2eq
13,693
2030
7,942
(42%)
(25%)
10,262
SBTi
(66%)
Notes:
1)
Scope 2 GHG emissions used to set the GHG emission reduction target are based on the location-based approach.
2)
The gases included in the calculations are CΟ2, CH4, and N2O.
3)
The GHG emission reduction target is reported on a gross basis and does not include GHG removals, carbon credits or avoided emissions.
4)
The carbon footprint for Scope 1 and Scope 2 were estimated based on the methodologies described in the Greenhouse Gas Protocol and ISO14064-1:2019
standard.
5)
Benchmark 1.5°C indicates the % reduction compared to the baseline if the 1.5 °C scenario was used.
The Group monitors the performance against the GHG emission target on own operation through SC, EXCO and
NCGC on a quarterly basis through the Sustainability Performance Report.
GHG Emission Reduction Targets – Loan Portfolio - Scope 3
The Group, by taking into account the GHG emissions estimated for loan portfolio, the most significant loan
exposures and the RIMA on C&E risks, decided to set a decarbonisation target on Mortgage portfolio, since their
exposure corresponds to 34% of Households, Non-Financial and Other-Financial Corporations exposures and
corresponds to c.6% of Group’s GHG emissions of loan portfolio. The target is aligned with the Group’s ESG
ambition to reach Net Zero by 2050 and is linked with the objectives of the policies mentioned above. The Group
has estimated the GHG emissions per square metre, as at 31 December 2022, for the properties financed under
its Mortgage portfolio using the PCAF methodology and proxies, to identify the baseline. By applying SBTi target
setting methodology, the baseline should be no more than a year from the target’s effective date. Therefore,
given the target was effective from December 2023, the baseline was set at December 2022. Then Group utilised
the SBTi’s tools, sectoral decarbonisation approach, in order to estimate the decarbonisation pathway that the
Mortgage portfolio should follow to be aligned with the IEA B2DS. The Group decided to align the Mortgage
portfolio with IEA B2DS due to the following reasons:
i.
The scenario is consistent with Global warming projections (IEA and Intergovernmental Panel on Climate
Change (‘IPCC’)) and is considered a widely acceptable scenario.
ii.
The scenario is considered more plausible compared to the IEA’s Net Zero Scenario given the fact that
Cyprus market is pre-mature in the climate field. Therefore, Group considers reasonable to initiate its
efforts based on a less intense scenario and then intensify its efforts when the overall Cyprus market is
more mature in the field.
iii.
Lack of data, enhances the risk of not having a solid baseline, so the Group considers that is more prudent
to initiate its efforts based on a less optimistic scenario until data availability and quality is enhanced.
iv.
The scenario is more straightforward to obtain and use as it is aligned with SBTi’s available tools.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
132
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
GHG Emission Reduction Targets – Loan Portfolio - Scope 3 (continued)
In order to ensure the feasibility of the interim decarbonisation target and derive the decarbonisation strategy of
Mortgage portfolio, the Group has projected the GHG emissions per square metre for the properties financed
under its Mortgage portfolio as at 31 December 2030. In order to project the Mortgage portfolio as at 31 December
2030, the Group used various assumptions such as:
i.
Projected new lending on Mortgage portfolio between 2025-2030;
ii.
Projected square metres of each property financed under projected Mortgage new lending;
iii.
Allocation of new lending on Mortgages to EPC classifications;
iv.
PCAF proxies on GHG emissions per financed residential property;
v.
Cyprus Government targets on the reduction of GHG emissions as well as the utilisation of renewable
energy on residential buildings by 2030;
vi.
Maturity of Mortgage exposures between 2025-2030.
When setting the target, the Group performed several sensitivities on the assumptions used to project Mortgage
portfolio as at 31 December 2030 in order to ensure the feasibility of the target. Under all scenarios (sensitivities)
the decarbonisation target on Mortgage on 2030 is achieved. In addition, sensitivities were performed to the
baseline of 2022, given the lack of sufficient data, in order to ensure that when data quality of the estimation is
improved in the upcoming years the adjusted decarbonisation target will be met. The decarbonisation target on
Mortgage is also achieved after the increase / decrease of baseline by 10%, under all scenarios. The
decarbonisation target has not been externally assured by relevant climate global bodies such as SBTi.
Metric
2022
Base
line
Target
year
Target
Target
reduction
Performance
as at 31
December 2024
Figure as at
31
December
2024
Methodology
Benchmark
1.5 °C
Scenario
kgCO2/m2
53.50
2030
30.65
(43%)
(12%)
47.19
PCAF/SBTi
25.32
kgCO2/m2
53.50
2035
18.60
(65%)
(12%)
47.19
PCAF/SBTi
13.77
kgCO2/m2
53.50
2040
11.27
(79%)
(12%)
47.19
PCAF/SBTi
4.78
kgCO2/m2
53.50
2045
5.29
(90%)
(12%)
47.19
PCAF/SBTi
2.47
kgCO2/m2
53.50
2050
2.34
(96%)
(12%)
47.19
PCAF/SBTi
1.22
The Group aims to reduce by 43% the kilograms of GHG emissions financed per square metre (kgCO2e/m2) under
the Mortgage portfolio, by 2030 compared to 2022 baseline. The Mortgage portfolio as at 31 December 2024
produced 47.19 kgCO2e/m2 which is 12% lower compared to the baseline due to increase in energy efficient
residential properties financed in 2024 following introduction of Green Housing product.
54 51 48 46 43 40 37 34 31 28 26 23 21 19 17 16 14 13 11 10 9 8 6 5 5 4 4 3 2
-
10
20
30
40
50
60
2020
2025
2030
2035
2040
2045
2050
Carbon Intensity (kgCO2/m2)
Year
Carbon Intensity Target – Mortgage Portfolio
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
133
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
GHG Emission Reduction Targets – Loan Portfolio - Scope 3 (continued)
At the end of 2023, the Group introduced the Green Housing product with a variable interest rate. In 2024, the
Group introduced the Green Housing product with a fixed interest rate. Both products are aligned with the GLP
of the LMA, supporting the decarbonization strategy of the mortgage portfolio. The Group’s new lending strategy,
embedded in the 2025-2028 Financial Plan, include a new lending internal KPI associated with the Green Housing
product which represents the decarbonization lever to reach the carbon intensity reduction as presented in the
above graph.
The feasibility of this GHG emission reduction target is strengthened by Cyprus legislation, which mandates that
residential properties must have an EPC Category A to obtain a planning permit for construction after July 1,
2020. The Group’s Mortgage portfolio should be aligned with the abovementioned graph in order to be aligned
with the climate scenario of IEA B2DS and being exposed to lower transition risks. The Group following the
abovementioned analysis determined its new Mortgage lending strategy to meet the decarbonisation target on
Mortgage.
The Group monitors the performance against the new lending metric associated with decarbonisation target on
Mortgage in order to take remedial action on time:
i.
By the SC, EXCO and NCGC through the Sustainability Performance Report (Quarterly)
ii.
By the SC, EXCO and RC through the Climate Risk Report (Quarterly)
iii.
By EXCO through the monthly performance pack (Quarterly)
iv.
By BDC on a monthly basis.
The GHG emission reduction target on Mortgage portfolio is reported based on the intensity value, adopting the
transitional provision to limit the information on value chain targets, for the first three years, to the information
available in-house, on absolute values for target year and interim years.
Operational Limits to manage material climate transition and physical risks
In addition to the decarbonisation target set on Mortgage portfolio, the Group has set Key Risk Indicators (KRIs)
for both climate-related transition and physical risks. The KRI related to transition risks of Non-Financial
Corporations (NFCs) measures the Scope 1 intensity per loan as compared with the average Scope 1 emission
intensity of Cyprus Republic. The KRI and relevant thresholds are updated on an annual basis through revision
of Risk Appetite process. The indicator is monitored by the SC, EXCO, RC and Board as part of the Risk Appetite
quarterly reporting. The KRI is effective for the FY2025 therefore no progress against the indicator has been
reported. The limit is linked with the Group’s Lending Policy.
Description
The indicator measures the potential exposure at risk in relation to transition risk.
The indicator is applicable to Non – Financial Corporations only.
Thresholds
Business as usual:
Early warning:
In-breach:
<=30%
30 – 40%
>40%
Note:
1)
The KRI measures the Potential Exposure at Risk [PEAR = (Exposures with GHG emissions >= the Cyprus average
Scope 1 emissions)/(Total Exposure)].
2)
The GHG emissions for BOC PCL’s exposures are estimated using the PCAF proxies and standard.
3)
The average Scope 1 emissions (kg per euro) for Cyprus, as reported by the Republic to EuroStat, covering the period
between 2013 to 2019. The data from 2020 to 2021 were excluded due to the impact of COVID-19, which resulted in
lower and non-representative emissions figures. When setting the indicator those were the latest available GHG
emission data for Cyprus.
4)
To calculate the PEAR ratio, the Scope 1 emissions per loan exceeding the Cyprus average were summed (numerator)
and then divided by the total GHG emissions of the Non-Financial Corporation Bank (denominator).
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
134
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Operational Limits to manage material climate transition and physical risks (continued)
The Group is also exposed to climate-related physical acute risks driven by the wildfire risk through its impact on
credit risk on the loan portfolio. Therefore, the Group has set a KRI that measures the exposure collateralised by
immovable property with a “Very High” rating for any physical risk that can impact collaterals (wildfire and
landslides) over the total exposure collateralised with immovable property. This allows the monitoring and
mitigation of such risks. The KRI is effective for the FY2025 therefore no progress against the indicator has been
reported. The limit is linked with the Group’s Lending Policy.
Description
The indicator measures the exposure collateralised by immovable property with a
“Very High” rating for any physical risk over the total exposure collateralised with
immovable property.
Thresholds
Business as usual:
Early warning:
In-breach:
<=30%
30 – 45%
>45%
Note:
1)
The KRI measures the Potential Exposure at Risk [PEAR = (Exposures with physical risk graded “Very High”)/(Total
Exposure)] both at country and district level.
2)
Potential exposure at Risk is calculated by considering exposure collateralised by immovable property with a “Very
High” rating for wildfire and / or landslide over the total exposure collateralised with immovable property.
3)
Each collateral location receives a rating for each risk, ranging from “Low” to “Very High”. This is referred to as the
SPRI (Synthetic Physical Risk Index), representing the asset's vulnerability to physical risk based on its geographic
location, different climate scenarios and time periods. It is noted that SPRIs do not indicate losses on asset values but
aid in measuring the materiality of exposure to physical risks in the bank’s collateral portfolio.
The above indicator also monitored across material portfolios and geographies (concentration) and their
thresholds are the same as indicated above. The Group has set the following operational limits, applicable for
FY2025, to track the effectiveness of the policies mentioned in Section Policies and Actions Related to Climate
Change Mitigation and Adaptation:
limits
Level
Policies to address material
impacts and risks
% of customers with ESG
Due Diligence
100% of all eligible (as per Lending
Policy) customers
Lending Policy
Overdue insurance policies
0% overdue insurance polices
Lending Policy
Outstanding valuations
0% overdue outstanding valuations
Valuation Policy
EPCs collections for new
lending
100% of eligible (as per Lending
Policy) collateral population
Lending Policy
50% of new EPCs to be >
C
50% of eligible (as per Lending Policy)
new collateral to be greater than EPC C
Lending Policy
Operational Limits – Details
Limit
% of customers with ESG Due Diligence
Description
Requires the completion of the ESG Due Diligence process through the Synesgy
platform (ESG questionnaires). The assessment takes place annually.
Risks addressed
The questionnaires cover a wide spectrum of ESG risks as it is structured based on
GRIs, ESRS and SDGs.
Lines / Portfolios
All eligible customers under SME Banking (Line 2) and Corporate Banking (Line 3).
The KPI will become applicable to any line to which the ESG Due Diligence process
is introduced.
Thresholds
100% of eligible customers within a single calendar year
limit
Overdue insurance policies
Description
Requires that all real estate obtained as collateral maintains insurance against the
main physical risks
Risks addressed
Physical risks: wildfire, flood, earthquake
Lines / Portfolios
All lines that obtain real estate as collateral
Thresholds
0% overdue insurance polices
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
135
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Operational Limits to manage material climate transition and physical risks (continued)
Operational Limits – Details (continued)
Limit
Outstanding valuations
Description
Requires that all real estate obtained as collateral maintains current valuations as
defined in the Valuation Policy. Since 2024, all valuers are requested to comment
on C&E risks that affect each property. Furthermore, they are required to record
in the Valuations System any flood, earthquake, and ground geological suitability
findings as determined by the various authorities of the Republic.
Risks addressed
Physical risks: flood, earthquake, geological findings
Lines / Portfolios
All lines that obtain real estate as collateral.
Thresholds
0% overdue outstanding valuations
Limit
EPCs collections for new lending
Description
Requires that EPCs are collected for all new real estate obtained as collateral as
part of new lending and are required by Law to have an EPC issued.
Risks addressed
Transition risks
Lines / Portfolios
All lines that obtain real estate as collateral.
Thresholds
100% of eligible collateral population
Limit
EPCs classification for new lending
Description
Requires that 50% of EPCs collected for all new real estate obtained as collateral
as part of new lending to have a classification greater than C. The KPI relates to
collaterals that are required by Law to have an EPC.
Risks addressed
Transition risks
Lines / Portfolios
All lines that obtain real estate as collateral.
Thresholds
50% of eligible collateral population to be greater than C
The KRIs and operational indicators are effective for the FY2025 therefore no progress against the indicators is
reported. The limits are not based on scientific evidence and only internal stakeholders were engaged in setting
those limits.
KPIs Escalation process
If any of the KRIs listed above is breached (whether at the early warning level or the in-breach level) then the
breach is escalated to the CRO. If the breach relates to either a RAS or a Recovery Plan indicator, then the
respective escalation process is followed. KPIs will be monitored as per the existing monitoring process in place
which provides for:
1.
KPIs are reported to the Credit Monitoring Forum on a monthly basis and monitored versus thresholds on
a quarterly basis
2.
In case of material deviations, these will be reported to the RC as necessary.
Given that the KPIs related to C&E risks, deviations will be reported to the CRO who may decide to escalate to
the SC before any further escalation to the RC.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
136
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Green lending to manage climate transition and physical risks
The Group, by taking into account the results of BES and the RIMA on C&E risks, has set Green /Transition new
lending internal KPIs for 2024 in order to support the transition of its customer and Cyprus to a low carbon
economy and limit its exposure to transition and physical risks in certain sectors. Specifically, BOC PCL by taking
into account the results of the RIMA on C&E risks, the expected introduction of Green taxation in Cyprus, the
amendments adopted on the Energy Performance Directive on buildings as well as the Cyprus Government
subsidies identified climate related opportunities and has set Green/Transition new lending internal KPIs on
specific sectors (i.e., Manufacturing, Trade, Construction and Accommodation) to enable the Green transition.
The Green/Transition new lending internal KPIs have been included in the Group’s Financial Plan for 2024 – 2027
and monitored on a monthly basis by the BDC of the Group. Green / Transition new lending internal KPIs are set
on an annual basis during the development of the Group’s Financial Plan.
In addition, the Group offers a range of environmentally friendly products to manage transition risk and help its
customers become more sustainable. For example, a number of loan products are offered under the Fil-eco
Product Scheme. The Group offers environmentally friendly Car Hire Purchase addressed to anyone who wants
to buy a new hybrid or electric car, providing its customers the opportunity to buy a new electric or hybrid vehicle
and to move away from transport options reliant on fossil fuels. Moreover, an environmentally friendly loan for
home renovation is offered to customers who want to renovate and upgrade the energy efficiency of their privately
owned primary residence or holiday home and achieve a higher energy efficiency rating. Further, the customers
may benefit from an Energy Loan for the installation of energy saving systems for home use. This product is
addressed to customers who seek financing for the installation of photovoltaic systems for home use and other
home energy-saving systems. At the end of 2023, the Group launched the Green Housing product, with variable
interest rate and in 2024 launched Green Housing product with fixed interest rate, aligned with GLP of LMA, which
drives the decarbonisation strategy of Mortgage portfolio. Green housing products provide a discount to
customers providing the EPC Category A. The new lending strategy of the Group, embedded in the Financial Plan
for 2025-2028, includes the ambition on the new Green Housing product in order be aligned with the GHG
emissions reduction target set and manage transition risk. The fact that the Cyprus legislation imposes residential
properties to have an EPC A so to issue a planning permit after 1 July 2020 facilitates the process. The
Environmentally friendly Gross Loans are not verified by independent body.
Notes:
1)
Renewable energy projects relate to Solar and wind parks financed.
2)
Energy loans relate to energy efficient equipment, solar panels and energy upgrade financed.
3)
Car loans relate to financing the acquisition of Environmentally friendly vehicles under Fil-eco and Green cars under
hire purchase agreement.
4)
Green Housing relates to financing the acquisition or construction of a residential property with EPC A. The EPC is
available at collateral level in the Group’s database therefore the one to one (one account number one collateral
property with EPC A) assumption has been applied to identify the Green Housing loans as at 31 December 2024 and
then used the same pool to identify the Green Housing as at 31 December 2023.
154
6
2
25
187
321
11
2
20
355
Green Housing (EPC
A)
Car Loans
Energy Loans
Renewable Energy
Projects
Total
Environmentally Friendly Loans - Gross Loans as at 31 December (€mn)
2023
2024
↑109%
↑91%
↑90%
↓20%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
137
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Energy Consumption and mix
Energy Consumption and mix
Energy consumption and mix
For the period ending 31
December 2023
For the period ending 31
December 2024
(1) Fuel consumption from coal and coal
products (MWh)
-
-
(2) Fuel consumption from crude oil and
petroleum products (MWh)
1,749
1,716
(3) Fuel consumption from natural gas
(MWh)
-
-
(4) Fuel consumption from other fossil
sources (MWh)
-
-
(5) Consumption of purchased or
acquired electricity, heat, steam, and
cooling from fossil sources (MWh)
12,816
12,792
(6) Total fossil energy consumption
(MWh) (calculated as the sum of
lines 1 to 5)
14,565
14,508
Share of fossil sources in total
energy consumption (%)
84%
83%
(7) Consumption from nuclear
sources (MWh)
-
-
Share of consumption from nuclear
sources in total energy consumption
(%)
-
-
(8) Fuel consumption for renewable
sources, including biomass (also
comprising industrial and municipal
waste of biologic origin, biogas,
renewable hydrogen, etc.) (MWh)
-
-
(9) Consumption of purchased or
acquired electricity, heat, steam, and
cooling from renewable sources (MWh)
2,501
2,497
(10) The consumption of self-generated
non-fuel renewable energy (MWh)
285
408
(11) Total renewable energy
consumption (MWh) (calculated as
the sum of lines 8 to 10)
2,786
2,905
Share of renewable sources in total
energy consumption (%)
16%
17%
Total energy consumption (MWh)
(calculated as the sum of lines 6, 7
and 11)
17,351
17,412
Notes: Energy mix as published by Electricity Authority of Cyprus has been used to break-down energy consumption between
fossil fuels sources and renewable energy sources.
The Group is a Financial Institution and does not belong to High climate impact sectors.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
138
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Gross Scope 1, 2, 3 and Total GHG emissions
Group’s Gross Scopes 1, 2, 3 and Total GHG emissions
Reporting Year
Gross Scope 1
Emissions
(tCO2eq)
Gross Scope 2
Emissions
(tCO2eq)
Gross Scope 3
Emissions
(tCO2eq)
Total GHG
Emissions
(tCO2eq)
2023
969
9,422
2,512,729
2,523,120
2024
934
9,327
2,883,374
2,893,635
Note: Refer to GHG emissions reporting principles in Additional Information – Sustainability Statement in page 239.
Group’s Gross Scopes 1, 2, 3 and Total GHG emissions
Reporting Year
Gross Scope 1
Emissions
(tCO2eq)
Gross Scope 2
Emissions
(tCO2eq)
Gross Scope 3
Emissions
(tCO2eq)
Total GHG
Emissions
(tCO2eq)
2023
BOC PCL (including
Jinius)
844
8,565
2,495,033
2,504,442
Eurolife
74
697
4,496
5,267
GIC
31
123
12,793
12,947
CISCO
20
37
407
464
Total
969
9,422
2,512,729
2,523,120
2024
BOC PCL (including
Jinius)
845
8,424
2,857,758
2,867,027
Eurolife
44
726
6,048
6,818
GIC
25
142
19,150
19,317
CISCO
20
35
418
473
Total
934
9,327
2,883,374
2,893,635
Note: Refer to GHG emissions reporting principles in Additional Information – Sustainability Statement in page 239.
Scope 3 GHG emissions
BOC PCL (including Jinius) – Scope 3 GHG Emissions
(tonnes CO₂e)
2023
2024
% of inputs used from
upstream and
downstream value
chain
Purchased Goods and
Services (Cat. 1)
47,171
43,891
0%
Upstream transportation
and distribution (Cat. 4)
1,376
1,735
0%
Waste generated in
operations (Cat. 5)
2,929
2,970
0%
Business Travel (Cat. 6)
317
327
100%
Employee commuting (Cat.
7)
1,732
1,957
47%
Mortgages Loans (Cat. 15)
152,251
139,419
12%
Motor Vehicles Loans (Cat.
15)
61,879
51,900
0%
Business Loans (Cat. 15)
1,763,963
2,024,808
0%
Commercial Real Estate
Loans (Cat. 15)
59,685
64,634
0%
Sovereign Bonds (Cat. 15)
343,103
381,871
60%
Corporate Bonds (Cat. 15)
60,627
144,246
0%
Total Scope 3 emissions
2,495,033
2,857,758
Note: Refer to GHG emissions reporting principles in Additional Information – Sustainability Statement in page 239.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
139
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Gross Scope 1, 2, 3 and Total GHG emissions (continued)
Scope 3 GHG emissions (continued)
Aligned with the Group’s 2050 Net Zero ambition, the Group joined the Partnership for Carbon Accounting
Financials (PCAF) in October 2022 and adopted its recommended methodology for estimating Financed Scope 3
GHG emissions from the Group’s investment and lending activities, as well as its insurance contracts. Group’s
Financed Scope 3 GHG emissions constitute 97% of the Group’s total emissions, estimated using the PCAF
Standard and proxies. The PCAF Standard, reviewed by the GHG Protocol, aligns with the Corporate Value Chain
(Scope 3) Accounting and Reporting Standard for category 15 investment activities. It includes a data quality
ranking scale from 1 (highest quality) to 5 (lowest quality), applied to the estimation of emissions for each asset
class.
To improve data quality and reduce data gaps, the Group launched ESG Due Diligence process to gather relevant
data and enhanced its loan origination process to gather Energy Performance Certificates (EPCs) for financed and
certain collateral properties. Additional data collection actions will be undertaken in 2025 based on the ESG and
Climate Data Gap & Strategy. The loan portfolio has been classified into PCAF asset classes to facilitate future
decarbonisation target-setting.
PCAF Asset
class
Definition
Business
loans8
Business loans include all loans and lines of credit for general corporate purposes (i.e., with
unknown use of proceeds as defined by the GHG Protocol) to businesses, non-profits, and any
other structure of organisation that are not traded on a market and are on the balance sheet
of the financial institution. Revolving credit facilities, overdraft facilities, and business loans
secured by real estate such as CRE-secured lines of credit are also included. Any off-balance
sheet loans and lines of credit are excluded.
Commercial
real estate
This asset class includes on-balance sheet loans for specific corporate purposes, namely the
purchase and refinance of CRE, and on-balance sheet investments in CRE. This definition implies
that the property is used for commercial purposes, such as retail, hotels, office space, industrial,
or large multifamily rentals. In all cases, the building owner or investor leases the property to
tenants to conduct income-generating activities
Mortgages
This asset class includes on-balance sheet loans for specific consumer purposes namely the
purchase and refinance of residential property, including individual homes and multifamily
housing with a small number of units. This definition implies that the property is used only for
residential purposes and not to conduct income-generating activities
Motor
vehicles
This asset class refers to on-balance sheet loans and lines of credit for specific (corporate or
consumer) purposes to businesses and consumers that are used to finance one or several motor
vehicles. Corporate loans for acquisition of vehicles for trade purposes were classified as
‘Business Loans
8 The Group classified Project Finance under Business Loans asset class due to limited available data on use of proceeds to
classify them under Project Finance asset class. GHG emission estimation is not impacted by this classification, as the two asset
classes utilise the same PCAF proxies.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
140
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Gross Scope 1, 2, 3 and Total GHG emissions (continued)
Scope 3 GHG emissions (continued)
The Group estimated the Financed Scope 3 GHG emissions for the above-mentioned asset classes. GHG emissions
associated with loan portfolio are metrics of transition risks that the portfolio is exposed. The Group, by taking
into account the GHG emissions estimated for loan portfolio, the most significant loan exposures and the
Materiality Assessment on C&E risks, it has decided to set a decarbonisation target on Mortgage portfolio in order
to be aligned with its Net Zero ambition and manage transition risk by directing its lending to more energy
efficient residential buildings.
Note: Refer to GHG emissions reporting principles in Additional Information – Sustainability Statement in page 239.
61,879
59,685
152,251
1,763,963
2,037,778
51,900
64,634
139,419
2,024,808
2,280,762
Motor Vehicles
CRE
Mortgages
Business loans
Total
Financed Scope 3 GHG emissions (tCO2e per year) - Loan Portfolio
2023
2024
DQS: 5
DQS:4.4
DQS:4.9
DQS:5
DQS: PCAF Data Quality Score
↓16%
↑8%
↓8%
↑15%
↑12%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
141
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Gross Scope 1, 2, 3 and Total GHG emissions (continued)
Scope 3 GHG emissions (continued)
Given that the majority of Financed Scope 3 GHG emissions of loan portfolio derive from Business Loan asset
class, the carbon concentrated sectors under Business Loan asset class have been identified and are considered
primary sectors for setting decarbonisation targets. The primary sectors identified under Business Loan asset
class are:
1.
Transportation and storage (51%),
2.
Wholesale and retail trade (19%),
3.
Manufacturing (11%) and
4.
Construction (6%).
BOC PCL – Financed Scope 3 GHG emissions – Business loan asset class
2023
2024
NACE
Sector
OS Loan
Amount
(€mn)
Emissions
(tCO2e per
year)
OS Loan
Amount
(€mn)
Emissions
(tCO2e per
year)
H
TRANSPORTATION AND STORAGE
299
736,988
504
1,029,608
G
WHOLESALE AND RETAIL TRADE;
REPAIR OF MOTOR VEHICLES AND
MOTORCYCLES
745
377,354
764
385,555
C
MANUFACTURING
331
256,115
279
225,123
F
CONSTRUCTION
306
112,440
317
116,190
D
ELECTRICITY, GAS, STEAM AND
AIR CONDITIONING SUPPLY
86
85,758
97
84,408
A
AGRICULTURE, FORESTRY AND
FISHING
34
65,941
31
58,568
M
PROFESSIONAL, SCIENTIFIC AND
TECHNICAL ACTIVITIES
235
42,638
231
41,850
I
ACCOMMODATION AND FOOD
SERVICE ACTIVITIES
712
28,090
651
25,664
L
REAL ESTATE ACTIVITIES
595
26,198
453
19,973
J
INFORMATION AND
COMMUNICATION
43
9,922
43
9,014
Q
HUMAN HEALTH AND SOCIAL
WORK ACTIVITIES
53
5,479
49
5,045
B
MINING AND QUARRYING
8
4,144
8
4,003
N
ADMINISTRATIVE AND SUPPORT
SERVICE ACTIVITIES
22
3,794
38
8,331
K
FINANCIAL AND INSURANCE
ACTIVITIES
211
2,263
282
2,916
S
OTHER SERVICE ACTIVITIES
16
2,038
19
2,476
R
ARTS, ENTERTAINMENT AND
RECREATION
15
1,816
13
1,642
P
EDUCATION
40
1,501
36
1,364
E
WATER SUPPLY; SEWERAGE,
WASTE MANAGEMENT AND
REMEDIATION ACTIVITIES
4
1,484
18
3,078
Total
3,755
1,763,963
3,833
2,024,808
Note: Refer to GHG emissions reporting principles in Additional Information – Sustainability Statement in page 239.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
142
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Gross Scope 1, 2, 3 and Total GHG emissions (continued)
Scope 3 GHG emissions (continued)
The Group has estimated the Financed Scope 3 GHG emissions of Corporate and Sovereign bond investment
portfolio for 2023 and 2024 using the PCAF standard and proxies.
Note 1: The Group has not estimated Financed Scope 3 GHG emissions of c.18% of Corporate and Sovereign bond portfolio due to lack of available
data mainly on Supranational Organisations which is allowed by PCAF methodology.
Group – Financed Scope 3 GHG emissions – Bond portfolio – 31 December 2024
Investment
Class
Total investment
amount (€mn)
Total GHG
Emissions (tCO2e)
Emission intensity
(tCO2e/€mn)
Weighted data
quality score
Corporate
Bonds
1,378
146,310
106
5
Sovereign
Bonds
1,982
368,452
186
2
Total
3,360
514,762
Note: As at 31 December 2024 the Group has bond exposures to Supranational Organisations amount to €848mn of which €738mn are out of
scope for GHG emission estimation due to lack of publicly available information and relevant proxies. The Financed Scope 3 GHG emissions of
bond exposures to Supranational Organisations, with publicly available information, are estimated at 17,176 tCO2e. Refer to GHG emission
estimation principles in Additional Information – Sustainability Statement in page 239.
Group – Financed Scope 3 GHG emissions – Bond portfolio – 31 December 2023
Investment
Class
Total investment
amount (€mn)
Total GHG
Emissions
(tCO2e)
Emission intensity
(tCO2e/€mn)
Weighted data
quality score
Corporate
Bonds
1,276
62,678
49
5
Sovereign
Bonds
1,575
327,820
208
2
Total
2,851
390,498
Note: As at 31 December 2023 the Group has bond exposures to Supranational Organisations amount to €696mn of which €600mn are out of
scope for emission estimation due to lack of publicly available information and relevant proxies. The Financed Scope 3 GHG emissions of bond
exposures to Supranational Organisations, with publicly available information, are estimated at 15,698 tCO2e. Refer to GHG emission estimation
principles in Additional Information – Sustainability Statement in page 239.
The increase in Financed Scope 3 GHG emissions for the Corporate and Sovereign bond portfolios reflects the rise
in investment exposure at each reporting date. To address this, the Group has established sector limits on
corporate bond investments in carbon-intensive sectors to reduce the corporate portfolio's GHG emissions.
62,678
343,518
146,310
385,628
Corporate Bonds
Sovereign Bonds
Financed Scope 3 GHG emissions (tCO2e/yr) - Bond portfolio
2023
2024
↑133%
↑12%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
143
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Gross Scope 1, 2, 3 and Total GHG emissions (continued)
Scope 3 GHG emissions (continued)
For the Sovereign bond portfolio, 56% of Financed Scope 3 GHG emissions are linked to exposure to Cyprus
Government bonds. As Cyprus accelerates its transition to a low-carbon economy, the associated emissions are
expected to decrease. Under the Effort Sharing Regulation, each EU Member State has targets to reduce GHG
emissions by 2030 in key sectors, covering nearly 60% of total domestic EU emissions. Cyprus aims to cut GHG
emissions in these sectors by 32% by 2030, contributing to the EU’s commitment to Net Zero by 2050.
The Group's decarbonisation strategy for Sovereign exposure considers progress against EU targets and evaluates
GHG emissions per million euros invested and ESG scores for Government bonds. As of 31 December 2024,
countries like Saudi Arabia, USA and Canada and Bulgaria exhibit the highest emission intensity per million euros
invested. Notably, Bulgaria is Paris Agreement signatory, while Saudi Arabia and USA and Canada are not.
Sovereign Bond Portfolio –2024 – Analysis by country
Country
Investment amount
(€mn)
Financed Scope 3 GHG
emission (tCO2e)
Emission intensity
(tCO2e/€mn)
Cyprus
1,023
205,000
200
France
125
14,899
119
Finland
108
16,924
157
Belgium
83
13,375
161
Luxembourg
80
8,786
110
Croatia
58
10,310
178
Spain
58
8,333
144
Poland
40
10,820
271
Austria
39
5,585
143
Ireland
38
4,160
109
Slovakia
37
7,645
207
Iceland
35
7,235
207
Chile
34
6,800
200
Israel
31
6,368
205
USA and
Canada
27
8,709
328
Italy
26
3,744
144
Hungary
21
3,822
182
Saudi Arabia
21
9,279
442
Sweden
21
1,560
74
Slovenia
18
3,169
176
Bulgaria
18
5,065
281
Germany
18
2,713
151
Peru
10
2,057
206
Lithuania
10
1,668
167
Netherlands
3
426
142
Total
1,982
368,452
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
144
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Gross Scope 1, 2, 3 and Total GHG emissions (continued)
GHG Emission Inventory
Retrospective
Milestones and target years
Emission Categories
Base
year
2023
2024
%
Change
(yoy)
2030
2050
Annual
%
target /
Base
year
Gross Scope 1 GHG
emissions (tCO2eq)
1,166
969
934
-3%
-42%
-20%
Percentage of Scope 1
GHG emissions from
regulated emission
trading schemes (%)
0%
0%
0%
Gross location-based
Scope 2 GHG emissions
(tCO2eq)
12,528
9,422
9,327
-1%
-42%
-26%
Gross market-based
Scope 2 GHG emissions
(tCO2eq)
Total Gross indirect
(Scope 3) GHG
emissions (tCO2eq)
2,512,729
2,883,374
Purchased goods and
services
50,298
47,608
-5%
Capital goods
Fuel and energy-related
Upstream transportation
and distribution
1,508
1,852
23%
Waste generated in
operations
3,202
3,263
2%
Business traveling
363
405
11%
Employee commuting
1,929
2,170
12%
Upstream leased assets
Downstream
transportation
Processing of sold
products
Use of sold products
End-of-life treatment of
sold products
Downstream leased
assets
Franchises
Investments
2,443,974
2,812,698
15%
of which lending portfolio
2,037,778
2,280,762
12%
of which investment
portfolio
406,196
531,937
31%
Insurance associated
GHG emissions
11,454
15,377
34%
Total GHG emissions
(location-based)
(tCO2eq)
2,523,120
2,893,635
Total GHG emissions
(market-based)
(tCO2eq)
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
145
ESRS E1 - Climate Change (continued)
7.
Climate Change Metrics & Targets (continued)
Gross Scope 1, 2, 3 and Total GHG emissions (continued)
Scope 3 GHG emissions (continued)
GHG intensity per net revenue
2023
2024
% Change
Total GHG emissions (location-based) per net revenue
(tCO2eq/Mn of Total operating Income)
2,288
2,641
15%
Total GHG emissions (market-based) per net revenue
(tCO2eq/Mn of Total operating Income)
Revenue reconciliation with Note 6 of the Consolidated Annual Financial Statements (€ mn)
2023
2024
Net revenue used to calculate GHG intensity – Total
operating income
1,103
1,096
Total net revenue – Note 6
1,103
1,096
8.
Increasing the Green Asset and Green Mortgage Ratios
EU Taxonomy Disclosures in accordance with Article 8 of the Taxonomy Regulation
The preparation of the EU Taxonomy reporting is based on prudential consolidation of the Group. The
consolidation is in accordance with the supervisory reporting of financial institutions as defined in Regulation (EU)
No 575/2013 of the European Parliament and of the Council, and the Commission Implementing Regulation (EU)
2021/451 (FINREP). The EU Taxonomy is a classification system of economic activities that make a substantial
contribution to environmental sustainability under Taxonomy Regulation (EU) 2020/852. In addition, the
preparation of reporting is based on the Delegated Act supplementing Article 8 of the Taxonomy Regulation
(Disclosures Delegated Act 2021/2178). Article 3 of the EU Taxonomy Regulation sets out the criteria that an
economic activity must meet to qualify as environmentally sustainable. This includes economic activity that is
carried out in compliance with the minimum safeguards and contributes substantially to one or more of the
environmental objectives.
The EU Taxonomy has six environmental objectives namely:
1.
climate change mitigation (CCM);
2.
climate change adaptation (CCA);
3.
sustainable use and protection of water and marine resources (WTR);
4.
transition to a circular economy (CE);
5.
pollution prevention and control (PPC); and
6.
protection and restoration of biodiversity and ecosystems (BIO).
Minimum Safeguards
As part of the assessment of environmentally sustainable economic activities, it is required that economic activity
is carried out in compliance with minimum safeguards as part of Article 18 of the EU Taxonomy Regulation. The
purpose of the minimum safeguards is to ensure compliance with minimum human and labour rights standards,
preventing activities that breach key social principles by aligning with the OECD Guidelines for Multinational
Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set
out in the eight fundamental conventions identified in the Declaration of the International Labour Organisation
on Fundamental Principles and Rights at Work and the International Bill of Human Rights. As part of Taxonomy
reporting, compliance with minimum safeguards is a mandatory requirement for non-financial undertakings. In
alignment with this requirement, the Group integrates minimum safeguards assessments into the Taxonomy Key
Performance Indicators (KPIs) applied to its exposures.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
146
ESRS E1 - Climate Change (continued)
8.
Increasing the Green Asset and Green Mortgage Ratios (continued)
Substantial contribution to the EU environmental objectives
Through its financing of large undertakings subject to the Non-Financial Reporting Directive (NFRD) and
investments in bonds and equities, the Group supports a variety of economic activities that contribute to the EU
environmental objectives. In addition, the Group’s sustainable finance products including green housing and
green motor loans contributes to the EU environmental objective of climate change mitigation. To classify such
sustainable products as Taxonomy-Aligned there are further criteria that must be adhered in addition to the
contribution to EU environmental objectives. The above-mentioned products are designed based on the GLPs of
LMA and are not structured as EU taxonomy aligned products. The Group intends to perform necessary action so
to be able to classify such products as EU taxonomy aligned.
Taxonomy KPIs
The Group is reporting on Taxonomy KPIs and GAR. The total GAR covers all six EU environmental objectives.
GAR is calculated as Taxonomy Aligned Assets as a % of Total Covered Assets. Total Covered Assets comprise of
total assets as defined under the prudential consolidation of the Group per FINREP, minus trading book assets
and minus exposures to central banks, central governments and supranational issuers (Total covered assets are
also referred to as total GAR assets). The GAR is calculated on two bases. One, referred to as the “Turnover
basis”, uses the % of each counterparty’s turnover that they report as taxonomy-eligible and taxonomy-aligned
to quantify how much of our loan exposure to that counterparty is taxonomy-aligned. The other, referred to as
the “CapEx basis”, uses the % of each counterparty’s CapEx that they report as taxonomy-eligible and taxonomy-
aligned to quantify how much of our loan exposure to that counterparty is taxonomy-aligned. The Group’s total
GAR based on turnover amounted to 0.6% of total covered assets, with the total GAR based on CapEx equivalent
to 0.3% of total covered assets as at year end 2024. The Taxonomy-aligned activities amounted to €91mn at
year end 2024. Gross carrying amount of total covered assets amounted to €15,774mn as at year end 2024.
Climate Delegated Act the Complementary Climate Delegated Act 2022/1214 including specific nuclear and gas
energy activities published in July 2022, requires the Group to assess and disclose taxonomy eligibility and non-
eligibility of nuclear and fossil gas-related activities at 31 December 2024. The Group has no direct exposure
through lending to customers that have economic activities related to the production of electricity or heating
using nuclear installations or electricity generation facilities that produce electricity from nuclear processes. The
Group also has exposure to customers involved in the operation of electricity generation facilities that produce
electricity using fossil gaseous fuels. See supplementary information in the section ‘Additional Information – EU
Taxonomy Disclosure Tables’ of Annual Financial Report under Annex XII of the Delegated Act in page 613.
EU taxonomy reporting principles
As companies' transparency in line with the EU Taxonomy increases, it will enable expanded reporting against
the Taxonomy. The adoption of CSRD and ESRS will support the further implementation of the EU Taxonomy
Regulation into our business strategy, systems, and investment and lending processes. Due to limitations in data
when assessing Taxonomy-eligible and Taxonomy-aligned activities for financial and non-financial undertakings,
actual published information provided by counterparties is utilised. However, a complete data collection has been
limited as published reporting on Taxonomy-alignment KPIs from financial and non-financial undertakings is not
yet available at the reporting date.
The EU Taxonomy disclosures have been prepared on a ‘best efforts’ basis using corporate disclosures and
published financial reports and information from our counterparty exposures (which primarily cover activity in
FY23 and not FY24). Our approach is to analyse and calculate taxonomy-eligibility and taxonomy- aligned based
on the published Taxonomy KPIs of our counterparties. The EU Taxonomy related disclosures presented in this
section have been made on the basis of our understanding of the terms and concepts used under the EU
Taxonomy Regulation and its implementing acts. As the EU Taxonomy reporting requirements and guidance
evolve over the coming years, and as we continue to develop our industry data sourcing methodologies, we will
continue to review our disclosure in future periods.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
147
ESRS E1 - Climate Change (continued)
8.
Increasing the Green Asset and Green Mortgage Ratios (continued)
Summary of KPIs
The following table is a summary of KPIs to be disclosed by credit institutions under Article 8 of the EU Taxonomy Regulation. See supplementary information in section
‘Additional Information – EU Taxonomy Disclosure Tables’ in page 613 of the 2024 Annual Financial Report for additional EU Taxonomy tables reported under Annex VI
of the Disclosures Delegated Act and taxonomy aligned activities.
Limitations in data Reporting on Taxonomy-aligned activities for FY 2024 has been constrained due to current limitations on the availability of relevant information
across key categories:
i.
When assessing Taxonomy-eligible and Taxonomy-aligned activities for financial and non-financial counterparties, actual information published by counterparties is required:
i.
published reporting on Taxonomy-alignment KPIs from financial undertakings is not available at the reporting date for WTR, CE, PPC environmental objectives given financial
undertakings are required to report towards eligibility on these objectives for the first time in FY2024;
ii.
non-financial undertakings have not yet published data for FY2024; consequently, the Taxonomy reporting of eligibility and alignment for non-financial undertakings is based
on published data from FY2023;
iii.
furthermore, reporting on Taxonomy-eligibility for the four additional environmental objectives is implemented in 2024, limited to information of non-financial undertakings
that were required to report towards these objectives from FY2023; and
iv.
exposure to non-financial counterparties in the Group’s corporate lending portfolio currently considered taxonomy eligible is limited due to the eligibility criteria requiring
counterparties to be large companies publicly listed in the EU.
ii.
When assessing Taxonomy-eligible and Taxonomy-aligned activities for lending to households, other data limitations impact reporting:
i.
Hybrid and Electric Vehicles lending exposures originated since the beginning of FY2024 are considered eligible per taxonomy criteria. However, they are not classified as
aligned due to the lack of available information in the industry to assess the vehicles against the Taxonomy DNSH (Do No Significant Harm) criteria.
9 Based on the Turnover KPI of the counterparty.
10 Based on the CapEx KPI of the counterparty.
11 Percentage of assets covered by the KPI over the total assets.
12 Trading book and Fees and Commissions KPIs only apply starting 2026.
Total
environmentally
sustainable
assets (€mn)
KPI
turnover9
%
KPI
CapEx10
%
%
coverage
(over total
assets)11
% of assets
excluded from the
numerator of the
GAR
% of assets excluded
from denominator of
the GAR
Main KPI
Green asset ratio (GAR)
stock
91
0.6%
0.3%
0.4%
27%
38%
Additional
KPIs
GAR (flow)
27
1.18%
0.8%
1%
33%
12%
Trading book12
n/a
n/a
n/a
Financial guarantees
-
0%
0%
Assets under management
-
0%
0%
Fee and commission income11
n/a
n/a
n/a
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
148
ESRS E2 – Pollution
This section outlines the Group’s approach in addressing pollution-related impacts. It highlights the policies and
actions in place to mitigate pollution associated with lending activities and support sustainable development.
1.
Description of the processes to identify and assess material pollution-related impacts, risks and
opportunities
As outlined in detail in ESRS E1 – Climate Change in pages 114 - 122, the Group has established a RIMA process for
the identification and assessment of C&E risks and utilises PRB Impact analysis tools to systematically identify,
measure, and assess C&E IROs, including pollution-related impacts, risks, and opportunities across its operations
and value chain.
Through a structured screening of site locations and business activities, the Group evaluates actual and potential
pollution IROs using both quantitative and qualitative methodologies. For the assessment of soil and air pollution as
credit risk drivers the Group utilized geolocation database for collaterals, using coordinates, and unsecured lending,
using postal codes. For Group’s site locations, given the quantitative assessment performed on collaterals and
unsecured lending, using expert judgement, the Group concluded that that pollution impacts and risks are low for
Group’s site locations. The Group assesses the materiality of pollution across multiple financial risk categories,
including credit risk, market risk, liquidity risk and operational risk.
The Group applies geolocation-based risk scoring methodologies to assess physical pollution hazards, such as air
pollution, soil contamination, and seismic activity, across its secured lending portfolio, deposit base, and business
locations.
BOC PCL, as part of stakeholder engagement, incorporates insights from expert judgment and external datasets such
as Eurostat, the World Resource Institute, and Climate Analytics which also capture the views of affected
communities. Additionally, internal consultations were performed through the DMA conclusion process, where key
affected stakeholders' views on the Group’s material impacts on pollution were gathered. The Group has not consulted
directly with affected communities. Following the deployment of ESG due diligence process in loan origination process
in 2024, BOC PCL will be in a better position to engage with customers on the ESG spectrum, including pollution
related matters. For more details on the identification and assessment of pollution related impacts and opportunities
refer to 4. Impacts, Risks and Opportunities in page 95.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
149
ESRS E2 – Pollution (continued)
2.
Material impacts, risks and opportunities and their interaction with strategy and business model
The Group has not identified material risks and opportunities for pollution, therefore no material current financial effects on financial position, financial
performance and cash flows are disclosed.
Material IROs - Pollution (E2)
ESRS Topic/Sub-Topic
IRO
Type
Description
Pollution - Pollution of soil,
living organisms and food
resources
Impact
Actual Negative
Financing activities to certain NACE sectors (i.e. Development of building projects,
other specialized wholesale, construction of residential and non-residential buildings)
with total portfolio exposure of 15.94% out of €5b exposures assessed under PRB
institutional banking impact analysis of 2024, create key/direct actual negative
impacts to composition of soil and its ability to deliver ecosystem services.
Time Horizons
Value Chain
Originate or
connected to
strategy
Business
relationship
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
Connected to
strategy through
provision of finance
Customers
ESRS Topic/Sub-Topic
IRO
Type
Description
Pollution - Pollution of air,
living organisms and food
resources
Impact
Actual Negative
Financing activities in certain NACE sectors (i.e. sea and coastal freight transport,
electric power generation, and pharmaceutical manufacturing), with total portfolio
exposure of 11.11% out of €5b exposures, create key/direct actual negative impacts
to air quality.
Time Horizons
Value Chain
Originate or
connected to
strategy
Business
relationship
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
Connected to
strategy through
provision of finance
Customers
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
150
ESRS E2 – Pollution (continued)
3.
Policies, actions and resources related to pollution
The Group’s material negative impacts on pollution stem from downstream value chain, through its loan portfolio.
Material pollution related impacts include air pollution, pollution of living organisms and food resources, and soil
pollution as shown in the table above.
As per the PRB impact analysis of 2024, BOC PCL provides financing to certain sectors that create negative impact
among others, to the air quality. As per the 2024 PRB institutional banking impact analysis, financing to key
sectors that amount to 11.11% of the portfolio under assessment (i.e. 49% of the Bank’s overall business activity
represented per business segment) and account for €560bn loans, create negative impacts to Air pollution.
Additionally, BOC PCL provides financing to certain sectors that as per PRB impact analysis of 2024, create
negative impacts among others, on the composition of soil and its ability to deliver ecosystem services. As per
the 2024 PRB institutional banking impact analysis, financing to key sectors that amount to 15.94% of the
portfolio under assessment (i.e. 49% of the Bank’s overall business activity represented per business segment)
and account for €804bn of loans, create negative impacts to the pollution of soil, by exposing it to pollutants and
factors that may interfere with soil stability for future land use.
Financing to key NACE sectors that create negative impacts on air (as per the 2024 PRB Impact
Analysis)
2023
2024
Sectors
Total %
to total
portfolio
OS Loan
Amount
(€mn)
Total %
to total
portfolio
OS Loan
Amount
(€mn)
E&S Policy
Score – Risk
Categorization
01.4 Animal production
0.50%
€24
0.43%
€22
Medium
10.8 Manufacture of other food
products
0.41%
€20
0.52%
€26
Medium
21.2 Manufacture of pharmaceutical
preparations
0.77%
€38
0.83%
€42
High
28.9 Manufacture of other special-
purpose machinery
0.21%
€11
0.40%
€20
Medium
35.1
Electric
power
generation,
transmission and distribution
1.15%
€57
1.44%
€72
High
49.3 Other passenger land transport
0.83%
€41
0.74%
€37
Medium
50.2 Sea and coastal freight water
transport
4.98%
€245
6.76%
€341
High
Total
8.86%
€436
11.11%
€560
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
151
ESRS E2 – Pollution (continued)
3.
Policies, actions and resources related to pollution (continued)
The Group’s policies, integrated into broader environmental and/or sustainability policies, are designed to address
considerations towards pollution. Aligned with the guidelines of the European Bank for Reconstruction and
Development (EBRD), Green Loan Principles, these policies establish a structured approach to identifying and
mitigating ESG impacts and risks. The Group recognises the interconnected nature of pollution, biodiversity, and
sustainability and integrates this perspective into its financing activities. Hence, it addresses pollution in key
areas, including air pollution, soil pollution, and pollution affecting living organisms and food resources, through
a combination of due diligence processes, and sustainable financing practices.
Environmental and Social (E&S) Policy
The Group’s E&S Policy underpins its efforts to manage environmental and social risks associated with financing
activities, including minimisation of potential pollution impacts. For the abovementioned activities, financed by
the Group and lead to material negative impacts, that are classified as low risk by EBRD’s E&S Risk Categorization
assessment a written customer confirmation for proper business conduct, relevant licenses and work permits is
obtained. For activities that are classified as Medium / High risk by EBRD’s E&S Risk Categorization assessment
a written customer confirmation for proper business conduct, relevant licenses and work permits is obtained and
an E&S study by an external expert is performed. In addition, other E&S checks are performed, such as
investigations into penalties, public complaints, adverse media reports, accidents / incidents, legal actions, and
regulatory investigations as well as site visits. The findings of the above actions must be stated in the credit
application together with any corrective measures for the mitigation of the E&S risk. The approving authority
decides whether the E&S risk is acceptable and set specific terms and covenants to control any E&S risks as well
as decides the frequency of future E&S studies (at least every 3 years for High-Risk E&S ratings).
Financing to key NACE sectors that create negative impacts on soil (as per the 2024 PRB Impact
Analysis)
2023
2024
Sectors
Total % to
total portfolio
OS Loan
Amount
(€mn)
Total % to
total
portfolio
OS Loan
Amount
(€mn)
E&S Policy
Score – Risk
Categorization
01.4 Animal production
0.50%
€24
0.43%
€22
Medium
21.2 Manufacture of
pharmaceutical
preparations
0.77%
€38
0.83%
€42
High
35.1 Electric power
generation, transmission
and distribution
1.15%
€57
1.44%
€72
High
41.1 Development of
building projects
7.18%
€354
6.18%
€312
Low
41.2 Construction of
residential and non-
residential buildings
1.22%
€60
1.35%
€68
High
42.9 Construction of other
civil engineering projects
0.17%
€8
0.68%
€34
43.9 Other specialised
construction activities
0.51%
€25
0.74%
€38
Medium
46.6 Wholesale of other
machinery, equipment and
supplies
0.74%
€36
0.72%
€37
Low
46.7 Other specialised
wholesale
2.82%
€139
2.82%
€142
Medium - High
49.3 Other passenger land
transport
0.83%
€41
0.74%
€37
Medium
Total
15.89%
€782
15.94%
€804
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
152
ESRS E2 – Pollution (continued)
3.
Policies, actions and resources related to pollution (continued)
Environmental and Social (E&S) Policy (continued)
For more details on the key content, general objectives, scope, monitoring arrangements, most senior level
accountable for the policy, any third-party standards, allocated resources other relevant information to
Environmental and Social (E&S) Policy refer to page 124.
Lending Policy
The Group’s Lending Policy underpins its efforts to manage environmental and social risks associated with
financing activities, including minimization of potential pollution impacts. The Policy sets the standards and
guidelines to be used during the credit granting process. This guides individuals involved in the credit granting
process on credit granting standards and evaluation of credit risk, including ESG Due Diligence in the loan
origination process for legal entities and its interaction with credit risk.
During the credit application assessment process, that falls under specific thresholds / criteria, for granting new
and/or reviewing existing credit facilities, Business Units must identify, evaluate and assess ESG matters that are
relevant to the borrower by applying the ESG Due Diligence process. The first step of ESG Due Diligence embeds
an ESG questionnaire designed to assess customer’s performance and risk exposure against ESG factors
(applicable for new lending and customer’s annual review). The questionnaires must be completed by the
customer, in order to collect relevant quantitative and qualitative data, identify and assess ESG matters that are
relevant to the borrower and derive an ESG score which reflects the performance of the customer towards ESG
factors and exposure of customers towards ESG risks. The relevant ESG questionnaire includes queries designed
to assess the performance and risk exposure of the counterparty towards pollution, taking into account the
industry the counterparty operates. The question relates to whether the counterparty, in the context of production
process, releases polluting chemicals into the environment. The customers have the option to not provide
information under the ESG questionnaire, hence in such case their overall ESG performance is penalised and
reflected in the overall ESG score obtained.
Following completion of ESG questionnaire an ESG score is derived which in combination with scenario analysis
to assess customer’s repayment ability under certain negative transition risk scenarios derives to the aggregated
score for environmental aspect of ESG. The aggregated score is then used to derive the loan pricing. In line with
the Lending Pricing Policy, a margin discount, based on the client’s E aggregate score, is implemented for both
new and existing clients on new lending requests, for all clients (all sectors) under Corporate Division,
differentiating however between carbon-intensive vs. non-carbon intensive sectors. The Group linked the margin
discount at the client level to the borrower's “E” scoring (extracted from borrower’s ESG score). In addition, the
Group linked the margin discount at the transaction level (i.e. whether lending is Green or not) utilizing the
provisions of the Group's Green Lending Policy.
All customers operating in the abovementioned industries are eligible for ESG Due Diligence process subject to
meeting relevant thresholds. For more details on the key content, general objectives, scope, monitoring
arrangements, most senior level accountable for the policy, any third-party standards, allocated resources and
other relevant information to Lending Policy refer to page 125.
Green Lending Policy
The Group’s Green Lending Policy, which is based on GLP of LMA, promotes financing towards projects with
tangible environmental benefits, including those aimed at pollution mitigation. The policy establishes the criteria
to classify a loan as green, focusing on projects such as renewable energy, sustainable construction, and pollution
prevention and control including reduction of air emissions, soil remediation, waste prevention, waste reduction,
waste recycling and other. By providing green lending BOC PCL manages the material negative impacts associated
with pollution of air and soil.
Following the BES process on C&E risks, BOC PCL incorporates green new lending internal KPIs, in the Group’s
Financial Plan, to Business Lines in order to promote green lending practices and manage C&E risks. For
environmentally friendly gross loans refer to page 136.
For more details on the key content, general objectives, scope, monitoring arrangements, most senior level
accountable for the policy, any third-party standards, allocated resources and other relevant information to Green
Lending Policy refer to page 126.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
153
ESRS E2 – Pollution (continued)
3.
Policies, actions and resources related to pollution (continued)
Concentration Risk Policy
The Concentration Policy applies at Group level and defines limits and the methodology for limit setting towards
exposures in specific assets, liabilities and off-balance sheet items to ensure that concentration risk is within the
Risk Appetite. The Concentration Risk Policy complements the efforts of managing negative impacts towards air
and soil pollution by restricting lending to carbon-intensive sectors, including oil, gas, manufacturing of cement,
manufacturing of Iron & Steel & Aluminium and non-renewable power generation. Financing in these sectors is
only permitted for transition or green projects that align with the Group’s sustainability objectives, subject to
approval by its highest credit committees.
For more details on the key content, general objectives, scope, monitoring arrangements, most senior level
accountable for the policy, any third-party standards, allocated resources and other relevant information to
Concentration Policy refer to section ESRS E1 in page 128.
Together, these policies and actions demonstrate the Group’s commitment to addressing pollution impacts and
risks through responsible financing practices. The above-mentioned policies do not include specific information
on pollutants or substances covered given that impacts derive from the value chain on the Group.
4.
Metrics & Targets related to Pollution
While the policies and actions described above address air and soil pollutants downstream value chain negative
impact of the Group, no specific, measurable, time-bounded and outcome-oriented targets have been established
to directly prevent or control these impacts. This is due to the current lack of industry-wide data readiness, which
limits the ability to establish informed and measurable objectives.
Nevertheless, the Group intends to:
1.
Examine, following the data gathered from ESG Due Diligence process, to establish and monitor pollution
related targets associated with loan portfolio by applying Science Based Target initiative’s guidance for
nature.
2.
Set Green new lending KPIs, that will be embedded in the Group’s Financial Plan, associated with pollution
and sectors of the economy which we are currently associated with negative impacts to pollution of air,
soil and living organisms and food resources.
Given the fact that the Group has not yet set measurable outcome-oriented targets, it tracks the effectiveness of
actions to meet the objectives of the above-mentioned policies through the monitoring arrangements established
on each policy which are explained in detail in 6. Policies and Actions Related to Energy, Climate Change Mitigation
and Adaptation in page 124.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
154
ESRS E3 - Water and Marine Resources
This section outlines the Group’s approach in addressing water-related risks. It highlights the policies and actions
in place to manage water scarcity risks as drivers of credit risk associated with lending activities.
1.
Description of the processes to identify and assess material pollution-related impacts, risks and
opportunities
The Group acknowledges the essential role of water and marine resources in maintaining sustainable ecosystems,
supporting societal wellbeing, and driving economic development. The Group has assessed material water related
IROs using primarily qualitative methodologies and expert judgment. The Group determined that the material
water-related topics are primarily associated with its loan portfolio rather than its operating activities given the
nature of operations. Water scarcity, in particular, has been identified as a material risk.
Water scarcity was evaluated based on the Cyprus Government’s annual water balance reports and external tools
such as the Aqueduct Water Risk Atlas and Climate ADAPT initiative. The assessment recognised water scarcity
as a material risk due to Cyprus’ reliance on rainfall and desalination, with water stress exceeding 80% in current
and projected scenarios. Sectoral exposure was analysed, identifying potential financial implications, particularly
in energy, manufacturing, and agriculture.
In case of years with insufficient rainfall, there might be profitability issues in water-intensive sectors such as "D:
Energy", "C: Manufacturing" and Agriculture, where water is needed for instance for cooling, cleaning or
production purposes leading to increased credit risk. While the Bank's exposure to these sectors is limited,
important secondary effects might spread to other economic sectors. In a long-term time horizon, the water
scarcity issue might be exacerbated by an increase of anomalies in precipitation patterns, as also discussed in
the context of Drought risk as well as long-term desertification risk and rainfall trends. The tool Climate ADAPT
also labels Water Scarcity as a "significantly increasing" hazard in Cyprus with high impact and vulnerability, and
provides a dedicated section to Water Management as a key affected sector: "Cyprus is already facing intense
problems of water shortage and drought, which are expected to intensify as a result of climate change". Cyprus'
Government has been already implementing actions to reinforce Cyprus’ adaptive capacity to the decreasing
availability of freshwater resources. For the next decades, Climate ADAPT indicates that the estimated water
resources are expected to satisfy the future water demand from all sectors. However, the occurrence of severe
droughts and water scarcity events might induce overexploitation of water resources.
Overall, the assessment incorporated expert judgement, consultation reports, and statistical data from sources
such as Eurostat, the World Resource Institute, and Climate Analytics to enhance the accuracy of its evaluations
and capture the views of affected communities. Additionally, internal consultations were performed through the
DMA conclusion process, where key affected stakeholders' views on the Group’s material IROs on water and
marine resources were gathered. The Group has not consulted directly with affected communities. Following the
deployment of ESG due diligence process in loan origination process in 2024, BOC PCL will be in a better position
to engage with customers on the ESG spectrum, including water related matters. For more details on the
identification and assessment of water related impacts and opportunities refer to 4. Impacts, Risks and
Opportunities in page 95.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
155
ESRS E3 - Water and Marine Resources (continued)
2.
Material impacts, risks and opportunities and their interaction with strategy and business model
Material IROs - Water and Marine Resources (E3)
ESRS Topic/Sub-Topic
IRO
Type
Description
Water and marine resources - Water
Consumption, Water Use and Water
Withdrawals
Risk
Environmental -
Physical -
Chronic
Chronic Water Scarcity could gradually impact the evaluation and operations of
buildings, assets, internal operations of customers and counterparties (e.g. data centres
or buildings, pledged as collaterals with the Bank). As a result, the PD and LGD of
customers and counterparties might be increased, and hence, the corresponding
normative and economic capital of the Group.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
No material current financial
effects
were
identified.
Anticipated
financial
effects
include increase in PD and LGD
of customers.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
156
ESRS E3 - Water and Marine Resources (continued)
3.
Policies, actions and resources related to water and marine resources
Environmental and Social (E&S) Policy
The Group’s E&S Policy provides the foundational framework for managing environmental and social risks,
including indirect considerations for water and marine resources. While the policy does not explicitly address
water and marine resources as standalone topics, it incorporates these considerations within its broader
environmental management system requirements.
Lending applications in Exclusion Sectors (e.g., thermal coal mining) are rejected and reported to RMD. For
activities classified as low-risk by EBRD’s E&S Risk Categorization assessment, a written confirmation of
compliance and permits are required. For medium/high-risk activities, a written customer confirmation for proper
business conduct, relevant licenses and work permits are obtained and an E&S study by external expert is
performed. In addition, other E&S checks are performed, such as investigations into penalties, public complaints,
adverse media reports, accidents / incidents, legal actions, and regulatory investigations as well as site visits.
The findings of the above actions must be stated in the credit application together with any corrective measures
for the mitigation of the E&S risk.
The approving authority decides whether the E&S risk is acceptable and set specific terms and covenants to
control any E&S risks as well as decides the frequency of future E&S studies (at least every 3 years for High-Risk
E&S ratings).
For more details on the key content, general objectives, scope, monitoring arrangements, most senior level
accountable for the policy, any third-party standards, allocated resources and other relevant information to
Environmental and Social (E&S) Policy refer to page 124.
Lending Policy
The Group’s Lending Policy underpins its efforts to manage environmental and social risks associated with
financing activities, including minimization of water and marine resources risks. The Policy sets the standards and
guidelines to be used during the credit granting process. This guides individuals involved in the credit granting
process on credit granting standards and evaluation of credit risk, including ESG Due Diligence in the loan
origination process for legal entities and its interaction with credit risk.
During the credit application assessment process, that falls under specific thresholds / criteria, for granting new
and/or reviewing existing credit facilities, Business Units must identify, evaluate and assess ESG matters that are
relevant to the borrower by applying the ESG Due Diligence process. The first step of ESG Due Diligence embeds
an ESG questionnaire designed to assess customer’s performance and risk exposure against ESG factors
(applicable for new lending and customer’s annual review). The questionnaires must be completed by the
customer, in order to collect relevant quantitative and qualitative data, identify and assess ESG matters that are
relevant to the borrower and derive an ESG score which reflects the performance of the customer towards ESG
factors and exposure of customers towards ESG risks. The relevant ESG questionnaire includes queries designed
to assess the performance and risk exposure of the counterparty towards water and marine resources, taking
into account the industry the counterparty operates. The customers have the option to not provide information
during the ESG questionnaire, hence in such cases their overall ESG performance is penalised and reflected in
the overall ESG score obtained. The ESG questionnaire’s questions include the following:
1.
Water consumption in cubic meters (m³);
2.
Whether the customer's operations are located in areas classified as water-stressed;
3.
Whether the customer adopted technologies for water reuse and recovery.
4.
Whether the customer integrated advanced systems for processing and reusing water or sewage within
the production processes
Following completion of ESG questionnaire an ESG score is derived which in combination with scenario analysis
to assess customer’s repayment ability under certain negative transition risk scenarios, derives to the aggregated
score for environmental aspect of ESG. The aggregated score is then used to derive the loan pricing. In line with
the Lending Pricing Policy, a margin discount, based on the client’s E aggregate score, is implemented for both
new and existing clients on new lending requests, for all clients (all sectors) under Corporate Division,
differentiating however between carbon-intensive vs. non-carbon intensive sectors. The Group linked the margin
discount at the client level to the borrower's “E” scoring (extracted from borrower’s “ESG” score). In addition, the
Group linked the margin discount at the transaction level (i.e. whether lending is Green or not) utilizing the
provisions of the Group's Green Lending Policy.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
157
ESRS E3 - Water and Marine Resources (continued)
3.
Policies, actions and resources related to water and marine resources (continued)
Lending Policy (continued)
For more details on the key content, general objectives, scope, monitoring arrangements, most senior level
accountable for the policy, any third-party standards, allocated resources and other relevant information to
Lending Policy refer to section ESRS E1 in page 125.
Green Lending Policy
The Group’s Green Lending Policy, which is based on GLP of LMA, promotes financing towards projects with
tangible environmental benefits, including those aimed at sustainable water-related initiatives. The policy
establishes the criteria to classify a loan as ‘green’, including projects associated with sustainable water and
wastewater management (including sustainable infrastructure for clean and/or drinking water, wastewater
treatment, sustainable urban drainage systems and river training and other forms of flooding mitigation). By
providing green lending BOC PCL manages the material risks associated with water and marine resources.
Following the BES process on C&E risks, BOC PCL incorporates green new lending internal KPIs, in the Group’s
Annual Financial Plan, to Business Lines in order to promote green lending practices and manage C&E risks. For
environmentally friendly gross loans refer to page 136.
For more details on the key content, general objectives, scope, monitoring arrangements, most senior level
accountable for the policy, any third-party standards, allocated resources and other relevant information to Green
Lending Policy refer to page 126.
Concentration Risk Policy
The Concentration Policy applies at Group level and defines limits and the methodology for limit setting towards
exposures in specific assets, liabilities and off-balance sheet items to ensure that concentration risk is within the
Risk Appetite. The Concentration Risk Policy complements the efforts of managing material risks identified on
water scarcity by restricting lending to carbon-intensive and water-intensive sectors, including oil, gas,
manufacturing of cement, manufacturing of Iron & Steel & Aluminium and non-renewable power generation.
Financing in these sectors is only permitted for transition or green projects that align with the Group’s
sustainability objectives, subject to approval by its highest credit committees.
For more details on the key content, general objectives, scope, monitoring arrangements, most senior level
accountable for the policy, any third-party standards, allocated resources and other relevant information to
Concentration Policy refer to page 128.
4.
Metrics & Targets related to water and marine resources
The Group has not yet established specific targets for water management. European Central Bank’s (ECB)
expectations (Expectation 2.1, 2.2, 4.1 and 4.2) on C&E risks, as described in the ECB Guide, require the Bank
to set specific KPIs and KRIs for material C&E risks identified. Given the fact that water scarcity risk has been
identified as material in the long-term, the Bank is obligated by June 2025 to set measurable water scarcity
related KPI and KRI. The Group acknowledges this regulatory requirement and is in the process of aligning its
strategies and frameworks to address this in future reporting, with a target to be set by 30 June 2025.
Given the fact that the Group has not yet set measurable outcome-oriented targets, it tracks the effectiveness of
actions to meet the objectives of the above-mentioned policies through the monitoring arrangements established
on each policy which are explained in detail in page 124.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
158
ESRS E5 – Resource Use and Circular Economy
This section outlines the Group’s approach to addressing resource use and circular economy related impacts. It
highlights the policies, actions and targets in place to increase circularity associated with lending activities and
support sustainable development.
1.
Description of the processes to identify and assess material resource use and circular economy-
related impacts, risks and opportunities
The Group has conducted a screening of its assets and activities to identify actual and potential impacts, risks,
and opportunities across its operations and value chain for resource use and the circular economy. The
assessment was performed using UNEP FI tools (loan & investment portfolio impact assessment) to evaluate
material negative impacts on resource intensity topics and the RIMA framework for risk identification as described
in page 114.
Key areas examined include:
1.
Circular Economy & Waste Management and Environmental Protection Requirements: Cyprus' low circular
material usage rate (Eurostat) and national waste management and environmental protection initiatives
were analyzed. Potential additional costs for businesses in key sectors (Accommodation & Food Services,
Wholesale & Retail Trade, Construction, Manufacturing) were considered, but no material risk was
identified.
2.
Environmentally Friendly Technologies: The impact of regulatory and market-driven technological
upgrades (e.g., water-efficiency, circular economy solutions) was assessed, particularly for Real Estate,
Transport & Storage, and Manufacturing. While potential short-term financial distress was noted, no
material risk was identified.
3.
Environmentally Driven Consumer Behaviour: The market sentiment in Cyprus towards sustainable
products remains at an early stage (PwC Cyprus CEO Survey 2023), leading to an overall low risk impact.
The Bank will monitor future developments through its Business Environment Scan process on C&E risks.
The Group conducted qualitative consultations based on expert judgment, utilising external sources such as
consultation reports, scientific publications, and Cyprus-specific data from Eurostat, World Resource Institute,
Climate Analytics, and Climate Vulnerability Monitor. Additionally, internal consultations were performed through
the DMA conclusion process, where key affected stakeholders' views on the Group’s material impact on resource
use and the circular economy were gathered. The Group has not consulted directly with affected communities.
Following the deployment of ESG due diligence process in loan origination process in 2024, BOC PCL will be in a
better position to engage with customers on the ESG spectrum, including resource use and circularity matters.
For more details on the identification and assessment of resource use and identification of impacts and
opportunities refer to 4. Impacts, Risks and Opportunities in page 95.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
159
ESRS E5 – Resource Use and Circular Economy (continued)
2.
Material impacts, risks and opportunities and their interaction with strategy and business model
Material IROs - Resource Use and Circular Economy (E5)
ESRS Topic/Sub-Topic
IRO
Type
Description
Resource Use and Circular
economy - Resources inflows,
including resource use and
resource outflows related to
products and services
Impact
Actual Negative
Financing activities to certain NACE sectors (i.e. Rental and operating of own or leased
real estate, development of building projects, buying and selling of own real estate) with
total portfolio exposure of 40.58% out of €5b exposures assessed under PRB institutional
banking impact analysis of 2024, create key/direct actual negative impacts to the efficient
use of limited, non-renewable and renewable natural resources.
Time Horizons
Value Chain
Originate or
connected to
strategy
Business
relationship
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
Connected to
strategy through
provision of finance
Customers
The Group has not identified material risks and opportunities for resource use and circular economy, therefore no material current financial effects on financial
position, financial performance and cash flows are disclosed.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
160
ESRS E5 – Resource Use and Circular Economy (continued)
3.
Policies, actions and resources related to resource use and circular economy
The Group’s negative impacts to circular economy derive from the downstream value chain as those associated
with loan portfolio. As part of its business activity, the Group provides financing to key certain sectors that as per
PRB impact analysis of 2024, create negative impacts among others, on the efficient use of limited, non-renewable
and renewable natural sources. In detail, as per the 2024 PRB institutional banking analysis, financing to sectors
that amount to 40.58% of the portfolio under assessment (i.e. 49% of the Bank’s overall business activity
represented per business segment) and account for €2,046mn of loans, create negative impacts to resource use
and circular economy. Refer to the table below for the Group’s exposure to certain sectors (Exposure >1%)
associated with negative impacts on resource use and circular economy.
The policies adopted to manage the material negative impacts on resource use and circular economy are:
Environmental and Social (E&S) Policy
The Group’s Environmental and Social (E&S) Policy underpins the efforts to manage environmental and social
risks associated with financing activities, including minimisation of potential resource use and circular economy
impacts.
For the abovementioned activities, financed by the Group and lead to material negative impacts, that are classified
as low risk by EBRD’s E&S Risk Categorization assessment a written customer confirmation for proper business
conduct, relevant licenses and work permits is obtained. For activities that are classified as Medium / High risk
by EBRD’s E&S Risk Categorization assessment a written customer confirmation for proper business conduct,
relevant licenses and work permits must be obtained and an E&S study by external expert should be performed.
In addition, other E&S checks should be performed, such as investigations into penalties, public complaints,
adverse media reports, accidents / incidents and regulatory investigations as well as site visits. The findings of
the above actions are stated in the credit application together with any corrective measures for the mitigation of
the E&S risk.
The approving authority decides whether the E&S risk is acceptable and set specific terms and covenants to
control any E&S risks as well as decides the frequency of future E&S studies (at least every 3 years for High-Risk
E&S ratings).
For more details on the key content, general objectives, scope, monitoring arrangements, most senior level
accountable for the policy, any third-party standards, allocated resources and other relevant information to
Environmental and Social (E&S) Policy refer to page 124.
Financing to key NACE sectors with an exposure of >1% that create negative impacts on resource
use and circular economy (as per the 2024 PRB Impact Analysis)
2023
2024
Sectors
Total %
to total
portfolio
OS Loan
Amount
(€mn)
Total %
to total
portfolio
OS Loan
Amount
(€mn)
E&S Policy
Score – Risk
Categorization
35.1 Electric power generation,
transmission and distribution
1.15%
€57
1.44%
€72
High
41.1 Development of building
projects
7.18%
€354
6.18%
€312
Low
41.2 Construction of residential
and non-residential buildings
1.22%
€60
1.35%
€68
High
50.2 Sea and coastal freight water
transport
4.98%
€245
6.76%
€341
High
68.1 Buying and selling of own
real estate
4.05%
€200
4.14%
€209
Low
68.2 Rental and operating of own
or leased real estate
15.48%
€763
13.04
€658
Medium
68.3 Real estate activities on a fee
or contract basis
1.14%
€56
0.52%
€26
Medium
Total
35.20%
€1,735
33.44%
€1,686
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
161
ESRS E5 – Resource Use and Circular Economy (continued)
3.
Policies, actions and resources related to resource use and circular economy (continued)
Lending Policy
The Group’s Lending Policy underpins its efforts to manage environmental and social risks associated with
financing activities, including minimization of potential resource use and circularity impacts. The Policy sets the
standards and guidelines to be used during the credit granting process. This guides individuals involved in the
credit granting process on credit granting standards and evaluation of credit risk, including ESG Due Diligence in
the loan origination process for legal entities and its interaction with credit risk.
During the credit application assessment process, that falls under specific thresholds / criteria, for granting new
and/or reviewing existing credit facilities, Business Units must identify, evaluate and assess ESG matters that are
relevant to the borrower by applying the ESG Due Diligence process. The first step of ESG Due Diligence embeds
an ESG questionnaire designed to assess customer’s performance and risk exposure against ESG factors
(applicable for new lending and customer’s annual review). The questionnaires must be completed by the
customer, in order to collect relevant quantitative and qualitative data, identify and assess ESG matters that are
relevant to the borrower and derive an ESG score which reflects the performance of the customer towards ESG
factors and exposure of customers towards ESG risks. The relevant ESG questionnaire includes queries designed
to assess the performance and risk exposure of the counterparty towards resource use and circularity, taking into
account the industry the counterparty operates. The questions are the following:
1.
Whether the counterparty promotes separation of waste in its facilities.
2.
Description of nature and weight (kg/tonnes) of the main raw materials used in production.
3.
Indication of the percentage of recycled and reused raw material that are used in production over total
raw materials used.
4.
Description of main materials/products and relevant weight (kg/tonnes), associated with counterparty’s
production process.
5.
Indication of percentage of company’s products that can be considered recycled / reused.
6.
Indicate the total amount of waste produced in the latest financial year.
Following completion of ESG questionnaire an ESG score is derived which in combination with scenario analysis
to assess customer’s repayment ability under certain negative Environmental scenarios derives to the aggregated
score for environmental aspect of ESG. The aggregated score is then used to derive the loan pricing. In line with
the Lending Pricing Policy, a margin discount, based on the client’s E aggregate score, is implemented for both
new and existing clients on new lending requests, for all clients (all sectors) under Corporate Division,
differentiating however between carbon-intensive vs. non-carbon intensive sectors. The Group linked the margin
discount at the client level to the borrower's “E” scoring (extracted from borrower’s “ESG” score). In addition, the
Group linked the margin discount at the transaction level (i.e. whether lending is Green or not) utilizing the
provisions of the Group's Green Lending Policy.
All customers operating in the abovementioned industries are eligible for ESG Due Diligence process subject to
meeting relevant thresholds. For more details on the key content, general objectives, scope, monitoring
arrangements, most senior level accountable for the policy, any third-party standards, allocated resources and
other relevant information to Lending Policy refer to page 125.
Green Lending Policy
The Group’s Green Lending Policy, which is based on Green Loan Principles (‘GLP’) of Loan Market Association
(‘LMA’), actively promotes financing towards projects with tangible environmental benefits, including those aimed
at improving resource use and circular economy. The policy establishes the criteria to classify a loan as ‘green’,
focusing, among others, on projects such circular economy adapted products, production technologies and
processes (such as the design and introduction of reusable, recyclable and refurbished materials, components
and products; circular tools and services; and/or certified eco-efficient products) as well as renewable energy. By
providing Green lending the Group effectively manages the material negative impacts associated with resource
use and circular economy.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
162
ESRS E5 – Resource Use and Circular Economy (continued)
3.
Policies, actions and resources related to resource use and circular economy (continued)
Green Lending Policy (continued)
Following the Business Environment Scan process on C&E risks, BOC PCL incorporates Green new lending internal
KPIs to Business Lines in the Group’s Financial Plan in order to promote Green lending practices and manage C&E
risks. For the environmentally friendly gross loans associated with the above-mentioned KPIs refer to page 136.
For more details on the key content, general objectives, scope, monitoring arrangements, most senior level
accountable for the policy, any third-party standards, allocated resources and other relevant information to Green
Lending Policy refer to page 126.
The Cyprus market’s demand for financing Green projects is focused on energy efficiency and renewable energy
projects at the moment. The Bank’s exposure to renewable energy projects (solar and wind parks) is disclosed
in the following graph. Reduction of c.20% has been observed in Gross loans to renewable energy projects due
to increased repayments in 2024 compared to new renewable energy projects financed in 2024.
Concentration Risk Policy
The Concentration Policy applies at Group level and defines limits and the methodology for limit setting towards
exposures in specific assets, liabilities and off-balance sheet items to ensure that concentration risk is within the
Risk Appetite. The Concentration Risk Policy aims to manage negative impacts towards resource use and circular
economy by restricting lending to resource intensive sectors, including oil, gas, manufacturing of cement,
manufacturing of Iron & Steel & Aluminium and non-renewable power generation. Financing in these sectors is
only permitted for transition or green projects that align with the Group’s sustainability objectives, subject to
approval by its highest credit committees.
For more details on the key content, general objectives, scope, monitoring arrangements, most senior level
accountable for the policy, any third-party standards, allocated resources and other relevant information to
Concentration Policy refer to section ESRS E1 in page 128.
4.
Metrics & Targets related to resource use and circular economy
While the policies and actions described above address resource use and circular economy downstream value
chain negative impact of the Group, no specific, outcome-oriented targets have been established to directly
prevent or control these impacts. This is due to the current lack of industry-wide data readiness, which limits the
ability to establish informed and measurable objectives.
Nevertheless, the Group intends to:
1.
Examine, following the data gathered from ESG Due Diligence process, to establish and monitor resource
use and circular economy targets associated with loan portfolio by applying Science Based Target
initiative’s guidance for nature.
2.
Set Green new lending KPIs, that will be embedded in the Group’s Financial Plan, associated with resource
use and circular economy and sectors of the economy which we are currently associated with negative
impacts to resource use and circular economy.
Given the fact that the Group has not yet set measurable outcome-oriented targets, it tracks the effectiveness of
actions to meet the objectives of the above-mentioned policies through the monitoring arrangements established
on each policy which are explained in detail in page 124.
25,1
20
Renewable energy projects
Renewable energy - Gross Loans (€mn)
Dec 23
Dec 24
↓20%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
163
ESRS S1 - Own Workforce
The Group’s employees are crucial to the Group’s operations, culture and success. Group’s employees are all part
of the business, which is governed by the Group’s strategy and business model and may be exposed to identified
impacts, risks and opportunities. This applies to employees of the Group, as well as those who perform
assignments on behalf of the Group as self-employed or employees of third-party service providers or seconded
staff. As an employer, the Group has a great responsibility to use policies, procedures and processes to manage
impacts, risks and opportunities and to continue to take these into account in the overall strategy. To continue
to be a successful Group and promote long-term sustainable growth, it is important that the Group has committed
and motivated employees. The Group’s employees are paid an adequate wage compared to Cyprus average wage.
1.
Interests and views of stakeholders
The Group integrates own workforce interests, views, and rights into its strategy and business model through
engagement and governance mechanisms. Employee feedback from surveys, performance appraisals, complaints
and whistleblowing channels directly inform decisions on workforce policies, training programs, wellbeing
initiatives and system of internal controls. The Executive Director of People & Change and Trade Union’s
representatives ensure workforce concerns are embedded in leadership’s decision-making process. Workforce-
related matters are factored into strategic planning, embedding areas such as talent retention, diversity,
remuneration, learning & development and workplace safety.
2.
Material impacts, risks and opportunities and their interaction with strategy and business model
The following categories of employees and non-employees within the organisation have been identified as subject
to material impacts from the Group’s operations:
1.
Normal salaried employees – Individuals directly employed by the Group under permanent full-time
contracts (employees).
2.
Part-time employees – Individuals directly employed by the Group under part-time contracts
(employees).
3.
Fixed-term employees – Individuals directly employed by the Group on a temporary basis under a fixed-
term contract (employees).
4.
Interns – Individuals engaged for internships, either directly employed or provided through educational
or third-party programs (employees or third-party personnel).
5.
External associates – Professionals engaged under contractual agreements, classified as self-employed
or provided through third-party service providers (self-employed or third-party personnel).
The Group as described in ESRS E1 - Climate Change, has not yet established a comprehensive transition plan.
However, based on the existing decarbonisation actions to reach GHG emission reduction target on own
operations and achieve Net Zero ambition by 2050, no material impacts on the company’s own workforce were
identified. The decarbonization strategy on own operations does not involve branch closures. Branch
rationalisation conducted during 2023 and 2024 was part of the digitalization agenda of the Group and any
affected staff resulting from branch rationalisation were redeployed within the Group.
The risk of forced labour, compulsory labour, or child labour is not relevant for the Group. The Group's vision,
mission and values as well as strategy and business model do not ignite significant risks associated with forced
or child labour. The Group does not operate in countries or geographic areas considered high-risk for forced or
child labour, given the fact that the majority of the operations are in Cyprus.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
164
ESRS S1 - Own Workforce (continued)
3.
Commitment to Human Rights
Respect for human rights is integrated into the Group’s operational policies and procedures. The Group’s Code of
Ethics and Code of Conduct outline defined standards for behaviour, responsibilities, and ethical practices
applicable to all employees. These frameworks are supported by reporting mechanisms and investigation
procedures to address issues and ensure equitable treatment. The Group engages its workforce through channels
designed to promote accountability and inclusion, as detailed below, supporting a culture aligned with these
principles.
The Group’s approach to Human rights is based on internationally recognised frameworks, including the
International Bill of Human Rights and international directives, principles and initiatives to protect human rights,
such as the Core Labour Conventions of the International Labour Organisation (ILO). The Group adheres to the
ILO Declaration on Fundamental Principles and Rights at Work, integrating its principles into various aspects of
operations. For instance, the Group’s collective agreement and relationship with the trade union address the first
principle of the Declaration. Fair and inclusive hiring practices ensure compliance with the second and third
principles, while health and safety measures, supported by the “Well at Work” wellbeing programme and Health
& Safety Management system, reflect the fifth principle. Group’s policies and practices are aligned with ILO
Declaration on Fundamental Principles and Rights at Work so by monitoring adherence to such policies and
practises also align with ILO. Additionally, the OECD Guidelines for Multinational Enterprises are encompassed
within the Group’s Code of Conduct, Code of Ethics, and Employee Handbook. These frameworks establish clear
expectations for ethical behaviour and corporate responsibility. Violations are addressed through the Group’s
formal disciplinary process.
The Group’s existing policies and processes, including the Recruitment Policy, Code of Ethics, and Code of
Conduct, already address concerns related to human trafficking, forced labour, and child labour, ensuring
responsible management. However, to enhance clarity and explicitly reinforce these commitments, the Group will
update its policies and processes by the end of 2025.
The Group maintains a zero-tolerance policy toward discrimination of any kind. This includes, but is not limited
to, discrimination based on race, ethnicity, colour, sex, sexual orientation, gender identity, disability, age,
religion, political opinion, national origin, social background, or any other grounds. Similarly, harassment in any
form—whether verbal, physical, visual, sexual, or bullying—is strictly prohibited. In addition, decisions related to
recruitment, promotion, and remuneration are based solely on objective criteria such as ability, ethics, and
experience. The Group through the Code of Conduct and Anti-Sexual Harassment Code of Practice set clear
standards for employee behaviour and responsibilities against any form of discrimination. No human rights
violations, such as forced labour or discrimination, were reported during the period.
The Group promotes integrity, as a core organisational value, through the implementation of the Disciplinary
code. This framework ensures timely detection and mitigation of any violations related to the Code of Conduct,
Code of Ethics, Anti-Sexual Harassment Code, internal policies, employment terms, circulars and any other
decisions of the Group associated with own workforce. To address significant breaches, the Group has established
the Disciplinary Committee. Misconduct, breaches or violations can be reported through various channels:
1.
Whistleblowing channel (Refer to page 209);
2.
Planned or unplanned internal audits;
3.
Complaints;
4.
Other means (Direct communication to Branch Manager, Manager, Director or through Internet
Banking).
The internal Audit Division investigates the violation and submits a report to the Executive Director People &
Change who oversees the process. If the investigation confirms a violation, the report is escalated to the
Disciplinary Committee. For breaches relating to the Code of Conduct or Code of Ethics (or any other matter
associated with HR) the matter is investigated by the relevant HR department and the relevant report is submitted
as described above. A Senior Management committee decides whether the matter requires escalation to the
Disciplinary Committee, which is responsible for determining appropriate disciplinary actions.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
165
ESRS S1 - Own Workforce (continued)
3.
Commitment to Human Rights (continued)
Incidents, complaints and severe human rights impacts
In FY2024, zero incidents of discrimination, including harassment, were reported.
Separately, a total of 12 matters were reported through the Group's channels for its workforce to raise concerns.
Matters reported / complaints filed relate to employee grievances or allegations made under the either complaints
or Whistleblowing process. These can relate to various issues including working conditions and other work-related
matters. Numbers quoted reflect all such incidents and complaints reported whether upheld or not. In FY24, the
Group faced no fines, penalties or compensation for damages as a result of these incidents and complaints.
In FY2024, the Group has not had any severe human rights incidents connected to the Group, in relation to cases
of non- respect of the UN Guiding Principles on Business and Human Rights, ILO Declaration on Fundamental
Principles and Rights at Work or OECD Guidelines for Multinational Enterprises. The Group faced no fines, penalties
or compensation as a result of severe human rights incidents. Severe human rights incidents are defined as cases
of modern slavery, human trafficking or child labour.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
166
ESRS S1 - Own Workforce (continued)
4.
Processes for engaging with own workforce and workers’ representatives about impacts
Own workforce engagement occurs at planning, decision-making, implementation, and evaluation stages to ensure a comprehensive approach that integrates employee
input throughout the process. Engagement occurs directly with employees, as well as through structured interactions with workers' representatives, where relevant.
The following table summarises the general processes for engaging with people in its own workforce and worker’s representatives about actual and potential positive
and/or negative impacts.
Engagement
Description
Direct
Engagement/Worke
r representative
Stages of the
engagement
Type of
engagement
Frequency
Operational
responsibility of
the engagement
Effectiveness of the
Engagement
Divisional/Regional
Meetings with all
staff
Direct
1.
Identification
2.
Determine
the approach
for mitigation
1.
Participation
2.
Consultation
1.
Annually for
strategy
2.
6-monthly for
other
communications
1.
Divisional
Directors
1.
Determination of key
priorities and establishment
of strategic initiatives
aligned with the set
priorities
2.
Divisional Strategy
approved by Divisional
Director
3.
Divisional Strategy is
reflected in Group’s
Financial Plan submitted for
approval to the EXCO and
the Board.
4.
Financial Plan is monitored
by EXCO and the Board.
Employee Opinion
Surveys
1.
Identification
3.
Evaluating
effectiveness
of mitigation
1.
Consultation
1.
Annual
2.
Human
Resources –
Executive
Director of People
& Change
1.
Determination of key
priorities
2.
Establishment of an action
plan with initiatives
designed to meet these
priorities
3.
Quarterly monitor the
action plan by EXCO and
HRRC
Focus Groups
4.
Determine
the approach
for mitigation
1.
Participation
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
167
ESRS S1 - Own Workforce (continued)
4.
Processes for engaging with own workforce and workers’ representatives about impacts (continued)
Engagement
Description
Direct
Engagement/Worker
representative
Stages of the
engagement
Type of
engagement
Frequency
Operational
responsibility of
the engagement
Effectiveness of the
Engagement
Kill-Bureaucracy
program (email/
Yammer)13
Direct
1.
Identification
2.
Determine
the approach
for mitigation
5.
Evaluating
effectiveness
of mitigation
1.
Participation
2.
Consultation
1.
Ongoing
1.
Human
Resources –
Executive
Director of
People & Change
1.
Determination of key
priorities
2.
Establishment of an action
plan with initiatives
designed to meet these
priorities
3.
Quarterly monitor the
action plan by EXCO and
HRRC
The steps the Group takes to gain insight into its workforce perspectives are inclusive of all employees, including those who may be particularly vulnerable or
marginalised. While current engagement processes do not explicitly differentiate between employee groups, those ensure that diverse voices are considered in shaping
workplace policies and decisions. The Group is a member of the European Banking Federation (EBF). This membership provides a platform for the Group to engage in
industry-wide discussions, share best practices, and gain deeper insights into the perspectives of its own workforce, particularly regarding human rights and labour
standards. EBF facilitates regular dialogue with workers’ representatives and contributes to shaping policies that respect and promote the rights of employees across
the banking sector.
13 Kill-Bureaucracy program: Internal program that employees can provide their recommendations through email / yammer / internal portal and those are evaluated for implementation.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
168
ESRS S1 - Own Workforce (continued)
5.
Processes to remediate negative impacts and channels for own workforce to raise concerns
The Group provides employees with a formal mechanism to raise concerns or complaints as outlined in the Code
of Conduct, which is accessible through the Internal Employee Portal. Employees may submit formal complaints
in writing, which are addressed through the Group’s Complaints Resolution Process. This process is designed to
manage and resolve employee grievances effectively, aiming to eliminate any form of discrimination or unequal
treatment. Complaints are addressed hierarchically, with escalation to the Personal Complaints Committee, if
necessary. The Committee consists of at least three members, one of whom is selected by Trade Union among
Group staff to represent the employees, and one member is appointed by Group’s Management. Following
consultation with the two members, the Group appoints a suitable individual to act as Committee Chair.
Employees can submit complaints in writing to their direct superior. Where the complaint is such that it pertains
to, or affects, the direct superior or supervisors, the complaint is submitted to the immediately higher superior in
the hierarchy. In exceptional circumstances, and provided this can be justified, the employee may submit their
complaint directly to the Personal Complaints Committee. Upon receiving a complaint, the recipient must provide
a written response to the employee within 15 days. If no response is provided, within the designated timeframe,
or if the employee concerned is not satisfied with the response, the complaint is submitted to the Personal
Complaints Committee. Complaints submitted to the Committee must be in writing and accompanied by all
relevant data and documentation. These submissions are routed through the Committee member appointed by
Trade Union or their alternate representative.
The Human Resources Division is responsible for the preparation of the case file, which is delivered to all
Committee members. Committee sessions are convened by the Chair whenever there are matters to be discussed.
The list of matters to be discussed during the session is submitted to the Committee Chair at least four days prior
to the day of the session. Committee members are entitled to request that the Committee examines both the
employee concerned as well as any other staff member they believe may assist in reviewing the complaint. The
request is submitted to the Committee Chair, who is responsible for issuing the necessary summons. Additionally,
Committee members are entitled to request the submission of any evidence which might assist in reviewing the
case. The minutes of sessions are kept by the Committee secretary, who shall be appointed by the Committee
and is a Group staff member. Copies of the minutes are distributed to all Committee members after the session
and are formally ratified during the subsequent session. The complaints review procedure must be concluded at
the latest within one month of the date of submission of the complaint to the Committee.
The Committee’s findings, which are solely advisory in nature, are forwarded by the Committee Chair to the
relevant Divisional Director and to the complainant.
The effectiveness of Complaints Resolution Process is measured on a case-by-case basis. Follow-up discussions
are conducted between the employee and the HR Business Partner (HRBP) to assess whether the grievance has
been resolved. In addition, the HRBPs through ad-hoc communication with employees (one to one meetings
performed throughout the year) explore the overall working conditions and employee relations. In order to gain
employee’s trust on these channels the Group provides information through Internal portal on how it deals with
complaints and information on the governance and monitoring arrangements of handling any complaint.
The departments responsible for managing workforce complaints and related processes are subject to a risk
assessment and audits relevant to these areas are included in the Internal Audit’s Internal Audit Plan.
In addition to the above, the Group has established a Whistleblowing Policy, offering accessible, confidential
channels for employees and external stakeholders to report violations, unethical behaviour, or improper practices.
For more details on the Whistleblowing system refer to page 209.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
169
ESRS S1 - Own Workforce (continued)
6.
Data Protection & Privacy
Material IROs - Own Workforce (S1)
ESRS Topic/Sub-
Topic
IRO
Type
Description
Own Workforce - Other
work-related rights -
Privacy
Impact
Potential -
Negative
Given the number of Group's employees there is a potential negative impact to own workforce arising
from personal data leakage.
Time Horizons
Value Chain
Originate from /
Connected to
Group’s strategy
and business
models
Widespread
or Systemic
/ Individual
Incidents
Inform and
contribute to
adapting the
undertaking’s
strategy and
business model
Short-Term
Medium-Term
Long-Term
Own
Operations
Upstream
Downstream
Connected to
business Model
Individual
Incidents
Refer to 6. Data
Protection & Privacy
Section
ESRS Topic/Sub-
Topic
IRO
Type
Description
Own Workforce - Other
work-related rights -
Privacy
Risk
Regulatory
Compliance /
Conduct Risk
Non-compliance with Data Protection Law (GDPR) leading to data leakage to employee personal data.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-Term
Long-Term
Own
Operations
Upstream
Downstream
Anticipated financial effects include increased costs due to
penalties arising from Commissioner for Personal Data
Protection (CPDP) and possible litigation costs. No litigation or
penalties arising due to personal data leakage in 2024.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
170
ESRS S1 - Own Workforce (continued)
6.
Data Protection & Privacy (continued)
Material IROs - Own Workforce (S1)
ESRS Topic/Sub-Topic
IRO
Type
Description
Own Workforce - Other work-
related rights - Privacy
Risk
Information
Security
(Including
Cyber) Risk
Cyber-attacks targeting the Group through Internet using a variety of techniques may
lead to loss or theft of data (including employee data), execution of fraudulent payments
and IT disruption.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
No material current financial effects
associated
with
cyber-attacks.
Anticipated financial effects include
reputational issues, identity theft,
fraud and regulatory penalties, fines,
increased cost to due inefficiencies and
loss of business.
The Group’s material risks on Data Protection and Privacy have not arisen from any negative impacts or dependencies on own workforce. Group’s own workforce is
exposed to similar types of privacy impacts and risks. It is important to note that employees who operate in departments which have access to personal data and
sensitive data are inherently exposed to greater Data Protection & Data Privacy risks. Information security and data privacy trainings are conducted annually to all staff.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
171
ESRS S1 - Own Workforce (continued)
6.
Data Protection & Privacy (continued)
6.1
Policies on Data Protection & Privacy
The Group prioritises the protection of data and personal data in its operations. The Group has implemented
measures to mitigate the negative impact on privacy as well as the identified risks associated with cyber-attacks
and data breaches, reflecting its compliance with applicable data protection regulations and its commitment to
the secure handling of employee information.
The Group maintains a Personal Data Protection Compliance Policy, to align with relevant regulations, including
the EU General Data Protection Regulation (GDPR) and national laws such as the Protection of Natural Persons
regarding the Processing of Personal Data Law 125(1)/2018 and section 106 of the ‘Regulation of Electronic
Communications and Postal Services Law 112(I)/2014’, as well as the relevant guidelines issued by the CPDP
from time to time. This policy outlines the Group’s commitment in protecting the personal data of customers,
employees, suppliers, and business partners, ensuring that data collection, use, and retention are lawful,
transparent, and aligned with GDPR principles. Protecting the security and privacy of personal data is important
to the Group, in order to conduct its business activities in the context of the envisaged privacy culture. The Board
and Senior Management are responsible to oversee the Group`s compliance with this policy. Additionally, they
have the ultimate responsibility for the implementation and adherence to this policy throughout the Group, and
the imposition of any remedial action. The Group and its subsidiaries must, as a minimum meet the requirements
of this policy. The policy is applicable for all subsidiaries of the Group as they are considered separate data
controllers. The management of each subsidiary is ultimately responsible for the implementation of this policy
and to ensure, at entity level, that there are adequate and effective procedures in place for its implementation
and ongoing monitoring to its adherence. The policy is readily available to all employees through internal portal
and to any affected stakeholder through Group’s website.
The Group also complies with the ISO 27001 Information Security Standard. The Group’s Information Security
Policy further outlines a structured incident management approach, ensuring that all information and cyber-
security risks associated with the Group’s systems and assets are handled in a timely and consistent manner.
More information on the policy is described in ESRS S4 – Consumers and end-users in page 187.
6.2
Actions on material impacts approach to managing material risks on Data Protection and
Privacy
The Group complies with GDPR requirements, ensuring transparency and accountability in employee data
processing activities. The Employee Privacy Notice, which was last updated in March 2024, outlines how employee
data is collected, processed, and protected. This notice is readily accessible on the Group’s internal portal,
ensuring employees are informed of their data privacy rights at all times.
The Group collects and processes personal data strictly as necessary for its business activities, in accordance with
legal obligations, contractual requirements, legitimate interests, or with employee consent. Data collection is
limited to relevant and essential information, with retention periods aligned to guidelines provided by the Local
CPDP. To ensure lawful processing, employees are informed of their right to withdraw consent at any time, and
specific consent is appropriately secured and documented when required.
Employees can raise concerns about how employee data are collected, processed or protected by emailing a
dedicated Human Resources address for GDPR matters or contacting the CPDP, as described in the Employee
privacy notice.
In the event of suspected or actual data breaches, employees are required to report such incidents to the Data
Protection Officer (DPO), within a maximum timeframe of 24 hours. The reporting can be done through designated
communication channels, including email or phone and after completing a form (form for reporting a possible
personal data breach). In case where the data breach incident affects a large volume (combination between data
subjects affected and systems affected or could be affected) of customers/employees, the Information Security
Department is notified, and the Security Incident Response Plan procedures are initiated. The Group has
established an incident response plan that includes containment, investigation and notification procedures in the
event of data breach. The plan is annually tested and updated to ensure effectiveness and compliance with
applicable laws and regulations. To facilitate effective reporting of data breaches, the Group has established a
guidance that serves as a reference for all employees and is embedded in the Employee Portal. This guidance
outlines the criteria and procedures for identifying and reporting reportable data breaches, empowering
employees to promptly and accurately report any incidents.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
172
ESRS S1 - Own Workforce (continued)
6.
Data Protection & Privacy
6.2 Actions on material impacts approach to managing material risks on Data Protection and Privacy
(continued)
The Group has faced privacy-related challenges, including a data breach in 2023 due to human error, where
inaccurate addresses were used to mail loan sale notification letters. The breach was identified through internal
reporting mechanisms and assessed by the DPO within 72 hours, as required by GDPR. Remedial actions were
immediately implemented, including strengthening internal controls, while the breach was reported to the CPDP,
resulting in a fine of €8,000. The Group did not have any fine relating to breach of the Regulation 2016/679 in
2024.
In addition, the Group employs Data Protection Impact Assessments (DPIAs) at all stages of data processing and
follows a data minimisation strategy. DPIAs support the identification of potential data privacy risks and comply
with data protection obligations and meet individuals’ expectations on privacy. The DPIA is initiated whenever a
new process/ product or system that involves personal data is implemented and it shall be revisited/updated
when there is a change in the risk profile of the process (e.g. new vendor, change of the procedure etc.). All
procedures relating to DPIA are analysed in the relevant circular which is readily available in the Internal Employee
Portal.
Internal circulars and manuals are annually reviewed and updated to ensure adherence from own workforce. The
Group’s DPO oversees GDPR compliance, provides guidance on data protection policies, and ensures effective
handling of data breaches and privacy complaints as part of the complaints handling procedure. The DPO advises
the Group on GDPR obligations, monitors compliance, oversees DPIAs, consults on high-risk processing, and
liaises with supervisory authorities. The DPO also ensures the resolution of data breaches and privacy complaints,
coordinating with other Group DPOs to address compliance issues. The Chief Information Officer (CIO) works
closely with the DPO to address and mitigate data security incidents. This collaborative approach reflects the
Group’s commitment to maintaining a high standard of data privacy and security, protecting employees’ personal
data, and adhering to all regulatory requirements.
The Group tracks the effectiveness of its privacy actions through quarterly monitoring report submitted by the
DPO to the Board through AC. Metrics such as the number of reported incidents, participation rates in training
programs, and vendor compliance evaluations enhance processes. The incident response plan undergoes annual
testing to ensure readiness, while privacy statements and data-handling procedures are reviewed annually to
maintain compliance with the regulations.
Internal Audit includes Personal Data Protection Compliance Policy as part of its Risk & Audit Universe and
assesses the need for audit engagements during the annual audit planning process.
The Group invests in privacy management through cybersecurity tools, dedicated DPOs for each legal entity
handling personal data, and cross-departmental collaboration across Legal, IT, HR, Internal Audit, Compliance,
Procurement, Vendor Management and Risk Management. This approach aims to mitigate risks, enhance privacy
practices, and maintain stakeholder trust.
6.3
Metrics and Targets to manage negative impacts and material risks
There is no set measurable, time-bound and outcome-oriented target associated with data protection and privacy
however, the Group nevertheless tracks the effectiveness of these actions through quarterly reporting to EXCO
and AC. Metrics reported include the number of data incidents, employee participation in privacy and information
security training programs. Board, Management and all staff participate, in 2024, in Information security training
(9,889 training hours), GDPR training (107 hours) and use of personal data training (1,207.5 hours).
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
173
ESRS S1 - Own Workforce (continued)
6.
Data Protection & Privacy (continued)
6.3 Metrics and Targets to manage negative impacts and material risks (continued)
Metrics associated with information security and GDPR training hours as well as personal data leakage reported
to the CPDP, are not validated by an external body.
In line with its Risk Appetite Statement (RAS), the Group has adopted the following qualitative stances associated
with data privacy and information security:
1.
Zero Tolerance for Privacy Risks: The Group maintains a strict no-tolerance policy for any non-compliance
with GDPR and expects full adherence to legal and regulatory requirements across all operations.
2.
No Data Leakage: The Group has zero tolerance to data leakage, whether due to system vulnerabilities or
employee mishandling. Rigorous protocols are in place to prevent and respond to potential breaches.
3.
Vendor Compliance: The Group does not engage with vendors who lack robust GDPR-aligned procedures and
practices. All third-party relationships are subject to assessments to ensure compliance with data protection
standards.
4.
Immediate Response to Data Subject Rights: The Bank has a zero-tolerance approach to delays or avoidance
in responding to data subject rights under GDPR. Processes are streamlined to ensure timely action on data
access, correction, or deletion requests.
The process for setting the above-mentioned qualitative metrics is described in the Risk Appetite Framework of
the Group. The objective of the Risk Appetite Framework (RAF) is to set out the level of risk that the Group is
willing to accept in pursuit of its strategic objectives, outlying the key principles and rules that govern the risk
appetite setting. It comprises the Risk Appetite Statement (RAS), the associated policies and limits where
appropriate, as well as the roles and responsibilities for the implementation and monitoring of the RAF.
6
13
FY2023
FY2024
Personal data leakage reported to the Commissioner for Personal Data
Protection
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
174
ESRS S1 - Own Workforce (continued)
7.
Health and Safety
Material IROs - Own Workforce (S1)
ESRS Topic/Sub-Topic
IRO
Type
Description
Own Workforce - Working
Conditions - Health & Safety
Risk
Health & Safety
risks
Poor health and safety practices can result in workplace accidents, incurring costs for
increased insurance premiums, legal defences, compensation payouts, and potential
regulatory fines for non-compliance. Operational disruptions stemming from such incidents
can diminish productivity and revenue, further straining financial performance.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
No
material
current
financial
effects
associated with work related injuries and
accidents. Anticipated financial effects
include reputational issues, increased
costs due to litigations and compensation.
The Group’s material risks on Health & Safety have not arisen from any negative impacts or dependencies on own workforce. Group’s entire own workforce is exposed
to similar types of Health & Safety risks given the office nature of operations, this is also evident from Health & Safety trainings conducted to all staff.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
175
ESRS S1 - Own Workforce (continued)
7.
Health and Safety (continued)
7.1
Health and Safety Policies (H&S)
The Group implements systems and policies to mitigate H&S risks associated with its own workforce. These
measures support operational efficiency and align with the Group’s commitment to maintaining a safe and
accountable workplace.
Health & Safety Policy
The Group’s H&S policy supports a safe and healthy environment for its employees, customers, visitors, suppliers,
external associates and other third parties. The policy emphasises risk prevention, legal compliance, and
continuous improvement. It includes regular risk assessments, workplace inspections, corrective actions, and
oversight by Safety Committees.
The policy was updated in 2023 and is readily available through Internal Employee Portal. The policy was reviewed
in 2024 and no changes were deemed necessary. The Organisational Procedure on H&S and the H&S internal
manual, outlines the responsibilities of line management, employees, and departments. These resources foster
collaboration and accountability in maintaining safety standards.
Executive Management has the ultimate responsibility to ensure compliance with the H&S regulatory framework,
its relevant provisions and adherence to H&S policy.
Health and Safety Management System (HSMS)
The HSMS, complies with the Safety and Health at Work Laws of 1996 to 2020 in Cyprus. This system defines
roles and responsibilities for management, employees, and technical teams to identify and address hazards across
all operations. It incorporates tailored measures for each facility, including emergency response plans, risk
assessments, training protocols, and detailed record-keeping.
In 2023, the HSMS underwent an external audit by a H&S consultant (approved by the Department of Labour
Inspection – member in EXYPP registry). The findings identified, were assessed and an action plan was prepared
to address them. External audit confirmed the system’s compliance and effectiveness. Senior Management
ensures consistent application of HSMS protocols, promoting accountability and standardisation across all offices.
The system applies to all employees and extends to outsourced workers and associates whose work is under the
Group’s control.
Employees under HSMS
Unit
2023
2024
Percentage of people in its own workforce who are
covered by the undertaking’s health and safety
management system based on legal requirements and/or
recognised standards or guidelines
#
2,673
2,726
%
94.45%
94.65%
Notes:
i.
The percentage of own workforce who is covered by the Group’s HSMS is calculated on a head count basis at the end
of the reporting date.
ii.
Employees of JCC Payment Systems Ltd, Unoplan and representative offices abroad are not covered by the Group’s
HSMS.
iii.
The above-mentioned metric has not been validated by an external body.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
176
ESRS S1 - Own Workforce (continued)
7.
Health and Safety (continued)
7.2
Actions to manage material risks on Health and Safety
H&S Committees
The Group promotes H&S at work and takes measures to prevent any occupation hazards and inform and share
knowledge to its workforce on H&S issues. The Group has approximately 51 H&S Committees that meet every
six months and, on an ad-hoc basis when requested by a member or in response to an incident. The Group’s
employees are represented in committees by staff from all the units of the buildings. As per the regulatory
framework, a committee must exist at all premises with more than 10 employees and its composition depends
on the number of employees stationed at the premises. The presidents of H&S Committees are the manager of
the branch or the Technical Project Coordinator of the building. Buildings with less employees have a responsible
person for the H&S issues which is the manager. The Committees are responsible to identify workplace hazards,
prevent / assess risks of accidents and resolve issues at the premises in cooperation with other departments (e.g.
Technical Services).
Incident Investigation
Employees play an active role in the HSMS by identifying hazards in their work environment. They are trained to
report these hazards via the Group’s dedicated application, or directly to the Safety Committee of their respective
building or H&S Officer. This ensures timely response and resolution of any identified issues.
The investigation of H&S incidents and work-related accidents are managed by the H&S Officer in collaboration
with the Manager of the respective branch or unit. The procedure includes:
1.
A detailed analysis of the cause,
2.
A description of the incident provided by the affected employee and witnesses,
3.
A site inspection, and
4.
The implementation of corrective actions to minimise future risks.
Any investigation of an incident/accident is documented in the relevant form, by the H&S officer and delivered to
the Manager of the Branch or Unit, Head of Claims of General Insurance and Human resources. The H&S officer,
within 15 working days from the accident, reports through dedicated forms the Department of Labour Inspection
of Cyprus Government.
Following the incident investigation, a form detailing corrective measures and actions is delivered by the H&S
officer to the Manager of Branch or Unit associated with the incident. The measures and actions are implemented
by Technical Services Department of the Group. The Implementation of corrective measures is monitored by the
Manager of the Branch or Unit associated with the incident and the Chairman of H&S Committee. Written
confirmation of the completion of these actions is provided to all involved parties.
Emergency Response and Preparedness
The Group premises have emergency evacuation plans. Annual evacuation drills are conducted across branches
and buildings, under the supervision of the Corporate Security Manager for all employees. These drills involve
fire prevention and evacuation training for assigned employees, with outcomes reviewed to implement any
necessary improvements.
The H&S Officer, as mandated by law, oversees the coordination and effectiveness of these procedures within the
broader HSMS. This ensures that emergency response measures are both comprehensive and compliant with
legal and operational standards, supporting the Group’s commitment to a safe and secure working environment.
H&S Inspections
Inspections are conducted across the Group’s branches and buildings to identify and mitigate H&S risks to
maintain a healthy environment for own workforce and any other party.
Inspections are conducted by:
1.
An H&S officer on an annual basis (random inspection and ad-hoc following incidents or complaints)
2.
An H&S representative of the property every three months
3.
The Chairman of H&S Committee on a six-month basis
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
177
ESRS S1 - Own Workforce (continued)
7.
Health and Safety (continued)
7.2 Actions to manage material risks on Health and Safety (continued)
Inspections are conducted to:
1.
Identify issues and weaknesses that should be remediated;
2.
Assess issues and weaknesses identified;
3.
Document an action plan to remediate the issues and weaknesses identified.
The Technical Services department or any other relevant department should be informed about the action plan
and the relevant timelines for implementation. The measures to remediate the issues and weaknesses identified
are monitored by the H&S Officers and Chairman of the H&S Committee. When the measures are implemented
the H&S Officer and Chairman of the H&S Committee are properly informed, and subsequently re-assess whether
the remedial actions implemented have resolved the issues and weaknesses identified.
H&S risk assessment studies
Additionally, the Group conducts H&S risk assessments in partnership with external H&S consultants (EXYPP).
These assessments, performed every two years, prioritise high and medium risks through detailed action plans.
Hazards such as slips and falls are addressed proactively by measures like floor inspections, placement of anti-
slip tapes, and safety signage.
Work-related injuries
The work-related injuries reported by the Group relate to slip and fall type injuries, none of which resulted in
high-consequence injuries. A procedure has been implemented by the Group in order to provide an analysis of
the cause, description of the incident by the affected employee and the people involved, along with the site
inspection and decisions taken to minimise the identified incident. Such incidents are addressed on a case-by-
case basis, and the actions taken by the Group include floor inspection, placement of anti-slip tapes and safety
signs wherever considered necessary. The chart below illustrates Group’s employees only, as no work-related
injuries occurred for workers who are not employees but whose work is controlled by the Group.
Notes:
i.
The rate of recordable work-related injuries has been calculated as follows:
(Total number of recordable work-related injuries) / (Total number of hours worked) x 1,000,000.
ii.
The number of hours worked was compiled using estimation. The total number of hours (2024: 4,646,016 2023:
4,670,066) is estimated based on total number of employees at each year end multiplied by 52 weeks/year multiplied
by 5 working days/week and excludes average leave days per employee and public holidays.
iii.
Recordable work-related injuries exclude JCC Payment Systems Ltd, Unoplan and representative offices abroad as
those establishments are not covered by the Group’s Health and Safety Management System.
iv.
The above-mentioned metrics have not been validated by an external body.
2
3
0.43
0.65
1
2023
2024
Recordable work-related injuries - Employees
Number of recordable work-related injuries
Rate of recordable work-related injuries
Days lost to work-related injuries
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
178
ESRS S1 - Own Workforce (continued)
7.
Health and Safety (continued)
7.2 Actions to manage material risks on Health and Safety (continued)
No fatalities existed as a result of work-related injuries or high consequence work-related injuries to either
employees and non-employees, nor any work-related ill health occurred in any of the years reported either to
employees and non-employees. The Group’s responsibility for H&S extends beyond its employees to outsourced
workers, visitors, customers, and suppliers. Vendors are required to comply with the Group’s H&S standards,
including risk assessments and certifications for equipment like lifting machinery. These assessments are
reviewed biannually, with corrective actions implemented as necessary to minimise risks.
Key action taken in 2024 in adherence to Group’s H&S policy and in management H&S risks:
1.
Monitor implementation of remedial actions identified from H&S risk assessments
2.
H&S training
3.
Buildings evacuation drills
4.
Air quality measurements for Head Office and IT buildings
5.
Electromagnetic and Magnetic Field Measurements at IT building
6.
Microbiological analysis of water quality from drinking dispensers
7.
Disinfection of water tanks at owned buildings and installation of filtration system.
Key actions planned
2025
2026
2027
1.
H&S risk assessment on:
1.
Job positions
2.
Installation
of
special
equipment
3.
Safe
evacuation
of
vulnerable people
4.
Branches and buildings (re-
assessment)
2. Estimation harmful factors (air
quality) – 3 buildings and 3
branches
3.
Monitor
implementation
of
remedial actions identified from
H&S risk assessments
4.
Support
in
drafting
new
procedure manuals and update of
existing
procedure
manual
associated with H&S
5.
Trainings
to
Protection
&
Prevention Internal Service and
H&S representatives
6. Diagnostic assessment towards
fire safety, analysis of the results
and
drafting
of
a
report
of
deviations and remedial actions -
(Head office)
1.
Confirmation
of
Group’s
adherence
to
regulatory
requirement through external
audit
and
preparation
of
relevant report.
2.
Diagnostic assessment towards
fire safety, analysis of the
results and drafting of a report
of deviations and remedial
actions – 1 Building per district
for 2026.
3.
Support and guide an internal
process
to
inform
own
workforce on H&S
4.
H&S
risk
assessment
on
management of new working
conditions like hybrid working
environment.
Policies
and
procedures drafted, approved
and adhered at Group level.
5.
Trainings
to
Protection
&
Prevention Internal Service and
H&S representatives
6.
Coordination and monitoring of
action plan on the outcome of
H&S
Risk
Assessment
for
period 2025-2026.
1.
H&S
risk
assessment
on
Branches and buildings (re-
assessment and assessment on
new buildings)
2.
Coordination and monitoring of
action plan on the outcome of
H&S risk assessment for period
2025-2026.
3.
Trainings
to
Protection
&
Prevention Internal Service and
H&S representatives.
4.
Support and guidance in an
internal
staff
awareness
campaign.
5.
Diagnostic assessment towards
fire safety, analysis of the
results and drafting of a report
of deviations and remedial
actions – 1 Building per district
for 2027.
6.
Diagnostic assessment of H&S
culture using e-survey.
The actions taken and planned for the future are all associated, derived and aligned with the Group H&S Policy
aiming on a safe and healthy environment for employees, customers, visitors, suppliers, external associates and
other third parties. In addition, the above-mentioned actions did not and will not require significant operating
expenditure and capital expenditure. The Group’s resources associated with H&S extend beyond H&S department,
certain roles and responsibilities (First aids, Security, Fire prevention) are assigned to employees of each Branch
and Building as well as members of the H&S committees.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
179
ESRS S1 - Own Workforce (continued)
7.
Health and Safety (continued)
7.3
Metrics & Targets related to managing material risks on Health and Safety
There are no measurable, time-bound, outcome-oriented targets associated with H&S risks, however the Group
nevertheless tracks the effectiveness of these actions through qualitative Key Risk Indicators and monitoring
mechanisms designed to mitigate potential hazards and ensure a safe working environment. Current qualitative
statements include:
1.
Managing H&S risks:
1.
Reducing the number of occupational accidents, illnesses, and injuries through preventive measures and
improved systems.
2.
Monitoring and reducing the number of untrained first aiders across premises to ensure preparedness in
emergencies.
3.
Addressing high- and medium-risk findings from risk assessments through corrective actions within
defined timelines.
4.
Conducting regular audits and inspections of the HSMS to ensure compliance with regulatory
requirements and industry standards.
2.
Compliance statements:
1.
Maintaining full compliance with the H&S regulatory framework, ensuring all policies and practices align
with legal obligations.
2.
Incorporating new regulations into the H&S Management System as they are issued, with annual reviews
to ensure alignment.
The process of setting the above-mentioned qualitative indicators is described in the Risk Appetite Framework of
the Group. The objective of the Risk Appetite Framework (RAF) is to set out the level of risk that the Group is
willing to accept in pursuit of its strategic objectives, outlying the key principles and rules that govern the risk
appetite setting. It comprises the Risk Appetite Statement (RAS), the associated policies and limits where
appropriate, as well as the roles and responsibilities for the implementation and monitoring of the RAF.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
180
ESRS S1 - Own Workforce (continued)
8.
Own workforce characteristics
Characteristics of Group’s own workforce
Gender
Number of employees (head count)14
2024
2023
Male
1,187
1,177
Female
1,693
1,653
Other
-
-
Not reported
-
-
Total Employees
2,880
2,830
Number of employees (head count)
Female
Male
Other
Not Disclosed
Total
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Total employees
1,693
1,653
1,187
1,177
-
-
-
-
2,880
2,830
Permanent employees
1,667
1,637
1,176
1,168
-
-
-
-
2,843
2,805
Temporary employees
19
9
10
8
-
-
-
-
29
17
Non-guaranteed hours
7
7
1
1
-
-
-
-
8
8
New employee hires and turnover
Total
2024
2023
Number of new employee hires
105
124
Number of employees turnover
81
211
Number of intragroup employee transfers
26
28
Rate of employee turnover
0.03
0.07
Notes:
i.
The number of employees (headcount) refers to the total number of people employed by the Group at the end of each reporting period.
ii.
The data has been collected based on the detailed payroll registers as of 31/12 for every fiscal year, in headcount. If data about a specific legal subsidiary of the Group was not
available in the systems, the legal entity representative was requested to provide the data.
iii.
99.7% of the employees relate to the Group’s own workforce in Cyprus (2023: 99.6%).
iv.
Staff turnover has been calculated as the aggregated number of employees who left voluntary or due to dismissal, retirement or death / Total head count of employees at each
year end.
Temporary staff consist of staff employed to undertake specific projects within the Group or are employed on a temporary basis at Real Estate Management Unit (REMU).
14 As disclosed in Note 14 of the 2024 Annual Financial Statements on page 329.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
181
ESRS S1 - Own Workforce (continued)
9.
Own workforce related metrics
Collective Bargaining
The freedoms to associate and to bargain collectively are fundamental rights and require a conducive and enabling environment. At BOC PCL we recognise the right to
collective bargaining as the key to the representation of collective interests.
2024
#
%
Employees covered by collective bargaining agreements
2,766
96%
Notes:
i.
The % of employees covered by collective bargaining agreements is calculated using the number of employees covered by collective bargaining agreements on a head count basis as at 31 December 2024 / Total head count of
employees as at 31 December 2024*100.
ii.
Employees not covered by collective bargaining agreement primarily relates to fixed term contract employees. Temporary employees are entitled to Provident Fund benefit under the collective agreement with Trade Union. They are
eligible to all other benefits included on the collective agreements with full -time employees (including Medical Fund and Life Insurance, in case of death or permanent total disability - once permanency is confirmed).
2024
Collective Bargaining Coverage
Social Dialogue
Employees – EEA
Employees – Non-EEA
Workplace representation (EEA only)
0-19%
-
-
-
20-39%
-
-
-
40-59%
-
-
-
60-79%
-
-
-
80-100%
Cyprus
-
Cyprus
The Group has collective bargaining agreements in place within the European Economic Area (EEA). The Group does not have representation agreements with any
European Works Council (EWC), Societas Europaea (SE) Works Council, or Societas Cooperativa Europaea (SCE) Works Council in place.
Gender Pay Gap
The Gender Pay Gap (GPG) is the difference in the hourly pay of men and women across the organisation. The Group’s gender pay gap (excluding LTIP 2024) is
calculated at 12.6%. The Group’s gender pay gap (including LTIP 2024) is calculated at 15.1%. The primary reason for the GPG is the larger number of females in
lower level roles, and higher numbers of males in more senior roles. The highest paid individual in our organisation is our CEO. The median annual total compensation
for all employees (excluding the CEO) for 2024 was €54,603 and, the ratio of the annual total compensation of our CEO to the median annual total compensation of all
employees (excluding the CEO) was 15:1 (excluding LTIP 2024) and 31:1 (including LTIP 2024). The Group prepared for the first time a gender pay gap analysis in line
with the EBA guidelines which will be monitored through an annual internal benchmarking study, aiming to identify the reasons for any such gap and find ways to
address it via our remuneration practices and policies.
Notes:
i.
For the calculation of GPG the Group utilizes all cash emoluments paid, in 2024, to all employees including base salary, bonus and benefits in kind. STIP bonus included in the calculation relates to the
amount paid in 2024 for FY2023, given the STIP 2023 and STIP 2024 are comparable amounts.
ii.
The GPG and the ratio of the annual total compensation of our CEO to the median annual total compensation of all employees has been calculated based on 98% of employee
headcount as at 31 December 2024.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
182
ESRS S4 - Consumers and End Users
Consumers and end-users include individuals and legal entities who purchase or use our financial products and services. The Group offers customers a wide range of
financial products and services, which might affect our customers in several ways. Additionally, how the Group interacts with its customers might also affect and pose
risks to us as a financial institution.
1.
Interests and views of stakeholders
Consumers and end-users are central to the Group’s decision-making, as outlined in the Group’s Code of Conduct and the Ethics Code. Stakeholder engagement
mechanisms, including complaint channels, surveys, focus groups and direct customer interactions, enable the Group to integrate customer feedback into strategic
decision making. Customer complaint statistics are analysed and reported quarterly to the AC and the Central Bank of Cyprus (CBC), and their satisfactory resolution
is monitored on an ongoing basis. The Group also evaluates its broader impact on consumers and end-users as part of its sustainability and risk management strategy.
It provides several engagement channels where customers can communicate concerns and suggestions, which are an input into strategic decision making. To ensure
business resilience and adaptability, the Group remains responsive to operational disruptions, by accelerating digital banking solutions to meet evolving consumer
needs.
2.
Material impacts, risks and opportunities and their interaction with strategy and business model
As a result of the DMA, the Group identified three material actual and potential positive impacts and one negative impact. The types of consumers and end-users subject
to a material impact include retail customers, business customers, digital and online customers, marginalised customers and customers in vulnerable circumstances.
These can be divided into the below categories:
Category of consumer and / or end-user
Group applicability
Consumers and / or end-users of services that potentially negatively impact their rights to privacy, to have their
personal data protected, to freedom of expression and to non-discrimination.
All types of Group consumers and end-users.
Consumers and / or end-users who are dependent on accurate and accessible product- or service-related information,
to avoid potentially damaging use of a product or service.
All types of Group consumers and end-users.
Consumers and / or end-users who are particularly vulnerable to health or privacy impacts or impacts from marketing
and sales strategies, such as children or financially vulnerable individuals.
Excluded populations and customers in
vulnerable circumstances
The Group positively impacts Health & Safety within Cypriot Society through the Bank of Cyprus Oncology Centre, which represents a partnership between the public
and the private sector. Since its inauguration in 1998, it has served cancer patients and the society at large. In addition, the Group creates positive impacts through
its Digital Transformation, which facilitates accessibility to financial services for all customers. In addition, the Group identified material positive impacts associated with
financing certain NACE (statistical classification of economic activities) sectors such as Rental and operating of own or leased real estate, development of building
projects, buying and selling of own real estate which support the access to safe and affordable housing. Regarding retail customers, the Group through provision of
housing loans, consumer loans and overdrafts create positive impacts on the accessibility to the use of financial services and being confident for the financial future
through the enhanced capacity to reach future goals.
A material negative impact arises, in relation to privacy, due to one privacy incident identified at the end of 2023. There was an internal data leak which resulted in the
improper use of addresses for loan notification letters leading to fine from the Commissioner for Personal Data Protection. Risks and opportunities described below arise
through impacts and dependencies with all Group’s consumers and end-users categories.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
183
ESRS S4 - Consumers and End Users (continued)
2.
Material impacts, risks and opportunities and their interaction with strategy and business model (continued)
The Group’s strategy and business model are actively shaped by both negative and positive impacts identified. The negative impact on privacy drives the enhancement
of policies and governance, while by continuously adapting its products, services, and operational model in line with economic and technological changes, the Group
ensures that its business strategy drives positive consumer impact. Similarly, the Group’s strategy and business model are informed by material risks and opportunities
arising from its dependencies on consumers and end-users. These are explained in the sections below.
The Group offers financial products and services to businesses and individuals, both nationally and internationally. All types of customers, can be materially impacted,
positively or negatively, by the Group's operations, products, services, value chain, and business relationships, and are therefore included in the scope of disclosures.
The Group has considered all types of consumers in its materiality assessment, incorporating historical incidents (privacy, health, safety) and scientific assessment
tools (PRB Tool) to evaluate actual and potential negative impacts. The material IROs relate to, all consumers and / or end-users, rather than to any specific groups.
3.
Commitment to Human rights
At the Group, respecting human rights of consumers and end-users is embedded in the Group’s Code of Ethics, Code of Conduct, and organisational values. These
commitments are integrated into the Group’s strategy and business model to ensure that the interests, views, and rights of consumers and end-users are considered
in the decision-making processes. The Group’s policies follow internationally recognised frameworks, including the UN Guiding Principles on Business and Human Rights,
the ILO Core Labour Conventions, the Universal Declaration of Human Rights (UDHR), and the OECD Guidelines for Multinational Enterprises. The Group has established
formal policies to ensure ethical practices, consumer protection, and operational transparency. The Customer Complaints Management Policy provides a structured
framework for addressing and resolving complaints. The Group Information Security Policy sets out safeguards for customer data, breaches, and GDPR compliance.
These policies are supported by the Code of Ethics and Code of Conduct, embedding fairness, accountability, and respect for consumer and end-user rights into all
operations. For more details on Human rights impacts refer to ESRS S1 – Own Workforce in page 164. The Group has no reported cases of non-compliance with the UN
Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, or the OECD Guidelines for Multinational Enterprises
involving consumers or end-users have been reported in its downstream value chain. Additionally, there were no reported severe human rights issues or reported
incidents connected to consumers or end-users.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
184
ESRS S4 - Consumers and End Users (continued)
4.
Processes for engaging with consumers and end-users about impacts
The Group actively engages with consumers and end-users, their representatives or with credible proxies about actual and potential impacts, including human right
impacts, in alignment with Group’s vision to create partnerships with customers, guiding and supporting them in a changing world. The Group is actively engaging with
customers at various stages and through different channels to ensure a comprehensive approach is in place to integrate customer’s input throughout the decision-
making process. The following table summarises the general processes for engaging with customers about actual and potential impacts.
Engagement
Description
Direct
Engagement
Stages of the
engagement
Type of
engagement
Frequency
Operational
responsibility
Effectiveness of the Engagement
Call Centre
Direct
1.
Identification
2.
Determine the
approach for
mitigation
3.
Evaluating
effectiveness of
mitigation
1.
Participation
2.
Consultation
3.
Information
1.
Ongoing
1.
Corporate Affairs
Department
2.
Business
Banking Division
3.
Complaints
Management
Unit (CMU)
1.
The customer is requested monthly to
complete a satisfaction survey on the
customer service received by the Group
which is communicated to line Directors
and
may
lead
to
improvements
in
processes, products and activities.
2.
For
the
effectiveness
of
handling
complaints for consumers and end users
refer
to
5.
Customer
complaint
management in page 185.
Personal
Meeting
Branches
Complaints
through various
means
Website
Customer
Survey
1.
Identification
1.
Participation
1.
Monthly
1.
Corporate Affairs
Department
The steps the Group takes to gain insight into its customers’ perspectives aim to be inclusive of all customers, including those who may be vulnerable. While current
engagement processes do not explicitly differentiate between customer groups, they engage across diverse voices in shaping policies and decisions. In addition to the
above, the Group engages with credible proxies, such as regulatory authorities, the Association of Banks, the Central Bank of Cyprus, and Financial Ombudsman, who
have knowledge of the interests, experiences or perspectives of consumer and end-users.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
185
ESRS S4 - Consumers and End Users (continued)
5.
Customer Complaints Management
The Group addresses negative impacts on consumers through a formal Customer Complaints Management Policy,
aiming to ensure a consistent, efficient, and impartial resolution process. The policy is publicly available for
transparency and includes follow-up feedback mechanisms to assess remedies and drive continuous
improvement. The Board holds ultimate responsibility for its implementation. The Policy and the underlying
Circular for Handling Complaints set the tone for managing feedback and complaints, ensuring that customers
and other stakeholders can express their dissatisfaction and allowing the Group to take appropriate action.
Customers can raise concerns through multiple channels, including in-person interactions with customer-facing
employees, call centre, formal letter and digital channels such as website, internet banking and portal, BOC
mobile application and emails. Information on how to raise concerns or complaints are readily available in the
Group’s website. Customers can raise concerns through institutional bodies, such as Central Bank of Cyprus,
Cyprus Securities and Exchange Commission, Cyprus Government Ministries, Commissioner of Data Protection
and Financial Ombudsman.
While the Customer Complaints Management Policy applies to the Group’s operations, vendors are expected to
adhere to similar standards on Complaints Management. The Group expects that all the principles regarding Labor
/ Human Rights / Ethics, Working Conditions and Health & Safety matters will be adhered by the vendors. Refer
to page 211.
Complaints are registered with sufficient detail to enable tracking and analysis. The analysis support the
identification of systemic issues and the effectiveness of remediation measures, aiming to ensure that that the
complaints handling process is continually improved and the issues are identified and addressed. Statistics on
customer complaints are prepared and reported by Internal Governance & Operations Department to the AC on
a quarterly basis. The Regulatory Compliance Division (RCD) also submits to the Central Bank of Cyprus (CBC) a
numerical complaint report on a quarterly basis. In addition, following the resolution of a complaint, the customer
is requested to provide feedback on how satisfied the customer is with the handling of the complaint. On a
monthly basis, the Complaint Management Unit provides a number of complaints to 1bank so to be provided with
customer’s feedback. Furthermore, on an annual basis the customer’s complaints are reviewed by RCD.
The Internal Audit Division evaluates the Customer Complaint Management Policy and reports any findings to the
AC with recommendations for improvement. Complaint investigations identify root causes and corrective
measures to prevent recurrence and enhance processes. Findings and recommendations are included in the
Annual Audit Report to the Board. Departments handling grievances undergo risk assessments and audits as part
of the Internal Audit’s Annual Plan, aiming to ensure oversight and compliance.
In order to gain customer’s trust on these channels the Group provides public information on how it deals with
complaints and information on the governance and monitoring arrangement of handling any complaint. The
Group’s Customer Complaints Management policy describes procedures and mechanisms to ensure confidentiality
in dealing with customer complaints which are implemented by the Group.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
186
ESRS S4 - Consumers and End Users (continued)
6.
Data Privacy, Information technology and security risks for consumers and end-users
The operational activities of the Group may negatively impact individuals' right to privacy, particularly through the unauthorised use or mishandling of personal data.
With expanding digital financial transactions, safeguarding personal information is a priority. Risks include GDPR compliance challenges, cybersecurity threats, financial
losses, and reputational damage. Cyberattacks and data breaches necessitate regular enhancement of secure networks. To mitigate these risks, the Group implements
safeguards to strengthen security and prevent threats.
Material IROs - Consumers and End-Users (S4)
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users -
Information-related impacts for
consumers and/or end users -
Privacy
Impact
Potential Negative
Negative impacts linked to incidents regarding customer privacy breaches during the
last three years (one incident during 2023, which was due to human error).
Time Horizons
Value Chain
Originate or
connected to
strategy/Business
Model
Business
relationship
Short-Term
Medium-Term
Long-Term
Own
Operations
Upstream
Downstream
Connected to business
model through
processing of personal
data
Customers
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users -
Information-related impacts for
consumers and/or end users -
Privacy
Risk
Regulatory
compliance and
Information
Security (Including
Cyber risk)
The risk of:
a) non-compliance with Data Protection Law;
b) cyber-attacks leading to loss of theft or data;
c) lack or inadequate control provisions on information assets, leading to data misuse,
unrestricted or unauthorised access to information assets;
d) Unauthorised disclosure of sensitive data by staff and agents/services providers,
either accidentally or maliciously, may lead to significant reputational issues, identity
theft, fraud and regulatory penalties.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-Term
Long-Term
Own
Operations
Upstream
Downstream
No material current financial effects.
Anticipated financial effects include fines,
penalties and loss of business.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
187
ESRS S4 - Consumers and End Users (continued)
6.
Data Privacy, Information technology and security risks for consumers and end-users (continued)
6.1
Policies to manage material impacts and risks on Data Privacy, Information technology and
security for consumers and end-users
Data Privacy
The Group maintains Personal Data Protection Compliance Policy, to comply to relevant regulations, including the
EU General Data Protection Regulation (GDPR) and national laws such as the Protection of Natural Persons
regarding the Processing of Personal Data Law 125(1)/2018 and section 106 of the ‘Regulation of Electronic
Communications and Postal Services Law 112(I)/2014’, as well as the relevant guidelines issued by the
Commissioner of Personal Data protection from time to time. This policy outlines the Group’s commitment to
protect the personal data of customers, employees, suppliers, and business partners, to ensure that data
collection, use, and retention are lawful, transparent, and aligned with GDPR principles. Protecting the security
and privacy of personal data is important to the Group, in order to conduct its business activities in the context
of the envisaged privacy culture. The Group complies with the ISO 27001 Information Security Standard,
reinforcing its commitment to secure data handling. The Board and Senior Management are responsible to oversee
the Group`s compliance with this policy. Additionally, they have the ultimate responsibility for the implementation
and adherence to this policy throughout the Group, and the imposition of any remedial action. BOC PCL and its
subsidiaries must, as a minimum meet the requirements of this policy. The policy is applicable for all subsidiaries
of the Group as they are considered separate data Controllers. The management of each subsidiary is ultimately
responsible for the implementation of this policy and to ensure, at entity level, that there are adequate and
effective procedures in place for its implementation and ongoing monitoring to its adherence. The privacy
statement of the Group is published in Group’s website to be made available to potentially affected stakeholder.
For more detail on Personal Data Protection Compliance Policy refer to ESRS S1 – Own Workforce in page 171.
Information Technology and security risks
The Group’s Information Security Policy further outlines a structured management approach, to address
information and cybersecurity risks and events associated with the Group’s technology systems and information
assets.
The purpose of the Policy is to provide an unambiguous set of standards, guidelines, controls, measures and
requirements designed to achieve a desired level of information security across all business and technical layers
of the Group. In essence, it governs the direction of all activities in the areas of information security and acts as
an umbrella document to all other Group Security Policies and associated standards, aiming to contribute to a
safe and responsible Information Security Management System (ISMS) within the Group, while supporting the
overall business objectives and goals. The scope of this policy includes all subsidiaries of the Group and all
individuals working at all levels and grades.
The functional scope of the policy includes all assets (in the broadest sense, e.g. systems, platforms, networks,
applications, documents, devices, etc.) that are used to store, process and transport Group’s information and the
information belonging to the customers, as well as facilities, equipment, resources, people and property.
This Policy is approved by the Group Board Risk Committee (RC) and reviewed on an annual basis, adhering to
internal guidelines for continued pertinence of the business documentation, to reflect in the policies and
procedures the latest regulatory requirements and any changed business processes and circumstances.
6.2
Actions to manage material impacts and risks on Data Privacy, Information technology and
security for consumers and end-users
Data Privacy
The Group safeguards customer data in compliance with GDPR and with transparency and accountability in all
processing activities. Data is collected through direct interactions, digital platforms (1bank, website), and
representatives, covering employees, clients, suppliers, and business partners when required for contractual,
legal, or legitimate interests. Data is limited to necessity, retained as per GDPR principles, and aligned with Local
Commissioner guidelines. Privacy Statements, available on the website, branches, and customer documents,
provide clear, accessible information, especially for children.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
188
ESRS S4 - Consumers and End Users (continued)
6.
Data Privacy, Information technology and security risks for consumers and end-users (continued)
6.2
Actions to manage material impacts and risks on Data Privacy, Information technology and
security for consumers and end-users (continued)
Data Privacy (continued)
The Privacy Statement, last updated in July 2024, outlines the right to withdraw consent anytime. Consent is
specific, documented, and managed. The Legal Department reviews and updates policies annually to ensure
compliance.
Customers can raise concerns on how their personal data are collected, processed or protected through channels
described in 5. Customer Complaints Management in page 185 respectively.
For details on actions on suspected or actual data breaches, actual negative impacts remediation, Data Protection
Impact Assessment, resources involved in Data privacy and effectiveness of actions performed refer to ESRS S1
– Own Workforce in page 171.
Information Technology and security risks
The Group has adopted an Information Security Management System (ISMS), in line with acknowledged
international standards (ISO/IEC 27001, NIST, CSA), as a basis for the structuring and maintaining of a system
of measures to safeguard confidentiality, integrity and availability of its information assets and information
systems. The ISMS provides a set of policies, frameworks, standards, guidelines, controls, measures and
requirements designed to achieve a desired level of information security across all business and technical layers
of the Group.
The Group is committed in protecting the security of its business information. For the purposes of meeting that
business objective the Group established the Information Security Division with the IT related personnel and
implemented, maintained an ISMS based on internationally acknowledged standards. Information Security team
is constantly monitoring cyber security threats (either internal or external, malicious or accidental) and invests
in cyber security measures and controls to protect, prevent, and respond against such threats to Group systems
and information. The ISMS ensures the protection of information assets through key security controls:
1)
Risk Management: Identifies, assesses, and mitigates security risks.
2)
Information Protection: Implements measures to classify, handle, and secure data.
3)
Supplier Security: Ensures third-party security compliance.
4)
Human Resources Security: Trains employees and contractors on security responsibilities.
5)
Physical Security: Protects assets from unauthorized access and disruptions.
6)
Operations Security: Secures IT infrastructure, networks, and communication channels.
7)
Cloud Security: Maintains data integrity and security in cloud environments.
8)
Mobile Security: Controls for secure mobile device management.
9)
Access Management: Restricts system and data access to authorized users.
10) System Security: Integrates security in system development and maintenance.
11) Backup Management: Ensures data recovery through secure backups.
12) Data Retention: Defines retention and archival policies.
13) Data Leakage Prevention: Detects and prevents unauthorized data distribution.
14) Patch Management: Regularly updates systems to address vulnerabilities.
15) Incident Response: Implements processes for managing security incidents.
16) Business Continuity: Ensures resilience against data loss and disruptions.
The Group implements processes to conduct periodic reviews to evaluate the effectiveness of implemented
information security controls in accordance with current risk appetite and prioritise corrective actions. The reviews
combine several different approaches, to improve situational awareness on the status of security controls across
the Group’s environment and increase insights into the processes used to manage organisational security. Those
reviews include Information security assessments, Information security controls maturity assessment,
Vulnerability and Security Configuration assessments/scanning, Enterprise penetration testing and Penetration
testing of specific applications/systems.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
189
ESRS S4 - Consumers and End Users (continued)
6.
Data Privacy, Information technology and security risks for consumers and end-users (continued)
6.2
Actions to manage material impacts and risks on Data Privacy, Information technology and
security for consumers and end-users (continued)
Information Technology and security risks (continued)
Where a control is found to operate outside the Group’s defined risk appetite:
1.
A risk assessment should be performed and risks should be managed using the procedure defined in the
Information Security Risk Management Methodology.
2.
Each control owner should aim to reduce the identified exposure within the defined risk appetite, in line
with the defined risk remediation targets.
The Board Technology Committee (TC) supports the Board in fulfilling the oversight responsibilities with respect
to the overall role of technology, including information security. The RC has the responsibility for the oversight of
Operational and Information Security risks. The TC is informed on the application of Information Security policies.
No significant operational expenditures and/or capital expenditures are associated with the above-mentioned
actions.
6.3
Metrics & Targets on Data Privacy, Information technology and security
There is no set measurable, time-bound, outcome-oriented target however, the Group nevertheless tracks the
effectiveness of these actions through established processes, procedures and KRIs. The Group maintains a
leakage registry to document and monitor data incidents, reviewed quarterly and reported to senior management
and the AC. Data subject requests and complaints are tracked to ensure resolution. Cyber-attacks and resolutions
are recorded, with updates provided to the DPO and regulatory authorities. The Group also maintains a Record
of Processing Activities (RoPA), conducts Data Protection Impact Assessments (DPIAs), updates GDPR-related
actions, including Privacy Statement revisions and provides internal training. Moreover, the Group’s Risk Appetite
Statement (RAS) reflects a zero-tolerance approach to privacy and data protection risks. Board, Management and
all staff participate, in 2024, in Information security training (9,889 training hours), GDPR training (107 hours)
and use of personal data training (1,207.5 hours).
For personal data leakage reported to the Commissioner for Personal Data Protection refer to the quantitative
metrics in ESRS S1 – Own Workforce in page 172.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
190
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services
7.1
Digital Transformation
The Group positively impacts accessibility to products and services through the strategic orientation to continuously scale up digital transformation.
Material IROs - Consumers and End-Users (S4)
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users - Social
inclusion of consumers and/or end-users -
Access to products and services
Impact
Actual &
Potential
Positive
The Group's Branch network, expansion in digital means and digital product offerings (1Bank,
Internet Banking, Subsidiary portals) contribute positively to accessibility on products and
services.
Time Horizons
Value Chain
Originate or connected
to strategy
Business
relationship
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
Originate from Digital
Transformation value
proposition
Customers
7.1.1 Policies related to consumers and end-users associated with access to product and services through Digital transformation
The Group through digital networks supports customer accessibility to financial products and services. Digital solutions like Internet Banking (1bank) and BOC Mobile
Application with offerings like QuickLoans, Digital Deposits, QuickPay, QuickCards, Digital Accounts, Antamivi Scheme, Digital card ‘wallets’ which provide secure,
efficient, and accessible way to financial services, reducing the need for branch visits and allowing customers to manage their finances remotely. The Group’s Treating
Customers Fairly Policy, on the Consumer Protection Law of 2021 (Law 112(I)/2021), emphasises the customer’s best interests and understanding of their needs,
ensuring products are designed with customer’s interest in mind and are easy to explain. This policy is available publicly in Group’s website through Code of Ethics and
Code of Conduct. The Board is responsible to oversee the Group`s compliance with this Policy. Additionally, the Board has the ultimate responsibility for the
implementation and adherence to this policy throughout the Group, and the imposition of any remedial action. The Board approves this Policy through AC and oversee
that sufficient, dependable, and secure internal procedures are in place to facilitate compliance with the policy. Internal audit includes the policy as an auditable area
in its Risk & Audit Universe and assesses the need for audit engagements during the annual audit planning process.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
191
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services (continued)
7.1
Digital Transformation (continued)
7.1.2 Actions enhancing positive impacts through Digital transformation
The Group in 2024, undertaken several actions to evolve its positive impact arising from digitalisation:
Schemes/Feature
/Product
Scope
Expected Outcome
Effectiveness Tracking
Pronomia
The new 'pronomia' loyalty scheme
primarily aims to acknowledge and
reward
loyal
Group’s
customers
through privileges and benefits
Increase customer satisfaction, facilitate access to products
and
services
through
reward
schemes
and
increase
customer’s trust.
Internal KPIs are set towards these
features, products and schemes which
are monitored through BDC and EXCO
on a monthly basis. In addition,
customers
are
providing
feedback
through monthly customer survey
towards satisfaction on Group’s digital
means.
JOEY
Next-generation banking application
designed specifically for kids aged 9 to
17
Joey supports kids and teens learn to manage money in a
safe, structured way, with the guidance of their guardian.
GIC Portal
Customer portal to apply or renew
general
insurance
contracts
embedding also reward schemes
Increase customer satisfaction, facilitate access to products
and
services
through
reward
schemes
and
increase
customer’s trust.
Quick Loans
Digital lending solution for rapid credit
access with minimal processing time
and lower fees.
Increase customer satisfaction, facilitate access to products
and services and increase customer’s trust.
Digital Deposits
Online
platform
for
deposit
management,
reducing
physical
interactions.
Increase customer satisfaction, facilitate access to products
and services and increase customer’s trust.
Digital Accounts and
Cards
Fully digital banking accounts and card
solutions for enhanced accessibility.
Increase customer satisfaction, facilitate access to products
and services and increase customer’s trust.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
192
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services (continued)
7.1
Digital Transformation (continued)
7.1.3 Metrics & Targets on positive impacts through Digital transformation
There is no set measurable, time-bounded and outcome-oriented
target however, the Group tracks effectiveness of these actions
through the internal KPIs. The Group sets annual internal KPIs
towards its digital offerings, features and schemes. Those KPIs are
monitored on a monthly basis through BDC and EXCO. Those KPIs
are set taking into account market conditions, operating environment
and historic information. Refer to the following metrics on the above-
mentioned internal KPIs. The below metrics are extracted either
through internally established dashboards or through export from
Group data warehouse. No significant assumptions made towards
extraction of metrics. Metrics are not validated by any external body.
12,781
21,531
Digital Accounts (#)
FY2023
FY2024
104.2
106.7
Quick Loans and ELoans (€mn)
FY2023
FY2024
415,045
613,486
Digital Sales Non-life insurance
(€000)
FY2023
FY2024
11,536
23,386
Debit Cards (#)
FY2023
FY2024
89.80%
92.20%
Digital Deposit Ratio (%)
FY2023
FY2024
95.56%
95.54%
Digital Transactions Ratio
(Total Portfolio)
FY2023
FY2024
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
193
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services (continued)
7.1
Digital Transformation (continued)
7.1.4 Material Opportunities on Digital Transformation
Material IROs - Consumers and End-Users (S4)
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users - Social
inclusion of consumers and/or end-
users - Access to products and
services
Opportunity
Digital
Transformation
Expand the QuickLoans offering through digital channels by allowing individuals to an
end-to-end Housing Loan capability.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
Enhance customer's accessibility
to financial products and increase
market share and revenue
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users - Social
inclusion of consumers and/or end-
users - Access to products and
services
Opportunity
Digital
Transformation
A POS (Point-of-Sale) credit facility is a lending product that offers the opportunity to
the customers to instantly obtain a product or a service both digitally and physically (at
the Point of Sale) with flexible payment options over a period of time.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
Enhance customer's accessibility
to financial products and increase
market share and revenue
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
194
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services (continued)
7.1
Digital Transformation (continued)
7.1.4 Material Opportunities on Digital Transformation (continued)
Material IROs - Consumers and End-Users (S4)
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users - Social
inclusion of consumers and/or end-
users - Access to products and
services
Opportunity
Digital
Transformation
Evolution of Jinius platform.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
Digitalise Cyprus economy and
enhance customer's accessibility
to financial products leading to
increased revenue and market
share
7.1.4.1 Policies associated with material opportunities on Digital Transformation
The Group implements a Group New product/Services Management policy to pursue a new product opportunity. This policy sets out and addresses key principles for
the development of new Products/Services and modification/amendment of existing ones. Failure to promptly identify, assess and mitigate product risk can have
adverse financial, regulatory, technology and/or reputational impact. This policy applies to all Group entities and in any country. The Board bears the ultimate
responsibility for the effective implementation of the Policy and for setting the right tone from the top. The RC maintains oversight and ensures that the framework for
assessing new Products/Services is in place and is effective, making sure that sufficient, dependable, and secure internal procedures are in place to ensure that the
Group complies with the policy. RC also monitors the effective implementation of the Policy through the Control Functions. The Group dedicates resources to ensure
appropriate launch of new products. The departments involved in the process are Operational Risk Management, Risk Operations, Data Office & Risk Analytics,
Information Security, Compliance Division, Data Protection Officer, Corporate Affairs, Legal, Information Technology, Organisation Department, Treasury Division,
Finance, HR, Internal Audit, Product Owner and Chief Digital Division. Certain Committees are involved in the process, Executive Committee, Product Governance, Asset
and Liability Committee and New Products Forum.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
195
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services (continued)
7.1
Digital Transformation (continued)
7.1.4 Material Opportunities on Digital Transformation (continued)
7.1.4.2 Actions associated with material opportunities on Digital Transformation
1.
Digital Housing
The Bank aims to offer Housing loans through Internet Banking and BOC Mobile Application. This initiative streamlines the loan assessment process by enabling
automatic approvals or rejections based on predefined criteria, improving both customer experience and the in-branch application processing. The Digital Housing is
expected to increase in-branch efficiency and sales. The Group followed the New Products/Services procedure, engaged with all relevant stakeholders to pursue the
relevant opportunity. The Phase 1 of the product was launched in January 2025 and relates to Digital Housing Product through Internet Banking. The Phase 2 of the
product is expected to be launched in 2025 allowing Digital Housing to be offered through BOC Mobile Application. A detailed road map has been established for effective
implementation and rollout.
2.
POS Credit Facility (Flexy)
The POS Credit Facility is a lending solution that allows customers to access products or services, both digitally and physically at the point of sale, with flexible payment
options. Delivered through the Group’s Internet banking, it enhances customer convenience while expanding the Group’s financial services portfolio. The POS Credit
Facility is expected to streamline operations with automated assessments and support environmental sustainability by cutting paper consumption and carbon emissions,
drive revenue growth through expanded loan offerings, empower customers with tools for better financial decision-making and enhance customer engagement and
gather valuable feedback.
After conducting market analysis, cost-benefit evaluation, benchmarking, and other assessments to explore the opportunity, the product is now progressing through
the appropriate governance framework under the New Products Circular, with a planned launch in 2025. The opportunity does not include any significant operating and
capital expenditure to pursue the above-mentioned opportunities.
3.
Digital Economy Platform (Jinius)
The Jinius platform offers services and tools that digitalise, simplify, and speed up the daily transactions and activities of businesses. Jinius through Business-to-Business
Services offer tender management, ecosystem management, invoice management and remittance management services. Jinius through Business to Consumers
services, launched in February 2024, offer product marketplace were retailers and consumers can interact. Jinius represents a significant opportunity for growth and
thus the strategic evolution of Jinius is part of the 5-year Group’s Financial Plan, evaluated each year, and any internal KPIs are monitored through BDC on a monthly
basis.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
196
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services (continued)
7.2
Financed Positive Impacts
Material IROs - Consumers and End-Users (S4)
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users - Social
inclusion of consumers and/or end-
users - Access to products and
services
Impact
Actual & Potential
Positive
a) Financing activities to certain NACE sectors (i.e. Rental and operating of own or leased
real estate, development of building projects, buying and selling of own real estate) with
total portfolio exposure of 25.98% out of €5b exposures assessed under PRB institutional
banking impact analysis of 2024, create key/direct actual positive impacts to stakeholders’
accessibility to affordable housing. Financing activities to consumer banking portfolio (i.e.
Home loans /mortgages) with total portfolio exposure of 80.8% out of €4.9b exposures
addressed under consumer banking impact analysis of 2024, create key/direct actual
positive
impacts
to
stakeholders’
accessibility
affordable
housing.
b) Financing activities to consumer banking portfolio (i.e. Home loans /mortgages,
consumer loans & overdraft) with total portfolio exposure of 100% out of €4.9b exposures
assessed under consumer banking impact analysis of 2024, create key/direct actual
positive impacts to accessibility to the use of financial services.
Time Horizons
Value Chain
Originate or
connected to
strategy
Business
relationship
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
Connected to
strategy through
provision of
Finance
Customer
The Group provides a wide range of high-quality financial products and services, including retail and commercial banking, factoring, private banking, life and general
insurance, aiming to cover fully and effectively the constantly changing needs of its customers, whether businesses or individuals. Products such as Housing loans,
Consumer loans, Credit Cards and Overdrafts as well as loans granted to the Real estate sector, positively contribute to the accessibility to adequate, safe and affordable
housing and to the use of financial services by individuals and firms.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
197
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services (continued)
7.2
Financed Positive Impacts
7.2.1 Policies on Financed positive impacts associated with access to product and services
The Group’s Lending Policy sets the principles for credit risk management and supports the risk culture in the
Group in order to be aligned with regulatory requirements and the strategic ambitions. The acceptance of credit
risk is an integral part of our core business, and fulfilling our financial goals requires commercial decisions that
balance risk and reward. The Policy sets principles for the customer’s credit risk profile (Risk rating systems),
repayment ability, loan to value and loan to cost limits, collateral, concentration risks, ESG Due Diligence and
how the exposures are monitored and reported on. Detailed guidelines for the implementation of the Policy are
incorporated in the Credit Risk Circulars which are approved by the CRO.
The Board bears the ultimate responsibility for the effective implementation of the Policy and for setting the right
tone from the top. The Board approves this policy through RC, making sure, that sufficient, dependable, and
secure internal procedures are in place to ensure that the Group complies with the Policy and monitoring the
effective implementation of the Policy via the Control Functions. Internal Audit Division reviews the policy for
proper governance and periodically assesses the Policy and the Group’s system of internal controls, corporate
governance and risk management processes related to the Policy and informs Audit Committee of its findings and
relevant recommendations. Credit Risk Control & Monitoring reviews the Policy for proper governance and is
responsible to examine adherence to policy, as part of on-going monitoring through reporting in regular intervals
or the review of credit applications on a sample basis, as described in the Group’s Credit Monitoring Policy and
CRC&M operations manual. For more details on MDR-P refer to ESRS E1 – Climate Change in page 125.
7.2.2 Actions on Financed positive impacts associated with access to product and services
1.
Housing
Housing is a key strategic priority, representing 35% of its performing loan portfolio as at 31 December 2024.
Taking into account the high construction costs and increased property prices in Cyprus market, the Group
understands that through the provision of finance it supports the increase of the housing supply in Cyprus. In
addition, the Group recognizes that increasing housing supply has a material positive social impact and
acknowledges any potential negative environmental impacts from the construction (Refer to ESRS E1 – Climate
Change in page 110, ESRS E2 – Pollution page 156 and ESRS E5 – Resource Use and Circular Economy page
158).
At the end of 2023 and during 2024, the Bank launched the “Green Housing” product, aligned with GLP of LMA,
in order to support the decarbonisation of residential properties in Cyprus and achieve the decarbonisation target
set. The Green Housing product enhances the accessibility and affordability on Housing, as it finances the
construction or acquisition of an energy efficient residential property (Energy Performance Certificate (EPC)
Category A) which has lower environmental impact and lower energy costs. In addition, the Green Housing
product is offered at lower interest rates as it provides discounts to those who provide the design and post
construction (EPC) Category A.
The retail housing is considered a critical financial product to support our customers to acquire their own home.
BOC PCL supports customers who are buying their first home, their holiday home, carrying renovation to their
existing home or acquiring a home for investment. In the Group’s website, new and existing customers can find
useful information to support them on their way. The Bank offers also an online calculation tool to provide an
indicative instalment to its customers. In addition, the Bank launched the Digital Housing product through internet
Banking and aims to launch it through BOC Mobile Application during 2025 to support further customer’s access
to affordable housing.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
198
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services (continued)
7.2
Financed Positive Impacts
7.2.2 Actions on Financed positive impacts associated with access to product and services (continued)
1.
Housing (continued)
The Group to further support the access to Housing, given the increases in interest rates the recent years,
introduced a series of support measures to the Cypriot society. The following measures were announced at the
end of 2024 and will be implemented in 2025:
1)
Support to performing borrowers: Rewarding performing Housing loan borrowers who have a Housing
loan with ECB or Euribor base rates if certain criteria are met. The rewards can be either through Antamivi
points or cash. The reward represents 0.5% of interest rate for the period 30/06/24-31/12/24.
2)
Personal Loans to Performing Borrowers with Housing loans: Introduction of new five-year fixed rate
personal loan product with limit 5,000 at preferential interest rate for energy upgrade.
3)
Interest Rate Subsidies:
a.
In alignment with Government Subsidy Scheme “Housing Subsidy Scheme for Young Couples
and/or Individuals up to 41 Years Old” a 1% interest rate subsidy for the approved Cypriot
residents under the scheme. The subsidy to be offered with the Bank’s 3 Years Fixed interest rate
Housing Loan product during the fixed rate period of the loan only.
b.
In alignment with Government Subsidy Scheme “Housing Scheme for the Revitalization of
Mountainous, Near the Buffer Zone and Disadvantaged Areas” a 1% interest rate subsidy for the
approved Cypriot residents under the scheme. The subsidy to be offered with the Bank’s 3 Years
Fixed interest rate Housing Loan product during the fixed rate period of the loan only.
4)
Offering of Housing Loans at lower Fixed interest rate by the Bank: Offering 3 year fixed interest housing
loan at a discount of 0.75% during the three-year Fixed rate period of the loan only. The product will be
with a rate of 2.85% or 2.90% depending on customer contribution (higher or below 30%). The discount
to be available only for primary residence Housing Loans for the acquisition of properties up to €350K for
a total amount of €100m.
The are no significant operating expenditure or capital expenditure on the above-mentioned actions.
In addition to the above, the Group through financing to certain sector of the economy continues to support the
access to adequate housing:
Financing to key NACE sectors that create positive impacts on Housing (as per the 2024 PRB
Impact Analysis)
2023
2024
Sectors
Total % to
total
portfolio
OS Loan
Amount
(€mn)
Total % to
total
portfolio
OS Loan
Amount (€mn)
41.1 Development of building
projects
7.18%
354
6.18%
312
41.2 Construction of residential and
non-residential buildings
1.22%
60
1.35%
68
43.9 Other specialised construction
activities
0.51%
25
0.74%
38
68.1 Buying and selling of own real
estate
4.05%
200
4.14%
209
68.2 Rental and operating of own or
leased real estate
15.48%
763
13.04%
658
68.3 Real estate activities on a fee
or contract basis
1.14%
56
0.52%
26
Total
29.58%
1,458
25.98%
1,311
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
199
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services (continued)
7.2
Financed Positive Impacts
7.2.2 Actions on Financed positive impacts associated with access to product and services (continued)
2.
Consumer Banking
The Group also provides a of day-to-day banking products and services, such as current accounts, deposits and
savings, cards, loans and insurance. The Bank acknowledges that its retail product offerings relating to Credit
cards, Consumer loans and Overdrafts positively impact the customers’ access to finance. At the same time, the
Bank also understands that those offerings may impact the customers’ disposable income due to higher interest
rates and fees. The above-mentioned product offerings correspond to 13% (€660mn) and 13% (€642mn) in 2024
and 2023 respectively of the Group’s consumer banking portfolio, as per the 2024 and 2023 PRB consumer
banking impact analysis. Even though not significant in terms of value those products provide individuals with
access to finance for any unexpected expenses and cover their needs. In addition, the Group associates Credit
Card products with ‘Privileges’ to boost the access to finance and mitigate the inherent negative impacts:
•
Participation in Antamivi Scheme;
•
Worldwide free ATM withdrawals;
•
Lounge key;
•
Free travel insurance and purchase protection insurance.
Through its digitalisation journey as already mentioned in Digital Transformation section, the Group offers
QuickLoans which provide easy access to Consumer loans with less impact to the customers’ disposable income.
The customers have quick access to finance as the applications for such products are submitted and assessed
electronically based on the creditworthiness, repayment ability and the Group’s credit policy. The decision for the
approval or rejection of the online credit application will be reached by processing the personal data using solely
automated means (including profiling), without human involvement, and only after the explicit consent to do so.
Therefore, the Quick Loan products are offered without any initial bank charges (arrangement or documentation
fees, except stamp duties which are required by law).
The above-mentioned metrics are extracted either through internally established dashboards or through export
from Group data warehouse. No significant assumptions made towards extraction of metrics. Metrics are not
validated by any external body.
7.2.3 Metrics & Targets related to financed positive impacts associated with access to product and
services
There are no set measurable, time-bound, outcome-oriented targets associated with financed positive impacts
nevertheless, the Group tracks the effectiveness of these actions through the Financial Plan process. The Group
sets specific internal annual KPIs associated with new lending of housing and other consumer banking offerings.
The Group has set its new lending internal KPIs for 2025-2028 in the Group’s Financial Plan. Those metrics are
monitored on a monthly basis at the BDC and EXCO and on quarterly basis from the Board. The Bank joined UN
PRB last year, therefore, a public outcome-oriented target on financial inclusion should be set in the upcoming
years.
During the year, the Group offered €491mn new lending on retail housing (2023: €454mn) which comprises 20%
of Group’s new lending and indicates the Group’s commitment to this area. The total performing gross loans
under performing retail housing amounts to €3,56bn as at 31 December 2024 (2023: €3.35bn). The Group aims
to steadily increase its retail housing portfolio and continue its positive impact to affordable housing. The above-
mentioned metrics are extracted either through internally established dashboards or through export from Group’s
data warehouse. No significant assumptions made towards extraction of metrics. Metrics are not validated by any
external body. In addition, there were €355mn gross environmentally friendly loans as at 31 December 2024
which correspond to a 90% increase compared to 31 December 2023. For details on environmentally friendly
loans refer to ESRS E1 – Climate Change in page 136. For the measures launched to support the Cypriot society,
describes above, metrics will be reported in FY2025, given those were launched in December 2024.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
200
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services (continued)
7.3
System Downtime and Disaster risks
Material IROs - Consumers and End-Users (S4)
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users - Social
inclusion of consumers and/or end-
users - Access to products and services
Risk
Technology risk
Group's system downtimes impacting accessibility to products and services and
customer service.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
No current material financial
effect. Anticipated financial effect
include loss of business
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users - Social
inclusion of consumers and/or end-
users - Access to products and services
Risk
Business
Continuity risk
One of the IT Data centres to be rendered unavailable due to natural disaster
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
No current material financial
effect. Anticipated financial effect
include loss of business
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
201
ESRS S4 - Consumers and End Users (continued)
7.
Access to Products and services (continued)
7.3 System Downtime and Disaster risks (continued)
7.3.1 Policies related to system downtime and disaster risks associated with access to product and
services
The Group’s wide range of financial products and services change from time to time and in order to adapt to the
needs of its customers, whether businesses or individuals, and aim to be in line with the changes in the broader
economy and environment. However, access to products and services can be significantly affected by system
downtimes, posing a material risk to the Group’s operations. Such downtimes disrupt customer services and
hinder transaction capabilities, leading to potential revenue losses, customer dissatisfaction, and reputational
damage. To address these risks, the Group has adopted a Business Continuity Management Policy that
demonstrates its commitment to maintaining a Business Continuity Management System (BCMS). This policy
applies to all employees within the Group that support the delivery of financial products and services to consumers
and businesses. It ensures that essential banking functions remain available, even in the event of disruptions,
safeguarding customer access and operational stability.
This internal policy approved by the Board through RC, supports with the Group’s business continuity objectives
as well as statutory, regulatory, and contractual obligations. The BCMS framework is designed according to the
standards set by ISO 22301:2019 “Societal security - Business continuity management systems – Requirements.”
BCMS aims to safeguard the interests of key stakeholders, reputation, brand and value creating-activities. It also
adheres to directives from the Central Bank of Cyprus, in order to ensure a structured and reliable approach to
mitigating the risks associated with service disruptions. The overall responsibility for approving and monitoring
the Group`s strategy and policy for managing Business Continuity risk lies with the Board which exercises this
responsibility through the RC. The Policy, circulars and procedures are readily available on the Employee Internal
Portal. In addition, the Head Business Continuity Risk Management conducts BCMS workshops and training
programs to ensure that the business continuity liaisons who are assigned business continuity responsibilities are
competent to perform the required tasks.
7.3.2 Actions related to system downtime and disaster risks associated with access to product and
services
To manage interruptions of critical IT systems and to avoid loss of data and services, as an after effect of natural
or man-made disasters, the Group implements a Disaster Recovery Plan (DRP). The DRP applies both to major
events that deny access to datacentres for an extended period, and to events that may deny access to parts of
the datacentres or certain systems. In that respect, the DRP is IT focused and designed to restore operability of
IT systems and applications at an alternative site, with the aim to mitigate any effects a disaster might have upon
the on-going operations of the Group. The Executive Director Technology & Operations is responsible for
reviewing, amending and updating the Group’s DRP for the recovery of key IT systems, telecommunications and
data to support the implementation of recovery locations in the context of Business Continuity Plan (BCP).
The DRP covers all relevant risk and incident types (i.e., flood, fire, tornado, electrical storms, act of sabotage,
electrical power failure, loss of communications network services), including recovery options and strategies for
cyber-security scenarios. The plan incorporates and define the priorities in recovering IT systems, considering
their interdependencies. Procedures for recovery priority identification and management are defined and
periodically reviewed. Ownership of the DRP is assigned to the Disaster Recovery Committee (DRC), which
nominates a Disaster Recovery Coordinator (DR Coordinator) to undertake responsibility for the efficient
maintenance of the DRP. The DRP is tested annually for the identification and implementation of necessary
remedial actions on any issues recognised during the test. The Group must maintain Crisis Management processes
towards the effective and efficient management of any crisis events in order to mitigate, as much as possible,
the impact on the organization, its stakeholders and its customers.
7.1 Metrics & Targets related to system downtime and disaster risks
There are no measurable, time-bound and outcome-oriented targets on system downtime and disaster risks
however, the Group tracks effectiveness of these actions through established escalation arrangements to CEO,
CRO and Deputy CEO in case of a critical impact incidents. The Group, in 2024, conducted Business Continuity
Management training (1,299.5 hours in 2024) and Disaster Recovery training (161 hours in 2024). 5 system
downtime incidents were reported, in 2024, to CBC. No disaster incidents occurred in 2024.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
202
ESRS S4 - Consumers and End Users (continued)
8.
Health & Safety
The Group faces material physical security risks and health & safety risks for its stakeholders.
8.1 Policies and actions related to physical security risks and H&S
To mitigate the above-mentioned risks, the Group is implementing the following policies:
1.
Health & Safety Policy: For the description, actions and metrics and targets associated with this policy refer to page 175 of ESRS S1 – Own Workforce.
2.
Physical and Environmental Security Policy: This policy applies to all premises and facilities and establishes minimum standards for safeguarding company
assets and creating a secure working environment. By protecting against unauthorised physical access, theft, and damage to operational equipment, this
framework minimises service disruptions and ensures the safety of individuals at Group premises.
This policy applies to all property, facilities, assets, and equipment, whether owned or leased by the Group, including but not limited to all premises and buildings of
the Group. In addition, this policy applies to all individuals working at all levels and grades. The Group regularly reviews and updates its strategic plans and compliance
with health and safety and physical security policies taking into account any H&S incident. The Operations and Cost Management Division oversees the policy, addresses
interpretation queries, ensures appropriate access controls based on the criticality of each location, and monitors adherence to established physical security KRIs. KRIs
and compliance audits ensure risks are effectively mitigated. The policy ensures implementation of security controls, access controls, physical monitoring controls,
equipment security and measures against physical and environmental threats. The material risks primarily affect customers who visit the Group’s branches or premises.
By mitigating these risks, the Group ensures a safe and secure environment for these interactions, by reducing potential harm to consumers and end-users.
8.2 Metrics & Targets related to physical security risks and H&S
There are no set measurable, time-bound and outcome-oriented targets nevertheless, the Group tracks the effectiveness of these actions through the following
monitoring mechanisms. The Group is committed to managing material risks on consumers and end-users, particularly in the area of physical security and health and
safety, through KRIs and monitoring mechanisms designed to mitigate potential hazards and ensure a safe working environment. For more details refer to page 179 of
ESRS S1 – Own Workforce.
Material – IROs Consumers and End-Users (S4)
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users - Social inclusion
of consumers and/or end-users - Health &
Safety and Security of a person
Risk
Physical
Security and
Safety Risk
Increased physical security risks (theft, vandalism, property damage, trespassers,
squatters etc.) health and safety risks (injuries, public health and safety hazards)
and/or legal and regulatory violations and penalties.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-
Term
Long-Term
Own
Operations
Upstream
Downstream
No
current
material
financial
effects. Anticipated financial effects include
potential litigation claims
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
203
ESRS S4 - Consumers and End Users (continued)
9.
Bank of Cyprus Oncology Centre
The Group positively impacts Health & Safety of customers, end-users and Cypriot Society through the Bank of Cyprus Oncology Centre, which represents a partnership
between the public and the private sector. Since its inauguration in 1998, it has served cancer patients and the society. It is also the first hospital in Cyprus and Greece
to receive quality accreditation from Caspe Healthcare Knowledge Systems (CHKS), one of Europe’s hospital accreditation organisation.
Material IRO
ESRS Topic/Sub-
Topic
IRO
Type
Description
Entity Specific -
BOC Oncology entre
Impact
Actual
Positive
The Group positively impacts Health & Safety of customers, end-users and Cypriot Society through the Bank of Cyprus
Oncology Centre, which represents the biggest and most successful partnership between the public and the private
sector.
Time Horizons
Value Chain
Originate or
connected to strategy
Business relationship
Short-Term
Medium-
Term
Long-Term
Own Operations
Upstream
Downstream
Connected to strategy
Operational/Customers/Suppliers
9.1 Policies and actions related to BOC Oncology Centre
Through their efforts, the Centre continues its positive impacts through innovation, research, and patient care. The Centre reinforced medical education and research
through collaborations with the University of Cyprus and St. George’s University of London, offering training to medical students. Additionally, an amount was invested
for research from the A.G. Leventis Foundation which was allocated towards establishing a clinical trials unit, supporting cancer research. The Centre also participated
in multiple European research programs, including EU4Health initiatives, and expanded its digital molecular profiling system, benefiting patients with breast, lung, and
colorectal cancer.
9.2 Metrics and Targets related to BOC Oncology Centre
There is no set measurable, time-bound and outcome-oriented target, however the Group nevertheless track the effectiveness of the above actions through Group’s
Executive and Senior Management being members of the BOC Oncology Centre’s Board. The Group, through annual contribution, €2mn in 2024 and €2mn in 2023,
supports the Centre’s vision and mission. Through the years with the Group's financial support the Oncology Center was able to support cancer patients in Cyprus.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
204
ESRS S4 - Consumers and End Users (continued)
10. Responsible marketing practices and Access to quality information
Material – IROs Consumers and End-Users (S4)
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users - Social
inclusion of consumers and/or end-
users - Responsible marketing
practices
Risk
Regulatory
Compliance
Non-compliance of new products with law and customer related regulations. The Group
introduces a large number of products with different legal or compliance requirements
that need to be assessed by different departments. There is a risk associated with
misselling and non-compliance with the relevant regulations.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
No material current financial effects.
Anticipated
financial
effects
include
fines, penalties, litigations and loss of
business.
ESRS Topic/Sub-Topic
IRO
Type
Description
Consumers and end-users - Social
inclusion of consumers and/or end-
users - Access to (quality)
information
Risk
Data Accuracy
and Integrity
Risk
Data quality remains an inherent risk for the Group resulting from lack of data
validation controls, which might lead to wrong, inaccurate and incomplete data,
system errors in batch processing and absence of data reconciliation controls.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-Term
Long-Term
Own Operations
Upstream
Downstream
No material current financial effects.
Anticipated
financial
effects
include
fines, penalties, litigations and loss of
business.
10.1
Policies related to responsible marketing practices
The Group recognises the material risks associated with non-compliance with legal and customer-related regulations during the introduction and management of new
products and services. Given the large number of offerings introduced, each with varying compliance requirements, the potential for misselling or regulatory non-
compliance could lead to significant financial, regulatory, technological, or reputational impacts. To mitigate these risks, the New Products/Services Management Policy
has been established. This policy sets out and addresses key principles for the development of new Products/Services and modification/amendment of existing ones.
Failure to promptly identify, assess and mitigate product risk can have adverse financial, regulatory, technology and/or reputational impact. This policy applies to all
Group entities. In any country or entity where the requirements of applicable legislation, directives or practices establish a higher standard, the corresponding Group
entities must meet those standards. The Board of Directors bears the ultimate responsibility for the effective implementation of the Policy and for setting the right tone
from the top.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Sustainability Statement
205
ESRS S4 - Consumers and End Users (continued)
10. Responsible marketing practices and Access to quality information (continued)
10.2
Actions related to responsible marketing practices
The New Products/Services procedure provides a framework addressing critical aspects of marketing and product development. This includes a process involving SWOT
analysis, target market identification, testing minimum viable products, conducting product and beta testing, analysing business data, and running marketability tests.
Additional steps include market research, procedures to consider alignment with the Group’s marketing and brand strategy, breakeven analysis, lead capture systems,
lead nurturing, and enhancement of customer experience. Specific controls are set with roles and responsibilities throughout the product lifecycle, particularly during
development and marketing.
Once new products or services receive the necessary approvals, the Corporate Affairs Division (CAD) collaborates with the Product Owner to implement marketing
campaigns that adhere to the Group’s branding and strategic objectives. The objective is that consumers and end-users are provided with reliable, accurate, and high-
quality information.
10.3 Policies and Actions related to access to quality information
To mitigate risks related to data quality, such as incomplete, inaccurate, or poorly validated information, the Group has a Data Quality & Governance Policy. This internal
policy establishes the Group’s standards, controls and guidelines for managing data Governance, Data Organisation, Data Architecture, Data Quality, Data Culture and
Data Security and Compliance integrity across relevant business and technical layers. The policy applies to all applicable data held by the Group. The Board bears the
ultimate responsibility for the effective implementation of the Policy and for setting the right tone from the top. RC reviews and recommends the Policy prior to
submission to the Board and considers that sufficient, dependable, and secure internal procedures are in place to ensure that the Group complies with the policy.
Updates on Data & Report Quality progress / status, as well as level of compliance to BCBS 239 Principles, are submitted to Data Quality & Governance Committee,
Executive Committee and Board through Joint AC & RC once a quarter, or as required. These measures aim to ensure that consumers and end-users are provided with
reliable, accurate, and high-quality information.
10.4
Metrics & Targets related to responsible marketing practices and Access to quality information
The Group has not set a measurable, time-bound and outcome-oriented target on responsible marketing practices and access to quality information, nevertheless the
above risks are monitored through the Risk Appetite Framework procedures. KRIs are embedded in RAS which are monitored through EXCO and RC on a quarterly
basis. The Group conducted, in 2024, training associated with responsible marketing practices (94 hours). Regarding data quality risks, those are monitored on a
quarterly basis through the Data Quality & Governance Committee (DQGC), EXCO and Board.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
206
ESRS G1 - Business Conduct
1.
Role of the Board on Business Conduct
The Board’s role, as stated in the Group’s Group Corporate Governance Policy & Framework, is to provide ethical
leadership and promote the Group’s vision, values, culture, and behaviour, within a framework of prudent and
effective controls, which enables risk to be identified, assessed, measured, and managed. The Board sets the
Group's corporate values and high ethical standards of business conduct for itself and all members of the Group
and ensures that its obligations to its shareholders and others are understood and met. Through oversight,
monitoring and review functions, the Board ensures the Group is being run in a sound and prudent manner on a
going concern basis to fulfil its obligations to all majority and minority shareholders while upholding and protecting
the interests of different constituencies.
The Board is responsible to set, approve and oversee the implementation of adequate and effective internal
governance and internal controls framework that includes a clear organisational structure and well-functioning
independent internal risk management, information security, compliance and audit functions that have sufficient
authority, stature and resources to perform their functions and ensures compliance with regulatory requirements
related to the prevention of money laundering. Arrangements adopted to ensure the integrity of the accounting
and financial reporting systems, including financial and operational controls and compliance with the law and
relevant standards.
The Board sets the Group’s strategic objectives and risk appetite to support the strategy; integrates sustainability
into the way business is conducted and should ensure that it is embedded in the Corporate Governance
Framework; ensures that the necessary financial and human resources are in place for the Group to meet its
objectives; ensures that the Group’s purpose, values, strategy and culture are all aligned and reviews
management performance in that regard. In addition, the Board ensures that policies to identify conflicts of
interest are developed and implemented and if these conflicts cannot be prevented, are appropriately managed.
The Board receives reports on, and reviews annually, the effectiveness of the Group’s internal control processes
to support its strategy and objectives in the context of its Risk Appetite.
2.
Expertise of the Board on Business Conduct
The Chairperson of the Board is responsible for ensuring the assessment of performance of individual Board
Directors, the Board as a whole and its Committees at least once a year and for preparing and submitting the
evaluation report to the Board. The Chairperson shall have due regard to the Group’s Suitability Policy. Pursuant
to the provisions of the CBC Governance Directive at least every three years an independent external consultant
performs an external review of the (i) composition and (ii) efficiency as well as (iii) effectiveness of the Board
and its Committees having regard to the requirements of the CBC Governance Directive and the EBA Governance
Guidelines, to bring an objective perspective and share leading industry practices. Such external advisors must
be rotated after two consecutive appraisals. The NCGC assesses annually the structure, size, composition,
performance, effectiveness, and diversity of the Board and submits recommendations and initiate the renewal
and replacement processes of the Directors. The Committee also assess the skills, knowledge, and expertise of
the Directors of the Board annually in accordance with the requirements of the EBA Governance Guidelines and
Joint Suitability Guidelines. Details of nature and depth of skills and experience of the Board are submitted to
NCGC for approval each year.
Board members have access to seminars and presentations on aspects of the Group's business activities and
opportunities to familiarise themselves with the Group's strategic plans, enterprise risks, group structure,
compliance programs, Code of Conduct, and corporate governance arrangements. The Company Secretary
prepares an annual training program for the Board, which is submitted to the NCGC for approval. The Board and
Key Function Holders require ongoing training sessions and a continued education program that keeps the Board
and Key Function Holders fluent and up to date regarding rapidly developing topics, which supports the Board
and Key Function Holders maintain the skills, knowledge and competence needed to effectively execute their
responsibilities on an on-going basis.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
207
ESRS G1 - Business Conduct (continued)
3.
Description of the processes to identify and assess material impacts, risks and opportunities
The overall process to identify and assess material impacts, risks and opportunities is described in 4. Impacts,
Risks and Opportunities in page 95. Regarding Business Conduct the Group analyses its business structure,
organisational structure, control environment, historic incidents as well as loan portfolio exposures to sectors that
ethics and compliance are considered key issues for the identification of impacts, risks and opportunities. In
identifying and assessing financial materiality, internal stakeholders and internal experts within relevant units
(Fraud Risk Management, Third Party Risk Management, Legal, Regulatory Compliance, Financial Crime &
Sanctions, Compliance and other) provided their opinions and assessments. In identifying and assessing material
impacts the PRB tool was engaged for loans and investment portfolio and assessment was conducted from various
internal stakeholders within the Group.
4.
Business conduct policies and corporate culture
The Group’s Corporate Governance Policy and Framework, which is aligned with internationally recognised
standards, including the UK Governance Code, CSE Code, EBA Guidelines on internal governance and CBC Internal
Governance Directive, provides the standards for Business Conduct and Ethical Behaviour across the Group.
The Group’s approach to business conduct is driven by leadership at the highest levels and firmly rooted in three
key pillars that define how the Group operates:
1.
Code of Ethics
The foundation of the Group’s values, the Code of Ethics guides decision-making by distinguishing right
from wrong. It provides ethical standards and general guidelines to help employees exercise sound
judgement and demonstrate appropriate behaviour in all situations.
2.
Code of Conduct
Establishing clear rules, the do’s and don’ts, the Code of Conduct outlines the required and prohibited
practices and behaviours for all employees. Adherence is mandatory, with accountability for any violations
ensuring consistent ethical practices.
3.
Policies
Designed to align operations with the expectations of the Board, the Group and stakeholders, the policies
detail the principles, processes and procedures essential for sound Business Conduct.
The Group’s Vision, Mission and Values indicating Group’s commitment to Business Conduct and Ethical
Behaviour.
These pillars, which apply to all employees and Group’s subsidiaries, work together to guide ethical practices into
the Group’s operations. The Group offers clear guidance on expected behaviour across all levels of the
organisation. The Code of Ethics and Code of Conduct are readily available to all employees through internal
portal and to any affected stakeholder through Group’s website.
Our Vision
To create lifelong partnerships with our customers, guiding and supporting them in a changing world.
Our Mission
Our organisation exists to support our clients in their most important life events as well as in their daily needs. To achieve
this, we invest capital and effort to ensure that our services are provided by top quality professionals and the usage of
cutting edge technology and uphold sound and ethical practices. We will continue to be not only a systemic bank driving
growth and shareholder value but also a key driver of progress in our community.
Our Values
The following key values comprise the core values of the Bank and the Group.
• Integrity: We are honest, ethical and fair.
• Reliability: We keep our promises and adhere to our word.
• Collaboration: We build lifelong partnerships and work together for a better common future.
• Professionalism: We constantly enrich our skills and knowledge, keeping up to date with the developments in our
industry.
• Innovation: We continuously move forward, innovating and improving.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
208
ESRS G1 - Business Conduct (continued)
4.
Business conduct policies and corporate culture (continued)
The Board obtains reasonable assurance that there is an ongoing appropriate and effective process in place for
ensuring adherence to the Code of Conduct. Compliance reports are submitted to the AC on such compliance,
noting any instances or material deviation from the standards together with any corrective action taken. The
Group promotes a strong compliance culture by strictly enforcing the Code of Conduct and by taking decisive
disciplinary action where warranted.
The Group’s established and implements policies, which provide additional guidance to support these principles,
the policies associated with material IROs are describes later in the section.
5.
Training on Business Conduct
To reinforce employee awareness on Business Conduct policies, the Board and the CEO actively promote a culture
of openness and accountability. Ad-hoc messages from the CEO encourage staff to raise concerns, while training
programs, tailored for all employees and the Board, provide an understanding and awareness of these critical
policies and mechanisms to raise concerns.
During 2024, Business Conduct and compliance related e-learnings, face-to face seminars and trainings were
organised and attended by the Board, Management and employees of the Group as presented in the table below.
All participants had to pass a short assessment course related to the training.
Business Conduct - Board of Directors – Training
No of
participants
Training – Hours
Women
Men
Total
AML ESSENTIALS & SANCTIONS
Board
5
0.5
2
2.5
Sanctions
Board
8
2.3
3.8
6.1
Prevention of ML & TF
Board
6
0.5
2.5
3
Market Abuse
Board
2
-
1
1
Business Conduct – All Staff – Training
No of
participants
Training – Hours
Women
Men
Total
Antibribery, Whistleblowing, Gifts
Management
564
146.5
149
295
Individual contributors
2,428
790
491.5
1,281.5
AML
Management
518
197.3
165.5
362.8
Individual contributors
2,155
914
455
1,369.5
Business Ethics
Board
10
10
6.5
16.5
Individual contributors
45
35.5
31.5
67
Conflict of interest
Management
6
21
-
21
Individual contributors
39
87.5
49
136.5
Complaints Management
Management
456
104.5
122.5
226.5
Individual contributors
1,925
607
355.5
962.5
Compliance Management
Management
44
57
57.5
114.5
Individual contributors
146
203.5
157.5
361
Fraud Risk Awareness
Management
572
145.5
151.5
297
Individual contributors
2,386
792
469.5
1,261.5
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
209
ESRS G1 - Business Conduct (continued)
5.
Training on Business Conduct (continued)
The Group adopted an Induction and Training policy applicable to the Board and Key Function Holders. The policy
aims on continues professional development and ongoing training to ensure the ongoing enhancement of skills,
knowledge and familiarity with the Group’s activities to ensure that they fulfil their roles effectively, and in
accordance with their duties. Regarding rest of the employees there is no specific Training Policy, however during
the annual performance appraisal, a mandatory development plan should be agreed between the appraiser and
the appraisee which includes training towards areas of development which are customised to each employee’s
needs. In addition, each Business Conduct policy specifically states training requirements to employees of the
Group. Refer to the table below.
Business Conduct Policies - Training
Business
Conduct Policy
Frequency
Target audience
Depth of coverage
Group
Anti-
Bribery
&
Corruption
This will be reflected in
the relevant policy by
the end of FY2025.
All employees,
High risk positions,
Recently appointed staff
Anti-Bribery
and
Corruption
issues, policies, and procedures
Group
Whistleblowing
policy
This will be reflected in
the relevant policy by
the end of FY2025.
Management
and
employees
Principles of whistleblowing and
relevant procedures
Group
policy
Relating
to
the
Prevention
of
Money Laundering
and
Terrorism
Financing
Annually
Management
and
employees
Changes in policies / procedures,
new
regulatory
developments,
identification and reporting of
suspicious transactions
Conflicts
of
Interest
Group
Policy
Annually
Management
and
employees
Matters of conflict of interest, to
build awareness around the topic
and
develop
the
knowledge
around processes and procedures
Group
Sanctions
Policy
This will be reflected in
the relevant policy by
the end of FY2025.
All employees,
High risk positions,
Recently appointed staff
Outlines the provisions of this
policy, importance of compliance
with
the
policy
and
the
implications of failure
Fraud
Risk
Management
Policy
Annually
Compliance,
DPO,
HR,
Business
Lines,
FRM
Department
Fraud related policies, standards
and procedures
6.
Whistleblowing system
The Group established and implements a Whistleblowing Policy, in compliance with the Protection of Persons who
Report Breaches of Union and National Law, Law N. 6(I)/2022, and harmonised with the EU Directive 2019/1937
of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report
breaches of Union law, offering accessible, confidential channels for employees to report violations, unethical
behaviour, or improper practices.
The policy offers multiple reporting channels, including an anomymous telephone line, written submissions via
letters or email to Internal Audit Director or Whistleblowing Champion, and in-person meetings with the Internal
Audit Division upon request. All staff members have a duty to report such concerns and incidents in accordance
with the relevant provisions of the Code of Conduct and Code of Ethics of the Group and this Policy. Reports can
be submitted anonymously or eponymously, ensuring flexibility and comfort for whistleblowers. The Board bears
the ultimate responsibility for the effective implementation of this Policy and setting the right tone from the top.
The Chairperson of the Audit Committee acts as the Whistleblowing Champion and oversees the integrity,
independence and effectiveness of the Group’s policy and procedure on whistleblowing.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
210
ESRS G1 - Business Conduct (continued)
6.
Whistleblowing system (continued)
Upon receiving a report, the Internal Audit Division evaluates and prioritises each case based on a preliminary
assessment. Investigations are conducted by the Internal Audit Division, with findings and recommended actions
submitted to the AC and other relevant reporting lines on a need-to-know basis. Investigation outcomes are
shared with the Board through the Annual Audit Report. Records of reports are securely maintained and stored
for as long as necessary, in accordance with the provisions of the Law N.6(I)/2022. If procedural risks are
identified during investigations, recommendations are made to the relevant divisions for improvement. When
breaches involve staff, the Human Resources Division (HRD) initiates disciplinary actions following the Code of
Conduct and Code of Ethics. For sensitive matters, the Corporate Affairs Division manages any potential media
exposure to safeguard the organisation's reputation.
The Group’s whistleblowing policy and procedures ensure confidentiality for whistleblowers as permitted by law.
If disclosure of a whistleblower’s identity is legally required, they are informed beforehand. The policy includes
anti-retaliation measures to protect whistleblowers from any form of reprisal, with strict disciplinary action for
violations. Additionally, the Group also protects persons that have been reported, from any negative effect, in
case the investigation results do not justify taking measures against that person.
7.
Zero tolerance on Bribery and Corruption
The Group implements an Anti-bribery and Corruption policy which is aligned with international frameworks, such
as the United Nations Convention Against Corruption. The Board bears the ultimate responsibility for the effective
implementation of the Policy and setting the right tone from the top. The Board approves the Policy through AC,
and makes sure that sufficient, dependable, and secure internal procedures are in place to ensure that the Group
complies with the policy and monitors the effective implementation of the Policy through the Control Functions.
Executive Management and Board Members file an annual declaration confirming their compliance with the Anti-
Bribery and Corruption Group Policy. This policy sets out comprehensive system of internal controls, including a
gift registry, conflict-of-interest declarations, approval thresholds, fraud prevention and detection tools, to
mitigate risks in high-exposure functions of the organisation. These functions encompass the Management, Senior
Management, Local Management, and Regional Management. In addition, the Group conducts Due Diligence
procedures in respect of persons who perform or will perform services on its behalf including appointment of
employees or agents, procurement procedures, acceptance of gifts or hospitality, avoid dealing with suppliers
and contractors known or reasonably suspected to pay bribes or involved in corrupt activities. The Group has
procedures in place which enable it to take disciplinary action against personnel who violate the Policy. It could
also result in the relevant person being convicted of a criminal offence and being liable to a fine and/or
imprisonment (depending on the relevant jurisdiction). It is important to note that in the general principles of
this policy, funds, property or facilities of the Group must not be used to provide support for, or contribute to,
any political organization or political candidate and Government and/or public/local authority official interactions
require heightened care, diligence and transparency and a need for appropriate disclosures and prior approvals.
There were no incidents of corruption and bribery in 2024.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
211
ESRS G1 - Business Conduct (continued)
8.
Management of relationships suppliers
Material IROs - Business Conduct (G1)
ESRS
Topic/Sub-
Topic
IRO
Type
Description
Business
Conduct -
Management
of
relationships
with
suppliers
Risk
Data Loss &
Outsourcing
& Third-
party Risk
Partial compliance with EBA Guidelines on Outsourcing Arrangements
and/or the Third-Party & Outsourcing Risk Management Policy may
result in weak contracts, over-dependence on a few providers, poor
vendor monitoring, and potentially lower service quality and
continuity. In addition, risks identified associated unauthorised
disclosure of sensitive data by agents/services providers, either
accidentally or maliciously.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-
Term
Long-Term
Own
Operations
Upstream
Downstream
Reputational
issues,
identity theft, fraud and
regulatory penalties, fines,
increased
cost
due
to
inefficiencies and loss of
business.
The Group’s Sourcing & Procurement and Vendor Management Policy establishes clear expectations for vendors
to operate responsibly and sustainably, aligning with the Group's dedication to ethical and responsible business
practices. The purpose of this policy is to set the rules governing procurement, upstream value chain. These rules
principally ensure the prevalence of transparency, integrity, fair competition, and accountability throughout the
execution of the process. To this extent, the policy aims to maximize the benefit in terms of expenditure on
products and services, always within a fair, lawful, and ethical framework. Each Divisional or Business Unit
Director is responsible for ensuring that the principles of this policy are implemented by the operations under
control. Tenders Committee maintains the overall responsibility for monitoring the implementation and
effectiveness of this policy. The manager of Sourcing & Procurement is responsible for the maintenance,
institutionalization, and implementation of this policy throughout the Group. Assigns a responsible Sourcing &
Procurement Analyst for each case. Follows up and monitors the execution. The policy is readily available for all
employees in the Group’s internal portal and Group’s website for all stakeholders. As part of Kill Bureaucracy
program stakeholders views are taken into account for setting and enhancing the policy.
All required purchases must follow the provisions of the Group’s Sourcing & Procurement and Vendor Management
process. Received proposals from potential vendors in response to the Group’s corresponding requests, should
not be judged solely based on economic competitiveness, but should be taking into consideration factors such as
the quality of the goods / services (fit to serve the purpose) and the Vendors/Service Providers ability to perform.
Standing by its longstanding commitment to responsible procurements / sourcing, in 2022 the Group has
implemented ZYCUS, the eProcurement system to manage vendor, contracts, and invoices.
Pre-selection process must use defined criteria regarding capacity, capability, consistency, effectiveness,
experience, current or previous cooperation and reciprocity. A structured assessment and, where appropriate,
vendor due diligence must be executed prior to selecting a Vendor/Service Provider. This is done before accepting
any proposal or signing any contract, as a key part of a vendor’s assessment or the tenders’ evaluation where
Privacy Matters are also taken into consideration.
The Procurement Process is aligned with the Group’s ESG strategy as this evolves and provides general principles
that should be adhered to. Additionally, vendors are expected to carry forward these principles to their vendors
and subcontractors. However, the Group is currently considering incorporating the ESG criteria through the
vendor qualification/onboarding process. The Group reserves the right to request from the vendor for any policies,
procedures, or documents that warrants the compliance with these principles. The Group encourages its vendors
to adopt, utilise and provide environmentally friendly technologies, products and services looking to contribute
to the sustainable development of Cyprus and the world and expects from its vendors to adhere to
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
212
ESRS G1 - Business Conduct (continued)
8.
Management of relationships suppliers (continued)
all the principles regarding Labor / Human Rights / Ethics, Working Conditions and Health & Safety matters.
Vendors are expected to uphold the highest ethical standards and comply with the principles and values of
transparency, integrity, fair competition, and accountability, in all their exchanges with the Group. They must
abstain from any action that might be linked to conflict of interest, bribery, any form of corruption or financial
crime. The Group expects its vendors to comply with local laws, anti-corruption measures and initiatives that
ensure commercial integrity (refrain from all forms of financial crime, improper or unwarranted payments,
conflicts of interest, fraud, presents, copyright, among others). No confirmed incidents where contracts with
vendors were eliminated or not renewed due to violations related to corruption during 2024. The evaluation of
tenders must be transparent and be using standardised methods based on accepted industry practices. The
integrity of the evaluation weighting structure and criteria must be assured through the employment of necessary
controls before the invitation to tender is issued and maintained as such throughout the process. At the highest
level the proportional rule of 40% to 60% as regards the weight of financial criteria to technical criteria
respectively should apply. The award should always be made by the competent Approving Authority, upon
submission of a detailed proposal (evaluation report) through Group’s Sourcing Procurement & Vendor
Management Policy.
A vendor / service provider is engaged for the supply of goods or services through a legal contract and its
performance is regularly appraised on the basis of meeting their contractual objectives. The Group pays particular
attention to the relationships it forges with its vendors and business partners. In 2024, the Bank continued to
apply its centralised procurement process, while it carried out tenders to purchase products or services or to
outsource services or activities. In order to maintain long term relationships with vendors, the Group:
1)
Follows a Qualification (Due Diligence) procedure for vendors
2)
Performs Vendor Performance Monitoring through specific templates in accordance with official
procedures and circulars, and reviews results
3)
Maintains a Complaints Procedure
4)
Offers e-learning sessions to employees and publishes Portal announcements on important provisions of
procedures and circulars
5)
Prepares manuals to be used by vendors for new tools and procedures or software
6)
Includes certain ESG criteria, where applicable, in RFPs/RFQs, which are evaluated during the evaluation
process by the Business Owners
The Group undertakes necessary actions to incorporate ESG due diligence procedures in the Group's procurement
and vendor management processes. The initiative involves the implementation of an approved platform to extract
ESG scores for vendors. This platform will feature a comprehensive ESG questionnaire, with vendor responses
analysed to derive and validate ESG scores that will be integrated into the Group’s vendor assessment and
selection framework. Scheduled for rollout in 2025, this project underscores Group’s commitment to embedding
formal social and environmental criteria into its operations, ensuring alignment with its long-term sustainability
goals and principles.
By refining its procurement framework and embedding further sustainability into vendor management practices,
the Group is laying the groundwork for ethical, responsible, and sustainable operations.
The Group through the Risk Appetite Statement establishes, annually, certain indicators to monitor risks
associated with Outsourcing arrangements. Specifically, zero number of third-party critical outsourced
arrangements not risk assessed prior to initial signing or renewal.
For details on how privacy and information security risks are mitigated on sourcing arrangement refer to ESRS
S1 – Own Workforce in page 171.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
213
ESRS G1 - Business Conduct (continued)
9.
Financial Crime and Fraud
This section concerns the Group’s reporting related to the work conducted to combat financial crime. This section
describes financial crime, defined as money laundering, financing of terrorism, bribery and corruption and fraud.
Bribery and corruption are reported above under Section Zero tolerance on Bribery and Corruption. Group’s work
with cyber security is described in S4. Refer to the following table for the material IROs towards Financial Crime.
Material IROs – Entity Specific
ESRS
Topic/Sub-
Topic
IRO
Type
Description
Entity
Specific -
Financial
Crime
Risk
Financial
Crime
The risk identified covers situations which the Group's infrastructure
and services are misused for criminal purposes. In addition, risk was
identified that Group's customers may violate sanctions. External fraud
attempts that may take various forms from phishing and vishing attacks
towards customers, bogus unauthorised payment instructions and card
transactions. These risks lead to increased cost, legal and regulatory
penalties and reputational damage to the Group.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium-
Term
Long-
Term
Own
Operations
Upstream
Downstream
Increased costs due to fines
and penalties
9.
Policies associated with Financial Crime and Fraud
The Group adopted a Policy relating to the Prevention of Money Laundering and Terrorism Financing. The purpose
of this policy is to set the minimum standards and provide general guidance and clarity on Group’s effort to
prevent and suppress money laundering, terrorist financing and other illegal activities and to ensure compliance
with all applicable legal and regulatory requirements. The Group is committed in the fight against money
laundering and terrorism financing and institutes appropriate procedures to comply with relevant legislation,
regulations, guidelines and best practices, and exercises due diligence to deter the use of its services and products
by money launderers and those involved in illegal activities including the financing of terrorism. The policy is
readily available for all employees in the Group’s internal portal and Group’s website for any affected stakeholders.
The policy covers both upstream and downstream value chain.
The main objectives of the principles incorporated in this Policy are to:
1.
Take all reasonable steps and exercise Due Diligence to deter the use of Group’s systems and processes by
money launderers and those involved in criminal and illegal activities including the Financing of Terrorism.
2.
Avoid violations, since they may result in criminal, civil and regulatory sanctions and/or penalties/fines
imposed.
3.
Protect Group’s reputation by protecting the Group and its employees from unfounded allegations of
facilitating Money Laundering and Terrorist Financing.
4.
Create a high standard of compliance culture among all the staff across the Group.
The Group through this policy ensures that the legal and regulatory requirements stemming from the provisions
set out in the Law 188(I) 2007, the 5th edition of the Central Bank of Cyprus Directive for the prevention of
Money Laundering and Terrorist financing and the 1st edition of the Central Bank of Cyprus Directive for
Compliance with the Provisions of UN Security Council of the European Union, are addressed.
In addition, the Group adopted a Sanction Policy to manage the risk of customer’s sanction violation. The purpose
of the Policy is to ensure Group’s full compliance with sanctions or restrictive measures imposed on countries,
territories, entities, or specific persons and bodies. The policy is readily available for all employees in the Group’s
internal portal and Group’s website for all stakeholders. The Sanctions Policy outlines the legal and regulatory
requirements/principles emanated from the provisions set out in (a) the Law for the Implementation of the
Provisions of the United Nations (UN) Security Council Resolutions (Sanctions) and the Decisions and Regulations
of the Council of the European Union (EU) Law 58(I) of 2016, and (b) the Central Bank of Cyprus Directive for
Compliance
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
214
ESRS G1 - Business Conduct (continued)
9.
Financial Crime and Fraud (continued)
9.1 Policies associated with Financial Crime and Fraud (continued)
with the Provisions of United Nations Security Council Resolutions and the Decisions/Regulations of the Council
of the European Union. In addition to UN, EU sanctions, the Group fully adheres to sanctions imposed by the US
and the UK. The policy covers both upstream and downstream value chain.
The Board bears the ultimate responsibility for the effective implementation of the above-mentioned Policies and
for setting the right tone from the top. The AC makes sure that sufficient, dependable, and secure internal
procedures are in place to ensure that the Group complies with the above-mentioned policies and monitors the
effective implementation of those Policies through the Control Functions. The Internal Audit Division is responsible
for providing independent and objective assurance to the Board, through the AC, and to management, by
assessing the effectiveness of governance, risk management, and control processes related to those policies and
informs the AC of any findings and relevant recommendations.
The Group also adopted a Fraud Risk Management Policy (applicable to activities in both upstream and
downstream) which sets out the appropriate steps to be followed for managing Internal and External Fraud risks
within the Group. The purpose of this Policy is to set out the minimum requirements and basic principles
underlying the governance and management of Fraud Risks in the Group, providing guidelines on the prevention,
detection, investigation, and response of actual (perpetrated) and suspected Fraud. The policy is readily available
for all employees in the Group’s internal portal. The Policy aims to safeguard the Group and internal or external
stakeholders’ interests.
The overall responsibility for approving and monitoring the Group`s strategy and policy for managing Fraud risk
lies with the Board, which exercises this responsibility through the RC. The RC annually reviews the adequacy
and effectiveness of the internal controls system, including areas related to Fraud Risk Management (FRM), based
on data and information produced by the Internal Audit (IA) division, the observations and comments of the
Group’s external auditors and the competent supervisory authorities as well as the assurance provided by the
CEO and make appropriate recommendations to the Board.
9.2 Actions and preventive work associated with Financial Crime and Fraud
The key element of Group’s preventing Financial crime is the Customer Due Diligence. Customer Due Diligence
includes the following:
1)
ascertaining the identity of the customer before establishing a business relationship or making a one-off
transaction;
2)
establishing the Ultimate Beneficial Owner of legal entities taking particular care on the identification of
the true owners of trusts, foundations, client accounts and other similar entities;
3)
building a detailed Economic Profile of the Customer;
4)
undertaking Enhanced Due Diligence for High and Significant Risk Customers and transactions;
5)
updating the identification data of customers on a regular basis;
6)
Detecting suspicious activities/transactions and where appropriate, reporting such activities/transactions
to the local FIU.
The Group also implements specialised software packages for the continuous monitoring of the customers’
accounts, to enable suspicious transactions to be recognised and to maintain procedures for the reporting of such
transactions to the appropriate authorities. The Group through specific procedures and circulars established a
specific process to identify and manage specific, general, sectoral sanctions imposed by the UN, EU, US and the
UK and focused prohibitions on the export / import of commercial and dual-use goods, software and technology
issued by the Council of the European Union, or subject to U.S. jurisdiction under the Export Administration
Regulations sanctions.
The Group established a Fraud Risk Management program with the following main components to identify,
prevent, detect and respond to Fraud Risk:
1.
Fraud risk identification and assessment: The risk of Fraud is identified, assessed and monitored in all
activities through established methodologies and processes. Fraud risks are scored and suitably prioritised
for action. The Group identifies inherent Fraud risk through an assessment of incentives, pressures and
opportunities to commit fraud. The Group assess likelihood and potential impact of residual Fraud risk. The
Group responds to reasonably likely, significant fraud risks through identification and implementation of
effective controls or detection procedures for the risks identified.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
215
ESRS G1 - Business Conduct (continued)
9.
Financial Crime and Fraud (continued)
9.2 Actions and preventive work associated with Financial Crime (continued)
2.
Fraud prevention:
a.
Process-level controls: Business lines supported by Fraud Risk Management (FRM) department,
Organisation (OD) and Digital Transformation departments developed and implement appropriate anti-
Fraud control procedures and mechanisms for all relevant business processes that either prevent or
minimise the likelihood and/or the potential impact of Fraudulent Conduct.
b.
Transaction level controls: Reviews of third-party and related-party transactions are established
throughout business processes. These controls are driven by appropriate know-your-customer/client
(KYC), know-your-intermediary (KYI) and know-your-staff (KYS) procedures, as well as background
checks on suppliers and business partners, to indicate potential entities that bear higher risk of Fraud.
c.
Awareness: Ensure that all employees receive training on Code of Conduct, Fraud trainings as well as
training on any updates or changes on related processes and procedures.
3.
Fraud detection:
a.
Business process-level mechanisms: Business processes and procedures are designed so that they
accommodate and integrate the systematic identification of the types of Fraud schemes that can be
perpetrated in relation to the specific business process.
b.
Key Fraud Indicators: Key Fraud Indicators (KFIs) are established and updated to monitor variables,
which may indicate the possibility of Fraud. Breach of relevant KFIs or adverse trend indications provide
early warning for high-risk Fraud areas and must trigger further assessment of the necessary controls in
that area and the residual risk.
c.
Other detection mechanisms: Includes IA reports, periodic reviews by external auditors or regulators
or findings and reports from other expert external business partners.
d.
Proactive Fraud detection procedures: Automated data analysis, continuous Monitoring techniques,
and appropriate technology tools to effectively detect Fraudulent Activity
e.
Internal Fraud reporting channels: Report fraud incidents to Internal Audit, Compliance or Fraud Risk
Management Department or through whistleblowing channels.
f.
Other external reporting channels: Complaint Management system. Refer to page 185.
4.
Fraud investigation and response: The Internal Audit Director is responsible for receiving reports of
alleged or suspected internal Fraudulent Conduct involving the Group’s activities or the members of governing
bodies and employees, carry out an investigation of actual or suspected Internal Fraud and report findings to
the AC, as well as the CEO or any other reporting line, on a need-to-know basis.
The above-mentioned actions are ongoing and associated with both upstream and downstream activities. For
Information security and cyber risk management refer in page 171 of ESRS S1 – Own Workforce.
9.3 Metrics and Targets associated with Financial Crime and Fraud
There are no measurable, time-bounded and outcome oriented targets nevertheless there are indicators which
monitors the effectiveness of these actions. The Group through the Risk Appetite Statement establishes certain
qualitative indicators to monitor risks associated with Financial Crime, Sanctions and Fraud risks:
1)
No tolerance for violating sanctions or other measures imposed by American Authorities, such as the US
Department of Treasury’s Office of Foreign Assets Control (OFAC), and by the UN, the EU and by the
government of countries that the Group operates in, with respect to violations of AML legislation 39 or
Sanction programs. In case of such deviations, immediate rectification and investigation actions shall be
enacted.
2)
No tolerance for deviations with regards to the opening of accounts in US Dollars for persons connected
with countries subject to strict sanctions imposed by the US Department of Treasury’s Office of Foreign
Assets Control (OFAC).
3)
No tolerance to facilitating any sort of financial crime/terrorism financing.
The Group, as previously mentioned, ensures relevant trainings are conducted to support mitigation of Financial
Crime risks. Refer to 5. Training on Business Conduct in page 208.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
216
ESRS G1 - Business Conduct (continued)
10. Conflict of Interest
Material IROs – Entity Specific
ESRS
Topic/Sub
-Topic
IRO
Type
Description
Entity
Specific –
Conflict of
Interest
Risk
Improper
Business
or Market
Practices
Risk of inadequate management of conflict of interest.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium
-Term
Long-
Term
Own
Operations
Upstream
Downstream
Fines, penalties and loss of
business
10.1 Policies on conflict of interest
The Group adopts a Conflict of Interest (COI) policy which sets out the framework for the prevention,
identification, assessment, documentation, escalation, and effective management of COI in compliance with the
legal and regulatory framework to which the Group is subject. This Policy applies to the Members of the Board,
Senior Management, and all employees of the Group in every country the Group operates and to the Group’s
contractors, agents, and other Relevant Persons. The policy is readily available for all employees in the Group’s
internal portal and Group’s website for all stakeholders.
The Board bears the ultimate responsibility for the effective implementation of this Policy and setting the right
tone from the top. The AC makes sure that sufficient, dependable, and secure internal procedures are in place to
ensure that the Group complies with the above-mentioned policies and monitors the effective implementation of
those Policies through the Control Functions. The Internal Audit Division is responsible for providing independent
and objective assurance to the Board, through the AC, and to management, by assessing the effectiveness of
governance, risk management, and control processes related to those policies and informs the AC of any findings
and relevant recommendations.
10.2 Actions and preventive work on conflict of interest
The Group implements procedures to identify the relationships, services, activities, or transactions in which COI
may arise. These procedures cover relationships between the Group and customers, shareholders, Members of
management body and their family members, employees, significant business parties and other related parties.
In addition, these procedures cover COI between different customers of the Group. Board members and Senior
Management self-assess potential conflict of interests annually. All COI identified by Compliance Division across
the Group are documented in a dedicated software and relevant information is presented to the AC and EXCO
quarterly. COI identified at Management Level and Board level are reported to the NCGC for decision-taking. The
above-mentioned actions are ongoing and associated with Group’s own operations.
10.3 Metrics and Targets on conflict of interest
The Group conflicts registry recorded 80 perceived conflicts of interest in 2024 (2023: 135, 2022: 212). Zero
incidents of conflict of interest (2023: 0, 2022: 3) were considered as high, 9 (2023: 9, 2022: 6) were considered
as medium and the remaining 71 (2023: 126, 2022: 203) were considered as low.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
217
ESRS G1 - Business Conduct (continued)
11. Conflict of Interest (continued)
10.3 Metrics and Targets on conflict of interest (continued)
The Group through the Risk Appetite Statement establishes, annually, qualitative statements associated with
the mitigation of Conflict of Interest risks:
1)
The Bank has no tolerance for participation in the decision making or voting on matters by persons that
have a conflict of interest.
2)
No transactions in BOC securities are tolerated for persons classified as ‘Relevant persons in possession
of inside information for BOC Group’, except in cases where permission is granted under the provisions
of the BOC Dealing code.
3)
The Bank has no tolerance for selecting outsourcing service providers, connected to any member of the
Group’s senior management or management body, the Group’s external auditors or legal advisors and
where this information has not been duly disclosed to the Bank.
4)
The Bank has no tolerance to acts of bribery and corruption by any of its employees or any business
partner.
The Group, as previously mentioned, ensures relevant trainings are conducted to support mitigation of Conflict-
of-Interest risks. Refer to 5. Training on Business Conduct in page 208.
12. Compliance with Laws and Regulations
Material IROs – Entity Specific
ESRS
Topic/Sub-
Topic
IRO
Type
Description
Entity
Specific -
Compliance
with Laws
and
Regulations
Risk
Compliance
Risk
As a listed Group which operates in an evolving and complex regulatory
and legal environment there is an increased risk of not compliance with
laws and regulations (such as Arrears Directive, ESG regulations,
MIFID, EMIR, Competition Law, FACTA, Market Abuse, Benchmark
regulations, GDPR) which may lead to fines and penalties.
Time Horizons
Value Chain
Financial Effects
Short-Term
Medium
-Term
Long-Term
Own
Operations
Upstream
Downstream
Fines, penalties and loss of
business
71
126
203
9
9
6
0
0
3
2024
2023
2022
Perceived conflicts of interests
Low
Medium
High
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
218
ESRS G1 - Business Conduct (continued)
12. Compliance with Laws and Regulations (continued)
12.1 Policies associated with Compliance with Laws and Regulations
The Group adopted a Compliance policy which sets out the business and legal environment applicable to the
Group, the principles and responsibilities for compliance and how these responsibilities are allocated and carried
out at group and entity level. The policy is readily available for all employees in the Group’s internal portal and
Group’s website for all stakeholders. The policy covers operations at Group level.
The Board bears the ultimate responsibility for the effective implementation of the above-mentioned Policies and
for setting the right tone from the top. The AC makes sure that sufficient, dependable, and secure internal
procedures are in place to ensure that the Group complies with the above-mentioned policies and monitors the
effective implementation of those Policies through the Control Functions. The Internal Audit Division is responsible
for providing independent and objective assurance to the Board, through the AC, and to management, by
assessing the effectiveness of governance, risk management, and control processes related to those policies and
informs the AC of any findings and relevant recommendations.
12.2 Actions and preventive work on Compliance with Laws and Regulations
The Regulatory Compliance Department ensures that the Group adopts all regulatory, legal, and compliance
requirements and is committed to the establishment of relevant controls and procedures to protect its clients and
all other stakeholders. Regulatory compliance implemented, through the network of Compliance Liaisons at the
various Departments, the compliance management system which automated most of the compliance processes.
The system is an integrated compliance management system which provides a comprehensive set of tools for
managing regulatory risks, including modules on regulatory change management with live regulatory feeds on
new or amended regulations, the recording and management of identified risks through various assessment
processes, the recording and management of regulatory incidents, conflicts of interest and gifts, KRIs and the
monitoring and follow up of issues and actions. Additionally, Regulatory Compliance Department regularly
performs compliance assurance reviews based on clear and aligned Compliance Review Methodologies aiming to
cover high risk areas. The Compliance Division presents its Key Risk and Key Performance Indicators to the EXCO
and the AC. Cases of significant non-compliance are identified through the three lines of defence model, whereby
responsibility for compliance reviews lies primarily with management, secondly with the control functions, by
assessing the severity of the instances of non-compliance. The above-mentioned actions are ongoing and
associated with Group’s own operations.
12.3 Metrics and Targets on Compliance with Laws and Regulations
There are no measurable, time-bounded and outcome oriented targets nevertheless there are indicators which
monitors the effectiveness of these actions. We are pleased to note that in the current year, the Group did not
receive any regulatory fines in relation to breaches of compliance with laws and regulations. The Group through
the Risk Appetite Statement establishes, qualitative statements associated with the Compliance Risks and has no
tolerance with regards to non-compliance with regulatory, legal and compliance requirements.
The Group, as previously mentioned, ensures relevant trainings are conducted to support mitigation of
Compliance risks. Refer to 5. Training on Business Conduct in page 208.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
219
ESRS G1 - Business Conduct (continued)
13. Reputational Risk
Material IROs – Entity Specific
ESRS Topic/Sub-
Topic
IRO
Type
Description
Entity Specific –
Reputational Risk
Risk
Reputational
Risk
Ineffective handling of reputational risk (at national and
institution level)
Time Horizons
Value Chain
Financial
Effects
Short-Term
Medium-
Term
Long-Term
Own
Operations
Upstream
Downstream
Loss of
business
13.1 Policies associated with Reputational risk
The Group adopted a Reputational Risk Management Policy to provide guidelines on the identification,
quantification and management of reputational risks that might arise from the business activities of the Group.
The overall responsibility for approving, monitoring and managing reputational risk lies with the BOD, which
exercises this responsibility through the Board Risk Committee (BRC). The policy is available for all employees
through internal portal. The engagement of customers on the effectiveness of the policy is measured through
customer’s surveys performed on monthly basis from Corporate Affairs Department. The policy is applicable for
Group’s operations. Internal Audit (IA) provides objective assurance to the AC and to EXCO that the controls in
place are appropriate in relation to this area, by including reputational risk as a primary risk in its Risk and Audit
Universe (RAU) and as such it is assessed as part of the annual update of the Internal Audit Plan.
13.2 Actions and preventive work on Reputational risk
The preventive actions associated with the management of reputational risk are primarily related to the effective
implementation of Code of Ethics, Code of Conduct as well as Business Conduct policies described in sections
above. Identification of reputational risk is primarily conducted through monitoring of media reports for possible
negative press coverage, social media, possible Information/data leaks, Customer complaints, major operational
losses (including legal cases) and key risk indicator breaches, system downtimes causing disruption of customer
service, Negative reports by statutory auditors and investigations, or penalties by regulators, Whistleblowing
reports and other. The Group prevents and reduce the impact of reputational risks through system of internal
process-level and transaction-level controls as described in detail in previous sections.
In case a reputational event has been identified the Corporate Affairs Department in conjunction with Operational
Risk Management Function, assess the impact of the event. Events with low impact are managed and resolved
at this level. For reputational events assessed as High/Critical the Incident Management & Response Team (IMRT)
undertakes to handle the incident. The IMRT convenes to further analyze the severity/impact of the reputational
event and suggest actions to effectively respond to this event. Continuous assessment of the potential impact of
the incident is being carried out throughout the lifecycle of the incident. In cases, whereby the reputational event
is believed to have the potential to escalate to a crisis, the Group Reputational Risk Committee (GRRC) and Crisis
Management and Response Plan are activated. The above-mentioned actions are ongoing and associated with
Group’s own operations.
13.3 Metrics and Targets on Reputational risk
There are no measurable, time-bounded and outcome oriented targets nevertheless there are indicators which
monitors the effectiveness of these actions. The Group has zero tolerance in respect to internal practices by
Management and employees that could lead to material reputational impact, i.e., it will not tolerate headline risk
associated with unacceptable business practices, privacy and other regulatory breaches and internal fraud.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement
220
ESRS G1 - Business Conduct (continued)
14. Process on setting Metrics and Targets on Business Conduct, Financial Crime & Fraud and
Conflict of Interest
The process of setting the above-mentioned qualitative indicators is described in the Risk Appetite Framework of
the Group. The objective of the Risk Appetite Framework (RAF) is to set out the level of risk that the Group is
willing to accept in pursuit of its strategic objectives, outlying the key principles and rules that govern the risk
appetite setting. It comprises the Risk Appetite Statement (RAS), the associated policies and limits where
appropriate, as well as the roles and responsibilities for the implementation and monitoring of the RAF.
The Group has established in RAF qualitative statements to set the overarching risk appetite direction of the
Group across material and critical risk types, articulating also the reasoning behind assuming or avoiding certain
types of risk, and to cover areas that are not fully quantifiable.
The RAS indicators are reported on a quarterly basis via the Risk Profile Report to the EXCO, RC and the Board.
Any interim breaches are assessed with respect to their Tier and breach severity and are reported/escalated to
the appropriate committee/authority. The dashboard is accompanied with a relevant commentary which
indicates:
1.
All violations present at the time.
2.
The nature of each violation.
3.
Whether management has taken or will take remedial steps.
Sustainability Statement - Additional Information
2024
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
222
Contents
Page
Disclosure requirements in ESRS covered by the undertaking’s Sustainability
Statement
223
List of disclosure requirements and related data points in cross-cutting and
topical standards that derive from other EU legislation
228
Phase-in provisions and transitional provisions
236
Reporting principles
239
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
223
Disclosure requirements in ESRS covered by the undertaking’s Sustainability Statement
ESRS
Standard
Disclosure
Requirement
Description
Page number
General Information
ESRS 2
BP-1
General basis for preparation of sustainability
statement
74
ESRS 2
BP-2
Disclosures in relation to specific circumstances
74, 100, 236, 239
ESRS 2
GOV-1
The role of the administrative, management
and supervisory bodies
75
ESRS 2
GOV-2
Information provided to and sustainability
matters addressed by the undertaking’s
administrative, management and supervisory
bodies
76
ESRS 2
GOV-3
Integration of sustainability-related
performance in incentive schemes
84
ESRS 2
GOV-4
Statement on due diligence
85
ESRS 2
GOV-5
Risk management and internal controls over
sustainability reporting
86
ESRS 2
SBM-1
Strategy, business model and value chain
87
ESRS 2
SBM-2
Interests and views of stakeholders
91
ESRS 2
SBM-3
Material impacts, risks and opportunities and
their interaction with strategy and business
model
106-109, 149, 155, 169-170, 174,
186, 190, 194, 196, 200, 202, 203,
204, 211, 213, 216, 217, 219
ESRS 2
IRO-1
Description of the process to identify and
assess material impacts, risks and
opportunities
95
ESRS 2
IRO-2
Disclosure requirements in ESRS covered by
the undertaking’s sustainability statement
223
E1- Climate Change
ESRS 2
GOV-3
Integration of sustainability-related
performance in incentive schemes
102
ESRS E1
E1-1
Transition plan for climate change mitigation
102
ESRS 2
SBM-3
Material impacts, risks and opportunities and
their interaction with strategy and business
model
106
ESRS 2
IRO-1
Description of the processes to identify and
assess material climate-related impacts, risks
and opportunities
114
ESRS E1
E1-2
Policies related to climate change mitigation
and adaptation
124
ESRS 2
MDR-P Policies
Minimum disclosure requirements – Policies
adopted to manage material sustainability
matters
124
ESRS E1
E1-3
Actions and resources in relation to climate
change policies
124
ESRS 2
MDR-A Actions
Minimum disclosure requirements – Actions and
resources in relation to material sustainability
matters
124
ESRS E1
E1-4
Targets related to climate change mitigation
and adaptation
131
ESRS 2
MDR-M Metrics Minimum disclosure requirements – Metrics in
relation to material sustainability matters
131
ESRS 2
MDR-T Targets
Minimum disclosure requirements – Tracking
effectiveness of policies and actions through
targets
131
ESRS E1
E1-5
Energy consumption and mix
137
ESRS E1
E1-6
Gross Scopes 1, 2, 3 and Total GHG emissions
138
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
224
Disclosure requirements in ESRS covered by the undertaking’s Sustainability Statement (continued)
ESRS
Standard
Disclosure
Requirement
Description
Page
number
E2-Pollution
ESRS 2
IRO-1
Description of the processes to identify and assess material
climate-related impacts, risks and opportunities
148
ESRS 2
SBM-3
Material impacts, risks and opportunities and their interaction
with strategy and business model
149
ESRS E2
E2-1
Policies related to pollution
150
ESRS 2
MDR-P Policies
Minimum disclosure requirements – Policies adopted to manage
material sustainability matters
150
ESRS E2
E2-2
Actions and resources related to pollution
150
ESRS 2
MDR-A Actions
Minimum disclosure requirements – Actions and resources in
relation to material sustainability matters
150
ESRS E2
E2-3
Targets related to pollution
153
ESRS 2
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation to
material sustainability matters
153
ESRS 2
MDR-T Targets
Minimum disclosure requirements – Tracking effectiveness of
policies and actions through targets
153
E3 – Water and Marine Resources
ESRS 2
IRO-1
Description of the processes to identify and assess material
climate-related impacts, risks and opportunities
154
ESRS 2
SBM-3
Material impacts, risks and opportunities and their interaction
with strategy and business model
155
ESRS E3
E3-1
Policies related to water and marine resources
156
ESRS 2
MDR-P Policies
Minimum disclosure requirements – Policies adopted to manage
material sustainability matters
156
ESRS E3
E3-2
Actions and resources related to water and marine resources
156
ESRS 2
MDR-A Actions
Minimum disclosure requirements – Actions and resources in
relation to material sustainability matters
156
ESRS E3
E3-3
Targets related to water and marine resources
157
ESRS 2
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation to
material sustainability matters
157
ESRS 2
MDR-T Targets
Minimum disclosure requirements – Tracking effectiveness of
policies and actions through targets
157
E5- Resource Use and Circular Economy
ESRS 2
IRO-1
Description of the processes to identify and assess material
climate-related impacts, risks and opportunities
158
ESRS 2
SBM-3
Material impacts, risks and opportunities and their interaction
with strategy and business model
159
ESRS E5
E5-1
Policies related to resource use and circular economy
160
ESRS 2
MDR-P Policies
Minimum disclosure requirements – Policies adopted to manage
material sustainability matters
160
ESRS E5
E5-2
Actions and resources related to resource use and circular
economy
160
ESRS 2
MDR-A Actions
Minimum disclosure requirements – Actions and resources in
relation to material sustainability matters
160
ESRS E5
E5-3
Targets related to resource use and circular economy
162
ESRS 2
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation to
material sustainability matters
162
ESRS 2
MDR-T Targets
Minimum disclosure requirements – Tracking effectiveness of
policies and actions through targets
162
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
225
Disclosure requirements in ESRS covered by the undertaking’s Sustainability Statement (continued)
ESRS
Standard
Disclosure
Requirement
Description
Page
number
S1-Own workforce
ESRS 2
SBM-2
Interests and views of stakeholders
163
ESRS 2
SBM-3
Material impacts, risks and opportunities and their interaction with
strategy and business model
163, 169,
174
ESRS S1
S1-1
Policies related to own workforce
171, 175
ESRS 2
MDR-P Policies
Minimum disclosure requirements – Policies adopted to manage
material sustainability matters
171, 175
ESRS S1
S1-2
Processes for engaging with own workforce and workers’
representatives about impacts
166
ESRS S1
S1-3
Processes to remediate negative impacts and channels for own
workforce to raise concerns
168
ESRS S1
S1-4
Taking action on material impacts on own workforce, and approaches
to managing material risks and pursuing material opportunities
related to own workforce, and effectiveness of those actions
171, 176
ESRS 2
MDR-A Actions
Minimum disclosure requirements – Actions and resources in relation
to material sustainability matters
171, 176
ESRS S1
S1-5
Targets related to managing material negative impacts, advancing
positive impacts, and managing material risks and opportunities
172, 179
ESRS 2
MDR-T Targets
Minimum disclosure requirements – Tracking effectiveness of policies
and actions through targets
172, 179
ESRS S1
S1-6
Characteristics of the undertaking’s employees
180
ESRS S1
S1-8
Collective bargaining coverage and social dialogue
181
ESRS S1
S1-14
Health and safety metrics
175, 177
ESRS S1
S1-16
Remuneration metrics (pay gap and total remuneration)
181
ESRS S1
S1-17
Incidents, complaints and severe human rights impacts
165
ESRS 2
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation to material
sustainability matters
172, 175,
177, 179
S4 – Consumers and end-users
ESRS 2
SBM-2
Interests and views of stakeholders
182
ESRS 2
SBM-3
Material impacts, risks and opportunities and their interaction with
strategy and business model
182, 186,
196, 200,
202, 204
ESRS S4
S4-1
Policies related to consumers and end-users
187, 197,
201, 202,
204
ESRS 2
MDR-P Policies
Minimum disclosure requirements – Policies adopted to manage
material sustainability matters
187, 197,
201, 202,
204
ESRS S4
S4-2
Processes for engaging with consumers and end-users about impacts
184
ESRS S4
S4-3
Processes to remediate negative impacts and channels for
consumers and end-users to raise concerns
185
ESRS S4
S4-4
Taking action on material impacts on consumers and end-users, and
approaches to managing material risks and pursuing material
opportunities related to consumers and end-users, and effectiveness
of those actions
187, 197,
201, 202,
205
ESRS 2
MDR-A Actions
Minimum disclosure requirements – Actions and resources in relation
to material sustainability matters
187, 197,
201, 202,
205
ESRS S4
S4-5
Targets related to managing material negative impacts, advancing
positive impacts, and managing material risks and opportunities
189, 199,
201, 202,
205
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
226
Disclosure requirements in ESRS covered by the undertaking’s Sustainability Statement (continued)
ESRS Standard
Disclosure
Requirement
Description
Page number
S4 – Consumers and end-users (Continued)
ESRS 2
MDR-T Targets
Minimum disclosure requirements – Tracking
effectiveness of policies and actions through targets
189, 199, 201,
202, 205
ESRS 2
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation
to material sustainability matters
189, 199, 201,
202, 205
G1- Business Conduct
ESRS 2
GOV-1
The role of the administrative, supervisory and
management bodies
206
ESRS 2
IRO-1
Description of the processes to identify and assess
material impacts, risks and opportunities
207
ESRS 2
SBM-3
Material impacts, risks and opportunities and their
interaction with strategy and business model
211
ESRS G1
G1-1
Business conduct policies and corporate culture
207
ESRS 2
MDR-P Policies
Minimum disclosure requirements – Policies adopted to
manage material sustainability matters
207
ESRS G1
G1-2
Management of relationships with suppliers
211
ESRS G1
G1-4
Incidents of corruption or bribery
210
ESRS 2
MDR-A Actions
Minimum disclosure requirements – Actions and
resources in relation to material sustainability matters
211
ESRS 2
MDR-T Targets
Minimum disclosure requirements – Tracking
effectiveness of policies and actions through targets
211
ESRS 2
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation
to material sustainability matters
211
Entity-specific information
BOC Oncology
Centre
MDR-P Policies
Minimum disclosure requirements – Policies adopted to
manage material sustainability matters
203
BOC Oncology
Centre
MDR-A Actions
Minimum disclosure requirements – Actions and
resources in relation to material sustainability matters
203
BOC Oncology
Centre
MDR-T Targets
Minimum disclosure requirements – Tracking
effectiveness of policies and actions through targets
203
BOC Oncology
Centre
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation
to material sustainability matters
203
Financial Crime
and fraud
MDR-P Policies
Minimum disclosure requirements – Policies adopted to
manage material sustainability matters
213
Financial Crime
and fraud
MDR-A Actions
Minimum disclosure requirements – Actions and
resources in relation to material sustainability matters
214
Financial Crime
and fraud
MDR-T Targets
Minimum disclosure requirements – Tracking
effectiveness of policies and actions through targets
215, 220
Financial Crime
and fraud
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation
to material sustainability matters
215, 220
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
227
Disclosure requirements in ESRS covered by the undertaking’s Sustainability Statement (continued)
ESRS Standard
Disclosure
Requirement
Description
Page
number
Entity-specific information
Conflict of Interest
MDR-P Policies
Minimum disclosure requirements – Policies adopted to
manage material sustainability matters
216
Conflict of Interest
MDR-A Actions
Minimum disclosure requirements – Actions and
resources in relation to material sustainability matters
216
Conflict of Interest
MDR-T Targets
Minimum disclosure requirements – Tracking
effectiveness of policies and actions through targets
216, 220
Conflict of Interest
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation
to material sustainability matters
216, 220
Compliance with laws
and Regulations
MDR-P Policies
Minimum disclosure requirements – Policies adopted to
manage material sustainability matters
217
Compliance with laws
and Regulations
MDR-A Actions
Minimum disclosure requirements – Actions and
resources in relation to material sustainability matters
218
Compliance with laws
and Regulations
MDR-T Targets
Minimum disclosure requirements – Tracking
effectiveness of policies and actions through targets
218, 220
Compliance with laws
and Regulations
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation
to material sustainability matters
218, 220
Reputational Risk
MDR-P Policies
Minimum disclosure requirements – Policies adopted to
manage material sustainability matters
219
Reputational Risk
MDR-A Actions
Minimum disclosure requirements – Actions and
resources in relation to material sustainability matters
219
Reputational Risk
MDR-T Targets
Minimum disclosure requirements – Tracking
effectiveness of policies and actions through targets
219, 220
Reputational Risk
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation
to material sustainability matters
219, 220
Digitilisation
MDR-P Policies
Minimum disclosure requirements – Policies adopted to
manage material sustainability matters
190, 194
Digitilisation
MDR-A Actions
Minimum disclosure requirements – Actions and
resources in relation to material sustainability matters
191, 195
Digitilisation
MDR-T Targets
Minimum disclosure requirements – Tracking
effectiveness of policies and actions through targets
192
Digitilisation
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation
to material sustainability matters
192
Information Security
MDR-P Policies
Minimum disclosure requirements – Policies adopted to
manage material sustainability matters
187
Information Security
MDR-A Actions
Minimum disclosure requirements – Actions and
resources in relation to material sustainability matters
187
Information Security
MDR-T Targets
Minimum disclosure requirements – Tracking
effectiveness of policies and actions through targets
189
Information Security
MDR-M Metrics
Minimum disclosure requirements – Metrics in relation
to material sustainability matters
189
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
228
List of disclosure requirements and related data points in cross-cutting and topical standards that derive from other EU legislation
Disclosure Requirement and related
datapoint
SFDR reference
Pillar 3 reference
Benchmark
Regulation reference
EU
Climate Law
reference
Applicable for the
Group
Page
ESRS 2 GOV-1
Board's gender diversity paragraph 21 (d)
Indicator number
13 of Table #1 of
Annex 1
Commission Delegated Regulation
(EU) 2020/1816 (5) , Annex II
Yes
82
ESRS 2 GOV-1
Percentage of board members who are
independent paragraph 21 (e)
Delegated Regulation
(EU) 2020/1816, Annex II
Yes
81
ESRS 2 GOV-4
Statement on due diligence paragraph 30
Indicator number
10 Table #3 of
Annex 1
Yes
85
ESRS 2 SBM-1
Involvement in activities related to fossil fuel
activities paragraph 40 (d) i
Indicators number 4
Table #1 of Annex 1
Article 449a Regulation (EU)
No 575/2013;
Commission Implementing
Regulation
(EU) 2022/2453 (6) Table 1:
Qualitative information on
Environmental risk and Table
2: Qualitative information on
Social risk
Delegated Regulation
(EU) 2020/1816, Annex II
Not Applicable
n/a
ESRS 2 SBM-1
Involvement in activities related to chemical
production paragraph 40 (d) ii
Indicator number 9
Table #2 of Annex 1
Delegated Regulation
(EU) 2020/1816, Annex II
Not Applicable
n/a
ESRS 2 SBM-1
Involvement in activities related to
controversial weapons paragraph 40 (d) iii
Indicator number
14 Table #1 of
Annex 1
Delegated Regulation
(EU) 2020/1818 (7), Article 12(1)
Delegated Regulation
(EU) 2020/1816, Annex II
Not Applicable
n/a
ESRS 2 SBM-1
Involvement in activities related to cultivation
and production of tobacco paragraph 40 (d)
iv
Delegated Regulation
(EU) 2020/1818, Article 12(1)
Delegated Regulation
(EU) 2020/1816, Annex II
Not Applicable
n/a
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
229
List of disclosure requirements and related data points in cross-cutting and topical standards that derive from other EU legislation (continued)
Disclosure Requirement and related
datapoint
SFDR reference
Pillar 3 reference
Benchmark
Regulation reference
EU
Climate Law
reference
Applicable for the Group
Page
ESRS E1-1
Transition plan to reach climate neutrality by
2050 paragraph 14
Regulation
(EU) 2021/1119,
Article 2(1)
Yes
102
ESRS E1-1
Undertakings excluded from Paris-aligned
Benchmarks paragraph 16 (g)
Article 449a
Regulation (EU)
No 575/2013; Commission
Implementing Regulation
(EU) 2022/2453 Template 1:
Banking book-Climate
Change transition risk: Credit
quality of exposures by
sector, emissions and residual
maturity
Delegated Regulation
(EU) 2020/1818,
Article12.1 (d) to (g), and
Article 12.2
Not Applicable
n/a
ESRS E1-4
GHG emission reduction targets paragraph
34
Indicator number 4
Table #2 of Annex
1
Article 449a
Regulation (EU)
No 575/2013; Commission
Implementing Regulation
(EU) 2022/2453 Template 3:
Banking book – Climate
change transition risk:
alignment metrics
Delegated Regulation
(EU) 2020/1818, Article 6
Yes
131
ESRS E1-5
Energy consumption from fossil sources
disaggregated by sources (only high climate
impact sectors) paragraph 38
Indicator number 5
Table #1 and
Indicator n. 5 Table
#2 of Annex 1
Not Applicable
n/a
ESRS E1-5 Energy consumption and mix
paragraph 37
Indicator number 5
Table #1 of Annex
1
Yes
137
ESRS E1-5
Energy intensity associated with activities in
high climate impact sectors paragraphs 40 to
43
Indicator number 6
Table #1 of Annex
1
n/a
n/a
n/a
Not Applicable
n/a
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
230
List of disclosure requirements and related data points in cross-cutting and topical standards that derive from other EU legislation (continued)
Disclosure Requirement and related
datapoint
SFDR reference
Pillar 3 reference
Benchmark
Regulation reference
EU
Climate
Law reference
Applicable for
the Group
Page
ESRS E1-6
Gross Scope 1, 2, 3 and Total GHG emissions
paragraph 44
Indicators number 1
and 2 Table #1 of
Annex 1
Article 449a; Regulation (EU)
No 575/2013; Commission
Implementing Regulation
(EU) 2022/2453 Template 1:
Banking book – Climate
change transition risk: Credit
quality of exposures by
sector, emissions and residual
maturity
Delegated Regulation
(EU) 2020/1818,
Article 5(1), 6 and 8(1)
Yes
144
ESRS E1-6
Gross GHG emissions intensity paragraphs 53
to 55
Indicators number 3
Table #1 of Annex 1
Article 449a Regulation (EU)
No 575/2013; Commission
Implementing Regulation
(EU) 2022/2453 Template 3:
Banking book – Climate
change transition risk:
alignment metrics
Delegated Regulation
(EU) 2020/1818,
Article 8(1)
Yes
145
ESRS E1-7
GHG removals and carbon credits paragraph
56
Regulation
(EU) 2021/1119,
Article 2(1)
Not material
n/a
ESRS E1-9
Exposure of the benchmark portfolio to
climate-related physical risks paragraph 66
Delegated Regulation
(EU) 2020/1818,
Annex II Delegated
Regulation
(EU) 2020/1816,
Annex II
Not Applicable –
Phase-in
n/a
ESRS E1-9
Disaggregation of monetary amounts by
acute and chronic physical risk paragraph 66
(a) ESRS E1-9 Location of significant assets
at material physical risk paragraph 66 (c).
Article 449a Regulation (EU)
No 575/2013; Commission
Implementing Regulation
(EU) 2022/2453 paragraphs
46 and 47; Template 5:
Banking book - Climate
change physical risk:
Exposures subject to physical
risk.
Not Applicable –
Phase-in
n/a
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
231
List of disclosure requirements and related data points in cross-cutting and topical standards that derive from other EU legislation (continued)
Disclosure Requirement and related
datapoint
SFDR reference
Pillar 3 reference
Benchmark
Regulation reference
EU
Climate
Law reference
Applicable for
the Group
Page
ESRS E1-9 Breakdown of the carrying value
of its real estate assets by energy-efficiency
classes paragraph 67 (c).
Article 449a Regulation (EU)
No 575/2013; Commission
Implementing Regulation
(EU) 2022/2453 paragraph
34;Template 2:Banking book
-Climate change transition
risk: Loans collateralised by
immovable property - Energy
efficiency of the collateral
Not Applicable –
Phase-in
n/a
ESRS E1-9
Degree of exposure of the portfolio to
climate- related opportunities paragraph 69
Delegated Regulation
(EU) 2020/1818,
Annex II
Not Applicable –
Phase-in
n/a
ESRS E2-4
Amount of each pollutant listed in Annex II of
the E-PRTR Regulation (European Pollutant
Release and Transfer Register) emitted to air,
water and soil, paragraph 28
Indicator number 8
Table #1 of Annex 1
Indicator number 2
Table #2 of Annex 1
Indicator number 1
Table #2 of Annex 1
Indicator number 3
Table #2 of Annex 1
Not material
n/a
ESRS E3-1
Water and marine resources paragraph 9
Indicator number 7
Table #2 of Annex 1
Yes
156
ESRS E3-1
Dedicated policy paragraph 13
Indicator number 8
Table 2 of Annex 1
Not material
n/a
ESRS E3-1
Sustainable oceans and seas paragraph 14
Indicator number 12
Table #2 of Annex 1
Not material
n/a
ESRS E3-4
Total water recycled and reused paragraph 28
(c)
Indicator number
6.2 Table #2 of
Annex 1
Not material
n/a
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
232
List of disclosure requirements and related data points in cross-cutting and topical standards that derive from other EU legislation (continued)
Disclosure Requirement and related
datapoint
SFDR reference
Pillar 3 reference
Benchmark
Regulation reference
EU
Climate
Law reference
Applicable for
the Group
Page
ESRS E3-4
Total water consumption in m 3 per net
revenue on own operations paragraph 29
Indicator number
6.1 Table #2 of
Annex 1
Not material
n/a
ESRS 2- SBM 3 - E4 paragraph 16 (a) i
Indicator number 7
Table #1 of Annex
1
Not material
n/a
ESRS 2- SBM 3 - E4 paragraph 16 (b)
Indicator number
10 Table #2 of
Annex 1
Not material
n/a
ESRS 2- SBM 3 - E4 paragraph 16 (c)
Indicator number
14 Table #2 of
Annex 1
Not material
n/a
ESRS E4-2
Sustainable land / agriculture practices or
policies paragraph 24 (b)
Indicator number
11 Table #2 of
Annex 1
Not material
n/a
ESRS E4-2
Sustainable oceans / seas practices or
policies paragraph 24 (c)
Indicator number
12 Table #2 of
Annex 1
Not material
n/a
ESRS E4-2
Policies to address deforestation paragraph
24 (d)
Indicator number
15 Table #2 of
Annex 1
Not material
n/a
ESRS E5-5
Non-recycled waste paragraph 37 (d)
Indicator number
13 Table #2 of
Annex 1
Not material
n/a
ESRS E5-5
Hazardous waste and radioactive waste
paragraph 39
Indicator number 9
Table #1 of Annex
1
Not material
n/a
ESRS 2- SBM3 - S1
Risk of incidents of forced labour paragraph
14 (f)
Indicator number
13 Table #3 of
Annex I
Yes
163
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
233
List of disclosure requirements and related data points in cross-cutting and topical standards that derive from other EU legislation (continued)
Disclosure Requirement and related
datapoint
SFDR reference
Pillar 3 reference
Benchmark
Regulation reference
EU
Climate
Law reference
Applicable for
the Group
Page
ESRS 2- SBM3 - S1
Risk of incidents of child labour paragraph 14
(g)
Indicator number
12 Table #3 of
Annex I
Yes
163
ESRS S1-1
Human rights policy commitments paragraph
20
Indicator number 9
Table #3 and
Indicator number
11 Table #1 of
Annex I
Yes
164
ESRS S1-1
Due diligence policies on issues addressed by
the fundamental International Labor
Organisation Conventions 1 to 8, paragraph
21
Delegated Regulation
(EU) 2020/1816, Annex II
Yes
164
ESRS S1-1
processes and measures for preventing
trafficking in human beings paragraph 22
Indicator number
11 Table #3 of
Annex I
Yes
164
ESRS S1-1
workplace accident prevention policy or
management system paragraph 23
Indicator number 1
Table #3 of Annex I
Yes
175
ESRS S1-3
grievance/complaints handling mechanisms
paragraph 32 (c)
Indicator number 5
Table #3 of Annex I
Yes
164, 168
ESRS S1-14
Number of fatalities and number and rate of
work-related accidents paragraph 88 (b) and
(c)
Indicator number 2
Table #3 of Annex I
Delegated Regulation
(EU) 2020/1816, Annex II
Yes
177
ESRS S1-14
Number of days lost to injuries, accidents,
fatalities or illness paragraph 88 (e)
Indicator number 3
Table #3 of Annex I
Yes
177
ESRS S1-16
Unadjusted gender pay gap paragraph 97 (a)
Indicator number
12 Table #1 of
Annex I
Delegated Regulation
(EU) 2020/1816, Annex II
Yes
181
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
234
List of disclosure requirements and related data points in cross-cutting and topical standards that derive from other EU legislation (continued)
Disclosure Requirement and related
datapoint
SFDR reference
Pillar 3 reference
Benchmark
Regulation reference
EU
Climate
Law reference
Applicable for
the Group
Page
ESRS S1-16
Excessive CEO pay ratio paragraph 97 (b)
Indicator number 8
Table #3 of Annex I
Yes
181
ESRS S1-17
Incidents of discrimination paragraph 103 (a)
Indicator number 7
Table #3 of Annex I
Yes
165
ESRS S1-17 Non-respect of UNGPs on
Business and Human Rights and OECD
Guidelines paragraph 104 (a)
Indicator number 10
Table #1 and
Indicator n. 14 Table
#3 of Annex I
Delegated Regulation
(EU) 2020/1816, Annex II
Delegated Regulation
(EU) 2020/1818 Art 12 (1)
Yes
165
ESRS 2- SBM3 – S2
Significant risk of child labour or forced
labour in the value chain paragraph 11 (b)
Indicators number 12
and n. 13 Table #3 of
Annex I
Not material
n/a
ESRS S2-1
Human rights policy commitments paragraph
17
Indicator number 9
Table #3 and
Indicator n. 11 Table
#1 of Annex 1
Not material
n/a
ESRS S2-1 Policies related to value chain
workers paragraph 18
Indicator number 11
and n. 4 Table #3 of
Annex 1
Not material
n/a
ESRS S2-1Non-respect of UNGPs on Business
and Human Rights principles and OECD
guidelines paragraph 19
Indicator number 10
Table #1 of Annex 1
Delegated Regulation
(EU) 2020/1816, Annex II
Delegated Regulation
(EU) 2020/1818, Art 12 (1)
Not material
n/a
ESRS S2-1
Due diligence policies on issues addressed by
the fundamental International Labor
Organisation Conventions 1 to 8, paragraph
19
Delegated Regulation
(EU) 2020/1816, Annex II
Not material
n/a
ESRS S2-4
Human rights issues and incidents connected
to its upstream and downstream value chain
paragraph 36
Indicator number 14
Table #3 of Annex 1
Not material
n/a
ESRS S3-1
Human rights policy commitments paragraph
16
Indicator number 9
Table #3 of Annex 1
and Indicator number
11 Table #1 of Annex
1
Not material
n/a
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
235
List of disclosure requirements and related data points in cross-cutting and topical standards that derive from other EU legislation (continued)
Disclosure Requirement and related
datapoint
SFDR reference
Pillar 3 reference
Benchmark
Regulation reference
EU
Climate
Law reference
Applicable for
the Group
Page
ESRS S3-1
non-respect of UNGPs on Business and
Human Rights, ILO principles or OECD
guidelines paragraph 17
Indicator number
10 Table #1 Annex
1
Delegated Regulation
(EU) 2020/1816, Annex II
Delegated Regulation
(EU) 2020/1818, Art 12
(1)
Not material
n/a
ESRS S3-4
Human rights issues and incidents paragraph
36
Indicator number
14 Table #3 of
Annex 1
Not material
n/a
ESRS S4-1 Policies related to consumers and
end-users paragraph 16
Indicator number 9
Table #3 and
Indicator number
11 Table #1 of
Annex 1
Yes
183
ESRS S4-1
Non-respect of UNGPs on Business and
Human Rights and OECD guidelines
paragraph 17
Indicator number
10 Table #1 of
Annex 1
Delegated Regulation
(EU) 2020/1816, Annex II
Delegated Regulation
(EU) 2020/1818, Art 12
(1)
Yes
183
ESRS S4-4
Human rights issues and incidents paragraph
35
Indicator number
14 Table #3 of
Annex 1
Yes
183
ESRS G1-1
United Nations Convention against
Corruption paragraph 10 (b)
Indicator number
15 Table #3 of
Annex 1
Not Applicable –
The Group has a
policy
n/a
ESRS G1-1
Protection of whistle- blowers paragraph 10
(d)
Indicator number 6
Table #3 of Annex
1
Not Applicable –
The Group has a
policy
n/a
ESRS G1-4
Fines for violation of anti-corruption and anti-
bribery laws paragraph 24 (a)
Indicator number
17 Table #3 of
Annex 1
Delegated Regulation
(EU) 2020/1816,
Annex II)
Not material
n/a
ESRS G1-4
Standards of anti- corruption and anti-
bribery paragraph 24 (b)
Indicator number
16 Table #3 of
Annex 1
Yes
210
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
236
Phase-in provisions and transitional provisions
ESRS
Disclosure
Requirement
Full name of the
Disclosure
Requirement
Phase-in or effective date (including the first year)
Group’s approach in
Phase-in provisions
ESRS 2
SBM-1
Strategy,
business
model
and
value
chain
The undertaking shall report the information prescribed by ESRS 2 SBM-1 paragraph
40(b) (breakdown of total revenue by significant ESRS sector) and 40(c) (list of
additional significant ESRS sectors) starting from the application date specified in a
Commission Delegated Act to be adopted pursuant to article 29b(1) third
subparagraph, point (ii), of Directive 2013/34/EU.
Adopted
ESRS 2
SBM-3
Material
impacts,
risks
and
opportunities
and
their interaction with
strategy and business
model
The undertaking may omit the information prescribed by ESRS 2 SBM-3 paragraph
48(e) (anticipated financial effects) for the first year of preparation of its
sustainability statement. The undertaking may comply with ESRS 2 SBM-3 paragraph
48(e) by reporting only qualitative disclosures for the first 3 years of preparation of
its sustainability statement, if it is impracticable to prepare quantitative disclosures.
Adopted
ESRS E1
E1-6
Gross Scopes 1, 2, 3
and
Total
GHG
emissions
Undertakings or groups not exceeding on their balance sheet dates the average
number of 750 employees during the financial year (on a consolidated basis where
applicable) may omit the datapoints on scope 3 emissions and total GHG emissions
for the first year of preparation of their sustainability statement.
Not eligible
ESRS E1
E1-9
Anticipated
financial
effects from material
physical
and
transition risks and
potential
climate-
related opportunities
The undertaking may omit the information prescribed by ESRS E1- 9 for the first
year of preparation of its sustainability statement. The undertaking may comply
with ESRS E1-9 by reporting only qualitative disclosures for the first 3 years of
preparation of its sustainability statement, if it is impracticable to prepare
quantitative disclosures.
Adopted
ESRS E2
E2-6
Anticipated
financial
effects from pollution-
related impacts, risks
and opportunities
The undertaking may omit the information prescribed by ESRS E2- 6 for the first
year of preparation of its sustainability statement. Except for the information
prescribed by paragraph 40 (b) on the operating and capital expenditures occurred
in the reporting period in conjunction with major incidents and deposits, the
undertaking may comply with ESRS E2-6 by reporting only qualitative disclosures,
for the first 3 years of preparation of its sustainability statement
Adopted
ESRS E3
E3-5
Anticipated
financial
effects
from
water
and
marine
resources-related
impacts,
risks
and
opportunities
The undertaking may omit the information prescribed by ESRS E3-5 for the first year
of preparation ofits sustainability statement. The undertaking may comply with
ESRSE3-5 by reporting only qualitative disclosures, for the first 3 years of
preparation of its sustainability statement.
Adopted
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
237
Phase-in provisions and transitional provisions (continued)
ESRS
Disclosure
Requirement
Full name of the
Disclosure
Requirement
Phase-in or effective date (including the first year)
Group’s approach in
Phase-in provisions
ESRS E4
All disclosure
requirements
All
disclosure
requirements
Undertakings or groups not exceeding on their balance sheet dates the average
number of 750 employees during the financial year (on a consolidated basis where
applicable) may omit the information specified in the disclosure requirements of ESRS
E4for the first 2 years of preparation of their sustainability statement.
Not material
ESRS E4
E4-6
Anticipated
financial
effects
from
biodiversity
and
ecosystem-related
impacts,
risks
and
opportunities
The undertaking may omit the information prescribed by ESRS E4-6 for the first year
of preparation of its sustainability statement. The undertaking may comply with ESRS
E4- 6 by reporting only qualitative disclosures, for the first 3 years of preparation of
its sustainability statement
Not material
ESRS E5
E5-6
Anticipated
financial
effects from resource
use
and
circular
economy-related
impacts,
risks
and
opportunities
The undertaking may omit the information prescribed by ESRS E5-6 for the first year
of preparation of its sustainability statement. The undertaking may comply with ESRS
E5- 6 by reporting only qualitative disclosures, for the first 3 years of preparation of
its sustainability statement
Adopted
ESRS S1
All disclosure
requirements
All
disclosure
requirements
Undertakings or groups not exceeding on their balance sheet dates, the average
number of 750 employees during the financial year (on a consolidated basis where
applicable) may omit the information specified in the disclosure requirements of ESRS
S1for the first year of preparation of their sustainability statement.
Not eligible
ESRS S1
S1-7
Characteristics
of
non-employee
workers
in
the
undertaking’s
own
workforce
The undertaking may omit reporting for all data points in this Disclosure Requirement
for the first year of preparation of its sustainability statement.
Adopted
ESRS S1
S1-8
Collective bargaining
coverage and social
dialogue
The undertaking may omit this Disclosure Requirement with regard to its own
employees in non-EEA countries for the first year of preparation of its sustainability
statement.
Not material
ESRS S1
S1-11
Social protection
The undertaking may omit the information prescribed by ESRS S1-11 for the first
year of preparation of its sustainability statement.
Not material
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
238
Phase-in provisions and transitional provisions (continued)
ESRS
Disclosure
Requirement
Full name of the
Disclosure
Requirement
Phase-in or effective date (including the first year)
Group’s approach in
Phase-in provisions
ESRS
S1
S1-12
Percentage of
employees with
disabilities
The undertaking may omit the information prescribed by ESRS S1-12 for the first
year of preparation of its sustainability statement.
Not material
ESRS
S1
S1-13
Training and skills
development
The undertaking may omit the information prescribed by ESRS S1-13 for the first
year of preparation of its sustainability statement.
Not material
ESRS
S1
S1-14
Health and Safety
The undertaking may omit the datapoints on cases of work-related ill-health and on
number of days lost to injuries, accidents, fatalities and work-related ill health for
the first year of preparation of its sustainability statement.
Not adopted
ESRS
S1
S1-14
Health and Safety
The undertaking may omit reporting on non-employees for the first year of
preparation of its sustainability statement
Adopted
ESRS
S1
S1-15
Work-life balance
The undertaking may omit the information prescribed by ESRS S1-15 for the first
year of preparation of its sustainability statement.
Not material
ESRS
S2
All disclosure
requirements
All disclosure
requirements
Undertakings or groups not exceeding on their balance sheet dates the average
number of 750 employees during the financial year (on a consolidated basis where
applicable) may omit the information specified in the disclosure requirements of ESRS
S2for the first 2 years of preparation of their sustainability statement.
Not eligible
ESRS
S4
All disclosure
requirements
All disclosure
requirements
Undertakings or groups not exceeding on their balance sheet dates the average
number of 750 employees during the financial year (on a consolidated basis where
applicable) may omit the information specified in the disclosure requirements of ESRS
S4 for the first 2 years of preparation of their sustainability statement.
Not eligible
Other transitional provisions
Group’s approach in other transitional provisions
First-time application on comparative information
Adopted
Entity specific information
Adopted
First three-year value chain information
Adopted
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
239
Reporting principles
GHG Emission
The carbon footprint for Scope 1, Scope 2 and material Scope 3 categories were estimated based on the
methodologies described in the Greenhouse Gas Protocol and ISO14064-1:2019 standard.
i.
For the purpose of the calculation of its 2023 and 2024 carbon footprint, the Group uses the operational
GHG accounting approach.
ii.
The Group considers the GHG protocol guidance, a Corporate Accounting and Reporting Standard, Revised
Edition (the GHG Protocol) for its Scope 1, 2 and 3 emissions calculations and guidance from PCAF, when
calculating its financed emissions.
iii.
The gases estimated and presented as in tones of CO2e where the calculations consist of are CΟ2, CH4,
and N2O gases.
iv.
The Group utilises the PCAF database and standard for the estimation of Financed Scope 3 GHG emissions
associated with Business Loans, Motor Vehicles, CREs, Mortgages, Corporate Bonds and Sovereign Bonds
as well as Insurance associated GHG emissions. For other asset classes the Group adopted the transitional
provision in relation to the entity specific information and therefore, has not included other asset classes
within the disclosures.
v.
The Group uses the most updated available emission factors for the estimations of 2024 and 2023,
utilizing the UK Department for Environment, Food and Rural Affairs (DEFRA) and US Environmental
Protection Agency (EPA) emission factor databases.
vi.
The Group has not entered in any power purchase agreement therefore, market-based Scope 2 GHG are
not estimated. The Group reports only location-based Scope 2 GHG emissions.
vii.
Gross Scope 1, 2, 3 GHG emissions do not include any removals, or any purchased, sold or transferred
carbon credits or GHG allowances in the calculation.
viii.
The Group has not been involved in any Emission Traded Scheme (ETS) until reporting date.
ix.
The most recent Global Warming Potential (GWP) values published by the IPCC based on a 100 year time
horizon have been used to estimate CO2e emission of non-CO2 gases.
x.
The Group’s GHG emissions comprise of GHG emissions of BOC PLC, Eurolife, Genikes Insurance, CISCO
and Jinius.
The estimation of GHG emissions involves assumptions and proxy data. The methodology applied, assumptions
used and sources to estimate GHG emissions are summarized below:
Scope 1
i.
The Group’s direct (Scope 1) GHG emissions come from sources owned or controlled by the Group and
include stationary combustion, mobile combustion and fugitive emissions.
i.
In line with the GHG Protocol, the Group's emissions are presented in tonnes of carbon dioxide equivalent
units (tCO2e) and include carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O).
ii.
The factors used for estimation of Scope 1 emissions are:
a.
Mobile Combustion: EPA 2024 and 2023 conversion factors (kg CO2e/ L) for diesel and gasoline
passenger cars, gasoline motorcycles, diesel and gasoline light duty trucks and hybrid (gasoline)
passenger cars. Emissions are estimated by multiplying the total consumption in litres per fuel
category with the EPA 2024 conversion factors.
b.
Stationary Combustion: DEFRA 2024 and 2023 conversion factors (kg CO2e/ kWh) for diesel
(average biofuel blend) and gas oil, in line with applicable GWP (AR5). Emissions are estimated
by multiplying the total kWh per fuel type with the DEFRA conversion factors.
c.
Refrigerants: DEFRA 2024 and 2023 conversion factors were used to estimate the emissions
from refrigerants leakage.
Scope 2
i.
The Group’s Scope 2 GHG emissions represent consumption of purchased electricity. The Group does not
consume purchased or acquired steam, heating and cooling.
ii.
In line with the GHG Protocol, the Group's emissions are presented in tonnes of carbon dioxide equivalent
units (tCO2e) and include carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O).
iii.
Bio-based CO₂ emissions are not considered significant for the Group's Scope 2 emissions.
iv.
Electricity Authority of Cyprus (EAC) emission factor, based on Cyprus energy mix, was used for the
calculation of Scope 2 GHG emissions (location-based). Currently, Scope 2 GHG emissions are based on
EAC emission factor for 2023 as the EAC emission factor for 2024 has been published.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
240
Reporting principles (continued)
GHG Emission (continued)
Scope 3
i.
A materiality assessment was conducted to identify the material emission categories relative to the
Group’s business model, activities and processes so to estimate the most significant categories of indirect
Scope 3 GHG emissions. By performing desktop benchmark analysis and analyzing data from peers,
international reports and industry sector standards, the Group identified which of the 15 categories, as
identified by GHG protocol, are significant for the Group.
ii.
In line with the GHG Protocol, the Group's emissions are presented in tonnes of carbon dioxide equivalent
units (tCO2e) and include carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O).
Category 1 - Purchased Good and Services
The Group utilises PCAF’s proxies tCO2 per million of revenue (€), per sector, for Cyprus to estimate GHG emission
under Category 1. The Group’s expense amount as per Trial Balance account was classified to relevant sector
and the associated emission factor was multiplied to derive GHG emissions.
Category 4 - Upstream transportation and distribution
The Group utilises PCAF’s proxies tCO2 per million of revenue (€), per sector, for Cyprus to estimate GHG emission
under Category 4. The Group’s expense amount as per Trial Balance account was classified to relevant sector
and the associated emission factor was multiplied to derive GHG emissions.
Category 5 - Waste generated in operations
The Group utilises online available sources to estimate the waste, per material, based on Group’s employee
headcount at the end of the reporting period. DEFRA emission factors (kgCO2e/ ton of waste activity) for 2024
and 2023 were multiplied with the waste volume to estimate GHG emissions under Category 5.
Category 6 - Business Travel
The Group collects data of business travelling (inland and abroad including air travel and accommodation) using
internal process and the Group’s systems. Air travel GHG emissions are estimated by multiplying distance
travelled (in kilometers) with EPA emissions factors for short, medium and long hauls. Inland travelling emissions
are estimated by multiplying distance travelled (in kilometers) by DEFRA emission factors (diesel and petrol
average vehicles). Hotel accommodation emissions are estimated by multiplying nights of hotel accommodation
by DEFRA emissions factors for hotel stay (kgCO2e/ Room per night).
Category 7 - Employee commuting
The Group conducts annually internal questionnaire to collect data regarding employee commuting (vehicle type,
fuel type, distance travelled). The GHG emissions of Category 7 were estimated by multiplying the distance
commuted (in kilometers) by DEFRA emission factors (kgCO2e/ km).
Category 15 - Financed Emissions
Category 15: Investments’ covers emissions associated with operation of investments (including equity and debt
investments and project finance) in the reporting year. This is considered the most material category for the
Group and relates to its lending activities. The estimation of financed emissions covers lending customers assets
and companies’ Scope 1, Scope 2 and Scope 3 emissions. The PCAF Standard defines these as follows:
i.
Scope 1 of the lending customer: Direct GHG emissions that occur from sources owned or controlled
by the customer, i.e. emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc.
ii.
Scope 2 of the lending customer: Indirect GHG emissions from the generation of purchased or
acquired electricity, steam, heating or cooling consumed by the customer. Scope 2 emissions physically
occur at the facility where the electricity, steam, heating or cooling is generated.
iii.
Scope 3 of the lending customer: All other indirect GHG emissions (not included in Scope 2) that occur
in the value chain of the customer. Scope 3 can be broken down into upstream emissions and downstream
emissions. Upstream emissions include all emissions that occur in the lifecycle of a material / product /
service up to the point of sale by the producer, such as from the production or extraction of purchased
materials. Downstream emissions include all emissions that occur because of the distribution, storage,
use and end-of-life treatment of the organisation’s products or services.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
241
Reporting principles (continued)
GHG Emission (continued)
Category 15 - Financed Emissions (continued)
The PCAF Standard applies the same general attribution principles across all lending asset classes:
i.
financed emissions are always calculated by multiplying an attribution factor (specific to that asset class)
by the emissions of the borrower or asset;
ii.
the attribution factor is defined as the share of total annual GHG emissions of the borrower or asset that
is allocated to the loan(s) or asset(s);
iii.
the attribution factor is calculated by determining the share of the outstanding amount of loans of a
financial institution over:
a.
the company value (total equity and debt of the company, project, etc.) to which the financial
institution has lent money to; or
b.
the asset value in the case of asset finance (such as for properties, motor vehicles etc).
The PCAF standard provides detailed methodological guidance to measure and disclose GHG emissions associated
with six asset classes: listed equity and corporate bonds, business loans and unlisted equity, project finance,
commercial real estate, mortgages, and motor vehicle loans. The Group measures the financed emissions
associated with the following asset classes adopting the entity specific disclosure transitional provision.
1.
Asset Class - Business Loans
Financed GHG emissions (tCO2e) for non-financial and other financial loan portfolio are estimated using the
following formula:
𝐹𝑖𝑛𝑎𝑛𝑐𝑒𝑑𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠=
𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔𝑎𝑚𝑜𝑢𝑛𝑡
𝐸𝑞𝑢𝑖𝑡𝑦+ 𝐷𝑒𝑏𝑖𝑡𝑜𝑟𝑇𝑜𝑡𝑎𝑙𝑎𝑠𝑠𝑒𝑡𝑠𝑥𝐶𝑜𝑚𝑝𝑎𝑛𝑦′𝑠𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠
Exposures classified as CRE or Motor vehicles under the non-financial and other financial portfolio were excluded
from the estimation under the Business loan asset class as those are estimated separately.
Data Inputs:
i.
Outstanding amount: Relates to the gross carrying amount as of 31 December 2024 and 31 December
2023 from Group’s FINREP reporting system.
ii.
Customer’s equity and debt are not readily available in the Group’s database, therefore the total assets
were used to estimate financed emissions. The Group, given the lack of customer’s emission data, utilized
the PCAF emission factors per sector, per million of total assets, for Cyprus. The emission factors were
multiplied with outstanding amount to estimate GHG emissions. The Group introduced the ESG Due
Diligence process aiming to enhance the emission data in the future.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
242
Reporting principles (continued)
GHG Emission (continued)
Category 15 - Financed Emissions (continued)
2.
Asset Class - Residential Portfolio (Mortgages)
The estimation covers the absolute scope 1 and 2 emissions related to the energy use of the property financed
through the mortgage (energy use includes the energy consumed by the building occupant).
Residential (Mortgage) portfolio financed emissions (tCO2e) are estimated using the formula from the PCAF
standard (Chapter 5.5 Mortgages):
𝐹𝑖𝑛𝑎𝑛𝑐𝑒𝑑𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠=
𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔𝑎𝑚𝑜𝑢𝑛𝑡
𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦𝑣𝑎𝑙𝑢𝑒𝑎𝑡𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑡𝑖𝑜𝑛𝑥𝐵𝑢𝑖𝑙𝑑𝑖𝑛𝑔′𝑠𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠
Data inputs:
i.
The outstanding amount relates to the Gross Carrying Amount as of 31 December 2024 and 31
December 2023 as obtained from the Group FINREP reporting system.
ii.
Due to the fact that details of the financed property (market value, floor size, year of built) are not
currently available in the Group’s database, the collateral property details associated with each loan were
utilized assuming that collateral property with priority 1 collateral is the financed property which aligned
with the principles of the Lending Policy.
iii.
PCAF allows, in case the property value at origination is not available, the latest property value to be
used. The Group used the latest value of collateral property to estimate the attribution factor. In case the
latest property value was not available as well, the loan original amount was used to estimate the
attribution factor following communication with PCAF.
iv.
Building’s Emissions:
a.
Square metres: Obtained from Cyprus Department of Land and Surveys (DLS), by connecting
the collateral property to the DLS register.
b.
Year built: Obtained from Cyprus Department of Land and Surveys (DLS), by connecting the
collateral property to the DLS register.
c.
Energy Performance Certificate (EPC): EPC was obtained from the Cyprus Government’s EPC
database or directly through loan origination process documentation and stored in Group’s
database.
d.
For properties with no year built and loan account open date at least two years from the reporting
date, no emissions were estimated as those properties were assumed to be under construction,
which are not within PCAF standard’s scope.
e.
PCAF proxies utilised, in case actual EPC data was not available, for residential properties:
i.
Average Cyprus residential property proxies per EPC Category, per property;
ii.
Average Cyprus residential property proxies per EPC Category, per square metres;
iii.
Average Cyprus residential property proxy.
f.
Based on data available, per loan account, the financed property emissions were estimated and
multiplied with attribution factor.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
243
Reporting principles (continued)
GHG Emission (continued)
Category 15 - Financed Emissions (continued)
3.
Commercial Real Estate (CRE) portfolio
For property already built, financial institutions shall cover the absolute scope 1 and 2 emissions related to the
energy use of financed buildings during their operation. Energy use includes the energy consumed by the
building’s occupant and shared facilities.
CRE portfolio financed emissions (tCO2e) are estimated using the formula from the PCAF standard (Chapter 5.4
Commercial Real Estate):
𝐹𝑖𝑛𝑎𝑛𝑐𝑒𝑑𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠=
𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔𝑎𝑚𝑜𝑢𝑛𝑡
𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦𝑣𝑎𝑙𝑢𝑒𝑎𝑡𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑡𝑖𝑜𝑛𝑥𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦′𝑠𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠
Data inputs:
i.
The outstanding amount relates to the Gross Carrying Amount as of 31 December 2024 and 31
December 2023 as obtained from the Group FINREP reporting system.
ii.
Due to the fact that details of the financed property (market value, floor size, year of built) are not
currently available in the Group’s database, the collateral property details associated with each loan were
utilized assuming that collateral property with priority 1 collateral is the financed property which aligned
with the principles of the Lending Policy.
iii.
PCAF allows, in case the property value at origination is not available, the latest property value to be
used. The Group used the latest value of collateral property to estimate the attribution factor. In case the
latest property value was not available as well, the loan original amount was used to estimate the
attribution factor following communication with PCAF.
iv.
Building’s Emissions
a.
Square metres: Obtained from Cyprus Department of Land and Surveys (DLS), by connecting
the collateral property to the DLS register.
b.
Year built: Obtained from Cyprus Department of Land and Surveys (DLS), by connecting the
collateral property to the DLS register.
c.
Energy Performance Certificate (EPC): EPC was obtained from the Cyprus Government’s EPC
database or directly through loan origination process documentation and stored in Group’s
database. Trivial number of EPC were gathered for CREs.
d.
PCAF proxies utilized for CREs:
i.
Average Cyprus proxies per EPC Category, per property type;
ii.
Average Cyprus proxies per EPC Category, per square metres, per property type;
iii.
Average Cyprus non-residential property proxy.
e.
Based on data available, per loan account, the financed property emissions were estimated and
multiplied with attribution factor.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
244
Reporting principles (continued)
GHG Emission (continued)
Category 15 - Financed Emissions (continued)
4.
Motor Vehicles Portfolio
The Group estimated the scope 1 and scope 2 emissions of the vehicles being financed:
i.
Scope 1: Direct emissions from fuel combustion in vehicles
ii.
Scope 2: Indirect emissions from electricity generation consumed in electric vehicles (EVs) (hybrid and
fully EVs)
Motor Vehicles portfolio financed emissions (tCO2e) are estimated using the formula from the PCAF standard
(Chapter 5.6 Motor Vehicle Loans):
𝐹𝑖𝑛𝑎𝑛𝑐𝑒𝑑𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠= Σ
𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔𝑎𝑚𝑜𝑢𝑛𝑡
𝑇𝑜𝑡𝑎𝑙𝑣𝑎𝑙𝑢𝑒𝑎𝑡𝑜𝑟𝑖𝑔𝑖𝑛𝑎𝑡𝑖𝑜𝑛𝑥𝑉𝑒ℎ𝑖𝑐𝑙𝑒′𝑠𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠
Data Inputs:
i.
The outstanding amount relates to the Gross Carrying Amount as of 31 December 2024 and 31
December 2023 as obtained from the Group FINREP reporting system.
ii.
PCAF allows, in case the property value at origination is not available, the latest vehicle value to be
used. The Group used the latest value of collateral to estimate the attribution factor given that the
collateral vehicle is in the majority of cases the financed vehicle. In case the latest property value was
not available as well, the loan original amount was used to estimate the attribution factor following
communication with PCAF.
iii.
Vehicle emissions:
a.
Vehicles type (passenger, heavy truck etc.) was obtained from the collateral database.
b.
PCAF proxies utilized for CREs:
i.
Average Cyprus proxies per year ((kgCO2e/ year)
c.
For exposures with no collaterals the Group used an internal proxy using the emissions estimated
for the Motor vehicle portfolio with vehicle type data at collateral level.
5.
Corporate Bonds
This asset class includes all on-balance sheet listed corporate bonds that are traded on a market and are for
general corporate purposes (i.e., unknown use of proceeds as defined by the GHG Protocol).
The Group does not estimate the emissions from corporate bonds issued by Supranational companies due to lack
of data availability except in cases were public data is available.
The Group reports Scope 1, Scope 2 and Scope 3 GHG emissions of corporate bonds using PCAF standard and
proxies.
Corporate bond portfolio financed emissions (tCO2e) are estimated using the formula from the PCAF standard
(Chapter 5.1 Listed equity and corporate bonds):
For listed companies:
𝐹𝑖𝑛𝑎𝑛𝑐𝑒𝑑𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠= Σ
𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔𝑎𝑚𝑜𝑢𝑛𝑡
𝐸𝑛𝑡𝑒𝑟𝑝𝑟𝑖𝑠𝑒𝑉𝑎𝑙𝑢𝑒𝐼𝑛𝑐𝑙𝑢𝑑𝑖𝑛𝑔𝐶𝑎𝑠ℎ (𝐸𝑉𝐼𝐶) 𝑥𝐶𝑜𝑚𝑝𝑎𝑛𝑦′𝑠𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠
For bonds to private companies:
𝐹𝑖𝑛𝑎𝑛𝑐𝑒𝑑𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠= Σ
𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔𝑎𝑚𝑜𝑢𝑛𝑡
𝑇𝑜𝑡𝑎𝑙𝑒𝑞𝑢𝑖𝑡𝑦+ 𝑑𝑒𝑏𝑡𝑜𝑟𝑇𝑜𝑡𝑎𝑙𝑎𝑠𝑠𝑒𝑡𝑠𝑥𝐶𝑜𝑚𝑝𝑎𝑛𝑦′𝑠𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠
Data Inputs:
i.
The outstanding amount as of 31 December 2024 and 31 December 2023 obtained from the Group
FINREP reporting system.
ii.
The EVIC, Total equity + debt and the emissions of corporates are not currently available in the Group’s
database. Therefore, the Group applies total assets for the estimation of financed emissions.
iii.
Company’s emissions: The Group utilizes PCAF proxies, CO2 per million of euro of total assets, per
industry and per County to estimate the financed emissions associated with Corporate Bond portfolio.
The outstanding amount was multiplied with the PCAF proxies to estimate financed emissions.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
245
Reporting principles (continued)
GHG Emission (continued)
Category 15 - Financed Emissions (continued)
6.
Sovereign Bonds
This asset class includes sovereign bonds and sovereign loans of all maturities issued in domestic or foreign
currencies. Sovereign debt is typically issued by the central government or treasury.
The Group reports gross Scope 1, domestic emissions from sources located within the country territory.
Sovereign bond portfolio financed emissions (tCO2e) are estimated using the formula from the PCAF standard
(Chapter 5.7 Sovereign Debt):
𝐹𝑖𝑛𝑎𝑛𝑐𝑒𝑑𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠=
𝐸𝑥𝑝𝑜𝑠𝑢𝑟𝑒𝑡𝑜𝑆𝑜𝑣𝑒𝑟𝑒𝑖𝑔𝑛𝐵𝑜𝑛𝑑 (𝑈𝑆𝐷)
𝑃𝑃𝑃−𝑎𝑑𝑗𝑢𝑠𝑡𝑒𝑑𝐺𝐷𝑃 (𝐼𝑛𝑡𝑒𝑟𝑛𝑎𝑡𝑖𝑜𝑛𝑈𝑆𝐷) 𝑥𝑆𝑜𝑣𝑒𝑟𝑒𝑖𝑔𝑛𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠 (𝑡𝐶𝑂2𝑒)
Data inputs:
i.
Exposure to Sovereign Bond as of 31 December 2024 and 31 December 2023 obtained from the Group
FINREP reporting system.
ii.
Purchasing power parity adjusted GDP is obtained from World Bank (latest available data relate to
2023).
iii.
Sovereign emissions obtained from the GHG Profiles per Country United Nations Climate Change
Convention (UNFCCC) (latest available data relate to 2021).
An emission factor was created using the PPP- adjusted GDP (International USD) of 2021 and Country emission
inventory which was applied to the exposure as at 31 December 2024.
7.
Insurance-Associate GHG emissions
The Group applies the PCAF methodology and proxies to estimate the insurance associated GHG emissions
resulting from the general insurance contracts issued by the Group. PCAF provides guidance on the estimation of
emission on certain lines of business. Specifically, Commercial lines and Personal motor lines portfolios.
Insurance contracts - Commercial line portfolios
Commercial line portfolio emissions (tCO2e) are estimated using the formula from the PCAF standard (Insurance-
Associated emissions Chapter 5.2 Emissions associated with commercial lines portfolios):
𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒𝑎𝑠𝑠𝑜𝑐𝑖𝑎𝑡𝑒𝑑𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠= 𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒𝑝𝑟𝑒𝑚𝑖𝑢𝑚
𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑟𝑒𝑣𝑒𝑛𝑢𝑒𝑥𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠
Data Inputs:
i.
The Insurance premium for the year ended 31 December 2024 obtained from the Group’s reporting
system.
ii.
The customer’s revenue and emissions are not available in the Group’s database. Therefore, the PCAF
proxy per customer’s revenue, per sector was utilized to estimate customer’s emissions (PCAF proxy
multiplied by customer’s revenue), leading to the following equation to estimate insurance associated
GHG emissions.
𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒𝑎𝑠𝑠𝑜𝑐𝑖𝑎𝑡𝑒𝑑𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠= 𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒𝑝𝑟𝑒𝑚𝑖𝑢𝑚𝑥𝑃𝐶𝐴𝐹𝑝𝑟𝑜𝑥𝑦
The following table summarizes the lines that, at the moment, are out of scope of PCAF standard.
Segment
Line of Business (LoBs)
Commercial insurance
Structured trade credit
Surety
Engineering lines: Construction all-risk, erection all-
risk only
Corporate life and pensions, personal accident
Personal lines
Liability
Property
Travel assistance
Life and Health
Treaty reinsurance
All LoBs
Facultative reinsurance
All LoBs
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Sustainability Statement - Additional Information
246
Reporting principles (continued)
GHG Emission (continued)
Category 15 - Financed Emissions (continued)
7.
Insurance-Associate GHG emissions (continued)
Insurance contracts – Motor line portfolios
The Group estimated and reports the insurance-associated GHG emissions of the annual emissions of the vehicles
being insured as:
i.
Scope 1: Direct emissions from fuel combustion in vehicles;
ii.
Scope 2: Indirect emissions from electricity generation consumed in plug-in hybrid vehicles and electric
vehicles.
Personal motor line portfolio emissions (tCO2e) are estimated using the formula from the PCAF standard
(Insurance-Associated emissions Chapter 5.3 Emissions associated with personal motor portfolios):
𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒𝑎𝑠𝑠𝑜𝑐𝑖𝑎𝑡𝑒𝑑𝑒𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠
= 𝐼𝑛𝑠𝑢𝑟𝑎𝑛𝑐𝑒𝑖𝑛𝑑𝑢𝑠𝑡𝑟𝑦′𝑠𝑡𝑜𝑡𝑎𝑙𝑝𝑟𝑒𝑚𝑖𝑢𝑚𝑓𝑟𝑜𝑚𝑡ℎ𝑒𝑚𝑜𝑡𝑜𝑟𝑙𝑖𝑛𝑒𝑜𝑓𝑏𝑢𝑠𝑖𝑛𝑒𝑠𝑠
𝑇𝑜𝑡𝑎𝑙𝑐𝑜𝑠𝑡𝑠𝑎𝑠𝑠𝑜𝑐𝑖𝑎𝑡𝑒𝑑𝑤𝑖𝑡ℎ 𝑣𝑒ℎ𝑖𝑐𝑙𝑒𝑜𝑤𝑛𝑒𝑟𝑠ℎ𝑖𝑝𝑜𝑓𝑎𝑙𝑙𝑣𝑒ℎ𝑖𝑐𝑙𝑒𝑠
𝑥𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠𝑜𝑓𝑖𝑛𝑠𝑢𝑟𝑒𝑑𝑣𝑒ℎ𝑖𝑐𝑙𝑒𝑠𝑤
Data Inputs:
i.
The Insurance industry’s total premium and total costs associated with vehicles for the year
ended 31 December 2024 are not currently available. The Group utilised the global weighted average
(Industry) attribution factor (6.99%) used to determine the percentage of cost of insurance. This factor
is calculated using consumer price index (CPI) data, which reflects the relative importance of insurance
cost based on their share in total household consumption
ii.
Emissions of insured vehicles are estimated using average PCAF emission factors for Scope 1 and
Scope 2 emission (kgCO2/ year) for Cyprus, per vehicle type and fuel type.
247
Independent Auditor’s Report
To the Members of Bank of Cyprus Public Company Limited
Report on the Audit of the Consolidated Financial Statements
Our opinion
In our opinion, the accompanying consolidated financial statements of Bank of Cyprus Public Company Limited (the
“Company”) and its subsidiaries (together the “Group”) give a true and fair view of the consolidated financial position of
the Group as at 31 December 2024, and of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with IFRS Accounting Standards as adopted by the European Union and the
requirements of the Cyprus Companies Law, Cap. 113.
What we have audited
We have audited the consolidated financial statements which are presented in pages 258 to 446 and comprise:
●
the Consolidated Balance Sheet as at 31 December 2024;
●
the Consolidated Income Statement for the year then ended;
●
the Consolidated Statement of Comprehensive Income for the year then ended;
●
the Consolidated Statement of Changes in Equity for the year then ended;
●
the Consolidated Statement of Cash Flows for the year then ended; and
● the Notes to the Consolidated Financial Statements, which include a summary of accounting policies.
The financial reporting framework that has been applied in the preparation of the consolidated financial statements is
IFRS Accounting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law,
Cap. 113.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group throughout the period of our appointment in accordance with the
International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code) together with the ethical requirements that are
relevant to our audit of the consolidated financial statements in Cyprus and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code.
248
Our audit approach
Overview
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
consolidated financial statements. In particular, we considered where the Board of Directors made subjective
judgements; for example, in respect of significant accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of
management override of internal controls, including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
● Overall group materiality: €27,7 million, which represents
approximately 5% of the Group’s profit before tax as presented on
the Consolidated Income Statement by line item ‘Profit before tax’.
•
We audited the complete financial information of Bank of Cyprus
Public Company Limited which is the main trading entity of the
Group, and assessed as the only significant component of the Group.
•
For centralised activities and non-significant components, further
audit procedures have been performed.
We have identified the following key audit matters:
● Impairment of loans and advances to customers.
● Provisions for pending litigation and claims.
● Valuation of stock of properties.
● Privileged user access over financial reporting systems.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable
assurance whether the consolidated financial statements are free from material misstatement. Misstatements may arise
due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the
overall group materiality for the consolidated financial statements as a whole as set out in the table below. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent
of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the
consolidated financial statements as a whole.
249
Overall group materiality
€27,7 million.
How we determined it
Based on approximately 5% of the Group’s profit before tax as
presented on the Consolidated Income Statement by line item
‘Profit before tax’.
Rationale for the
materiality benchmark
applied
We chose profit before tax as the benchmark, because in our
view, this is a metric against which the recurring performance
of the Group is commonly measured to assess its performance.
We chose 5%, which is within the range of acceptable
quantitative materiality thresholds in auditing standards.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
€1,385 thousand as well as misstatements below that amount that, in our view, warranted reporting for qualitative
reasons.
How we tailored our group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the
consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes
and controls, and the industry in which the Group operates.
Bank of Cyprus Public Company Limited is the parent of a group of companies. The financial information of this Group
is included in the consolidated financial statements of Bank of Cyprus Public Company Limited.
Considering our ultimate responsibility for the opinion on the Group’s consolidated financial statements we are
responsible for the direction, supervision and review of the group audit. In this context, we tailored the scope of our
audit and determined the nature and extent of the audit procedures for the components of the Group to ensure that we
perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking
into account the structure of the Group, the significance and/or risk profile of the group entities or activities, the
accounting processes and controls, and the industry in which the Group operates.
The Group’s activities mainly consist of banking operations, which are primarily in Cyprus. These are carried out by
Bank of Cyprus Public Company Limited, which is the main trading entity of the Group and for which full scope audit
procedures were performed based on its financial significance and risk of material misstatement to the Group financial
statements. For centralised activities and non-significant components, further audit procedures have been performed
so as to ensure we obtained sufficient audit evidence on individual financial statement line items.
250
Where the work was performed by component auditors, we as group auditors determined the level of involvement we
needed to have in the audit work of those components to be able to conclude whether sufficient appropriate audit
evidence had been obtained as a basis for our opinion on the consolidated financial statements as a whole. Our
involvement in that work included, amongst others, the instructing of the component auditors with respect to matters
pertaining to the risk assessment process as well as our review of detailed memorandums prepared by the component
auditors delineating the results of audit procedures performed. Further, on the basis of frequent communications with
component audit teams in relation to the nature, timing and extent of the work impacting the Group audit opinion we
ensured that our audit plan was appropriately executed. The group consolidation and consolidated financial statement
disclosures are audited by the group engagement team.
By performing the procedures above at component level, combined with the additional procedures at group level, we
have obtained sufficient and appropriate audit evidence regarding the consolidated financial information of the Group
as a whole to provide a basis for our audit opinion on the consolidated financial statements.
Key audit matters incorporating the most significant risks of material misstatements, including
assessed risk of material misstatements due to fraud
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key Audit Matter
How our audit addressed the Key Audit
Matter
Impairment of loans and advances to
customers
Refer to Note 2.17 “Impairment of financial assets”
within Note 2 “Summary of accounting policies”, Note
5.1 “Calculation of expected credit losses” within Note
5 “Significant and other judgements, estimates and
assumptions", Note 23 “Loans and advances to
customers” and Note 44 “Risk management – Credit
risk”.
The Group has developed complex models to calculate
expected credit losses (“ECL”) on its loans and
advances to customers. Impairment provisions are
calculated on a collective basis for portfolios of loans
of similar credit risk characteristics and on an
individual basis for loans that are individually
significant or which meet specific criteria determined
by management.
We understood and evaluated the design of the
overall control framework relevant to the
measurement of impairment of loans and advances
to customers and tested the operating effectiveness
of key controls across processes relevant to the
calculation of ECL.
We assessed the appropriateness of the key
assumptions used in the methodologies and
collective ECL model developed by the Group and
their compliance with the requirements of IFRS 9.
251
We determined this to be a key audit matter due to the
greater levels of management judgement exercised in
the following areas:
•
Methodology and model changes;
•
Estimation uncertainty with respect to the future
cash flows of Stage 3 individually assessed
exposures;
•
The application of staging requirements to
identify a ‘significant increase in credit risk’ and
specifically in relation to the quantitative
thresholds and qualitative criteria used for
manual intervention; and
•
Incorporation of forward-looking economic
scenarios and the related inputs, assumptions and
probability weights assigned to multiple economic
scenarios as used by the Group.
We challenged the appropriateness and application
of the qualitative criteria used to assess significant
increase in credit risk in accordance with IFRS 9.
We assessed the quantitative thresholds and other
triggers identified by management to determine the
appropriate staging of loans within Stages 1, 2 or 3
and tested, on a sample basis, the allocation of
loans and advances to customers to Stages 1, 2 or 3
with reference to those thresholds and/or triggers.
We compared, with the assistance of PwC credit
risk experts, the forward-looking macroeconomic
assumptions used in the base, favourable and
adverse scenarios to publicly available information.
We also assessed the reasonableness of the adverse
and favourable assumptions together with the
scenario-weightings applied by management.
We tested, with the assistance of PwC credit risk
experts, the assumptions, inputs and formulas used
in the calculation of collective ECL. This included
considering the appropriateness of the collective
ECL model methodology (including changes in the
current year) and challenging the assumptions used
(e.g., Exposure at Default, Loss Given Default and
Probability of Default).
We tested the completeness and accuracy of data
inputs to the collective ECL model on a sample
basis.
We tested the mathematically accuracy of the
calculation of the collective ECL.
We evaluated the Group’s individual loan
impairment assessments for a sample of Stage 3
exposures for compliance with IFRS 9
requirements; significant data inputs were tested
with reference to appropriate supporting
documentation, such as collateral valuations and
Land Registry records.
We evaluated the appropriateness of the Group's
disclosures particularly in relation to significant
judgements and estimates.
We concluded that the methodologies and
judgements used by management in determining
the impairment of loans and advances to customers
were reasonable.
252
Provision for pending litigation and claims
Refer to Note 2.35 “Provisions for pending litigation,
claims, regulatory and other matters” within Note 2
“Summary of accounting policies”, Note 5.3
"Provisions for pending litigation and claims, within
Note 5 “Significant and other judgements, estimates
and assumptions” and Note 38 “Provisions for
pending litigation, claims, regulatory and other
matters”.
The Group is subject to various legal claims,
investigations and other proceedings. Provisions for
pending litigation, claims, regulatory and other
matters amounted to c.€93 million as at 31 December
2024, of which c.€69 million amounts to provisions
for pending litigation and claims.
Management together with the Group’s compliance
and legal departments and, where necessary, the risk
management department, review all existing and
potential legal cases, prepare an assessment of
potential outcomes for cases assessed individually and
collectively, and evaluate the probability of economic
outflow from the Group.
We determined this to be a key audit matter as the
recognition and measurement of provisions in respect
of pending litigation and claims requires a significant
level of judgement by management. The judgements
relate to the probability of obligating events requiring
an outflow of resources to settle the obligation and
estimation of the extent of any economic outflow.
We obtained an understanding of and evaluated the
design of controls relevant to the recognition and
measurement of pending litigation and claims. We
tested the operating effectiveness of controls we
sought to place reliance on.
We tested a risk based sample of management's
assessment of individual cases, including whether
economic outflow was assessed as probable. We
assessed management's provisions against
information contained in case files, information
obtained from external legal advisors and where
applicable post year end information.
Where deemed necessary, we confirmed case facts
and judgements with external legal advisors. For a
sample of cases where management assessed
economic outflow as probable, and therefore a
provision was recorded, we recalculated the
provision and performed sensitivity analysis on key
assumptions used by management.
We understood the basis of management’s
collective provisions, in circumstances where these
are applied, assessed the key assumptions used by
reference to past experience and recalculated
provisions booked. We inspected the minutes of
meetings of the Board of Directors and certain of its
committees for evidence of any unidentified legal
cases or relevant developments in current cases,
including the minutes of the Settlement of Legal
Cases Committee.
We evaluated whether the disclosures made
addressed significant uncertainties and assessed
their adequacy against the relevant accounting
standards for both provisions and contingencies as
at 31 December 2024.
Based on evidence obtained, while noting the
inherent uncertainty in such matters, we concluded
that the recorded provisions for pending litigation
and claims were reasonable.
253
Valuation of stock of properties
Refer to Note 2.28 “Stock of property”, within Note 2
“Summary of accounting policies”, Note 5.2 “Stock of
property - estimation of net realisable value” within
Note 5 “Significant and other judgements, estimates
and assumptions" and Note 27 “Stock of property”.
The Group has, over the years, acquired a significant
number of properties as a result of restructuring
agreements with customers. These properties are
accounted for as stock of property and measured at
the lower of their cost or net realisable value in
accordance with IAS 2.
Valuations obtained from external valuers and the
holding periods for assets are key inputs to determine
the appropriate carrying value.
We determined this to be a key audit matter in light of
the large volume of properties held and the
uncertainty around market conditions when
estimating the carrying amount.
We understood and evaluated the design of the
overall control framework relevant to repossessed
properties and tested the operating effectiveness of
key controls around their valuation.
We focused on the key inputs and assumptions
underlying the valuation of the properties. We
evaluated the competence, capability and
objectivity of management’s external experts
(property valuers). For a sample of external
valuation reports, we assessed the methodology
and assumptions used with the assistance of PwC
valuation experts, where relevant. We tested the
accuracy of the application by management of
illiquidity discounts for a sample of properties held
at year end.
For a sample of properties acquired during the
year, we tested ‘cost’ by reference to signed ‘debt-
for-asset’ agreements entered into with borrowers,
and we tested the ‘net realisable value’ at year end
by reference to external valuation reports.
We performed look-back procedures by comparing
the price achieved for disposals during 2025 to the
carrying values for those assets at 31 December
2024.
We evaluated whether the disclosures address
significant judgements and estimates and assessed
their adequacy against the relevant accounting
standards.
We concluded that estimates used by management
in determining the carrying amount of stock of
property were reasonable.
Privileged user access over financial reporting
systems
The Group’s financial reporting is reliant on a number
of complex IT systems, some of which have been in
place for a number of years and which are inherently
complex.
With the assistance of PwC IT audit specialists, we
obtained an understanding of the Group’s IT
environment and changes made during the
financial year. We evaluated the design and tested
the operating effectiveness of those IT General
Controls (ITGCs) on IT systems that support
financial reporting.
254
Privileged user access management controls are an
integral part of the IT environment to ensure both
system access and changes made to systems are
authorised and appropriate. In the context of our
audit scope, we consider privileged user access
management controls contribute to mitigating the risk
of potential fraud or error and an integral part of our
audit testing is the effectiveness of the privilege user
access management controls.
We determined privileged user access to be a key
audit matter as our audit approach relies on IT
dependent controls and data.
We performed testing on the design,
implementation and operating effectiveness of IT
General Controls (ITGCs) over privileged user
access provisioning, revocation, recertification and
authentication.
Where control deficiencies were identified we
considered the mitigating controls in place and/or
performed additional substantive audit procedures.
Having completed the additional audit procedures
we concluded that we obtained sufficient evidence
for the purpose of our audit.
Reporting on other information
The Board of Directors is responsible for the other information. The other information comprises the information
included in the Forward Looking Statements and Notes, Management Report of Bank of Cyprus Public Company
Limited, Risk and Capital Management Report, Sustainability Statement, Alternative Performance Measures
Disclosures and Additional Information - EU Taxonomy Disclosure Tables, but does not include the consolidated
financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors and those charged with governance for the Consolidated
Financial Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and
fair view in accordance with IFRS Accounting Standards as adopted by the European Union and the requirements of
the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary
to enable the preparation of consolidated financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
255
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
●
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
●
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
●
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Board of Directors.
●
Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
●
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events in
a manner that achieves a true and fair view.
●
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the Group as a basis for forming an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and review of the audit work performed for
purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
256
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters.
Report on Other Legal and Regulatory Requirements
Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in
our Independent Auditor’s Report, which is required in addition to the requirements of International Standards on
Auditing.
Appointment of the Auditor and Period of Engagement
We were first appointed as auditors of the Group on 2 April 2019 by the shareholder of the Company through an
extraordinary general meeting for the audit of the consolidated financial statements for the year ended 31 December
2019. Our appointment has been renewed annually by shareholder resolution representing a total period of
uninterrupted engagement appointment of 6 years.
Consistency of the Additional Report to the Audit Committee
We confirm that our audit opinion on the consolidated financial statements expressed in this report is consistent with
the additional report to the Audit Committee of the Company, which we issued on 26 March 2025 in accordance with
Article 11 of the EU Regulation 537/2014.
Provision of Non-audit Services
We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72
of the Auditors Law of 2017 were provided. In addition, there are no non- audit services which were provided by us to
the Group and which have not been disclosed in the consolidated financial statements or the Management Report of
Bank of Cyprus Public Company Limited .
Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
●
In our opinion, based on the work undertaken in the course of our audit, the Management Report of Bank of
Cyprus Public Company Limited has been prepared in accordance with the requirements of the Cyprus
Companies Law, Cap. 113, and the information given is consistent with the consolidated financial statements.
●
In light of the knowledge and understanding of the Group and its environment obtained in the course of the
audit, we are required to report if we have identified material misstatements in the Management Report of
Bank of Cyprus Public Company Limited . We have nothing to report in this respect.
257
Other Matter
This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance
with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no other purpose.
We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose
knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor’s report is Anna Loizou.
Anna Loizou
Certified Public Accountant and Registered Auditor
for and on behalf of
PricewaterhouseCoopers Limited
Certified Public Accountants and Registered Auditors
PwC Central, 43 Demostheni Severi Avenue
CY-1080 Nicosia, Cyprus
26 March 2025
Consolidated Financial Statements 2024
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Consolidated Financial Statements
for the year ended 31 December 2024
Contents
Page
Page
Consolidated Income Statement
260
Consolidated Statement of Comprehensive Income
261
Consolidated Balance Sheet
262
Consolidated Statement of Changes in Equity
263
Consolidated Statement of Cash Flows
265
Notes to the Consolidated Financial Statements
1.
Corporate information
267
2.
Summary of accounting policies
267
2.1
Basis of preparation
267
2.2
Accounting policies and changes in accounting
policies and disclosures
268
2.3
Standards and Interpretations that are issued but
not yet effective
269
2.4
Basis of consolidation
270
2.5
Foreign currency translation
271
2.6
Segment reporting
271
2.7
Turnover
272
2.8
Revenue from contracts with customers
272
2.9
Recognition of interest income/expense and
income/expense similar to interest
274
2.10
Employee benefits
275
2.11
Tax
275
2.12
Financial instruments - initial recognition
276
2.13
Classification and measurement of financial assets
and financial liabilities
277
2.14
Reclassification of financial assets and liabilities
282
2.15
Derecognition of financial assets and financial
liabilities
282
2.16
Modification of financial assets
282
2.17
Impairment of financial assets
283
2.18
Write-offs
290
2.19
Financial guarantees, letters of credit and undrawn
loan commitments
291
2.20
Offsetting financial instruments
291
2.21
Hedge accounting
291
2.22
Cash and cash equivalents
292
2.23
Insurance business
292
2.24
Repurchase and reverse repurchase agreements
296
2.25
Leases
296
2.26
Property and equipment
298
2.27
Investment properties
298
2.28
Stock of property
299
2.29
Non-current assets held for sale and discontinued
operations
299
2.30
Intangible assets
300
2.31
Share capital
300
2.32
Share-based compensation plans
301
2.33
Other equity instruments
301
2.34
Dividends on ordinary shares
301
2.35
Provisions for pending litigation, claims, regulatory
and other matters
301
2.36
Business combinations
302
3.
Going concern
302
4.
Economic and geopolitical environment
302
5.
Significant and other judgements, estimates and
assumptions
303
6.
Segmental analysis
316
7.
Interest income and income similar to interest income
323
8.
Interest expense and expense similar to interest expense
324
9.
Fee and commission income and expense
324
10.
Net foreign exchange gains
325
11.
Net gains on financial instruments
325
12.
Net insurance result
326
13.
Other income
328
14.
Staff costs
329
15.
Other operating expenses
337
16.
Credit losses on financial assets and impairment net of
reversals on non-financial assets
339
17.
Income tax
340
18.
Earnings per share
343
19.
Cash, balances with central banks and loans and advances
to banks
343
20.
Investments
344
21.
Derivative financial instruments
349
22.
Fair value measurement
354
23.
Loans and advances to customers
362
24.
Life insurance business assets attributable to
policyholders
364
25.
Property and equipment
366
26.
Intangible assets
367
27.
Stock of property
368
28.
Prepayments, accrued income and other assets
369
29.
Funding from central banks
370
30.
Customer deposits
371
31.
Insurance and reinsurance contracts
372
32.
Debt securities in issue and Subordinated liabilities
374
33.
Accruals, deferred income, other liabilities and other
provisions
376
34.
Share capital
376
35.
Distributions
377
36.
Retained earnings
378
37.
Fiduciary transactions
378
38.
Provisions for pending litigation, claims, regulatory and
other matters
378
39.
Contingent liabilities and commitments
383
40.
Additional information on cash flow statement
383
41.
Cash and cash equivalents
384
42.
Leases
385
43.
Analysis of assets and liabilities by expected maturity
386
44.
Risk management - Credit risk
387
45.
Risk management - Market risk
414
46.
Risk management - Liquidity and funding risk
421
47.
Risk management - Insurance risk
429
48.
Capital management
431
49.
Related party transactions
433
50.
Group companies
441
51.
Investments in associates and joint venture
443
52.
Offsetting financial assets and liabilities
443
53.
Country by country reporting
445
54.
Events after the reporting period
446
259
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Consolidated Income Statement
for the year ended 31 December 2024
2024
2023
Notes
€000
€000
Interest income
7
1,000,135
931,407
Income similar to interest income
7
10,163
12,792
Interest expense
8
(186,885)
(149,714)
Expense similar to interest expense
8
(1,289)
(1,293)
Net interest income
822,124
793,192
Fee and commission income
9
184,418
188,343
Fee and commission expense
9
(7,475)
(7,320)
Net foreign exchange gains
10
27,285
28,588
Net gains on financial instruments
11
10,672
12,780
Net (losses)/gains on derecognition of financial assets measured at amortised cost
(13)
6,361
Net insurance finance income/(expense) and net reinsurance finance income/(expense)
12
(3,907)
960
Net insurance service result
12
76,791
73,528
Net reinsurance service result
12
(26,693)
(21,000)
Net (losses)/gains from revaluation and disposal of investment properties
(1,430)
1,043
Net gains on disposal of stock of property
27
216
8,972
Other income
13
14,381
18,337
Total operating income
1,096,369
1,103,784
Staff costs
14
(203,062)
(192,266)
Special levy on deposits and other levies/contributions
15
(39,115)
(42,380)
Provisions for pending litigation, claims, regulatory and other matters (net of reversals)
38
(11,775)
(28,464)
Other operating expenses
15
(161,876)
(158,545)
Operating profit before credit losses and impairment
680,541
682,129
Credit losses on financial assets
16
(31,797)
(79,830)
Impairment net of reversals on non-financial assets
16
(56,040)
(46,852)
Profit before tax
592,704
555,447
Income tax
17
(81,128)
(72,938)
Profit after tax for the year
511,576
482,509
Attributable to:
Owners of the Company
510,621
480,772
Non-controlling interests
955
1,737
Profit for the year
511,576
482,509
Basic and diluted profit per share attributable to the owners of the Company (€
cent)
18
5.32
5.01
260
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2024
2024
2023
Notes
€000
€000
Profit for the year
511,576
482,509
Other comprehensive income (OCI)
OCI that may be reclassified in the consolidated income statement
in subsequent periods
(5,011)
2,975
Fair value reserve (debt instruments)
(5,028)
3,069
Net (losses)/gains on investments in debt instruments measured at fair
value through OCI (FVOCI)
(5,028)
3,401
Transfer to the consolidated income statement on disposal
-
(332)
Foreign currency translation reserve
17
(94)
Profit/(loss) on translation of net investments in foreign subsidiaries
17
(81)
Loss on hedging of net investments in foreign subsidiaries
21
-
(13)
OCI not to be reclassified in the consolidated income statement in
subsequent periods
1,428
10,198
Fair value reserve (equity instruments)
1,070
(712)
Net gains/(losses) on investments in equity instruments designated at FVOCI
1,070
(712)
Property revaluation reserve
542
10,290
Net fair value gains before tax
25
522
13,524
Deferred tax credit/(charge)
17
20
(3,234)
Actuarial (losses)/gains on defined benefit plans
(184)
620
Remeasurement (losses)/gains on defined benefit plans
14
(184)
620
Other comprehensive (loss)/income for the year net of taxation
(3,583)
13,173
Total comprehensive income for the year
507,993
495,682
Attributable to:
Owners of the Company
507,060
493,721
Non-controlling interests
933
1,961
Total comprehensive income for the year
507,993
495,682
261
262
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Consolidated Statement of Changes in Equity
for the year ended 31 December 2024
Attributable to the owners of the Company
Share
capital
(Note 34)
Share
premium
(Note 34)
Other
capital
reserves
(Note 14)
Retained
earnings
(Note 36)
Property
revaluation
reserve
Financial
instruments
fair value
reserve
Foreign
currency
translation
reserve
Total
Other equity
instruments
(Note 34)
Non-
controlling
interests
Total
equity
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
1 January 2024
959,794
1,250
917
1,175,506
84,239
9,553
16,674
2,247,933
220,000
21,261
2,489,194
Profit for the year
-
-
-
510,621
-
-
-
510,621
-
955
511,576
Other comprehensive (loss)/income after tax for the year
-
-
-
(184)
564
(3,958)
17
(3,561)
-
(22)
(3,583)
Total comprehensive income/(loss) after tax for the year
-
-
-
510,437
564
(3,958)
17
507,060
-
933
507,993
Dividends (Note 35)
-
-
-
(136,590)
-
-
-
(136,590)
-
-
(136,590)
Share-based benefits - cost (Note 14)
-
-
932
-
-
-
-
932
-
-
932
Payment of coupon to AT1 holders (Note 34)
-
-
-
(26,125)
-
-
-
(26,125)
-
-
(26,125)
Dividends paid to non-controlling interest
-
-
-
-
-
-
-
-
-
(2,000)
(2,000)
Transfer to retained earnings
-
-
-
1,906
66
(1,972)
-
-
-
-
-
31 December 2024
959,794
1,250
1,849
1,525,134
84,869
3,623
16,691
2,593,210
220,000
20,194
2,833,404
263
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Consolidated Statement of Changes in Equity
for the year ended 31 December 2024
Attributable to the owners of the Company
Share
capital
(Note 34)
Share
premium
(Note 34)
Other
capital
reserves
(Note 14)
Retained
earnings
(Note 36)
Property
revaluation
reserve
Financial
instruments
fair value
reserve
Foreign
currency
translation
reserve
Total
Other
equity
instruments
(Note 34)
Non-
controlling
interests
Total
equity
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
1 January 2023
959,794
1,250
322
750,578
74,170
7,142
16,768
1,810,024
220,000
22,300
2,052,324
Profit for the year
-
-
-
480,772
-
-
-
480,772
-
1,737
482,509
Other comprehensive income/(loss) after tax for the year
-
-
-
620
10,066
2,357
(94)
12,949
-
224
13,173
Total comprehensive income/(loss) after tax for the year
-
-
-
481,392
10,066
2,357
(94)
493,721
-
1,961
495,682
Shared-based benefits-cost (Note 14)
-
-
595
-
-
-
-
595
-
-
595
Dividends (Note 35)
-
-
-
(22,310)
-
-
-
(22,310)
-
-
(22,310)
Payment of coupon to AT1 holders (Note 34)
-
-
-
(27,339)
-
-
-
(27,339)
-
-
(27,339)
Dividends paid to non-controlling interests
-
-
-
-
-
-
-
-
-
(3,000)
(3,000)
Issue of other equity instruments (Note 34)
-
-
-
-
-
-
-
-
220,000
-
220,000
Repurchase of other equity instruments (Note 34)
-
-
-
(6,820)
-
-
-
(6,820)
(220,000)
-
(226,820)
Transfers to the consolidated income statement
-
-
-
-
62
-
-
62
-
-
62
Transfers to retained earnings
-
-
-
5
(59)
54
-
-
-
-
-
31 December 2023
959,794
1,250
917
1,175,506
84,239
9,553
16,674
2,247,933
220,000
21,261
2,489,194
264
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Consolidated Statement of Cash Flows
for the year ended 31 December 2024
2024
2023
Note
€000
€000
Profit before tax
592,704
555,447
Adjustments for:
Depreciation of property and equipment and amortisation of intangible assets
36,171
34,253
Impairment net of reversals on non-financial assets
56,040
46,852
Credit losses on financial assets
31,797
79,830
Net gains on derecognition of financial assets measured at amortised cost
13
(6,361)
Amortisation of discounts/premiums and interest on debt securities
(102,975)
(64,185)
Dividend income
(183)
(856)
Net loss on disposal of investment in debt securities measured at FVOCI
-
438
Loss/(gain) from revaluation of financial instruments designated as fair value hedges
40,312
(1,655)
Interest on subordinated liabilities and debt securities in issue
64,310
39,409
Interest on reverse repurchase agreements
(27,012)
(3,219)
Interest on funding from central banks
21,842
67,194
Share-based benefits cost
14
932
595
Net gains on disposal of stock of property and investment properties
(1,225)
(11,400)
Profit on sale and write offs of property and equipment and intangible assets
(28)
(53)
Interest expense on lease liability
493
1,453
Premium tax included in net insurance service result as directly attributable expense
2,558
2,222
Net losses from revaluation of investment properties
2,439
1,385
Net exchange differences
(18,135)
7,966
700,053
749,315
Change in:
Loans and advances to banks
(430,577)
(30,478)
Deposits by banks
(107,325)
(36,102)
Obligatory balances with central banks
(58,523)
55,358
Balances with central banks for ancillary services
(47,390)
-
Customer deposits
1,189,968
340,561
Life insurance business assets attributable to policyholders and Insurance contract liabilities
(38,285)
(46,448)
Loans and advances to customers
(380,944)
55,619
Prepayments, accrued income and other assets
91,995
65,697
Provisions for pending litigation, claims, regulatory and other matters
(38,883)
3,129
Accruals, deferred income, other liabilities and other provisions
64,982
56,143
Derivative financial instruments
(57,534)
(1,091)
Investments measured at FVPL
(1,354)
54,934
Stock of property
152,450
132,979
1,038,633
1,399,616
Tax paid
(28,542)
(20,135)
Net cash from operating activities
1,010,091
1,379,481
Cash flows from investing activities
Purchases of debt securities, treasury bills and equity securities
(1,433,813)
(1,557,117)
Purchase of reverse repurchase agreements
(600,000)
(400,000)
Proceeds on disposal/redemption of investments in debt and equity securities
834,618
555,666
Interest received from debt securities
66,125
36,334
Interest received from reverse repurchase agreements
20,032
-
Dividend income from equity securities
183
856
Payment for purchase of Velocity 2
-
(3,649)
Purchases of property and equipment
25
(21,055)
(7,454)
Additions to intangible assets
26
(19,736)
(14,949)
Proceeds on disposal of property and equipment and intangible assets
44
77
Proceeds on disposal of investment properties
24,622
9,924
Net cash used in investing activities
(1,128,980)
(1,380,312)
265
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Consolidated Statement of Cash Flows
for the year ended 31 December 2024
2024
2023
Note
€000
€000
Cash flow from financing activities
Payment of coupon to AT1 holders
34
(26,125)
(27,339)
Issue of other equity instruments (net of transaction costs)
34
-
220,000
Repurchase of other equity instruments
34
-
(226,820)
Repayment of funding from central banks
(2,065,710)
-
Proceeds from the issue of debt securities in issue (net of transaction costs)
297,767
347,689
Dividend paid on ordinary shares
(136,590)
(22,310)
Interest on subordinated liabilities
(19,875)
(19,875)
Interest on debt securities in issue
(33,313)
(7,500)
Principal elements of lease payments
(9,741)
(7,846)
Dividend paid by subsidiaries to non-controlling interests
(2,000)
(3,000)
Net cash (used in)/from financing activities
(1,995,587)
252,999
Net (decrease)/increase in cash and cash equivalents
(2,114,476)
252,168
Cash and cash equivalents 1 January
9,838,321
9,586,153
Cash and cash equivalents 31 December
41
7,723,845
9,838,321
Additional information on the cash flow statement is provided in Note 40.
266
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
1.
Corporate information
Bank of Cyprus Public Company Limited (the 'Company') is the holding company of Bank of Cyprus Group
(the 'Group'). The principal activities of the Group involve the provision of banking services, financial
services, insurance services and the management and disposal of property predominately acquired in
exchange of debt.
The Company is a significant credit institution for the purposes of the SSM Regulation and has been
designated by the CBC as an 'Other Systemically Important Institution' (O-SII). The Group is subject to
joint supervision by the ECB and the CBC for the purposes of its prudential requirements.
The Company is a limited liability company incorporated in 1930 under the Cyprus Companies Law.
The shares of the parent company Bank of Cyprus Holding Public Limited Company (‘BOCH’), a company
incorporated in Ireland, are listed and trading on the Cyprus Stock Exchange (CSE) and from 23 September
2024 the shares of BOCH are also listed and trading on the Athens Stock Exchange (ATHEX). During the
year until 19 September 2024 the shares of BOCH were also listed and trading on London Stock Exchange
(LSE). On 19 September 2024, BOCH's shares were delisted and trading was suspended from the LSE.
The Consolidated Financial Statements are available at the Company’s registered office (51 Stassinos
Street, Ayia Paraskevi, 2002 Strovolos, Nicosia, Cyprus) and on the Group's website www.bankofcyprus.com
(Group/Investors Relations/Financial Results) (the Group's website).
The Annual Financial Report of Bank of Cyprus Holdings Public Limited Company Group (BOCH Group) is
available on the Group's website.
Consolidated Financial Statements
The Consolidated Financial Statements of the Company for the year ended 31 December 2024 (the
Consolidated Financial Statements) were authorised for issue by a resolution of the Board of Directors on 26
March 2025.
2.
Summary of accounting policies
2.1
Basis of preparation
The Consolidated Financial Statements have been prepared on a historical cost basis, except for properties
held for own use and investment properties, investments at fair value through other comprehensive income
(FVOCI), financial assets (including loans and advances to customers and investments) at fair value through
profit or loss (FVPL) and derivative financial assets and derivative financial liabilities that have been
measured at fair value, non-current assets held for sale measured at fair value less costs to sell and stock of
property measured at net realisable value where this is lower than cost. The carrying values of recognised
assets and liabilities that are hedged items in fair value hedges, and otherwise carried at cost, are adjusted
to record changes in fair value attributable to the risks that are being hedged.
Statement of compliance
The Consolidated Financial Statements have been prepared in accordance with IFRS Accounting Standards
as adopted by the European Union (EU) and with the requirements of the Cyprus Companies Law, Cap 113.
Presentation of the Consolidated Financial Statements
The Consolidated Financial Statements are presented in Euro (€) and all amounts are rounded to the
nearest thousand, except where otherwise indicated. A comma is used to separate thousands and a dot is
used to separate decimals.
The Group presents its balance sheet broadly in order of liquidity. An analysis regarding expected recovery
or settlement of assets and liabilities within twelve months after the balance sheet date and more than
twelve months after the balance sheet date is presented in Note 43.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.1
Basis of preparation (continued)
Comparative information
Comparative information was restated following a change in the presentation of segmental analysis as
detailed in Note 6. This change led to a respective restatement in Notes 14, 23, 30, 44.2, 44.3 and 44.5.
where analysis by business line is presented. The relevant tables are identified as restated.
The restatements did not have an impact on the results for the year or equity of the Group.
Change in presentation
The Group has changed the presentation of the interest component of fair value hedging derivatives used in
accounting hedges to more appropriately reflect the impact of the accounting hedges. As a result, the net
interest income/expense on qualifying hedge derivatives designated as fair value hedges, is now presented
within ‘Interest income’ where the derivative is used to hedge an asset and as ‘Interest expense’ where the
derivative is used to hedge a liability, and is presented together with the interest component of the
respective hedged asset and hedged liability. This was previously presented in 'Income similar to interest
income' and 'Expense similar to interest expense'. The comparative amounts for 2023 have been
represented.
2.2
Accounting policies and changes in accounting policies and disclosures
The Consolidated Financial Statements contain a summary of the accounting policies adopted in the
preparation of the Consolidated Financial Statements.
The accounting policies adopted are consistent with those of the previous year, except for macro fair value
hedging as explained below in Note 2.21, which was applied in 2024. The adoption of new and amended
standards and interpretations that became effective on or after 1 January 2024 did not have an impact on
the financial statements as explained in Note 2.2.1.
2.2.1
New and amended standards and interpretations
The Group applied for the first time certain standards and amendments, which are effective for annual
periods beginning on or after 1 January 2024 and which are explained below. The Group has not early
adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance
Arrangements (amendments)
These amendments require the disclosures of an entity’s supplier finance arrangements that would enable
the users of financial statements to assess the effects of those arrangements on the entity’s liabilities and
cash flows and on the entity’s exposure to liquidity risk, thus enhancing the transparency of the supplier
finance arrangements. The amendments did not affect recognition or measurement principles. These
amendments did not have an impact on the financial position and results of the Group during the year
ended 31 December 2024.
IFRS 16 Leases: Lease Liability in a Sale and Leaseback (amendments)
The amendment to IFRS 16 Leases specifies the requirements that a seller-lessee uses in measuring the
lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognise any
amount of the gain or loss that relates to the right of use it retains. A sale and leaseback transaction
involves the transfer of an asset by an entity (the seller-lessee) to another entity (the buyer-lessor) and the
leaseback of the same asset by the seller-lessee. The amendment did not have an impact on the financial
position and results of the Group during the year ended 31 December 2024.
IAS 1 Presentation of Financial Statements: classification of Liabilities as Current or Non-current
(amendments)
The IASB issued amendments to IAS 1 Presentation of Financial Statements to specify the requirements for
classifying liabilities as current or non-current. The amendments clarify: (a) what is meant by a right to
defer settlement, (b) that a right to defer must exist at the end of the reporting period and (c) that
classification is unaffected by the likelihood that an entity will exercise its deferral right. Terms of a liability
that could, at the option of the counterparty, result in its settlement by the transfer of the entity’s own
equity instruments do not affect its classification as current or non-current if, the entity classifies the option
as an equity instrument, recognising it separately from the liability as an equity component of a compound
financial instrument. These amendments did not have an impact on the financial position and results of the
Group during the year ended 31 December 2024.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.3
Standards and Interpretations that are issued but not yet effective
2.3.1
Standards and Interpretations issued by the IASB and adopted by the EU
IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (amendments)
These amendments help entities assess exchangeability between two currencies and determine the spot
exchange rate, when exchangeability is lacking. An entity is impacted by the amendments when it has a
transaction or an operation in a foreign currency that is not exchangeable into another currency at a
measurement date for a specified purpose. The amendments to IAS 21 do not provide detailed
requirements on how to estimate the spot exchange rate. Instead, they set out a framework under which an
entity can determine the spot exchange rate at the measurement date. When applying the new
requirements, it is not permitted to restate comparative information. Rather, it is required to translate the
affected amounts at estimated spot exchange rates at the date of initial application, with an adjustment to
retained earnings or to the reserve for cumulative translation differences. The amendments will be effective
for annual reporting periods beginning on or after 1 January 2025. Earlier application is permitted. The
Group does not expect these amendments to have a material impact on its results and financial position.
2.3.2
Standards and Interpretations issued by the IASB but not yet adopted by the EU
IFRS 18 Presentation and Disclosure in Financial Statements (new standard)
The new standard on presentation and disclosure in financial statements focuses on updates to the
statement of profit or loss. The key new concepts introduced in IFRS 18 relate to the structure of the
statement of profit or loss, required disclosures in the financial statements for certain profit or loss
performance measures that are reported outside an entity’s financial statements (that is, management-
defined performance measures) and enhanced principles on aggregation and disaggregation which apply to
the primary financial statements and notes in general. IFRS 18 will not impact the recognition or
measurement of items in the financial statements, but it might change what an entity reports as its
‘operating profit or loss’. IFRS 18 will apply for reporting periods beginning on or after 1 January 2027 and
will also apply to comparative information. The Group does not expect these amendments to have an
impact on its results and financial position; however, presentational changes and additional disclosures may
be required upon adoption.
IFRS 19 Subsidiaries without Public Accountability: Disclosures (new standard)
The IASB issued a new accounting standard for subsidiaries. IFRS 19 Subsidiaries without Public
Accountability will enable subsidiaries to keep only one set of accounting records in order to meet the needs
of both their parent company and the users of their financial statements. In addition, the IFRS 19 will
permit reduced disclosures better suited to the needs of the users of the financial statements while still
maintaining the usefulness of the information. The new standard will be effective for annual periods
beginning on or after 1 January 2027. The new standard does not apply to the financial statements of the
Group.
IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures (amendments)
The IASB issued targeted amendments to report the financial effects of nature-dependent electricity
contracts, which are often structured as power purchase agreements (PPAs). The amendments include
clarifying the application of the ‘own-use’ requirements, permitting hedge accounting if these contracts are
used as hedging instruments; and adding new disclosure requirements to enable investors to understand
the effect of these contracts on a company’s financial performance and cash flows. The amendments will be
effective for annual periods beginning on or after 1 January 2026. The Group does not expect these
amendments to have a material impact on its results and financial position.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.3
Standards and Interpretations that are issued but not yet effective (continued)
2.3.2
Standards and Interpretations issued by the IASB but not yet adopted by the EU
(continued)
Annual Improvements to IFRS Accounting Standards — Volume 11
The amendments contained in the Annual Improvements relate to:
(i)
IFRS 1 First-time Adoption of International Financial Reporting Standards - Hedge Accounting by
a First-time Adopter
(ii)
IFRS 7 Financial Instruments: Disclosures and its accompanying Guidance on implementing IFRS
7
(iii)
IFRS 9 Financial Instruments - Derecognition of lease liabilities and Transaction price
(iv)
IFRS 10 Consolidated Financial Statements - Determination of a ‘de facto agent’
(v)
IAS 7 Statement of Cash Flows - Cost Method.
These amendments will be effective for annual reporting periods beginning on or after 1 January 2026.
Earlier application is permitted. The Group will be assessing the impact that these amendments might have
on its results and financial position.
IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Classification and
Measurement of financial Instruments (amendments)
The IASB issued amendments to IFRS 9 and IFRS 7. The amendments: (a) clarify the date of recognition
and derecognition of some financial assets and liabilities, with a new exception for some financial liabilities
settled through an electronic cash transfer system, (b) add further guidance for assessing whether a
financial asset meets the solely payments of principal and interest (SPPI) criterion, (c) add new disclosures
for certain instruments with contractual terms that can change cash flows, (d) update the disclosures for
equity instruments designated at fair value through other comprehensive income (FVOCI). These
amendments to IFRS 9 and IFRS 7 will be effective for annual reporting periods beginning on or after 1
January 2026. Earlier application is permitted. The Group will be assessing the impact that these
amendments might have on its results and financial position.
2.4
Basis of consolidation
The Consolidated Financial Statements comprise the Consolidated Financial Statements of the Company as
at and for the year ended 31 December 2024. The financial statements of the subsidiaries are prepared as
of the same reporting date as that of the Company, using consistent accounting policies.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Specifically,
the Group controls an investee only if the Group has:
i.
power over an investee (i.e. existing rights that give it the current ability to direct the relevant
activities of the investee)
ii.
exposure, or rights, to variable returns from its involvement with the investee
iii. the ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results in control. To support this
presumption and in cases the Group has less than a majority of the voting rights of an investee, the Group
considers all relevant facts and circumstances in assessing whether it has power over an investee including
any contractual arrangements with the other vote holders, rights arising from other contractual
arrangements, and the Group’s voting and potential voting rights.
The Group re-assesses whether or not it controls an investee if facts indicate that there are changes to any
of the three elements of control.
Assets, liabilities, income and expenses of subsidiaries acquired or disposed of during the year are included
in the Consolidated Financial Statements from the date of acquisition or up to the date of disposal,
respectively. Profit or loss and each component of other comprehensive income (OCI) are attributed to the
equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-
controlling interests having a deficit balance. Non-controlling interests represent the portion of profit or loss
and net assets not held by the Group, directly or indirectly. The non-controlling interests are presented
separately in the consolidated income statement and within equity from the Company owners’ equity.
All intra-group balances and transactions are eliminated on consolidation.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.4
Basis of consolidation (continued)
A change in the ownership interest of a subsidiary, without loss of control, is accounted for as a transaction
between the owners, which affects equity. As a result, no goodwill arises and no gain/loss is recognised in
the consolidated income statement from such transactions. The foreign exchange differences which relate to
the share of non-controlling interests being sold/acquired are reclassified between the foreign currency
reserve and non-controlling interests.
2.5
Foreign currency translation
The Consolidated Financial Statements are presented in Euro (€), which is the functional and presentation
currency of the Company and its operating subsidiaries in Cyprus. Each subsidiary, overseas branch or
overseas subsidiary of the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency. The Group uses the direct method of
consolidation and on disposal of a foreign operation, the gain or loss that is reclassified to profit or loss
reflects the amount that arises from using this method.
2.5.1
Transactions and balances
Transactions in foreign currencies are recorded using the functional currency rate of exchange ruling at the
date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency
rate of exchange ruling at the reporting date. All differences are taken to ‘Net foreign exchange gains’ in the
consolidated income statement, with the exception of differences on foreign currency assets/liabilities that
provide a hedge against the net investments in subsidiaries and overseas branches. These differences are
recognised in other comprehensive income in the ‘Foreign currency translation reserve’ until the disposal or
liquidation of the net investment, at which time the cumulative amount is reclassified to the consolidated
income statement.
Non-monetary items that are measured at historic cost in a foreign currency are translated using the
exchange rates ruling as at the dates of the initial transactions. Non-monetary items measured at fair value
in a foreign currency are translated using the exchange rates ruling at the date when the fair value is
determined. The retranslation of non-monetary assets carried at fair value is reported as part of the fair
value change.
2.5.2
Subsidiary companies and branches
At the reporting date, the assets and liabilities of subsidiaries (including special purpose entities that the
Group consolidates) and branches whose functional currency is other than the Group’s presentation
currency are translated into the Group’s presentation currency at the rate of exchange ruling at the
reporting date, and their income statements are translated using the average exchange rates for the year.
Foreign exchange differences arising on translation are recognised in other comprehensive income in the
‘Foreign currency translation reserve’. On disposal or liquidation of a subsidiary or branch, the cumulative
amount of the foreign exchange differences relating to that particular overseas operation, is reclassified to
the consolidated income statement as part of the profit/loss on disposal/dissolution of subsidiaries.
2.6
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker is the person or group of persons that
allocate resources to and assess the performance of the operating segments.
The chief operating decision-maker of the Group is the Group Executive Committee.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.7
Turnover
Group turnover is represented by the Total operating income which comprises of net interest income, net
fee and commission income, net foreign exchange gains, net gains/(losses) on financial instruments, net
gains/(losses) on derecognition of financial assets measured at amortised cost, net insurance result, net
gains/(losses) from revaluation and disposal of investment properties, net gains/(losses) on disposal of
stock of property and other income as these are presented in the Consolidated Income Statement and is
presented in Note 6.
2.8
Revenue from contracts with customers
The Group recognises revenue when control of the promised goods or services is transferred to customers
in return of an amount that reflects the consideration to which the Group expects to be entitled in exchange
for those goods or services. The revenue recognition model applies the following five steps:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the Group satisfies a performance obligation.
The performance obligation notion in effect represents a promise in a contract with a customer to transfer
to the customer either: (a) a good or service (or a bundle of goods or services) that is distinct; or (b) a
series of distinct goods or services that are substantially the same and that have the same pattern of
transfer to the customer.
Contract balances
A contract asset is the right to consideration in exchange for services transferred to the customer. If the
Group performs by transferring services to a customer before the customer pays consideration or before
payment is due, a contract asset is recognised for the earned consideration that is conditional.
Receivables are recorded where the Group provides services to clients, consideration is due immediately
upon satisfaction of a point in time service or at the end of a prespecified period for an over the time
service. It is the Group’s right to an amount of consideration that is unconditional (i.e. only the passage of
time is required before payment of the consideration is due). The initial recognition and subsequent
measurement of such receivables is disclosed in Notes 2.13 to 2.17.
Contract liabilities relate to payments received from customers where the Group is yet to satisfy its
performance obligation. Contract liabilities are recognised as revenue when the Group performs under the
contract.
Contract assets and receivables are recorded within ‘Prepayments, accrued income and other assets’ and
contract liabilities within ‘Accruals, deferred income, other liabilities and other provisions’ in the
consolidated balance sheet.
2.8.1
Fee and commission income
The Group earns fee income from a diverse range of services it provides to its clients. Fee income can be
divided into two broad categories:
i.
fees earned from services that are provided over a certain period of time, such as asset or portfolio
management, custody services and certain advisory services; and
ii.
fees earned from point in time services such as executing transactions and brokerage fees (e.g.
securities and derivative execution and clearing).
Over time services
For fees earned from services that are provided over a certain period of time revenue is recognised pro-rata
over the service period, provided the fees are not contingent on successfully meeting specified performance
criteria that are beyond the control of the Group. Costs to fulfil over time services are recorded in the
consolidated income statement immediately, because such services are considered to be a series of services
that are substantially the same from day to day and have the same pattern of transfer.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.8
Revenue from contracts with customers (continued)
2.8.1
Fee and commission income (continued)
Point in time services
For fees earned from providing transaction-type services, revenue is recognised when the service has been
completed, provided such fees are not subject to refund or another contingency beyond the control of the
Group. Incremental costs to fulfil services provided at a point in time are typically incurred and recorded at
the same time as the performance obligation is satisfied and revenue is earned, and are therefore not
recognised as an asset, e.g. brokerage commissions.
Fee and commission income is measured based on consideration specified in a legally enforceable contract
with a customer, excluding amounts such as taxes collected on behalf of third parties. Consideration can
include both fixed and variable amounts. Variable consideration includes refunds, discounts and other
amounts that are contingent on the occurrence or non-occurrence of a future event. Variable consideration
that is contingent on an uncertain event can only be recognised to the extent that it is highly probable that
a significant reversal in the amount of cumulative revenue for a contract will not occur.
In relation to sales of services for card processing activities the Group acts as an agent and therefore
income is recognised on a net basis.
2.8.2
Dividend income
Dividend income is recognised in the consolidated income statement when the Group’s right to receive
payment is established, i.e. upon approval by the general meeting of the shareholders.
2.8.3
Rental income
Rental income from investment properties and stock of property is accounted for on a straight-line basis
over the period of the lease and is recognised in the consolidated income statement in ‘Other income’.
2.8.4
Gains on disposal of investment property
Gains on disposal of investment property are recognised in the consolidated income statement in ‘Net
gains/(losses) from revaluation and disposal of investment properties’ when the buyer accepts delivery and
the control of the property is transferred to the buyer.
2.8.5
Gains on disposal of stock of property
Gains on disposal of stock of property are recognised in the consolidated income statement in 'Net gains on
disposal of stock of property' when the buyer accepts delivery and the control of the property is transferred
to the buyer.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.9
Recognition of interest income/expense and income/expense similar to interest
The Group calculates interest income/expense by applying the effective interest rate (EIR) to the gross
carrying amount of financial assets, unless the asset is credit-impaired. For financial assets and financial
liabilities measured at FVPL which accrue interest, the Group follows the principles of the effective interest
method with the only difference being the treatment of fees that are integral to the financial asset/financial
liabilities. That is, for financial assets and financial liabilities classified at FVPL the fees are recognised as
revenue or expense when the instrument is initially recognised and not as part of the EIR calculation.
When a financial asset becomes credit-impaired and is therefore classified as Stage 3, interest income is
calculated by applying the EIR to the amortised cost of the financial asset, being the gross carrying amount
of the financial asset less any loss allowance. If the financial asset cures and is no longer credit-impaired,
the Group reverts to calculating interest income on the gross carrying amount. In such cases, the Group
unwinds the discount on the expected credit losses (ECL) through the 'Credit losses on financial assets' line
in the consolidated income statement.
Interest income on purchased or originated credit-impaired (POCI) financial assets is recognised using the
credit adjusted effective interest rate (CAEIR) calculated at initial recognition. The CAEIR is applied on the
amortised cost of the financial asset, being the gross carrying amount of the financial asset less any loss
allowance.
Interest income from financial assets at amortised cost and financial assets at FVOCI is presented within the
caption ‘Interest income’, while interest income on financial instruments at FVPL is presented within the
caption ‘Income similar to interest income’ in the consolidated income statement. Interest expense on
financial liabilities at amortised cost is presented within the caption ‘Interest expense’, while interest
expense on financial instruments at FVPL is presented within the caption ‘Expense similar to interest
expense’ in the consolidated income statement. All form part of the ‘Net interest income’.
The effective interest rate method
Interest income and expense are recognised in the consolidated income statement by applying the effective
interest rate (EIR) for all financial instruments measured at amortised cost and debt instruments at FVOCI.
The EIR is the rate that exactly discounts estimated future cash payments or receipts through the expected
life of the financial instrument to the gross carrying amount of the financial asset or the amortised cost of
the financial liability.
The EIR, and therefore the amortised cost of the asset, is calculated by taking into account any discount or
premium on acquisition, fees and costs that are an integral part of the EIR. Fees and incremental costs that
are directly attributable to loans and advances to customers are also deferred and amortised as part of
interest income using the effective interest rate method.
For floating-rate financial instruments, periodic re-estimation of cash flows to reflect the movements in the
market rates of interest also alters the EIR, but when instruments were initially recognised at an amount
equal to the principal, re-estimating the future interest payments does not significantly affect the carrying
amount of the asset or the liability.
The carrying amount of a financial asset or liability is adjusted if the Group revises its estimates of
payments or receipts for reasons other than credit risk. The adjusted carrying amount is calculated based
on the original effective interest rate and the change in carrying amount is recorded in ‘Net gains/(losses)
on financial instruments' for debt securities, or in ‘Changes in expected cash flows’ component of the 'Credit
losses to cover credit risk on loans and advances to customers' for loans and advances to customers
included within 'Credit losses on financial assets'.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.10
Employee benefits
2.10.1
Retirement benefits
The Group operates both defined contribution and defined benefit retirement plans.
Defined contribution plans
The Group recognises obligations in respect of the accounting period in the consolidated income statement.
Any unpaid contributions at the reporting date are included as a liability.
Defined benefit plans
The cost of providing benefits for defined benefit plans is estimated separately for each plan using the
Projected Unit Credit Method of actuarial valuation.
The defined benefit asset or liability comprises the present value of the defined benefit obligations (using a
discount rate based on high quality corporate bonds), reduced by the fair value of plan assets out of which
the obligations are to be settled. Plan assets are assets that are held by a funded plan or qualifying
insurance policies. Any net defined benefit surplus is limited to the present value of available refunds and
reductions in future contributions to the plan. Fair value is based on market price information and in the
case of quoted securities it is the published bid price.
The net charge to the consolidated income statement mainly comprises the service costs and the net
interest on the net defined benefit asset or liability, and is presented in staff costs. Service costs comprise
current service costs, past service costs, gains and losses or curtailments and non-routine settlements. Re-
measurements, comprising actuarial gains and losses, the effect of the asset ceiling (excluding net interest),
and the return on plan assets (excluding net interest), are recognised immediately on the consolidated
balance sheet with a corresponding debit or credit in other comprehensive income. Re-measurements are
not reclassified to profit or loss in subsequent periods.
Actuarial gains and losses comprise experience adjustments (the effects of differences between the previous
actuarial assumptions and what has actually occurred), as well as the effects of changes in actuarial
assumptions.
2.10.2
Short-term employee benefits
Short-term employee benefits, such as salaries and other benefits, are accounted for on an accrual basis
over the period during which employees have provided services. Bonuses are recognised to the extent that
the Group has a legal or constructive obligation to its employees that can be measured reliably.
2.10.3
Exit cost benefits
Exit cost benefits refer to termination benefits and are recognised as an expense at the earlier of when the
Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a
restructuring under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which includes the
payment of termination benefits.
For termination benefits which become payable as a result of an employee’s decision to accept an offer of
voluntary redundancy, which is not within the scope of IAS 37 Provisions, Contingent Liabilities and
Contingent Assets, the Group recognises the expense at the earlier of when the employee accepts the offer
and when a restriction on the Group’s ability to withdraw the offer takes effect.
2.11
Tax
Current income tax and deferred tax
Tax on income is provided in accordance with the fiscal regulations and rates which apply in the countries
where the Group operates and is recognised as an expense in the period in which the income arises.
Deferred tax is provided using the liability method. Current income tax assets and liabilities are measured
at the amount expected to be recovered from or paid to the tax authorities. Current income tax and
deferred tax relating to items recognised directly in equity is recognised directly in equity.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.11
Tax (continued)
Deferred tax liabilities are recognised for taxable temporary differences between the tax basis of assets and
liabilities and their carrying amounts at the reporting date, which will give rise to taxable amounts in future
periods. Deferred tax liabilities are recognised for taxable temporary differences associated with
investments in subsidiary and associate companies and branches, except where the timing of the reversal of
the temporary differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and carry-forward of unutilised tax
losses to the extent that it is probable that taxable profit will be available, against which the deductible
temporary differences and carry-forward of unutilised tax losses can be utilised. The carrying amount of
deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profit will be available to utilise all or part of the deductible temporary
differences or tax losses. Unrecognised deferred tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that future taxable profit will allow the deferred tax
asset to be recovered.
Deferred tax assets and liabilities are measured at the amount that is expected to be paid to or recovered
from the tax authorities, after taking into account the tax rates and legislation that have been enacted or
substantially enacted by the reporting date.
The deferred tax assets arising from specific tax losses and which are subject to the Income Tax Law
Amendment 28 (I) of 2019, are accounted for on the same basis as other deferred tax assets and can be
converted into tax credits. These tax losses are converted into 11 equal annual instalments and each
instalment could be claimed as a deductible expense in the determination of the taxable income for the
relevant year. Any amount of the annual instalment not utilised is converted into a tax credit and can be
utilised in the tax year following the tax year to which this tax credit relates to. Any unutilised tax credit in
the relevant year is converted into a receivable from the Cyprus Government. Further details are disclosed
in Note 17.
Current and deferred tax assets and liabilities are offset when they arise from the same tax reporting entity
and relate to the same tax authority and when the legal right to offset exists.
Indirect tax-Value Added Tax (VAT)
Expenses and assets are recognised net of the amount of VAT, except:
i.
when the VAT incurred on a purchase of assets or services is not recoverable from the tax
authorities, in which case, the VAT suffered is recognised as part of the cost of acquisition of the
asset or as part of the expense item, as applicable.
ii.
when receivables and payables are stated with the amount of VAT charged. The amount of VAT
recoverable from, or payable to the tax authorities, is included as part of receivables or payables in
the consolidated balance sheet.
2.12
Financial instruments - initial recognition
2.12.1
Date of recognition
‘Balances with central banks’, ‘Loans and advances to banks’, ‘Loans and advances to customers’, ‘Deposits
by banks’, ‘Funding from central banks’ and ‘Customer deposits’ are recognised when cash is received by
the Group or advanced to the borrowers. All other financial assets and financial liabilities are initially
recognised on the trade date. Purchases or sales of financial assets, where delivery is required within a time
frame established by regulations or by market convention, are also recognised on the trade date, i.e. the
date that the Group commits to purchase or sell the asset. Derivatives are also recognised on a trade date
basis.
2.12.2
Initial recognition and measurement of financial instruments
The classification of financial assets on initial recognition depends on their contractual terms and the
business model for managing the instruments, as described in Note 2.13.
All financial instruments are measured initially at their fair value plus, in the case of financial assets and
liabilities not measured at FVPL, any directly attributable incremental costs of acquisition or issue.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.12
Financial instruments - initial recognition (continued)
2.12.2
Initial recognition and measurement of financial instruments (continued)
When the fair value of financial instruments at initial recognition differs from the transaction price, the
Group accounts for the Day 1 profit or loss, as described in Note 2.12.3 below.
2.12.3
Day 1 profit or loss
When the transaction price of the instrument differs from the fair value at origination and the fair value is
based on a valuation technique using only inputs observable in market transactions, the Group recognises
the difference between the transaction price and fair value in 'Net gains/(losses) on financial instruments'
caption. In the cases, where the fair value is based on models for which some of the inputs are not
observable, the difference between the transaction price and the fair value is deferred and is only
recognised in profit or loss when the inputs become observable, or when the instrument is derecognised.
2.12.4
Measurement categories of financial assets and financial liabilities
Financial assets are measured either at amortised cost, FVOCI or FVPL.
The Group classifies and measures its derivatives and trading portfolios at FVPL. The Group may designate
financial instruments at FVPL, if doing so eliminates or significantly reduces measurement or recognition
inconsistencies.
Financial liabilities, other than loan commitments and financial guarantees, are measured at amortised cost
or at FVPL when they are held for trading or relate to derivative instruments.
2.13
Classification and measurement of financial assets and financial liabilities
The classification and measurement of financial assets depends on how these are managed as part of the
business models the Group operates and their contractual cash flow characteristics (whether the cash flows
represent solely payments of principal and interest (SPPI)).
Business model assessment
The Group assesses the business model at a portfolio level. The portfolio level is determined at the
aggregation level that reflects how the Group manages its financial assets and the business model is based
on observable factors which include:
i.
How the performance of the business model and the financial assets held within that business model
are evaluated and reported to the Group's key management personnel;
ii.
The risks that affect the performance of the business model (and the financial assets held within that
business model) and, in particular, the way in which those risks are managed;
iii. How managers of the business are compensated (for example, whether the compensation is based
on the fair value of the assets managed or on the contractual cash flows collected);
iv. The expected frequency, value and timing of sales are also important aspects of the Group’s
assessment.
If cash flows after initial recognition are realised in a way that is different from the Group’s original
expectations, the Group does not change the classification of the remaining financial assets held in that
business model, but incorporates such information when assessing newly originated or newly purchased
financial assets going forward.
Contractual cash flows characteristics assessment (SPPI test)
The Group assesses whether the individual financial assets’ cash flows represent solely payments of
principal and interest on the principal amount outstanding at origination (SPPI test).
For the purposes of this assessment, principal is defined as the fair value of the financial asset on initial
recognition and may change over the life of the financial asset (for example, if there are repayments of
principal or amortisation of the premium/discount).
Interest is defined as consideration for the time value of money, for the credit risk associated with the
principal amount outstanding during a particular period of time and for other basic lending risks and costs
(e.g. liquidity risk and administrative costs), as well as a profit margin.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.13
Classification and measurement of financial assets and financial liabilities (continued)
In assessing whether contractual cash flows are SPPI, the Group applies judgement and considers the terms
that could change the contractual cash flows so that they would not meet the condition for SPPI, and be
inconsistent to a basic lending arrangement, including: (i) contingent and leverage features, (ii) interest
rates which are beyond the control of the Group or variable interest rate consideration, (iii) features that
could modify the time value of money, (iv) prepayment and extension options, (v) non-recourse
arrangements, and (vi) convertibility features.
Where the contractual terms of a financial asset introduce a more than de-minimis exposure to risks or
volatility that are inconsistent with a basic lending arrangement, the related financial asset will be measured
at FVPL.
2.13.1
Derivative financial instruments
Derivatives are recorded at fair value and classified as assets when their fair value is positive and as
liabilities when their fair value is negative. Subsequently, derivatives are measured at fair value.
Revaluations of trading derivatives are included in the consolidated income statement in ‘Net foreign
exchange gains’ in the case of currency derivatives and in ‘Net gains/(losses) on financial instruments’ in
the case of all other derivatives. Interest income and expense for derivatives not in accounting hedges are
included in the ‘Income similar to interest income’ and ‘Expense similar to interest expense’ captions
respectively in the consolidated income statement.
An embedded derivative is a component of a hybrid instrument that also includes a non-derivative host
contract with the effect that some of the cash flows of the combined instrument vary in a way similar to a
stand-alone derivative.
For hybrid contracts where the host contract is a financial asset within the scope of IFRS 9, the classification
and measurement criteria are based on the business model and SPPI assessment as described in the
classification of financial assets section of Note 2.13 and applied to the entire hybrid instrument.
Derivatives embedded in financial liabilities and non-financial host contracts, are treated as separate
derivatives and recorded at fair value if their economic characteristics and risks are not closely related to
those of the host contract, and the host contract is not itself measured at fair value with revaluation
recognised in the consolidated income statement. The embedded derivatives separated from the host are
carried at fair value, with revaluations recognised in ‘Net gains/(losses) on financial instruments' in the
consolidated income statement. The host contract is accounted for in accordance with the relevant
standards.
2.13.2
Financial assets measured at amortised cost
Financial assets are measured at amortised cost if they meet both of the following conditions:
i.
The financial asset is held within a business model with the objective to hold financial assets in order
to collect contractual cash flows;
ii.
The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI
on the principal amount outstanding.
This classification relates to cash and balances with central banks, loans and advances to banks, reverse
repurchase agreements, loans and advances to customers that pass the SPPI test, debt securities held
under the ‘Hold to collect’ business model and other financial assets that pass the SPPI test.
After their initial recognition, financial instruments measured at amortised cost are measured at amortised
cost using the effective interest rate method, less allowances for expected credit losses (ECL). Amortised
cost is calculated by taking into account any discount or premium on acquisition and fees that are an
integral part of the effective interest rate. The amortisation is included in ‘Interest income’ in the
consolidated income statement. The losses arising from impairment are recognised in the consolidated
income statement in ‘Credit losses on financial assets'.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.13
Classification and measurement of financial assets and financial liabilities (continued)
2.13.3
Debt instruments measured at FVOCI
Debt instruments are measured at FVOCI if they meet both of the following conditions:
i.
The financial asset is held within a business model the objective of which is achieved by both
collecting contractual cash flows and selling financial assets;
ii.
The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI
on the principal amount outstanding.
This classification relates to debt securities held under the ‘Hold to collect and sell’ business model that pass
the SPPI test.
FVOCI debt instruments are subsequently measured at fair value with gains and losses due to changes in
fair value recognised directly in other comprehensive income in the ‘Net gains/(losses) on investments in
debt instruments measured at FVOCI’ caption. Upon derecognition of these instruments, any accumulated
balances in other comprehensive income are reclassified to the consolidated income statement and reported
within ‘Net gains/(losses) on financial instruments' caption. The interest income, foreign exchange
differences and ECL are recognised in the consolidated income statement in the respective lines in the same
manner as for financial assets at amortised cost.
2.13.4
Financial assets or financial liabilities held for trading
Financial assets or financial liabilities held for trading represent assets and liabilities acquired or incurred
principally for the purpose of selling or repurchasing them in the near term and are recognised in the
consolidated balance sheet at fair value. Changes in the fair value are recognised in ‘Net gains/(losses) on
financial instruments' in the consolidated income statement. Interest income and expense are included in
the captions ‘Income similar to interest income’ and ‘Expense similar to interest expense’ respectively in the
consolidated income statement according to the terms of the relevant contract, while dividend income is
recognised in ‘Other income’ when the right to receive payment has been established.
This classification relates to debt and equity instruments that have been acquired principally for the
purposes of sale or repurchase in the near term.
2.13.5
Financial assets or financial liabilities at FVPL
Financial assets and financial liabilities, other than those held for trading, classified in this category are
those that are designated by management on initial recognition or are mandatorily required to be measured
at fair value under IFRS 9.
Management only designates an instrument at FVPL at initial recognition when one of the following criteria
are met:
(a)
the designation eliminates or significantly reduces the inconsistency that would otherwise arise
from the measurement of the assets or liabilities or the recognition of gains or losses on them on a
different basis, or
(b)
the liabilities are part of a group of financial liabilities or financial assets and financial liabilities
which are managed and their performance is evaluated on a fair value basis, in accordance with a
documented risk management or investment strategy, or
(c)
the liabilities contain an embedded derivative, unless the embedded derivative does not
significantly modify the cash flows of the instrument or it is clear, with little or no analysis, that the
embedded derivative could not be separated.
Such designation is determined on an instrument-by-instrument basis.
Assets held under unit-linked insurance contracts, certain non-linked insurance contracts and investment
contracts issued by insurance subsidiaries are designated at FVPL.
Financial assets mandatorily classified at FVPL include certain loans and advances to customers, certain
investment fund holdings and other securities and other assets for which the contractual cash flows do not
meet the SPPI test, or the financial assets are part of a portfolio held within a business model under which
they are managed and their performance is evaluated on a fair value basis.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.13
Classification and measurement of financial assets and financial liabilities (continued)
2.13.5
Financial assets or financial liabilities at FVPL (continued)
Financial assets and financial liabilities at FVPL are recorded in the consolidated balance sheet at fair value.
Changes in the fair value are recognised in ‘Net gains/(losses) on financial instruments' in the consolidated
income statement. Interest income and expense are included in the captions ‘Income similar to interest
income’ and ‘Expense similar to interest expense’ respectively in the consolidated income statement.
Dividend income is recognised in ‘Other income’ in the consolidated income statement when the right to
receive payment has been established.
2.13.6
Equity instruments measured at FVOCI
At initial recognition, the Group can make an irrevocable election to classify an investment in an equity
instrument at FVOCI, when that meets the definition of equity under IAS 32 Financial Instruments:
'Presentation', and is not held for trading. Such classification is determined on an instrument-by-instrument
basis.
Fair value gains and losses on these equity instruments are recognised in other comprehensive income and
are not recycled to profit or loss upon derecognition, but are transferred directly to retained earnings.
Dividends on equity investments are recognised in the consolidated income statement and reported within
‘Other Income’ when the right to receive payment has been established, except when the Group benefits
from such proceeds as a recovery of part of the cost of the instrument, in which case it is recorded in other
comprehensive income. Equity instruments measured at FVOCI are not subject to an impairment
assessment.
2.13.7
Debt securities in issue and Subordinated liabilities
Debt securities in issue and Subordinated liabilities are initially measured at the fair value of the
consideration received, net of any issue costs. They are subsequently measured at amortised cost using the
effective interest rate method, in order to amortise the difference between the cost at inception and the
redemption value, over the period to the earliest date that the Group has the right to redeem those
instruments.
Interest on debt securities in issue and subordinated liabilities is included in ‘Interest expense’ in the
consolidated income statement.
2.13.8
Other financial liabilities
Other financial liabilities include ‘Customer deposits’, ‘Deposits by banks’, ‘Funding from central banks’ and
other financial liabilities.
Financial liabilities are recognised when the Group enters into the contractual provisions of the
arrangements with counterparties, which is generally on trade date, and initially measured at fair value,
which is normally the consideration received, net of directly attributable transaction costs incurred.
Subsequent measurement of other financial liabilities is at amortised cost, using the effective interest
method.
2.13.9
Determination of fair value - Valuation techniques
The following is a description of the determination of fair value for financial instruments which are recorded
at fair value and for financial instruments which are not measured at fair value but for which fair value is
disclosed, using valuation techniques. These incorporate the Group’s estimate of assumptions that a market
participant would make when valuing the instruments.
Derivative financial instruments
Derivative financial instruments valued using a valuation technique with market observable inputs are
mainly interest rate swaps, currency swaps, currency rate options, forward foreign exchange rate contracts
and interest rate collars. The most frequently applied valuation techniques include forward pricing and swap
models, using present value calculations. The models incorporate various inputs, including foreign exchange
spot and forward rates and interest rate curves.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.13
Classification and measurement of financial assets and financial liabilities (continued)
2.13.9
Determination of fair value - Valuation techniques (continued)
Credit Valuation Adjustments (CVA) and Debit Valuation Adjustments (DVA)
The CVA and DVA are incorporated into derivative valuations to reflect the impact on fair value of
counterparty risk and the Company’s own credit quality respectively.
The Group calculates the CVA by applying the PD of the counterparty, conditional on the non-default of the
Group, to the Group’s expected positive exposure to the counterparty and multiplying the result by the loss
expected in the event of default. Conversely, the Group calculates the DVA by applying the Company's PD,
conditional on the non-default of the counterparty, to the expected positive exposure of the counterparty to
the Group and multiplying the result by the loss expected in the event of default.
The expected exposure of derivatives is calculated as per the CRR and takes into account the netting
agreements where they exist. A standard Loss Given Default (LGD) assumption in line with industry norm is
adopted. Alternative LGD assumptions may be adopted when both the nature of the exposure and the
available data support this.
The Group does not hold any significant derivative instruments which are valued using a valuation technique
with significant non-market observable inputs.
Investments at FVPL, investments at FVOCI and investments at amortised cost
Investments which are valued using a valuation technique or pricing models, primarily consist of unquoted
equity securities and debt securities. These assets are valued using valuation models which sometimes only
incorporate market observable data and at other times use both observable and non-observable data. The
rest of the investments are valued using quoted prices in active markets.
Loans and advances to customers
The fair value of loans and advances to customers is based on the present value of expected future cash
flows. Future cash flows have been based on the future expected loss rate per loan portfolio, taking into
account expectations for the credit quality of the borrowers. The discount rate includes components that
capture the risk-free rate per currency, funding cost, servicing cost and the cost of capital, considering the
risk weight of each loan.
Customer deposits
The fair value of customer deposits is determined by calculating the present value of future cash flows. The
discount rate takes into account current market rates and the credit profile of the Company. The fair value
of deposits repayable on demand and deposits protected by the Deposit Protection Guarantee Scheme are
approximated by their carrying values.
Loans and advances to banks
Loans and advances to banks with maturity over one year are discounted using an appropriate risk-free rate
plus the appropriate credit spread. For short-term lending, the fair value is approximated by the carrying
value.
Reverse repurchase agreements
Fair values of reverse repurchase agreements that are held on a non-trading basis are determined by
calculating the present value of future cash flows. The cashflows are discounted using an appropriate risk-
free rate plus the appropriate credit spread.
Cash flows relating to reverse repurchase agreements (including interest received) are presented as
investing activities in the Consolidated Statement of Cash Flows.
Deposits by banks and funding from central banks
Deposits by banks and funding from central banks with maturity over one year are discounted using an
appropriate risk-free rate plus the appropriate credit spread. For short-term funding, the fair value is
approximated by the carrying value.
Debt securities in issue and Subordinated liabilities
Debt securities and subordinated liabilities issuances are traded in an active market with quoted prices.
Further details on the fair value of assets and liabilities are disclosed in Note 22.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.14
Reclassification of financial assets and liabilities
The Group does not reclassify its financial assets subsequent to their initial recognition, apart from
exceptional circumstances in which the Group changes its business model for managing financial assets and
acquires, disposes of, or terminates a business line. Reclassification is applied prospectively from the
reclassification date, which is the first day of the first reporting period following the change in business
model that results in the reclassification. Any previously recognised gains, losses or interest are not
restated.
Financial liabilities are never reclassified.
2.15
Derecognition of financial assets and financial liabilities
2.15.1
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is derecognised when the contractual rights to the cash flows from the financial asset have expired.
The Group also derecognises a financial asset if it has both transferred the financial asset and the transfer
qualifies for derecognition.
The Group transfers a financial asset if, and only if, either:
i.
The Group transfers its contractual rights to receive cash flows from the financial asset; or
ii.
The Group retains the rights to the cash flows, but assumes an obligation to pay the received cash
flows in full without material delay to a third party under a ‘pass-through’ arrangement.
A transfer only qualifies for derecognition if either:
i.
The Group transfers substantially all the risks and rewards of the asset; or
ii.
The Group neither transfers nor retains substantially all the risks and rewards of the asset, but it
transfers control of the asset.
2.15.2
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or
expired. Modifications to, and exchanges of, financial liabilities are treated as extinguishments and
derecognised, when the revised terms are substantially different to the original term. The difference
between the carrying amount of the original financial liability and the consideration paid is recognised in
profit or loss.
2.16
Modification of financial assets
The contractual terms of a financial asset may be modified due to various reasons, either due to commercial
renegotiations or as a response to a borrower's financial difficulties (forborne modified loans) with a view to
maximise recovery.
In the event that the terms and conditions of a financial asset are renegotiated or otherwise modified, the
Group considers whether the modification results in derecognition of the existing financial asset and the
recognition of a new financial asset. A derecognition of a financial asset (or part of a financial asset) and a
recognition of a new financial asset would occur where there has been a substantial modification on the
revised terms to the original cash flows.
Judgement is required to assess whether a change in the contractual terms is substantial enough to lead to
derecognition. The Group considers a series of factors of both qualitative and quantitative nature when
making such judgements on a modification in the contractual cash flows, including change in the currency,
change in counterparty, introduction of substantially different terms such as addition of equity conversion
features, changes in the legal framework and other.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.16
Modification of financial assets (continued)
Where the modification does not result in derecognition, the Group recognises a modification gain or loss,
based on the difference between the modified cash flows discounted at the original EIR and the existing
gross carrying value of the financial asset. The financial asset continues to be subject to the same
assessments for significant increase in credit risk relative to initial recognition and credit-impairment. A
modified financial asset will transfer out of Stage 3 if the conditions that led to it being identified as credit-
impaired, as defined in Note 2.17.2, are no longer present. A modified financial asset will transfer out of
Stage 2 when it no longer meets the criteria for significant increase in credit risk such as it satisfies relative
thresholds, which are based on changes in its lifetime probability of default (PD), days past due are not
considered to be forborne, and other considerations. The financial asset continues to be monitored for
significant increases in credit risk and credit impairment.
Where the modification results in derecognition, the new financial asset is classified at amortised cost or
FVOCI and an assessment is performed on whether it should be classified as Stage 1 or POCI for ECL
measurement. For the purposes of assessing significant increases in credit risk, the date of initial
recognition for the new financial asset is the date of the modification.
2.17
Impairment of financial assets
2.17.1
Overview of ECL principle
The Group uses a forward looking ECL model, requiring judgement, estimates and assumptions in
determining the level of ECL. ECL is recorded for all financial assets measured at amortised cost and FVOCI,
lease receivables, loan commitments and financial guarantee contracts. Equity instruments are not subject
to impairment.
At initial recognition, impairment allowance (or provision in the case of commitments and guarantees) is
required for ECL resulting from default events that are possible within the next 12 months (12-month ECL),
unless assets are deemed as POCI whereby the ECL is measured on a lifetime basis. In the event of a
significant increase in credit risk since initial recognition, impairment allowance is required resulting from all
possible default events over the expected life of the financial instrument (lifetime ECL). The Group’s policies
for determining if there has been a significant increase in credit risk are set out in Note 2.17.3.
The Group categorises its financial assets into Stage 1, Stage 2, Stage 3 and POCI for ECL measurement as
described below:
Stage 1: Financial assets which did not have a significant increase in credit risk since initial recognition are
considered to be Stage 1 and 12-month ECL is recognised.
Stage 2: Financial assets which are considered to have experienced a significant increase in credit risk since
initial recognition are considered to be Stage 2 and lifetime ECL is recognised.
Stage 3: Financial assets which are considered to be credit-impaired (refer to Note 2.17.2 on how the Group
defines credit-impaired and default) and lifetime ECL is recognised.
POCI: These are purchased or originated financial assets that are credit-impaired on initial recognition. POCI
assets include loans purchased or originated at a deep discount that reflects incurred credit losses. Changes
in lifetime ECL since initial recognition are recognised until a POCI loan is derecognised.
ECL is recognised in profit or loss with a corresponding ECL allowance reported as a decrease in the carrying
value of financial assets measured at amortised cost on the balance sheet. For financial assets measured at
FVOCI the carrying value is not reduced, but the accumulated amount of ECL allowance is recognised in
OCI. For off-balance sheet instruments, accumulated provisions for ECL are reported in ‘Accruals, deferred
income, other liabilities and other provisions’, except in the case of loan commitments where ECL on the
loan commitment is recognised together with the loss allowance of the relevant on balance-sheet exposure,
as the Group cannot separately identify the ECL on the loan commitment from those on the on-balance
sheet exposure component. ECL for the period is recognised within the consolidated income statement in
'Credit losses on financial assets' and further analysed in Note 16 in ‘Credit losses to cover credit risk on
loans and advances to customers’ for loans and advances to customers and loan commitments and financial
guarantees, and in ‘Credit losses on other financial instruments’ for all other financial instruments.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.17
Impairment of financial assets (continued)
2.17.2
Credit impaired and definition of default
Loans and advances to customers, loan commitments and financial guarantees
The Group considers loans and advances to customers that meet the non-performing exposure (NPE)
definition as per the European Banking Authority (EBA) standards to be in default and hence stage 3 (credit-
impaired). Therefore such loans have ECL calculated on a lifetime basis and are considered to be in default
for credit risk management purposes.
As per the EBA standards and European Central Bank’s (ECB) Guidance to Banks on Non-Performing Loans
(which was published in March 2017), NPEs are defined as those exposures that satisfy one of the following
conditions:
i.
The borrower is assessed as unlikely to pay its credit obligations in full without the realisation of the
collateral, regardless of the existence of any past due amount or of the number of days past due.
ii.
Defaulted or impaired exposures as per the approach provided in the Capital Requirement
Regulation (CRR), which would also trigger a default under specific credit adjustment, diminished
financial obligation and obligor bankruptcy.
iii.
Material exposures as set by the Central Bank of Cyprus (CBC), which are more than 90 days past
due.
iv.
Performing forborne exposures under probation for which additional forbearance measures are
extended.
v.
Performing forborne exposures previously classified as NPEs that present more than 30 days past
due within the probation period.
From 1 January 2021 two regulatory guidelines came into force that affect NPE classification and Days-Past-
Due calculation. More specifically, these are the RTS on the Materiality Threshold of Credit Obligations Past-
Due (EBA/RTS/2016/06), and the Guideline on the Application of the Definition of Default under article 178
(EBA/RTS/2016/07).
The Days-Past-Due (DPD) counter begins counting DPD as soon as the arrears or excesses of an exposure
reach the materiality threshold (rather than as of the first day of presenting any amount of arrears or
excesses). Similarly, the counter will be set to zero when the arrears or excesses drop below the materiality
threshold. Payments towards the exposure that do not reduce the arrears/excesses below the materiality
threshold, will not impact the counter.
For retail debtors, when a specific part of the exposures of a customer that fulfils the NPE criteria set out
above is greater than 20% of the gross carrying amount of all on-balance sheet exposures of that customer,
then the total customer exposure is classified as non-performing; otherwise only the specific part of the
exposure is classified as non-performing.
For non-retail debtors, when an exposure fulfils the NPE criteria set out above, then the total customer
exposure is classified as non-performing.
Material arrears/excesses are defined as follows:
i.
Retail exposures: Total arrears/excess amount greater than €100
ii.
Exposures other than retail: Total arrears/excess amount greater than €500
and the amount in arrears/excess is at least 1% of the customer's total exposure.
The definitions of credit-impaired and default are aligned so that stage 3 represents loans which are
considered defaulted or otherwise credit-impaired.
Exposures are classified as forborne when concessions are made to debtors who are facing or about to face
financial difficulties and cannot meet their contractual obligations.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.17
Impairment of financial assets (continued)
2.17.2
Credit impaired and definition of default (continued)
Non-performing forborne exposures cease to be considered as NPEs and in such case are transferred out of
Stage 3, only when all of the following conditions are met:
i.
The extension of forbearance measures does not lead to the recognition of impairment or default.
ii.
A period of one year has passed since the latest of the following events:
a.
The restructuring date
b.
The date the exposure was classified as non-performing
c.
The end of the grace period included in the restructuring arrangements.
iii.
Following the forbearance measures and according to the post-forbearance conditions, there is no
past due amount or concerns regarding the full repayment of the exposure.
iv.
No Unlikely-to-Pay criteria exist for the debtor.
v.
The debtor has made post-forbearance payments of a non-insignificant amount of capital (different
capital thresholds exist according to the facility type).
Non-performing non-forborne exposures cease to be considered as NPEs only when all of the following
conditions are met:
i.
At least three months have passed since the date that the conditions for which the exposure was
classified as non-performing cease to be met, and within these three months there are no default
triggers, and
ii.
During the three-month period, the behaviour of the obligor should be taken into account, i.e. there
are no arrears/excesses and instalments are being repaid normally, and
iii. During the three-month period, the financial situation of the obligor should be taken into account,
i.e. the financial situation of the obligor has improved, and
iv. During the three-month period an Unlikely-to-Pay criteria assessment is carried out and it is
assessed that the obligor can fulfil their obligations without resorting to the liquidation of collateral
and there are no other Unlikely-to-Pay criteria, and
v.
The obligor does not have any amount past due by more than 90 days.
When a loan facility exits Stage 3, it is transferred to Stage 2 for a probationary period of 6 months. At the
end of this period, the significant increase in credit risk (SICR) assessment is performed by comparing the
PD at the reporting date with the PD at initial recognition as described in Note 2.17.3 and if PD is assessed
to have deteriorated beyond the set thresholds, the loan remains in Stage 2, otherwise the loan is
transferred to Stage 1. The reversal of previous unrecognised interest on loans and advances to customers
that no longer meet Stage 3 criteria is presented in 'Credit losses to cover credit risk on loans and advances
to customers' within 'Credit losses on financial assets'.
Debt securities, reverse repurchase agreements, loans and advances to banks and balances with central
banks
Debt securities, reverse repurchase agreements, loans and advances to banks and balances with central
banks are considered defaulted and transferred to Stage 3 if the issuers have failed to pay either interest or
principal. Moody’s ratings indicate these exposures with a grade C which is the lowest Moody’s rating
category. In addition, a number of other criteria are considered such as adverse changes in business,
financial and economic conditions as well as external market indicators (credit spreads, credit default swap
(CDS) prices) in determining whether there has been a significant deterioration in the financial position that
could lead to unlikeliness to pay.
2.17.3
Significant increase in credit risk (SICR)
IFRS 9 requires that in the event of a significant increase in credit risk since initial recognition, the
calculation basis of the loss allowance would change from 12-month ECL to lifetime ECL.
The assessment of whether credit risk has increased significantly since initial recognition is performed at
each reporting date, by considering the change in the risk of default occurring over the remaining life of the
financial instrument since initial recognition.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.17
Impairment of financial assets (continued)
2.17.3
Significant increase in credit risk (SICR) (continued)
Significant increase in credit risk for loans and advances to customers
Primarily, the Group uses the lifetime probability of default (PD) as the quantitative metric in order to
assess transition from Stage 1 to Stage 2 for all portfolios. The Group considers an exposure to have
experienced significant increase in credit risk (SICR) by comparing the PD at the reporting date with the PD
at initial recognition to compute the relative increase in regards to the corresponding threshold. The
threshold has been determined by using statistical analysis on historical information of credit migration
exposures on the basis of days past due, for the different segments. The Group applies the thresholds
presented in the table below to each portfolio/segment, based on the following characteristics: customer
type, product type and rating at origination. The threshold is then assigned to each facility according to the
facility's portfolio/segment.
The SICR trigger is activated based on the comparison of the ratio of current lifetime PD to the remaining
Lifetime PD at origination (PD@O) to the pre-established threshold. If the resulting ratio is higher than the
pre-established threshold then deterioration is assumed to have occurred and the exposure is transferred to
Stage 2. In addition, to minimize Stage 2 volatility caused by facilities with small PD, the Group introduced
during the first half of 2024 an absolute threshold where the annualized lifetime reporting PD of each facility
should increase more than 1,06% with respect to the corresponding origination PD. The PD cut-off is based
on the weighted PD of Stage 1.
The table below summarises the quantitative measure of the SICR trigger which varies depending on the
credit quality at origination as follows, applied on 31 December 2024 and 2023:
Segment
Rating at
origination
PD Deterioration
thresholds applied at
31 December 2024
(median across
IFRS 9 segments)
PD Deterioration
thresholds applied at
31 December 2023
(median across
IFRS 9 segments)
Retail
1-7
3 X PD@O
3 X PD@O
SME
1-7
3 X PD@O
6 X PD@O
Corporate
1-7
2 X PD@O
2 X PD@O
During the year ended 31 December 2024 PDs were calibrated and consequently the PD deterioration
thresholds were also updated.
For exposures which are subject to individual impairment assessment, the following qualitative factors in
addition to the ones incorporated in the PD calculation, are considered:
i.
significant
change
in
collateral
value
or
guarantee
or
financial
support
provided
by
shareholders/directors,
ii.
significant adverse changes in business, financial and/or economic conditions in which the borrower
operates.
SICR is automatically triggered upon the granting of forbearance measures to performing borrowers. Stage
1 exposures that are classified as 'performing forborne' are automatically transferred to Stage 2.
The Group also considers, as a backstop criterion, that a significant increase in the credit risk occurs when
contractual payments are more than 30 days past due (past due materiality is applied). Loans that meet
this condition are classified in Stage 2. The transfer to Stage 2 does not take place in cases where certain
exposures are past due for more than 30 days but certain materiality limits are not met (such as arrears up
to €100 and the amount in arrears is lower than 1% of the customer's total exposure, in the case of retail
exposures and arrears up to €500 and the amount in arrears is lower than 1% of the customer's total
exposure, on all exposures other than retail). The materiality levels are set in accordance with the ECB
Regulation (EU) 2018/1845.
The thresholds for movement between Stage 1 and Stage 2 are symmetrical. After a financial asset has
been transferred to Stage 2, if its credit risk is no longer considered to have significantly increased relative
to its initial recognition, the financial asset will move back to Stage 1.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.17
Impairment of financial assets (continued)
2.17.3
Significant increase in credit risk (SICR) (continued)
Significant increase in credit risk for financial instruments other than loans and advances to customers
Low credit risk simplification is adopted for debt securities, loans and advances to banks, reverse
repurchase agreements and balances with central banks with external credit ratings that are rated as
investment grade. The assessment of low credit risk is based on both the external credit rating and the
internal scoring (which considers latest available information on the instrument and issuer). The
combination of the two provides an adjusted credit rating. An adjusted credit rating which remains
investment grade is considered as having low credit risk.
For debt securities, loans and advances to banks, reverse repurchase agreements and balances with central
banks which are below investment grade, the low credit risk exemption does not apply and therefore an
assessment of significant credit deterioration takes place, by comparing their credit rating at origination
with the credit rating on the reporting date. Significant deterioration in credit risk is considered to have
occurred when the adjusted rating of the exposures drops to such an extent that the new rating relates to a
riskier category (i.e. from a non-investment grade to speculative and then to highly speculative), or when
the PD of the exposure at the origination date compared to the PD at the reporting date has increased by a
level greater than the pre-set threshold.
2.17.4
Measurement of ECLs
IFRS 9 ECL reflects an unbiased, probability-weighted estimate based on either loss expectations resulting
from default events either over a maximum 12-month period from the reporting date, or over the remaining
life of a financial instrument. The Group calculates lifetime ECL and 12-month ECL either on an individual
basis or a collective basis, depending on the nature of the underlying portfolio of financial instruments.
The Group calculates ECL based on three-weighted scenarios to measure the expected cash flow shortfalls,
discounted at an approximation to the EIR as calculated at initial recognition. A cash flow shortfall is the
difference between the cash flows that are due in accordance with the contract and the cash flows expected
to be received.
The Group calculates ECL using the following three components:
i.
exposure at default (EAD),
ii.
probability of default (PD), and
iii. loss given default (LGD).
Exposure at default (EAD)
EAD represents the expected exposure in the event of a default during the life of a financial instrument,
considering expected repayments, interest payments and accruals. EAD definition is differentiated for the
following categories: revolving and non-revolving exposures.
For non-revolving exposures the term is based on the contractual term of the exposure and both on-balance
sheet and off-balance sheet exposures are amortised in accordance with the principal contractual payment
schedule of each exposure. For revolving exposures, the projected EAD is the carrying value plus the credit
conversion factor applied on the undrawn amount. The credit conversion factor model is derived based on
empirical data from 2014 onwards.
In regards to the credit-impaired exposures, the EAD is equal to the on balance sheet amount as at the
reporting date.
Probability of default (PD)
PD represents the probability an exposure defaults and is calculated based on statistical rating models,
calculated per segment and taking into consideration each individual’s exposure rating as well as forward
looking information based on macroeconomic inputs.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.17
Impairment of financial assets (continued)
2.17.4
Measurement of ECLs (continued)
For each exposure, lifetime PD represents the probability of default within the lifetime horizon and is based
on the underlying models of marginal probability of default through the cycle (MPD TTC), MPD individual,
MPD individual (embedding also the NPE overlay), MPD point in time and Marginal Probability of Paid-off
(MPP). In particular, the first element, MPD TTC is constructed per segment, illustrating the probability of
default status depending on number of months since the origination date. The PD for each month since the
origination date is calculated under the condition that exposures survived until the prior month. The MPD
individual is allocated to linked individual exposures through a scaling factor constructed based on the
current individual risk assessment, which is represented by the Group’s PD per rating grade. It also embeds
the NPE overlay, which is an add-on factor that calibrates the underlying models, such that they are aligned
with the NPE definition. MPD is adjusted to reflect the current and forward looking information based on the
macroeconomic inputs. The MPP Component is the curve that shows the probability of full payment of a
particular exposure based on specific period in months since the open date of the exposure. MPP is
estimated for each particular segment and depends on the contractual terms of the exposure. For revolving
facilities where there is no contractual survival maturity, curves based on product type are developed. The
combination of these models gives rise to a PD value for each month for the lifetime of the exposure.
The Company's internal rating process is summarised in Note 44.
Loss given default (LGD)
LGD represents an estimate of the loss if default occurs at a given time. It is usually expressed as a
percentage of the EAD. Two distinct paths are taken into consideration for the LGD parameter. The first one
is that of a cured facility where there is a full recovery thus no losses occur. In the second scenario, the
facility remains non-performing resulting in the Company proceeding with collateral liquidation actions. To
this end, the LGD model considers parameters such as historical loss and/or recovery rates as well as the
collateral value which is discounted to the present value determining the amount of the expected shortfall.
LGD rates are estimated for the Stage 1, Stage 2, Stage 3 and POCI segments of each asset class.
The structure of the LGD model considers the following:
i.
Curing where the probability of cure model was derived based on historical observations.
ii.
Non-curing including cash recovery, realisation through portfolio sales or realisation of collaterals,
either voluntarily i.e. debt for asset swap, or through forced sale, auctions and foreclosure and
receivership.
A model monitoring process is followed for PD, EAD and LGD models, where model outputs are back-tested
against recent data points.
Individually assessed loans
The individual assessment is performed not only for individually significant performing and non-performing
exposures, but also for other exposures meeting specific criteria and thresholds determined by Credit Risk
Management. A risk-based approach is used on the selection criteria of the individually assessed population
which include, among others, forborne exposures, exposures with significant decrease in the yearly credit
turnover and/or in assigned collaterals. Also, significant Stage 1 exposures within sectors assessed by
Credit Risk Management to be highly impacted by one or more factors or events (such as a global or local
economic/market/regulatory/geopolitical development) are assessed for potential increase in credit risk and
significant exposures that have transitioned to Stage 2 from Stage 1 are assessed for potential indications
of unlikeness to pay.
The ECL for individually assessed Stage 3 assets is calculated on an individual basis and all relevant
considerations of the expected future cash flows are taken into account (for example, the business
prospects for the customer, the realisable value of collateral, the Group’s position relative to other
claimants, the reliability of customer information and the likely cost and duration of the work out process).
Collectively assessed loans
All customer exposures that are not individually assessed are assessed on a collective basis. For the
purposes of calculating ECL, exposures are grouped into granular portfolios/segments with shared risk
characteristics. The granularity is based on different levels of segmentation which, among other factors
include customer type, exposure class and portfolio type. The granularity of the IFRS 9 segments is aligned
with the Internal Rating Based (IRB) segmentation of the CRR.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.17
Impairment of financial assets (continued)
2.17.4
Measurement of ECLs (continued)
When a financial asset has been identified as credit-impaired, ECL are measured as the difference between
the asset’s gross carrying amount and the present value of estimated future cash flows discounted at the
instrument’s original effective interest rate.
2.17.5
Scenarios and scenario weights
The Group uses reasonable and supportable information, including forward-looking information, in the
calculation of ECL. ECL are the unbiased probability-weighted credit losses determined by evaluating a
range of possible outcomes and considering future economic conditions. ECL are calculated for three
macroeconomic scenarios, baseline, adverse and favourable and the output is the weighted average ECL
based on the assigned probability of each scenario (Note 44).
Macroeconomic scenarios impact both the probability of default (PD) and the loss given default (LGD).
Specifically, forward looking information is embedded in the PD based on regression equations derived on
the basis of historical data. Using statistical analysis, the most significant and relevant macro-variables have
been selected in order to predict more accurately the expected default rates. In regard to the LGD, the
forward looking information is incorporated via the property indices for the relevant categories of properties
(residential, commercial, industrial). In particular, for each collateral a forward-looking projection of the
realisable value is calculated before discounting back to reporting date to quantify the expected cash
shortfall.
Each macroeconomic scenario used in the ECL calculation includes a projection of all relevant
macroeconomic variables used in the models for a five-year period, subsequently reverting to projections of
long-run growth averages based on estimates of potential growth, and behavioural relationships between
the targeted variables.
Regarding the scenario weights, these are determined using probability theory and severity analysis.
Historical data for GDP growth (1995-2024) is analysed and a frequency distribution is produced. From that
distribution probabilities are derived for all possible outcomes. Deviations of actual outcomes from the mean
are calculated in terms of standard deviation ratios, and severity is higher at higher deviation ratios. The
baseline scenario is defined over the range of values that correspond to 50% probability of equidistant
deviations around the mean of the historical distribution. The favourable scenario is defined over the range
of values to the right of the distribution that correspond to 25% probability. The adverse scenario is defined
over the range of values to the left of the distribution that correspond to 25% probability. These benchmark
probability points (50%, 25% and 25%), are decided using severity analysis which incorporates the average
and standard deviation of the distribution.
The macroeconomic forecasts for the baseline, favourable and adverse scenarios are determined by the
Economic Research Department of the Company. This process utilises a variety of external actual and
forecast information (International Monetary Fund (IMF), European Commission and other). The
corresponding weights are also determined by the Economic Research Department, as described above, by
also applying discretion and expert judgement where necessary. The resulting scenarios and weights are
reviewed and proposed by the Chief Risk Officer (CRO) and are submitted to the Provisions Committee for
their endorsement.
Qualitative adjustments or overlays are occasionally made when inputs calculated do not capture all the
characteristics of the market at the reporting date. Overlays performed are set out in Note 5.1 and are
assessed/reconfirmed at each reporting date.
2.17.6
ECL measurement period
The period for which expected credit losses are determined (either for 12-month or lifetime horizon) is
based on the stage classification of the facility and its contractual life. For non-revolving exposures the
expected lifetime is the period from the reporting date to the termination date of the facility. For irrevocable
loan commitments and financial guarantee contracts, the measurement period is determined similar to the
period of the revolving facilities.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.17
Impairment of financial assets (continued)
2.17.6
ECL measurement period (continued)
For revolving facilities, credit cards and corporate and retail overdrafts, the Company has the right to cancel
and/or reduce the facilities with two months’ notice. The Company does not limit its exposure to credit
losses to the contractual notice period, but instead a behavioural maturity model is utilised where each
revolving facility is assigned an expected time period to termination.
2.17.7
Purchased or originated credit-impaired financial assets (POCI)
POCI financial assets are recorded at fair value on initial recognition. ECL are only recognised or released to
the extent that there is a subsequent change in the lifetime expected credit losses. For POCI financial
assets, the Group only recognises the cumulative changes in lifetime ECL since initial recognition in the loss
allowance. POCI remain a separate category until derecognition.
2.18
Write-offs
The Group reduces the gross carrying amount of a financial asset when there is no reasonable expectation
of recovering it. In such case, financial assets are written-off either partially or in full. Write-off refers to
both contractual and non-contractual write-offs. A non-contractual write-off is defined as the accounting
reduction of a debt, without waiving the legal claim against the debtor. The Company continues to seek
recovery of the debt (e.g. restructuring arrangements, debt-for-assets swaps, full settlement, etc.) and the
amount written-off for financial assets that are still subject to enforcement activity.
Indicative conditions for writing-off part or the full amount of the exposure include, but are not limited to,
the following list of criteria. The criteria are applicable to both contractual and non-contractual write-offs
and are not by default applicable to all cases, as individual assessment and judgement is required in order
to evaluate each case on its own merits.
i.
Cases which are close to realisation of a security or collateral may be deemed necessary to be
considered for write-off. With regards to such financial assets for which the security or collateral has
not yet been realised (but may be close to agreement or other arrangement for realising), the
Company forms a reasonable expectation of future cash flows which would also take into account the
collateral’s realisable value.
ii.
When the Company ceases all collection and debt enforcement actions, such remaining debt can be
assessed for write-off. However, debt can be written-off even while collection and enforcement
activities are proceeding.
iii. Debtor status is another indicator for assessment for write-off; for example, the debtor’s insolvency
status, or whether the debtor is deceased or cannot be traced. While such loans may already be
impaired, the Company might be unable to form a reasonable expectation of future cash flows.
Nevertheless, the Company takes all the legally available steps to recover the debt, where
appropriate.
iv. Customers with exposures with significant number of days past due, provided that all other efforts
for restructuring are exhausted and the exposure or part of the exposure is deemed as
unrecoverable / uncollectable, are also assessed for write-off.
Write-offs are subject to the Groups internal governance process for review and approval.
Write-offs and partial write-offs represent derecognition/partial derecognition events. If the amount of
write-off is greater than the amount of accumulated loss allowance, the difference is first treated as an
addition to the allowance that is then applied against the gross carrying amount. Recoveries in part or in
full, of amounts previously written-off are credited to the consolidated income statement in 'Credit losses on
financial assets' and separately identified in Note 16 within ‘Credit losses to cover credit risk on loans and
advances to customers’.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.19
Financial guarantees, letters of credit and undrawn loan commitments
The Group issues financial guarantees to its customers, consisting of letters of guarantee and acceptances.
Financial guarantees are initially recognised at fair value being the premium received, and presented on the
consolidated balance sheet within ‘Accruals, deferred income, other liabilities and other provisions’.
Subsequently, the Group’s liability under each guarantee is measured at the higher of: (a) the amount
initially recognised reduced by the cumulative amortised premium which is periodically recognised in the
consolidated income statement in ‘Fee and commission income’ in accordance with the terms of the
guarantee, and (b) the amount of ECL provision.
ECL relating to financial guarantees is recorded in 'Credit losses on financial assets' and further identified in
Note 16 in ‘Credit losses to cover credit risk on loans and advances to customers’. The balance of the
liability for financial guarantees that remains is recognised in ‘Fee and commission income’ in the
consolidated income statement when the guarantee is fulfilled, cancelled or expired.
Undrawn loan commitments and letters of credit are commitments under which, over the duration of the
commitment the Group is required to provide a loan with pre-specified terms to the customer.
Corresponding ECL are presented within ‘Accruals, deferred income, other liabilities and other provisions’ on
the Group’s balance sheet, except in the case of loan commitments where ECL on the loan commitment is
recognised together with the loss allowance of the relevant on balance-sheet exposure as the Group cannot
separately identify the ECL on the loan commitment from those on the on-balance sheet exposure
component. ECL relating to loan commitments and letters of credit is recorded in ‘Credit losses on financial
assets' and further identified in Note 16 in 'Credit losses to cover credit risk on loans and advances to
customers'.
When a customer draws on a commitment, the resulting loan is presented within (i) financial assets at fair
value held for trading, consistent with the associated derivative loan commitment, (ii) financial assets at fair
value not held for trading, following loan commitments designated at FVPL, or (iii) loans and advances to
customers, when the associated loan commitment is not fair valued through profit or loss.
2.20
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance
sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an
intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. The legally
enforceable right must not be contingent on future events and must be enforceable in the normal course of
business and in the event of default, insolvency or bankruptcy of either party.
2.21
Hedge accounting
The Group elected, as a policy choice permitted by IFRS 9, to continue to apply hedge accounting in
accordance with IAS 39, including the provisions related to macro fair value hedge accounting (IAS 39
'carve-out').
The Group uses derivative financial instruments to hedge exposures to interest rate and foreign exchange
risks and in the case of the hedge of net investments, the Group uses also non-derivative financial liabilities.
The Group applies hedge accounting for transactions which meet the specified criteria.
Transactions that are entered into in accordance with the Group's hedging objectives, but do not qualify for
hedge accounting, are referred to as economic hedge relationships.
At inception of the hedging relationship, the Group formally documents the relationship between the hedged
item and the hedging instrument, including the nature of the risk and the objective and strategy for
undertaking the hedge. The method that will be used to assess the effectiveness, both at the inception and
at ongoing basis, of the hedging relationship also forms part of the Group’s documentation.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.21
Hedge accounting (continued)
At inception of the hedging relationship and at each hedge effectiveness assessment date, a formal
assessment is undertaken to ensure that the hedging relationship is highly effective regarding the offsetting
of the changes in fair value or the cash flows attributable to the hedged risk. A hedge is regarded as highly
effective if the changes in fair value or cash flows attributable to the hedged risk of the hedging instrument
and the hedged item during the period for which the hedge is designated, are expected to offset in a range
of 80% to 125%. In the case of cash flow hedges where the hedged item is a forecast transaction, the
Group assesses whether the transaction is highly probable and presents an exposure to variations in cash
flows that could ultimately affect the consolidated income statement.
Portfolio Hedging (Macro-Hedging)
The Group applies macro fair value hedging to non-maturing deposits (NMDs), in accordance with IAS 39,
as adopted by the EU (IAS 39 carve-out). The hedged items are determined through behavioural modelling
identifying the ‘core’ Non-Maturing Deposits (NMDs), which are stable demand deposits with behavioural
maturity of up to ten years. Deposits within the identified portfolios are allocated to repricing/maturity time
buckets based on expected, rather than contractual, maturity dates. The hedging instruments (pay
floating/receive fixed rate interest rate swaps) are designated appropriately to those repricing/maturity
time buckets. Hedge effectiveness is measured by comparing fair value movements of the hedged amount
attributable to the hedged risk, against the fair value movements of the hedging derivatives, to ensure that
they are within an 80% to 125% range.
2.21.1
Fair value hedges
In the case of fair value hedges that meet the criteria for hedge accounting, the change in the fair value of a
hedging instrument is recognised in the consolidated income statement in ‘Net gains/(losses) on financial
instruments'. The change in the fair value of the hedged item attributable to the risk hedged is recorded as
part of the carrying value of the hedged item and is also recognised in the consolidated income statement in
‘Net gains/(losses) on financial instruments'.
If the hedging instrument expires or is sold, terminated or exercised, or where the hedge no longer meets
the criteria for hedge accounting, the hedging relationship is discontinued prospectively. For hedged items
recorded at amortised cost, the difference between the carrying value of the hedged item on termination
and the face value is amortised to the consolidated income statement, over the remaining term of the
original hedge. If the hedged item is derecognised, the unamortised fair value adjustment is recognised
immediately in the consolidated income statement.
2.21.2
Hedges of net investments in foreign operations
Hedges of net investments in overseas branches or subsidiaries are accounted for in a way similar to cash
flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are
recognised in other comprehensive income in the 'Foreign currency translation reserve', while gains or
losses relating to the ineffective portion are recognised in ‘Net foreign exchange gains’ in the consolidated
income statement.
On disposal or liquidation of an overseas branch or subsidiary, the cumulative gains or losses recognised in
other comprehensive income are transferred in the consolidated income statement as part of the gain/(loss)
on the disposal or liquidation.
2.22
Cash and cash equivalents
Cash and cash equivalents for the purposes of the consolidated statement of cash flows consist of cash,
non-obligatory balances with central banks, loans and advances to banks and other securities that are
readily convertible into known amounts of cash and are repayable within three months of the date of their
acquisition.
2.23
Insurance business
The Group undertakes both life insurance and non-life insurance business and issues insurance and
investment contracts. An insurance contract is a contract under which one party (the insurer) accepts
significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder
if a specified uncertain future event (the insured event) adversely affects the policyholder.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.23
Insurance business (continued)
Once a contract has been classified as an insurance contract, it remains an insurance contract until expiry or
until all the rights and obligations under the contract have been fulfilled, even if the insurance risk has been
significantly reduced during its term.
Investment contracts are those contracts that transfer financial risk. Investment contracts can, however, be
reclassified as insurance contracts after inception, if insurance risk becomes significant.
Identifying contracts
When identifying contracts there is a need to assess whether contracts need to be treated as a single
contract and whether embedded derivatives, investment components and goods and services components
need to be separated and accounted for under another standard.
Level of aggregation
Individual insurance contracts that are managed together and are subject to similar risks are identified as a
group.
Contracts that are managed together usually belong to the same product line and have similar
characteristics, such as being subject to a similar pricing framework or similar product management, and
are issued by the same legal entity. If a contract is exposed to more than one risk, the dominant risk of the
contract is used to assess whether the contract features similar risks.
Each group of contracts is then divided into annual cohorts (i.e. by year of issue) and each cohort into three
groups, based on expected profitability: (i) contracts that are onerous at initial recognition; (ii) contracts
that at initial recognition have no significant possibility of becoming onerous subsequently; and (iii) the
remaining contracts.
The groups of insurance contracts are established at initial recognition without subsequent reassessment
and form the unit of account at which the contracts are measured.
Recognition
Groups of insurance contracts issued are initially recognised from the earliest of the following:
i.
the beginning of the coverage period;
ii.
the date when the first payment from the policyholder is due or actually received, if there is no due
date; and
iii. when the Group determines that a group of contracts becomes onerous.
The Group adds new contracts to the group in the reporting period in which that contract meets one of the
criteria set out above.
Contract boundaries
The measurement of a group of insurance contracts includes all the future cash flows within the boundary of
each contract in the group. Cash flows are within the boundary of an insurance contract if they arise from
substantive rights and obligations that exist during the reporting period in which the Group can compel the
policyholder to pay the premiums, or in which the Group has a substantive obligation to provide the
policyholder with services. For multi-year (more than one year) non-life contracts, the Group has assessed
that they are expected to equal their duration as the Group cannot reprice or terminate the insurance
contract during the coverage period.
Measurement
The General Measurement Model (GMM) is the standard measurement model and the Premium Allocation
Approach (PAA) is the simplified approach for the measurement of the contracts that fall under the scope of
IFRS 17. The Variable Fee Approach (VFA) is mandatory to apply for insurance contracts with direct
participation features upon meeting the eligibility criteria. While the GMM is the default measurement
model, the Group applies the VFA primarily to insurance contracts in the unit-linked life portfolio. The PAA is
an optional simplification applicable for measuring the Liability for Remaining Coverage (LRC) for contracts
with coverage periods of one year or less, or when doing so approximates the GMM; it is primarily applied
by the Group to non-life insurance contracts and to non-individual life insurance contracts, as well as to
reinsurance contracts of the Group, except for the individual life reinsurance agreement, for which the GMM
is applied. For the rest of the insurance contracts (individual protection life contracts, the acquired portfolio
and health long-term portfolio), the Group applies the GMM approach.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.23
Insurance business (continued)
Initial measurement
Groups of insurance contracts under the GMM or the VFA are initially measured as the total of:
a.
Fulfilment cash flows, which comprise:
i.
an estimate of the present value of future cash flows that are expected to arise as the Group
fulfils its service under the insurance contracts; and
ii.
an explicit risk adjustment for non-financial risk (i.e., the risk adjustment held on balance
sheet).
b.
Contractual Service Margin (CSM) which represents the unearned profit that the Group will recognise as
it provides insurance contract services.
The fulfilment cash flows comprise unbiased and probability-weighted estimates of future cash flows,
discounted to present value to reflect both the time value of money and financial risks, plus a risk
adjustment for non-financial risk. The discount rate applied reflects the time value of money, the
characteristics of the cash flows, the liquidity characteristics of the insurance contracts and, where
appropriate, is consistent with observable current market prices.
The risk adjustment for non-financial risk for a group of insurance contracts is the compensation required
for bearing the uncertainty in relation to the amount and timing of the cash flows that arises from non-
financial risk. The risk adjustment is explicit and determined separately from other fulfilment cash flows.
A CSM arises when, for a group of contracts, the sum of the discounted cash flows and the risk adjustment
is a net inflow. If the sum of these is a net outflow, then the group of contracts is onerous and a loss equal
to the net outflow is recognised in the consolidated income statement.
Under the PAA, the liability for remaining coverage is initially recognised as the premiums received at initial
recognition, minus any insurance acquisition cash flows.
Subsequent measurement
GMM
At the end of each reporting period, insurance contracts are measured as the sum of:
i.
Liability for remaining coverage (LRC), comprising fulfilment cash flows related to future service and
the CSM at the reporting date; and
ii.
Liability for incurred claims (LIC), comprising fulfilment cash flows related to past service at the
reporting date (claims and expenses not yet paid, including claims incurred but not yet reported).
The fulfilment cash flows of groups of insurance contracts are measured at the reporting date using current
estimates of future cash flows, current discount rates and current estimates of the risk adjustment for non-
financial risk. Changes in fulfilment cash flows are recognised as follows:
i.
Changes related to future service are adjusted against the CSM, unless the group of contracts is
onerous, in which case such changes are recognised in the net insurance service result in the
consolidated income statement
ii.
Changes related to past or current service are recognised in the net insurance service result in the
consolidated income statement
iii. The effects of the time value of money and financial risk are recognised as net insurance finance
income or expense in the consolidated income statement.
The amount of CSM recognised in income statement for services in a period is determined by the allocation
of the CSM remaining at the end of the reporting period (before any allocation) over the current and
remaining expected coverage period of the group of insurance contracts based on coverage units. These
coverage units reflect the quantity of benefits and the coverage duration. Adjustments relating to future
service and thus adjust the CSM using locked-in discount rates (i.e. those that reflect the characteristics of
the cash flows of initial recognition) except for changes in the risk adjustment for non-financial risk that
relate to future service.
VFA
The VFA is applied for contracts with direct participation features (contracts where returns are based on the
performance of underlying assets). For insurance contracts under the VFA, changes in the Group’s share of
the underlying items, and economic experience and economic assumption changes adjust the CSM, whereas
these changes do not adjust the CSM under the GMM but are recognised in profit or loss as they arise.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.23
Insurance business (continued)
PAA
Subsequently to initial measurement, the carrying amount of the LRC is increased with premiums received
in the period, minus insurance acquisition cash flows, plus amortisation of acquisition cash flows, minus the
amount recognised as insurance revenue for coverage provided in that period. The LRC is not discounted,
since at initial recognition, it is expected that the time between providing each part of the coverage and the
due date of the related premium is not more than a year.
Reinsurance contracts
The Group applies the same accounting policies to measure a group of reinsurance contracts under PAA,
with the following modifications to reflect features that differ from those of insurance contracts. The Group
establishes a loss-recovery component on the carrying amount of the asset for remaining coverage for a
group of reinsurance contracts, depicting the recovery of losses, where the Group recognises a loss on initial
recognition of an onerous group of underlying insurance contracts or when further onerous underlying
insurance contracts are added to a group.
The Group calculates the loss-recovery component by multiplying the loss recognised on the underlying
insurance contracts and the percentage of claims on the underlying insurance contracts the Group expects
to recover from the group of reinsurance contracts. The loss-recovery component adjusts the carrying
amount of the asset for remaining coverage.
The subsequent measurement of reinsurance contracts follows the same principles as those for insurance
contracts issued and has been adapted to reflect the specific features of reinsurance. Where the Group has
established a loss-recovery component, the Group subsequently reduces the loss-recovery component to
zero in line with reductions in the onerous group of underlying insurance contracts in order to reflect that
the loss-recovery component shall not exceed the portion of the carrying amount of the loss component of
the onerous group of underlying insurance contracts that the entity expects to recover from the group of
reinsurance contracts.
The measurement of reinsurance contracts under the individual life reinsurance agreement follows the same
principles as those for insurance contracts measured under the GMM. The carrying amount of the
reinsurance contracts at each reporting date is the sum of the asset for remaining coverage and the asset
for incurred claims. The asset for remaining coverage comprises (a) the fulfilment cash flows that relate to
services that will be received under the contracts in future periods, and (b) any remaining CSM at that date.
The risk adjustment for non-financial risk represents the amount of risk being transferred by the Group to
the reinsurer.
The CSM of a group of reinsurance contracts represents a net cost or net gain on purchasing reinsurance.
The Group has made the below elections in relation to the measurement of insurance and reinsurance
contract assets and liabilities and related income/expense:
i.
Recognition of total insurance finance income or expenses in the consolidated income statement in
the period in which they arise i.e. not to apply disaggregation,
ii.
Deferral of insurance acquisition cash flows for non-life insurance business other than the health
insurance business, when applying the premium allocation approach, and
iii. Disaggregation of the change in risk adjustment for non-financial risk between the net insurance
service result and net insurance finance income/(expense).
Contract derecognition
The Group derecognises an insurance contract issued when the obligation specified in the contract expires,
is discharged, or is cancelled, or if its terms are modified significantly. When a contract is modified
significantly, a new contract based on the modified terms is recognised.
On derecognition of an insurance contract, the Group:
i.
adjusts the fulfilment cash flows to eliminate the present value of future cash flows and risk
adjustment for non-financial risk relating to the rights and obligations that have been derecognised
from the group of contracts,
ii.
adjusts the CSM of the group of contracts for the change in the fulfilment cash flows, except where
such changes are allocated to a loss component; and
iii. adjusts the number of coverage units for the expected remaining services, to reflect the number of
coverage units derecognised from the group of contracts.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.23
Insurance business (continued)
Onerous groups of contracts
For portfolios measured under the PAA, the Company assumes that no contracts in the portfolio are onerous
at initial recognition unless facts and circumstances indicate otherwise. For contracts not measured under
the PAA, that are not onerous, the Group assesses, at initial recognition, that there is no significant
possibility of becoming onerous subsequently by assessing the likelihood of changes in applicable facts and
circumstances. The Group considers facts and circumstances to identify whether a group of contracts are
onerous based on:
i.
major shifts in economic and regulatory environment;
ii.
combined Loss Ratio (Claims plus expenses divided by premium);
iii. pricing strategy leading to loss;
iv. changes in claims handling policy (e.g. time – stamped period) etc.
The Group has based its assessment on the Combined Loss Ratio as one of the key indicators of whether
there are facts and circumstances to conclude that a group of contracts is onerous, as it takes into account
economic shifts, the Group’s decision on the pricing strategy, as well as the Group’s claims' handling
processes.
For the portfolios measured under GMM and VFA models, the Group performs profitability assessment to
assess the portfolio of insurance contracts issued into three profitability groups, if applicable, for the
purpose of calculating the CSM. The grouping is performed per set of contracts at initial recognition based
on assumed profitability (profit testing exercise).
Insurance acquisition cash flows
The Group includes the following acquisition cash flows within the insurance contract boundary that arise
from selling and starting a group of insurance contracts and that are:
a.
costs directly attributable to individual contracts and groups of contracts; and
b.
costs directly attributable to the portfolio of insurance contracts to which the group belongs, which
are allocated on a reasonable and consistent basis to measure the group of insurance contracts.
Directly attributable expenses
Expenses directly attributable to a group of insurance contracts, which include both acquisition and
maintenance costs, are incorporated in actual and estimated future cash flows and recognised in the net
insurance result. Insurance acquisition cash flows are amortised. Expenses that are not directly attributable
are excluded from the measurement of insurance contract liabilities and are recognised in profit and loss as
incurred.
2.24
Repurchase and reverse repurchase agreements
Securities sold under agreements to repurchase (repos) at a specific future date are not derecognised from
the consolidated balance sheet as the Group retains substantially all risks and rewards of ownership. The
corresponding cash received, including accrued interest, is recognised on the consolidated balance sheet as
‘Repurchase agreements’, reflecting its economic substance as a loan to the Group. The difference between
the sale price and repurchase price is treated as interest expense and is accrued over the life of the
agreement using the effective interest rate method. The investments pledged as security for the repurchase
agreements can be sold or repledged by the counterparty. When the counterparty has the right to sell or
repledge the securities, the Group discloses those securities as ‘Investments pledged as collateral’.
Securities purchased under agreements to resell (reverse repos) at a specific future date, are not
recognised on the consolidated balance sheet, rather are recorded as 'Reverse Repurchase agreements' on
the consolidated balance sheet. The difference between the purchase and the resale price is treated as
interest income and is accrued over the life of the agreement using the effective interest rate method.
Reverse repos outstanding at the reporting date relate to agreements with financial institutions. The
investments received as security under reverse repurchase agreements can either be sold or repledged by
the Group.
2.25
Leases
Group as a lessee
The Group recognises right of use assets (RoU assets) and lease liabilities for contracts that convey the
right to control the use of an identified asset for a period of time in exchange for consideration.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.25
Leases (continued)
The Group has the right to direct the use of an identified asset throughout the period of use when it has the
right to direct how and for what purpose the asset is used and has the right to change the purpose,
throughout the period of use (i.e. the decision-making rights that most significantly affect the economic
benefits that can be derived from the use of the underlying asset). Essentially, this right permits the Group
to change its decisions throughout the contract term without approval from the lessor.
The lease liabilities are initially measured at the present value of the future lease payments, discounted at
the lessee’s incremental borrowing rate (IBR) given that the interest rate implicit in the lease cannot be
readily determined. Subsequently, the lease liability is adjusted for interest and lease payments, as well as
the impact of lease modifications. Interest is computed by unwinding the present value of the lease liability
and charged to the consolidated income statement within 'Interest expense'.
RoU assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The cost of the RoU asset comprises the amount of the initial
measurement of the lease liability, initial direct costs and the provision for restoration costs, adjusted for
any related prepaid or accrued lease payments previously recognised. Depreciation is computed on a
straight line basis up to the end of the lease term, and recognised in the consolidated income statement
within 'Other operating expenses'. RoU assets are subject to impairment under IAS 36.
The Group elected to use the recognition exemption for lease contracts that, at the commencement date,
have a lease term of 12 months or less and do not contain a purchase option (‘short-term leases’), and
lease contracts for which the underlying asset is of low value (‘low value assets’). Payments associated with
short-term leases and leases of low value assets are recognised on a straight line basis as an expense in the
consolidated income statement.
Leases are monitored for significant changes that could trigger a change in the lease term and at the end of
each reporting period the impact on the lease liability and the RoU asset is reassessed. Lease liability is
remeasured if there is a change in future lease payments, a change in the lease term, or as appropriate, a
change in the assessment of whether an extension option is reasonably certain to be exercised or a
termination option is reasonably certain not to be exercised. When the lease liability is remeasured, a
corresponding adjustment is made to the RoU asset and/or profit or loss, as appropriate.
The lease term is calculated as the non-cancellable term of the lease, together with any periods covered by
an option to extend the lease (if reasonably certain to be exercised), or any periods covered by an option to
terminate the lease (if reasonably certain not to be exercised). The assessment of whether the Group is
reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of
lease liabilities and RoU assets recognised. Judgement is used in calculating the lease term, as further
disclosed in Note 5.12.
Lease payments generally include fixed payments and variable payments that depend on an index (such as
an inflation index).
Variable lease payments that are determined by reference to an index or a rate are taken into account in
the lease liability only when there is a change in the cash flows resulting from a change in the reference
index or rate. In cases where the lease contract includes a term relating to increase in the lease payment
based on variable lease payments, this increase is applied on the lease when it becomes effective (when the
actual cash outflow occurs). The assessment is performed at each reporting date. In cases where the lease
contract includes a term with fixed increments in the lease payments, the increase is accounted for in the
initial recognition of lease liability.
When a lease contains an extension or termination option that the Group considers reasonably certain to be
exercised, the expected lease payments or costs of termination are included within the lease payments in
determining the lease liability.
Group as a lessor
Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership
of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis
over the lease terms and is included in ‘Other income’ in the consolidated income statement due to its
operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to
the carrying amount of the leased asset and recognised over the lease term on the same basis as rental
income.
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Annual Financial Report 2024
Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.26
Property and equipment
Owner-occupied property is property held by the Group for use in the supply of services or for
administrative purposes. Investment property is property held by the Group to earn rentals and/or for
capital appreciation, as further disclosed in Note 2.27. If a property of the Group includes a portion that is
owner-occupied and another portion that is held to earn rentals or for capital appreciation, the classification
is based on whether or not these portions can be sold separately. Otherwise, the whole property is classified
as owner-occupied property unless the owner-occupied portion is insignificant. The classification of property
is reviewed on a regular basis to account for major changes in its use.
Owner-occupied property is initially measured at cost and subsequently measured at fair value less
accumulated depreciation and impairment. Valuations are carried out periodically between 3 to 5 years,
(but more frequent revaluations may be performed where there are significant and volatile movement in
values), by independent, qualified valuers or by the internal qualified valuers of the Group applying a
valuation model recommended by internationally accepted valuation standards. At the date of the
revaluation, the accumulated depreciation is eliminated against the gross carrying amount of the property.
Depreciation is calculated on the revalued amount less the estimated residual value of each building on a
straight line basis over its estimated useful life. Gain from revaluations are recognised in other
comprehensive income in ‘Property revaluation reserve', however to the extent it reverses an impairment
previously recognised in the consolidated income statement, the increase is recognised in the consolidated
income statement. A revaluation loss is recognised in the consolidated income statement, except to the
extent it offsets an existing revaluation reserve surplus.
Useful life is in the range of 30 to 67 years. Freehold land is not depreciated. On disposal of freehold land
and buildings, the relevant revaluation reserve balance is transferred to ‘Retained earnings’.
The cost of adapting/improving leasehold property is amortised over 5 years.
Equipment is measured at cost less accumulated depreciation. Depreciation of equipment is calculated on a
straight line basis over its estimated useful life of 5 to 10 years.
RoU assets recognised as property are measured at cost less accumulated depreciation and adjusted for
certain remeasurements of lease liabilities. Depreciation of the recognised RoU assets is calculated on a
straight line basis over the lease term, as further disclosed in Note 2.25.
At the reporting date, when events or changes in circumstances indicate that the carrying value may not be
recovered, property and equipment is assessed for impairment. Where the recoverable amount is less than
the carrying amount, property and equipment is written down to its recoverable amount.
2.27
Investment properties
Investment properties comprise land and buildings that are not occupied for use by, or in the operations of
the Group, nor for sale in the ordinary course of business, but are held primarily to earn rental income
and/or for capital appreciation. Additionally, leased properties which are acquired in exchange for debt and
are leased out under operating leases are also usually classified as 'Investment properties'.
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial
recognition, investment properties are measured at fair value as at the reporting date. Gains or losses
arising from changes in the fair values of investment properties are included in ‘Net gains/(losses) from
revaluation and disposal of investment properties’ in the consolidated income statement. Valuations are
carried out by independent, qualified valuers or by the Group's internal qualified valuers applying a
valuation model recommended by internationally accepted valuation standards.
Transfers are made to (or from) investment property only when there is a change in use. For a transfer
from owner-occupied property to investment property, the Group accounts for such property in accordance
with the policy described in Note 2.26 ‘Property and equipment’ up to the date of change in use. For a
transfer from investment property to stock of property, the property’s deemed cost for subsequent
accounting is its fair value at the date of change in use.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.28
Stock of property
The Group in its normal course of business acquires properties in exchange of debt, which are held either
directly by the Company or by entities set up and controlled by the Group for the sole purpose of managing
these properties with an intention to be disposed of. These properties are recognised in the Consolidated
Financial Statements as ‘Stock of property’, reflecting the substance of these transactions. Transfers from
stock of property are made at their carrying value when there is a change in use of property.
Stock of property is initially measured at cost and subsequently measured at the lower of cost and net
realisable value. Net realisable value is the estimated selling price, less the estimated costs necessary to
make the sale.
If net realisable value is below the cost of the stock of property, impairment is recognised in ‘Impairment
net of reversals on non-financial assets’ in the consolidated income statement.
2.29
Non-current assets held for sale and discontinued operations
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be
recovered principally through a sale or distribution rather than through continuing use.
The condition for such classification is regarded as met only when the sale is highly probable and the asset
or disposal group is available for immediate sale in its present condition. Actions required to complete the
sale should indicate that it is unlikely that significant changes to the plan will be made or that the plan will
be withdrawn. Management must be committed to the sale, which should be expected to qualify for
recognition as a completed sale within one year from the date of classification.
Such non-current assets and disposal groups held for sale are measured at the lower of their carrying
amount and fair value less costs to sell, except for those assets and liabilities that are not within the scope
of the measurement requirements of IFRS 5 ‘Non-current assets held for sale and discontinued operations’
such as deferred taxes, financial instruments, investment properties measured at fair value, insurance
contracts and assets and liabilities arising from employee benefits. These are measured in accordance with
the Group’s relevant accounting policies described elsewhere in this note.
Immediately before the initial classification as held for sale, the carrying amount of the asset (or assets and
liabilities in the disposal group) is measured in accordance with applicable IFRS Accounting Standards. On
subsequent remeasurement of a disposal group, the carrying amounts of the assets and liabilities noted
above that are not within the scope of the measurement requirements of IFRS 5 are remeasured in
accordance with applicable IFRS Accounting Standards.
Assets and liabilities classified as held for sale are presented separately in the consolidated balance sheet.
A disposal group qualifies as a discontinued operation if an entity or a component of an entity has been
disposed of or is classified as held for sale and a) represents a separate major line of business or
geographical area of operations, b) is part of a single coordinated plan to dispose of a separate major line of
business or geographical area of operations, or c) is a subsidiary acquired exclusively with a view to resale.
Net profit/loss from discontinued operations includes the net total of operating profit and loss before tax
from discontinued operations (including net gain or loss on sale before tax and gain or loss on measurement
to fair value less cost to sell of a disposal group constituting a discontinued operation) and discontinued
operations tax expense.
Discontinued operations are excluded from the results of continuing operations and are presented as a
single amount, as profit or loss after tax from discontinued operations in the consolidated income
statement.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.30
Intangible assets
Intangible assets comprise computer software (including internally developed software). Intangible assets
acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a
business combination is their fair value as at the date of acquisition. The Group recognises an intangible
asset that arises from development or the development phase of an internal project if, and only if, it can
demonstrate all of the following:
i.
The technical feasibility of completing the intangible asset so that it will be available for use or sale;
ii.
Its intention to complete the intangible asset and use or sell it;
iii. Its ability to use or sell the intangible asset;
iv. How the intangible asset will generate probable future economic benefits;
v.
The availability of adequate technical, financial and other resources to complete the development and
to use or sell the intangible asset; and
vi. Its ability to reliably measure the expenditure attributable to the intangible asset during its
development.
The expenditure arising on research or the research phase of an internal project are expensed as incurred
and cannot be subsequently capitalised.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any
accumulated impairment losses.
Amortisation is calculated on a straight line basis over the estimated useful life of the assets which is 3 to 8
years for computer software, including internally developed computer software.
Intangible assets are reviewed for impairment when events relating to changes in circumstances indicate
that the carrying value may not be recoverable. If the carrying amount exceeds the recoverable amount
then the intangible assets are written down to their recoverable amount and an impairment loss is
recognised in 'Impairment net of reversals on non-financial assets' in the consolidated income statement.
2.31
Share capital
Ordinary shares are classified as equity.
Any difference between the issue price of share capital and the nominal value is recognised as share
premium. The costs incurred attributable to the issue of share capital are deducted from equity.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.32
Share-based compensation plans
The Group recognises expenses for deferred compensation awards over the period that the employee is
required to provide service to become entitled to the award. Whereby employees render services in
exchange for equity instruments these arrangements are classified as equity-settled transactions.
Share-based compensation benefits are provided to employees (senior management of the Group) via the
Long-Term Incentive Plan, an employee share arrangement which satisfies an incentive based award
through the issue of shares (equity-settled).
Share-based compensation expense is measured by reference to the fair value of the equity instruments on
the date of grant, with a corresponding increase in equity (other capital reserves), taking into account the
terms and conditions inherent in the award, including, where relevant, dividend rights, transfer restrictions
in effect beyond the vesting date, market conditions, and non-vesting conditions. For equity-settled awards,
fair value is not remeasured unless the terms of the award are modified such that there is an incremental
increase in value.
The total expense is recognised on a per-tranche basis, over the service period based on an estimate of the
number of shares expected to vest and are adjusted to reflect the actual outcomes of service or
performance conditions. At the end of each reporting period, the Group revises its estimates of the number
of shares that are expected to vest and recognises the impact of the revision to original estimates, if any, in
the consolidated income statement, with a corresponding adjustment to equity (other capital reserves). The
cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date
reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of
shares that will ultimately vest. The expense or credit in the consolidated income statement for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period. No
expense is recognised for awards that do not ultimately vest because non-market performance and/or
service conditions have not been met.
The vesting period for these schemes may commence before the legal grant date if the employees have
started to render services in respect of the award before the legal grant date, where there is a shared
understanding of the terms and conditions of the arrangement. Expenses are recognised when the
employee starts to render service to which the award relates.
2.33
Other equity instruments
An instrument is an equity instrument if the instrument includes no contractual obligation to deliver cash or
another financial asset to another entity, or to exchange financial assets or financial liabilities with another
entity under conditions that are potentially unfavourable to the issuer.
Other equity instruments are recorded at their residual amount and are not subject to any re-measurement
after initial recognition. The cost incurred attributable to the issue of other equity instruments is deducted
from retained earnings. Any subsequent write-down or write-up results to a credit or debit in retained
earnings respectively. Coupon payments are recorded directly in retained earnings.
2.34
Dividends on ordinary shares
Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved
by the Company’s shareholders. Interim dividends are deducted from equity when they are declared and
are no longer at the discretion of the Company. Dividends for the year that are approved after the reporting
date, are disclosed as an event after the reporting date.
2.35
Provisions for pending litigation, claims, regulatory and other matters
Provisions for pending litigation, claims, regulatory and other matters against the Group are made when:
(a) there is a present obligation (legal or constructive) arising from past events, (b) the settlement of the
obligation is expected to result in an outflow of resources embodying economic benefits, and (c) a reliable
estimate of the amount of the obligation can be made.
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Notes to the Consolidated Financial Statements
2.
Summary of accounting policies (continued)
2.36
Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, measured at the acquisition date fair value and
the amount of any non-controlling interests in the acquiree. For each business combination the Group elects
whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share
of the acquiree’s identifiable net assets. Any excess of the cost of acquisition over the Group’s share of the
fair values of the identifiable net assets acquired is recognised as goodwill on the consolidated balance
sheet. Where the Group’s share of the fair values of the identifiable net assets is greater than the cost of
acquisition (i.e. negative goodwill), the difference is recognised directly in the consolidated income
statement in the year of acquisition. Acquisition related costs are expensed as incurred and included in
other operating expenses.
If the business combination is achieved in stages, the previously held equity interest is remeasured at fair
value and any resulting gain or loss is recognised in the consolidated income statement.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with contractual terms, economic circumstances and pertinent
conditions as at the acquisition date.
3.
Going concern
The Directors have made an assessment of the ability of the Group and the Company to continue as a going
concern for a period of 12 months (the period of assessment) from the date of approval of these
Consolidated Financial Statements.
The Directors have concluded that there are no material uncertainties which would cast a significant doubt
over the ability of the Group and the Company to continue to operate as a going concern for a period of 12
months from the date of approval of the Consolidated Financial Statements and the Financial Statements of
the Company.
In making this assessment, the Directors have considered a wide range of information relating to present
and future conditions, including projections of profitability, cash flows, capital requirements and capital
resources, liquidity and funding position, taking also into consideration the Group’s Financial Plan approved
by the Board in February 2025 (the ‘Plan’) and the operating environment. The Group has sensitised its
projection to cater for a downside scenario and has used reasonable economic inputs to develop its
medium-term strategy.
Capital
The Directors and management have considered the Group’s forecasted capital position, including the
potential impact of a deterioration in economic conditions. The Group has developed capital projections
under a base and an adverse scenario and the Directors believe that the Group has sufficient capital to meet
its regulatory capital requirements throughout the period of assessment.
Funding and liquidity
The Directors and management have considered the Group’s funding and liquidity position and are satisfied
that the Group has sufficient funding and liquidity throughout the period of assessment. The Group
continues to hold a significant liquidity buffer at 31 December 2024 that can be monetised in a period of
stress.
4.
Economic and geopolitical environment
Cyprus is a small, open, services-based economy, with a large external sector and high reliance on tourism
and international business and information and communication technology (ICT) services. As a result,
external factors which are beyond the control of the Group, including developments in the European Union
and in the global economy, or in specific countries with which Cyprus maintains close economic and
investment links, can have a significant impact on domestic economic activity. A number of macro and
market related risks, including weaker economic activity, a highly volatile interest rate environment, and
higher competition in the financial services industry, could negatively affect the Group’s business
environment, results, and operations.
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Notes to the Consolidated Financial Statements
4.
Economic and geopolitical environment (continued)
There are heightened geopolitical tensions between the world’s largest economies adding uncertainty to the
global economy outlook. War and geopolitics can be very disruptive to the economy. Continued
uncertainties arise from the ongoing wars in Russia/Ukraine and the Middle East.
In this context, the Group is closely monitoring the developments, utilising dedicated governance structures
including a Crisis Management Committee as required, and has assessed the impact the crisis has on the
Group’s operations and financial performance. Furthermore, the Group in its models includes related events
in its stress testing scenarios in order to gain a better understanding of the potential capital impact.
Although, there have been distinct improvements in Cyprus’ risk profile after the banking crisis, substantial
risks remain. Cyprus’ overall country risk is a combination of sovereign, currency, banking, political and
economic structure risk, influenced by external developments. Given the above, the Group recognises that
unforeseen political events can have negative effects on the Group’s activities.
The Group is continuously monitoring the current affairs and the impact of the forecasted macroeconomic
conditions and geopolitical developments on the Group’s strategy to proactively manage emerging risks.
5.
Significant and other judgements, estimates and assumptions
The preparation of the Consolidated Financial Statements requires the Company’s Board of Directors and
management to make judgements, estimates and assumptions that can have a material impact on the
amounts recognised in the Consolidated Financial Statements and the accompanying disclosures, as well as
the disclosures of contingent liabilities. Uncertainty about these assumptions and estimates could result in
outcomes that require a material adjustment to the carrying amount of assets or liabilities affecting future
periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities are described below. The Group based its assumptions and estimates on parameters available
when the Consolidated Financial Statements were prepared. Existing circumstances and assumptions about
future developments may, however, change due to market changes or circumstances beyond the control of
the Group. Such changes are reflected in the assumptions when they occur.
The most significant judgements, estimates and assumptions relate to the calculation of expected credit
losses (ECL), the estimation of the net realisable value of stock of property and the provisions for pending
litigation and claims, which are presented in Notes 5.1 to 5.3 below. Other judgements, estimates and
assumptions are disclosed in Notes 5.4 to 5.13.
5.1
Calculation of expected credit losses
The calculation of ECL requires management to apply significant judgement and make estimates and
assumptions, involving significant uncertainty at the time these are made. Changes to these estimates and
assumptions can result in significant changes to the timing and amount of ECL to be recognised. The
Group’s calculations are outputs of models, of underlying assumptions on the choice of variable inputs and
their interdependencies.
It has been the Group’s policy to regularly review its models in the context of actual loss experience and
adjust when necessary.
Elements of ECL models that are considered accounting judgements and estimates include:
Assessment of significant increase in credit risk (SICR)
IFRS 9 does not include a definition of significant increase in credit risk. The Group assesses whether
significant increase in credit risk has occurred since initial recognition using predominantly quantitative and
in certain cases qualitative information and backstop indicators. The determination of the relevant criteria to
determine whether a significant increase in credit risk has occurred, is based on statistical metrics and could
be subject to management judgement. The relevant criteria are set, monitored and updated on a yearly
basis by the Risk Management Division and endorsed by the Group Provisions Committee. Lifetime ECL
applies when a significant increase in credit risk has occurred on an individual or collective basis.
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
Determining the probability of default (PD) at initial recognition requires management estimates in
particular cases. Specifically, in the case of exposures existing prior to the adoption of IFRS 9, a
retrospective calculation of the PD is made in order to quantify the risk of each exposure at the time of the
initial recognition. In certain cases, estimates about the date of initial recognition might be required.
For the retail portfolio, the Group uses a PD at origination incorporating behavioural information (score
cards) whereas, for the corporate portfolio, the Group uses the internal credit rating information. For
revolving facilities, management estimates are required with respect to the lifetime and hence a behavioural
maturity model is utilised, assigning an expected maturity based on product and customer behaviour.
Scenarios and macroeconomic factors
The Group determines the ECL, which is a probability weighted amount, by evaluating a range of possible
outcomes. Management uses forward looking scenarios and assesses the suitability of weights used. These
are based on management’s assumptions taking into account macroeconomic, market and other factors.
Changes in these assumptions and in other external factors could significantly impact ECL. Macroeconomic
inputs and weights per scenario are monitored by the Economic Research Department and are based on
internal model analysis and expert judgement, considering also external forecasts.
The Cypriot economy has demonstrated remarkable resilience and growth in recent years, navigating
through global uncertainties and regional challenges. In 2024, the economy achieved a growth rate of
3.4%, driven by rising exports and strong economic activity in key sectors such as tourism, information and
communications, construction and trade. This follows a period of strong growth with an annual average of
5.1% in the period 2015-2023. The unemployment rate has remained low, dropping to 4.9% in 2024
indicating near-full employment conditions. Inflation has been successfully stabilized, with rates declining
from 3.9% in 2023 to 2.3% in 2024. General government debt metrics have significantly improved in recent
years. The government debt-to-GDP ratio dropped to 65.4% in December 2024 from 73.6% in 2023 and
113.6% at the end of 2020. Looking ahead, continued budgetary surpluses and favourable debt dynamics
are expected to further reduce the debt ratio, potentially dropping below 60% by 2026. Growth in the
medium term, is expected to continue to outpace eurozone peers. Growth is expected to average about 3%
annually in 2025-2027, driven by services exports and private consumption on the expenditure side and by
international business services and the ICT sector on the production side.
The credit profile of Cyprus has improved significantly in the more recent period, reflecting a solid medium-
term growth outlook, good institutional strength and effective policy making.
However, substantial risks remain in terms of the domestic operating environment, as well as the external
environment on which it depends. Public debt has dropped in relation to GDP, but government expenditures
need more rationalisation. In the banking sector non-performing exposures need to drop further. The
current account deficit remains sizable. At the same time long-term yields may remain elevated for longer,
despite interest rate cuts by the monetary policy, if inflation pressures increase and geopolitical
uncertainties escalate.
For the ECL, the Group updated its forward-looking scenarios, factoring in updated macroeconomic
assumptions and other monetary and fiscal developments at the national and the EU level based on
developments and events as at the reporting date.
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
For the ECL calculations, the Group uses an unbiased and probability-weighted amount that is determined
by evaluating a range of possible outcomes, as described in Note 2.17.5. The approach employed, involves
scenario generation, where the scenarios applied by the Group are anchored to the baseline scenario. All
scenarios are updated on a quarterly basis for the purposes of the ECL calculation in tandem with the
baseline scenario. The updated macroeconomic inputs (incorporating any uncertainties and downside risks)
are therefore reflected in the scenario parameters, starting from the baseline and updated in turn for the
adverse and the favourable scenarios accordingly. If the baseline becomes more pessimistic, then both the
favourable and downside scenarios would be adjusted accordingly, reflecting the fact that the economic
variables used in the scenarios are not constant but are conditional on the economy’s position in the
business cycle. A dynamic scenario approach is followed as explained above where the scenario parameters
derived, reflect the Group’s view of the economic conditions. The probability weights attached to the
scenarios are a function of their relative position on the distribution, with a lower probability weight
attached to the scenarios that were assessed to be more distant from the centre of the distribution. The
baseline scenario is defined over the range of values corresponding to 50% probability of equidistant
deviations around the mean of the historical distribution. The favourable and adverse scenarios are defined
over the range of values to the right and left of the distribution respectively, each corresponding to 25%
probability.
The most significant macroeconomic variables for each of the scenarios used by the Group as at 31
December 2024 and 2023 are presented in the table below. The Group uses three different economic
scenarios in the calculation of default probabilities and provisions. The scenarios factor-in updated
macroeconomic assumptions and other monetary and fiscal developments based on events as at the
reporting date. The Group has used the 30-50-20 probability structure for the adverse, baseline and
favourable scenarios respectively compared to the 25-50-25 structure derived using the method described
in Note 2.17.5 and above. This reflects management's view of specific characteristics of the Cyprus
economy that render it more vulnerable to external and internal shocks.
31 December 2024
Year
Scenario
Weight %
Real GDP (%
change)
Unemployment
rate (% of
labour force)
Consumer
Price Index
(average %
change)
RICS House
Properties
Price Index
(average %
change)
2025
Adverse
30.0
-1.4
5.4
-0.7
-3.9
Baseline
50.0
3.0
4.5
1.8
2.2
Favourable
20.0
4.2
4.4
2.5
3.8
2026
Adverse
30.0
-0.9
5.6
1.2
-0.2
Baseline
50.0
2.9
4.5
2.2
2.3
Favourable
20.0
3.1
4.3
2.1
2.7
2027
Adverse
30.0
2.0
5.3
1.8
2.3
Baseline
50.0
2.8
4.5
2.0
2.2
Favourable
20.0
2.5
4.4
2.0
2.6
2028
Adverse
30.0
3.4
5.2
1.9
2.9
Baseline
50.0
2.6
4.5
1.9
2.3
Favourable
20.0
2.4
4.4
1.9
2.6
2029
Adverse
30.0
2.8
5.2
1.9
2.5
Baseline
50.0
2.5
4.5
1.8
2.2
Favourable
20.0
2.4
4.4
1.9
2.3
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
31 December 2023
Year
Scenario
Weight %
Real GDP (%
change)
Unemployment
rate (% of
labour force)
Consumer
Price Index
(average %
change)
RICS House
Properties
Price Index
(average %
change)
2024
Adverse
30.0
-1.6
6.3
0.9
-3.1
Baseline
50.0
2.7
5.8
2.5
3.0
Favourable
20.0
3.5
5.6
3.1
3.7
2025
Adverse
30.0
-0.7
6.9
1.2
0.6
Baseline
50.0
2.6
5.4
2.5
2.3
Favourable
20.0
3.1
5.2
2.6
2.5
2026
Adverse
30.0
2.2
7.0
1.2
1.9
Baseline
50.0
2.6
5.1
2.1
2.2
Favourable
20.0
2.7
4.9
2.0
2.3
2027
Adverse
30.0
3.6
6.7
2.3
2.4
Baseline
50.0
2.4
4.9
2.3
2.2
Favourable
20.0
2.6
4.6
2.2
2.3
2028
Adverse
30.0
3.5
6.4
2.2
2.4
Baseline
50.0
2.3
4.6
2.2
2.3
Favourable
20.0
2.5
4.2
2.3
2.4
The adverse scenarios may outpace the base and favourable scenarios after the initial shock has been
adjusted to and the economy starts to expand from a lower base. Thus, in the adverse scenario GDP will
follow a growth trajectory that will ultimately equal and surpass the baseline before converging. Property
prices are determined by multiple factors with GDP growth featuring prominently.
The baseline scenario was updated for the 31 December 2024 reporting, considering available information
and relevant developments until then, and is described next. Growth moderated in 2023 following strong
recoveries in 2021-2022, but remained above the Euro area average, supported by the continued recovery
in tourism and expanding services activity. Real GDP increased by 2.6% on average in 2023 and growth
accelerated in 2024, averaging 3.4%. Tourist arrivals in Cyprus exceeded 4.0 million in 2024, up by an
annual 5.1%. Under the baseline scenario the economy is expected to advance by 3.0% in 2025 and
consumer price inflation will decelerate to 1.8%. House prices are expected to rise by 2.2% in 2025
following strong increases in 2022-2024.
The adverse scenario is consistent with assumptions for a global economic slowdown driven by geopolitical
tensions, tariff wars, elevated inflation expectations and the steepening of yield curves. The Cypriot
economy relies on services, particularly on tourism, international business, and information and
communication services with an outward orientation. This makes the Cypriot economy more exposed than
other economies to the international environment and terms of trade shocks. Weaker external demand will
lead to a slowdown of economic activity. The adverse scenario assumes a deeper impact of these conditions
on the real economy than under the baseline scenario. Under the adverse scenario, real GDP is expected to
drop by 1.4% in 2025 as a whole, and contract further by 0.9% in 2026. In the labour market the
unemployment rate will rise only modestly to 5.4% and inflation will actually turn negative by 0.7%. House
prices will also slow in line with the contraction in real GDP.
The Group uses actual values for the input variables. These values are sourced from the Cyprus Statistical
Service, the Eurostat, the Central Bank of Cyprus for the residential property price index, and the European
Central Bank for interest rates. Interest rates are also sourced from the Eurostat. In the case of property
prices, the Group additionally uses data from the Royal Institute of Chartered Surveyors. For the forward
reference period, the Group uses the forecast values for the same variables, as prepared by the Company's
Economic Research Department. The results of the internal forecast exercises are consistent with publicly
available forecasts from official sources including the European Commission, the International Monetary
Fund, the European Central Bank and the Ministry of Finance of the Republic of Cyprus.
Qualitative adjustments or overlays are occasionally made when inputs calculated do not capture all the
characteristics of the market. These are reviewed and adjusted, if considered necessary, by the Risk
Management Division, endorsed by the Group Provisions Committee and approved by the Board Risk and
Audit Committees. Qualitative adjustments or overlays are described in the below sections as applicable.
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
For Stage 3 customers, the calculation of individually assessed provisions is the weighted average of three
scenarios: base, adverse and favourable. The base scenario focuses on the following variables, which are
based on the specific facts and circumstances of each customer: the operational cash flows, the timing of
recovery of collaterals and the haircuts from the realisation of collateral. The base scenario is used to derive
additional either more favourable or more adverse scenarios. Under the adverse scenario, operational cash
flows are decreased by 50%, applied haircuts on real estate collateral are increased by 50% and the timing
of recovery of collaterals is increased by one year with reference to the baseline scenario, whereas under
the favourable scenario applied haircuts are decreased by 5%, with no change in the recovery period with
reference to the baseline scenario. Assumptions used in estimating expected future cash flows (including
cash flows that may result from the realisation of collateral) reflect current and expected future economic
conditions and are generally consistent with those used in the Stage 3 collectively assessed exposures.
The above assumptions are also influenced by the ongoing regulatory dialogue the Company maintains with
its lead regulator, the ECB, and other regulatory guidance and interpretations issued by various regulatory
and industry bodies such as the ECB and the EBA.
Any changes in these assumptions or difference between assumptions made and actual results could result
in significant changes in the estimated amount of expected credit losses of loans and advances to
customers.
For collectively assessed customers the calculation is also the weighted average of three scenarios: base,
adverse and favourable.
Assessment of loss given default (LGD)
For the estimation of loss given default (LGD) key estimates are the timing and net recoverable amount
from repossession or realisation of collaterals (including through portfolio sales) which mainly comprise real
estate assets.
Assumptions have been made about the future changes in property values, as well as the timing for the
realisation of collateral, taxes and expenses on the repossession and subsequent sale of the collateral as
well as any other applicable haircuts. Indexation has been used as the basis to estimate updated market
values of properties, supplemented by management judgement where necessary, given the difficulty in
differentiating between short-term impacts and long-term structural changes and the shortage of market
evidence for comparison purposes. Assumptions were made on the basis of a macroeconomic scenario for
future changes in property prices and qualitative adjustments or overlays were applied to the projected
future property value increases to restrict the level of future property price growth to 0% for all scenarios
for loans and advances to customers which are secured by property collaterals.
At 31 December 2024, the weighted average haircut (including liquidity haircut and selling expenses) used
for the provision calculation for loans and advances to customers (for both Stage 1 and Stage 2 exposures
and collectively assessed Stage 3 exposures) is approximately 42% under the baseline scenario, excluding
those classified as held for sale (2023: approximately 31.3%). The increase in the haircut percentage is
primarily due to the calibration of the collateral realisation model during the first half of 2024, as explained
in section 'Calibration of IFRS 9 models and removal of overlays in relation to economic conditions'.
At 31 December 2024, the timing of recovery from real estate collaterals used for the provision calculation
for loans and advances to customers (for both Stage 1 and Stage 2 exposures and collectively assessed
Stage 3 exposures) has been estimated to be on average seven years under the baseline scenario,
excluding those classified as held for sale (2023: average of six years).
In the 2023 Financial Statements the above disclosures in relation to the weighted average haircut and
timing of recovery from real estate collaterals were by reference to exposures that were collectively
assessed and not including exposures which were assessed for staging purposes on an individual basis. The
comparative information presented above has been updated for aligning with the disclosure for the year
ended 31 December 2024.
For the calculation of individually assessed provisions of Stage 3 exposures, the timing of recovery of
collaterals as well as the haircuts used, are based on the specific facts and circumstances of each case. For
specific cases judgement may also be exercised over staging during the individual assessment.
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
Any changes in these assumptions or variance between assumptions made and actual results could result in
significant changes in the estimated amount of expected credit losses of loans and advances to customers.
Modelling adjustments
Forward looking models have been developed for ECL parameters (PD, EAD, LGD) for all portfolios and
segments sharing similar characteristics. Model validation (initial and periodic) is performed by the
independent validation unit within the Risk Management Division and involves assessment of a model under
both quantitative (i.e. stability and performance) and qualitative terms. The frequency and level of rigour of
model validation is commensurate to the overall use, complexity and materiality of the models, (i.e. risk
tiering). In certain cases, judgement is exercised in the form of expert judgment and/or management
overlay by applying adjustments on the modelled parameters. Governance of these models lies with the
Risk Management Division, where a governance process is in place around the determination of the
impairment measurement methodology including inputs, assumptions and overlays. Any management
overlays are prepared by the Risk Management Division, endorsed by the Group Provisions Committee and
approved by the Board Risk and Audit Committees.
Calibration of IFRS 9 models and removal of overlays in relation to economic conditions in 2024
During the year ended 31 December 2024, the Group performed a calibration of its IFRS 9 models which
involved the reassessment and update of the ECL model parameters (PDs, LGDs and cure rates) and SICR
thresholds so as to incorporate in the models the effects of the recent economic conditions and experience,
which were previously reflected in the ECL through the use of overlays. Further, the calibration involved the
Group updating and revising the LGD parameter, as part of the Group’s ongoing review and update of
models as to incorporate updated data information and to reflect an update on realisation paths and rates
applied.
More specifically, the Group proceeded with model calibrations affecting the probability of default parameter
(the ‘PD-macro’), the SICR parameter, the probability of cure model and the collateral realisation model and
introducing an LGD floor, as explained below:
i.
The calibration of the PD-macro model included the introduction of inflation related variables and the
inclusion of post-COVID period data to capture the low-default environment as well as the
integration of a dynamic adjustment to calibrate (up or down) the model projection based on the
relationship between the past model projections and the actual observed defaults (structural breaks
in the relationship e.g. between a specific macro factor and the PD value). Refinement of the PD
adjustment factor was also made during 2024, to include a more extended observation period for the
SICR parameter. The net impact of this calibration was €4.2 million ECL release during the year
ended 31 December 2024.
ii.
As a result of the PD-macro calibration, the SICR model was revisited following a statistical model
methodology calibration, whilst introducing an absolute threshold to increase stability. The
corresponding impact was €1.4 million ECL release during the year ended 31 December 2024 and
net transfer of related loans from Stage 2 to Stage 1.
iii. With respect to the probability of cure model, a different curability period was introduced for each
macro-economic scenario following a detailed statistical analysis examining the relationship of cure
rates with macro indicators and concluding that curability should differentiate at the level of the
scenario. The respective impact was an ECL charge of €2.1 million during the year ended 31
December 2024.
iv. As a result of calibrations (i)-(iii), the Group removed the prior year overlays applied in the context
of economic conditions with the resulting impact being €15.7 million ECL release during the year
ended 31 December 2024.
v.
For the collateral realisation model, the Group has updated its LGD parameter with respect to the
path of realisation through portfolio sales, by increasing the likelihood of this realisation path. The
resulting impact was an ECL charge of €19.2 million during the year ended 31 December 2024.
vi. Lastly, the Group has incorporated a minimum LGD rate which provides for a minimum loss rate
(which acts as a floor) irrespective of the realisation path and value of collateral. This minimum LGD
was introduced as to capture the subjectivity and uncertainty involved in the value of recovery
assumptions (i.e. collateral recoverable amount, maximum recovery period, etc.) which impacts the
realisation amount. The corresponding impact was an ECL charge of €20.0 million during the year
ended 31 December 2024.
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
Overlays applied in the prior year:
i.
Overlays introduced in prior years in the context of economic conditions from the consequences of
the Ukrainian crisis, in the collectively assessed population for exposures that were considered to be
the most vulnerable to the implications of the crisis, were removed during 2024. The impact on the
ECL from the application of these overlays was approximately €3.4 million ECL release during the
year ended 31 December 2023.
ii.
In addition, the overlay on the PD (PD floored to the maximum of 2018/2019 level), introduced in
prior years to address specifically the high inflation environment affecting the economy, was
removed during 2024. The impact on the ECL from the application of this overlay was €7.2 million
charge during the year ended 31 December 2023.
iii. During the year ended 31 December 2023, an overlay for the LGD parameter has been integrated
through reduced curability period for Stage 2 and Stage 3 exposures with a resulting impact on the
ECL of €7 million charge during the year ended 31 December 2023.
The IFRS 9 models are reviewed regularly in order to incorporate the most recent information available and
to ensure that they perform adequately and that they are suitably representative when applied to the
current portfolio for the calculation of impairment loss allowances.
The Group has exercised critical judgement on a best effort basis, to consider all reasonable and
supportable information available at the time of the assessment of the ECL allowance as at 31 December
2024. The Group will continue to evaluate the ECL allowance and the related economic outlook each
quarter, so that any changes arising from the uncertainty on the macroeconomic outlook and geopolitical
developments, are timely captured.
Portfolio segmentation
The individual assessment is performed not only for individually significant assets but also for other
exposures meeting specific criteria determined by management. The selection criteria for the individually
assessed exposures are based on management judgement and are reviewed on a quarterly basis by the
Risk Management Division and are adjusted or enhanced, if deemed necessary. Following the wars in
Ukraine and the Middle East, the selection criteria were further enhanced to include significant exposures to
customers with passport of origin or residency in Russia, Ukraine or Belarus and/or business activity within
these countries and significant exposures with repayment deriving from Israel.
Further details on impairment allowances and related credit information are set out in Note 44.
In addition to the above significant judgments and assumptions made for the calculation of the ECL, the
Group also applies judgment for the following:
Expected lifetime of revolving facilities
The expected lifetime of revolving facilities is based on a behavioural maturity model for revolving facilities
based on the Company's available historical data, where an expected maturity for each revolving facility
based on the customer's profile is assigned. The behavioural model was updated in the third quarter of
2023 to reflect updates in customers' profile whilst maintaining the same model components.
Off-balance sheet credit exposures
ECL allowances also include allowances on off-balance sheet credit exposures represented by guarantees
given and by irrevocable commitments to disburse funds. Off-balance sheet credit exposures of the
individually assessed assets require assumptions on the probability, timing and amount of cash outflows.
For the collectively assessed off-balance sheet credit exposures, the allowance for provisions is calculated
using the Credit Conversion Factor (CCF) model.
5.2
Stock of property - estimation of net realisable value
Stock of property is measured at the lower of cost and net realisable value. The net realisable value is
determined through valuation techniques, requiring significant judgement, taking into account all available
reference points, such as expert valuation reports, current market conditions, applying an appropriate
illiquidity discount where considered necessary, taking into consideration observed sales, the holding period
of the asset, realisation strategy and any other relevant parameters. Selling expenses are deducted from
the realisable value.
More details on the stock of property are presented in Note 27.
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.3
Provisions for pending litigation and claims
The accounting policy for provisions for pending litigation, claims, regulatory and other matters is described
in Note 2.35.
Judgement is required in determining whether a present obligation exists and in estimating the probability,
timing and amount of any outflows. Provisions for pending litigation and claims usually require a higher
degree of judgement than other types of provisions. It is expected that the Group will continue to have a
material exposure to litigation and regulatory proceedings and investigations relating to legacy issues in the
medium term. The matters for which the Group determines that the probability of a future loss is more than
remote will change from time to time, as will the matters as to which a reliable estimate can be made and
the possible loss for such matters can be estimated. Actual results may prove to be significantly higher or
lower than the estimated possible loss in those matters, where an estimate was made. In addition, loss may
be incurred in matters with respect to which the Group believed the probability of loss was remote.
For a detailed description of the nature of uncertainties and assumptions and the effect on the amount and
timing of pending litigation and claims refer to Note 38.
5.4
Tax
The Group, is subject to tax in Cyprus and in the countries that it has run-down operations mainly in
Greece, Russia and Romania. Estimates are required in determining the provision for taxes at the reporting
date. The Group recognises income tax liabilities for transactions and assessments whose tax treatment is
uncertain. Where the final tax is different from the amounts initially recognised in the consolidated income
statement, such differences will impact the income tax expense, the tax liabilities and deferred tax assets or
liabilities of the period in which the final tax is agreed with the relevant tax authorities.
Deferred tax assets
In the absence of a specific accounting standard dedicated to the accounting of the asset that arose
pursuant to amendments in the Income Tax Law effected in March 2019 which provides for the
recoverability of tax assets arising from transfer of tax losses following resolution of a credit institution,
within the framework of 'The Resolution of Credit and Other Institutions', to be guaranteed (Note 17), the
Company had exercised judgement in applying the guidance of IAS 12 as the most relevant available
standard and accounted for this asset item on the basis of IAS 12 principles relating to deferred tax assets.
For further details on such deferred tax assets refer to Note 17.
5.5
Fair value of investments and derivatives
The best evidence of fair value is a quoted price in an actively traded market. If the market for a financial
instrument is not active, a valuation technique is used. The majority of valuation techniques employed by
the Group use primarily observable market data and so the reliability of the fair value measurement is
relatively high.
However, certain financial instruments are valued on the basis of valuation techniques that feature one or
more significant inputs that are not observable. Valuation techniques that rely on non-observable inputs
require a higher level of management judgement to calculate a fair value than those based wholly on
observable inputs.
Valuation techniques used to calculate fair values include comparisons with similar financial instruments for
which market observable prices exist, discounted cash flow analysis and other valuation techniques
commonly used by market participants. Valuation techniques incorporate assumptions that other market
participants would use in their valuations, including assumptions about interest rate yield curves, exchange
rates, volatilities and default rates. When valuing instruments by reference to comparable instruments,
management takes into account the maturity, structure and rating of the instrument with which the position
held is being compared.
The Group uses models with only unobservable inputs for the valuation of certain unquoted equity
investments. In these cases, estimates are made to reflect uncertainties in fair values resulting from a lack
of market data inputs, for example, as a result of illiquidity in the market. Inputs into valuations based on
unobservable data are inherently uncertain because there is little or no current market data available from
which to determine the level at which an arm’s length transaction would occur under normal business
conditions. Unobservable inputs are determined based on the best information available.
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.5
Fair value of investments and derivatives (continued)
Further details on the fair value of assets and liabilities are disclosed in Notes 2.13.9 and 22.
5.6
Retirement benefits
The cost of defined benefit pension plans is determined using actuarial valuations. The actuarial valuations
involve making assumptions about discount rates, the expected rate of return on plan assets, future salary
increases, mortality rates as well as future pension increases where necessary. The Group’s management
sets these assumptions based on market expectations at the reporting date using its best estimates for
each parameter covering the period over which the obligations are to be settled. In determining the
appropriate discount rate, management considers the yield curve of high quality corporate bonds. In
determining other assumptions, a certain degree of judgement is required. Future salary increases are
based on expected future inflation rates for the specific country plus a margin to reflect the best possible
estimate relating to parameters such as productivity, workforce maturity and promotions. The expected
return on plan assets is based on the composition of each fund’s plan assets, estimating a different rate of
return for each asset class. Estimates of future inflation rates on salaries and expected rates of return of
plan assets represent management’s best estimates for these variables. These estimates are derived after
consultation with the Group’s advisors, and involve a degree of judgement. Due to the long-term nature of
these plans, such estimates are inherently uncertain.
Further details on retirement benefits are disclosed in Note 14.
5.7
Non-life insurance business
The Group is engaged in the provision of non-life insurance services. Risks under these policies usually
cover a period of 12 months.
A summary of the significant judgements and estimates made in the measurement of insurance and
reinsurance contract assets and liabilities is included in Note 5.9.
Further information on non-life insurance business is disclosed in Note 12.
5.8
Life insurance business
The Group is engaged in the provision of life insurance services. Whole life insurance plans (life plans) are
unit-linked contracts associated with assets where the amount payable in the case of death is the greater of
the sum insured and the value of investment units. Simple insurance or temporary term plans (term plans)
relate to fixed term duration plans for protection against death. In case of death within the coverage period,
the insured sum will be paid. Endowment insurance (such as investment plans/horizon plans/Capital builder
and Lifestart) refer to specific duration plans linked to investments, to create capital through systematic
investment in association with death insurance coverage whereby the higher of the sum insured and the
value of investment units is payable on death within the contract term.
A summary of the significant judgements and estimates made in the measurement of insurance and
reinsurance contract assets and liabilities is included in Note 5.9.
Further information on life insurance business is disclosed in Note 12.
5.9
Insurance and reinsurance contracts
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of insurance and
reinsurance assets and liabilities within the next financial year are discussed below. The Group based its
assumptions and estimates on parameters available by the reporting date. Existing circumstances and
assumptions about future developments, however, may change due to market changes or circumstances
arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they
occur.
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.9
Insurance and reinsurance contracts (continued)
Estimates of future cash flows
In estimating future cash flows, the Group incorporates, in an unbiased way, all reasonable and supportable
information that is available without undue cost or effort at the reporting date. This information includes
both internal and external historical data about claims and other experience, updated to reflect current
expectations of future events.
Cash flows within the boundary of a contract are those that relate directly to the fulfilment of the contract,
including those for which the Group has discretion over the amount or timing. These include payments to
(or on behalf of) policyholders and other costs that are incurred in fulfilling contracts. These comprise both
an allocation of fixed and variable overheads.
The estimates of future cash flows reflect the Group’s view of current conditions at the reporting date, as
long as the estimates of any relevant market variables are consistent with observable market prices.
The following key assumptions were used when estimating future cash flows in relation to life insurance
contracts:
a)
Mortality and morbidity rates
b)
Expenses and inflation
c)
Lapse and surrender rates
Mortality and morbidity rates
Assumptions are based on standard international tables of mortality and morbidity, according to the type of
contract. In addition, a study is performed based on the actual experience (actual deaths) of the insurance
company for comparison purposes and if sufficient evidence exists which is statistically reliable, the results
are incorporated in these tables. An increase in mortality rates will lead to a larger expected number of
claims (or claims could occur sooner than anticipated), which will increase the expenditure and reduce
profits for shareholders.
The table below sets out the percentage estimated to apply to industry mortality and morbidity tables in
estimating fulfilment cash flows:
Mortality Rates
Mortality rates*
31 December
2024
31 December
2023
Males
Smokers
61% A67/70
68% A67/70
Non-Smokers
43% A67/70
48.25% A67/70
Smokers
61% A67/70
rated down by 4
years
68% A67/70
rated down by 4
years
Females
Non-Smokers
43% A67/70
rated down by 4
years
48.25% A67/70
rated down by 4
years
* The Group uses A67/70 UK standard mortality table in setting the mortality assumption, since the Group’s
own claim experience is not sufficient to allow the development of its own mortality table. To reflect the
Group’s specific claims experience more accurately, a percentage is applied on the A67/70 UK standard
mortality table.
Expense and inflation
Expense assumptions are based on the actual costs of the insurance activities of the Group incurred within
the year. To derive the per-policy expense assumption, every year the Group performs an expense analysis
which is based on the Group’s insurance subsidiaries actual expenses. For the purpose of the expense
analysis, expenses are split into expenses which are attributable and non-attributable. The Group produces
various metrics/ratios to allocate the costs to the underlying products. Non-attributable expenses are
excluded from the analysis as these are not directly related to a group of insurance contracts.
An assumption is also made for the rate of increase in expenses in relation to the annual inflation rate. An
increase in the level of expenses would reduce profitability.
312
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.9
Insurance and reinsurance contracts (continued)
31 December
2024
31 December
2023
€000
€000
Inflation rate
4,00%
4,00%
Lapse and surrender rates
An analysis of contract termination rates is performed every year, using actual data from the insurance
company incorporation until the immediate preceding year. Rates vary according to the type and duration of
the plan.
Unit-Linked
(protection)
Unit-Linked
(savings)
Non-Linked
(term)
Non-Linked
(Cap. Builder &
Lifestart)
2024
2023
2024
2023
2024
2023
2024
2023
Year 1
3%
4%
6%
6%
5%
4%
3%
3%
Year 2
4%
5%
6%
6%
6%
6%
6%
7%
Year 3
4%
5%
5%
6%
5%
6%
6%
7%
Year 4
4%
5%
5%
6%
6%
7%
6%
6%
Year 5
4%
5%
4%
6%
6%
7%
6%
6%
Year 6+
4%
5%
4%
5%
6%
8%
5%
6%
Discount rates
Discount rates are applied to adjust the estimates of future cash flows to reflect the time value of money
and the financial risks related to those cash flows, to the extent that the financial risks are not included in
the estimates of cash flows.
Discount rates should:
i.
Reflect the time value of money, characteristics of the cash flows and liquidity characteristics of the
insurance contract
ii.
Be consistent with observable current market prices (if any) for financial instruments with cash flows
whose characteristics are consistent with those of the insurance contracts (e.g., timing, currency and
liquidity)
iii. Exclude the effect of factors that influence such observable market prices, but do not affect the
future cash flows of the insurance contracts
IFRS 17 does not require a particular estimation technique for determining discount rates but provides two
alternative approaches that may be used to derive discount rates. The determination of discount rates may
be derived from a yield curve that reflects the current market rates of return of an actual or reference
portfolio of assets, adjusted to eliminate any factors that are not relevant to the insurance contracts (top-
down approach), or discount rates may be derived based on a liquid risk-free yield curve adjusted for an
illiquidity premium (bottom-up approach). The Group has elected to apply a bottom-up approach whereby
discount rates are derived based on a liquid risk free yield curve adjusted for an illiquidity premium which is
derived from each insurance subsidiary's own bond portfolio assets. Under the bottom-up approach, the risk
free yield curve should be based on interest rates that are risk-free without including any component of
credit risk and should be derived from each insurance subsidiary at which two parties are willing to
exchange interest obligations. It is therefore necessary for these to be available for different times
reflecting the liabilities of the insurance contracts. It should also be based on information from financial
markets. The Group has elected to use the EIOPA risk-free rate curve as the liquid risk-free curve as it
covers all the above requirements. An illiquidity premium is then added which is calculated by subtracting
the credit risk premium and risk-free rate from the Yield to Maturity ('YTM') of the own bond portfolio of
assets for each insurance subsidiary. The YTM represents the interest rate that would be required for the
portfolio’s future cash flows to equal its market price.
313
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.9
Insurance and reinsurance contracts (continued)
The rates applied for discounting future cash flows are listed below:
Year 1
Year 3
Year 5
Year 10
Year 20
31
December
2024
31
December
2023
31
December
2024
31
December
2023
31
December
2024
31
December
2023
31
December
2024
31
December
2023
31
December
2024
31
December
2023
Life insurance
contracts (unit-
linked)
2.5%
3.5%
2.4%
2.5%
2.4%
2.4%
2.5%
2.5%
2.5%
2.5%
Life insurance
contracts (non-
linked)
2.5%
3.5%
2.4%
2.6%
2.4%
2.5%
2.6%
2.5%
2.5%
2.5%
Non-life insurance
contracts
2.8%
4.6%
2.5%
3.8%
2.5%
3.7%
2.6%
3.7%
2.6%
3.7%
Investment return
The investment returns are the same as the discount rates applied.
Risk adjustment for non-financial risk
IFRS 17 provides limited prescriptive requirements as to the methodology to be used to calculate the risk
adjustment for non-financial risk and allows an entity to apply judgement in determining an appropriate
estimation technique.
Life insurance business and health insurance business
The Group has applied judgement in estimating the risk adjustment, in the following areas:
i.
Risks included within the risk adjustment calculation – the risk adjustment for non-financial risk is
the compensation that is required for bearing the uncertainty about the amount and timing of cash
flows that arises from insurance risk and other non-financial risks as the insurance contract is
fulfilled. In estimating the risk adjustment, the Group has considered the non-market risks which are
also allowed in the calculation of the Solvency II Risk Margin. These include life and health
underwriting risks whereas, as specified by the standard, counterparty and operational risks are
excluded.
ii.
Method of calculation - the Group calculates a margin, above best estimate assumptions, for each
non-financial risk to which the Group is exposed through issuing insurance contracts. The margins
are set so that (in combination) they would cover potential losses from movements in non-financial
risks within a specified confidence level. The total of these margins is the risk adjustment. The Group
has applied judgement in setting the confidence level applied in the risk adjustment calculation,
based on the Group’s appetite for accepting the risk inherent in writing insurance contracts and the
compensation required for doing so.
The Group has estimated the risk adjustment using a hybrid of Cost of Capital (CoC) and Value at Risk
(VaR) techniques. The Group first uses the CoC technique to calculate Risk Adjustment, which is then scaled
up/down using the VaR technique, to reflect the Group’s risk appetite and overall strategy.
The CoC methodology assesses the cost of holding capital sufficient to cover the relevant risks over the
lifetime of the business. It determines a required compensation amount by discounting the projected cost of
the calculated capital and translating that compensation amount to a corresponding confidence level. The
Group uses the CoC technique to produce a normal distribution with:
i.
the Best Estimate Liabilities (BEL) as the mean of the distribution, and
ii.
the Best Estimate Liabilities plus the solvency capital requirement (SCR) as the 99,5% percentile of the
distribution.
The Group estimated the probability distribution of the expected present value of the future cash flows from
the contracts at each reporting date and calculates the risk adjustment for non-financial risk at value at risk
of the target confidence level. The Group uses a target 90% (2023: 90%) percentile for the confidence
level.
Non-life insurance business other than the health insurance business
For non-life insurance business the risk adjustment forms a key component of the LIC.
314
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.9
Insurance and reinsurance contracts (continued)
The risk adjustment for LRC forms part of the loss component calculation which is used to determine the
groupings of contracts that are expected to be onerous.
Risk adjustment for non-financial risk is determined to reflect the compensation that the Group would
require for bearing non-financial risk and its degree of risk aversion. It is determined separately for each
non-life line of business and allocated to groups of contracts based on the total premiums for each group. It
reflects the effects of the diversification benefits between the different lines of business, which are
determined using a correlation matrix technique available from EIOPA.
The risk adjustment for non-financial risk is determined using a confidence level technique which stems
from a hybrid CoC and VaR approach. To determine the risk adjustment for non-financial risk for non-life
reinsurance contracts, the Group applies this technique to the gross amounts and then by using gross to net
ratios it derives the amount of risk being transferred to the reinsurer as the difference between the two
results.
The Group estimates the probability distribution of the expected present value of the future cash flows from
the contracts at each reporting date and calculates the risk adjustment for non-financial risk at value at risk
of the target confidence level. The Group uses a target 75% (2023:75%) percentile for the confidence level.
CSM
The CSM of a group of contracts is recognised in the consolidated income statement to reflect services
provided in each year, by identifying the coverage units in the group, allocating the CSM remaining at the
end of the year equally to each coverage unit provided in the year and expected to be provided in future
years, and recognising in consolidated income statement the amount of the CSM allocated to coverage units
provided in the year. The number of coverage units is the quantity of services provided by the contracts in
the group, determined by considering for each contract the quantity of the benefits and its expected
coverage period. The coverage units are reviewed and updated at each reporting date.
Further details on insurance liabilities are disclosed in Note 31.
5.10
Classification of properties
The Group determines whether a property is classified as investment property or stock of property as
follows:
i.
Investment properties comprise land and buildings that are not occupied for use by, or in the
operations of the Group, nor for sale in the ordinary course of business, but are held primarily to earn
rental income and/or capital appreciation. These buildings are substantially rented to tenants and not
intended to be sold in the ordinary course of business. Additionally, they comprise leased properties
which are acquired in exchange of debt and are leased out under operating leases.
ii.
Stock of property comprises real estate assets held with an intention to be disposed of. This principally
relates to properties acquired through debt-for-property swaps and properties acquired through the
acquisition of certain operations of Laiki Bank in 2013 (except from those that are leased out and are
classified as investment properties).
5.11
Fair value of properties held for own use and investment properties
In accordance with the Group’s accounting policy, property held for own use, as well as investment
property, is measured at fair value. In the case of property held for own use, valuations are carried out
periodically so that the carrying value is not materially different from the fair value, whereas in the case of
investment property, the fair value is established at each reporting date. Valuations are carried out by
qualified valuers by applying valuation models recommended by internationally accepted valuation
standards.
In arriving at their estimates of the fair values of properties, the valuers use their market knowledge and
professional judgement and do not rely solely on historical transactional comparable information, taking into
consideration the greater degree of uncertainty that exists compared to a more active market. Depending
on the nature of the underlying asset and available market information, the determination of the fair value
of property may require the use of estimates such as future cash flows from assets and discount rates
applicable to those assets. All these estimates are based on local market conditions existing at the reporting
date.
315
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Notes to the Consolidated Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.11
Fair value of properties held for own use and investment properties (continued)
Further information on inputs used is disclosed in Note 22.
5.12
Leases
Incremental Borrowing Rate (IBR)
The determination of an IBR term structure which is used in the measurement of the present value of the
future lease payments as described in Note 2.25, inherently involves significant judgement. The IBR used
was based on the Cyprus Government yield curve, with no further adjustment, as a fair proxy for the
Group’s secured borrowing cost, for a time horizon in accordance to the lease term. The sensitivity analysis
on the yield curve performed by the Company showed that the value of the lease liability and corresponding
RoU assets is relatively insensitive to changes in the IBR.
Lease term
In determining the lease term, management considers all facts and circumstances that could make a
contract enforceable, such as the economics of the contract. The following assumptions were made for the
duration of lease term depending on the contract terms:
i.
For cancellable leases, an assessment was made at the initial application of the standard and
subsequently updated where considered appropriate, based on the horizon used in the Group’s
financial plan. The current medium term financial plan assessment is for a duration of 4 years. The
lease term was therefore based on an assessment of either 4 years (being the medium time horizon)
or 8 years (being an assessment of a longer time horizon).
ii.
For non-cancellable leases, the lease term has been assessed to be the non-cancellable period.
iii. For leases with an option for renewal, the Group’s past practice regarding the period over which it
has typically used properties (whether leased or owned), and its economic reasons for doing so,
provide information that is helpful in assessing whether the lessee is reasonably certain to exercise,
or not to exercise, an option.
Low value assets
The Group has exercised judgement in determining the threshold of low value assets which was set at
€5,000.
Further details on the leases are disclosed in Note 42.
5.13
Classification of financial assets
The Group exercises judgement upon determining the classification of its financial assets, in relation to
business models and future cash flows.
Judgement is also required to determine the appropriate level at which the assessment of business models
needs to be performed. In general, the assessment for the classification of financial assets into the business
models is performed at the level of each business line. Further, the Group exercises judgement in
determining the effect of sales of financial instruments on its business model assessment.
The Group also applies judgement upon considering whether contractual features including interest rate
could significantly affect future cash flows. Furthermore, judgement is required when assessing whether
compensation paid or received on early termination of lending arrangements results in cash flows that are
not SPPI.
6.
Segmental analysis
The Group’s activities are mainly concentrated in Cyprus. Cyprus operations are organised into operating
segments based on the line of business. The results of the overseas subsidiaries and branches of the Group,
namely in Greece, Romania and Russia, are presented within segment ‘Other’, given the size of these
operations which are in a run-down mode and relate to legacy operations of the Group. Further, the results
of certain small subsidiaries of the Group are allocated to the segments based on their key activities.
316
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Notes to the Consolidated Financial Statements
6.
Segmental analysis (continued)
As from the first quarter of 2024, following an internal re-organisation, the activities previously reported
under segment ‘Wealth Management’ were reorganised and are now reported as follows: part of the
activities were undertaken by the newly set up unit, Affluent Banking which is presented and monitored
under ‘Retail’ and part of the activities are carried out by the Institutional Wealth Management and Custody,
which was transferred under and is now presented and monitored as part of ‘Treasury’. As a result of the
changes, ‘Wealth Management’ no longer comprises a separately reportable segment. The activities of the
subsidiary companies of the Group, CISCO and its subsidiary, which were part of the 'Wealth Management'
segment and whose activities relate to investment banking, brokerage, discretionary asset management
and investment advice services do not qualify as a material segment and are now presented within ‘Other’.
Comparative information in ‘Analysis by business line’, ‘Analysis of total revenue’ and ‘Analysis of assets and
liabilities’ in this note and comparative information in the ‘By business line’ analysis in Notes 14, 23, 30,
44.2, 44.3 and 44.5 was restated to reflect this change.
The operating segments are analysed below:
i.
The Corporate, Small and Medium-sized Enterprises (SME) and Retail business lines are managing
loans and advances to customers. As from the first quarter of 2024, retail business line also includes
the Affluent Banking unit, which offers banking and investment services to its clients. Categorisation
of loans per customer group is detailed further below.
ii.
IBU & International Corporate comprises of:
1.
IBU, which specialises in the offering of banking services to the international corporate
customers based in Cyprus, particularly international business companies whose ownership
and business activities lie outside Cyprus, and non resident individual customers of the
Company.
2.
International Corporate, which comprises of International Corporate Banking, Project Finance
& Loan Syndication and Shipping Centre. International Corporate Banking provides financing
from Cyprus in respect of projects based overseas with main focus being in Greece and the
United Kingdom. Project Finance & Loan Syndication acts as arranger or participant in large
international loan syndication transactions. Shipping Centre provides shipping financing
primarily for ocean-going cargo vessels.
iii. Restructuring and Recoveries is the specialised unit which was set up to tackle the Group’s loan
portfolio quality and manages exposures to borrowers in distress situation through innovative
solutions.
iv. The Real Estate Management Unit (REMU) manages properties acquired through debt-for-property
swaps and properties acquired through the acquisition of certain operations of Laiki Bank in 2013
and executes exit strategies in order to monetise these assets. REMU also includes other subsidiary
property companies of the Group.
v.
Treasury is responsible for managing assets and liabilities within the Risk Appetite Framework set by
the Board of Directors. Treasury manages the Group’s liquid assets, investing in fixed income
securities and in the interbank market. This business line manages the interest rate and foreign
exchange risks to which the Group is exposed to and is also responsible for liquidity management
and for ensuring compliance with internal and regulatory liquidity guidelines. It is also responsible for
raising funding through the issuance of debt in the wholesale markets. As from the first quarter of
2024, Treasury also reports and monitors the Institutional Wealth Management and Custody unit,
which comprises of market execution and custody unit services along with asset management.
vi. The Insurance business line is involved in both life and non-life insurance business.
vii. Payment Services comprise the subsidiary company JCC, which is involved in the development of
inter-banking systems, acquiring and processing of debit and credit card transactions, other payment
services and other activities.
viii. The segment 'Other' includes central functions of the Company such as finance, risk management,
compliance, legal, information technology, corporate affairs, human resources and other. These
functions provide services to the operating segments. Segment 'Other' also includes the subsidiary
company, CISCO and other small subsidiary companies in Cyprus (excluding the insurance
subsidiaries, property companies under REMU and the payment services subsidiary of the Group
(JCC)), as well as the overseas legacy activities of the Group.
The Company broadly categorises its loans per customer group, in the following customer sectors:
i.
Retail – all individuals, regardless of the facility amount, and legal entities with facilities from the
Company of up to €500 thousand, excluding business property loans, and/or annual credit turnover
up to €1 million.
ii.
Small and medium-sized enterprises (SME) – any company or group of companies (including
personal and housing loans to the directors or shareholders of a company) with facilities from the
Company in the range of €500 thousand to €4 million and/or annual credit turnover in the range of
€1 million to €10 million.
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Notes to the Consolidated Financial Statements
6.
Segmental analysis (continued)
iii. Corporate – any company or group of companies (including personal and housing loans to the
directors or shareholders of a company) with available credit lines with the Company of over €4
million and/or having a minimum annual credit turnover of over €10 million. These companies are
either local larger corporations or international companies or companies in the shipping sector.
Lending includes direct lending or through syndications.
Management monitors the operating results of each business segment separately for the purposes of
performance assessment and resource allocation. Segment performance is evaluated based on profit after
tax and non-controlling interests. Inter-segment transactions and balances are eliminated on consolidation.
Operating segment disclosures are provided as presented to the Group Executive Committee.
Income and expenses associated with each business line are included within the business line results for
determining its performance. Fund transfer pricing and internal charges methodologies are applied between
the business lines as to reflect the performance of each business line. Income and expenses incurred
directly by the business lines are allocated to the business lines as incurred. Indirect income and expenses
are re-allocated from the central functions to the business lines. For the purposes of the Cyprus analysis by
business line, notional tax rate is charged/credited to the profit or loss before tax of each business line.
The loans and advances to customers, the customer deposits and the related income and expense are
generally included in the segment where the business is managed, instead of the segment where the
transaction is recorded.
318
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Notes to the Consolidated Financial Statements
6.
Segmental analysis (continued)
Analysis by business line
Corporate
IBU &
International
corporate
SME
Retail
Restructuring
and recoveries
REMU
Insurance
Treasury
Payment
services
Other
Total
2024
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
Net interest income/(expense)
157,910
159,223
58,978
419,895
14,656
(23,185)
19
38,009
-
(3,381)
822,124
Net fee and commission income/(expense)
20,203
48,744
9,698
66,834
2,178
(99)
(8,796)
4,324
28,271
5,586
176,943
Net foreign exchange gains/(losses)
1,351
6,813
775
2,683
36
-
-
15,546
(18)
99
27,285
Net gains on financial instruments
1,232
-
-
-
-
4
2,372
-
2,587
4,477
10,672
Net (losses)/gains on derecognition of financial assets measured at amortised cost
(8,843)
(670)
(309)
(1,416)
11,559
-
-
(326)
-
(8)
(13)
Net insurance result
-
-
-
-
-
-
46,191
-
-
-
46,191
Net losses from revaluation and disposal of investment properties
-
-
-
-
-
(118)
(446)
-
-
(866)
(1,430)
Net gains/(losses) on disposal of stock of property
-
-
-
-
-
693
-
-
-
(477)
216
Other income
14
10
14
219
70
4,321
2,647
-
3,828
3,258
14,381
Total operating income
171,867
214,120
69,156
488,215
28,499
(18,384)
41,987
57,553
34,668
8,688
1,096,369
Staff costs
(7,869)
(14,513)
(5,960)
(59,808)
(9,621)
(3,408)
(3,657)
(3,017)
(9,591)
(85,618)
(203,062)
Special levy on deposits and other levies/contributions
(4,439)
(7,843)
(2,143)
(24,355)
(40)
-
-
(295)
-
-
(39,115)
Provisions for pending litigation, claims, regulatory and other matters (net of reversals)
-
-
-
-
13,651
-
-
-
1,721
(27,147)
(11,775)
Other operating expenses
(32,501)
(19,885)
(15,170)
(100,734)
(8,900)
(14,827)
(5,058)
(12,711)
(13,974)
61,884
(161,876)
Operating profit/(loss) before credit losses and impairment
127,058
171,879
45,883
303,318
23,589
(36,619)
33,272
41,530
12,824
(42,193)
680,541
Credit losses on financial assets
10,879
(807)
(847)
(9,956)
(30,580)
(1,047)
(312)
869
-
4
(31,797)
Impairment net of reversals on non-financial assets
-
-
-
-
-
(50,041)
-
-
-
(5,999)
(56,040)
Profit/(loss) before tax
137,937
171,072
45,036
293,362
(6,991)
(87,707)
32,960
42,399
12,824
(48,188)
592,704
Income tax
(17,242)
(21,384)
(5,629)
(36,670)
874
9,531
(2,894)
(5,300)
(1,381)
(1,033)
(81,128)
Profit/(loss) after tax
120,695
149,688
39,407
256,692
(6,117)
(78,176)
30,066
37,099
11,443
(49,221)
511,576
Non-controlling interests-(profit)/loss
-
-
-
-
-
2,215
-
-
(2,856)
(314)
(955)
Profit/(loss) after tax attributable to the owners of the Company
120,695
149,688
39,407
256,692
(6,117)
(75,961)
30,066
37,099
8,587
(49,535)
510,621
319
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
6.
Segmental analysis (continued)
Analysis by business line (continued)
Corporate
IBU &
International
corporate
SME
Retail
Restructuring
and recoveries
REMU
Insurance
Treasury
Payment
services
Other
Total
2023 (restated)
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
Net interest income/(expense)
165,640
155,678
56,351
394,125
17,702
(34,263)
(2)
39,264
-
(1,303)
793,192
Net fee and commission income/(expense)
19,798
51,679
10,452
65,020
2,844
(212)
(8,350)
3,838
29,537
6,417
181,023
Net foreign exchange gains/(losses)
2,010
5,212
700
2,372
(171)
(14)
-
18,897
(287)
(131)
28,588
Net gains on financial instruments
2,401
-
-
-
-
7
5,648
3,583
1,007
134
12,780
Net gains/(losses) on derecognition of financial assets measured at amortised cost
4,400
(246)
(2,299)
(461)
6,770
-
-
(1,783)
-
(20)
6,361
Net insurance result
-
-
-
-
-
-
53,350
-
-
138
53,488
Net gains/(losses) from revaluation and disposal of investment properties
-
-
-
-
-
1,548
(331)
-
-
(174)
1,043
Net gains on disposal of stock of property
-
-
-
-
-
8,476
-
-
-
496
8,972
Other income
24
5
16
209
67
7,551
5,594
12
3,775
1,084
18,337
Total operating income
194,273
212,328
65,220
461,265
27,212
(16,907)
55,909
63,811
34,032
6,641
1,103,784
Staff costs
(7,559)
(13,156)
(5,908)
(52,548)
(8,929)
(3,917)
(3,791)
(4,272)
(7,307)
(84,879)
(192,266)
Special levy on deposits and other levies/contributions
(4,340)
(8,765)
(2,176)
(26,789)
(109)
-
-
(201)
-
-
(42,380)
Provisions for pending litigation, claims, regulatory and other matters (net of reversals)
-
-
-
-
-
-
-
-
(380)
(28,084)
(28,464)
Other operating expenses
(36,392)
(18,959)
(14,597)
(85,511)
(11,506)
(15,341)
(4,591)
(9,057)
(12,342)
49,751
(158,545)
Operating profit/(loss) before credit losses and impairment
145,982
171,448
42,539
296,417
6,668
(36,165)
47,527
50,281
14,003
(56,571)
682,129
Credit losses on financial assets
(36,553)
(2,130)
625
(4,337)
(30,419)
(5,737)
(229)
548
-
(1,598)
(79,830)
Impairment net of reversals on non-financial assets
-
-
-
-
-
(46,307)
-
-
-
(545)
(46,852)
Profit/(loss) before tax
109,429
169,318
43,164
292,080
(23,751)
(88,209)
47,298
50,829
14,003
(58,714)
555,447
Income tax
(13,679)
(21,165)
(5,395)
(36,512)
2,969
16,296
(4,201)
(6,354)
(2,070)
(2,827)
(72,938)
Profit/(loss) after tax
95,750
148,153
37,769
255,568
(20,782)
(71,913)
43,097
44,475
11,933
(61,541)
482,509
Non-controlling interests-(profit)/loss
-
-
-
-
-
1,252
-
-
(2,984)
(5)
(1,737)
Profit/(loss) after tax attributable to the owners of the Company
95,750
148,153
37,769
255,568
(20,782)
(70,661)
43,097
44,475
8,949
(61,546)
480,772
320
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
6.
Segmental analysis (continued)
Analysis of total revenue
Total revenue includes net interest income, net fee and commission income, net foreign exchange gains, net gains/(losses) on financial instruments, net
gains/(losses) on derecognition of financial assets measured at amortised cost, net insurance result, net gains/(losses) from revaluation and disposal of
investment properties, net gains/(losses) on disposal of stock of property and other income. There was no revenue deriving from transactions with a single
external customer that amounted to 10% or more of Group revenue.
Corporate
IBU &
International
corporate
SME
Retail
Restructuring
and recoveries
REMU
Insurance
Treasury
Payment
Services
Other
Total
2024
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
Revenue from third parties
193,280
118,263
60,097
255,129
29,720
5,707
50,580
343,314
28,801
11,478
1,096,369
Inter-segment (expense)/revenue
(21,413)
95,857
9,059
233,086
(1,221)
(24,091)
(8,593)
(285,761)
5,867
(2,790)
-
Total revenue
171,867
214,120
69,156
488,215
28,499
(18,384)
41,987
57,553
34,668
8,688
1,096,369
2023 (restated)
Revenue from third parties
219,193
124,579
56,574
250,424
27,719
17,778
64,101
307,002
28,889
7,525
1,103,784
Inter-segment (expense)/revenue
(24,920)
87,749
8,646
210,841
(507)
(34,685)
(8,192)
(243,191)
5,143
(884)
-
Total revenue
194,273
212,328
65,220
461,265
27,212
(16,907)
55,909
63,811
34,032
6,641
1,103,784
Analysis of assets and liabilities
Corporate
IBU &
International
corporate
SME
Retail
Restructuring
and recoveries
REMU
Insurance
Treasury
Payment
Services
Other
Total
2024
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
Assets
Assets
3,506,922
1,078,202
960,321
4,544,575
113,338
742,194
1,053,971
13,640,957
133,198
916,746
26,690,424
Inter-segment assets
(65,959)
-
-
-
-
(67,834)
(19,446)
-
(24,883)
(26,180)
(204,302)
Total assets
3,440,963
1,078,202
960,321
4,544,575
113,338
674,360
1,034,525 13,640,957
108,315
890,566
26,486,122
2023 (restated)
Assets
Assets
3,469,090
880,219
942,490
4,351,607
213,477
895,374
919,427
13,971,313
93,536
1,056,935
26,793,468
Inter-segment assets
(35,367)
-
-
-
-
(39,843)
(19,443)
-
(33,058)
(35,944)
(163,655)
Total assets
3,433,723
880,219
942,490
4,351,607
213,477
855,531
899,984 13,971,313
60,478
1,020,991
26,629,813
321
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
6.
Segmental analysis (continued)
Analysis of assets and liabilities (continued)
Corporate
IBU &
International
corporate
SME
Retail
Restructuring
and recoveries
REMU
Insurance
Treasury
Payment
Services
Other
Total
2024
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
Liabilities
Liabilities
2,445,790
4,313,738
1,161,464
12,600,526
20,139
21,366
895,120
1,818,808
104,856
475,213
23,857,020
Inter-segment liabilities
(135,625)
-
-
-
-
(14,636)
(2,275)
-
(27,895)
(23,871)
(204,302)
Total liabilities
2,310,165
4,313,738
1,161,464 12,600,526
20,139
6,730
892,845
1,818,808
76,961
451,342
23,652,718
2023 (restated)
Liabilities
Liabilities
2,197,945
3,901,025
1,019,245
12,216,209
29,045
24,695
803,319
3,588,480
40,635
483,676
24,304,274
Inter-segment liabilities
(111,192)
-
-
-
-
(11,667)
(16,404)
-
-
(24,392)
(163,655)
Total liabilities
2,086,753
3,901,025
1,019,245 12,216,209
29,045
13,028
786,915
3,588,480
40,635
459,284
24,140,619
Segmental analysis of customer deposits and loans and advances to customers is presented in Notes 30 and Notes 23, 44.2 and 44.5 respectively.
322
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
6.
Segmental analysis (continued)
Analysis of turnover
2024
2023
€000
€000
Net interest income
822,124
793,192
Net fee and commission income
176,943
181,023
Net foreign exchange gains
27,285
28,588
Net gains on financial instruments
10,672
12,780
Net (losses)/gains on derecognition of financial assets measured at amortised
cost
(13)
6,361
Net insurance result (Note 12)
46,191
53,488
Net (losses)/gains from revaluation and disposal of investment properties
(1,430)
1,043
Net gains on disposal of stock of property
216
8,972
Other income
14,381
18,337
1,096,369
1,103,784
Analysis of turnover for the Company
2024
2023
€000
€000
Net interest income
823,300
799,171
Net fee and commission income
155,119
157,978
Net foreign exchange gains
27,285
28,888
Net gains on financial instruments
5,581
4,632
Net (losses)/gains on derecognition of financial assets measured at amortised
cost
(13)
6,361
Dividend income from subsidiaries
22,958
85,118
Net (losses)/gains from revaluation and disposal of investment properties
(641)
303
Net gains on disposal of stock of property
5,054
10,004
Other income
3,447
7,147
1,042,090
1,099,602
7.
Interest income and income similar to interest income
Interest income
2024
2023
€000
€000
Financial assets at amortised cost:
- Loans and advances to customers
538,712
511,602
- Loans and advances to banks and central banks
297,255
321,828
- Reverse repurchase agreements
27,012
3,219
- Debt securities
97,628
56,906
- Other financial assets
16,877
19,774
Debt securities at FVOCI
22,651
18,078
1,000,135
931,407
Income similar to interest income
2024
2023
€000
€000
Loans and advances to customers measured at FVPL
8,841
11,489
Derivative financial instruments
1,322
1,303
10,163
12,792
323
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
8.
Interest expense and expense similar to interest expense
Interest expense
2024
2023
Financial liabilities at amortised cost:
€000
€000
- Customer deposits
84,199
32,358
- Funding from central banks and deposits by banks
30,549
74,393
- Debt securities in issue
50,686
22,091
- Subordinated liabilities
21,189
20,578
Interest expense on lease liabilities
262
294
186,885
149,714
Expense similar to interest expense
2024
2023
€000
€000
Derivative financial instruments
1,289
1,293
9.
Fee and commission income and expense
Fee and commission income
2024
2023
€000
€000
Credit-related fees and commissions
55,939
54,020
Other banking commissions
86,885
92,086
Fees on servicing loans disposed of under Project Helix 3
-
646
Mutual funds and asset management fees
4,668
4,079
Brokerage commissions
1,375
1,146
Other commissions
35,551
36,366
184,418
188,343
Mutual funds and asset management fees relate to fiduciary and other similar activities.
Credit-related fees and commissions include commissions from credit card arrangements amounting to
€33,190 thousand (2023: €32,522 thousand). Other banking commissions include commissions from
payment orders amounting to €24,690 thousand (2023: €26,676 thousand) and account maintenance fees
of €29,462 thousand (2023: €29,420 thousand).
Fee and commission income is further divided into:
Fees earned from services that are provided over time:
2024
2023
€000
€000
Credit-related fees and commissions
25,132
26,879
Other banking commissions
43,710
44,150
Fees on servicing loans disposed of under Project Helix 3
-
646
Mutual funds and asset management fees
3,057
2,878
71,899
74,553
324
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
9.
Fee and commission income and expense (continued)
Fees earned from point in time services:
2024
2023
€000
€000
Credit-related fees and commissions
30,807
27,141
Other banking commissions
43,175
47,936
Mutual funds and asset management fees
1,611
1,201
Brokerage commissions
1,375
1,146
Other commissions
35,551
36,366
112,519
113,790
Fee and commission expense
2024
2023
€000
€000
Banking commissions
6,681
6,784
Mutual funds and asset management fees
410
343
Brokerage commissions
384
193
7,475
7,320
10.
Net foreign exchange gains
Net foreign exchange gains comprise of the conversion of monetary assets and liabilities in foreign currency
at the reporting date, realised exchange gains/(losses) from transactions in foreign currency settled during
the year, customer related foreign exchange and the revaluation of foreign exchange derivatives.
11.
Net gains on financial instruments
2024
2023
€000
€000
Trading portfolio:
- derivative financial instruments
79
26
Other investments at FVPL:
- non-equity securities
6,942
1,268
- mutual funds
2,500
5,787
- equity securities
(81)
1,618
Net losses on disposal of FVOCI debt securities
-
(438)
Net gains on loans and advances to customers measured at FVPL (Note 22)
1,232
2,401
Revaluation of financial instruments designated as fair value hedges:
- hedging instruments (Note 21)
44,132
(2,211)
- hedged items (Note 21)
(44,132)
4,329
10,672
12,780
325
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
12.
Net insurance result
2024
2023
Life
insurance
Non-life
insurance
Total
Life
insurance
Non-life
insurance
Total
€000
€000
€000
€000
€000
€000
Insurance finance
income/(expense)
(60,640)
(1,725)
(62,365)
(43,820)
(1,269)
(45,089)
Reinsurance finance
income/(expense)
(1,375)
647
(728)
2,114
449
2,563
Return on assets backing
insurance liabilities
59,186
-
59,186
43,486
-
43,486
Net insurance finance
income/(expense) and net
reinsurance finance
income/(expense)
(2,829)
(1,078)
(3,907)
1,780
(820)
960
Insurance revenue
54,150
95,920
150,070
57,081
88,694
145,775
Insurance service expenses
(20,252)
(52,921)
(73,173)
(25,259)
(46,273)
(71,532)
Other insurance related
income/(expense)
(106)
-
(106)
(715)
-
(715)
Net insurance service result
33,792
42,999
76,791
31,107
42,421
73,528
Allocation of reinsurance
premiums
(18,340)
(37,685)
(56,025)
(14,824)
(34,498)
(49,322)
Amounts recoverable from
reinsurers for incurred claims
12,325
17,007
29,332
11,853
16,469
28,322
Net reinsurance service result
(6,015)
(20,678)
(26,693)
(2,971)
(18,029)
(21,000)
Net insurance result
24,948
21,243
46,191
29,916
23,572
53,488
The analysis of the insurance revenue recognised during the year is presented below:
2024
2023
€000
€000
Life insurance contracts
Amounts relating to the changes in the liability for remaining coverage
Expected incurred claims and insurance service expenses incurred in the year
34,183
37,129
Change in the risk adjustment for non-financial risk
1,047
1,306
Amount of CSM recognised in profit or loss
8,893
7,792
Other amounts, including experience adjustments for premium receipts
859
1,160
Amounts relating to recovery of insurance acquisition cash flows
Allocation of the portion of premiums that relate to the recovery of insurance
acquisition cash flows
349
228
Insurance revenue from contracts measured under GMM and VFA
45,331
47,615
Insurance revenue from contracts measured under PAA
8,819
9,466
Insurance revenue - life
54,150
57,081
Non-life insurance contracts
Insurance revenue from contracts measured under PAA
95,920
88,694
Insurance revenue - non-life
95,920
88,694
Insurance revenue
150,070
145,775
326
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
12.
Net insurance result (continued)
The analysis of the insurance service expenses recognised during the year is presented below:
2024
2023
Life
insurance
Non-life
insurance
Total
Life
insurance
Non-life
insurance
Total
€000
€000
€000
€000
€000
€000
Incurred claims and directly
attributable expenses
(19,462)
(39,840)
(59,302)
(24,446)
(32,964)
(57,410)
Amortisation of insurance
acquisition cash flows
(349)
(6,945)
(7,294)
(227)
(5,541)
(5,768)
Insurance acquisition cash flows
expensed as incurred
(2,750)
(6,317)
(9,067)
(2,581)
(5,907)
(8,488)
Reversals of losses/(losses) on
onerous contracts
413
(337)
76
1,145
(108)
1,037
Changes to liabilities for incurred
claims (LIC)
1,896
518
2,414
850
(1,753)
(903)
Insurance service expenses
(20,252)
(52,921)
(73,173)
(25,259)
(46,273)
(71,532)
The analysis of the net reinsurance service result from reinsurance contracts held, recognised during the
year is presented below:
2024
2023
Reinsurance contracts - life contracts
€000
€000
Amounts relating to the changes in the assets for remaining coverage
Expected recovery for insurance service expenses incurred in the year
(12,924)
(10,087)
Change in the risk adjustment for non-financial risk
(23)
41
Net cost/gain recognised in profit or loss
(2,665)
(1,559)
Allocation of reinsurance premiums from contracts measured under GMM
(15,612)
(11,605)
Allocation of reinsurance premiums from contracts measured under PAA
(2,728)
(3,219)
Allocation of reinsurance premiums
(18,340)
(14,824)
Amounts recoverable for claims and other expenses incurred in the year
12,810
12,247
Changes in amounts recoverable arising from changes in liability for incurred
claims
(883)
(394)
Changes in fulfilment cash flows which relate to onerous underlying contracts
398
-
Amounts recoverable from reinsurers for incurred claims
12,325
11,853
Net reinsurance service result - life
(6,015)
(2,971)
Reinsurance contracts - non-life contracts
Allocation of reinsurance premiums from contracts measured under PAA
(37,685)
(34,498)
Allocation of reinsurance premiums
(37,685)
(34,498)
Amounts recoverable for claims and other expenses incurred in the year
12,106
13,346
Changes in amounts recoverable arising from changes in liability for incurred
claims
4,715
3,072
Changes in fulfilment cash flows which relate to onerous underlying contracts
186
51
Amounts recoverable from reinsurers for incurred claims
17,007
16,469
Net reinsurance service result - non-life
(20,678)
(18,029)
Net reinsurance service result
(26,693)
(21,000)
327
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
12.
Net insurance result (continued)
The analysis of insurance finance income/(expense) and reinsurance finance income/(expense) recognised
during the year is presented below:
2024
2023
Life
insurance
Non-life
insurance
Total
Life
insurance
Non-life
insurance
Total
€000
€000
€000
€000
€000
€000
Changes in value of underlying
assets of direct participating
contracts
(59,346)
-
(59,346)
(42,949)
-
(42,949)
Interest accreted to insurance
contracts using current financial
assumptions
(71)
(1,371)
(1,442)
(307)
(1,297)
(1,604)
Interest accreted to insurance
contracts using locked-in rates
(60)
-
(60)
13
-
13
Changes in interest rates and
other financial assumptions
(1,163)
(354)
(1,517)
(577)
28
(549)
Insurance finance
income/(expense)
(60,640)
(1,725)
(62,365)
(43,820)
(1,269)
(45,089)
Interest accreted to reinsurance
contracts using current financial
assumptions
-
544
544
-
465
465
Interest accreted to reinsurance
contracts using locked-in rates
639
-
639
(85)
-
(85)
Changes in interest rates and
other financial assumptions
(2,014)
112
(1,902)
2,199
(19)
2,180
Changes in non-performance risk
of reinsurer
-
(9)
(9)
-
3
3
Reinsurance finance
income/(expense)
(1,375)
647
(728)
2,114
449
2,563
13.
Other income
2024
2023
€000
€000
Dividend income
183
856
Profit on sale and write-off of property and equipment and intangible assets
28
53
Rental income from investment properties
2,153
3,239
Rental income from stock of property
204
346
Income from hotel, golf and other leisure activities
2,036
3,463
Income from insurance compensation
1,889
5,093
Other income
7,888
5,287
14,381
18,337
The income from hotel, golf and other leisure activities primarily relates to activities of subsidiaries acquired
in debt satisfaction as part of loan restructuring activity.
328
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
14.
Staff costs
Staff costs
2024
2023
€000
€000
Salaries
143,115
137,390
Employer's contributions
26,604
23,301
Variable compensation:
Accrual for short-term incentive award (Note 14.3)
10,090
11,488
Share-based benefits expense (Note 14.2)
932
595
Retirement benefit plan costs
12,782
12,072
Exit cost and other termination benefits
9,539
7,420
203,062
192,266
The number of persons employed by the Group as at 31 December 2024 was 2,880 (2023: 2,830).
Staff costs are presented in the Consolidated Income Statement net of software capitalisation costs and
costs included in the insurance contracts fulfilment cash flow liabilities under IFRS 17. An analysis of
expenses by nature incurred by the Group is included in Note 15.1.
The cost for the short-term incentive award comprises the cost for the short-term incentive award for the
performance year 2024 which amounts to €11,968 thousand (2023: €11,488 thousand), of which an
amount of €1,597 thousand (2023: €1,533 thousand) relates to employers' contributions accrual on 2024
STIP, and a credit amount of €1,878 thousand which relates to 2023 STIP.
During 2024, the Group provided for termination benefits to 57 (2023: 50) of the Group's full time
employees at a total cost of €9,539 thousand (2023: €7,420 thousand).
The following table shows the analysis per geographical location of the Group’s average number of
employees (full time) and analysis of the average number of employees in Cyprus per business line for 2024
and 2023.
2024
2023
(restated)
Corporate
52
53
IBU & International corporate
- IBU
212
211
- International corporate
7
14
Small and medium-sized enterprises
83
82
Retail
879
912
Restructuring and recoveries
120
132
REMU
39
41
Insurance
209
200
Treasury
37
30
Payment services
117
113
Other (primarily head office functions)
1,096
1,088
Total Cyprus
2,851
2,876
Other countries
7
7
2,858
2,883
329
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
14.
Staff costs (continued)
14.1
Retirement benefits
In addition to the employer's contributions to state social insurance, the Group operates plans for the
provision of additional retirement benefits as described below:
2024
2023
€000
€000
Defined benefit plans
261
512
Defined contribution plans
13,624
12,226
13,885
12,738
During the year ended 31 December 2024 retirement benefit costs of €1,103 thousand are included within
net insurance service result as directly attributable expenses for the fulfilment of insurance contracts within
the scope of IFRS 17 (2023: €666 thousand) (Note 15.1).
Cyprus
The main retirement plan for the Group’s permanent employees in Cyprus (85% of total Group employees)
is a defined contribution plan. This plan provided for employer contributions of 9% for 2024 and 2023 and
employee contributions of 3%-10% of the employees’ gross salaries for both 2024 and 2023. This plan is
managed by an Administrative Committee appointed by the members.
A small number of employees of Group subsidiaries in Cyprus are also members of defined benefit plans.
These plans are funded with assets backing the obligations held in separate legal vehicles.
Greece
Following IFRIC’s decision in May 2021 about the periods of service to which an entity attributes benefit for
a particular defined benefit plan, the Group as at 31 December 2024 and 2023 does not have any
retirement benefits obligation for its employees in Greece, and as a result the accumulated actuarial
gains/losses attributable to these plans were derecognised since 31 December 2021.
United Kingdom
The Group has assumed in prior years the obligation of the defined benefit plan of employees of the former
subsidiary of the Group in the United Kingdom which was closed in December 2008 to future accrual of
benefits for active members. As at 31 December 2024 and 2023 the Group's remaining retirement benefit
obligation related to the UK pension plan.
In December 2024, the UK pension scheme undertook a bulk insurance buy-in transaction. The policy
purchased is designed to provide cash flows that match the amount and timing of the benefits payable to
the Scheme’s members giving protection against demographic and investment risks and meet the members’
corresponding defined benefit obligations. The buy-in policy is presented as a pension plan asset with the
fair value being equal to the present value of the scheme's defined benefit obligation.
Analysis of the results of the actuarial valuations for the defined benefit plans
2024
2023
Amounts recognised in the consolidated balance sheet
€000
€000
Liabilities (Note 33)
-
565
Assets (Note 28)
(1,767)
(669)
(1,767)
(104)
Total funded status at a surplus, amounts to €992 thousand (2023: total funded status at a surplus of
€7,141 thousand) that is not recognised as an asset on the basis that the Group has no unconditional right
to future economic benefits either via a refund or a reduction in future contributions.
330
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
14.
Staff costs (continued)
14.1
Retirement benefits (continued)
The amounts recognised in the consolidated balance sheet and the movement in the net defined benefit obligation for the years ended 31 December 2024 and
2023 are presented below:
Present value of
obligation
Fair value of
plan assets
Net amount
before impact of
asset ceiling
Impact of
minimum
funding
requirement/
asset ceiling
Net defined
benefit liability
€000
€000
€000
€000
€000
1 January 2024
58,018
(65,263)
(7,245)
7,141
(104)
Current service cost
119
-
119
-
119
Net interest expense/(income)
2,590
(2,637)
(47)
-
(47)
Administration cost
-
189
189
-
189
Total amount recognised in the consolidated income
statement
2,709
(2,448)
261
-
261
Remeasurements:
Return on plan assets, excluding amounts included in
net interest expense
-
11,695
11,695
-
11,695
Actuarial gain from changes in financial assumptions
(2,697)
-
(2,697)
-
(2,697)
Demographic assumptions
(2,272)
-
(2,272)
-
(2,272)
Experience adjustments
298
-
298
-
298
Change in asset ceiling
-
-
-
(6,840)
(6,840)
Total amount recognised in the consolidated OCI
(4,671)
11,695
7,024
(6,840)
184
Exchange differences
2,806
(2,951)
(145)
691
546
Contributions:
Employer
-
(2,654)
(2,654)
-
(2,654)
Plan participants
180
(180)
-
-
-
Benefits paid from the plans
(2,347)
2,347
-
-
-
31 December 2024
56,695
(59,454)
(2,759)
992
(1,767)
331
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
14.
Staff costs (continued)
14.1
Retirement benefits (continued)
Present value of
obligation
Fair value of plan
assets
Net amount before
impact of asset
ceiling
Impact of minimum
funding
requirement/ asset
ceiling
Net defined
benefit liability
€000
€000
€000
€000
€000
1 January 2023
54,743
(62,605)
(7,862)
10,740
2,878
Current service cost
395
-
395
-
395
Net interest expense/(income)
2,624
(2,507)
117
-
117
Total amount recognised in the consolidated income
statement
3,019
(2,507)
512
-
512
Remeasurements:
Return on plan assets, excluding amounts included in
net interest expense
-
394
394
-
394
Actuarial loss from changes in financial assumptions
1,623
-
1,623
-
1,623
Demographic assumptions
(605)
-
(605)
-
(605)
Experience adjustments
621
-
621
-
621
Asset adjustment
-
1,600
1,600
-
1,600
Change in asset ceiling
-
-
-
(4,253)
(4,253)
Total amount recognised in the consolidated OCI
1,639
1,994
3,633
(4,253)
(620)
Exchange differences
889
(1,465)
(576)
654
78
Contributions:
Employer
-
(2,952)
(2,952)
-
(2,952)
Plan participants
177
(177)
-
-
-
Benefits paid from the plans
(2,449)
2,449
-
-
-
31 December 2023
58,018
(65,263)
(7,245)
7,141
(104)
332
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
14.
Staff costs (continued)
14.1
Retirement benefits (continued)
The actual return on plan assets for year 2024 was a loss of €9,247 thousand (2023: gain of €2,113
thousand) mainly due to the assets for the UK pension fund measured so that the fair value matches the
present value of the liability following the buy-in insurance policy.
The assets of funded plans are generally held in separately administered entities, either as specific assets or
as a proportion of a general fund, or as insurance contracts and are governed by local regulations and
practice in each country.
Pension plan assets are invested in different asset classes in order to maintain a balance between risk and
return. Investments are well diversified to limit the financial effect of the failure of any individual
investment. Through its defined benefit plans, the Group is exposed to a number of risks as outlined below:
Interest rate risk
The Group is exposed to interest rate risk due to the mismatch of the duration
of assets and liabilities.
Changes in bond yields
A decrease in corporate bond yields will increase the liabilities, although this
will be partially offset by an increase in the value of bond holdings.
Inflation risk
The Group faces inflation risk, since the liabilities are either directly (through
increases in pensions) or indirectly (through wage increases) exposed to
inflation risks. Investments to ensure inflation-linked returns (i.e. real returns
through investments such as equities, index-linked bonds and assets whose
return increases with increasing inflation) could be used to better match the
expected increases in liabilities.
Asset volatility
The liabilities are calculated using a discount rate set with reference to
corporate bond yields; if assets underperform this yield, a deficit will be
created.
The fair value of insurance policy related to buy-in transaction was estimated as the present value of the
underlying obligations covered by the insurance policy, hence the fair value of this asset at each reporting
date is impacted by the measurement uncertainty of the related scheme liabilities.
The major categories of plan assets as a percentage of total plan assets are as follows:
2024
2023
Equity securities
%
8
%
10
Debt securities
%
11
%
66
Loans and advances to banks
%
6
%
21
Funds
%
4
%
3
Buy-in insurance policy
%
71
%
-
%
100
%
100
The Group expects to make additional contributions to defined benefit plans of €622 thousand during 2025.
At the end of the reporting period, the average duration of the defined benefit obligations was 13 years
(2023: 14 years).
333
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
14.
Staff costs (continued)
14.1
Retirement benefits (continued)
Principal actuarial assumptions used in the actuarial valuations
The present value of the defined benefit obligations of the retirement plans is estimated annually using the
Projected Unit Credit Method of actuarial valuation, carried out by independent actuaries. The principal
actuarial assumptions used for the valuations of the retirement plans of the Group during 2024 and 2023 are
set out below:
2024
Cyprus
UK
Discount rate
3.35%
5.15%
Inflation rate
2.00%
3.05%
Future salary increases
2.00%
n/a
Rate of pension increase
n/a
2.90%
Life expectancy for pensioners at age 60
n/a
n/a
Life expectancy for pensioners at age 65
n/a
22.6 years M
24.3 years F
2023
Discount rate
3.27%
4.75%
Inflation rate
2.25%
3.00%
Future salary increases
2.25%
n/a
Rate of pension increase
n/a
2.80%
Life expectancy for pensioners at age 60
23.5 years M
29.6 years F
n/a
Life expectancy for pensioners at age 65
n/a
23.0 years M
24.7 years F
The discount rate used in the actuarial valuations reflects the rate at which liabilities could effectively be
settled and is set by reference to market yields at the reporting date of high quality corporate bonds of
suitable maturity and currency. For the Group’s plans in the Eurozone which comprise 21% of the defined
benefit obligations, the Group adopted a full yield curve approach using AA- rated corporate bond data from
the iBoxx Euro Corporates AA10+ index. For the Group’s plan in the UK which comprises 79% of the defined
benefit obligations, the Group adopted a full yield curve approach using the discount rate that has been set
based on the yields on AA- rated corporate bonds with duration consistent with the scheme’s liabilities.
Under this approach, each future liability payment is discounted by a different discount rate that reflects its
exact timing.
To develop the assumptions relating to the expected rates of return on plan assets, the Group, in
consultation with its actuaries, uses forward-looking assumptions for each asset class reflecting market
conditions and future expectations at the reporting date. Adjustments are made annually to the expected
rate of return assumption based on revised expectations of future investment performance of asset classes,
changes to local legislation that may affect investment strategy, as well as changes to the target strategic
asset allocation.
The impact of significant assumptions' fluctuations on the defined benefit obligation as at 31 December
2024 and 2023 is presented below:
2024
2023
Variable
Change
+0.5%
Change
-0.5%
Change
+0.5%
Change
-0.5%
Discount rate
%
-5.8
%
6.2
%
-6.4
%
6.8
Inflation growth rate
%
3.8
%
-3.7
%
4.2
%
-4.1
Salary growth rate
%
0.9
%
-0.8
%
1.1
%
-1.0
Pension growth rate
%
0.1
%
-0.1
%
0.1
%
-0.1
Plus 1 year
Minus 1 year
Plus 1 year
Minus 1 year
Life expectancy
%
3.3
%
-3.3
%
3.8
%
-3.8
334
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
14.
Staff costs (continued)
14.1
Retirement benefits (continued)
The above sensitivity analysis (with the exception of the inflation sensitivity) is based on a change in one
assumption while holding all other assumptions constant. In practice this is unlikely to occur and some
changes of the assumptions may be correlated. The inflation sensitivity includes changes to any inflation-
linked benefit increases. When calculating the sensitivity of the defined benefit obligation to significant
assumptions, the same method has been applied as when calculating the pension liability recognised on the
consolidated balance sheet. The methods and types of assumptions used in preparing the sensitivity
analysis did not change compared to previous years.
14.2
Share-based compensation plan
Long-Term Incentive Plan
At the Annual General Meeting of the shareholders of BOCH which took place on 20 May 2022, a special
resolution was approved for the establishment and implementation of the share based Long-Term Incentive
Plan (the ‘LTIP’) of Bank of Cyprus Holdings Public Limited Company.
The LTIP is an equity-settled share-based compensation plan for executive directors and senior
management of the Group. The LTIP provides for an award in the form of ordinary shares of BOCH based on
certain non-market performance and service vesting conditions. Performance is measured over a three-year
period. The performance conditions are set by the Human Resources & Remuneration Committee (HRRC)
each year and may be differentiated at the HRRC's discretion to reflect the Group's strategic targets and
employees' personal performance. Performance will be assessed against an evaluation scorecard consistent
with the Group’s Medium-Term Strategic Targets containing both financial and non-financial objectives, and
including targets in the areas of: (i) Profitability; (ii) Asset quality; (iii) Capital adequacy; (iv) Risk control &
compliance; (v) Environmental, Social and Governance ('ESG'); and (vi) Customer Experience (targets in
the area of Customer Experience have been introduced for non-control functions from 2024). The awards
ordinarily vest in six tranches, with 40% vesting in the year following the year the performance period ends
and the remaining 60% vesting in tranches (12%), on each of the first, second, third, fourth and fifth
anniversary of the first vesting date. For any award to vest the employee must be in the employment of the
Group up until the date of the vesting of such an award. Awards are subject to potential forfeiture under
certain leaver scenarios. Under certain circumstances the HRRC has the discretion to determine whether the
award will lapse and/or the extent to which the award will be vested.
The maximum number of shares that may be issued pursuant to the LTIP until the tenth anniversary of the
relevant resolution shall not exceed 5% of the issued ordinary share capital of BOCH as at the date of the
resolution (being 22,309,996 ordinary shares of €0.10 each), as adjusted for any issuance or cancellation of
shares subsequently to the date of the resolution (excluding any issuances of shares pursuant to the LTIP).
Under the LTIP the following share awards were outstanding as of 31 December 2024:
i.
On 3 April 2024 (grant date) a maximum of 403,990 share awards were granted by BOCH to 21 eligible
employees, comprising the Extended Executive Committee of the Group. The awards granted in April
2024 are subject to a three-year performance period 2024-2026 (with all performance conditions being
non-market performance conditions).
ii.
On 3 October 2023 (grant date) a maximum of 479,160 share awards were granted by BOCH to 21
eligible employees, comprising the Extended Executive Committee of the Group. The awards granted in
October 2023 are subject to a three-year performance period 2023-2025 (with all performance
conditions being non-market performance conditions).
iii. On 22 December 2022 (grant date) a maximum of 819,860 share awards were granted by BOCH to 22
eligible employees, comprising the Extended Executive Committee of the Group. The awards granted in
December 2022 were subject to a three-year performance period 2022-2024 (with all performance
conditions being non-market performance conditions). The amounts awarded under this 2022 LTIP cycle
in early 2025 are disclosed in Note 49 of the Consolidated Financial Statements.
The following table presents movements in outstanding share-based awards during 2024 and 2023.
335
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
14.
Staff costs (continued)
14.2
Share-based compensation plan (continued)
2024
2023
Number of
shares
Weighted
average grant
date fair value
Number of
shares
Weighted
average grant
date fair value
€
€
As at 1 January
1,209,036
2.15
819,860
1.69
Granted during the year
403,990
3.70
479,160
2.95
Change in estimate of number of awards to
vest
39,004
-
-
-
Vested during the year
-
-
-
-
Forfeited during the year
-
n/a
(89,984)
n/a
31 December
1,652,030
1,209,036
Assumptions
The fair value calculations as of the granting date for each of the share awards are calculated using the
Black-Scholes model. As the award is a share award (and does not contain any market-based performance
conditions) the fair value is based on the share price at the date of the grant.
14.3
Short-term incentive plan
Short-term incentive award refers to a Short-Term Incentive Plan first introduced by the BOCH Group in
2023. This is an annual incentive which involves variable remuneration in the form of cash, or a combination
of cash and shares, to selected employees, and is driven by both delivery of the BOCH's Group's Strategy,
as well as individual performance, in the relevant year. Executive Management are also eligible to be
considered for the short-term incentive award. The short-term incentive award is generally paid in cash and
is non-deferred, however, in cases where the total variable remuneration in a year (i.e including both
amounts under STIP and LTIP) of an employee exceeds a specified threshold as per regulatory guidelines,
then at least 50% of the total variable remuneration is awarded in shares. In cases where the total variable
remuneration threshold is exceeded, the STIP award (both the cash and share component, if any) vests
similarly to the vesting of LTIP award, i.e., 40% vests in the year following the performance year to which
the incentive award relates to, and the remaining 60% vests in tranches (12%) over five years.
Shares vesting as part of the short-term incentive award are subject to one-year retention period and 100%
of the award is subject to clawback provisions.
For the short-term incentive award for the performance year 2024 no amount is to be granted in the form
of shares (2023: €250 thousand of the total STIP for 2023 was granted in the form of shares). Further
information on the amounts awarded under the short-term incentive award for the performance year 2024
to Executive Directors and other key management personnel is disclosed in Note 49.
336
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
15.
Other operating expenses
2024
2023
€000
€000
Technology and systems
34,684
31,159
Property-related costs
14,348
14,392
Consultancy, legal and other professional services fees
18,425
17,448
Insurance
5,070
5,739
Advertising and marketing
13,281
9,000
Incentives to performing customers
2,300
2,500
Depreciation of property and equipment (Note 15.1)
16,075
13,760
Amortisation of intangible assets (Note 15.1)
14,901
15,740
Communication expenses
5,936
6,119
Printing and stationery
1,685
1,641
Cash transfer expenses
3,352
3,193
Other operating expenses
31,819
35,601
161,876
156,292
Advisory and other transformation costs (non-recurring)
-
2,253
161,876
158,545
The Group has changed the description of the first line item in the table above to more appropriately reflect
the nature of this expense and has changed this to 'Technology and systems' from 'Repairs and
Maintenance'. As a result of this change, expenses of €2,678 thousand have been included in 'Property-
related costs' and €31,159 thousand in 'Technology and systems' in respect of the comparative information.
Advisory and other transformation costs comprise mainly fees to external advisors in relation to the
transformation program and other strategic projects of the Group and are considered to be non-recurring.
During the year ended 31 December 2024, the Group recognised €56 thousand relating to rent expense for
short-term leases, included within 'Property-related costs' (2023: €57 thousand).
Incentives to performing customers of €2,300 thousand during the year ended 31 December 2024 (2023:
€2,500 thousand relate to the Reward Programme launched in June 2023) relate to the Reward Programme
launched in August 2024 to reward performing borrowers through the Antamivi reward scheme.
Within total other operating expenses, an amount of €542 thousand (2023: €777 thousand) relates to
investment property that generated rental income.
Special levy on deposits and other levies/contributions as presented in the consolidated income statement
are set out below:
2024
2023
€000
€000
Special levy on deposits of credit institutions in Cyprus
29,448
23,300
Single Resolution Fund contribution
-
5,477
Guarantee fee on annual deferred tax credit (Note 17)
5,364
5,364
Contribution to Deposit Guarantee Fund
4,303
8,239
39,115
42,380
The special levy on credit institutions in Cyprus (the Special Levy) is imposed on the level of deposits as at
the end of the previous quarter, at the rate of 0.0375% per quarter. Following an amendment of the
Imposition of Special Credit Institution Tax Law in 2017, the Single Resolution Fund ('SRF') contribution,
which is charged annually by the Single Resolution Board ('SRB'), reduces the charge of the Special Levy up
to the level of the total annual Special Levy charge. In February 2024, the SRB announced that no regular
annual contributions would be collected in 2024 from the institutions falling in scope of the SRF and
contributions would only be collected in the event of specific circumstances.
337
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
15.
Other operating expenses (continued)
As from 1 January 2020 and until 3 July 2024 the Company was subject to a contribution to the Deposit
Guarantee Fund (DGF) on a semi-annual basis. The contributions were calculated based on the Risk Based
Methodology (RBM) as approved by the management committee of the Deposit Guarantee and Resolution of
Credit and Other Institutions Schemes (DGS) and is publicly available on the CBC’s website. In line with the
RBM, the contributions are broadly calculated on the covered deposits of all authorised institutions and the
target level was to reach at least 0.8% of covered deposits by 3 July 2024. The management committee of
the DGS can decide to collect additional ex-ante contributions to achieve a higher return.
Fees to the independent auditors of the Group for audit and other professional services provided both in
Cyprus and overseas are presented in the table below:
PwC Cyprus
PwC Network firms
2024
2023
2024
2023
€000
€000
€000
€000
Audit of the individual and the Group financial
statements
1,575
1,585
315
314
Other assurance services
760
402
66
140
Tax compliance and advisory services
174
149
18
18
Other non-assurance services
288
199
95
127
1,222
750
179
285
2,797
2,335
494
599
Fees are exclusive of VAT.
Other assurance services fees relate primarily to the fees for limited assurance review of the Sustainability
Statement (2024 only), letters of comfort and interim review.
15.1
Expenses by nature
Analysis of staff costs and other operating expenses incurred by the Group by nature, is presented in the
table below:
2024
Directly
attributable
expenses
(Note 12)
Capitalised
as
internally
developed
computer
software
(Note 26)
Staff
costs
(Note 14)
Other
operating
expenses
(Note 15)
Total
€000
€000
€000
€000
€000
Salaries and employer's contributions
11,193
2,337
169,719
-
183,249
Variable compensation:
Accrual for short-term incentive award
-
-
10,090
-
10,090
Share-based benefits expense
-
-
932
-
932
Retirement benefit plan costs (Note 14.1)
1,103
-
12,782
-
13,885
Exit cost and other termination benefits
-
-
9,539
-
9,539
Depreciation (Note 25)
453
-
-
7,698
8,151
Depreciation of RoU assets (Note 25)
1,451
-
-
8,377
9,828
Amortisation of intangible assets (Note 26)
3,291
-
-
14,901
18,192
Other operating expenses
4,148
-
-
130,900
135,048
Total
21,639
2,337
203,062
161,876
388,914
338
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
15.
Other operating expenses (continued)
15.1
Expenses by nature (continued)
2023
Directly
attributable
expenses
(Note 12)
Capitalised
as internally
developed
computer
software
(Note 26)
Staff
costs
(Note 14)
Other
operating
expenses
(Note 15)
Total
€000
€000
€000
€000
€000
Salaries and employer's contributions
9,898
2,202
160,691
-
172,791
Variable compensation:
Accrual for short-term incentive award
-
-
11,488
-
11,488
Share-based benefits expense
-
-
595
-
595
Retirement benefit plan costs (Note 14.1)
666
-
12,072
-
12,738
Exit cost and other termination benefits
-
-
7,420
-
7,420
Depreciation (Note 25)
387
-
-
8,270
8,657
Depreciation of RoU assets (Note 25)
1,246
-
-
5,490
6,736
Amortisation of intangible assets (Note 26)
3,120
-
-
15,740
18,860
Other operating expenses
4,088
-
-
129,045
133,133
Total
19,405
2,202
192,266
158,545
372,418
Directly attributable expenses are expenses incurred by the insurance subsidiaries of the Group that relate
directly to the fulfilment of insurance and re-insurance contracts within the scope of IFRS 17.
16.
Credit losses on financial assets and impairment net of reversals on non-financial assets
2024
2023
Credit losses on financial assets
€000
€000
Credit losses to cover credit risk on loans and advances to customers
Impairment net of reversals on loans and advances to customers (Note 44.5)
47,519
81,764
Recoveries of loans and advances to customers previously written off
(13,520)
(15,057)
Changes in expected cash flows
(1,080)
4,824
Financial guarantees and commitments (Notes 44.6.1 and 44.6.2)
(1,006)
1,763
31,913
73,294
Credit losses on other financial instruments
Amortised cost debt securities (Note 20)
(256)
(531)
FVOCI debt securities (Note 20)
(242)
(380)
Loans and advances to banks (Note 19)
19
1
Balances with central banks (Note 19)
(403)
330
Reverse repurchase agreements
9
20
Other financial assets
757
7,096
(116)
6,536
31,797
79,830
2024
2023
Impairment net of reversals on non-financial assets
€000
€000
Stock of property (Note 27)
55,612
46,026
Other non-financial assets
428
826
56,040
46,852
339
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
17.
Income tax
2024
2023
€000
€000
Current tax:
- Cyprus
45,214
46,319
Cyprus special defence contribution
121
47
Deferred tax charge
34,081
26,001
Prior years’ tax adjustments
515
(52)
Other tax charges
1,197
623
81,128
72,938
The reconciliation between the income tax expense and the profit before tax as estimated using the current
income tax rates is set out below:
2024
2023
€000
€000
Profit before tax
592,704
555,447
Income tax at the normal tax rates in Cyprus
74,088
69,431
Income tax effect of:
- expenses not deductible for income tax purposes
20,456
12,862
- income not subject to income tax
(8,981)
(6,556)
- other allowable deductions
(6,268)
(3,417)
79,295
72,320
Cyprus special defence contribution
121
47
Prior years' tax adjustments
515
(52)
Other tax charges
1,197
623
81,128
72,938
The corporate income tax rate in Cyprus is 12.5% on taxable income (2023: 12.5%). The tax rates
prevailing in the countries the Group has entities incorporated, in the year ended 31 December 2024 were:
Greece 22% (2023: 22%), Romania 16% (2023: 16%) and Russia 20% (2023: 20%).
For life insurance business there is a minimum income tax charge of 1.5% on gross premiums (this is
included within 'Net insurance service result'), which amounted to €2,494 thousand for the year ended 31
December 2024 (2023: €2,148 thousand). Special defence contribution is payable on the 75% of rental
income at a rate of 3% (2023: 3%) and on interest income from activities outside the ordinary course of
business at a rate of 17% (2023: 30%).
The Group is subject to income tax in the various jurisdictions in which it operates and the calculation of the
Group’s income tax charge, top-up tax liability under Cyprus Pillar Two Law and provisions for income tax
necessarily involves a degree of estimation and judgement. There are transactions and calculations for
which the ultimate income tax treatment is uncertain and cannot be determined until resolution has been
reached with the relevant tax authority. The Group has a number of open income tax returns with various
income tax authorities and liabilities relating to these judgemental matters which are based on estimates of
whether additional income taxes will be due. In case the final income tax outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the current and
deferred income tax assets and liabilities in the period in which such determination is made.
On 22 December 2022, the European Commission approved Directive 2022/2523 which provides for a
minimum effective tax rate of 15% for the global activities of large multinational groups (Pillar Two tax).
The Directive (EU) 2022/2523 that follows closely the OECD Inclusive Framework on Base Erosion and Profit
Shifting was voted into Law 151(Ι)/2024 (the 'Cyprus Pillar Two Law') in December 2024, effective for
financial years starting from 31 December 2023. The Group is in scope of the Cyprus Pillar Two Law for the
year ended 31 December 2024. The Group is eligible for the transitional provision under Article 55 of the
Cyprus Pillar Two Law which results in zeroing any top-up tax liability in Cyprus computed in accordance
with the rules laid out in the Cyprus Pillar Two Law for the year ended 31 December 2024. The Group does
not anticipate any top-up tax liability arising from the foreign jurisdictions in which it has subsidiary entities.
340
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
17.
Income tax (continued)
Deferred tax
The movement of the net deferred tax assets is set out below:
Differences
between
capital
allowances
and
depreciation
Own property
revaluation
Stock of
property and
investment
properties
Unutilised
income tax
losses
carried
forward
(guaranteed
deferred tax
asset)
Other
temporary
differences
(net)
Total
2024
€000
€000
€000
€000
€000
€000
Net Deferred tax asset/(liability) as
at 1 January 2024
(10,329)
(16,546)
7,542
189,546
(1,251)
168,962
Income Statement - tax
(charge)/credit
(762)
-
3,004
(37,909)
1,586
(34,081)
Other comprehensive income - tax
credit
-
20
-
-
-
20
31 December 2024
(11,091)
(16,526)
10,546
151,637
335
134,901
Deferred tax assets
87
29
13,393
151,637
1,698
166,844
Deferred tax liabilities
(11,178)
(16,555)
(2,847)
-
(1,363)
(31,943)
31 December 2024
(11,091)
(16,526)
10,546
151,637
335
134,901
2023
Net Deferred tax asset/(liability) as
at 1 January 2023
(10,528)
(13,338)
(2,847)
227,455
(7,442)
193,300
Income Statement - tax
credit/(charge)
199
-
10,389
(37,909)
1,320
(26,001)
Other comprehensive income - tax
charge
-
(3,234)
-
-
-
(3,234)
Other transfers
-
26
-
-
-
26
Transfer to current tax payables
following the adoption of IFRS 17
-
-
-
-
4,871
4,871
31 December 2023
(10,329)
(16,546)
7,542
189,546
(1,251)
168,962
Deferred tax assets
56
29
10,389
189,546
1,248
201,268
Deferred tax liabilities
(10,385)
(16,575)
(2,847)
-
(2,499)
(32,306)
31 December 2023
(10,329)
(16,546)
7,542
189,546
(1,251)
168,962
The deferred tax assets (DTA) relate to Cyprus operations.
341
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
17.
Income tax (continued)
The Group offsets income tax assets and liabilities only if it has a legally enforceable right to set-off current
income tax assets and current income tax liabilities.
Income Tax Law Amendment 28(I) of 2019
On 1 March 2019, the Cyprus Parliament adopted legislative amendments to the Income Tax Law (the
'Law') which were published in the Official Gazette of the Republic on 15 March 2019 ('the amendments').
The Company has DTA that meets the requirements of the Income Tax Law Amendment 28(I) of 2019
relating to income tax losses transferred to the Company as a result of the acquisition of certain operations
of Laiki Bank, on 29 March 2013, under ‘The Resolution of Credit and Other Institutions Law’. The DTA
recognised upon the acquisition of certain operations of Laiki in 2013 amounted to €417 million
(corresponding to €3.3 billion tax losses) for which the Company paid a consideration as part of the
respective acquisition. The period of utilisation of the tax losses which may be converted into tax credits is
eleven years following the amendment of the Law in 2019, starting from 2018 i.e., by end of 2028.
As a result of the above Law, the Group has DTA amounting to €151,637 thousand as at 31 December 2024
(2023: €189,546 thousand) that meet the requirements under this Law, the recovery of which is
guaranteed. On an annual basis, an amount is either converted to annual tax credit and is reclassified from
the DTA to current tax receivables or it is used in the determination of the taxable income of the relevant
year, as the annual instalment can be claimed as a deductible expense. The annual instalment is reflected
as a charge in the Consolidated Income Statement.
The DTA subject to the Law is accounted for on the same basis as described in Note 2.11.
The Law, provides that an annual fee is charged on an annual basis until expiration of such losses in 2028.
The Group estimates that such fees could range to approximately €5,300 thousand per year (for each tax
year in scope i.e., since 2018) although the Group understands that such fee may fluctuate annually as to
be determined by the Ministry of Finance. An amount of €5,364 thousand that relates to the tax credit of
year 2024 (2023: €5,364 thousand) was recorded during the year ended 31 December 2024.
Accumulated income tax losses
The accumulated income tax losses are presented in the table below:
Total income
tax losses
Income tax
losses for
which a
deferred tax
asset was
recognised
Income tax
losses for
which no
deferred tax
asset was
recognised
2024
€000
€000
€000
Expiring within 5 years
464
-
464
Utilisation in annual instalments up to 2028
1,213,091
1,213,091
-
1,213,555
1,213,091
464
2023
Expiring within 5 years
45,851
-
45,851
Utilisation in annual instalments up to 2028
1,516,364
1,516,364
-
1,562,215
1,516,364
45,851
342
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
18.
Earnings per share
Basic and diluted earnings per share
2024
2023
Profit for the year attributable to the owners of the Company
(€ thousand) (basic)
510,621
480,772
Weighted average number of shares in issue during the year, excluding
treasury shares (thousand)
9,597,945
9,597,945
Basic and diluted profit per share attributable to the owners of the
Company
(€ cent)
5.32
5.01
For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted for the
dilutive effect of ordinary shares that may arise in respect of share awards granted to executive directors
and senior management of the Group under the Long-Term Incentive Plan (LTIP) for the performance years
2022-2024, 2023-2025 and 2024-2026 and the STIP award granted for the performance year 2023.
19.
Cash, balances with central banks and loans and advances to banks
2024
2023
€000
€000
Cash
94,991
92,541
Balances with central banks
7,505,855
9,522,484
Allowance for expected credit losses (Note 16)
(120)
(523)
7,600,726
9,614,502
2024
2023
€000
€000
Loans and advances to banks
820,615
384,824
Allowance for expected credit losses (Note 16)
(41)
(22)
820,574
384,802
Balances with central banks are classified as Stage 1.
The ECL release (Note 16) on balances with central banks for the year ended 31 December 2024 amounted
to €403 thousand (2023: ECL charge of €330 thousand).
An analysis of the movement of the gross carrying amount before ECL and ECL of loans and advances to
banks is presented in the table below:
2024
2023
Gross carrying
amount
ECL
Gross carrying
amount
ECL
€000
€000
€000
€000
1 January
384,824
(22)
204,832
(21)
Net increase/(decrease)
435,792
-
180,043
-
Changes to models and inputs used for ECL
calculation (Note 16)
-
(19)
-
(1)
Foreign exchange adjustments
(1)
-
(51)
-
31 December
820,615
(41)
384,824
(22)
All loans and advances to banks are classified as Stage 1.
Balances with central banks include obligatory deposits for liquidity purposes which amount to €117,702
thousand as at 31 December 2024 (2023: €59,179 thousand) (Note 41). The average balance of obligatory
deposits that should be maintained with central banks was set at €194,636 thousand for the period of
December 2024 to February 2025 (2023: €186,794 thousand for the period December 2023 to January
2024).
343
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
19.
Cash, balances with central banks and loans and advances to banks (continued)
The credit rating analysis of balances with central banks and loans and advances to banks by independent
credit rating agencies is set out in Note 44.11.
Loans and advances to banks earn interest based on the interbank rate of the relevant term and currency.
20.
Investments
The analysis of the Group’s investments is presented in the table below:
2024
2023
€000
€000
Investments at FVPL
136,629
135,275
Investments at FVOCI
416,077
443,420
Investments at amortised cost
3,805,637
3,116,714
4,358,343
3,695,409
Out of these, the amounts pledged as collateral are shown below:
2024
2023
Investments pledged as collateral
€000
€000
Investments at FVOCI
-
25,458
Investments at amortised cost
39,958
234,553
39,958
260,011
Investments pledged as collateral as at 31 December 2024 are mainly used as supplementary assets for the
covered bond (Note 46). As at 31 December 2023, debt securities collateralised were primarily used for the
amounts borrowed from the ECB Targeted Longer-Term Refinancing Operations (TLTRO III) (Note 29) which
was fully repaid in the year ended 31 December 2024. Encumbered assets are disclosed in Note 46.
The maximum exposure to credit risk for debt securities is disclosed in Note 44.1 and the debt securities
price risk sensitivity analysis is disclosed in Note 45.
The increase in the investment portfolio as at 31 December 2024 is consistent with the strategy of the
Group to grow the fixed income portfolio.
The credit rating analysis of investments is disclosed in Note 44.11.
Investments at fair value through profit or loss
2024
2023
€000
€000
Other non-equity securities
10,702
3,611
Equity securities
837
903
Mutual funds
125,090
130,761
136,629
135,275
Investments at FVOCI
2024
2023
€000
€000
Debt securities
406,540
431,068
Equity securities
9,537
12,352
416,077
443,420
344
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
20.
Investments (continued)
Investments at amortised cost
2024
2023
€000
€000
Debt securities
3,805,637
3,116,714
Further analysis of the Group's investments is provided in the tables below.
Equity securities
FVPL
FVOCI
Total
2024
€000
€000
€000
Listed on the Cyprus Stock Exchange
-
6
6
Listed on other stock exchanges
837
60
897
Unlisted
-
9,471
9,471
837
9,537
10,374
FVPL
FVOCI
Total
2023
€000
€000
€000
Listed on the Cyprus Stock Exchange
-
728
728
Listed on other stock exchanges
903
58
961
Unlisted
-
11,566
11,566
903
12,352
13,255
The Group irrevocably made the election to classify its equity investments as equity investments at FVOCI
on the basis that these are not held for trading. Their carrying value amounts to €9,537 thousand at 31
December 2024 and is equal to their fair value (2023: €12,352 thousand).
Equity investments at FVOCI comprise mainly investments in private Cyprus registered companies, acquired
through loan restructuring activity and specifically through debt for equity swaps.
Dividend income amounting to €183 thousand has been received and recognised during the year ended 31
December 2024 in other income (2023: €856 thousand) (Note 13).
During the year ended 31 December 2024, holdings of equity investments measured at FVOCI with a
carrying value of €812 thousand have been disposed of (2023: €702 thousand).
Mutual funds
FVPL
2024
€000
Listed on other stock exchanges
30,740
Unlisted
94,350
125,090
FVPL
2023
€000
Listed on other stock exchanges
35,192
Unlisted
95,569
130,761
The majority of the unlisted mutual funds relate to investments whose underlying assets are listed on stock
exchanges and are therefore presented in Level 2 hierarchy in Note 22.
345
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
20.
Investments (continued)
Debt securities and other non-equity securities
Analysis by issuer type
FVPL
FVOCI
Amortised
cost
Total
2024
€000
€000
€000
€000
Cyprus government
-
287,590
735,617
1,023,207
Other governments
-
24,735
1,056,915
1,081,650
Financial institutions
-
65,822
1,084,888
1,150,710
Other financial corporations
10,702
-
57,258
67,960
Supranational organisations
-
23,462
696,260
719,722
Other non-financial corporations
-
4,972
175,431
180,403
Allowance for expected credit losses
-
(41)
(732)
(773)
10,702
406,540
3,805,637
4,222,879
FVPL
FVOCI
Amortised
cost
Total
2023
€000
€000
€000
€000
Cyprus government
-
315,844
611,199
927,043
Other governments
-
10,317
751,399
761,716
Financial institutions
-
81,803
1,046,525
1,128,328
Other financial corporations
3,611
-
47,483
51,094
Supranational organisations
-
18,439
550,441
568,880
Other non-financial corporations
-
4,948
110,655
115,603
Allowance for expected credit losses
-
(283)
(988)
(1,271)
3,611
431,068
3,116,714
3,551,393
Geographic dispersion by country of issuer
FVPL
FVOCI
Amortised
cost
Total
2024
€000
€000
€000
€000
Cyprus
-
287,590
737,640
1,025,230
Greece
-
11,097
78,492
89,589
Germany
-
2,934
217,589
220,523
France
-
23,140
344,597
367,737
Other European Union countries
-
31,201
1,129,546
1,160,747
United Kingdom
-
-
18,094
18,094
USA and Canada
10,702
4,091
291,982
306,775
Other countries
-
23,066
292,169
315,235
Supranational organisations
-
23,462
696,260
719,722
Allowance for expected credit losses
-
(41)
(732)
(773)
10,702
406,540
3,805,637
4,222,879
346
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
20.
Investments (continued)
Geographic dispersion by country of issuer
FVPL
FVOCI
Amortised cost
Total
2023
€000
€000
€000
€000
Cyprus
-
315,844
621,617
937,461
Greece
-
18,793
60,516
79,309
Germany
-
-
210,519
210,519
France
-
31,662
283,256
314,918
Other European Union countries
-
20,345
741,331
761,676
United Kingdom
-
-
18,098
18,098
USA and Canada
3,611
4,078
273,471
281,160
Other countries
-
22,190
358,453
380,643
Supranational organisations
-
18,439
550,441
568,880
Allowance for expected credit losses
-
(283)
(988)
(1,271)
3,611
431,068
3,116,714
3,551,393
'Other countries' include exposures in Israel amounting to €31,065 thousand as at 31 December 2024
(2023: €46,715 thousand).
Analysis by currency
FVPL
FVOCI
Amortised
cost
Total
2024
€000
€000
€000
€000
Euro
-
387,000
3,510,264
3,897,264
US dollar
10,702
19,581
283,963
314,246
Pound sterling
-
-
12,142
12,142
Allowance for expected credit losses
-
(41)
(732)
(773)
10,702
406,540
3,805,637
4,222,879
FVPL
FVOCI
Amortised cost
Total
2023
€000
€000
€000
€000
Euro
-
412,913
2,877,334
3,290,247
US dollar
3,611
18,438
228,779
250,828
Pound sterling
-
-
11,589
11,589
Allowance for expected credit losses
-
(283)
(988)
(1,271)
3,611
431,068
3,116,714
3,551,393
Listing analysis
FVPL
FVOCI
Amortised
cost
Total
2024
€000
€000
€000
€000
Listed on the Cyprus Stock Exchange
-
-
33,884
33,884
Listed on other stock exchanges
-
406,581
3,772,485
4,179,066
Unlisted
10,702
-
-
10,702
Allowance for expected credit losses
-
(41)
(732)
(773)
10,702
406,540
3,805,637
4,222,879
FVPL
FVOCI
Amortised cost
Total
2023
€000
€000
€000
€000
Listed on the Cyprus Stock Exchange
-
-
4,567
4,567
Listed on other stock exchanges
-
431,351
3,113,135
3,544,486
Unlisted
3,611
-
-
3,611
Allowance for expected credit losses
-
(283)
(988)
(1,271)
3,611
431,068
3,116,714
3,551,393
The Group uses fair value hedging to manage the interest rate risk in relation to its FVOCI bonds (Note 21).
347
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
20.
Investments (continued)
An analysis of the movement of the gross debt securities at FVOCI and ECL of debt securities at FVOCI is
presented in the table below:
2024
2023
Gross debt
securities
ECL
Gross debt
securities
ECL
€000
€000
€000
€000
1 January
431,351
(283)
454,438
(663)
New assets acquired in the year
45,316
-
84,700
-
Assets derecognised and/or redeemed in the
year (Note 16)
(75,871)
68
(128,929)
39
Interest accrued and amortisation
(2,959)
-
(1,728)
-
Foreign exchange adjustments
1,188
-
(640)
-
Changes to models and inputs used for ECL
calculations (Note 16)
-
174
-
341
Changes in fair value
7,556
-
23,510
-
31 December
406,581
(41)
431,351
(283)
All debt securities measured at FVOCI are classified as Stage 1 as at 31 December 2024 and 31 December
2023.
An analysis of the movement in the gross carrying amount and ECL of the debt securities at amortised cost
is presented in the table below:
2024
2023
Gross debt
securities
ECL
Gross debt
securities
ECL
€000
€000
€000
€000
1 January
3,117,702
(988)
2,047,638
(1,519)
New assets acquired in the year
1,388,497
-
1,472,417
-
Assets derecognised and/or redeemed in the
year (Note 16)
(758,747)
177
(428,958)
102
Fair value due to hedging relationship
2,362
-
2,674
-
Interest accrued and amortisation
39,809
-
31,326
-
Changes to models and inputs used for ECL
calculation (Note 16)
-
79
-
429
Foreign exchange adjustments
16,746
-
(7,395)
-
31 December
3,806,369
(732)
3,117,702
(988)
All debt securities measured at amortised cost are classified as Stage 1 as at 31 December 2024 and 31
December 2023.
There were no reclassifications of investments during the year ended 31 December 2024 and 2023.
The fair value of the financial assets that have been reclassified out of FVPL to FVOCI on transition to IFRS
9, amounts to €6,932 thousand at 31 December 2024 (2023: €7,149 thousand). The fair value gain that
would have been recognised in the consolidated income statement during the year ended 31 December
2024 if these financial assets had not been reclassified as part of the transition to IFRS 9, amounts to €6
thousand (2023: loss of €140 thousand). The effective interest rate of these instruments is 1.6%-5.0%
(2023: 1.6%-5.0%) per annum and the respective interest income during the year ended 31 December
2024 amounts to €206 thousand (2023: €227 thousand).
348
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
21.
Derivative financial instruments
The contract amount and fair value of the derivative financial instruments is set out below:
2024
2023
Fair value
Fair value
Contract
amount
Assets
Liabilities
Contract
amount
Assets
Liabilities
€000
€000
€000
€000
€000
€000
Trading derivatives
Forward exchange rate contracts
23,232
171
126
23,960
205
184
Currency swaps
926,195
7,662
517
986,259
136
13,278
Interest rate swaps
-
-
-
13,460
189
181
Currency options
472
455
17
44
2
42
Interest rate caps/floors
18,130
945
945
166,075
1,843
1,844
968,029
9,233
1,605
1,189,798
2,375
15,529
Derivatives qualifying for hedge
accounting
Fair value hedges - interest rate
swaps
1,637,500
58,299
2,918
1,401,531
48,679
2,451
Portfolio fair value hedges - interest
rate swaps
2,914,362
27,741
140
-
-
-
Net investments - forward exchange
rate contracts
985
-
1
1,200
1
-
4,552,847
86,040
3,059
1,402,731
48,680
2,451
Total
5,520,876
95,273
4,664
2,592,529
51,055
17,980
The use of derivatives is an integral part of the Group’s activities. Derivatives are used to manage the
Group’s own exposure to fluctuations in interest rates and foreign currency exchange rates. Derivatives are
also sold to customers as risk management products.
Credit risk for derivatives arises from the possibility of the counterparty’s failure to meet the terms of any
contract. In the case of derivatives, credit losses are a significantly smaller amount compared to the
derivatives’ notional amount. In order to manage credit risk, the Group sets derivative limits based on the
creditworthiness of the involved counterparties and uses credit mitigation techniques such as netting,
collateralisation, margin calls and clearing through Central Clearing House (CCP) where applicable.
Interest rate risk is explained in Note 45. The interest rate risk is managed through the use of own balance
sheet solutions such as plain vanilla interest rate swaps and interest rate options. In fair value hedging of
interest rate risk, fixed rate assets/liabilities are converted to floating. In cash flow hedging of interest rate
risk, the Group converts floating rate assets/liabilities to fixed.
Currency risk is explained in Note 45. In order to manage currency risk, the Group hedges its open position
by entering into foreign exchange deals such as: foreign exchange spot, foreign exchange forwards, foreign
exchange swaps or foreign exchange options. The foreign currency risk mainly arises from customer-driven
transactions on deposits and loans and advances.
Forward exchange rate contracts are irrevocable agreements to buy or sell a specified quantity of foreign
currency on a specified future date at an agreed rate.
Currency swaps involve the exchange of two currencies at the current market rate and the commitment to
re-exchange them at a specified rate upon maturity of the swap. Cross-currency swaps are interest rate
swaps in which the cash flows are in different currencies.
Interest rate swaps are contractual agreements between two parties to exchange fixed rate and floating
rate interest, by means of periodic payments, based upon a notional principal amount and the interest rates
defined in the contract.
Currency options are contracts that grant the holder the right, but not the obligation, to buy or sell currency
at a specified exchange rate during a specified period of time.
Interest rate caps/floors protect the buyer from fluctuations of interest rates above or below a specified
interest rate for a specified period of time.
349
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
21.
Derivative financial instruments (continued)
The credit exposure of derivative financial instruments represents the cost to replace these contracts at the
reporting date. The exposure arising from these transactions is managed as part of the Group’s credit risk
management process for credit facilities granted to customers and financial institutions.
The contract amount of certain types of derivative financial instruments provides a basis for comparison
with other instruments recognised on the consolidated balance sheet, but does not necessarily indicate the
amount of future cash flows involved or the current fair value of the instruments and, consequently, does
not indicate the Group’s exposure to credit or market risk.
The fair value of the derivatives can be either positive (asset) or negative (liability) as a result of
fluctuations in market interest rates and foreign currency exchange rates in accordance with the terms of
the relevant contract. The aggregate net fair value of derivatives may fluctuate significantly over time.
Hedge accounting
The Group elected, as a policy choice permitted by IFRS 9, to continue to apply hedge accounting in
accordance with IAS 39.
The Group applies hedge accounting using derivatives when the required criteria for hedge accounting are
met. The Group also uses derivatives for economic hedging (hedging the changes in interest rates, foreign
currency exchange rates or other risks) which do not meet the criteria for hedge accounting. As a result,
these derivatives are accounted for as trading derivatives and the gains or losses arising from revaluation
are recognised in the consolidated income statement.
Derivatives held for trading comprise derivatives entered into with economic hedging intent to which the
Group does not apply hedge accounting or derivative positions arise as a result of activity generated by
corporate customers. Derivatives classified as held for hedging comprise only those derivatives to which the
Group applies hedge accounting.
Fair value hedges
The Group uses interest rate swaps to hedge the interest rate risk arising as a result of the possible adverse
movement in the fair value of fixed rate debt securities measured at FVOCI, debt securities in issue and
subordinated liabilities, as well as customer deposits.
As part of its structural interest rate risk management, during the year ended 31 December 2024, the
Group has contracted fixed-rate receiver swaps to hedge interest rate risk by setting up fair value hedges
for a portfolio of liabilities being the core NMDs. This strategy is designated as a fair value hedge, under the
IAS 39 as adopted by the EU (IAS 39 carve-out) and its effectiveness is assessed by comparing changes in
the fair value of the designated hedged item, attributable to changes in the benchmark interest rate, with
the respective changes in the fair value of the interest rate swaps used as hedging instruments.
Changes in the fair value of derivatives designated as fair value hedges (both for micro hedges and macro
hedges) and the fair value of the hedged items in relation to the risk being hedged are recognised in the
consolidated income statement.
In the case of fair value macro hedges, fair value changes of the hedged portfolios are recognised in the
liability side of the consolidated balance sheet under caption ‘Changes in the fair value of hedged items in
portfolio hedges of interest rate risk’, which as at 31 December 2024 amounted to a cumulative fair value
change of €44,074 thousand (2023: n/a).
Hedges of net investments
The Group’s consolidated balance sheet is impacted by foreign currency exchange differences between Euro
and all non-Euro functional currencies of overseas subsidiaries and other foreign operations. The Group
hedges its structural currency risk when it considers that the cost of such hedging is within an acceptable
range (in relation to the underlying risk). This hedging is done through the use of forward exchange rate
contracts.
As at 31 December 2024, forward exchange rate contracts amounting to €985 thousand (2023: €1,200
thousand) have been designated as hedging instruments and have given rise to approximately nil loss
(2023: loss of €13 thousand) which was recognised in the ‘Foreign currency translation reserve’ in the
consolidated statement of comprehensive income, against the profit or loss from the retranslation of the net
assets of the overseas subsidiaries and other foreign operations.
350
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
21.
Derivative financial instruments (continued)
Gains/(losses) attributable to
hedged risk
Hedge in-
effectiveness
2024
Hedged items
Hedging
instruments
Derivatives qualifying for hedge accounting
€000
€000
€000
Fair value hedges - interest rate swaps
-debt securities - investment
8,763
(8,763)
-
-debt securities in issue
(8,914)
8,914
-
-subordinated liabilities
93
(93)
-
-customer deposits (macro hedge)
(44,074)
44,074
-
Total
(44,132)
44,132
-
Gains/(losses) attributable
to hedged risk
Hedge in-
effectiveness
2023
Hedged items
Hedging
instruments
Derivatives qualifying for hedge accounting
€000
€000
€000
Fair value hedges - interest rate swaps
-debt securities - investments
22,840
(20,722)
2,118
-debt securities in issue
(14,274)
14,274
-
-subordinated liabilities
(4,237)
4,237
-
Net investments
-forward exchange rate contracts
13
(13)
-
Total
4,342
(2,224)
2,118
351
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
21.
Derivative financial instruments (continued)
The accumulated fair value adjustment arising from the hedging relationships is presented in the table
below:
Carrying amount of hedged
items
Accumulated amount of fair
value hedging adjustments
gains/(losses) on the
hedged item
2024
Assets
Liabilities
Assets
Liabilities
Derivatives qualifying for hedge
accounting
€000
€000
€000
€000
Fair value hedges - interest rate swaps
-debt securities - investments
379,937
-
(28,498)
-
-debt securities in issue
-
989,435
-
(18,335)
-subordinated liabilities
-
307,955
-
(4,144)
-customer deposits (macro hedge)
-
2,914,362
-
(44,074)
Net investments - forward exchange rate
contracts
Net assets/liabilities
-
985
-
1
Total
379,937
4,212,737
(28,498)
(66,552)
Carrying amount of hedged
items
Accumulated amount of fair
value hedging adjustments
gains/(losses) on the hedged
item
2023
Assets
Liabilities
Assets
Liabilities
Derivatives qualifying for hedge
accounting
€000
€000
€000
€000
Fair value hedges - interest rate swaps
-debt securities - investments
439,043
-
(43,441)
-
-debt securities in issue
-
671,632
-
(9,421)
-subordinated liabilities
-
306,787
-
(4,237)
Net investments - forward exchange rate
contracts
Net assets/liabilities
1,200
-
1
-
Total
440,243
978,419
(43,440)
(13,658)
For assets hedged using fair value hedges the applicable average rates of hedging instruments is 2.35%
fixed rate as at 31 December 2024 (2023: 2.05%). For liabilities hedged using fair value hedges, the
average fixed rate is 3.55% as at 31 December 2024 (2023: 5.44%).
352
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
21.
Derivative financial instruments (continued)
The maturity of the Group's contract amount of the derivatives is presented in the table below:
On demand
and up to one
month
Between one
and three
months
Between
three months
and one year
Between one
and five
years
Over five
years
Total
contract
amount
2024
€000
€000
€000
€000
€000
€000
Trading
derivatives
Forward exchange
rate contracts
8,040
9,870
5,322
-
-
23,232
Currency swaps
719,764
206,213
218
-
-
926,195
Currency options
472
-
-
-
-
472
Interest rate
caps/floors
-
-
-
18,130
-
18,130
728,276
216,083
5,540
18,130
-
968,029
Derivatives
qualifying for
hedge
accounting
Fair value hedges
- interest rate
swaps
-
-
69,000
1,404,000
164,500
1,637,500
Portfolio fair value
hedges - interest
rate swaps
-
-
-
2,914,362
-
2,914,362
Net investments -
forward exchange
rate contracts
985
-
-
-
-
985
985
-
69,000
4,318,362
164,500
4,552,847
Total
729,261
216,083
74,540
4,336,492
164,500
5,520,876
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years
Over five
years
Total contract
amount
2023
€000
€000
€000
€000
€000
€000
Trading
derivatives
Forward exchange
rate contracts
9,734
9,657
4,569
-
-
23,960
Currency swaps
852,963
132,603
693
-
-
986,259
Interest rate
swaps
-
4,372
9,088
-
-
13,460
Currency options
44
-
-
-
-
44
Interest rate
caps/floors
-
-
-
166,075
-
166,075
862,741
146,632
14,350
166,075
-
1,189,798
Derivatives
qualifying for
hedge
accounting
Fair value hedges
- interest rate
swaps
-
15,000
56,031
1,166,000
164,500
1,401,531
Net investments -
forward exchange
rate contracts
1,200
-
-
-
-
1,200
1,200
15,000
56,031
1,166,000
164,500
1,402,731
Total
863,941
161,632
70,381
1,332,075
164,500
2,592,529
353
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
22.
Fair value measurement
The following table presents the carrying value and fair value of the Group's financial assets and liabilities.
2024
2023
Carrying
value
Fair value
Carrying
value
Fair value
Financial assets
€000
€000
€000
€000
Cash and balances with central banks
7,600,726
7,600,726
9,614,502
9,614,502
Loans and advances to banks
820,574
813,239
384,802
370,853
Investments at FVPL
136,629
136,629
135,275
135,275
Investments at FVOCI
416,077
416,077
443,420
443,420
Investments at amortised cost
3,805,637
3,837,774
3,116,714
3,119,618
Reverse repurchase agreements
1,010,170
1,026,046
403,199
411,654
Derivative financial assets
95,273
95,273
51,055
51,055
Loans and advances to customers
10,117,168
10,117,524
9,823,127
9,973,588
Life insurance business assets attributable to
policyholders
761,127
761,127
637,562
637,562
Financial assets classified as held for sale
23,143
23,143
-
-
Other financial assets
295,632
300,606
388,244
406,602
25,082,156
25,128,164
24,997,900
25,164,129
Financial liabilities
Funding from central banks and deposits by
banks
364,231
334,156
2,515,424
2,472,718
Derivative financial liabilities
4,664
4,664
17,980
17,980
Customer deposits
20,528,848
20,504,116
19,338,880
19,302,832
Debt securities in issue
989,435
1,024,400
671,632
655,428
Subordinated liabilities
307,955
314,195
308,049
300,098
Other financial liabilities and lease liabilities
430,561
430,561
359,624
359,624
22,625,694
22,612,092
23,211,589
23,108,680
The fair value of financial assets and liabilities in the above table is as at the reporting date and does not
represent any expectations about their future value.
The Group uses the following hierarchy for determining and disclosing fair value:
Level 1: investments valued using quoted prices in active markets.
Level 2: investments valued using models for which all inputs that have a significant impact on fair value
are market observable.
Level 3: investments valued using models for which inputs that have a significant impact on fair value are
not based on market observable data.
Observable inputs to the models for the valuation of unquoted equity and debt securities include, where
applicable, current and expected market interest rates, market expected default rates, market implied
country and counterparty credit risk and market liquidity discounts.
For assets and liabilities that are recognised in the Consolidated Financial Statements at fair value, the
Group determines whether transfers have occurred between levels in the hierarchy by re-assessing
categorisation at the end of each reporting period.
354
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
22.
Fair value measurement (continued)
The following table presents the fair value measurement hierarchy of the Group's assets and liabilities
recorded at fair value and financial assets and financial liabilities for which fair value is disclosed, by level of
the fair value hierarchy.
Level 1
Level 2
Level 3
Total
2024
€000
€000
€000
€000
Assets measured at fair value
Investment properties
Residential
-
-
4,584
4,584
Offices and other commercial properties
-
-
20,715
20,715
Manufacturing and industrial properties
-
-
8,662
8,662
Land (fields and plots)
-
-
2,290
2,290
-
-
36,251
36,251
Freehold property
Offices and other commercial properties
-
-
240,185
240,185
Loans and advances to customers measured
at FVPL
-
-
131,008
131,008
Trading derivatives
Forward exchange rate contracts
-
171
-
171
Currency swaps
-
7,662
-
7,662
Interest rate swaps
-
-
-
-
Currency options
-
455
-
455
Interest rate caps/floors
-
945
-
945
-
9,233
-
9,233
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps
-
58,299
-
58,299
Portfolio fair value hedges - interest rate
swaps
-
27,741
-
27,741
-
86,040
-
86,040
Investments at FVPL
31,577
94,350
10,702
136,629
Investments at FVOCI
406,600
6
9,471
416,077
Prepayments, accrued income and other
assets
-
-
25,500
25,500
438,177
189,629
453,117
1,080,923
Financial assets not measured at fair
value
Loans and advances to banks
-
813,239
-
813,239
Investments at amortised cost
3,604,367
233,407
-
3,837,774
Reverse repurchase agreements
-
1,026,046
-
1,026,046
Loans and advances to customers
-
-
9,986,516
9,986,516
3,604,367
2,072,692
9,986,516
15,663,575
The discount rate used in the determination of the fair value of the loans and advances to customers
measured at FVPL as at 31 December 2024 is 6.79% (2023: 7.56%).
For loans and advances to customers measured at FVPL categorised as Level 3 as at 31 December 2024, an
increase in the discount factor by 10% would result in a decrease of €2,460 thousand in their fair value and
a decrease in the discount factor by 10% would result in an increase of €591 thousand in their fair value.
For one investment included in other non-equity securities mandatorily measured at FVPL as a result of the
SPPI assessment and categorised as Level 3 with a carrying amount of €10,702 thousand as at 31
December 2024, a change in the conversion factor by 10% would result in a change in the value of the
other non-equity securities by €1,070 thousand.
For additional disclosures on sensitivity analysis of equity securities refer to Note 45.
355
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
22.
Fair value measurement (continued)
The fair value measurement hierarchy for life insurance business assets attributable to policy holders is
disclosed in Note 24.
Level 1
Level 2
Level 3
Total
2024
€000
€000
€000
€000
Liabilities measured at fair value
Trading derivatives
Forward exchange rate contracts
-
126
-
126
Currency swaps
-
517
-
517
Currency options
-
17
-
17
Interest rate caps/floors
-
945
-
945
-
1,605
-
1,605
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps
-
2,918
-
2,918
Portfolio fair value hedges - interest rate
swaps
-
140
-
140
Net investments - forward exchange rate
contracts
-
1
-
1
-
3,059
-
3,059
-
4,664
-
4,664
Financial liabilities not measured at fair
value
Deposits by banks
-
334,156
-
334,156
Customer deposits
-
-
20,504,116
20,504,116
Debt securities in issue
1,024,400
-
-
1,024,400
Subordinated liabilities
-
314,195
-
314,195
1,024,400
648,351
20,504,116
22,176,867
356
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
22.
Fair value measurement (continued)
Level 1
Level 2
Level 3
Total
2023
€000
€000
€000
€000
Assets measured at fair value
Investment properties
Residential
-
-
5,933
5,933
Offices and other commercial properties
-
-
34,369
34,369
Manufacturing and industrial properties
-
-
19,513
19,513
Land (fields and plots)
-
-
2,290
2,290
-
-
62,105
62,105
Freehold property
Offices and other commercial properties
-
-
232,235
232,235
Loans and advances to customers measured
at FVPL
-
-
138,727
138,727
Trading derivatives
Forward exchange rate contracts
-
205
-
205
Currency swaps
-
136
-
136
Interest rate swaps
-
189
-
189
Currency options
-
2
-
2
Interest rate caps/floors
-
1,843
-
1,843
-
2,375
-
2,375
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps
-
48,679
-
48,679
Net investments-forward exchange rate
contracts
-
1
-
1
-
48,680
-
48,680
Investments at FVPL
36,095
95,569
3,611
135,275
Investments at FVOCI
431,854
-
11,566
443,420
467,949
146,624
448,244
1,062,817
Financial assets not measured at fair
value
Loans and advances to banks
-
370,853
-
370,853
Investments at amortised cost
2,958,793
160,825
-
3,119,618
Reverse repurchase agreements
-
411,654
-
411,654
Loans and advances to customers
-
-
9,834,861
9,834,861
2,958,793
943,332
9,834,861
13,736,986
For loans and advances to customers measured at FVPL categorised as Level 3 as at 31 December 2023, an
increase in the discount factor by 10% would result in a decrease of €2,714 thousand in their fair value and
a decrease in the discount factor by 10% would result in an increase of €622 thousand in their fair value.
For one investment included in other non-equity securities mandatorily measured at FVPL as a result of the
SPPI assessment and categorised as Level 3 with a carrying amount of €3,611 thousand as at 31 December
2023, a change in the conversion factor by 10% would result in a change in the value of the other non-
equity securities by €361 thousand.
357
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
22.
Fair value measurement (continued)
Level 1
Level 2
Level 3
Total
2023
€000
€000
€000
€000
Liabilities measured at fair value
Trading derivatives
Forward exchange rate contracts
-
184
-
184
Currency swaps
-
13,278
-
13,278
Interest rate swaps
-
181
-
181
Currency options
-
42
-
42
Interest rate caps/floors
-
1,844
-
1,844
-
15,529
-
15,529
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps
-
2,451
-
2,451
-
17,980
-
17,980
Financial liabilities not measured at fair
value
Funding from central banks
-
2,043,868
-
2,043,868
Deposits by banks
-
428,850
-
428,850
Customer deposits
-
-
19,302,832
19,302,832
Debt securities in issue
655,428
-
-
655,428
Subordinated liabilities
-
300,098
-
300,098
655,428
2,772,816
19,302,832
22,731,076
The cash and balances with central banks are financial instruments whose carrying value is a reasonable
approximation of fair value because they are mostly short-term in nature or are repriced to current market
rates frequently. The carrying value of other financial assets, other than the deferred purchase payment
consideration (Note 28), and other financial liabilities is a close approximation of their fair value and they
are categorised as Level 3.
During the years ended 31 December 2024 and 2023 there were no significant transfers between Level 1
and Level 2.
358
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
22.
Fair value measurement (continued)
Movements in Level 3 assets measured at fair value
Transfers from Level 3 to Level 2 occur when the market for some securities becomes more liquid, which eliminates the need for the previously required
significant unobservable valuation inputs. Following a transfer to Level 2 the instruments are valued using valuation models incorporating observable market
inputs. Transfers into Level 3 reflect changes in market conditions as a result of which instruments become less liquid and consequently, the Group requires
significant unobservable inputs to calculate their fair value.
The movement in Level 3 assets which are measured at fair value is presented below:
2024
2023
Investment
properties
Own use
properties
Other
financial
assets
Loans and
advances to
customers
Financial
instruments
Investment
properties
Own use
properties
Loans and
advances to
customers
Financial
instruments
€000
€000
€000
€000
€000
€000
€000
€000
€000
1 January
62,105
232,235
-
138,727
15,177
85,099
203,658
214,359
21,233
Additions
198
9,549
25,500
-
-
1,390
836
-
-
Disposals
(23,613)
-
-
-
-
(23,797)
-
-
-
Transfers from own use properties to investment properties (Note 25)
-
-
-
-
-
798
(798)
-
-
Net transfers from stock of property (Note 25)
-
-
-
-
-
-
17,827
-
-
Conversion of instruments into common shares
-
-
-
-
-
-
-
-
(6,521)
Depreciation charge for the year
-
(2,121)
-
-
-
-
(2,047)
-
-
Impairment (Note 25)
-
-
-
-
-
-
(765)
-
-
Fair value (losses)/gains
(2,439)
522
-
-
4,847
(1,385)
13,524
-
569
Net gains on loans and advances to customers measured at FVPL (Note 11)
-
-
-
1,232
-
-
-
2,401
-
Repayments/derecognition of loans
-
-
-
(17,792)
-
-
-
(89,522)
-
Interest on loans (Note 7)
-
-
-
8,841
-
-
-
11,489
-
Foreign exchange adjustments
-
-
-
-
149
-
-
-
(104)
31 December
36,251
240,185
25,500
131,008
20,173
62,105
232,235
138,727
15,177
Valuation policy and sensitivity analysis
Investment properties and own use properties
The valuation technique mainly applied by the Group is the market comparable approach, adjusted for market and property specific conditions. In certain
cases, the Group also utilises the income capitalisation approach. The key inputs used for the valuations of the investment properties and own use properties
are presented in the tables below:
359
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
22.
Fair value measurement (continued)
Valuation policy and sensitivity analysis (continued)
Analysis of investment properties
Type and country
2024
Estimated
rental value
per m2 per
annum
Estimated
building cost
per m2
Yield
Estimated fair
value per m2
Estimated
land value per
m2
Land
Building area
Age of
building
Residential
€000
m2
m2
Years
Cyprus
1,638
€41-€108 €1,250-€1,542
3.0%-5.0%
€473-€1,886
€130-€380
607-725
142-420
12-59
Greece
2,946
€15-€118
€229-€3,018
2.7%-9.4%
€45-€2,038
€26-€479
24-5,147
51-825
19-52
4,584
Offices and other commercial properties
Cyprus
17,942
€47-€349
n/a
4.0%-7.0%
€579-€5,833
€500-€3,900
348-1,872
16-3,292
18-70
Greece
2,773
€9-€219
€193-€1,161
4.9%-8.8%
€73-€3,648
€558-€3,451
100-8,582
6-4,692
20-66
20,715
Manufacturing and industrial
Cyprus
2,679
€45-€67
€709
6.0%-7.0%
€920-€956
€150-€400
2,935-3,410
1,608-1,713
31
Greece
5,983
€1-€71
€214-€1,199
4.5%-10.3%
€12-€464
€52-€521
57-34,495
349-5,858
15-86
8,662
Land (fields and plots)
Cyprus
2,290
n/a
n/a
n/a
n/a
€989
2,316
n/a
n/a
2,290
Total
36,251
Analysis of own use properties
Type and country
2024
Estimated
rental value
per m2 per
annum
Estimated
building cost
per m2
Yield
Estimated fair
value per m2
Estimated
land value per
m2
Land
Building area
Age of
building
Offices and other commercial properties
€000
m2
m2
Years
Cyprus
240,185
€36-€264 €1,063-€3,162
5.5%-6.0%
€383-€5,254
€150-€2,757
390-51,947
210-24,035
17-100
Total
240,185
360
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
22.
Fair value measurement (continued)
Valuation policy and sensitivity analysis (continued)
Analysis of investment properties
Type and country
2023
Estimated
rental value
per m2 per
annum
Estimated
building cost
per m2
Yield
Estimated fair
value per m2
Estimated
land value per
m2
Land
Building area
Age of
building
Residential
€000
m2
m2
Years
Cyprus
2,024
€41-€98
€1,090-€1,673
4.5%-5.5%
€380-€2,338
€130-€380
607-725
89-594
10-58
Greece
3,909
€6-€113
€164-€2,961
2%-9.4%
€46-€1,878
€16-€1,910
24-5,147
51-825
16-51
5,933
Offices and other commercial properties
Cyprus
31,297
€36-€289
€470
3.9%-6.7%
€578-€5,781
€150-€3,900
348-11,301
0-4,605
11-68
Greece
3,072
€9-€219
€193-€1,404
4.9%-8.8%
€72-€3,648
€261-€289
100-8,582
6-4,692
19-65
34,369
Manufacturing and industrial
Cyprus
12,583
€23-€67
€205-€709
4.5%-7.0%
€266-€1,225
€165-€500
2,202-14,590
743-8,007
20-37
Greece
6,930
€1-€99
€172-€684
4.4%-10.4%
€12-€439
€10-€191
57-34,495
349-5,858
14-85
19,513
Land (fields and plots)
Cyprus
2,290
n/a
n/a
n/a
n/a
€989
2,316
n/a
n/a
2,290
Total
62,105
Analysis of own use properties
Type and country
2023
Estimated
rental value
per m2 per
annum
Estimated
building cost
per m2
Yield
Estimated fair
value per m2
Estimated
land value per
m2
Land
Building area
Age of
building
Offices and other commercial properties
€000
m2
m2
Years
Cyprus
232,235
€30-€315
€1,063-€3,162
6%-6.5%
€65-€5,254
€65-€2,756
390-51,947
210-24,035
16-100
Total
232,235
361
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
22.
Fair value measurement (continued)
Valuation policy and sensitivity analysis (continued)
Sensitivity analysis
The fair value of the Group’s properties have been classified as Level 3 in the fair value measurement
hierarchy. Significant increases/decreases in estimated values per square meter for properties valued with
the comparable approach or significant increases/decreases in estimated rental values or yields for
properties valued with the income capitalisation approach could result in a significantly higher/lower fair
value of the properties.
23.
Loans and advances to customers
2024
2023
€000
€000
Gross loans and advances to customers at amortised cost
10,130,405
9,862,514
Allowance for ECL for impairment of loans and advances to customers (Note 44.5)
(147,019)
(179,453)
9,983,386
9,683,061
Gross loans and advances to group companies at amortised cost
2,774
1,339
Loans and advances to customers measured at FVPL
131,008
138,727
10,117,168
9,823,127
Gross loans and advances to group companies represent loans and advances to parent company classified
as Stage 1 as at December 2024 and 2023.
The following tables present the Group’s gross loans and advances to customers at amortised cost by
staging.
Stage 1
Stage 2
Stage 3
POCI
Total
2024
€000
€000
€000
€000
€000
Gross loans at amortised cost
before residual fair value
adjustment on initial recognition
9,176,411
785,674
169,189
59,810
10,191,084
Residual fair value adjustment on
initial recognition
(49,916)
(10,594)
1,579
(1,748)
(60,679)
Gross loans at amortised cost
9,126,495
775,080
170,768
58,062
10,130,405
2023
Gross loans at amortised cost
before residual fair value
adjustment on initial recognition
8,334,929
1,168,745
328,177
100,197
9,932,048
Residual fair value adjustment on
initial recognition
(59,340)
(7,474)
(1,294)
(1,426)
(69,534)
Gross loans at amortised cost
8,275,589
1,161,271
326,883
98,771
9,862,514
Residual fair value adjustment
The residual fair value adjustment on initial recognition mainly relates to the loans and advances to
customers acquired as part of the acquisition of certain operations of Laiki Bank in 2013. In accordance with
the provisions of IFRS 3, this adjustment decreased the gross balance of loans and advances to customers.
The residual fair value adjustment is included within the gross balances of loans and advances to customers
as at each balance sheet date. However, for credit risk monitoring, the residual fair value adjustment as at
each balance sheet date is presented separately from the gross balances of loans and advances, as shown
in the tables above.
Loans and advances to customers measured at FVPL are managed in Cyprus.
362
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
23.
Loans and advances to customers (continued)
The following tables present the Group’s gross loans and advances to customers at amortised cost by
staging and by business line concentration.
2024
Stage 1
Stage 2
Stage 3
POCI
Total
By business line
€000
€000
€000
€000
€000
Corporate
2,897,542
409,697
30,103
9,879
3,347,221
IBU & International corporate
- IBU
104,327
16,124
126
117
120,694
- International corporate
935,383
25,634
-
4
961,021
SMEs
886,864
68,843
8,094
4,270
968,071
Retail
- housing
3,327,631
179,619
18,206
9,893
3,535,349
- consumer, credit cards and
other
959,787
61,415
8,463
10,729
1,040,394
Restructuring
- corporate
1,424
3,184
2,469
10,357
17,434
- SMEs
6,447
3,928
8,205
1,966
20,546
- retail housing
5,062
5,898
24,281
1,143
36,384
- retail other
2,014
738
11,698
754
15,204
Recoveries
- corporate
-
-
3,873
307
4,180
- SMEs
-
-
8,671
993
9,664
- retail housing
-
-
30,358
4,494
34,852
- retail other
14
-
16,221
3,156
19,391
9,126,495
775,080
170,768
58,062
10,130,405
2023 (restated)
Stage 1
Stage 2
Stage 3
POCI
Total
By business line
€000
€000
€000
€000
€000
Corporate
2,709,523
519,134
96,289
32,799
3,357,745
IBU & International corporate
- IBU
99,009
21,409
320
140
120,878
- International corporate
744,955
17,220
38
15
762,228
SMEs
824,503
109,865
5,583
9,042
948,993
Retail
- housing
3,038,339
345,135
23,508
9,897
3,416,879
- consumer, credit cards and
other
836,679
103,710
9,814
13,839
964,042
Restructuring
- corporate
3,770
21,747
13,461
10,073
49,051
- SMEs
9,831
8,089
13,715
2,431
34,066
- retail housing
6,450
12,429
39,696
1,912
60,487
- retail other
2,471
2,533
13,474
733
19,211
Recoveries
- corporate
-
-
6,378
967
7,345
- SMEs
-
-
15,812
1,587
17,399
- retail housing
-
-
65,070
10,255
75,325
- retail other
59
-
23,725
5,081
28,865
8,275,589
1,161,271
326,883
98,771
9,862,514
During 2023, the Company entered into an agreement with Cyprus Asset Management Company
('KEDIPES') to acquire a portfolio of performing and restructured loans with gross book value of
approximately €58 million with reference date 31 December 2022 (the 'Transaction'). The Transaction was
completed in March 2024.
Loans and advances to customers pledged as collateral are disclosed in Note 46.
363
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
23.
Loans and advances to customers (continued)
Additional analysis and information on loans and advances to customers and related allowance for ECL are
set out in Note 44.
The following portfolio of loans and advances to customers was classified as held for sale as at 31 December
2024. There were no loans and advances to customers classified as held for sale as at 31 December 2023.
2024
2023
€000
€000
Disposal group
23,143
-
23,143
-
2024
2023
€000
€000
Gross loans and advances to customers (Note 44.3)
54,921
-
Allowance for ECL for impairment of loans and advances to customers (Note
44.5)
(31,778)
-
23,143
-
Disposal Group
Disposal group comprises a portfolio of loans and advances to customers known as Project River, classified
as held for sale as at 31 December 2024. The Group entered into agreement with funds associated with
Cerberus Global Investments B.V. to sell two non-performing loan portfolios with a total gross book value of
approximately €55 million as at 31 December 2024 (the ‘Sale transaction’). The Sale transaction is subject
to the necessary approvals and is expected to be completed within the first half of 2025.
The analysis of the gross book value and the allowance for ECL of loans and advances to customers
classified as held for sale by staging is provided below:
Stage 3
POCI
Total
2024
€000
€000
€000
Gross loans and advances to customers
49,589
5,332
54,921
Allowance for ECL for impairment of loans and advances to
customers
(29,003)
(2,775)
(31,778)
31 December
20,586
2,557
23,143
The disposal portfolio relates mainly to corporate and retail exposures under the Restructuring & Recoveries
business line.
24.
Life insurance business assets attributable to policyholders
2024
2023
€000
€000
Equity securities
2,145
1,982
Debt securities
81,299
58,688
Mutual funds
639,321
549,592
Bank deposits and other receivables
38,362
27,300
761,127
637,562
Property
11,630
11,650
772,757
649,212
Financial assets of life insurance business attributable to policyholders are classified as investments at FVPL.
Bank deposits and other receivables include other financial receivables of €8,550 thousand (2023: €2,957
thousand).
364
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
24.
Life insurance business assets attributable to policyholders (continued)
In addition to the above assets, the life insurance subsidiary of the Group holds shares of BOCH, as part of
the assets attributable to policyholders with a carrying value as at 31 December 2024 of €654 thousand
(2023: €476 thousand). Such shares are presented in the Consolidated Financial Statements of BOCH as
treasury shares (Note 34).
The analysis of the financial assets of life insurance business attributable to policyholders measured at fair
value by level of the fair value hierarchy is presented below:
Level 1
Level 2
Level 3
Total
2024
€000
€000
€000
€000
Equity securities
2,145
-
-
2,145
Debt securities
61,699
-
19,600
81,299
Mutual funds
636,240
-
3,081
639,321
700,084
-
22,681
722,765
2023
Equity securities
1,982
-
-
1,982
Debt securities
38,378
-
20,310
58,688
Mutual funds
546,475
-
3,117
549,592
586,835
-
23,427
610,262
Bank deposits are financial instruments whose carrying amount is a reasonable approximation of fair value,
because they are short-term in nature or are repriced to current market rates frequently. The carrying value
of other financial receivable is a close approximation of their fair value and they are categorised as Level 3.
The movement of financial assets classified as Level 3 is presented below:
2024
2023
€000
€000
1 January
23,427
22,503
Unrealised (losses)/gains recognised in the consolidated income statement
(746)
924
31 December
22,681
23,427
During the years ended 31 December 2024 and 2023 there were no significant transfers between Level 1
and Level 2.
The property asset of life insurance business attributable to policyholders is measured at fair value and is
categorised as Level 3 in the fair value hierarchy.
365
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
25.
Property and equipment
Property
Equipment
Total
2024
€000
€000
€000
Net book value at 1 January
255,905
29,663
285,568
Additions
10,591
10,464
21,055
Revaluation
522
-
522
Disposals and write-offs
-
(11)
(11)
Depreciation charge for the year (Note 15.1)
(9,347)
(8,632)
(17,979)
New leases (Note 42)
1,575
895
2,470
Re-assessment of RoU assets (Note 42)
16,158
-
16,158
Derecognition of RoU assets (Note 42)
(369)
-
(369)
Net book value at 31 December
275,035
32,379
307,414
1 January 2024
Cost or valuation
327,251
123,677
450,928
Accumulated depreciation
(71,346)
(94,014)
(165,360)
Net book value
255,905
29,663
285,568
31 December 2024
Cost or valuation
354,363
134,622
488,985
Accumulated depreciation
(79,328)
(102,243)
(181,571)
Net book value
275,035
32,379
307,414
Property
Equipment
Total
2023
€000
€000
€000
Net book value at 1 January
235,538
17,840
253,378
Additions
396
7,058
7,454
Revaluation
13,524
-
13,524
Impairment
(765)
-
(765)
Transfers to investment properties (Note 22)
(798)
-
(798)
Net transfers from stock of property (Note 27)
17,827
-
17,827
Disposals and write-offs
-
(24)
(24)
Depreciation charge for the year (Note 15.1)
(8,997)
(6,396)
(15,393)
New leases (Note 42)
168
11,185
11,353
Re-assessment of RoU assets (Note 42)
(988)
-
(988)
Net book value at 31 December
255,905
29,663
285,568
1 January 2023
Cost or valuation
303,891
142,787
446,678
Accumulated depreciation
(68,353)
(124,947)
(193,300)
Net book value
235,538
17,840
253,378
31 December 2023
Cost or valuation
327,251
123,677
450,928
Accumulated depreciation
(71,346)
(94,014)
(165,360)
Net book value
255,905
29,663
285,568
366
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
25.
Property and equipment (continued)
As at 31 December 2024 the net book value of the Group's equipment includes an amount of €9,169
thousand that relates to RoU asset - Computer hardware (2023: €11,462 thousand).
The net book value of the Group's property comprises:
2024
2023
€000
€000
Freehold property
240,185
232,235
Improvements on leasehold property
1,726
1,270
RoU assets (Note 42)
33,124
22,400
Total
275,035
255,905
Freehold property includes land amounting to €93,409 thousand (2023: €92,751 thousand) for which no
depreciation is charged. Further, freehold property includes an amount of €22,507 thousand (2023:
€20,876 thousand) which relates to a property under construction.
The Group’s policy is to revalue its properties periodically (between 3 to 5 years) but more frequent
revaluations may be performed where there are significant and volatile movements in values. The Group
performed revaluations during the year ended 31 December 2023. The valuations were carried out by
independent qualified valuers, on the basis of market value using observable prices and/or recent market
transactions depending on the location of the property. Details on valuation techniques and inputs are
presented in Note 22.
There were no charges against the freehold property of the Group as at 31 December 2024 and 2023.
The net book value of freehold property, on a cost less accumulated depreciation basis, as at 31 December
2024 amounts to €166,126 thousand (2023: €158,900 thousand).
26.
Intangible assets
2024
2023
€000
€000
Net book value at 1 January
48,635
52,546
Additions
19,736
14,949
Disposals and write-offs
(432)
-
Amortisation charge for the year (Note 15.1)
(18,192)
(18,860)
Net book value at 31 December
49,747
48,635
1 January
Cost
268,268
253,353
Accumulated amortisation and impairment
(219,633)
(200,807)
Net book value
48,635
52,546
31 December
Cost
287,208
268,268
Accumulated amortisation and impairment
(237,461)
(219,633)
Net book value
49,747
48,635
Computer software includes internally developed computer software with a net carrying amount of €5,570
thousand as at 31 December 2024 (2023: €4,679 thousand).
367
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
27.
Stock of property
The carrying amount of stock of property is determined as the lower of cost and net realisable value.
Impairment is recognised if the net realisable value is below the cost of the stock of property. During the
year ended 31 December 2024 an impairment loss of €55,612 thousand (2023: €46,026 thousand) was
recognised in 'Impairment net of reversals on non-financial assets' in the consolidated income statement. At
31 December 2024, stock of property of €405,520 thousand (2023: €445,009 thousand) is carried at net
realisable value.
There is no stock of property pledged as collateral.
The carrying amount of the stock of property is analysed in the tables below:
2024
2023
€000
€000
Net book value at 1 January
826,115
1,041,032
Additions
30,488
19,531
Disposals
(152,234)
(170,595)
Net transfer to property and equipment (Note 25)
-
(17,827)
Impairment for the year (Note 16)
(55,612)
(46,026)
Net book value at 31 December
648,757
826,115
The result on the disposal of stock of property in the year is presented in the table below:
2024
2023
€000
€000
Net consideration
152,450
179,567
Carrying value of stock of property disposed of
(152,234)
(170,595)
Net gains on disposal of stock of property
216
8,972
Analysis by type and country
Cyprus
Greece
Total
2024
€000
€000
€000
Residential properties
44,327
3,216
47,543
Offices and other commercial properties
59,650
5,060
64,710
Manufacturing and industrial properties
12,532
3,993
16,525
Hotels
7,005
339
7,344
Land (fields and plots)
509,547
3,088
512,635
Total
633,061
15,696
648,757
2023
€000
€000
€000
Residential properties
47,841
8,091
55,932
Offices and other commercial properties
91,114
9,978
101,092
Manufacturing and industrial properties
23,373
9,263
32,636
Hotels
17,345
437
17,782
Land (fields and plots)
614,990
3,683
618,673
Total
794,663
31,452
826,115
368
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
28.
Prepayments, accrued income and other assets
2024
2023
€000
€000
Financial assets
Debtors
33,340
34,662
Insurance contract assets (Note 31)
-
1,255
Receivable relating to tax
2,772
3,263
Deferred purchase payment consideration
143,604
243,013
Other assets
115,916
106,051
295,632
388,244
Non-financial assets
Insurance and reinsurance contract assets (Note 31)
50,612
56,239
Current tax receivable
61,890
73,943
Prepaid expenses
978
767
Retirement benefit plan assets (Note 14.1)
1,767
669
Other assets
68,076
64,954
183,323
196,572
478,955
584,816
An analysis of the movement of the gross carrying amount of the financial assets included in prepayments,
accrued income and other assets measured at amortised cost is presented in the table below:
Stage 1
Stage 3
Simplified
method
Total
2024
€000
€000
€000
€000
1 January
381,151
35,934
5,872
422,957
Net (decrease)/increase
(116,822)
(504)
(427)
(117,753)
31 December
264,329
35,430
5,445
305,204
2023
1 January
394,814
37,512
4,919
437,245
Net (decrease)/increase
(13,663)
(1,578)
953
(14,288)
31 December
381,151
35,934
5,872
422,957
An analysis of the movement of the ECL of the above financial assets is presented in the table below:
Stage 1
Stage 3
Simplified
method
Total
2024
€000
€000
€000
€000
1 January
2,101
31,876
736
34,713
Changes to models and inputs used for ECL
calculations
229
8
122
359
31 December
2,330
31,884
858
35,072
2023
1 January
2,107
32,181
495
34,783
Write-offs
-
(82)
-
(82)
Changes to models and inputs used for ECL
calculations
(6)
(223)
241
12
31 December
2,101
31,876
736
34,713
There were no financial assets classified as Stage 2 as at 31 December 2024 and 2023. In addition, financial
assets amounting to €25,500 thousand were measured at FVPL as at 31 December 2024 (2023: nil).
369
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
28.
Prepayments, accrued income and other assets (continued)
Within other non-financial assets an amount of €18,550 thousand as at 31 December 2024 (2023: €18,550
thousand) relates to contract assets from contracts with customers.
On the completion date of the sale of Project Helix 2 (the ‘Transaction’) in June 2021, the Group recognised
an amount of €381,567 thousand in other financial assets, which represented the fair value of the deferred
consideration receivable from the Transaction (the ‘DPP’). The remaining amount outstanding is payable by
December 2025. An amount of €16,042 thousand, which represents the interest income on the DPP has
been recognised in the Consolidated Income Statement for the year ended 31 December 2024 (2023:
€19,774 thousand) within 'Interest income - Financial assets at amortised cost - Other financial assets'
(Note 7). There are no other conditions attached. The DPP is classified as Stage 1 as at 31 December 2024
and 2023.
29.
Funding from central banks
Funding from central banks comprises funding from the ECB under Eurosystem monetary policy operations
as set out in the table below:
2024
2023
€000
€000
Targeted Longer-Term Refinancing Operations (TLTRO IΙI)
-
2,043,868
As at 31 December 2024, there was no outstanding ECB funding (2023: €2 billion) as the amount
outstanding as at 31 December 2023 was fully repaid during the year ended 31 December 2024.
Details on encumbered assets are disclosed in Note 46.
370
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
30.
Customer deposits
2024
2023
€000
€000
By type of deposit
Demand
10,747,056
10,169,587
Savings
3,091,475
2,979,275
Time or notice
6,690,317
6,190,018
20,528,848
19,338,880
By geographical area
Cyprus
16,431,661
15,357,410
Greece
1,558,482
1,473,491
United Kingdom
396,972
386,057
United States
129,823
166,673
Germany
80,796
77,288
Romania
38,408
29,729
Russia
88,710
128,489
Ukraine
212,662
183,316
Belarus
1,583
3,762
Israel
214,547
195,580
Other countries
1,375,204
1,337,085
20,528,848
19,338,880
Deposits by geographical area are based on the country of residence of the Ultimate Beneficial Owner.
2024
2023
€000
€000
By currency
Euro
18,568,911
17,516,365
US Dollar
1,589,240
1,448,753
British Pound
309,083
300,867
Russian Rouble
1,080
1,322
Swiss Franc
8,315
8,947
Other currencies
52,219
62,626
20,528,848
19,338,880
2024
2023
(restated)
By business line
€000
€000
Corporate
2,319,737
2,088,718
IBU & International corporate
- IBU
4,139,368
3,779,571
- International corporate
174,370
121,454
SMEs
1,161,464
1,019,245
Retail
12,600,526
12,216,209
Restructuring
– corporate
10,000
12,565
– SMEs
2,854
5,954
– retail other
6,306
9,428
Recoveries
– corporate
979
1,098
Institutional Wealth Management and Custody
113,244
84,638
20,528,848
19,338,880
371
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
31.
Insurance and reinsurance contracts
The breakdown of groups of insurance and reinsurance contracts, that are in an asset position and those in a liability position is set out in the table below:
2024
2023
Assets
Liabilities
Net
Assets
Liabilities
Net
Insurance contracts
€000
€000
€000
€000
€000
€000
Life insurance
-
(682,830)
(682,830)
6,472
(604,233)
(597,761)
Non-life insurance
-
(60,854)
(60,854)
-
(54,191)
(54,191)
Total insurance contracts
-
(743,684)
(743,684)
6,472
(658,424)
(651,952)
Reinsurance contracts
Life insurance
24,039
-
24,039
26,350
-
26,350
Non-life insurance
26,573
-
26,573
24,672
-
24,672
Total reinsurance contracts
50,612
-
50,612
51,022
-
51,022
Total insurance and reinsurance contracts
50,612
(743,684)
(693,072)
57,494
(658,424)
(600,930)
The table below presents a reconciliation of the measurement components of insurance and reinsurance contract balances showing estimates of the present
value of future cash flows, risk adjustment and CSM for portfolios in the life insurance business measured under GMM and VFA.
2024
2023
Estimates of
the present
value of
future cash
flows
Risk
adjustment
for
non-
financial
risk
Contractual
Service
Margin
Total
Estimates of
the present
value of
future cash
flows
Risk
adjustment
for
non-financial
risk
Contractual
Service
Margin
Total
Insurance contracts
€000
€000
€000
€000
€000
€000
€000
€000
Insurance contracts liabilities
(586,145)
(17,302)
(75,615)
(679,062)
(528,955)
(13,940)
(58,331)
(601,226)
Insurance contracts assets
-
-
-
-
10,411
(2,004)
(1,935)
6,472
Reinsurance contracts
Reinsurance contracts assets
(915)
15
23,654
22,754
7,896
220
16,979
25,095
372
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
31.
Insurance and reinsurance contracts (continued)
The roll-forward of the net asset or liability for insurance contracts issued, showing the liabilities for remaining coverage and the liabilities for incurred claims
for portfolio included in life and non-life insurance, is disclosed in the table below:
2024
2023
Liabilities for remaining coverage
LRC
Liabilities for
incurred claims
LIC
Total
Liabilities for remaining coverage
LRC
Liabilities for
incurred claims
LIC
Total
Excluding loss
component
Loss component
Excluding loss
component
Loss component
€000
€000
€000
€000
€000
€000
€000
€000
Insurance contract liabilities as at 1 January
(580,410)
(5,713)
(72,301)
(658,424)
(522,191)
(6,278)
(69,512)
(597,981)
Insurance contract assets as at 1 January
7,175
(305)
(398)
6,472
4,110
(1,540)
(300)
2,270
Net insurance contract assets/(liabilities) as at 01 January
(573,235)
(6,018)
(72,699)
(651,952)
(518,081)
(7,818)
(69,812)
(595,711)
Insurance revenue
150,070
-
-
150,070
145,775
-
-
145,775
Insurance service expenses
Incurred claims and directly attributable expenses
3,976
545
(63,823)
(59,302)
-
815
(58,225)
(57,410)
Amortisation of insurance acquisition cash flows
(7,294)
-
-
(7,294)
(5,768)
-
-
(5,768)
Insurance acquisition cash flows expensed as incurred
(9,067)
-
-
(9,067)
(8,488)
-
-
(8,488)
Reversals of losses/(losses) on onerous contracts
-
76
-
76
-
1,037
-
1,037
Changes to liabilities for incurred claims (LIC)
-
-
2,414
2,414
-
-
(903)
(903)
Investment component
65,973
-
(65,973)
-
55,325
-
(55,325)
-
Insurance finance income/(expense)
(60,630)
(10)
(1,725)
(62,365)
(43,778)
(42)
(1,269)
(45,089)
Total changes in the statement of profit or loss
143,028
611
(129,107)
14,532
143,066
1,810
(115,722)
29,154
Premiums received
(266,547)
-
-
(266,547)
(234,913)
-
-
(234,913)
Claims and other directly attributable expenses paid
-
-
119,760
119,760
-
-
112,670
112,670
Insurance acquisition cash flows
40,302
-
221
40,523
36,693
(10)
165
36,848
Total cash flows
(226,245)
-
119,981
(106,264)
(198,220)
(10)
112,835
(85,395)
Net insurance contract assets/(liabilities) as at 31 December
(656,452)
(5,407)
(81,825)
(743,684)
(573,235)
(6,018)
(72,699)
(651,952)
Insurance contract liabilities as at 31 December
(656,452)
(5,407)
(81,825)
(743,684)
(580,410)
(5,713)
(72,301)
(658,424)
Insurance contract assets as at 31 December
-
-
-
-
7,175
(305)
(398)
6,472
Net insurance contract assets/(liabilities) as at 31 December
(656,452)
(5,407)
(81,825)
(743,684)
(573,235)
(6,018)
(72,699)
(651,952)
373
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
31.
Insurance and reinsurance contracts (continued)
The table below presents a roll-forward of the net asset or liability for insurance contacts issued, showing
CSM for portfolios included in the life insurance business.
2024
2023
€000
€000
Insurance contract liabilities as at 1 January
(58,331)
(41,863)
Insurance contract assets as at 1 January
(1,935)
(180)
Contractual Service Margin as at 1 January
(60,266)
(42,043)
Changes that relate to current services
Contractual service margin recognised for services provided
8,893
7,792
Changes that relate to future services
Contracts initially recognised in the period
(2,492)
(282)
Changes in estimates that adjust the contractual service margin
(21,691)
(25,150)
Insurance service result
(15,290)
(17,640)
Insurance finance expenses
(59)
(583)
Total changes in the consolidated income statement
(15,349)
(18,223)
Contractual Service Margin as at 31 December
(75,615)
(60,266)
Insurance contract liabilities as at 31 December
(75,615)
(58,331)
Insurance contract assets as at 31 December
-
(1,935)
Contractual Service Margin as at 31 December
(75,615)
(60,266)
32.
Debt securities in issue and Subordinated liabilities
2024
2023
Nominal
value
Carrying
value
Nominal valueCarrying value
Subordinated
liabilities
Contractual interest
rate
€000
€000
€000
€000
Subordinated Tier 2
Capital Note - April 2021
6.625% up to
23 October 2026
300,000
307,955
300,000
308,049
Debt securities in
issue
Senior Preferred Notes -
June 2021
2.50% up to
24 June 2026
300,000
305,274
300,000
303,466
Senior Preferred
Notes - July 2023
7.375% up to
25 July 2027
350,000
368,714
350,000
368,166
Green Senior Preferred
Notes - May 2024
5% up to
2 May 2028
300,000
315,447
-
-
950,000
989,435
650,000
671,632
BOCH and the Company maintain a Euro Medium Term Note (ΕΜΤΝ) Programme with an aggregate nominal
amount up to €4,000 million.
Subordinated Liabilities
Subordinated Tier 2 Capital Note - April 2021
In April 2021, BOCH issued a €300 million unsecured and subordinated Tier 2 Capital Note under the EMTN
Programme and immediately after, BOCH and the Company entered into an agreement pursuant to which
BOCH on-lent to the Company the entire €300 million proceeds of the issue of the Note (the 'T2 Loan') on
terms substantially identical to the terms and conditions of the Note issued by BOCH. The T2 Loan was
priced at par with a coupon of 6.625% per annum payable annually in arrear and resettable on 23 October
2026 at the then prevailing 5 year swap rate plus a margin of 6.902% per annum up to 23 October 2031,
payable annually. The T2 Loan matures on 23 October 2031. The Company has the option to redeem the
note early on any day during the six month period from 23 April 2026 to 23 October 2026, subject to
applicable regulatory consents.
The fair value of the subordinated liabilities as at 31 December 2024 and 2023 is disclosed in Note 22.
374
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
32.
Debt securities in issue and Subordinated liabilities (continued)
Debt securities in issue
Senior Preferred Notes - June 2021
In June 2021, the Company issued a €300 million senior preferred note under the EMTN Programme. The
note was priced at par with a fixed coupon of 2.50% per annum, payable annually in arrear and resettable
on 24 June 2026. The note matures on 24 June 2027. The Company has the option to redeem the note
early on 24 June 2026, subject to applicable regulatory consents. The note is listed on the Luxembourg
Stock Exchange’s Euro MTF market. The note complies with the criteria for the minimum requirement for
own funds and eligible liabilities (MREL) and contributes towards the Company’s MREL requirements.
Senior Preferred Notes - July 2023
In July 2023, the Company issued a €350 million senior preferred note under the EMTN Programme. The
note was priced at par with a fixed coupon of 7.375% per annum, payable annually in arrear and resettable
on 25 July 2027. The note matures on 25 July 2028. The Company has the option to redeem the note early
on 25 July 2027, subject to applicable regulatory consents. The note is listed on the Luxembourg Stock
Exchange’s Euro MTF market. The note complies with the criteria for the minimum requirement for own
funds and eligible liabilities (MREL) and contributes towards the Company’s MREL requirements.
Green Senior Preferred Notes - May 2024
In May 2024, the Company issued a €300 million green senior preferred note under the EMTN Programme.
The note was priced at par with a fixed coupon of 5.00% per annum, payable annually in arrear and
resettable on 2 May 2028. The note matures on 2 May 2029. the Company has the option to redeem the
note early on 2 May 2028, subject to applicable regulatory consents. The note is listed on the Luxembourg
Stock Exchange’s Euro MTF market. The note complies with the criteria for the minimum requirement for
own funds and eligible liabilities (MREL) and contributes towards the Company’s MREL requirements.
The fair value of the debt securities in issue as at 31 December 2024 and 2023 is disclosed in Note 22.
375
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
33.
Accruals, deferred income, other liabilities and other provisions
2024
2023
€000
€000
Income tax payable and related provisions
74,159
66,163
Special defence contribution payable
1,322
1,308
Retirement benefit plan liabilities (Note 14.1)
-
565
Provisions for financial guarantees and commitments (Note 44.6.1)
17,893
19,192
Liabilities arising from non-participating investment contracts
119,636
87,756
Accrued expenses and other provisions
89,972
82,368
Deferred income
20,130
19,569
Items in the course of settlement
61,078
69,519
Lease liabilities (Note 42)
36,903
30,217
Other liabilities
124,171
89,764
545,264
466,421
Other liabilities include an amount of €10,385 thousand (2023: €10,385 thousand) relating to the
guarantee fee for the conversion of DTA into tax credits (Note 17) and an amount of €13,367 thousand
(2023: €19,354 thousand) relating to card processing transactions. As at 31 December 2024, other
liabilities include an amount of €19,495 thousand for the ancillary guarantee fund (2023: nil).
34.
Share capital
2024
2023
Number of
shares
(thousand)
€000
Number of
shares
(thousand)
€000
Authorised
Ordinary shares of €0.10 each
47,677,593
4,767,759
47,677,593
4,767,759
Issued
31 December
9,597,945
959,794
9,597,945
959,794
Authorised and issued share capital
All issued ordinary shares carry the same rights.
The authorise share capital of the Company is €4,767,759 thousand divided into 47,677,593 thousand
shares of a nominal value of €0.10 each. There were no changes to the authorised or issued share capital
during the years ended 31 December 2024 and 2023.
Share premium reserve
There were no changes to the share premium reserve during the years ended 31 December 2024 and 2023.
Other equity instruments
2024
2023
€000
€000
2023 Reset Perpetual Additional Tier 1 Capital Securities
220,000
220,000
220,000
220,000
376
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
34.
Share capital (continued)
In June 2023, BOCH issued €220,000 thousand Fixed Rate Reset Perpetual Additional Tier 1 Capital
Securities (the ‘2023 Capital Securities'). On the same date, the Company and BOCH entered into an
agreement pursuant to which BOCH on lent to the Company the entire €220,000 thousand proceeds of the
issue of the BOCH Capital Securities (‘2023 Capital Securities Loan’) on terms substantially identical to the
terms and conditions of the BOCH 2023 Capital Securities. The 2023 Capital Securities Loan constitutes an
unsecured and subordinated obligation of the Company, is perpetual and is issued at par. The 2023 Capital
Securities Loan carries an initial coupon of 11.875% per annum, payable semi annually, and resettable on
21 December 2028 and every five years thereafter. The Company may elect to cancel any interest payment
for an unlimited period, on a non cumulative basis, whereas it mandatorily cancels interest payment under
certain conditions. The 2023 Capital Securities Loan is perpetual and has no fixed date of redemption, but
can be redeemed (in whole but not in part) at the Company's option from, and including, 21 June 2028 to,
and including, 21 December 2028 and on each interest payment date thereafter, subject to applicable
regulatory consents and the relevant conditions to redemption.
In addition, in June 2023 BOCH invited the holders of its outstanding €220,000 thousand 2018 Reset
Perpetual Additional Tier 1 Capital Securities (the '2018 Capital Securities') to tender for cash purchase by
BOCH at a price equal to 103% of the principal amount. At the same time the Company invited BOCH to
tender its outstanding €220,000 thousand 2018 Capital Securities Loan for cash purchase by the Company,
at a price equal to 103% of the principal amount, on same terms as the tender by BOCH of its external
2018 Capital Securities. As a result of the tender offer, €204,483 thousand in aggregate nominal amount
were purchased and cancelled by the Company as at 30 June 2023. In July 2023, the Company purchased
approximately €7,000 thousand of the outstanding nominal amount of the 2018 Capital Securities Loan. In
November 2023, the Board of Directors resolved to exercise the option to redeem the remaining nominal
amount outstanding of the 2018 Capital Securities Loan in December 2023. As a result of the buyback, a
total cost of €6,820 thousand was recorded directly in equity during the year ended 31 December 2023.
During the year ended 31 December 2024, coupon payments for the total amount of €26,125 thousand
(2023: €27,339 thousand) were made to the holders of the AT1 Capital Securities and have been
recognised in retained earnings.
35.
Distributions
Based on the relevant SREP decisions applicable in the years 2023 and 2024, any equity dividend
distribution was subject to regulatory approval, both for the Company and BOCH. The requirement for
approval did not apply if the distributions were made via the issuance of new ordinary shares to the
shareholders which were eligible as Common Equity Tier 1 Capital nor to the payment of coupons on any
AT1 capital instruments issued by the Company or BOCH. Following the SREP decision received in December
2024 the requirement for approval was lifted effective from 1 January 2025.
In March 2024, the Company obtained the approval of the European Central Bank to pay a cash dividend of
€136,590 thousand in respect of earnings for the year ended 31 December 2023. The AGM, on 17 May
2024, approved a final cash dividend of €0.01 per ordinary share in respect of earnings for the year ended
31 December 2023.
In April 2023, the Company obtained the approval of the European Central Bank to pay a dividend in
respect of earnings for the year ended 31 December 2022. The AGM, on 26 May 2023, declared a final cash
dividend of €0.002 per ordinary share in respect of earnings for the year ended 31 December 2022. The
dividend amounted to €22,310 thousand in total.
Information on distribution in respect of 2024 earnings is disclosed in Note 54 of the Consolidated Financial
Statements.
377
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
36.
Retained earnings
For the purpose of dividend distribution, retained earnings determined at the Company level are the only
distributable reserve.
Companies, tax resident in Cyprus, which do not distribute at least 70% of their profits after tax as defined
by the Special Defence Contribution Law during the two years after the end of the year of assessment to
which the profits refer, will be deemed to have distributed this amount as dividend. Special defence
contribution (SDC) at 17% is payable on such deemed dividend distribution to the extent that the
shareholders of the Company at the end of the period of two years from the end of the year of assessment
to which the profits refer, are directly or indirectly Cyprus tax residents and/or individuals who are Cyprus
tax resident and domiciled in Cyprus. Deemed dividend distribution does not apply in respect of profits that
are directly or indirectly attributable to shareholders that are non-Cyprus tax residents and individual
shareholders who are not domiciled in Cyprus. The deemed dividend distribution is subject to 2.65%
contribution to the General Health System (GHS).
The amount of this deemed dividend distribution is reduced by any actual dividend paid out of the profits of
the relevant year.
This SDC and GHS are paid by the Company on account of the shareholders. During the year ended 31
December 2024, no SDC and GHS on deemed dividend distribution were accrued by the Company (2023:
SDC and GHS of €313 thousand were accrued).
37.
Fiduciary transactions
The Group offers fund management and custody services that result in holding or investing financial assets
on behalf of its customers. The Group is not liable to its customers for any default by other banks or
organisations. The assets under management and custody are not included in the consolidated balance
sheet of the Group unless they are placed with the Group. Total assets under management at 31 December
2024, measured at fair value, amounted to €2,183,775 thousand (2023: €1,967,686 thousand).
38.
Provisions for pending litigation, claims, regulatory and other matters
The Group, in the ordinary course of business, is involved in various disputes and legal proceedings and is
subject to enquiries and examinations, requests for information, audits, investigations and other
proceedings by regulators, governmental and other public bodies, actual and threatened, relating to the
suitability and adequacy of advice given to clients or the absence of advice, lending and pricing practices,
selling and disclosure requirements, reporting and information security requirements and a variety of other
matters. In addition, as a result of the deterioration of the Cypriot economy and banking sector in 2012 and
the subsequent restructuring of the Company in 2013 as a result of the bail-in Decrees, the Company is
subject to a number of proceedings that either precede or result from the events that occurred during the
period of the bail-in Decrees.
Apart from what is described below, the Group considers that none of these matters are material, either
individually or in aggregate. Nevertheless, provisions have been made where: (a) there is a present
obligation (legal or constructive) arising from past events, (b) the settlement of the obligation is expected
to result in an outflow of resources embodying economic benefits, and (c) a reliable estimate of the amount
of the obligation can be made. The Group has not disclosed an estimate of the potential financial effect on
its contingent liabilities arising from these matters where it is not practicable to do so, because it is too
early or the outcome is too uncertain or, in cases where it is practicable, where disclosure could prejudice
conduct of the matters. Provisions have been recognised for those cases where the Group is able to reliably
estimate probable losses (Note 5.3). Where an individual provision is material, the fact that a provision has
been made is stated except to the extent that doing so would be prejudicial. Any provision recognised does
not constitute an admission of wrongdoing or legal liability. There are also situations where the Group may
enter into a settlement agreement. This may occur only if such settlement is in the Group's interest (such
settlement does not constitute an admission of wrongdoing) and only takes place after obtaining legal
advice and all approvals by the appropriate bodies of management. While the outcome of these matters is
inherently uncertain, management believes that, based on the information available to it, appropriate
provisions have been made in respect of legal proceedings, regulatory and other matters as at 31 December
2024 and hence it is not believed that such matters, when concluded, will have a material impact upon the
financial position of the Group.
378
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
38.
Provisions for pending litigation, claims, regulatory and other matters (continued)
38.1
Pending litigation and claims
Investigations and litigation relating to securities issued by the Company
A number of institutional and retail customers have filed various separate actions against the Company
alleging that the Company is guilty of misselling in relation to securities issued by the Company between
2007 and 2011. Remedies sought include the return of the money investors paid for these securities. Claims
are currently pending before the courts in Cyprus and in Greece.
The bonds and capital securities in respect of which claims have been brought are the following: 2007
Capital Securities, 2008 Convertible Bonds, 2009 Convertible Capital Securities (CCS) and 2011 Convertible
Enhanced Capital Securities (CECS).
The Company is defending these claims, particularly with respect to institutional investors and retail
purchasers who received investment advice from independent investment advisors. In the case of retail
investors, if it can be demonstrated that the relevant the Company's officers 'persuaded' them to proceed
with the purchase and/or purported to offer 'investment advice', the Company may face significant
difficulties.
To date, a number of cases have been tried in Greece. The Company has appealed against any such cases
which were not ruled in its favour, except for cases adjudicated against the Company at Areios Pagos
(Supreme Court of Greece) which are deemed as concluded.
Similarly, a number of cases have been tried in Cyprus and some are pending at appeal. It is to be noted
that the statutory limitation period for filing claims in the courts of Cyprus with respect to this for which the
cause of action arose prior and up to 31 December 2015, expired on 31 December 2021.
The resolution of the claims brought in the courts of Greece and Cyprus is expected to take a number of
years.
Provision has been made based on management's best estimate of probable outflows for capital securities
related litigation.
Bail-in related litigation
Depositors
A number of the Company's depositors, who allege that they were adversely affected by the bail-in, filed
claims against the Company and other parties (such as the CBC and the Ministry of Finance of Cyprus)
including against the Company as the alleged successor of Laiki Bank on the grounds that, inter alia, the
‘Resolution Law of 2013’ and the Bail-in Decrees were in conflict with the Constitution of the Republic of
Cyprus and the European Convention on Human Rights. They are seeking damages for their alleged losses
resulting from the bail-in of their deposits. Cases could relate to bail-in related litigation (on failure to follow
instructions), bail-in decree related cases and bail-in wrongful application. The Company is defending these
actions. In relation to the bail-in decree related cases, the court ruled in favour of the Company on the
grounds that the measures that the government implemented were necessary to prevent the collapse of the
financial sector, which would have detrimental consequences for the country’s economy. Under the
circumstances the government could rely on the doctrine of necessity when it imposed the bail-in. To date,
a number of cases have been tried however the resolution of the claims brought is expected to take a
number of years.
Provision has been made based on management's best estimate of probable outflows for depositors related
litigation.
Shareholders
A number of actions for damages have been filed with the District Courts of Cyprus alleging either the
unconstitutionality of the Resolution Law and the Bail-in Decrees, or a misapplication of same by the
Company (as regards the way and methodology whereby such Decrees have been implemented), or that
the Company failed to follow instructions promptly prior to the bail-in coming into force. As at the present
date, both the Resolution Law and the Bail-in Decrees have not been annulled by a court of law and thus
remain legally valid and in effect. The Company contests all of these claims.
379
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
38.
Provisions for pending litigation, claims, regulatory and other matters (continued)
38.1
Pending litigation and claims (continued)
Legal position of the Group
All of the above claims are being vigorously disputed by the Group, in close consultation with the
appropriate state and governmental authorities. The position of the Group is that the Resolution Law and
the Decrees take precedence over all other laws. As matters now stand, both the Resolution Law and the
Decrees issued thereunder are constitutional and lawful, in that they were properly enacted and have not so
far been annulled by any court.
Provident fund case
In December 2015, the Bank of Cyprus Employees Provident Fund (the Provident Fund) filed an action
against the Company claiming €70 million allegedly owed as part of the Company's contribution by virtue of
an agreement with the Union dated 31 December 2011. Towards the end of 2024, the Group has reached a
final settlement arrangement, which has received final court approval so that the case was permanently
withdrawn with no right to be reinstated, and as a result of which, the Group has recognised a provision as
at 31 December 2024. The financial settlement took place early in 2025. This matter is now concluded,
without anything pending at court.
Employment litigation
Former employees of the Group have instituted a number of employment claims including unfair dismissals.
The Group does not consider that the pending cases in relation to employment will have a material impact
on its financial position. A judgment has been issued in one of the unfair dismissal cases and the Company
lost. The Company has filed an appeal with respect to this case and similarly, the plaintiff has also filed an
appeal. The facts of this case are unique and it is not expected to affect the rest of the cases where unfair
dismissal is claimed.
Additionally, a number of former employees have filed claims against the Company contesting entitlements
received relating to the various voluntary exit plans. As at the reporting date, most of these cases have
been withdrawn with only two such cases remaining. The Group does not expect that these actions will have
a material impact on its financial position.
Banking business cases
There is a number of banking business cases where the amounts claimed are significant. These cases
primarily concern allegations as to the Company's standard policies and procedures allegedly resulting to
damages and other losses for the claimants (including cases where it is alleged that the Company misled
borrowers and/or misrepresented matters, in violation of applicable laws for matters such as foreign
currency lending and advancing/misselling loans for the purchase of property in Cyprus by UK nationals).
Further, there are several other banking claims, where the amounts involved are not as significant.
Management has assessed either the probability of loss as remote and/or does not expect any future
outflows with respect to these cases to have a material impact on the financial position of the Group. Such
matters arise as a result of the Group’s activities and management appropriately assesses the facts and the
risks of each case accordingly.
General criminal investigations and proceedings
The Attorney General and the Cypriot Police (the Police) are conducting various investigations and inquiries
following and relating to the financial crisis which culminated in March 2013. The Company is cooperating
fully with the Attorney General and the Police and is providing all information requested of it. Based on the
currently available information, the Group is of the view that any further investigations or claims resulting
from these investigations will not have a material impact on its financial position.
Others
An investigation is in process related to potentially overstated and/or fictitious claims paid by the non-life
insurance subsidiary of the Group. The information usually required by IAS 37 'Provisions, Contingent
Liabilities and Contingent Assets' is not disclosed on the grounds that it is expected to seriously prejudice
the outcome of the investigation and/or the possible taking of legal action. Based on the information
available at present, management considers that it is unlikely for this matter to have a material adverse
impact on the financial position and capital adequacy of the non-life insurance subsidiary and thereby the
Group, also taking into account that it is virtually certain that compensations will be received from a
relevant insurance coverage, upon the settlement of any obligation that may arise.
380
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
38.
Provisions for pending litigation, claims, regulatory and other matters (continued)
38.2
Regulatory matters
The Hellenic Capital Market Commission (HCMC) Investigation
The HCMC has been in the process of investigating matters concerning the Group's investment in Greek
Government Bonds from 2009 to 2011, including, inter alia, related non-disclosure of material information
in the Company's CCS, CECS and rights issue prospectuses (tracking the investigation carried out by CySEC
in 2013), Greek government bonds' reclassification, ELA disclosures and allegations by some investors
regarding the Company's non-compliance with Markets in Financial Instruments Directive (MiFID) in respect
of investors' direct investments in Greek Government Bonds.
A specific estimate of the outcome of the investigations or of the amount of possible fines cannot be given
at this stage, though it is not expected that any resulting liability or damages will have a material impact on
the financial position of the Group.
Central Bank of Cyprus (CBC)
The CBC had conducted an investigation in the past into the Company's issuance of capital securities and
concluded that the Company breached certain regulatory requirements concerning the issuance of
Convertible Capital Securities (Perpetual) in 2009, but not in relation to the CECS in 2011. The CBC had, in
2013, imposed a fine of €4 thousand upon the Company, who filed a recourse. The Administrative Court
cancelled both the CBC’s decision and the fine that was imposed upon the Company in a respective
judgment dated in 2020. In 2021, CBC decided to re-examine this matter and to re-open the investigation.
This matter is still pending as at the year end.
Commission for the Protection of Competition Investigation (CPC)
In April 2014, following an investigation which began in 2010, CPC issued a statement of objections,
alleging violations of Cypriot and EU competition law relating to the activities and/or omissions in respect of
card payment transactions by, among others, the Company and JCC Payment Systems Ltd (JCC), a card
processing business currently 75% owned by the Company. There was also an allegation concerning the
Company's arrangements with American Express, namely that such exclusive arrangements violated Cypriot
and EU competition law. On both matters, the CPC has concluded that the Company (in common with other
banks and JCC) has breached the relevant provisions of the applicable law for the protection of competition
and imposed a fine of €18 million upon the Company. The Company filed a recourse against the decision
and the fine. In June 2018, the Administrative Court accepted the Company’s position and cancelled the
decision as well as the fine imposed upon the Company. During 2018, the Attorney General has filed an
appeal before the Supreme court with respect to such decision. Following the decision of the appeal court in
the CySEC case mentioned above, the Attorney General acting on behalf of CPC withdrew his appeal. In July
2024, the Group was informed that the CPC had resolved to refrain from re-opening the investigation and
the matter is now considered closed.
Consumer Protection Service (CPS)
In July 2017, CPS imposed a fine of €170 thousand upon the Company after concluding an ex officio
investigation regarding some terms in both the Company's and Marfin Popular Bank's loan documentation,
that were found to constitute unfair commercial practices. Decisions of the CPS (according to rulings of the
Administrative Court) are not binding but merely an expression of opinion. The Company has filed a
recourse before the Administrative Court against this decision. The Administrative Court has issued its
judgment in 2022 in favour of the Company, and the CPS decision along with the fine have been cancelled.
An appeal has been submitted by CPS with regards to this judgment, which is still pending as at 31
December 2024.
In March 2020, the Company has been served with an application by the director of CPS seeking for an
order of the court, with immediate effect, the result of which will be for the Company to cease the use of a
number of terms in the contracts of the Company relating to 2006-2007 deemed to be unfair under the said
order. This application was withdrawn in November 2024 and the matter is considered closed.
In April 2021, the director of CPS filed an application for the issuance of a court order against the Company,
prohibiting the use of a number of contractual terms included in the Company’s consumer contracts and
requiring the amendment of any such contracts (present and future) so as to remove such unfair terms.
This matter is still pending before the court as at 31 December 2024.
381
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
38.
Provisions for pending litigation, claims, regulatory and other matters (continued)
38.2
Regulatory matters (continued)
Cyprus Consumers’ Association (CCA)
In March 2021, the Company was served with an application filed by the CCA for the issuance of a court
order prohibiting the use of a number of contractual terms included in the Company’s consumer contracts
and requiring the amendment of any such contracts (present and future) so as to remove such terms
deemed as unfair. The said contractual terms were determined as unfair pursuant to the decisions issued by
the Consumer Protection Service of the Ministry of Energy, Commerce, Industry and Tourism against the
Company in 2016 and 2017. The Company will take all necessary steps for the protection of its interests.
This matter is still pending before the court as at 31 December 2024.
The Consumer Protection Law 2021 brings under one umbrella the existing legislation on unfair contract
terms and practices with some enhanced powers vested in the Consumer Protection Service, i.e. power to
impose increased fines which are immediately payable. The Consumer Protection Law 2021 has a
retrospective effect in that it also applies to all contracts/practices entered into and/or terminated prior to
this law coming into effect as opposed to contracts/practices which are only entered into/adopted as from
the date of publication of the new Law on Consumer Protection.
There are many factors that may affect the range of outcomes and the resulting financial impact of these
matters is unknown.
UK regulatory matters
During the year ended 31 December 2024, the obligation undertaken in regards to UK regulatory matters as
part of the sale of Bank of Cyprus UK Ltd expired and was terminated, thus the respective provision balance
was released.
38.3
Οther matters
Other matters include among others, provisions for various other open examination requests by
governmental and other public bodies, legal matters and provisions for warranties and indemnities related
to the disposal process of certain operations of the Group.
The provisions for pending litigation and claims, regulatory and other matters described above and provided
in the tables below do not include insurance claims arising in the ordinary course of business of the Group’s
insurance subsidiaries as these are included in ‘Insurance contract liabilities’.
38.4
Provisions for pending litigation, claims, regulatory and other matters
Pending
litigation and
claims
(Note 38.1)
Regulatory
matters
(Note 38.2)
Other matters
(Note 38.3)
Total
2024
€000
€000
€000
€000
1 January
60,968
14,741
55,794
131,503
Net increase in provisions including unwinding
of discount
42,714
-
11,374
54,088
Utilisation of provisions
(24,274)
(58)
(29,802)
(54,134)
Release of provisions
(10,896)
(11,618)
(16,601)
(39,115)
Transfer
-
-
234
234
Foreign exchange adjustments
-
44
-
44
31 December
68,512
3,109
20,999
92,620
Provisions expected to be settled within 12
months post reporting date
39,897
-
7,661
47,558
382
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
38.
Provisions for pending litigation, claims, regulatory and other matters (continued)
38.4
Provisions for pending litigation, claims, regulatory and other matters (continued)
2023
1 January
63,947
14,918
48,742
127,607
Net increase in provisions including unwinding
of discount
36,227
527
4,940
41,694
Utilisation of provisions
(28,777)
(727)
(108)
(29,612)
Release of provisions
(10,429)
-
-
(10,429)
Transfer
-
-
2,220
2,220
Foreign exchange adjustments
-
23
-
23
31 December
60,968
14,741
55,794
131,503
Provisions expected to be settled within 12
months post reporting date
24,814
-
29,606
54,420
Provisions for pending litigation, claims, regulatory and other matters recorded in the consolidated income
statement during the year ended 31 December 2024 amounted to €11,775 thousand (2023: €28,464
thousand), include a credit amount of €3,198 thousand representing an amount recovered on the conclusion
of open examinations of governmental bodies and amounts from litigation settled, directly recognised in the
consolidated income statement (2023: €2,801 thousand).
Some information required by IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' is not
disclosed on the grounds that it can be expected to prejudice seriously the outcome of the litigation or the
outcome of the negotiation in relation to provisions for warranties and indemnities related to the disposal
process of certain operations of the Group.
39.
Contingent liabilities and commitments
As part of the services provided to its customers, the Group enters into various irrevocable commitments
and contingent liabilities. These consist of financial and other guarantees, letters of credit and other
undrawn commitments to lend.
Even though these obligations may not be recognised on the consolidated balance sheet, they do entail
credit risk and are therefore part of the overall credit risk exposure of the Group (Notes 44.1 and 44.6).
39.1
Capital commitments
Capital commitments for the acquisition of property, equipment and intangible assets as at 31 December
2024 amount to €22,456 thousand (2023: €20,139 thousand).
39.2
Contingent liabilities
The Group, as part of the disposal process of certain of its operations, has provided various representations,
warranties and indemnities to the buyers. These relate to, among other things, the ownership of the loans,
the validity of the liens, tax exposures and other matters agreed with the buyers. As a result, the Group
may be obliged to compensate the buyers in the event of a valid claim by the buyers with respect to the
above representations, warranties and indemnities.
A provision has been recognised, based on management’s best estimate of probable outflows, where it was
assessed that such an outflow is probable (Note 38.3).
40.
Additional information on cash flow statement
Non-cash transactions
Repossession of collaterals
During the year ended 31 December 2024, the Group acquired properties by taking possession of collaterals
held as security for loans and advances to customers of €25,833 thousand (2023: €20,921 thousand).
Recognition of RoU assets and lease liabilities
During 2024 the Group recognised RoU assets and corresponding lease liabilities of €2,470 thousand (2023:
€11,353 thousand).
383
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
40.
Additional information on cash flow statement (continued)
Net cash flow from operating activities - interest and dividends
2024
2023
€000
€000
Interest paid
(156,839)
(121,340)
Interest received
995,064
1,038,969
Dividends received (Note 13)
183
856
838,408
918,485
Changes in liabilities arising from financing activities
Funding from
central banks
(Note 29)
Debt securities
in issue and
Subordinated
liabilities
(Note 32)
Total
2024
€000
€000
€000
1 January
2,043,868
979,681
3,023,549
Cash flows
(2,065,710)
244,579
(1,821,131)
Other non-cash movements
21,842
73,130
94,972
31 December
-
1,297,390
1,297,390
2023
1 January
1,976,674
601,448
2,578,122
Cash flows
-
320,314
320,314
Other non-cash movements
67,194
57,919
125,113
31 December
2,043,868
979,681
3,023,549
Further information relating to the change in lease liabilities is disclosed in Note 42.
41.
Cash and cash equivalents
Cash and cash equivalents comprise:
2024
2023
€000
€000
Cash and non-obligatory balances with central banks
7,435,634
9,555,323
Loans and advances to banks with original maturity less than three months
288,211
282,998
7,723,845
9,838,321
Analysis of cash and balances with central banks and loans and advances to banks
2024
2023
€000
€000
Cash and non-obligatory balances with central banks
7,435,634
9,555,323
Obligatory balances with central banks (Note 19)
117,702
59,179
Balances with central banks for ancillary systems (restricted)
47,390
-
Total cash and balances with central banks (Note 19)
7,600,726
9,614,502
Loans and advances to banks with original maturity less than three months
288,211
282,998
Loans and advances to banks with original maturity more than three months
472,163
-
Restricted loans and advances to banks
60,200
101,804
Total loans and advances to banks (Note 19)
820,574
384,802
384
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
41.
Cash and cash equivalents (continued)
Restricted loans and advances to banks include nil collaterals under derivative transactions (2023: €13,970
thousand) which are not immediately available for use by the Group, but are released once the transactions
are terminated. As at 31 December 2024, €6,685 thousand were placed as collateral for the reverse
repurchase agreements (2023: €29,524 thousand) (Note 44.11).
42.
Leases
The Group is a lessee for commercial properties such as office and branch buildings. The basic terms for
lease contracts relating to the branch network are primarily uniform, irrespective of lessors, with the non-
cancellable rental period being two years. The Group has the option to extend the tenancy for four further
periods of two years each. The Group has the right at any time after the expiry of the initial term to
terminate the present rental agreement by providing notice (usually 3 or 6 months’ notice) to the lessor.
Depending on the terms agreed, the rent is adjusted at the end of each renewal period, according to the
current rates of the area and considering the relevant legislation.
Office buildings are leased by the Group for the operation of administrative functions. The basic terms for
new lease contracts and the current practice are substantially the same with those for lease contracts of
branches.
As at 31 December 2024, the lease term for branches and other buildings was re-assessed using the
assumptions as detailed in Note 5.12, resulting in a remeasurement of the lease liability for those contracts.
The carrying amounts of the Group’s RoU assets and lease liabilities and the movement during the year
ended 31 December 2024 and the year ended 31 December 2023 is presented in the table below:
2024
RoU assets
(Note 25)
Lease
Liabilities
(Note 33)
€000
€000
1 January
33,862
(30,217)
Depreciation charge for the year (Note 15.1)
(9,828)
-
New leases (Note 25)
2,470
(1,489)
Re-assesment of lease terms (Note 25)
16,158
(16,158)
Assets derecognised (Note 25)
(369)
1,713
Interest expense
-
(493)
Cash outflows-payments
-
9,741
31 December
42,293
(36,903)
2023
RoU assets
(Note 25)
Lease
Liabilities
(Note 33)
€000
€000
1 January
30,233
(30,190)
Depreciation charge for the year (Note 15.1)
(6,736)
-
New leases (Note 25)
11,353
(7,113)
Re-assesment of lease terms (Note 25)
(988)
693
Interest expense
-
(1,453)
Cash outflows-payments
-
7,846
31 December
33,862
(30,217)
As at 31 December 2024 RoU assets comprised of leases of buildings of a carrying amount of €33,124
thousand (2023: €22,400 thousand) and computer hardware of a carrying amount of €9,169 thousand
(2023: €11,462 thousand), and are presented within Property and equipment in Note 25.
Interest expense on lease liabilities of €231 thousand is included within net insurance service result as it is
directly attributable expense for the fulfilment of insurance contracts within IFRS 17 scope (2023: €1,159
thousand).
385
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
42.
Leases (continued)
Cash outflows relate to lease payments made during the year.
The analysis of lease liabilities based on remaining contractual maturity is disclosed in Note 46.
43.
Analysis of assets and liabilities by expected maturity
2024
2023
Less than
one year
Over one
year
Total
Less than
one year
Over one
year
Total
Assets
€000
€000
€000
€000
€000
€000
Cash and balances with
central banks
7,435,634
165,092
7,600,726
9,555,323
59,179
9,614,502
Loans and advances to
banks
760,374
60,200
820,574
282,998
101,804
384,802
Derivative financial assets
8,742
86,531
95,273
859
50,196
51,055
Investments
714,954
3,643,389
4,358,343
736,664
2,958,745
3,695,409
Reverse repurchase
agreements
-
1,010,170
1,010,170
-
403,199
403,199
Loans and advances to
customers
1,216,995
8,900,173 10,117,168
1,194,139
8,628,988
9,823,127
Life insurance business
assets attributable to
policyholders
34,373
738,384
772,757
27,632
621,580
649,212
Prepayments, accrued
income and other assets
378,841
100,114
478,955
349,723
235,093
584,816
Stock of property
155,015
493,742
648,757
191,818
634,297
826,115
Investment properties
11,985
24,266
36,251
10,605
51,500
62,105
Deferred tax assets
37,909
128,935
166,844
37,909
163,359
201,268
Property, equipment and
intangible assets
-
357,161
357,161
-
334,203
334,203
Non-current assets and
disposal groups held for
sale
23,143
-
23,143
-
-
-
10,777,965 15,708,157 26,486,122
12,387,670
14,242,143
26,629,813
Liabilities
Deposits by banks
140,694
223,537
364,231
202,850
268,706
471,556
Funding from central
banks
-
-
-
2,043,868
-
2,043,868
Derivative financial
liabilities
798
3,866
4,664
14,079
3,901
17,980
Customer deposits
6,538,212 13,990,636 20,528,848
5,986,765
13,352,115
19,338,880
Changes in the fair value
of hedged items in
portfolio hedges of
interest rate risk
-
44,074
44,074
-
-
-
Insurance liabilities
100,390
643,294
743,684
88,616
569,808
658,424
Accruals, deferred income
and other liabilities and
provisions for pending
litigation, claims,
regulatory and other
matters
382,000
255,884
637,884
368,652
229,272
597,924
Debt securities in issue
and subordinated
liabilities
-
1,297,390
1,297,390
-
979,681
979,681
Deferred tax liabilities
-
31,943
31,943
1,622
30,684
32,306
7,162,094 16,490,624 23,652,718
8,706,452
15,434,167
24,140,619
The main assumptions used in determining the expected maturity of assets and liabilities are set out below.
386
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
43.
Analysis of assets and liabilities by expected maturity (continued)
Cash and balances with central banks, loans and advances to banks and reverse repurchase agreements are
classified in the relevant time band based on the contractual maturity, with the exception of obligatory
balances with central banks and balances with central banks for ancillary systems and restricted balances
with other banks which are classified in the 'Over one year' time band.
The investments and life insurance assets attributable to policy holders are classified in the relevant time
band based on expectations as to their realisation. In most cases this is the maturity date, unless there is
an indication that the maturity will be prolonged or there is an intention to sell, roll or replace the security
with a similar one.
Performing loans and advances to customers in Cyprus are classified based on the contractual repayment
schedule. Overdraft accounts are classified in the ‘Over one year’ time band. The Stage 3 Loans are
classified in the ‘Over one year’ time band except cash flows from expected receipts which are included
within time bands, according to historic amounts of receipts in the recent months.
Stock of property and investment property are classified in the relevant time band based on expectations as
to their realisation.
A percentage of customer deposits maturing within one year is classified in the ‘Over one year’ time band,
based on the observed behavioural analysis.
Deposits by banks are classified based on contractual maturity.
The expected maturity of all prepayments, accrued income and other assets and accruals, deferred income
and other liabilities is the same as their contractual maturity. If they do not have a contractual maturity, the
expected maturity is based on the timing the asset is expected to be realised and the liability is expected to
be settled.
44.
Risk management - Credit risk
Credit risk is the risk that arises from the possible failure of one or more customers to discharge their credit
obligations towards the Group, together with the counterparty credit risk arising from investment in debt
securities.
In the ordinary course of its business the Group is exposed to credit risk which is monitored through various
control mechanisms across all Group entities in order to identify and measure credit risk, control risk taking
including preventing undue risk concentrations.
In order to manage this risk, management has in place established credit risk policies on which the Group's
lending and investment procedures are based on. The credit risk policies are complemented by the
methods/models used for the assessment of the customers' credit worthiness (credit rating and credit
scoring systems) as disclosed in Note 44.4.
Management and structure
The Credit Risk Management department, develops and sets credit risk policies, guidelines and approval
limits which are necessary to manage and control or mitigate the credit and concentration risk of the Group.
The Credit Risk Control and Monitoring department monitors compliance with credit risk policies applicable
to each business line and the quality of the Group's loans and advances portfolio. The credit exposures of
related accounts are aggregated and monitored on a consolidated basis.
The Credit Risk Management department, in co-operation with the Credit Risk Control and Monitoring
department, also safeguards the effective management of credit risk at all stages of the credit cycle,
monitors the quality of decisions and processes and ensures that the credit sanctioning function is being
properly managed.
The credit risk exposure of the Group is diversified across the various sectors of the economy. Credit Risk
Management department determines concentration limits for each sector, sets prohibited sectors and
defines sectors which may require prior approval before credit applications are submitted.
The loan portfolio is analysed on the basis of the customers' creditworthiness, their economic sector of
activity and geographical concentration.
387
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
The debt securities portfolio is managed by the Treasury Division in line with limits and parameters set in
the various policies and frameworks. The Market & Liquidity Risk department assesses the credit risk
relating to exposures to credit institutions and governments and other exposures of both the debt securities
portfolio as well as reverse repurchase agreements.
The Group sets credit risk control limits and country risk exposure limits to mitigate concentration risk.
Models and limits are presented to and approved by the Board of Directors, through the relevant authority
based on the authorisation level limits.
The Group’s significant judgements, estimates and assumptions regarding the determination of the level of
provisions for impairment are described in Note 5.
Monitoring process and credit risk mitigation
Loans and advances to customers
The Credit Risk Management department determines the effective credit standards required for the granting
of new loans to customers. The assessment of financial position/repayment ability is the determining factor
when assessing the granting of a new loan. Furthermore, post-approval monitoring is in place to ensure
adherence to both terms and conditions set in the approval process and credit risk policies and procedures.
A key aspect of credit risk is credit risk concentration which is defined as the risk that arises from the
uneven distribution of exposures to individual borrowers, specific industry or economic sectors, geographical
regions, product types or currencies. The monitoring and control of concentration risk is achieved by limit
setting (e.g. sector and name limits) and reporting them to senior management. In addition, the Group
obtains collaterals which are used for risk mitigation, as they act as a secondary source of repayment.
The main types of collateral obtained by the Group are mortgages on real estate, cash collateral/blocked
deposits, bank guarantees, government guarantees, pledges of equity securities and debt instruments of
public companies, fixed and floating charges over corporate assets, assignment of life insurance policies,
assignment of rights on contracts of sale and personal and corporate guarantees.
The Group regularly monitors the changes in the market value of the collateral and, where necessary,
requests the pledging of additional collateral in accordance with the relevant agreement.
The Group's requirements on obtaining collateral, valuation and management of collateral are set out in
relevant policies of the Group.
Off-balance sheet exposures
The Group enters into various irrecoverable commitments and contingent liabilities, by offering guarantee
facilities, documentary credits and other commitments to extend credit lines of its customers to secure their
liquidity needs. Even though these obligations may not be recognised on the statement of financial position,
such commitments expose the Group to risks similar to those of loans and advances and are therefore
monitored by the same policies and control processes.
The Group makes available to its customers guarantees that may require that the Bank makes payments on
their behalf. The Group also enters into commitments, such as documentary credits which commit the
Group to make payments on behalf of customers in the event of a specific act, generally related to the
import or export of goods.
Policies and procedures for managing, monitoring and mitigating credit risk on off-balance sheet exposures
apply as for loans and advances to customers.
Other financial instruments
Collateral held as security for financial assets other than loans and advances to customers and off-balance
sheet exposures is determined by the nature of the financial instrument. Debt securities and other eligible
bills are generally unsecured with the exception of asset-backed securities and similar instruments, which
are secured by pools of financial assets. In addition, some debt securities are government-guaranteed.
Reverse repurchase agreements are generally secured by bonds.
The Market & Liquidity Risk Unit monitors the debt security investment and reverse repo arrangement limits
in place for governing the level of riskiness of the overall portfolio, as well as the credit limits per issuer.
Analysis of the positions the Group maintains per issuer type is presented in Note 20 and information for
the credit quality is presented in Note 44.11.
388
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
The Group has chosen the ISDA Master Agreement for documenting its derivatives activity. It provides the
contractual framework within which dealing activity across a full range of over-the-counter (OTC) products
is conducted and contractually binds both parties to apply close-out netting across all outstanding
transactions covered by an agreement, if either party defaults. In most cases the parties execute a Credit
Support Annex (CSA) in conjunction with the ISDA Master Agreement. Under a CSA, the collateral is passed
between the parties in order to mitigate the market contingent counterparty risk inherent in their open
positions. As at 31 December 2024, the majority of derivative exposures are covered by ISDA netting
arrangements. The effect of potential effect of netting arrangements on the Group's financial position is
presented in Note 52. An analysis of derivative asset and liability exposures is available in Note 21.
Information about the Group’s level of collateral under derivative transactions as at 31 December is
provided in Note 41.
44.1
Maximum exposure to credit risk and collateral and other credit enhancements
The table below presents the maximum exposure to credit risk, the tangible and measurable collateral and
credit enhancements held and the net exposure to credit risk, that is the exposure after taking into account
the impairment loss and tangible and measurable collateral and credit enhancements held. Personal
guarantees are an additional form of collateral, but are not included in the information below since it is
impracticable to estimate their fair value.
The fair value of the collateral presented in the tables below is capped to the carrying value of the loans and
advances to customers.
389
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.1
Maximum exposure to credit risk and collateral and other credit enhancements (continued)
Fair value of collateral and credit enhancements held by the Group
Maximum
exposure to
credit risk
Cash
Securities
Letters of credit/
guarantee
Property
Other
Surplus collateral
Net collateral
Net exposure to
credit risk
2024
€000
€000
€000
€000
€000
€000
€000
€000
€000
Balances with central banks (Note 19)
7,505,735
-
-
-
-
-
-
-
7,505,735
Loans and advances to banks (Note 19)
820,574
-
-
-
-
-
-
-
820,574
Reverse repurchase agreements (Note 44.11)
1,010,170
13,068
1,006,856
-
-
-
(9,754)
1,010,170
-
FVPL non-equity securities (Note 20)
10,702
-
-
-
-
-
-
-
10,702
Debt securities classified at amortised cost and
FVOCI (Note 20)
4,212,177
-
-
-
-
-
-
-
4,212,177
Derivative financial instruments (Note 21)
95,273
-
-
-
-
-
-
-
95,273
Loans and advances to customers (Note 23)
10,117,168
577,972
659,723
233,160
17,141,516
292,621
(10,037,307)
8,867,685
1,249,483
Loans and advances to customers classified as
held for sale (Note 23)
23,143
-
-
-
-
-
-
-
23,143
Debtors (Note 28)
33,340
-
-
-
-
-
-
-
33,340
Insurance and reinsurance contract assets
(Note 28)
50,612
-
-
-
-
-
-
-
50,612
Deferred purchase payment consideration
(Note 28)
143,604
-
-
-
-
-
-
-
143,604
Other financial assets (Note 28)
118,688
57,481
-
-
-
-
-
57,481
61,207
On-balance sheet total
24,141,186
648,521
1,666,579
233,160
17,141,516
292,621
(10,047,061)
9,935,336
14,205,850
Contingent liabilities
Acceptances and endorsements
5,271
-
-
-
5,269
2
-
5,271
-
Guarantees
705,774
72,744
209
4,099
148,199
224
-
225,475
480,299
Commitments
Documentary credits
14,768
844
-
-
166
-
-
1,010
13,758
Undrawn formal stand-by facilities, credit lines
and other commitments to lend
2,009,698
26,529
20,349
2,459
439,691
22,722
-
511,750
1,497,948
Off-balance sheet total
2,735,511
100,117
20,558
6,558
593,325
22,948
-
743,506
1,992,005
26,876,697
748,638
1,687,137
239,718
17,734,841
315,569
(10,047,061)
10,678,842
16,197,855
390
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.1
Maximum exposure to credit risk and collateral and other credit enhancements (continued)
Fair value of collateral and credit enhancements held by the Group
Maximum
exposure to
credit risk
Cash
Securities
Letters of credit/
guarantee
Property
Other
Surplus collateral
Net collateral
Net exposure to
credit risk
2023
€000
€000
€000
€000
€000
€000
€000
€000
€000
Balances with central banks (Note 19)
9,521,961
-
-
-
-
-
-
-
9,521,961
Loans and advances to banks (Note 19)
384,802
39,344
-
-
-
-
-
39,344
345,458
FVPL non-equity securities (Note 20)
3,611
-
-
-
-
-
-
-
3,611
Debt securities classified at amortised cost and FVOCI
(Note 20)
3,547,782
-
-
-
-
-
-
-
3,547,782
Reverse repurchase agreements (Note 44.11)
403,199
-
426,419
-
-
-
(29,524)
396,895
6,304
Derivative financial instruments (Note 21)
51,055
-
-
-
-
-
-
-
51,055
Loans and advances to customers (Note 23)
9,823,127
475,241
743,890
149,415
16,755,799
275,344
(9,615,735)
8,783,954
1,039,173
Debtors (Note 28)
34,662
-
-
-
-
-
-
-
34,662
Insurance and reinsurance contract assets (Note 28)
57,494
-
-
-
-
-
-
-
57,494
Deferred purchase payment consideration (Note 28)
243,013
-
-
-
-
-
-
-
243,013
Other financial assets (Note 28)
109,314
-
-
-
-
-
-
-
109,314
On-balance sheet total
24,180,020
514,585
1,170,309
149,415 16,755,799
275,344
(9,645,259)
9,220,193
14,959,827
Contingent liabilities
Acceptances and endorsements
2,580
8
-
-
2,570
2
-
2,580
-
Guarantees
703,044
71,752
1,874
6,797
145,545
255
-
226,223
476,821
Commitments
Documentary credits
10,251
140
-
-
21
-
-
161
10,090
Undrawn formal stand-by facilities, credit lines and
other commitments to lend
1,948,482
22,980
10,648
9,764
455,964
17,231
-
516,587
1,431,895
Off-balance sheet total
2,664,357
94,880
12,522
16,561
604,100
17,488
-
745,551
1,918,806
26,844,377
609,465
1,182,831
165,976 17,359,899
292,832
(9,645,259)
9,965,744
16,878,633
391
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.2
Credit risk concentration of loans and advances to customers
There are restrictions on loan concentrations which are imposed by the Banking Law in Cyprus, the relevant
CBC Directives and CRR. The Group’s Risk Appetite Statement may impose stricter concentration limits
which are monitored by the Group.
The credit risk concentration, which is based on industry (economic activity) and business line, as well as
the geographical concentration, is presented below.
The geographical analysis, for credit risk concentration purposes, is based on the Group’s Country Risk
Policy which is followed for monitoring the Group's exposures. Market and Liquidity Risk department is
responsible for analysing the country risk of exposures. ALCO reviews the country risk of exposures on a
quarterly basis and the Board, through its Risk Committee, reviews the country risk of exposures and any
breaches of country risk limits on a regular basis and at least annually.
The table below presents the geographical concentration of loans and advances to customers by country of
risk based on the country of residency for individuals and the country of registration for companies.
2024
Cyprus
Greece
United
Kingdom
Russia
Other
countries
Gross loans at
amortised cost
By economic activity
€000
€000
€000
€000
€000
€000
Trade
880,142
8,405
1
-
15,283
903,831
Manufacturing
275,779
9,691
193
-
31,412
317,075
Hotels and catering
914,460
33,500
38,355
-
36,329
1,022,644
Construction
453,362
36,629
-
-
297
490,288
Real estate
757,099
114,289
2
-
34,565
905,955
Private individuals
4,670,608
7,842
34,513
7,534
40,083
4,760,580
Professional and other services
568,294
567
5,171
6
61,550
635,588
Shipping
36,874
12
-
-
302,279
339,165
Other sectors
606,598
106,116
-
5
42,560
755,279
9,163,216
317,051
78,235
7,545
564,358
10,130,405
2024
Cyprus
Greece
United
Kingdom
Russia
Other
countries
Gross loans at
amortised cost
By business line
€000
€000
€000
€000
€000
€000
Corporate
3,286,902
59,961
195
-
163
3,347,221
IBU & International corporate
- IBU
92,206
1,638
4,769
5,214
16,867
120,694
- International corporate
147,180
251,140
43,245
-
519,456
961,021
SMEs
964,412
402
1,054
-
2,203
968,071
Retail
- housing
3,496,469
2,544
22,185
80
14,071
3,535,349
- consumer, credit cards and other
1,033,208
1,339
337
-
5,510
1,040,394
Restructuring
- corporate
16,015
-
1,241
112
66
17,434
- SMEs
20,289
-
157
-
100
20,546
- retail housing
35,644
-
534
126
80
36,384
- retail other
15,169
2
3
-
30
15,204
Recoveries
- corporate
3,627
-
32
144
377
4,180
- SMEs
7,760
4
390
876
634
9,664
- retail housing
25,795
5
3,571
907
4,574
34,852
- retail other
18,540
16
522
86
227
19,391
9,163,216
317,051
78,235
7,545
564,358
10,130,405
392
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.2
Credit risk concentration of loans and advances to customers (continued)
2023
Cyprus
Greece
United
Kingdom
Russia
Other
countries
Gross loans at
amortised cost
By economic activity
€000
€000
€000
€000
€000
€000
Trade
868,039
277
40
-
15,340
883,696
Manufacturing
287,524
43,971
192
-
31,194
362,881
Hotels and catering
928,910
29,454
36,704
-
39,368
1,034,436
Construction
486,622
8,332
14
-
331
495,299
Real estate
871,544
108,635
1,863
-
51,349
1,033,391
Private individuals
4,543,985
9,680
56,074
12,075
48,080
4,669,894
Professional and other services
535,994
572
5,242
352
54,846
597,006
Shipping
20,622
15
-
-
222,422
243,059
Other sectors
512,666
-
-
2
30,184
542,852
9,055,906
200,936
100,129
12,429
493,114
9,862,514
2023 (restated)
Cyprus
Greece
United
Kingdom
Russia
Other
countries
Gross loans at
amortised cost
By business line
€000
€000
€000
€000
€000
€000
Corporate
3,326,556
30,487
193
324
185
3,357,745
IBU & International corporate
- IBU
87,127
1,688
6,544
6,901
18,618
120,878
- International corporate
115,212
164,103
43,401
-
439,512
762,228
SMEs
945,018
482
1,177
-
2,316
948,993
Retail
- housing
3,369,111
2,320
27,728
86
17,634
3,416,879
- consumer, credit cards and other
956,834
1,775
480
-
4,953
964,042
Restructuring
- corporate
48,440
-
611
-
-
49,051
- SMEs
33,212
-
261
532
61
34,066
- retail housing
57,685
-
2,468
122
212
60,487
- retail other
19,164
22
2
-
23
19,211
Recoveries
- corporate
6,079
-
182
173
911
7,345
- SMEs
13,419
1
1,173
1,623
1,183
17,399
- retail housing
50,927
50
14,718
2,399
7,231
75,325
- retail other
27,122
8
1,191
269
275
28,865
9,055,906
200,936
100,129
12,429
493,114
9,862,514
The loans and advances to customers include lending exposures in Cyprus with collaterals in Greece with a
carrying value as at 31 December 2024 of €176,890 thousand (2023: €128,705 thousand).
The loans and advances to customers reported within 'Other countries' as at 31 December 2024 include
exposures of €0,6 million in Ukraine (2023: €1,7 million) and €4,9 million in Israel (2023: €4,9 million).
393
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.3
Analysis of loans and advances to customers
The movement of the gross loans and advances to customers at amortised cost by staging, including the
loans and advances to customers classified as held for sale is presented in the tables below:
Stage 1
Stage 2
Stage 3
POCI
Total
2024
€000
€000
€000
€000
€000
1 January
8,275,589
1,161,271
326,883
98,771
9,862,514
Transfers to stage 1
565,289
(564,134)
(1,155)
-
-
Transfers to stage 2
(228,889)
265,111
(36,222)
-
-
Transfers to stage 3
(14,037)
(19,442)
33,479
-
-
Foreign exchange and other
adjustments
-
-
(5)
-
(5)
Write offs
(801)
(619)
(47,106)
(4,951)
(53,477)
Interest accrued and other
adjustments
417,918
74,717
43,137
7,703
543,475
New loans originated or
purchased and drawdowns of
existing facilities
2,252,251
69,200
1,877
11,336
2,334,664
Loans derecognised or repaid
(excluding write offs)
(2,140,595)
(212,439)
(100,651)
(49,241)
(2,502,926)
Changes to contractual cash flows
due to modifications
(230)
1,415
120
(224)
1,081
31 December
9,126,495
775,080
220,357
63,394
10,185,326
Stage 1
Stage 2
Stage 3
POCI
Total
2023
€000
€000
€000
€000
€000
1 January
7,867,256
1,565,603
371,018
113,458
9,917,335
Transfers to stage 1
786,990
(785,026)
(1,964)
-
-
Transfers to stage 2
(514,415)
546,249
(31,834)
-
-
Transfers to stage 3
(38,959)
(83,436)
122,395
-
-
Foreign exchange and other
adjustments
-
-
10
-
10
Write offs
(594)
(588)
(79,286)
(5,282)
(85,750)
Interest accrued and other
adjustments
388,970
39,662
47,804
8,001
484,437
New loans originated or
purchased and drawdowns of
existing facilities
1,827,530
89,118
8,125
1,847
1,926,620
Loans derecognised or repaid
(excluding write offs)
(2,038,389)
(210,331)
(107,490)
(22,753)
(2,378,963)
Changes to contractual cash flows
due to modifications
(2,800)
20
(1,895)
(149)
(4,824)
Acquisition of Velocity 2 portfolio
-
-
-
3,649
3,649
31 December
8,275,589
1,161,271
326,883
98,771
9,862,514
As at 31 December 2023 no loans and advances to customers were classified as held for sale.
For revolving facilities, overdrafts and credit cards, the net positive change in balance by stage excluding
write-offs is reported in ‘New loans originated’ and the net negative change is reported in ‘Loans
derecognised or repaid'.
The analysis of gross loans and advances to customers at amortised cost by staging and by business line
concentration is included in Note 23.
394
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.3
Analysis of loans and advances to customers (continued)
The movement of gross loans and advances to customers at amortised cost, in the Corporate, IBU &
International corporate, SME and Retail business lines in Cyprus (the country where the loans are
managed), are presented in the tables below:
Corporate
IBU &
International
corporate
SME
Retail
2024
€000
€000
€000
€000
1 January
3,357,421
883,106
948,624
4,380,921
Transfers (out of)/in business line
(19,487)
(3,596)
21,822
(5,792)
Write offs
(4,597)
(189)
(144)
(1,458)
Interest accrued
179,997
77,373
44,709
201,869
New loans originated or purchased
933,201
426,906
204,860
761,804
Loans derecognised or repaid (excluding write
offs)
(1,098,155)
(302,429)
(252,530)
(762,789)
Changes to contractual cash flows due to
modifications not resulting in derecognition
(1,159)
544
396
1,188
31 December
3,347,221
1,081,715
967,737
4,575,743
Corporate
IBU &
International
corporate
SME
Retail
2023 (restated)
€000
€000
€000
€000
1 January
3,398,475
823,182
1,026,608
4,264,777
Transfers in/(out of) business line
111,905
(35,005)
(38,809)
36,081
Write offs
(25,277)
(173)
(142)
(1,165)
Interest accrued
166,290
56,142
59,465
159,108
New loans originated or purchased
748,197
218,979
192,439
696,146
Loans derecognised or repaid (excluding write
offs)
(1,037,422)
(179,763)
(291,534)
(775,774)
Changes to contractual cash flows due to
modifications not resulting in derecognition
(4,747)
(256)
597
1,748
31 December
3,357,421
883,106
948,624
4,380,921
44.4
Credit quality of loans and advances to customers based on the internal credit rating
Credit scoring is the primary risk rating system for assessing obligor and transaction risk for the key
portfolios of the Company. For the purposes of credit scoring, these portfolios are Corporate, Retail and
SMEs. Corporate and SME portfolios include legal entities. Retail portfolio includes individuals.
Scoring models use internal and external data to assess and 'score' borrowers and their credit quality, in
order to provide further input on managing limits for existing loans and collection activities. The data is
specific to the borrower but additional data which could affect the borrower’s behaviour is also used.
Credit score is one of the factors employed on new clients and management of existing clients. The credit
score of the borrower is used to assess the credit quality for each independent acquisition or account
management action, leading to an automated decision or guidance for an adjudicator. Credit scoring
enhances the credit decision quality and facilitates risk-based pricing where feasible.
Borrower score defines the rating of the borrower from a range of 1-8 where 8 is defined as defaulted. The
12-months probability of default (PD) is calculated per rating. The following table presents weighted PD per
risk level's rating for corporate, retail and SME exposures.
Unrated corporate exposures are assessed using the Group's in-house behavioural scorecard model for
corporate legal entities. Unrated retail exposures include qualifying revolving facilities without scoring (i.e.
prepaid cards) and other revolving facilities (i.e. financial guarantees) which are assigned a more generic
curve. Similarly unrated SME exposures are assigned a more generic segment curve.
395
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.4
Credit quality of loans and advances to customers based on the internal credit rating
(continued)
New customers' lending to corporate and SME legal entities and new lending to retail individuals are
separately disclosed since a time span of seven months is necessary in order to provide an accurate rating.
The portfolios weighted PD per rating is presented below.
2024
12-month PD
Rating
Corporate legal entities
%
Retail individuals
%
SME legal entities
%
1
0.52
0.04
0.08
2
0.55
0.06
0.17
3
0.71
0.11
0.35
4
0.98
0.16
1.26
5
1.43
0.50
3.73
6
1.74
3.34
8.44
7
2.07
8.80
15.62
2023
12-month PD
Rating
Corporate legal entities
%
Retail individuals
%
SME legal entities
%
1
1.32
0.10
0.18
2
1.42
0.17
0.46
3
1.75
0.28
0.96
4
2.38
0.42
3.37
5
3.68
0.89
8.92
6
3.82
7.20
18.16
7
4.88
15.21
36.65
Lower rating exposures demonstrate a better capacity to meet financial commitments, with lower
probability of default, whereas higher rating exposures require varying degrees of special attention and
default risk is of greater concern.
As disclosed in Note 5.1 under section ‘Calibration of IFRS 9 models and removal of overlays in relation to
economic conditions', the Group during 2024 proceeded with model calibrations affecting the probability of
default parameter (the ‘PD-macro’) which led to a reduction in portfolios weighted PDs, when compared to
last year.
The tables below show the gross loans and advances to customers at amortised cost which are managed in
Cyprus, using the corporate legal entities, SMEs legal entities and retail individuals definition as per the
internal rating of the Company.
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Corporate legal entities
€000
€000
€000
€000
€000
€000
Rating 1
795,970
7,675
803,645
654,192
8,681
662,873
Rating 2
414,627
12,266
426,893
404,127
2,604
406,731
Rating 3
840,468
17,460
857,928
857,583
17,943
875,526
Rating 4
617,084
181,452
798,536
420,299
75,912
496,211
Rating 5
446,603
85,994
532,597
593,987
210,143
804,130
Rating 6
58,029
61,365
119,394
97,182
176,247
273,429
Rating 7
6,217
21,329
27,546
30,182
10,713
40,895
Unrated
231,861
22,225
254,086
230,024
34,157
264,181
New customers
654,183
48,048
702,231
397,922
14,956
412,878
4,065,042
457,814
4,522,856
3,685,498
551,356
4,236,854
Total Stage 3 and POCI
58,171
157,455
4,581,027
4,394,309
396
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.4
Credit quality of loans and advances to customers based on the internal credit rating
(continued)
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Retail individuals
€000
€000
€000
€000
€000
€000
Rating 1
404,639
1,263
405,902
410,510
886
411,396
Rating 2
309,996
898
310,894
296,784
1,182
297,966
Rating 3
539,982
1,155
541,137
531,271
8,583
539,854
Rating 4
1,523,523
12,369
1,535,892
1,387,960
59,067
1,447,027
Rating 5
1,107,575
48,957
1,156,532
915,585
195,178
1,110,763
Rating 6
59,245
81,998
141,243
63,506
91,634
155,140
Rating 7
82,361
120,555
202,916
104,288
121,092
225,380
Unrated
-
2,215
2,215
-
2,099
2,099
New customers
380,491
6,629
387,120
308,043
13,166
321,209
4,407,812
276,039
4,683,851
4,017,947
492,887
4,510,834
Total Stage 3 and POCI
146,115
230,837
4,829,966
4,741,671
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
SMEs legal entities
€000
€000
€000
€000
€000
€000
Rating 1
125,714
1,235
126,949
120,165
3,360
123,525
Rating 2
260,609
2,266
262,875
210,856
47,818
258,674
Rating 3
125,330
8,654
133,984
108,742
29,117
137,859
Rating 4
47,228
15,261
62,489
45,841
14,490
60,331
Rating 5
10,668
4,285
14,953
13,021
5,771
18,792
Rating 6
3,414
4,361
7,775
5,300
3,328
8,628
Rating 7
3,172
1,415
4,587
3,324
2,534
5,858
Unrated
-
670
670
-
6,312
6,312
New customers
77,368
3,080
80,448
64,722
4,298
69,020
653,503
41,227
694,730
571,971
117,028
688,999
Total Stage 3 and POCI
24,348
36,842
719,078
725,841
397
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.5
Credit losses of loans and advances to customers
The movement in ECL of loans and advances to customers, including those classified as held for sale, is as
follows:
Stage 1
Stage 2
Stage 3
POCI
Total
2024
€000
€000
€000
€000
€000
1 January
24,205
30,257
103,996
20,995
179,453
Transfers to stage 1
11,706
(11,386)
(320)
-
-
Transfers to stage 2
(660)
4,411
(3,751)
-
-
Transfers to stage 3
(131)
(984)
1,115
-
-
Impact on transfer between
stages during the year*
(8,970)
1,221
7,638
(173)
(284)
Foreign exchange and other
adjustments
-
-
41
-
41
Write offs
(801)
(619)
(47,106)
(4,951)
(53,477)
Interest (provided) not
recognised in the income
statement
-
-
4,156
1,105
5,261
New loans originated or
purchased*
5,043
-
-
385
5,428
Loans derecognised or repaid
(excluding write offs)*
(4,390)
(1,177)
(14,213)
(801)
(20,581)
Write offs*
748
325
12,193
295
13,561
Changes to models and inputs
(changes in PDs, LGDs and EADs)
used for ECL calculations*
(14,380)
15,373
43,693
3,684
48,370
Changes to contractual cash flows
due to modifications not resulting
in derecognition*
(365)
1,318
77
(5)
1,025
31 December
12,005
38,739
107,519
20,534
178,797
Individually assessed
3,378
17,069
21,286
10,485
52,218
Collectively assessed
8,627
21,670
86,233
10,049
126,579
12,005
38,739
107,519
20,534
178,797
* Individual components of the ‘Impairment net of reversals on loans and advances to customers’ (Note
16).
The main driver of the ECL charge are the ‘Changes to models and inputs (changes in PDs, LGDs and EADs)
used for ECL calculations’ which includes the calibration of the provisioning models as set out in Note 5.1
together with the impact of the agreement for disposal of NPE portfolio (Project River).
As at 31 December 2023 no loans and advances to customers were classified as held for sale.
398
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.5
Credit losses of loans and advances to customers (continued)
Stage 1
Stage 2
Stage 3
POCI
Total
2023
€000
€000
€000
€000
€000
1 January
22,288
27,041
113,573
15,540
178,442
Transfers to stage 1
10,985
(10,504)
(481)
-
-
Transfers to stage 2
(1,532)
6,677
(5,145)
-
-
Transfers to stage 3
(481)
(2,576)
3,057
-
-
Impact on transfer between
stages during the year*
(8,860)
3,450
24,888
-
19,478
Foreign exchange and other
adjustments
-
-
91
-
91
Write offs
(594)
(588)
(79,286)
(5,282)
(85,750)
Interest (provided) not
recognised in the income
statement
-
-
3,827
1,079
4,906
New loans originated or
purchased*
5,953
-
-
992
6,945
Loans derecognised or repaid
(excluding write offs)*
(2,798)
(782)
(5,433)
(162)
(9,175)
Write offs*
455
340
7,981
1,118
9,894
Changes to models and inputs
(changes in PDs, LGDs and EADs)
used for ECL calculations*
258
7,021
39,891
7,935
55,105
Changes to contractual cash flows
due to modifications not resulting
in derecognition*
(1,469)
178
1,033
(225)
(483)
31 December
24,205
30,257
103,996
20,995
179,453
Individually assessed
8,287
11,983
45,178
13,480
78,928
Collectively assessed
15,918
18,274
58,818
7,515
100,525
24,205
30,257
103,996
20,995
179,453
* Individual components of the ‘Impairment net of reversals on loans and advances to customers’ (Note
16).
The analysis of credit losses of loans and advances to customers by business line, excluding those classified
as held for sale is presented in the table below:
Stage 1
Stage 2
Stage 3
POCI
Total
2024
€000
€000
€000
€000
€000
Corporate
4,468
17,645
14,830
323
37,266
IBU & International corporate
- IBU
84
378
51
5
518
- International corporate
1,925
1,070
-
-
2,995
SMEs
958
3,209
3,303
142
7,612
Retail
- housing
2,604
10,895
4,911
526
18,936
- consumer, credit cards and
other
1,836
4,856
4,790
750
12,232
Restructuring
- corporate
2
127
1,627
10,178
11,934
- SMEs
47
123
2,997
515
3,682
- retail housing
53
371
10,686
341
11,451
- retail other
28
65
7,524
475
8,092
Recoveries
- corporate
-
-
2,053
158
2,211
- SMEs
-
-
4,714
470
5,184
- retail housing
-
-
11,686
2,600
14,286
- retail other
-
-
9,344
1,276
10,620
12,005
38,739
78,516
17,759
147,019
399
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.5
Credit losses of loans and advances to customers (continued)
Stage 1
Stage 2
Stage 3
POCI
Total
2023 (restated)
€000
€000
€000
€000
€000
Corporate
12,993
11,727
32,761
5,169
62,650
IBU & International corporate
- IBU
161
323
40
5
529
- International corporate
1,498
816
38
6
2,358
SMEs
2,424
2,403
1,200
303
6,330
Retail
- housing
3,098
6,435
3,804
486
13,823
- consumer, credit cards and
other
3,693
5,665
4,969
1,164
15,491
Restructuring
- corporate
21
1,635
6,962
9,964
18,582
- SMEs
134
589
4,334
553
5,610
- retail housing
75
440
12,393
204
13,112
- retail other
108
224
7,060
489
7,881
Recoveries
- corporate
-
-
3,342
267
3,609
- SMEs
-
-
4,794
150
4,944
- retail housing
-
-
13,772
1,094
14,866
- retail other
-
-
8,527
1,141
9,668
24,205
30,257
103,996
20,995
179,453
The movement of the ECL allowance for the loans and advances to customers in the Corporate, IBU &
International corporate, SME and Retail business lines in Cyprus (the country where the loans are
managed), is presented in the table below:
Corporate
IBU &
International
corporate
SME
Retail
2024
€000
€000
€000
€000
1 January
62,425
2,887
6,134
29,314
Transfer (out of)/in the business line
(10,684)
91
921
(1,409)
Write offs
(4,597)
(189)
(144)
(1,458)
Interest (provided) not recognised in the income
statement
987
2
116
458
New loans originated or purchased
1,998
1,029
287
1,688
Loans derecognised or repaid (excluding write offs)
(10,004)
(487)
(216)
(2,183)
Write offs
10
21
79
979
Changes to models and inputs (changes in PDs,
LGDs and EADs) used for ECL calculations
(1,078)
(52)
105
4,317
Changes to contractual cash flows due to
modifications not resulting in derecognition
800
(2)
174
64
Impact on transfer between stages during the year
(2,591)
213
(40)
(602)
31 December
37,266
3,513
7,416
31,168
400
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.5
Credit losses of loans and advances to customers (continued)
Corporate
IBU &
International
corporate
SME
Retail
2023 (restated)
€000
€000
€000
€000
1 January
56,359
1,087
5,879
24,827
Transfer in/(out of) the business line
(660)
112
76
(1,813)
Write offs
(25,276)
(173)
(142)
(1,165)
Interest (provided) not recognised in the income
statement
287
-
-
464
New loans originated or purchased
4,058
470
616
1,804
Loans derecognised or repaid (excluding write offs)
(2,627)
(315)
-
(1,615)
Write offs
18
28
135
740
Changes to models and inputs (changes in PDs,
LGDs and EADs) used for ECL calculations
12,120
885
242
6,236
Changes to contractual cash flows due to
modifications not resulting in derecognition
481
4
(469)
(283)
Impact on transfer between stages during the year
17,665
789
(203)
119
31 December
62,425
2,887
6,134
29,314
During the year ended 31 December 2024 the total non-contractual write-offs recorded by the Group
amounted to €25,391 thousand (2023: €66,547 thousand). The contractual amount outstanding on financial
assets that were written off during the year ended 31 December 2024 and that are still subject to
enforcement activity is €187,288 thousand (2023: €566,451 thousand).
Sensitivity analysis
The Group has performed sensitivity analysis relating to the loan portfolio in Cyprus, which represents more
than 99% of the total loan portfolio of the Group with reference date 31 December 2024 and 2023.
The Group has applied sensitivity analysis to the below parameters and the impact on the ECL, for both
individually and collectively assessed ECL calculations, is presented in the table below:
Increase/(decrease) on ECL for
loans and advances to customers
at amortised cost
2024
2023
€000
€000
Increase the adverse weight by 5% and decrease the favourable weight by 5%
1,560
1,297
Decrease the adverse weight by 5% and increase the favourable weight by 5%
(1,677)
(1,629)
Increase the expected recovery period by 1 year
1,965
6,090
Decrease the expected recovery period by 1 year
(2,047)
(7,863)
Increase the collateral realisation haircut by 5%
4,429
8,816
Decrease the collateral realisation haircut by 5%
(3,771)
(9,495)
Increase in the PDs of stages 1 and 2 by 20%*
18,232
5,424
Decrease in the PDs of stages 1 and 2 by 20%*
(8,273)
(5,880)
401
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.5
Credit losses of loans and advances to customers (continued)
The increase/(decrease) on ECL, for loans and advances to customers at amortised cost is presented per
stage in the table below:
Stage 1
Stage 2
Stage 3
Total
2024
€000
€000
€000
€000
Increase the adverse weight by 5% and decrease the
favourable weight by 5%
186
931
443
1,560
Decrease the adverse weight by 5% and increase the
favourable weight by 5%
(213)
(522)
(942)
(1,677)
Increase the expected recovery period by 1 year
139
870
956
1,965
Decrease the expected recovery period by 1 year
(111)
(687)
(1,249)
(2,047)
Increase the collateral realisation haircut by 5%
265
1,579
2,585
4,429
Decrease the collateral realisation haircut by 5%
(182)
(1,067)
(2,522)
(3,771)
Increase in the PDs of stages 1 and 2 by 20%*
1,810
16,422
-
18,232
Decrease in the PDs of stages 1 and 2 by 20%*
(2,059)
(6,214)
-
(8,273)
Stage 1
Stage 2
Stage 3
Total
2023
€000
€000
€000
€000
Increase the adverse weight by 5% and decrease the
favourable weight by 5%
295
204
798
1,297
Decrease the adverse weight by 5% and increase the
favourable weight by 5%
(235)
(267)
(1,127)
(1,629)
Increase the expected recovery period by 1 year
727
1,201
4,162
6,090
Decrease the expected recovery period by 1 year
(695)
(1,121)
(6,047)
(7,863)
Increase the collateral realisation haircut by 5%
1,037
1,692
6,087
8,816
Decrease the collateral realisation haircut by 5%
(900)
(1,406)
(7,189)
(9,495)
Increase in the PDs of stages 1 and 2 by 20%*
2,624
2,800
-
5,424
Decrease in the PDs of stages 1 and 2 by 20%*
(1,325)
(4,555)
-
(5,880)
*The impact on the ECL also includes the transfer between stages of the loans and advances to customers
following the increase/decrease in the PD.
402
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.5
Credit losses of loans and advances to customers (continued)
The sensitivity analysis performed on the collateral realisation haircut and its impact on the ECL by business
line is presented in the table below:
Increase the
collateral
realisation
haircut by
5%
Decrease the
collateral
realisation
haircut by
5%
Increase the
collateral
realisation
haircut by 5%
Decrease the
collateral
realisation
haircut by 5%
2024
2024
2023
(restated)
2023
(restated)
€000
€000
€000
€000
Corporate
553
(1,061)
2,708
(2,521)
IBU & International corporate
- IBU
3
(2)
9
(6)
- International corporate
17
(14)
65
(55)
SMEs
464
(382)
365
(324)
Retail
- housing
940
(638)
1,128
(811)
- consumer, credit cards and other
200
(137)
336
(286)
Restructuring
- corporate
34
(29)
1,029
(3,337)
- SMEs
109
(88)
233
(300)
- retail housing
660
(576)
694
(616)
- retail other
148
(140)
196
(175)
Recoveries
- corporate
22
(87)
123
(111)
- SMEs
209
(146)
932
(319)
- retail housing
671
(346)
693
(455)
- retail other
399
(125)
305
(179)
4,429
(3,771)
8,816
(9,495)
44.6
Contingent liabilities and commitments
The Group enters into various irrevocable commitments and contingent liabilities. These consist of
acceptances and endorsements, guarantees, documentary credits and undrawn formal stand-by facilities,
credit lines and other commitments to lend.
44.6.1
Contingent liabilities
An analysis of changes in the outstanding nominal amount of exposures and the corresponding ECL are
disclosed in the tables below:
Stage 1
Stage 2
Stage 3
Total
2024
€000
€000
€000
€000
Exposures
1 January
483,831
184,827
36,966
705,624
Transfers to stage 1
51,626
(51,626)
-
-
Transfers to stage 2
(16,549)
17,453
(904)
-
Transfers to stage 3
(147)
(3,121)
3,268
-
Net increase/(decrease)
45,157
(32,736)
(7,000)
5,421
31 December
563,918
114,797
32,330
711,045
403
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.6
Contingent liabilities and commitments (continued)
44.6.1
Contingent liabilities (continued)
Stage 1
Stage 2
Stage 3
Total
2023
€000
€000
€000
€000
Exposures
1 January
509,186
110,626
36,582
656,394
Transfers to stage 1
8,820
(8,755)
(65)
-
Transfers to stage 2
(88,817)
91,722
(2,905)
-
Transfers to stage 3
(585)
(3,763)
4,348
-
Net increase/(decrease)
55,227
(5,003)
(994)
49,230
31 December
483,831
184,827
36,966
705,624
Stage 1
Stage 2
Stage 3
Total
2024
€000
€000
€000
€000
ECL
1 January
-
18
19,174
19,192
Net decrease
-
-
(293)
(293)
Credit for the year
-
(4)
(1,002)
(1,006)
31 December
-
14
17,879
17,893
Individually assessed
-
-
17,879
17,879
Collectively assessed
-
14
-
14
-
14
17,879
17,893
Stage 1
Stage 2
Stage 3
Total
2023
€000
€000
€000
€000
ECL
1 January
119
110
17,013
17,242
Transfers to stage 3
(35)
(4)
39
-
Charge/(credit) for the year
(84)
(88)
2,122
1,950
31 December
-
18
19,174
19,192
Individually assessed
-
-
19,174
19,174
Collectively assessed
-
18
-
18
-
18
19,174
19,192
The credit quality of contingent liabilities as per the internal rating system of the Company is disclosed in
the table below.
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Corporate legal entities
€000
€000
€000
€000
€000
€000
Rating 1
98,192
2,161
100,353
130,436
266
130,702
Rating 2
17,055
151
17,206
16,168
2
16,170
Rating 3
92,078
63
92,141
33,253
29,663
62,916
Rating 4
27,905
421
28,326
26,279
2,686
28,965
Rating 5
73,886
17,939
91,825
25,253
30,270
55,523
Rating 6
1,768
5,700
7,468
19,494
281
19,775
Rating 7
1,817
66
1,883
6,485
33
6,518
Unrated
64,565
23,683
88,248
26,003
33,737
59,740
New customers
56,061
500
56,561
102,235
6,174
108,409
433,327
50,684
484,011
385,606
103,112
488,718
Total Stage 3
6,038
8,314
490,049
497,032
404
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.6
Contingent liabilities and commitments (continued)
44.6.1
Contingent liabilities (continued)
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
SME legal entities
€000
€000
€000
€000
€000
€000
Rating 1
57,714
1,147
58,861
42,683
2,796
45,479
Rating 2
20,390
74
20,464
6,435
8,181
14,616
Rating 3
3,149
536
3,685
1,599
1,950
3,549
Rating 4
672
916
1,588
329
907
1,236
Rating 5
6
2
8
31
7
38
Rating 6
17
2
19
3
14
17
Rating 7
27
136
163
4
137
141
Unrated
-
43,046
43,046
-
50,393
50,393
New customers
48,616
1,213
49,829
47,141
122
47,263
130,591
47,072
177,663
98,225
64,507
162,732
Total Stage 3
26,190
28,232
203,853
190,964
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Retail individuals
€000
€000
€000
€000
€000
€000
Unrated
-
17,041
17,041
-
17,208
17,208
-
17,041
17,041
-
17,208
17,208
Total Stage 3
102
420
17,143
17,628
44.6.2
Commitments
An analysis of changes in the outstanding exposures and the corresponding ECL are disclosed in the tables
below:
Stage 1
Stage 2
Stage 3
Total
2024
€000
€000
€000
€000
Exposure
1 January
1,665,479
271,766
21,488
1,958,733
Transfers to stage 1
156,132
(155,983)
(149)
-
Transfers to stage 2
(23,419)
23,754
(335)
-
Transfers to stage 3
(441)
(2,736)
3,177
-
Net increase/(decrease)
62,616
7,353
(4,236)
65,733
31 December
1,860,367
144,154
19,945
2,024,466
Stage 1
Stage 2
Stage 3
Total
2023
€000
€000
€000
€000
Exposure
1 January
1,564,964
319,114
43,033
1,927,111
Transfers to stage 1
121,814
(121,602)
(212)
-
Transfers to stage 2
(100,140)
102,838
(2,698)
-
Transfers to stage 3
(4,872)
(3,783)
8,655
-
Net increase/(decrease)
83,713
(24,801)
(27,290)
31,622
31 December
1,665,479
271,766
21,488
1,958,733
405
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.6
Contingent liabilities and commitments (continued)
44.6.2
Commitments (continued)
Stage 1
Stage 2
Stage 3
Total
2023
€000
€000
€000
€000
ECL
1 January
90
97
-
187
Charge/(credit) for the year
(90)
(97)
-
(187)
31 December
-
-
-
-
There is no ECL on commitments as at 31 December 2024 and 2023.
The credit quality of commitments, as per the internal rating system of the Company is disclosed in the
table below.
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Corporate legal entities
€000
€000
€000
€000
€000
€000
Rating 1
287,501
4,488
291,989
280,836
10,252
291,088
Rating 2
48,996
2,543
51,539
63,694
1,672
65,366
Rating 3
90,481
1,897
92,378
78,107
8,560
86,667
Rating 4
106,090
6,608
112,698
77,465
3,669
81,134
Rating 5
63,889
12,487
76,376
45,954
22,251
68,205
Rating 6
1,691
4,919
6,610
14,720
4,892
19,612
Rating 7
1,883
555
2,438
2,074
336
2,410
Unrated
131,778
45,041
176,819
90,986
51,113
142,099
New customers
91,060
2,359
93,419
86,953
707
87,660
823,369
80,897
904,266
740,789
103,452
844,241
Total Stage 3
11,035
11,981
915,301
856,222
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
SME legal entities
€000
€000
€000
€000
€000
€000
Rating 1
306,438
17,151
323,589
275,684
34,643
310,327
Rating 2
104,628
1,473
106,101
54,993
56,903
111,896
Rating 3
18,280
1,916
20,196
11,146
13,215
24,361
Rating 4
3,529
1,196
4,725
2,698
1,811
4,509
Rating 5
558
100
658
530
322
852
Rating 6
128
152
280
173
152
325
Rating 7
13
9
22
7
192
199
Unrated
-
5,242
5,242
-
8,577
8,577
New customers
11,375
692
12,067
16,658
915
17,573
444,949
27,931
472,880
361,889
116,730
478,619
Total Stage 3
5,125
5,742
478,005
484,361
406
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.6
Contingent liabilities and commitments (continued)
44.6.2
Commitments (continued)
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Retail individuals
€000
€000
€000
€000
€000
€000
Rating 1
143,334
8,115
151,449
145,977
11,477
157,454
Rating 2
83,886
4,617
88,503
85,690
5,503
91,193
Rating 3
136,728
6,649
143,377
135,923
10,084
146,007
Rating 4
88,827
3,502
92,329
90,081
6,541
96,622
Rating 5
27,224
1,519
28,743
22,724
5,899
28,623
Rating 6
4,704
1,778
6,482
5,317
2,645
7,962
Rating 7
931
1,213
2,144
1,142
1,459
2,601
Unrated
30
7,038
7,068
-
6,832
6,832
New customers
106,385
895
107,280
75,947
1,144
77,091
592,049
35,326
627,375
562,801
51,584
614,385
Total Stage 3
3,785
3,765
631,160
618,150
44.7
Collateral and other credit enhancements obtained
The carrying value of assets obtained during 2024 and 2023 by taking possession of collateral held as
security, was as follows:
2024
2023
€000
€000
Residential property
7,968
5,980
Commercial and other property
11,388
14,560
Land (fields and plots)
6,477
-
25,833
20,540
The total carrying value of stock of property and investment properties obtained over the years by taking
possession of collateral held as security for customer loans and advances and held by the Group as at 31
December 2024, including any expenses capitalised during the year, amounted to €659,976 thousand
(2023: €861,675 thousand).
The disposals of repossessed assets during 2024 amounted to €174,840 thousand (2023: €173,587
thousand).
44.8
Currency concentration of loans and advances to customers
The following table presents the currency concentration of the Group's loans and advances to customers at
amortised cost.
2024
2023
Gross loans at amortised cost
€000
€000
Euro
9,475,479
9,336,828
US Dollar
573,140
409,555
British Pound
72,361
87,610
Russian Rouble
-
324
Swiss Franc
8,935
27,358
Other currencies
490
839
10,130,405
9,862,514
407
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.9
Modified loans and advances to customers
Modified loans and advances to customers are those loans where the original contractual terms of the loans
i.
have been modified due to financial difficulties of the borrower and are considered as
forborne/restructured (as explained in Note 44.10), and
ii.
have been modified due to commercial renegotiations and such loans are considered as non-
forborne.
Customers classified as Stage 2 and Stage 3 as at 31 December 2023, that had facilities modified (in a prior
or the current period), and are classified as Stage 1 as at 31 December 2024 amount to €157,066 thousand
(2023: €137,357 thousand) and their corresponding ECL amount to €251 thousand (2023: €547 thousand).
Previously classified Stage 2 and Stage 3 customers (with a carrying amount as at 31 December 2023 of
€95,331 thousand (2022: €30,012 thousand)) that had facilities modified during the year and are classified
as Stage 1 at 31 December 2024 amount to €88,935 thousand (2023: €19,113 thousand) and their
corresponding ECL amount to €118 thousand (2023: €36 thousand). Their related modification loss
amounted to €277 thousand (2023: €55 thousand).
Stage 2 and Stage 3 loans that were forborne during the year amounted to €148,112 thousand (2023:
€44,827 thousand). Their related modification loss amounted to €5,941 thousand (2023: €3,036 thousand).
Facilities that reverted to Stage 2 and Stage 3 having once cured during the year amount to €44,655
thousand (2023: €51,720 thousand) and their corresponding ECL amount to €3,243 thousand (2023:
€1,984 thousand) as at 31 December 2024.
44.10
Forbearance/Restructuring
Forborne/restructured loans and advances are those loans and advances that have been modified because
the borrower is considered unable to meet the terms and conditions of the contract due to financial
difficulties. Taking into consideration these difficulties, the Group decides to modify the terms and
conditions of the contract to provide the borrower with the ability to service the debt or refinance the
contract, either partially or fully. They include the facilities for which the Group has modified the repayment
programme (e.g. provision of a grace period, suspension of the obligation to repay one or more
instalments, reduction in the instalment amount and/or elimination of overdue instalments relating to
capital or interest).
The practice of extending forbearance/restructuring measures constitutes a grant of a concession whether
temporarily or permanently to that borrower. A concession may involve restructuring the contractual terms
of a debt or payment in some form other than cash, such as an arrangement whereby the borrower
transfers collateral pledged to the Group.
For an account to qualify for forbearance/restructuring it must meet certain criteria including the viability of
the customer. The extent to which the Group reschedules accounts that are eligible under its existing
policies may vary depending on its view of the prevailing economic conditions and other factors which may
change from year to year. In addition, exceptions to policies and practices may be allowed in specific
situations in response to legal or regulatory requirements.
Forbearance/restructuring activities may include measures that restructure the borrower's business
(operational restructuring) and/or measures that restructure the borrower's financing (financial
restructuring).
Forbearance/restructuring options may be of a short or long-term nature or a combination thereof. The
Group has developed and deployed sustainable restructuring solutions, which are suitable for the borrower
and acceptable for the Group.
Short-term restructuring solutions are defined as restructured repayment solutions of duration of less than
two years. In the case of loans for the construction of commercial property and project finance, a short-
term solution may not exceed one year.
Short-term restructuring solutions can include the following:
i.
Suspension of capital or capital and interest: granting to the borrower a grace period in the payment of
capital (i.e. during this period only interest is paid) or capital and interest, for a specific period of time.
408
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.10
Forbearance/Restructuring (continued)
ii.
Reduced payments: decrease of the amount of repayment instalments over a defined short-term period
in order to accommodate the borrower’s new cash flow position.
iii. Arrears and/or interest capitalisation: capitalisation of the arrears and of any unpaid interest to the
outstanding principal balance for repayment under a rescheduled program.
Long-term restructuring solutions can include the following:
i.
Interest rate reduction: permanent or temporary reduction of interest rate (fixed or variable) into a fair
and sustainable rate.
ii.
Extension of maturity: extension of the maturity of the loan which allows a reduction in instalment
amounts by spreading the repayments over a longer period.
iii. Sale of Assets: Part of the restructuring can be the agreement with the borrower for immediate or over
time sale of assets (mainly real estate) to reduce borrowing.
iv. Modification of existing terms of previous decisions: In the context of the new sustainable restructuring
solution, any terms of previous decisions that are assessed not feasible to be met are revisited.
v.
Consolidation/refinancing of existing facilities that: In cases where the borrower maintains several
separate loans with different collaterals, these can be consolidated and a new repayment schedule can
be set and the new loan can be secured with all existing collaterals.
vi. Hard Core Current Account Limit: In such cases a loan with a longer repayment may be offered to
replace/reduce the current account limit.
vii. Split and freeze: the customer’s debt is split into sustainable and unsustainable parts. The sustainable
part is restructured to a sustainable repayment program. The unsustainable part is ‘frozen’ for the
restructured duration of the sustainable part. At the maturity of the restructuring, the frozen part is
either forgiven pro rata (based on the actual repayment of the sustainable part) or restructured.
viii. Rescheduling of payments: the existing contractual repayment schedule is adjusted to a new
sustainable repayment program based on a realistic, current and forecasted assessment of the cash flow
generation of the borrower.
ix. Liquidation Collateral: An agreement between the Company and a borrower for the voluntary sale of
mortgaged assets, for partial or full repayment of the debt.
x.
Currency Conversion: This solution is provided to match the credit facility currency and the borrower's
income currency.
xi. Additional Financing: This solution can be granted, simultaneously with the restructuring of the existing
credit facilities of the borrower, to cover any financing gap.
xii. Partial or total write off: This solution corresponds to the Group forfeiting the right to legally recover
part or the whole of the amount of debt outstanding by the borrower.
xiii. Debt/equity swaps: debt restructuring that allows partial or full repayment of the debt in exchange of
obtaining an equivalent amount of equity in the company by the Group, with the remaining debt right
sized to the cash flows of the borrower to allow repayment. This solution is used only in exceptional
cases and only where all other efforts for restructuring are exhausted and after ensuring compliance
with the banking law.
xiv. Debt/asset swaps: agreement between the Group and the borrower to voluntarily transfer the
mortgaged asset or other immovable property to the Group, to partially or fully repay the debt. Any
residual debt may be restructured with an appropriate repayment schedule in line with the borrower’s
reassessed repayment ability.
The loans forborne continue to be classified as Stage 3 in the case they are performing forborne exposures
under probation for which additional forbearance measures are extended, or performing forborne
exposures, previously classified as NPEs that present more than 30 days past due within the probation
period.
Forbearance modifications of loans and advances that do not affect payment arrangements, such as
restructuring of collateral or security arrangements, are not regarded as sufficient to categorise the facility
as credit impaired, as by themselves do not necessarily indicate credit distress affecting payment ability
such that would require the facility to be classified as NPE.
The forbearance characteristic contributes in two specific ways for the calculation of lifetime ECL for each
individual facility. Specifically, it is taken into consideration in the scorecard development, where, if this
characteristic is identified as statistically significant, it affects negatively the rating of each facility. It also
contributes in the construction through the cycle probability of default and cure curves, where, when
feasible, a specific curve for the forborne products is calculated and assigned accordingly.
409
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.10
Forbearance/Restructuring (continued)
The below table presents the movement of the Group’s forborne loans and advances to customers
measured at amortised cost.
2024
2023
€000
€000
1 January
455,740
1,106,298
New loans and advances forborne in the year
148,348
47,366
Loans no longer classified as forborne and repayments
(249,742)
(705,103)
Write off of forborne loans and advances
(11,983)
(41,996)
Interest accrued on forborne loans and advances
24,427
49,102
Foreign exchange adjustments
49
73
31 December
366,839
455,740
The forborne loans classification is discontinued when all EBA criteria for the discontinuation of the
classification as forborne exposure are met. The criteria are set out in the EBA Final draft Implementing
Technical Standards (ITS) on supervisory reporting and non-performing exposures.
The below tables present the Group’s forborne loans and advances to customers by staging, economic
activity and business line classification, as well as the ECL allowance and tangible collateral held for such
forborne loans.
2024
2023
€000
€000
Stage 1
-
-
Stage 2
253,862
261,091
Stage 3
86,639
173,728
POCI
26,338
20,921
366,839
455,740
Fair value of collateral
2024
2023
€000
€000
Stage 1
-
-
Stage 2
234,794
241,983
Stage 3
75,515
154,051
POCI
24,965
19,734
335,274
415,768
The fair value of collateral presented above has been computed to the extent that the collateral mitigates
credit risk.
410
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.10
Forbearance/Restructuring (continued)
Credit risk concentration
2024
2023
By economic activity
€000
€000
Trade
10,155
15,578
Manufacturing
3,325
10,195
Hotels and catering
6,058
60,129
Construction
132,011
82,849
Real estate
26,614
61,550
Private individuals
116,063
187,537
Professional and other services
36,621
35,197
Other sectors
35,992
2,705
366,839
455,740
2024
2023
By business line
€000
€000
Corporate
224,271
207,534
IBU & International corporate
- IBU
944
2,386
- International corporate
653
768
SMEs
19,046
20,823
Retail
- housing
47,506
67,087
- consumer, credit cards and other
8,411
17,265
Restructuring
- corporate
12,555
33,098
- SMEs
7,726
11,749
- retail housing
18,818
34,538
- retail other
4,764
7,399
Recoveries
- corporate
966
2,480
- SMEs
2,511
6,157
- retail housing
13,960
34,496
- retail other
4,708
9,960
366,839
455,740
411
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.10
Forbearance/Restructuring (continued)
2024
Stage 1
Stage 2
Stage 3
POCI
Total
By business line
€000
€000
€000
€000
€000
Corporate
-
189,064
25,745
9,462
224,271
IBU & International corporate
- IBU
-
943
1
-
944
- International corporate
-
653
-
-
653
SMEs
-
13,519
5,527
-
19,046
Retail
- housing
-
34,818
10,508
2,180
47,506
- consumer, credit cards and
other
-
5,942
2,413
56
8,411
Restructuring
- corporate
-
1,431
1,006
10,118
12,555
- SMEs
-
2,507
4,350
869
7,726
- retail housing
-
4,444
13,458
916
18,818
- retail other
-
541
3,825
398
4,764
Recoveries
- corporate
-
-
934
32
966
- SMEs
-
-
2,280
231
2,511
- retail housing
-
-
12,356
1,604
13,960
- retail other
-
-
4,236
472
4,708
-
253,862
86,639
26,338
366,839
2023
Stage 1
Stage 2
Stage 3
POCI
Total
By business line
€000
€000
€000
€000
€000
Corporate
-
136,097
71,330
107
207,534
IBU & International corporate
- IBU
-
2,091
295
-
2,386
- International corporate
-
768
-
-
768
SMEs
-
19,414
1,409
-
20,823
Retail
- housing
-
51,588
13,479
2,020
67,087
- consumer, credit cards and
other
-
13,047
4,089
129
17,265
Restructuring
- corporate
-
21,254
1,807
10,037
33,098
- SMEs
-
3,686
6,760
1,303
11,749
- retail housing
-
11,341
21,633
1,564
34,538
- retail other
-
1,805
5,249
345
7,399
Recoveries
- corporate
-
-
2,250
230
2,480
- SMEs
-
-
5,668
489
6,157
- retail housing
-
-
30,643
3,853
34,496
- retail other
-
-
9,116
844
9,960
-
261,091
173,728
20,921
455,740
412
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.10
Forbearance/Restructuring (continued)
ECL allowance
2024
2023
€000
€000
Stage 1
-
-
Stage 2
9,525
8,643
Stage 3
36,503
47,840
POCI
12,462
11,510
58,490
67,993
44.11
Credit quality of Group assets exposed to credit risk other than loans and advances to
customers - analysis by rating agency designation
Balances with central banks and loans and advances to banks
Balances with central banks and loans and advances to banks are analysed by Moody’s Investors Service
rating as follows:
2024
2023
€000
€000
Aaa - Aa3
468,981
227,075
A1 - A3
7,743,265
23,647
Baa1 - Baa3
17,983
9,550,286
Ba1 - Ba3
3,642
4,545
B1 - B3
-
254
Caa - C
-
2,148
Unrated
23,910
64,276
Other receivables from banks
68,528
34,532
8,326,309
9,906,763
All balances with central banks and loans and advances to banks are classified as Stage 1 (Note 19).
Reverse repurchase agreements
Reverse repurchase agreements counterparties are analysed by Moody's Investors Service rating as follows:
2024
2023
€000
€000
A1 - A3
306,053
-
Unrated
704,117
403,199
1,010,170
403,199
The average rating of the collateral received was Aa2 as at 31 December 2024 (2023: Aa1).
In accordance with the terms of the reverse repurchase agreements of a carrying value of €1,010 million
(2023: €403 million) that are held by the Group as at 31 December 2024, the Group accepts collateral that
it is permitted to sell. At 31 December 2024, the total fair value of the collateral received was €1,007
million (2023: €426 million), none of which had been resold or repledged. As at 31 December 2024, cash
collateral of €7 million has been placed with counterparties and €13 million has been received from the
counterparties (2023: cash collateral of €30 million was placed with the counterparties). The effective yield
of the reverse repurchase agreements is approximately 3% p.a. (2023: 3% p.a.) and the average duration
is estimated at approximately 2.1 years (2023: 2.8 years).
413
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
44.
Risk management - Credit risk (continued)
44.11
Credit quality of Group assets exposed to credit risk other than loans and advances to
customers - analysis by rating agency designation (continued)
Debt securities and other non-equity securities
Investments in debt securities and other non-equity securities are analysed by Moody's Investors Service
rating as follows:
2024
2023
Moody's rating
€000
€000
Aaa - Aa3
2,459,365
1,969,693
A1 - A3
1,506,802
442,968
Baa1 - Baa3
254,698
1,049,328
Ba1 - Ba3
2,014
89,404
4,222,879
3,551,393
The tables below present the Moody's Investors Service rating of the Group's investments in debt securities:
FVOCI
Amortised cost
Stage 1
Stage 1
2024
€000
€000
Aaa - Aa3
75,598
2,373,065
A1 - A3
319,855
1,186,947
Baa1 - Baa3
11,087
243,611
Ba1 - Ba3
-
2,014
406,540
3,805,637
FVOCI
Amortised cost
Stage 1
Stage 1
2023
€000
€000
Aaa - Aa3
62,469
1,903,613
A1 - A3
34,234
408,734
Baa1 - Baa3
315,640
733,688
Ba1 - Ba3
18,725
70,679
431,068
3,116,714
The ratings are provided for the ISIN or if not available for the specific issuance, the rating of the
counterparty is used.
45.
Risk management - Market risk
Market risk is the risk of loss from adverse changes in market prices namely from changes in interest rates,
credit spreads, foreign currency exchange rates, property and security prices. The Market and Liquidity Risk
department is responsible for monitoring the risk on financial instruments resulting from such changes with
the objective to minimise the impact on earnings and capital. The department also monitors property price
risk, liquidity risk and credit risk from counterparties and countries. It is also responsible for monitoring
compliance with the various market risk policies and procedures.
414
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
45.
Risk management - Market risk (continued)
Interest rate risk
Interest rate risk refers to the current or prospective risk to Group's capital and earnings arising from
adverse movements in interest rates that affect the Group's banking book positions.
Interest rate fluctuations affect the economic value of the Group’s assets, liabilities and off-balance sheet
items, through corresponding changes in the cash flow amounts and discount rates and therefore their
present value. Changes in interest rates also affect the earnings by increasing or decreasing the net interest
income of other interest rate-sensitive items. As such, interest rate risk is measured primarily by reference
to the impact on net interest income and impact on economic value.
The Group’s balance sheet composition is characterized by floating rate assets and fixed or non-rate
sensitive liabilities, resulting in an increased volatility on net interest income, with a negative impact when
interest rates decrease and a positive impact when interest rates increase. In addition, this balance sheet
composition results in relatively low volatility of the Economic Value. This is due to the floating rate nature
of assets which are longer term in terms of maturity such as loans and advances and the short term nature
of the sizable central bank balances. On the liability side, term deposits, although fixed rate in nature, have
short contractual maturities (mainly up to one year). In addition, the economic value impact from fixed rate
assets is mitigated by the impact of core NMDs which behave as fixed rate liabilities.
Interest rate risk is managed through internal and regulatory limits on the change in net interest income
and economic value of equity under various adverse interest rate shock scenarios. Internal limits on net
interest income are set as a percentage of the annualised net interest income while regulatory limits on net
interest income and economic value of equity are set as a percentage of the Group Tier 1 regulatory capital.
Treasury is responsible for the management of the interest rate risk arising from the banking book and
asset and liability positions, effected through the hedging strategy. This involves the set of techniques and
the financial instruments used to manage the risk of adverse changes in interest rates, affecting the net
interest income and the economic value of the Group and aims to ensure financial stability and robust risk
management. The Group uses derivatives and currently applies fair value hedge accounting. The Group
applies macro fair value hedging to NMDs and micro fair value hedging to fixed rate debt securities
measured at FVOCI, debt securities in issue and subordinated liabilities. For fair value hedges the Group
uses interest rate swaps to manage the fair value movements of fixed rate financial instruments due to
changes in the benchmark rate.
The Group assesses and measures hedge effectiveness of a hedging relationship based on the change in the
fair value of the derivative instrument relative to the change in the fair value of the hedged item
attributable to the hedged risk.
The Market and Liquidity Risk department is responsible to measure, monitor and control the interest rate
risk on the banking book (IRRBB) based on the established Risk Appetit Framework (RAF) of the Group. One
of the risk metrics that Market and Liquidity Risk department uses for monitoring and controlling the IRRBB
is the Net Interest Income Sensitivity, which measures changes to interest income under varying interest
rate scenarios over a one-year horizon and assuming a constant balance sheet over this period. Its main
purpose is to measure the vulnerability of the profitability to changing interest rate conditions. In addition,
another risk metric employed by the Group for this purpose is the Economic Value of Equity Sensitivity. This
represents the change in the net present value of all cash flows in the balance sheet under a set of interest
rate stress scenarios and is calculated on the entire balance sheet under a run-off assumption, i.e., no
replenishment of matured transactions.
The Group does not maintain a trading book.
Sensitivity analysis
The table below sets out the impact on the Group’s net interest income, over a one-year period, from
reasonably possible changes in the interest rates of the Euro and the US Dollar, being the main currencies,
using the assumptions of the prevailing market risk policy as at 31 December 2024 and 2023 respectively.
415
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
45.
Risk management - Market risk (continued)
Impact on Net Interest Income
€000
Currency
Interest Rate Scenario
2024
(+135 bps/-100
bps for Euro and
+160 bps/-100 bps
for US Dollar)
2023
(+140 bps/-120 bps
for Euro and +170
bps/-110 bps for US
Dollar)
All
Parallel up
102,061
147,348
All
Parallel down
(84,200)
(135,973)
All
Steepening
(51,175)
(81,265)
All
Flattening
79,770
112,104
All
Short up
106,190
150,679
All
Short down
(88,788)
(140,778)
Euro
Parallel up
98,728
142,318
Euro
Parallel down
(82,267)
(132,297)
Euro
Steepening
(51,731)
(79,595)
Euro
Flattening
79,588
108,998
Euro
Short up
104,647
145,795
Euro
Short down
(88,085)
(137,046)
US Dollar
Parallel up
3,333
5,030
US Dollar
Parallel down
(1,932)
(3,676)
US Dollar
Steepening
556
(1,670)
US Dollar
Flattening
182
3,106
US Dollar
Short up
1,543
4,884
US Dollar
Short down
(703)
(3,732)
The above sensitivities incorporate assumptions on the pass-through rate of time deposits of 40% for the
upside scenario and 50% for the downside scenario for Euro denominated deposits for the year ended 31
December 2024 (2023: 40% for the upside scenario and 50% for the downside scenario for Euro
denominated deposits). The above sensitivities are computed under the assumption of a constant balance
sheet and that all market rates move upwards or downwards in parallel.
416
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
45.
Risk management - Market risk (continued)
The table below sets out the impact on the Group’s equity, from reasonably possible changes in the interest
rates under various interest rate scenarios for the Euro and the US Dollar in line with the EBA guidelines.
Impact on Equity
€000
Currency
Interest Rate Scenario
2024
(+135 bps/-100
bps for Euro and
+160 bps/-100 bps
for US Dollar)
2023
(+140 bps/-120 bps
for Euro and +170
bps/-110 bps for US
Dollar)
All
Parallel up
(16,380)
62,584
All
Parallel down
613
(89,615)
All
Steepening
41,074
(511)
All
Flattening
(113,840)
(11,035)
All
Short up
(112,972)
14,117
All
Short down
40,990
(40,727)
Euro
Parallel up
(15,355)
114,640
Euro
Parallel down
953
(60,469)
Euro
Steepening
78,258
6,669
Euro
Flattening
(107,390)
20,775
Euro
Short up
(106,983)
48,756
Euro
Short down
78,078
(27,450)
US Dollar
Parallel up
(1,025)
10,529
US Dollar
Parallel down
273
(29,146)
US Dollar
Steepening
3,890
(3,846)
US Dollar
Flattening
(6,450)
(21,422)
US Dollar
Short up
(5,990)
(10,261)
US Dollar
Short down
3,903
(13,277)
The aggregation of the impact on equity was performed as per the EBA guidelines by adding the negative
and 50% of the positive impact of each scenario. The increased IRRBB hedging that took place during the
year ended 31 December 2024 and the different magnitude of the shocks impact the sensitivity scenarios
year-on-year.
In addition to the above fluctuations in net interest income, interest rate changes can result in fluctuations
in the fair value of investments at FVPL (including investments held for trading) and in the fair value of
derivative financial instruments impacting the profit and loss of the Group.
The equity of the Group is also affected by changes in market interest rates. The impact on the Group’s
equity arises from changes in the fair value of mainly fixed rate debt securities classified at FVOCI.
The sensitivity analysis is based on the assumption of a parallel shift of the yield curve. The table below sets
out the impact on the Group’s profit/loss before tax and equity as a result of reasonably possible changes in
the interest rates of the major currencies.
Parallel change in interest rates
Impact on profit/loss
before tax
Impact on equity
2024
€000
€000
+1.6% for US Dollar
+1.35% for Euro
+3% for British Pound
(934)
(1,982)
-1% for US Dollar
-1% for Euro
-3% for British Pound
692
1,468
417
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
45.
Risk management - Market risk (continued)
Impact on profit/loss
before tax
Impact on equity
Parallel change in interest rates
€000
€000
2023
+1.7% for US Dollar
+1.4% for Euro
+3% for British Pound
(2,468)
(773)
-1.1% for US Dollar
-1.2% for Euro
-3% for British Pound
2,115
663
The hedging relationships have been taken into account in the Net Interest Income (NII) and Economic
Value of Equity (EVE) Sensitivity tables.
Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in foreign currency exchange rates.
In order to manage currency risk, the ALCO has approved open position limits for the total foreign currency
positions. The foreign currency position limits are lower than those prescribed by the regulator. These limits
are managed by Treasury Division and monitored daily by Market and Liquidity Risk department.
The Group does not maintain a currency trading book.
The table below sets out the Group's currency risk resulting from the Group's open FX position. The analysis
assumes reasonably possible changes in the exchange rates of major currencies against the Euro, based
mainly on historical price fluctuations. The impact on profit/loss after tax includes the change in net interest
income that arises from the change of currency rate.
The impact on equity arises from the hedging instruments that are used to hedge part of the net assets of
the subsidiaries whose functional currency is not the Euro. The net assets of foreign operations are also
revalued and affect equity (by an approximately equal and opposite impact), but their impact is not taken
into account in the below sensitivity analysis as the below relates only to financial instruments which have a
direct impact either on profit/loss after tax or on equity.
Change in foreign
exchange rate
Impact on profit/loss
after tax
Impact on equity
2024
%
€000
€000
US Dollar
+5
1,566
-
Russian Rouble
+60
1,231
-
Romanian Lei
+5
4
(49)
Swiss Franc
+5
91
-
British Pound
+5
235
-
Japanese Yen
+5
1
-
Other currencies
+5
54
-
US Dollar
-5
(1,417)
-
Russian Rouble
-30
(189)
-
Romanian Lei
-5
(4)
44
Swiss Franc
-5
(82)
-
British Pound
-5
(212)
-
Japanese Yen
-5
(1)
-
Other currencies
-5
(49)
-
418
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
45.
Risk management - Market risk (continued)
Change in foreign
exchange rate
Impact on profit/loss
after tax
Impact on equity
2023
%
€000
€000
US Dollar
+5
1,622
-
Russian Rouble
+60
1,364
-
Romanian Lei
+5
3
(63)
Swiss Franc
+5
92
-
British Pound
+5
307
-
Japanese Yen
+5
2
-
Other currencies
+5
48
-
Change in foreign
exchange rate
Impact on profit/loss
after tax
Impact on equity
US Dollar
-5
(1,467)
-
Russian Rouble
-30
(210)
-
Romanian Lei
-5
(3)
57
Swiss Franc
-5
(84)
-
British Pound
-5
(278)
-
Japanese Yen
-5
(2)
-
Other currencies
-5
(53)
-
Price risk
Equity securities price risk
The risk of loss from changes in the price of equity securities arises when there is an unfavourable change in
the prices of equity securities held by the Group as investments.
Investments in equities are outside the Group’s risk appetite, but may be acquired in the context of
delinquent loan workouts. The Group monitors the current portfolio mostly acquired by the Group as part of
the acquisition of certain operations of Laiki Bank, or through delinquent loan workouts, with the objective
to gradually liquidate all positions for which there is a market. Equity securities are disposed of by the
Group as soon as practicable.
Changes in the prices of equity securities that are classified as investments at FVPL affect the results of the
Group, whereas changes in the value of equity securities classified as FVOCI affect directly the equity of the
Group.
The table below shows the impact on the profit/loss before tax and on equity of the Group from a change in
the price of the equity securities held, as a result of reasonably possible changes in the relevant stock
exchange indices.
Change in index
Impact on profit/loss
before tax
Impact on equity
2024
%
€000
€000
Cyprus Stock Exchange
+40
-
575
Athens Exchange
+50
419
-
New York Exchange
+40
-
-
Other stock exchanges and
unlisted
+40
-
1,343
Non-listed (Real Estate)
+10
-
693
Cyprus Stock Exchange
-40
-
(575)
Athens Exchange
-50
(419)
-
New York Exchange
-10
-
-
Other stock exchanges and
unlisted
-40
-
(1,343)
Non-listed (Real Estate)
-10
-
(693)
419
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
45.
Risk management - Market risk (continued)
Change in index
Impact on profit/loss
before tax
Impact on equity
2023
%
€000
€000
Cyprus Stock Exchange
+40
1
900
Athens Exchange
+50
419
-
New York Exchange
+45
-
-
Other stock exchanges and
unlisted
+40
26
1,270
Non-listed (Real Estate)
+25
-
1,732
Cyprus Stock Exchange
-40
(1)
(900)
Athens Exchange
-50
(419)
-
New York Exchange
-10
-
-
Other stock exchanges and
unlisted
-40
(26)
(1,270)
Non-listed (Real Estate)
-10
-
(693)
Debt securities price risk
Debt securities price risk is the risk of loss as a result of adverse changes in the prices of debt securities
held by the Group. Debt security prices change as the credit risk of the issuer changes and/or as the market
interest rates change mainly for fixed rate securities. The Group invests a significant part of its liquid assets
in highly rated debt securities. The average Moody’s Investors Service rating of the debt securities portfolio
of the Group as at 31 December 2024 was Aa2 (2023: A1). Further information on ratings of debt securities
is disclosed in Note 44.11.
Changes in the prices of debt securities classified as investments at FVPL, affect the profit or loss of the
Group, whereas changes in the value of debt securities classified as FVOCI affect directly the equity of the
Group.
The table below indicates how the profit/loss before tax and equity of the Group will be affected from
reasonably possible changes in the price of the debt securities held, based on Value at Risk.
Impact on profit/loss
before tax
Impact on equity
2024
€000
€000
Up scenario:
Aa3 and above rated bonds
1,250
2,168
A3 and above rated bonds
281
655
Baa1 and below rated bonds
6
437
Cyprus Government bonds
-
12,273
Down scenario:
Aa3 and above rated bonds
(1,250)
(2,168)
A3 and above rated bonds
(281)
(655)
Baa1 and below rated bonds
(6)
(437)
Cyprus Government bonds
-
(12,273)
420
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
45.
Risk management - Market risk (continued)
Impact on profit/loss
before tax
Impact on equity
2023
€000
€000
Up scenario:
Aa3 and above rated bonds
2,614
4,068
A3 and above rated bonds
151
1,938
Baa1 and below rated bonds
53
430
Cyprus Government bonds
-
27,618
Down scenario:
Aa3 and above rated bonds
(2,614)
(4,068)
A3 and above rated bonds
(151)
(1,938)
Baa1 and below rated bonds
(53)
(430)
Cyprus Government bonds
-
(27,618)
Other non-equity instruments price risk
The table below shows the impact on the profit/loss before tax and equity of the Group from a change in the
price of other non-equity instruments held, as a result of reasonably possible changes in the price index of
the relevant instruments.
Change in index
Impact on profit/loss
before tax
Impact on equity
2024
%
€000
€000
Other non-equity instruments
+40
4,281
-
Other non-equity instruments
-10
(1,070)
-
2023
Other non-equity instruments
+45
1,625
-
Other non-equity instruments
-10
(361)
-
Property price risk
A significant part of the Group’s loan portfolio is secured by real estate, the majority of which is located in
Cyprus. Furthermore, the Group holds a substantial number of properties mainly arising from loan
restructuring activities; the enforcement of loan collateral and debt for asset swaps. These properties are
held by the Group primarily as stock of property and some are held as investment properties.
Property risk is the risk that the Group’s business and financial position will be affected by adverse changes
in the demand for, and prices of, real estate, or by regulatory capital requirements relating to increased
charges with respect to the stock of property held.
46.
Risk management - Liquidity and funding risk
Liquidity Risk
Liquidity risk is the risk that the Group is unable to fully or promptly meet current and future payment
obligations as and when they fall due. This risk includes the possibility that the Group may have to raise
funding at high cost or sell assets at a discount to fully and promptly satisfy its obligations.
It reflects the potential mismatch between incoming and outgoing payments, taking into account
unexpected delays in repayment and unexpectedly high payment outflows. Liquidity risk involves both the
risk of unexpected increases in the cost of funding of the portfolio of assets and the risk of being unable to
liquidate a position in a timely manner on reasonable terms.
In order to limit this risk, management has in place an established Liquidity Risk Policy of managing assets,
taking liquidity into consideration and monitoring cash flows and liquidity on a regular basis. The Group has
developed internal control processes and contingency plans for managing liquidity risk.
421
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
46.
Risk management - Liquidity and funding risk (continued)
Management and structure
The Board of Directors sets the Group's Liquidity Risk Appetite which defines the level of risk at which the
Group should operate.
The Board of Directors, through its Risk Committee, approves the Liquidity Risk Policy and reviews at
frequent intervals the liquidity position of the Group.
The ALCO is responsible for setting the policies for the effective management and monitoring of liquidity risk
across the Group.
The Treasury Division is responsible for liquidity management at Group level, ensuring compliance with
internal policies and regulatory liquidity requirements and providing direction as to the actions to be taken
regarding liquidity needs. The Treasury Division assesses on a regular basis the adequacy of the liquid
assets and takes the necessary actions to ensure adequate liquidity position.
Liquidity is also monitored by Market and Liquidity Risk department, to ensure compliance with both internal
policies and limits, and with the limits set by the regulatory authorities. Market and Liquidity Risk
department reports the liquidity position to ALCO at least monthly. It also provides the results of various
stress tests to ALCO and the Board Risk Committee at least quarterly.
Liquidity is monitored and managed on an ongoing basis through:
(i)
Risk appetite: establishes the Group's Risk Appetite Statement together with the appropriate limits
for the management of all risks including liquidity risk.
(ii)
Liquidity Risk Policy: sets the principles, the roles and responsibilities for managing liquidity risk as
well as the liquidity and funding risk management framework, stress testing and the reporting on
liquidity and funding.
(iii)
Liquidity limits: a number of internal and regulatory limits are monitored on a regular basis. Where
applicable, a traffic light system (RAG) is used for ratios, in order to raise flags and take action
when the ratios deteriorate.
(iv)
Early Warning Indicators: monitoring of a range of indicators for early signs of liquidity risk in the
market or specific to the Group. These are designed to immediately identify the emergence of
increased liquidity risk so as to maximise the time available to execute appropriate mitigating
actions.
(v)
Liquidity Contingency Plan: maintenance of a Liquidity Contingency Plan (LCP) which is designed to
provide a framework where a liquidity stress could be effectively identified and managed. The LCP
provides a communication plan and includes management actions to respond to liquidity stresses.
(vi)
Recovery Plan: the Group has developed a Recovery Plan (RP), the key objectives of which are,
among others, to set key Recovery and Early Warning Indicators and to set in advance a range of
recovery options to enable the Group to be adequately prepared to respond to stressed conditions
and restore the Group’s liquidity position.
Monitoring process
Daily
The daily monitoring of the stock of highly liquid assets is important to safeguard and ensure the
uninterrupted operations of the Group’s activities. Market and Liquidity Risk department prepares a daily
report analysing the internal liquidity buffer and comparing it to the previous day’s buffer. Results are made
available to members of the Risk and Treasury Divisions. In addition, Treasury monitors daily and intraday
the customer inflows and outflows in the main currencies used by the Group.
The liquidity buffer is made up of: Banknotes, CBC balances (excluding the Minimum Reserve Requirements
(MRR)), unpledged cash and nostro current accounts, as well as money market placements up to the stress
horizon, available ECB credit line and market value net of haircut of unencumbered/available liquid bonds.
422
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
46.
Risk management - Liquidity and funding risk (continued)
The designing of the stress tests follows guidance and is based on the liquidity risk drivers which are
recognised internationally by both the Prudential Regulation Authority (PRA) and EBA. In addition, it takes
into account SREP recommendations, as well as the Annual Risk Identification Process of the Group. The
stress test assumptions are reviewed on an annual basis and approved by the Board of Directors through its
Risk Committee. Whenever it is considered appropriate to amend the assumptions during the year, approval
is requested from ALCO and the Board Risk Committee. The main items shocked in the different scenarios
are: deposit outflows, wholesale funding, loan repayments, off balance sheet commitments, marketable
securities, own issue covered bond, additional credit claims, interbank takings and cash collateral for
derivatives and repos.
Weekly
Market and Liquidity Risk department prepares a report indicating the level of liquid assets including Credit
Institutions Money-Market Placements as per LCR definitions.
Market and Liquidity Risk department also prepares the liquidity stress testing for bank specific, market
wide and combined scenarios on a weekly basis. The requirement is to have sufficient liquidity buffer to
enable the Company to survive a twelve-month stress period, including capacity to raise funding under all
scenarios.
Furthermore, a report is submitted to the regulator on a weekly basis. The report includes information on
deposits breakdown, cash flow information, survival period, LCR ratio, rollover of funding, funding gap
(through the Maturity Ladder analysis), concentration of funding and collateral details. It concludes on the
overall liquidity position of the Company and describes the measures already implemented and those which
will be implemented in the short-term to improve liquidity position if needed.
Monthly
Market and Liquidity Risk department prepares reports monitoring compliance with internal and regulatory
liquidity requirements and submits them to the ALCO, the Executive Committee and the Board Risk
Committee. It also calculates the surplus liquidity buffer following stress outflows. The fixed deposit renewal
rates, the percentage of International business unit deposits over total deposits and the percentage of
instant access deposits are also presented. The liquidity mismatch in the form of the Maturity Ladder report
(for both contractual and behavioural flows) is presented to ALCO and the resulting mismatch between
assets and liabilities is compared to previous month’s mismatch.
Market and Liquidity Risk department also reports the Liquidity Coverage Ratio (LCR) and Additional
Liquidity Monitoring Metrics (ALMM) to the CBC/ECB on a monthly basis.
Quarterly
The results of the stress testing scenarios are reported to ALCO and the Board Risk Committee quarterly as
part of the quarterly Internal Liquidity Adequacy Assessment Process (ILAAP) review. Market and Liquidity
Risk department also reports the Net Stable Funding Ratio (NSFR) to the CBC/ECB quarterly.
Annually
The Group prepares on an annual basis its ILAAP package. The ILAAP package provides a holistic view of the
Group’s liquidity adequacy under normal and stress conditions. Within ILAAP, the Group evaluates its
liquidity risk in the context of established policies and processes for the identification, measurement,
management and monitoring of liquidity risk as implemented by the Group.
The Market and Liquidity Risk department also prepares annually an ECB/SRB liquidity report, the 'Joint
liquidity template' that runs for five consecutive days. The report includes information on deposits
breakdown, cash flow information, survival period, LCR ratio, rollover of funding, funding gap (through the
Maturity Ladder analysis), concentration of funding and collateral details. It concludes on the overall
liquidity position of the Company and describes the measures implemented and to be implemented in the
short-term to improve liquidity position if needed.
As part of the Group’s procedures for monitoring and managing liquidity risk, there is a Group Liquidity
Contingency Plan (LCP) for handling liquidity difficulties. The LCP details the steps to be taken in the event
that liquidity problems arise, which escalate to a special meeting of the Crisis Management Committee for
LCP (CMC-LCP). The LCP sets out the members of this committee and a series of the possible actions that
can be taken. The LCP is reviewed and tested at least annually.
423
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
46.
Risk management - Liquidity and funding risk (continued)
Liquidity ratios
The Group LCR is calculated based on the Delegated Regulation (EU) 2015/61. It is designed to establish a
minimum level of high quality liquid assets sufficient to meet an acute stress lasting for 30 calendar days.
Τhe minimum regulatory requirement is 100%. The Group also calculates its NSFR as per Capital
Requirements Regulation II (CRR II), with the limit set at 100%. The NSFR is the ratio of available stable
funding to required stable funding. NSFR has been developed to promote a sustainable maturity structure of
assets and liabilities.
Funding risk
Funding risk is the risk that the Group does not have sufficiently stable sources of funding or access to
sources of funding may not always be available at a reasonable cost, and thus the Group may fail to meet
its obligations, including regulatory ones (e.g. MREL).
Main sources of funding
As at 31 December 2024, the Group’s main sources of funding were its deposit base and wholesale funding.
Wholesale funding is becoming an important source of funding, with the issuance of Tier 2 of a nominal
amount of €300 million, the issuances of senior preferred debt of an aggregate nominal amount of €950
million and the AT1 issuance for €220 million. As at 31 December 2024, the wholesale funding nominal
amount was €1,470 million (2023: €1,170 million) as further described in Notes 32 and 34.
With respect to funding from TLTRO III operations, this was fully repaid in the year ended 31 December
2024.
Funding to subsidiaries
The funding provided by the Company to its subsidiaries for liquidity purposes is repayable as per the terms
of the respective agreements.
The subsidiaries may proceed with dividend distributions in the form of cash to the Company, provided that
they are not in breach of their regulatory capital and liquidity requirements, where applicable.
Collateral requirements and other disclosures
Collateral requirements
The carrying values of the Group's encumbered assets as at 31 December 2024 and 2023 are summarised
below:
2024
2023
€000
€000
Cash and other liquid assets
55,434
72,800
Investments
39,958
260,011
Loans and advances
3,470,859
3,349,118
3,566,251
3,681,929
Cash is mainly used to cover collateral required for derivatives, trade finance transactions and guarantees
issued. It may also be used as part of the supplementary assets for the covered bond.
As at 31 December 2024 investments are used as supplementary assets for the covered bond. As at 31
December 2023 investments were mainly used as collateral for ECB funding or as supplementary assets for
the covered bond.
As at 31 December 2024, loans and advances indicated as encumbered are mainly pledged for any potential
use of the funding facilities of the ECB and for the covered bond. As at 31 December 2023, loans and
advances indicated as encumbered were mainly used as collateral for funding from the ECB and the covered
bond.
424
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
46.
Risk management - Liquidity and funding risk (continued)
Loans and advances to customers include mortgage loans of a nominal amount of €1,010 million as at 31
December 2024 (2023: €1,008 million) in Cyprus, pledged as collateral for the covered bond issued by the
Company in 2011 under its Covered Bond Programme. As at 31 December 2024, although there is no
outstanding funding from the ECB, housing loans of a nominal amount of €2,431 million (2023: €2,329
million) in Cyprus, remain in the collateral pool of the CBC part of the available credit line.
The Company maintains a Covered Bond Programme set up under the Cyprus Covered Bonds legislation and
the Covered Bonds Directive of the CBC. Under the Covered Bond Programme, the Company has in issue
covered bonds of €650 million secured by residential mortgages originated in Cyprus. The Covered Bonds
have a maturity date of 12 December 2026 and pay an interest rate of 3-month Euribor plus 1.25% on a
quarterly basis. On 9 August 2022, the Company proceeded with an amendment to the terms and
conditions of the covered bonds following the implementation of Directive (EU) 2019/2162 in Cyprus. The
covered bonds are listed on the Luxemburg Bourse. The covered bonds have a conditional Pass-Through
structure. All the bonds are held by the Company. The covered bonds are eligible collateral for the
Eurosystem credit operations and are placed as collateral for accessing funding from the ECB.
In addition to the encumbered assets presented above, as at 31 December 2024 cash collateral of €7
million has been placed with counterparties in relation to the reverse repurchase agreements (2023: €30
million) (Note 44.11).
Other disclosures
Deposits by banks include balances of €13,870 thousand as at 31 December 2024 (2023: €20,462
thousand) relating to borrowings from international financial and similar institutions for funding, aiming to
facilitate access to finance and improve funding conditions for small or medium sized enterprises, active in
Cyprus. The carrying value of the respective loans and advances granted to such enterprises serving this
agreement amounts to €27,341 thousand as at 31 December 2024 (2023: €40,049 thousand).
Analysis of financial assets and liabilities based on remaining contractual maturity
The analysis of the Group’s financial assets and liabilities based on the remaining contractual maturity at 31
December is based on undiscounted cash flows, analysed in time bands according to the number of days
remaining from 31 December to the contractual maturity date.
Financial assets
The analysis of financial assets does not include any interest receivable cash flows. Financial assets have a
much longer duration than financial liabilities and non-discounted interest receivable cash flows are higher
than non-discounted interest payable cash flows (based on remaining contractual maturity). As a result,
non-discounted cash inflows from interest receivable would have greatly exceeded non-discounted cash
outflows on interest payable, thus artificially improving liquidity.
Cash and balances with central banks are classified in the relevant time band based on the contractual
maturity, with the exception of obligatory balances with central banks and balances with central banks for
ancillary systems. Obligatory balances with central banks are assigned to different time bands
proportionally according to the allocation of customer deposits and deposits by banks. Balances with central
banks for ancillary systems are classified in the 'over five years' time band.
Current accounts, overdrafts and amounts in arrears are included within the first maturity time band which
reflects their contractual maturity. All other loans and advances to customers are analysed according to
their contractual repayment schedule.
Loans and advances to banks are analysed in the time bands according to the number of days remaining
from 31 December until their contractual maturity date. Amounts placed as collateral (primarily for
derivatives) are assigned to different time bands based on either their maturity, or proportionally according
to the maturities of derivatives (where the collateral had no fixed maturity).
Financial assets with no contractual maturity (such as equity securities) are included in the 'Over five years'
time band, unless classified as at FVPL, in which case they are included in the 'On demand and up to one
month' time band.
The investments are classified in the relevant time band according to their contractual maturity.
425
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
46.
Risk management - Liquidity and funding risk (continued)
Financial liabilities
All financial liabilities for the repayment of which notice is required, are included in the relevant time bands
as if notice had been given on 31 December, despite the fact that the Group expects that the majority of its
customers will not demand repayment of such liabilities on the earliest possible date. Fixed deposits are
classified in time bands based on their remaining contractual maturity. Although customers may demand
repayment of time deposits (subject to penalties depending on the type of the deposit account), the Group
has the discretion not to accept such early termination of deposits.
Debt securities in issue and subordinated liabilities are classified in the relevant time band according to the
remaining contractual maturity.
The amounts presented in the table below are not equal to the amounts presented on the balance sheet,
since the table below presents all cash flows (including interest to maturity) on an undiscounted basis.
Derivative financial instruments
The fair value of the derivatives is included in financial assets or in financial liabilities in the time band
corresponding to the remaining maturity of the derivative.
Gross settled derivatives are presented in a separate table and the corresponding cash flows are classified
accordingly in the time bands which relate to the number of days until their receipt or payment.
Contingent liabilities and Commitments
Amounts of contingent liabilities and commitments are included in the time band on the basis of their
remaining contractual maturities except for amounts of undrawn facilities and guarantees which are
included in the earliest date on which the Group can be required to pay. For guarantees to give rise to a
payment obligation to the Group, certain conditions must be met specific to the guarantee contract in order
for an outflow to arise. Given that guarantees could be called at any time by the counterparty, subject to
the occurrence of the relevant event, they are included in the 'On demand and up to one month' time band.
The analysis in the time bands of the amounts for the guarantees for the comparative period has been
changed from being included in the time bands on the basis of their remaining contractual maturities to the
‘On demand and up to one month’ time band to align to the above. The total amount presented for
guarantees for the comparative period is not impacted.
As a significant portion of the contingent liabilities and commitments expire without being utilised the total
of the nominal principal amounts is not indicative of future liquidity requirements.
426
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
46.
Risk management - Liquidity and funding risk (continued)
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
2024
€000
€000
€000
€000
€000
€000
Financial assets
Cash and balances with
central banks
7,512,616
14,685
23,759
2,061
47,605
7,600,726
Loans and advances to
banks
289,133
1,566
472,188
57,687
-
820,574
Reverse repurchase
agreements
-
-
-
1,010,170
-
1,010,170
Fair value of derivative
assets
7,907
332
503
75,197
11,334
95,273
Investments at FVPL
128,996
-
5,335
2,298
-
136,629
Investments not at FVPL
119,238
97,899
400,429
1,965,335
1,638,813
4,221,714
Loans and advances to
customers
1,059,779
214,529
744,076
3,078,961
5,019,823
10,117,168
Other assets
73,560
4,214
158,119
49,289
10,450
295,632
9,191,229
333,225
1,804,409
6,240,998
6,728,025
24,297,886
Financial liabilities
Deposits by banks
100,558
11,533
32,434
207,342
23,284
375,151
Customer deposits
16,448,840
1,550,780
2,535,228
15,440
-
20,550,288
Debt securities in issue
-
-
48,313
1,104,057
-
1,152,370
Subordinated liabilities
-
-
19,875
102,615
356,162
478,652
Fair value of derivative
liabilities
585
34
178
2,077
1,790
4,664
Lease liabilities
870
1,269
4,383
22,127
9,911
38,560
Other liabilities
272,725
543
188
33,972
86,230
393,658
16,823,578
1,564,159
2,640,599
1,487,630
477,377
22,993,343
Net financial
(liabilities)/assets
(7,632,349)
(1,230,934)
(836,190)
4,753,368
6,250,648
1,304,543
427
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
46.
Risk management - Liquidity and funding risk (continued)
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five
years
Over five years
Total
2023
€000
€000
€000
€000
€000
€000
Financial assets
Cash and balances with
central banks
9,571,884
14,810
23,159
3,995
654
9,614,502
Loans and advances to
banks
292,546
1,609
467
79,899
10,281
384,802
Reverse repurchase
agreements
-
-
-
403,199
-
403,199
Fair value of derivative
assets
220
99
540
35,263
14,933
51,055
Investments at FVPL
131,664
-
-
3,611
-
135,275
Investments not at FVPL
86,322
76,184
483,759
1,816,464
1,097,405
3,560,134
Loans and advances to
customers
1,101,513
188,261
723,535
2,798,404
5,011,414
9,823,127
Other assets
95,211
2,649
123,783
151,298
15,303
388,244
11,279,360
283,612
1,355,243
5,292,133
6,149,990
24,360,338
Financial liabilities
Deposits by banks
153,942
18,737
35,481
210,135
69,494
487,789
Funding from central banks
-
1,752,836
313,174
-
-
2,066,010
Customer deposits
15,177,652
1,538,792
2,424,392
214,190
-
19,355,026
Debt securities in issue
-
-
33,323
779,464
-
812,787
Subordinated liabilities
-
-
19,885
94,663
384,739
499,287
Fair value of derivative
liabilities
13,362
516
201
2,515
1,386
17,980
Lease liabilities
1,710
2,193
4,583
20,304
1,427
30,217
Other liabilities
181,959
17,640
35,090
32,836
61,882
329,407
15,528,625
3,330,714
2,866,129
1,354,107
518,928
23,598,503
Net financial
(liabilities)/assets
(4,249,265)
(3,047,102)
(1,510,886)
3,938,026
5,631,062
761,835
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
2024
€000
€000
€000
€000
€000
€000
Gross settled derivatives
Financial assets
Contractual amounts
receivable
667,289
181,962
2,991
-
-
852,242
Contractual amounts payable
(659,663)
(181,323)
(2,927)
-
-
(843,913)
7,626
639
64
-
-
8,329
Financial liabilities
Contractual amounts
receivable
144,527
34,120
2,549
-
-
181,196
Contractual amounts payable
(144,633)
(34,119)
(2,605)
-
-
(181,357)
(106)
1
(56)
-
-
(161)
428
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
46.
Risk management - Liquidity and funding risk (continued)
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
2024
€000
€000
€000
€000
€000
€000
Contingent liabilities and
commitments
Contingent liabilities
Acceptances and
endorsements
4,097
711
463
-
-
5,271
Guarantees
705,774
-
-
-
-
705,774
Commitments
Documentary credits
7,318
1,539
5,911
-
-
14,768
Undrawn formal standby
facilities, credit lines and
other commitments to lend
2,009,698
-
-
-
-
2,009,698
2,726,887
2,250
6,374
-
-
2,735,511
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
2023
€000
€000
€000
€000
€000
€000
Gross settled derivatives
Financial assets
Contractual amounts
receivable
56,545
6,059
2,646
-
-
65,250
Contractual amounts payable
(56,310)
(5,992)
(2,599)
-
-
(64,901)
235
67
47
-
-
349
Financial liabilities
Contractual amounts
receivable
907,453
136,201
2,617
-
-
1,046,271
Contractual amounts payable
(920,105)
(136,063)
(2,637)
-
-
(1,058,805)
(12,652)
138
(20)
-
-
(12,534)
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
2023 (restated)
€000
€000
€000
€000
€000
€000
Contingent liabilities and
commitments
Contingent liabilities
Acceptances and
endorsements
1,321
879
380
-
-
2,580
Guarantees
703,044
-
-
-
-
703,044
Commitments
Documentary credits
1,242
3,830
5,179
-
-
10,251
Undrawn formal standby
facilities, credit lines and
other commitments to lend
1,948,482
-
-
-
-
1,948,482
2,654,089
4,709
5,559
-
-
2,664,357
47.
Risk management - Insurance risk
Insurance risk is the risk that an insured event under an insurance contract occurs and the related
uncertainty of the amount and the timing of the resulting claim. By the very nature of an insurance
contract, this risk is largely random and therefore unpredictable.
429
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
47.
Risk management - Insurance risk (continued)
For a portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning,
the principal risk that the Group faces is that the actual claims and benefit payments will exceed the
carrying amount of insurance liabilities. This could occur because the frequency or severity of claims and
benefits are greater than estimated. Insurance events are largely random and the actual volume and cost of
claims and benefits will vary from year to year compared to the estimate established using statistical or
actuarial techniques.
The above risk exposure is mitigated by the Group through the diversification across a large portfolio of
insurance contracts. The variability of risks is also reduced by careful selection and implementation of
underwriting strategy guidelines, as well as the use of reinsurance arrangements. Although the Group has
reinsurance coverage, it is not relieved of its direct obligations to policyholders and is thus exposed to credit
risk with respect to ceded insurance, to the extent that any reinsurer is unable to meet the obligations
assumed under such reinsurance arrangements. For that reason, the creditworthiness of reinsurers is
evaluated by considering their solvency and credit rating.
Life and Accident and Health insurance contracts
The main factors that could affect the overall frequency of claims are epidemics, major lifestyle changes,
pandemics and natural disasters.
The underwriting strategy and risk assessment is designed to ensure that risks are diversified in terms of
type of risk and level of insured benefits. This is largely achieved through the use of medical screening in
order to ensure that pricing takes account of the current medical conditions and family medical history and
through the regular review of actual claims and product pricing. The Group has the right to decline policy
applications, it can impose additional charges and it has the right to reject the payment of fraudulent
claims.
The most significant risks relating to accident and health insurance contracts result from lifestyle changes
and from climate and environmental changes. The risks are mitigated by the use of strategic selection and
risk-taking at the underwriting stage and by thorough investigation for possible fraudulent claims.
The following sensitivity analysis shows the impact on profit before tax and equity for reasonably possible
movements in key assumptions, with all other assumptions held constant. The correlation of assumptions
will have a significant effect in determining the ultimate impacts, but to demonstrate the impact due to
changes in each assumption, assumptions are changed on an individual basis while holding all other
assumptions constant. Movements in these assumptions are non–linear. Sensitivity information also varies
according to the current economic assumptions.
2024
Change in
assumptions
Impact on profit
before tax
Impact on
equity
%
€000
€000
Change in mortality rates
-10%
609
533
Change in lapsation and surrender rates
+10%
(419)
(479)
Change in expenses
+5%
(1,107)
(1,265)
Change in inflation
+1%
(2,210)
(2,526)
Change in discount rate curve at each projection
year
-0,25%
221
193
2023
Change in
assumptions
Impact on Profit
before tax
Impact on
equity
%
€000
€000
Change in mortality rates
-10%
1,956
1,711
Change in lapsation and surrender rates
+10%
(143)
(163)
Change in expenses
+5%
(891)
(1,019)
Change in inflation
+1%
(1,673)
(1,912)
Change in discount rate curve at each projection
year
-0,25%
119
104
Some of the sensitivity scenarios shown in respect of changes to both economic and non–economic
variables may have a consequential effect on the valuation basis when a product is valued on an active
basis which is updated to reflect current economic conditions.
430
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
47.
Risk management - Insurance risk (continued)
Non-life insurance contracts other than accident and health
Non-life insurance business is concentrated in Cyprus and the main claims during the year ended 31
December 2024 and 2023 related to fire and natural forces and other damage to property, motor vehicle
liability and general liability.
Risks under these policies are usually covered for a period of 12 months, with the exception of the goods in
transit class that covers shorter periods and the contractors all risks class that covers longer periods.
The liabilities for outstanding claims arising from insurance contracts issued by the Group are based on
experts’ estimates and facts known at the balance sheet date. With time, these estimates are reconsidered
and any adjustments are recognised in the financial statements in the period in which they arise.
The principal assumptions underlying the estimates for each claim are based on experience and market
trends, taking into consideration claims handling costs, inflation and claim numbers for each accident year.
Also, external factors that may affect the estimate of claims, such as recent court rulings and the
introduction of new legislation, are taken into consideration.
The insurance contract liabilities are sensitive to changes in the above key assumptions. The sensitivity of
certain assumptions, such as the introduction of new legislation and the rulings of court cases, is very
difficult to be quantified. Furthermore, the delays that arise between the occurrence of a claim and its
subsequent notification and eventual settlement increase the uncertainty over the cost of claims at the
reporting date.
The risk of a non-life insurance contract occurs from the uncertainty of the amount and time of presentation
of the claim. Therefore, the level of risk is determined by the frequency of such claims, their severity and
their evolution from one period to the next.
The main risks for the non-life insurance business arise from major catastrophic events like natural
disasters. These risks vary depending on location, type and nature. The variability of risks is mitigated by
the diversification of risk of loss to a large portfolio of insurance contracts, as a more diversified portfolio is
less likely to be affected by changes in any subset of the portfolio. The Group’s exposure to insurance risks
from non-life insurance contracts is also mitigated by the following measures: adherence to underwriting
policies, frequent review and processing of claims to minimise the possibility of negative developments in
the future, and use of effective reinsurance arrangements to minimise the impact of risks, especially for
catastrophic events.
48.
Capital management
The primary objective of the Group’s capital management is to ensure compliance with the relevant
regulatory capital requirements and to maintain healthy capital adequacy ratios to cover the risks of its
business, support its strategy and maximise shareholders’ value.
The capital adequacy framework, as in force, was incorporated through the Capital Requirements Regulation
(CRR) and Capital Requirements Directive (CRD) which came into effect on 1 January 2014 with certain
specified provisions implemented gradually. The CRR and CRD transposed the capital, liquidity and leverage
standards of Basel III into the European Union’s legal framework. CRR establishes the prudential
requirements for capital, liquidity and leverage for credit institutions. It is directly applicable in all EU
member states. CRD governs access to deposit taking activities and internal governance arrangements
including remuneration, board composition and transparency. Unlike the CRR, member states were required
to transpose the CRD into national law and national regulators were allowed to impose additional capital
buffer requirements.
On 27 June 2019, the revised rules on capital and liquidity (Regulation (EU) 2019/876 (CRR II) and
Directive (EU) 2019/878 (CRD V)) came into force. As an amending regulation, the existing provisions of
CRR apply unless they are amended by CRR II. Certain provisions took immediate effect (primarily relating
to Minimum Requirement for Own Funds and Eligible Liabilities (MREL)), but most changes became effective
as of June 2021. The key changes introduced consist of, among others, changes to qualifying criteria for
Common Equity Tier 1 (CET1), Additional Tier 1 (AT1) and Tier 2 (T2) instruments, introduction of
requirements for MREL and a binding Leverage Ratio requirement (as defined in the CRR) and a Net Stable
Funding Ratio (NSFR).
431
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
48.
Capital management (continued)
The amendments that came into effect on 28 June 2021 are in addition to those introduced in June 2020
through Regulation (EU) 2020/873, which among other, brought forward certain CRR II changes in light of
the COVID-19 pandemic. The main adjustments of Regulation (EU) 2020/873 that had an impact on the
Group’s capital ratio relate to the acceleration of the implementation of the new SME discount factor (lower
RWAs), extending the IFRS 9 transitional arrangements and introducing further relief measures to CET1
allowing to fully add back to CET1 any increase in ECL recognised in 2020 and 2021 for non-credit impaired
financial assets and phasing-in this starting from 2022 (phasing-in at 25% in 2022, 50% in 2023 and 75%
in 2024) and advancing the application of prudential treatment of software assets as amended by CRR II
(which came into force in December 2020).
In October 2021, the European Commission adopted legislative proposals for further amendments to the
CRR, CRD and the BRRD (the ‘2021 Banking Package’). Amongst other things, the 2021 Banking Package
would implement certain elements of Basel III that had not yet been transposed into EU law. In addition, in
the case of the proposed amendments to CRD and the BRRD, their terms and effect will depend, in part, on
how they are transposed in each member state. In December 2023, the preparatory bodies of the Council
and European Parliament endorsed the amendments to the CRR and the CRD and the legal texts were
published on the Council and the Parliament websites. In April 2024, the European Parliament voted to
adopt the amendments to the CRR and the CRD; Regulation (EU 2024/1623 (known as CRR III) and
Directive (EU) 2024/1619 (known as CRD VI) were published in the EU's official journal in June 2024, with
entry into force 20 days from the date of the publication. Most provisions of CRR III have become effective
on 1 January 2025 with certain measures subject to transitional arrangements or to be phased in over time.
Member states shall adopt and publish, by 10 January 2026, the laws, regulations and administrative
provisions necessary to comply with CRD VI and shall apply most of those measures by 11 January 2026.
The Group and the Company have complied with the minimum capital requirements (Pillar I and Pillar II).
The insurance subsidiaries of the Group, the General Insurance of Cyprus Ltd and EuroLife Ltd, comply with
the requirements of the Superintendent of Insurance including the minimum solvency ratio. The regulated
Cyprus Investment Firm (CIF) of the Group, The Cyprus Investment and Securities Corporation Ltd (CISCO)
complies with the minimum capital adequacy ratio requirements. The payment services subsidiary of the
Group, JCC Payment Services Ltd, complies with regulatory capital requirements under the Provision and
Use of Payment Services and Access to Payment Systems Laws of 2018 to 2023.
432
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
49.
Related party transactions
Related parties of the Group include associates and joint ventures, key management personnel, members of
the Board of Directors and their connected persons. Connected persons for the purpose of this disclosure
include spouses, minor/dependent children and companies in which the directors/key management
personnel, hold directly or indirectly, at least 50% of the voting shares in a general meeting, or act as
executive director or exercise control of the entities in any way.
(a)
Transactions with subsidiaries
The Company is the holding company of the Group. The Company enters into transactions with its
subsidiaries in the normal course of business. Balances and transactions between the Company and its
subsidiaries are disclosed in Note 17 of the Company’s financial statements. Transactions with the
subsidiaries have been eliminated on consolidation.
(b)
Transactions with associates
From time to time, the Group provides to and receives from its associates certain banking and financial
services. These are not material to the Group and all the transactions are made on normal business terms
as for comparable transactions with other customers of a similar type.
(c)
Compensation of the Board of Directors and key management personnel
The following disclosures are made in accordance with the provisions of IAS 24 Related Party Disclosures, in
respect of the compensation of the Board of Directors and key management personnel.
Fees and emoluments of members of the Board of Directors and key management personnel
2024
2023
Directors' emoluments
€000
€000
Executives
Salaries and other short-term benefits
1,151
1,061
Variable remuneration - STIP
72
400
Variable remuneration - LTIP
1,180
-
Retirement benefit plan costs
102
94
2,505
1,555
Non-executives
Fees
942
1,077
Total directors' emoluments
3,447
2,632
Key management personnel emoluments
Salaries and other short-term benefits
3,241
3,058
Termination benefits
-
200
Variable remuneration - STIP
600
610
Variable remuneration - LTIP
2,161
-
Retirement benefit plan costs
275
262
Total key management personnel emoluments
6,277
4,130
Total
9,724
6,762
Fees and emoluments of members of the Board of Directors and key management personnel are included
for the period that they serve as members of the Board of Directors and as key management personnel
respectively.
The retirement benefit plan costs relate to contributions paid for defined contribution plans.
433
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
49.
Related party transactions (continued)
Variable remuneration amounts (amounts for STIP and LTIP) presented in the tables above and further
below in the tables in this Note represent the award amount awarded in respect of the performance year
2024 for STIP and of the performance period 2022-2024 for the 2022 LTIP (2022 LTIP cycle awarded), and
include both amounts expected to vest in 2025 and amounts to be deferred in following years. In respect of
the 2022 LTIP, the amount of the award disclosed is different from the annual cost amount recorded in the
consolidated income statement as the annual cost is calculated under the IFRS 2 provisions as per the
accounting policy disclosed in Note 2.32. The LTIP amount included in the tables in this Note represents the
amount awarded, calculated as the final amount of shares to be delivered (subject to continuing
employment) (determined by reference to the performance scorecard assessment outcome) based on the
average closing share price on the Cyprus Stock Exchange for the period from 1 December 2024 to 17
January 2025 of €4.62. The final number of shares to be delivered to the CEO have been set to 192,883, to
the EDF to 62,614 and for the key management personnel to 467,662. No LTIP cycle had a performance
period ending in the year ended 31 December 2023 and therefore no amounts are included in the tables in
respect of variable remuneration under LTIP for the comparative period. The annual expense amounts
recorded in the consolidated income statement for the year ended 31 December 2024 and 2023 in
accordance with IFRS 2 in respect of the Executive Directors and key management personnel are disclosed
below.
As disclosed in Note 14.3, the short-term incentive award is primarily awarded in the form of cash. Where
the total amount of variable remuneration for a financial year awarded under STIP and LTIP for an individual
exceeds a threshold as per regulatory guidelines, then at least 50% of the variable remuneration must be
awarded in the form of shares. In the case of the Executive Directors and key management personnel for
the year ended 31 December 2024, the amounts awarded under STIP will be in the form of cash as the LTIP
award is awarded in the form of shares and it is in excess of 50% of the variable remuneration for 2024
(2023: in the case of the Executive Directors, the 2023 STIP award was 50% in the form of cash and 50%
in the form of shares and in the case of the other key management personnel an amount of €560 thousand
was in the form of cash and an amount of €50 thousand in the form of shares). In the context of
establishing the final amount of variable remuneration for the performance year 2024, following the
outcome of the assessment of the predetermined performance targets, the amounts awarded under the
2022 LTIP cycle were determined first, followed by the STIP amount to be awarded so that the total variable
remuneration is within the 100% fixed to variable remuneration ratio threshold. Therefore, for year 2024,
where for a participant the entire of the 100% threshold was utilised for the LTIP, no STIP amount has been
awarded.
In case the total variable remuneration award to an individual exceeds a certain regulatory threshold, then
vesting conditions as described in Note 14.3, apply for both the cash and the share component and remain
subject to malus and clawback conditions as per the applicable regulatory framework and the LTIP Plan
rules.
Executive Directors' emoluments
A cost of €317 thousand has been recorded by the Group in its Consolidated Income Statement in relation
to awards granted in 2022, 2023 and 2024 to the Executive Directors under the Long-Term Incentive Plan
(LTIP) as described in Note 14.2 (2023: cost of €235 thousand for awards granted in 2022 and 2023). The
recognition of such cost is in accordance with the Group accounting policy described in Note 2.32.
Key management personnel
The emoluments of key management personnel include the remuneration of the members of the Executive
Committee and the emoluments of other members of the Senior Management team (Extended EXCO) since
the date of their appointment to the Committees.
Further, employer's contributions in relation to the emoluments of key management personnel of €391
thousand have been recorded in the Consolidated Income Statement during the year ended 31 December
2024 (2023: €351 thousand). Such amounts are not considered part of the remuneration, but rather an
incremental cost to the Group, and as such not included in the table above.
Further, a cost of €615 thousand has been recorded by the Group in its Consolidated Income Statement in
relation to awards granted in 2022, 2023 and 2024 to the key management personnel under the Long-Term
Incentive Plan (LTIP) as described in Note 14.2 (2023: cost of €360 thousand for awards granted in 2022
and 2023). The recognition of such cost is in accordance with the Group accounting policy described in Note
2.32.
434
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
49.
Related party transactions (continued)
Executive Directors
The fees and emoluments of the Executive Directors are analysed as follows:
2024
2023
€000
€000
Panicos Nicolaou (Chief Executive Officer)
Salaries and other short-term benefits
819
761
Variable remuneration - STIP
-
300
Variable remuneration - LTIP
891
-
Retirement benefit plan costs
73
68
1,783
1,129
Eliza Livadiotou (Executive Director Finance)
Salaries and other short-term benefits
332
300
Variable remuneration - STIP
72
100
Variable remuneration - LTIP
289
-
Retirement benefit plan costs
29
26
722
426
Total
2,505
1,555
The share-based benefits expense recorded in the Consolidated Income Statement during the year ended
31 December 2024 for the share awards granted under the LTIP for LTIP Cycles 2022, 2023 and 2024
amounts to €240 thousand (2023: €186 thousand) for the Chief Executive Officer and to €77 thousand
(2023: €49 thousand) for the Executive Director Finance.
Further, employer's contributions of €63 thousand have been recorded in the Consolidated Income
Statement during the year ended 31 December 2024, of which €34 thousand relate to the Chief Executive
Officer and €29 thousand relate to the Executive Director Finance (2023: total employer's contributions of
€64 thousand, of which €38 thousand relate to the Chief Executive Officer and €26 thousand to the
Executive Director Finance). Such amounts are not considered part of the remuneration of Directors, but
rather an incremental cost to the Group, and as such have not been included in the table above.
Non-executive Directors
The fees of Non-executive Directors are analysed as follows:
2024
2023
€000
€000
Efstratios-Georgios Arapoglou
261
250
Lyn Grobler
165
155
Constantine Iordanou (1)
81
148
Monique Eugenie Hemerijck(2)
152
38
Adrian John Lewis(3)
159
8
Christian Philipp Hansmeyer(4)
62
-
William Stuart Birrell(4)
62
-
Arne Berggren(5)
-
30
Ioannis Zographakis(6)
-
113
Nicolaos Sofianos (7)
-
117
Paula Hadjisotiriou(6)
-
141
Maria Philippou(8)
-
77
942
1,077
Further, employer's contributions in relation to non-executive Directors of €24 thousand have been recorded
in the Consolidated Income Statement during the year ended 31 December 2024 (2023: €31 thousand).
Such amounts are not considered part of the remuneration of Directors, but rather an incremental cost to
the Group, and as such have not been included in the table above.
435
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
49.
Related party transactions (continued)
(1)Passed away on 16 June 2024.
(2)ECB approved the appointment of Mrs Monique Eugenie Hemerijck on 10 August 2023.
(3)ECB approved the appointment of Mr Adrian John Lewis on 17 November 2023.
(4)On 29 April 2024, ECB approved the appointment of Mr Christian Philipp Hansmeyer and Mr William Stuart
Birrell as members of the Board of Directors and during the AGM on 17 May 2024, they were appointed to
the Board of Directors.
(5)On 31 March 2023, Mr Arne Berggren resigned as a member of the Board of Directors.
(6)On 31 December 2023, both Mrs Paula Hadjisotiriou and Mr Ioannis Zographakis resigned from their
respective positions as members of the Board of Directors.
(7)On 11 December 2023, Mr Nicolaos Sofianos resigned as a member of the Board of Directors.
(8)On 13 October 2023, Mrs Maria Philippou resigned as a member of the Board of Directors.
The fees of the non-executive Directors include fees as members of the Board of Directors of the Company
and its subsidiaries, as well as fees as members of committees of the Board of Directors. Fees are included
for the period that they serve as members of the Board of Directors, upon approval of appointment by the
ECB, and for the period that they serve as members of the committees of the Board of Directors, upon their
appointment in the respective committee.
(d)
Transactions with Directors and key management personnel
The tables below show the deposits, loans and advances and other credit balances held by the members of
the Board of Directors and key management personnel and their connected persons, as at the balance sheet
date and other relevant information as required by the provisions of IAS 24 Related Party Disclosures.
Loans to Directors
For the purposes of these disclosures, ‘Directors’ means the current Board of Directors of the Company and
any past Directors who were members of the Board of Directors of the Company during the year.
All transactions with members of the Board of Directors and their connected persons are made on normal
business terms as for comparable transactions, including interest rates, with customers of a similar credit
standing.
There were nine Directors in office during the year (2023: twelve Directors), two of whom availed of credit
facilities (2023: three Directors). Two of the Directors who availed of credit facilities had balances
outstanding at 31 December 2024 (2023: two of the Directors who availed of credit facilities had balances
outstanding). The balances outstanding are disclosed below.
The value of arrangements at the beginning and end of the current and preceding financial years as stated
below, expressed as a percentage of the net assets of the Group at the beginning and end of the current
and preceding financial years is less than 1%. No amounts have been waived during the year ended 31
December 2024.
436
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
49.
Related party transactions (continued)
Board of Directors
Details of transactions with the Directors and their connected persons, where indicated, for the years ended
31 December 2024 and 2023 are as follows:
Balance as
at 1 January
Amounts
advanced
during the
year
Amounts
repaid
during the
year
Balance as at
31 December
Aggregate
maximum
amount
outstanding
during the
year
Unused
credit
facilities
Panicos Nicolaou
€000
€000
€000
€000
€000
€000
2024
Overdrafts/ credit cards
2
n/a
n/a
3
5
54
Panicos Nicolaou
2023
Overdrafts/ credit cards
2
n/a
n/a
2
4
54
Balance as
at 1 January
Amounts
advanced
during the
year
Amounts
repaid
during the
year
Balance as at
31 December
Aggregate
maximum
amount
outstanding
during the
year
Unused
credit
facilities
Eliza
Livadiotou
€000
€000
€000
€000
€000
€000
2024
Loans
71
-
14
60
71
-
Overdrafts/ credit cards
4
n/a
n/a
8
8
55
75
68
79
55
Eliza
Livadiotou
2023
Loans
87
-
19
71
87
-
Overdrafts/ credit cards
14
n/a
n/a
4
14
59
101
75
101
59
Balance as
at 1 January
Amounts
advanced
during the
year
Amounts
repaid
during the
year
Balance
as at
31 December
Aggregate
maximum
amount
outstanding
during the
year
Unused
credit
facilities
Ioannis Zographakis
€000
€000
€000
€000
€000
€000
2023
Overdrafts/ credit cards
2
n/a
n/a
n/a
2
-
The balances included in the table above include principal and interest. Also, amounts approved and repaid
are not shown for overdraft and credit card facilities as these are revolving in nature. The aggregate
maximum amount outstanding includes credit card exposures at the maximum statement balance.
No other Directors had any loan facilities or overdraft/credit card balances with the Group during the year
ended 31 December 2024 (2023: nil).
The aggregate expected credit loss allowance on the above loans and credit facilities is below €5 thousand
as at 31 December 2024 (2023: below €5 thousand). All principal and interest that has fallen due on these
loans or credit facilities has been paid.
437
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
49.
Related party transactions (continued)
Connected persons of the Board of Directors
The aggregate of loans to connected persons of Directors in office at 31 December 2024 are as follows
(2024: aggregate of two persons; 2023: aggregate of two persons):
Balance as at
1 January
Amounts
advanced
during the year
Amounts
repaid during
the year
Balance as at
31 December
Aggregate
maximum
amount
outstanding
during the year
Panicos Nicolaou
€000
€000
€000
€000
€000
2024
Overdrafts/credit cards
1
n/a
n/a
1
3
2023
Overdrafts/credit cards
2
n/a
n/a
1
2
Balance as at
1 January
Amounts
advanced
during the year
Amounts
repaid during
the year
Balance as at
31 December
Aggregate
maximum
amount
outstanding
during the year
Eliza Livadiotou
€000
€000
€000
€000
€000
2024
Loans
66
-
13
57
66
Overdrafts/credit cards
18
n/a
n/a
15
18
84
72
84
2023
Loans
74
-
13
66
74
Overdrafts/credit cards
10
n/a
n/a
18
18
84
84
92
The balances included in the table above include principal and interest. Also, amounts approved and repaid
are not shown for overdraft and credit card facilities as these are revolving in nature. The aggregate
maximum amount outstanding includes credit card exposures at the maximum statement balance.
The aggregate expected credit loss allowance on the above loans and credit facilities is below €5 thousand
as at 31 December 2024 (2023: below €5 thousand). All principal and interest that has fallen due on these
loans or credit facilities has been paid.
Key management personnel in office during the year and their connected persons
There were 19 key management personnel in office during the year (2023: 20 key management personnel),
19 of whom availed of credit facilities (2023: 20 key management personnel). All of the key management
personnel who availed of credit facilities had balances outstanding at 31 December 2024 and 2023.
A number of loans and advances have been extended to key management personnel on the same terms as
those applicable to the rest of the Group’s employees and to their connected persons on the same terms as
those of customers of a similar credit standing.
Where no amount is shown in the tables below, this indicates a credit balance, a nil balance, or a balance of
less than €500.
438
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
49.
Related party transactions (continued)
Details of transactions with key management personnel and their connected persons for the years ended 31
December 2024 and 2023 are as follows:
Balance as
at 1 January
Balances of
key
management
personnel
appointed in
the year
Other
movements
on balances
of key
management
personnel and
their
connected
persons
during the
year
Amounts
advanced
during the year
Amounts repaid
during the year
Balance as at
31 December
Aggregate
maximum
amount
outstanding
during the
year (since
appointment
date)
2024
€000
€000
€000
€000
€000
€000
€000
Loans
2,092
n/a
-
142
477
1,967
2,303
Overdrafts/credit cards
249
n/a
n/a
n/a
n/a
269
437
2,341
2,236
2,740
2023
Loans
2,400
-
-
605
490
2,092
2,439
Overdrafts/credit cards
386
n/a
n/a
n/a
n/a
249
568
2,786
2,341
3,007
The balances included in the table above include principal and interest. Also, amounts approved and repaid
are not shown for overdraft and credit card facilities as these are revolving in nature. The aggregate
maximum amount outstanding includes credit card exposures at the maximum statement balance.
The aggregate expected credit loss allowance on the above loans and credit facilities is below €26 thousand
as at 31 December 2024 (2023: below €11 thousand). All principal and interest that has fallen due on these
loans or credit facilities has been paid.
Aggregate amounts outstanding at year end and additional transactions
2024
2023
€000
€000
Loans and advances as at 31 December
Board of Directors
71
77
Key management personnel
1,706
1,849
Connected persons - Board of Directors
73
85
Connected persons - Key management personnel
530
492
2,380
2,503
Deposits as at 31 December
Board of Directors
644
1,919
Key management personnel
2,945
2,004
Connected persons - Board of Directors
308
969
Connected persons - Key management personnel
4,541
2,402
8,438
7,294
Interest income for the year
113
119
Interest expense for the year
37
9
Insurance premium income for the year
487
497
Insurance expenses for the year
6
5
The above table does not include year-end balances for members of the Board of Directors, key
management personnel and their connected persons who resigned during the year, nor balances of
customers that do not meet the definition of connected persons as at 31 December 2024.
439
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
49.
Related party transactions (continued)
As at 31 December 2024 there were nine Directors in office (2023: seven) and 19 key management
personnel in office (2023: 18).
Interest income and expense are disclosed for the period during which they were members of the Board of
Directors or served as key management personnel.
During the year ended 31 December 2024 an amount of €871 thousand has been paid to connected persons
of key management personnel for the cost of services capitalised within property and equipment. These
services were rendered on normal business terms as for comparable services received from third parties.
In addition to loans and advances, there were contingent liabilities and commitments in respect of members
of the Board of Directors and their connected persons, mainly in the form of documentary credits,
guarantees and commitments to lend, amounting to €114 thousand as at 31 December 2024 (2023: €116
thousand).
There were also contingent liabilities and commitments to key management personnel and their connected
persons amounting to €1,379 thousand as at 31 December 2024 (2023: €1,197 thousand).
The total unsecured amount of the loans and advances and contingent liabilities and commitments to
members of the Board of Directors, key management personnel and their connected persons (using forced-
sale values for tangible collaterals and assigning no value to other types of collaterals) at 31 December
2024 amounted to €1,485 thousand (2023: €1,489 thousand).
During the year ended 31 December 2024 premiums of €177 thousand (2023: €220 thousand) and nil
claims (2023: nil) were paid by/to the members of the Board of Directors of the Company and their
connected persons to/from the insurance subsidiaries of the Group.
There were no other transactions during the year ended 31 December 2024 and 2023 with connected
persons of the current members of the Board of Directors or with any members who resigned during the
years.
440
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
50.
Group companies
The main subsidiary companies and branches included in the Consolidated Financial Statements of the
Company, their country of incorporation, their activities and the percentage held by the Company (directly
or indirectly) as at 31 December 2024 are:
Company
Country of
incorporation
Activities
Percentage
holding (%)
EuroLife Ltd
Cyprus
Life insurance
100
General Insurance of Cyprus Ltd
Cyprus
Non-life insurance
100
JCC Payment Systems Ltd
Cyprus
Development of inter-banking
systems, acquiring and
processing of card transactions,
other payment services and
other activities
75
The Cyprus Investment and Securities
Corporation Ltd (CISCO)
Cyprus
Investment banking,
brokerage, discretionary asset
management and investment
advice services
100
Jinius Ltd
Cyprus
Digital Economy Platform
100
LCP Holdings and Investments Public Ltd
Cyprus
Investments in securities and
participations in companies and
schemes that are active in
various business sectors and
projects
67
Kermia Ltd
Cyprus
Property trading and
development
100
Kermia Properties & Investments Ltd
Cyprus
Property trading and
development
100
S.Z. Eliades Leisure Ltd
Cyprus
Land development and
operation of a golf resort
70
Auction Yard Ltd
Cyprus
Auction company
100
BOC Secretarial Company Ltd
Cyprus
Secretarial services
100
Bank of Cyprus Public Company Limited (branch
of the Company)
Greece
Administration of guarantees
and holding of real estate
properties
n/a
BOC Asset Management Romania S.A.
Romania
In run-down
100
MC Investment Assets Management LLC
Russia
Problem asset management
company - In run-down
100
Fortuna Astrum Ltd
Serbia
Problem asset management
company - In run-down
100
In addition to the above companies, as at 31 December 2024, the Company had 100% shareholding, either
directly or indirectly, in the companies listed below, whose activity is the ownership and management of
immovable property:
Cyprus: Tolmeco Properties Ltd, Pelika Properties Ltd, Cobhan Properties Ltd, Nalmosa Properties Ltd,
Emovera Properties Ltd, Blodar Properties Ltd, Cranmer Properties Ltd, Les Coraux Estates Ltd, Natakon
Company Ltd, Oceania Ltd, Dominion Industries Ltd, Ledra Estate Ltd, Laiki Lefkothea Center Ltd, Labancor
Ltd, Joberco Ltd, Domita Estates Ltd, Memdes Estates Ltd, Kernland Properties Ltd, Jobelis Properties Ltd,
Melsolia Properties Ltd, Spacous Properties Ltd, Solomaco Properties Ltd, Linaland Properties Ltd, Unital
Properties Ltd, Neraland Properties Ltd, Wingstreet Properties Ltd, Nolory Properties Ltd, Lisbo Properties
Ltd, Mantinec Properties Ltd, Provezaco Properties Ltd, Hillbay Properties Ltd, Forenaco Properties Ltd,
Hovita Properties Ltd, Astromeria Properties Ltd, Barosca Properties Ltd, Fogland Properties Ltd, Tebasco
Properties Ltd, Valecross Properties Ltd, Altco Properties Ltd, Olivero Properties Ltd, Jaselo Properties Ltd,
Elosa Properties Ltd, Flona Properties Ltd, Toreva Properties Ltd, Resoma Properties Ltd, Mostero Properties
Ltd, Helal Properties Ltd, Pendalo Properties Ltd, Frontyard Properties Ltd, Bonsova Properties Ltd,
Thermano Properties Ltd, Venicous Properties Ltd, Lorman Properties Ltd, Eracor Properties Ltd, Rulemon
Properties Ltd, Maledico Properties Ltd, Balasec Properties Ltd, Diafor Properties Ltd, Kartama Properties
Ltd, Paramina Properties Ltd, Nouralia Properties Ltd, Resocot Properties Ltd, Soblano Properties Ltd,
Talamon Properties Ltd, Weinar Properties Ltd, Zemialand Properties Ltd, Coeval Properties Ltd, Finevo
Properties Ltd, Mazima Properties Ltd, Riveland Properties Ltd, Rosalica Properties Ltd, Secretsky Properties
Ltd, Senadaco Properties Ltd, Tasabo Properties Ltd, Venetolio Properties Ltd, Zandexo Properties Ltd,
Odolo Properties Ltd, Molemo Properties Ltd, Samilo Properties Ltd, Alezia Properties Ltd, Enelo Properties
Ltd, Monata Properties Ltd, Amary Properties Ltd, Aparno Properties Ltd, Lomenia Properties Ltd, Midelox
Properties Ltd, Montira Properties Ltd, Orilema Properties Ltd, Carilo Properties Ltd, Olisto Properties Ltd,
Holstone Properties Ltd, Gelimo Properties Ltd, Larizemo Properties Ltd and Philiki Ltd.
441
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
50.
Group companies (continued)
Romania: Otherland Properties Dorobanti SRL.
Further, at 31 December 2024, the Company had 100% shareholding in Stamoland Properties Ltd, Unoplan
Properties Ltd, Petrassimo Properties Ltd and Gosman Properties Ltd.
The main activities of the above companies are the holding of shares and other investments and the
provision of services.
At 31 December 2024, the Company had 100% shareholding in BOC Terra AIF V.C.I.C. Plc which is a real
estate alternative investment fund, currently inactive.
At 31 December 2024, the Company had 100% shareholding, either directly or indirectly, in the companies
listed below which are reserved to accept property:
Cyprus: Rifelo Properties Ltd, Dadela Properties Ltd, Leziga Properties Ltd, Bavara Properties Ltd, Fernia
Properties Ltd, Wolfenia Properties Ltd, Ortizelo Properties Ltd and Ellagio Properties Ltd.
In addition, the Company holds 100% of the following intermediate holding companies:
Cyprus: Otherland Properties Ltd, Battersee Properties Ltd, Bonayia Properties Ltd, Janoland Properties Ltd,
Imoreth Properties Ltd, Inroda Properties Ltd, Zunimar Properties Ltd, Nikaba Properties Ltd, Allioma
Properties Ltd and Hydrobius Ltd.
The Company also holds 100% of the following companies which are inactive:
Cyprus: Laiki Bank (Nominees) Ltd, Paneuropean Ltd, Nelcon Transport Co. Ltd, Canosa Properties Ltd,
Hοmirova Properties Ltd and Finerose Properties Ltd.
Greece: Kyprou Zois (branch of EuroLife Ltd), Kyprou Asfalistiki (branch of General Insurance of Cyprus
Ltd), Kyprou Commercial SA and Kyprou Properties SA.
The Company also holds indirectly 75% of Settle Cyprus Ltd, which is inactive.
All Group companies are accounted for as subsidiaries using the full consolidation method. All companies
listed above have share capital consisting of ordinary shares.
Acquisitions of subsidiaries
During the years ended 31 December 2024 and 2023 there were no acquisitions of subsidiaries.
Dissolution and disposal of subsidiaries
There were no material disposals of subsidiaries during the year ended 31 December 2024. CYCMC IV Ltd,
Blindingqueen Properties Ltd, Prodino Properties Ltd, Ensolo Properties Ltd, Fairford Properties Ltd, Sylvesta
Properties Ltd and Iperi Property Ltd were dissolved during the year ended 31 December 2024. Regetona
Properties Ltd, Soluto Properties Ltd, Camela Properties Ltd, Baleland Properties Ltd, Ramendi Properties
Ltd, Fitrus Properties Ltd, Estaga Properties Ltd, Avaleto Properties Ltd, Zecomex Ltd, Bendolio Properties
Ltd, Cramonco Properties Ltd, Zenoplus Properties Ltd, Hamura Properties Ltd, Vertilia Properties Ltd, Colar
Properties Ltd, Koralmon Properties Ltd and Skellom Properties Ltd were disposed of during the year ended
31 December 2024.
As at 31 December 2024, the following subsidiaries were in the process of dissolution or in the process of
being struck off: Fantasio Properties Ltd, Demoro Properties Ltd, Bramwell Properties Ltd, Battersee Real
Estate SRL,Thryan Properties Ltd, Obafemi Holdings Ltd, Birkdale Properties Ltd, Green Hills Properties SRL,
Imoreth Properties SRL, Inroda Properties SRL, Zunimar Properties SRL, Allioma Properties SRL,
Landanafield Properties Ltd and Nikaba Properties SRL.
442
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
51.
Investments in associates and joint venture
Percentage
holding
Investments in associates
(%)
Aris Capital Management LLC
30.0
Fairways Automotive Holdings Ltd
45.0
During the year ended 31 December 2024, Rosequeens Properties Limited (33.3% holding) was dissolved.
The carrying values of the investments in associates are assessed as fully impaired and their value has been
restricted to zero.
Percentage
holding
Investment in joint venture
(%)
Tsiros (Agios Tychon) Ltd
50.0
The carrying value of the investment in the joint venture is assessed as fully impaired and its value has
been restricted to zero.
52.
Offsetting financial assets and liabilities
The following tables set out the effect or potential effect of netting arrangements on the Group's financial
position. This includes the effect or potential effect of rights of set off associated with the Group's
recognised financial assets and recognised financial liabilities that are subject to an enforceable master
netting arrangement, irrespective of whether they are set off in accordance with paragraph 42 of IAS 32.
The 'Amounts subject to master netting agreements' column identifies financial assets and liabilities that are
subject to set off under netting provisions included in counterparties' agreements such as an ISDA Master
Agreement.
The agreement between the Group and the counterparty allows for net settlement of the relevant financial
assets and liabilities when both elect to settle on a net basis. In the absence of such an election, financial
assets and liabilities are settled on a gross basis; however each party, for which the netting provisions apply
under an ISDA Master Agreement, has the option to settle all such amounts on a net basis in the event of
default of the other party.
Related amounts
not set off in the
balance sheet
Gross
amounts of
recognised
financial
assets
Gross
amounts of
recognised
financial
liabilities
set off in
the balance
sheet
Net
amounts of
financial
assets
presented
in the
balance
sheet
Amounts
subject to
master
netting
agreements
Financial
collateral
(including
cash
collateral)
Net
amount
Assets
€000
€000
€000
€000
€000
€000
2024
Derivative financial assets
95,273
-
95,273
(3,421)
(91,202)
650
Reverse repurchase agreements
1,010,170
-
1,010,170
-
(13,068)
997,102
Total
1,105,443
-
1,105,443
(3,421) (104,270)
997,752
2023
Derivative financial assets
51,055
-
51,055
(3,705)
(47,179)
171
Reverse repurchase agreements
403,199
-
403,199
-
-
403,199
Total
454,254
-
454,254
(3,705)
(47,179)
403,370
443
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
52.
Offsetting financial assets and liabilities (continued)
The gross amounts of recognised derivative financial assets, include amounts of €3,421 thousand that do
not meet the offsetting criteria, but are subject to enforceable master netting arrangements (2023: €3,705
thousand). Financial collateral (including cash collateral) disclosed is limited to the net position exposure
and hence may differ from the maximum collateral available for offset and is reported in 'Deposits by
banks'.
Related amounts
not set off in the
balance sheet
Gross
amounts of
recognised
financial
liabilities
Gross
amounts of
recognised
financial
assets set
off in the
balance
sheet
Net
amounts of
financial
liabilities
presented
in the
balance
sheet
Amounts
subject to
master
netting
agreements
Financial
collateral
(including
cash
collateral)
Net
amount
Liabilities
€000
€000
€000
€000
€000
€000
2024
Derivative financial liabilities
4,664
-
4,664
(3,421)
-
1,243
Total
4,664
-
4,664
(3,421)
-
1,243
2023
Derivative financial liabilities
17,980
-
17,980
(3,705)
(11,896)
2,379
Total
17,980
-
17,980
(3,705)
(11,896)
2,379
The gross amounts of recognised derivative financial liabilities, include amounts of €3,421 thousand that do
not meet the offsetting criteria, but are subject to enforceable master netting arrangements (2023: €3,705
thousand). Financial collateral (including cash collateral) disclosed is limited to the net position exposure
and hence may differ from the maximum collateral available for offset and is reported in 'Loans and
advances to banks'.
444
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
53.
Country by country reporting
Article 89 of CRD IV requires banks to disclose on a consolidated basis the following information for all countries where the Group operates. The table below
provides information on the following items of the Group for year 2024:
Total operating
income/(expense)
Average number
of employees
Profit/(loss)
before tax
Accounting tax
expense on
profit/(loss)
Corporation tax
paid/(refunded)
Public subsidies
received
Country
€000
€000
€000
€000
€000
Cyprus
1,096,640
2,851
602,426
45,214
28,515
-
Russia
-
1
(250)
-
-
-
Romania
10
-
(269)
-
-
-
Greece
(281)
6
(9,203)
-
-
-
Total
1,096,369
2,858
592,704
45,214
28,515
-
Total operating income/(expense), profit/(loss) before tax and accounting tax expense on profit/(loss) are prepared on the same basis as the figures reported
elsewhere in these financial statements.
The activities of Group companies by geographical area are disclosed in Note 50.
Total operating income/(expense): comprises net interest income, net fee and commission income, net foreign exchange gains, net gains on financial
instruments, net losses on derecognition of financial assets measured at amortised cost, net insurance result, net losses from revaluation and disposal of
investment properties, net gains on disposal of stock of property and other income.
Number of employees: the number of employees has been calculated as the average number of employees, on a quarterly basis, who were employed by the
Group during the year ended 31 December 2024.
Profit/(loss) before tax: profit/(loss) before tax represents profits/(losses) after the deduction of inter-segment revenues/(expenses).
Accounting tax expense on profit/(loss): represents the corporation tax expense for the current year and excludes deferred taxes, adjustments in respect of
prior years and other tax provisions.
Corporation tax paid/(refunded) includes actual payments made during 2024 for corporation tax (including insurance premium taxes) and Cyprus special
defence contribution.
445
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Consolidated Financial Statements
54.
Events after the reporting period
Distribution in respect of 2024 earnings
The Board of Directors of the Company has resolved to propose to the AGM that will be held on 16 May
2025 for approval, a final cash dividend of €0.03 per ordinary share in respect of earnings for the year
ended 31 December 2024, which amounts to an agreegate distribution of €241 million. The financial
statements for the year ended 31 December 2024 do not reflect this dividend, which will be accounted for in
shareholders’ equity as an appropriation of retained earnings in the year ending 31 December 2025.
Dividends are funded out of distributable reserves.
No other significant non-adjusting events have taken place since 31 December 2024.
446
447
Independent Auditor’s Report
To the Members of Bank of Cyprus Public Company Limited
Report on the Audit of the Separate Financial Statements
Our opinion
In our opinion, the accompanying separate financial statements of parent company Bank of Cyprus Public Company
Limited (the “Company”) give a true and fair view of the financial position of the Company as at 31 December 2024, and
of its financial performance and its cash flows for the year then ended in accordance with IFRS Accounting Standards as
adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.
What we have audited
We have audited the separate financial statements which are presented in pages 457 to 595 and comprise:
●
the Balance Sheet as at 31 December 2024;
●
the Income Statement for the year then ended;
●
the Statement of Comprehensive Income for the year then ended;
●
the Statement of Changes in Equity for the year then ended;
●
the Statement of Cash Flows for the year then ended; and
●
the Notes to the Separate Financial Statements, which include a summary of accounting policies.
The financial reporting framework that has been applied in the preparation of the separate financial statements is IFRS
Accounting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Separate Financial
Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Company throughout the period of our appointment in accordance with the
International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code) together with the ethical requirements that are
relevant to our audit of the separate financial statements in Cyprus and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code.
448
Our audit approach
Overview
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
separate financial statements. In particular, we considered where the Board of Directors made subjective judgements;
for example, in respect of significant accounting estimates that involved making assumptions and considering future
events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of
internal controls, including among other matters, consideration of whether there was evidence of bias that represented
a risk of material misstatement due to fraud.
● Overall materiality: €27,7 million, which represents approximately
5% of the Company’s profit before tax as presented on the Income
Statement by line item ‘Profit before tax’.
We have identified the following key audit matters:
● Impairment of loans and advances to customers
● Provisions for pending litigation and claims
● Valuation of stock of properties held directly and indirectly through
investment in subsidiaries
● Privileged user access over financial reporting systems
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable
assurance whether the separate financial statements are free from material misstatement. Misstatements may arise due
to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the separate financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the
overall materiality for the separate financial statements as a whole as set out in the table below. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both individually and in aggregate on the separate financial
statements as a whole.
449
Overall materiality
€27,7 million.
How we determined it
Based on approximately 5% of the Company’s profit before tax
as presented on the Income Statement by line item ‘Profit
before tax’.
Rationale for the
materiality benchmark
applied
We chose profit before tax as the benchmark, because in our
view, this is a metric against which the recurring performance
of the Company is commonly measured to assess its
performance. We chose 5%, which is within the range of
acceptable quantitative materiality thresholds in auditing
standards.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above
€1,385 thousand as well as misstatements below that amount that, in our view, warranted reporting for qualitative
reasons.
Key audit matters incorporating the most significant risks of material misstatements, including
assessed risk of material misstatements due to fraud
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
separate financial statements of the current period. These matters were addressed in the context of our audit of the
separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Key Audit Matter
How our audit addressed the Key Audit
Matter
Impairment of loans and advances to
customers
Refer to Note 5.1 “Calculation of expected credit
losses” within Note 5 “Significant and other
judgements, estimates and assumptions”, Note 21
“Loans and advances to customers ”and Note 42 “Risk
management - Credit risk”.
The Company has developed complex models to
calculate expected credit losses (“ECL”) on its loans
and advances to customers. Impairment provisions
are calculated on a collective basis for portfolios of
loans of similar credit risk characteristics and on an
individual basis for loans that are individually
significant or which meet specific criteria determined
by management.
We understood and evaluated the design of the
overall control framework relevant to the
measurement of impairment of loans and
advances to customers and tested the operating
effectiveness of key controls across processes
relevant to the calculation of ECL.
We assessed the appropriateness of the key
assumptions used in the methodologies and
collective ECL model developed by the Company
and their compliance with the requirements of
IFRS 9.
450
We determined this to be a key audit matter due to the
greater levels of management judgement exercised in
the following areas:
•
Methodology and model changes;
•
Estimation uncertainty with respect to the future
cash flows of Stage 3 individually assessed
exposures;
•
The application of staging requirements to
identify a ‘significant increase in credit risk’ and
specifically in relation to the quantitative
thresholds and qualitative criteria used for
manual intervention; and
•
Incorporation of forward-looking economic
scenarios and the related inputs, assumptions and
probability weights assigned to multiple economic
scenarios as used by the Company.
We challenged the appropriateness and
application of the qualitative criteria used to
assess significant increase in credit risk in
accordance with IFRS 9. We assessed the
quantitative thresholds and other triggers
identified by management to determine the
appropriate staging of loans within Stages 1, 2 or
3 and tested, on a sample basis, the allocation of
loans and advances to customers to Stages 1, 2
or 3 with reference to those thresholds and/or
triggers.
We compared, with the assistance of PwC credit
risk experts, the forward-looking
macroeconomic assumptions used in the base,
favourable and adverse scenarios to publicly
available information. We also assessed the
reasonableness of the adverse and favourable
assumptions together with the scenario-
weightings applied by management.
We tested, with the assistance of PwC credit risk
experts, the assumptions, inputs and formulas
used in the calculation of collective ECL. This
included considering the appropriateness of the
collective ECL model methodology (including
changes in the current year) and challenging the
assumptions used (e.g., Exposure at Default,
Loss Given Default and Probability of Default).
We tested the completeness and accuracy of
data inputs to the collective ECL model on a
sample basis.
We tested the mathematically accuracy of the
calculation of the collective ECL.
We evaluated the Company’s individual loan
impairment assessments for a sample of Stage 3
exposures for compliance with IFRS 9
requirements; significant data inputs were
tested with reference to appropriate supporting
documentation, such as collateral valuations
and Land Registry records.
451
We evaluated the appropriateness of the
Company's disclosures particularly in relation to
significant judgements and estimates.
We concluded that the methodologies and
judgements used by management in
determining the impairment of loans and
advances to customers were reasonable.
Provision for pending litigation and claims
Refer to Note 5.3 "Provisions for pending litigation
and claims, within Note 5 “Significant and other
judgements, estimates and assumptions” and Note 36
“Provisions for pending litigation, claims, regulatory
and other matters”.
The Company is subject to various legal claims,
investigations and other proceedings. Provisions for
pending litigation, claims, regulatory and other
matters amounted to c.€93 million as at 31 December
2024, of which c.€68 million amounts to provisions
for pending litigation and claims.
Management together with the Company’s compliance
and legal departments and, where necessary, the risk
management department, review all existing and
potential legal cases, prepare an assessment of
potential outcomes for cases assessed individually and
collectively, and evaluate the probability of economic
outflow from the Company.
We determined this to be a key audit matter as the
recognition and measurement of provisions in respect
of pending litigation and claims requires a significant
level of judgement by management. The judgements
relate to the probability of obligating events requiring
an outflow of resources to settle the obligation and
estimation of the extent of any economic outflow.
We obtained an understanding of and evaluated
the design of controls relevant to the recognition
and measurement of pending litigation and
claims. We tested the operating effectiveness of
controls we sought to place reliance on.
We tested a risk based sample of management's
assessment of individual cases, including
whether economic outflow was assessed as
probable. We assessed management's provisions
against information contained in case files,
information obtained from external legal
advisors and where applicable post year end
information.
Where deemed necessary, we confirmed case
facts and judgements with external legal
advisors. For a sample of cases where
management assessed economic outflow as
probable, and therefore a provision was
recorded, we recalculated the provision and
performed sensitivity analysis on key
assumptions used by management.
We understood the basis of management’s
collective provisions, in circumstances where
these are applied, assessed the key assumptions
used by reference to past experience and
recalculated provisions booked. We inspected
the minutes of meetings of the Board of
Directors and certain of its committees for
evidence of any unidentified legal cases or
relevant developments in current cases,
including the minutes of the Settlement of Legal
Cases Committee.
452
We evaluated whether the disclosures made
addressed significant uncertainties and assessed
their adequacy against the relevant accounting
standards for both provisions and contingencies
as at 31 December 2024.
Based on evidence obtained, while noting the
inherent uncertainty in such matters, we
concluded that the recorded provisions for
pending litigation and claims were reasonable.
Valuation of stock of properties held directly
and indirectly through investment in
subsidiaries
Refer to Note 5.2 “Stock of property - estimation of
net realisable value” within Note 5 “Significant and
other judgements, estimates and assumptions", Note
26 “Stock of property” and Note 47 “Subsidiary
companies”.
The Company has over the years acquired a significant
number of properties as a result of restructuring
agreements with customers. These properties are held
by the Company either i) directly and accounted for as
stock of property and measured at the lower of their
cost or net realisable value in accordance with IAS 2,
or ii) held through investment in subsidiaries and
their valuation impacts the recoverable amount of the
subsidiaries which are held at cost less impairment in
line with IAS 36.
Valuations obtained from external valuers and the
holding periods for assets are key inputs to determine
the appropriate carrying value.
We determined this to be a key audit matter in light of
the large volume of properties held and the
uncertainty around market conditions when
estimating the carrying amount.
We understood and evaluated the design of the
overall control framework relevant to
repossessed properties and tested the operating
effectiveness of key controls around their
valuation.
We focused on the key inputs and assumptions
underlying the valuation of the properties. We
evaluated the competence, capability and
objectivity of management’s external experts
(property valuers). For a sample of external
valuation reports, we assessed the methodology
and assumptions used with the assistance of
PwC valuation experts, where relevant. We
tested the accuracy of the application by
management of illiquidity discounts for a
sample of properties held at year end.
For a sample of properties acquired during the
year, we tested ‘cost’ by reference to signed
‘debt-for-asset’ agreements entered into with
borrowers, and we tested the ‘net realisable
value’ at year end by reference to external
valuation reports.
We performed look-back procedures by
comparing the price achieved for disposals
during 2025 to the carrying values for those
assets at 31 December 2024.
We evaluated whether the disclosures address
significant judgements and estimates and
assessed their adequacy against the relevant
accounting standards.
453
We concluded that estimates used by
management in determining the carrying
amount of stock of property and investment in
subsidiaries were reasonable.
Privileged user access over financial reporting
systems
The Company’s financial reporting is reliant on a
number of complex IT systems, some of which have
been in place for a number of years and which are
inherently complex.
Privileged user access management controls are an
integral part of the IT environment to ensure both
system access and changes made to systems are
authorised and appropriate. In the context of our
audit scope, we consider privileged user access
management controls contribute to mitigating the risk
of potential fraud or error and an integral part of our
audit testing is the effectiveness of the privilege user
access management controls.
We determined privileged user access to be a key
audit matter as our audit approach relies on IT
dependent controls and data.
With the assistance of PwC IT audit specialists,
we obtained an understanding of the Company’s
IT environment and changes made during the
financial year. We evaluated the design and tested
the operating effectiveness of those IT General
Controls (ITGCs) on IT systems that support
financial reporting.
We performed testing on the design,
implementation and operating effectiveness of IT
General Controls (ITGCs) over privileged user
access provisioning, revocation, recertification
and authentication.
Where control deficiencies were identified we
considered the mitigating controls in place
and/or performed additional substantive audit
procedures.
Having completed the additional audit
procedures we concluded that we obtained
sufficient evidence for the purpose of our audit.
Reporting on other information
The Board of Directors is responsible for the other information. The other information comprises the information
included in the Forward Looking Statements and Notes, Management Report of Bank of Cyprus Public Company
Limited, Risk and Capital Management Report, Sustainability Statement, Alternative Performance Measures
Disclosures and the Additional Information - EU Taxonomy Disclosure Tables, but does not include the separate
financial statements and our auditor’s report thereon.
Our opinion on the separate financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the separate financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the separate
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
454
Responsibilities of the Board of Directors and those charged with governance for the Separate
Financial Statements
The Board of Directors is responsible for the preparation of the separate financial statements that give a true and fair
view in accordance with IFRS Accounting Standards as adopted by the European Union and the requirements of the
Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary to
enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the separate financial statements, the Board of Directors is responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Separate Financial Statements
Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
●
Identify and assess the risks of material misstatement of the separate financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
●
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
●
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Board of Directors.
●
Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
455
●
Evaluate the overall presentation, structure and content of the separate financial statements, including the
disclosures, and whether the separate financial statements represent the underlying transactions and events in a
manner that achieves a true and fair view.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the separate financial statements of the current period and are therefore the key audit
matters.
Report on Other Legal and Regulatory Requirements
Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in
our Independent Auditor’s Report, which is required in addition to the requirements of International Standards on
Auditing.
Appointment of the Auditor and Period of Engagement
We were first appointed as auditors of the Company on 2 April 2019 by the shareholder of the Company through an
extraordinary general meeting for the audit of the separate financial statements for the year ended 31 December 2019.
Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted
engagement appointment of 6 years.
Consistency of the Additional Report to the Audit Committee
We confirm that our audit opinion on the separate financial statements expressed in this report is consistent with the
additional report to the Audit Committee of the Company, which we issued on 26 March 2025 in accordance with Article
11 of the EU Regulation 537/2014.
Provision of Non-audit Services
We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72
of the Auditors Law of 2017 were provided. In addition, there are no non- audit services which were provided by us to
the Company and which have not been disclosed in the separate financial statements or the Management Report of Bank
of Cyprus Public Company Limited.
456
Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
●
In our opinion, based on the work undertaken in the course of our audit, the Management Report of Bank of
Cyprus Public Company Limited has been prepared in accordance with the requirements of the Cyprus
Companies Law, Cap. 113, and the information given is consistent with the separate financial statements.
●
In light of the knowledge and understanding of the Company and its environment obtained in the course of
the audit, we are required to report if we have identified material misstatements in the Management Report
of Bank of Cyprus Public Company Limited. We have nothing to report in this respect.
Other Matters
This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance
with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no other purpose.
We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose
knowledge this report may come to.
We have reported separately on the consolidated financial statements of the Company and its subsidiaries for the year
ended 31 December 2024.
The engagement partner on the audit resulting in this independent auditor’s report is Anna Loizou.
Anna Loizou
Certified Public Accountant and Registered Auditor
for and on behalf of
PricewaterhouseCoopers Limited
Certified Public Accountants and Registered Auditors
PwC Central, 43 Demostheni Severi Avenue
CY-1080 Nicosia, Cyprus
26 March 2025
Financial Statements 2024
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Financial Statements
for the year ended 31 December 2024
Contents
Page
Income Statement
459
Statement of Comprehensive Income
460
Balance Sheet
461
Statement of Changes in Equity
462
Statement of Cash Flows
464
Notes to the Financial Statements
1.
Corporate information
466
2.
Summary of accounting policies
466
3.
Going concern
467
4.
Economic and geopolitical environment
468
5.
Significant and other judgements, estimates and
assumptions
468
6.
Interest income and income similar to interest
income
480
7.
Interest expense and expense similar to interest
expense
480
8.
Fee and commission income and expense
481
9.
Net foreign exchange gains
482
10. Net gains on financial instruments
482
11. Other income
482
12. Staff costs
483
13. Other operating expenses
491
14. Credit losses on financial assets and impairment
net of reversals on non-financial assets
493
15. Income tax
493
16. Earnings per share
496
17. Cash, balances with central banks and loans and
advances to banks
497
18. Investments
498
19. Derivative financial instruments
503
20. Fair value measurement
509
21. Loans and advances to customers
517
22. Balances and transactions with Group companies
520
23. Investments in associates
522
24. Property and equipment
523
25. Intangible assets
524
26. Stock of property
525
27. Prepayments, accrued income and other assets
526
28. Funding from central banks
527
29. Customer deposits
527
30. Debt securities in issue and Subordinated liabilities
528
31. Accruals, deferred income, other liabilities and
other provisions
530
32. Share capital
530
33. Distributions
531
34. Retained earnings
531
35. Fiduciary transactions
532
36. Provisions for pending litigation, claims, regulatory
and other matters
532
37. Contingent liabilities and commitments
537
38. Additional information on cash flow statement
538
39. Cash and cash equivalents
538
40. Leases
540
41. Analysis of assets and liabilities by expected
maturity
541
42. Risk management - Credit risk
542
43. Risk management - Market risk
570
44. Risk management - Liquidity and funding risk
578
45. Capital management
585
46. Related party transactions
586
47. Subsidiary companies
591
48. Offsetting financial assets and liabilities
593
49. Events after the reporting period
595
458
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Income Statement
for the year ended 31 December 2024
2024
2023
Notes
€000
€000
Interest income
6
1,000,936
932,109
Income similar to interest income
6
10,466
18,052
Interest expense
7
(186,813)
(149,697)
Expense similar to interest expense
7
(1,289)
(1,293)
Net interest income
823,300
799,171
Fee and commission income
8
168,077
170,244
Fee and commission expense
8
(12,958)
(12,266)
Net foreign exchange gains
9
27,285
28,888
Net gains on financial instruments
10
5,581
4,632
Net (losses)/gains on derecognition of financial assets measured at
amortised cost
(13)
6,361
Dividend income from subsidiaries
22
22,958
85,118
Net (losses)/gains from revaluation and disposal of investment properties
(641)
303
Net gains on disposal of stock of property
26
5,054
10,004
Other income
11
3,447
7,147
Total operating income
1,042,090
1,099,602
Staff costs
12
(186,752)
(177,965)
Special levy on deposits and other levies/contributions
13
(39,115)
(42,380)
Provisions for pending litigation, claims, regulatory and other matters (net of
reversals)
36
(14,288)
(28,084)
Other operating expenses
13
(136,755)
(136,154)
Operating profit before credit losses and impairment
665,180
715,019
Credit losses on financial assets
14
(32,376)
(69,335)
Impairment net of reversals on non-financial assets
14
(78,588)
(69,598)
Profit before tax
554,216
576,086
Income tax
15
(77,650)
(66,271)
Profit after tax for the year
476,566
509,815
Basic and diluted profit per share (€ cent)
16
5.0
5.3
Information about the Company's turnover is analysed in Note 6 of the Consolidated Financial Statements of
the Company.
459
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Statement of Comprehensive Income
for the year ended 31 December 2024
2024
2023
Notes
€000
€000
Profit for the year
476,566
509,815
Other comprehensive income (OCI)
OCI that may be reclassified in the income statement in subsequent
periods
(5,492)
2,972
Fair value reserve (debt instruments)
(5,492)
2,972
Net (losses)/gains on investments in debt instruments measured at fair
value through OCI (FVOCI)
(5,492)
3,304
Transfer to the income statement on disposal
-
(332)
OCI not to be reclassified in the income statement in subsequent
periods
(749)
9,506
Fair value reserve (equity instruments)
324
25
Net gains on investments in equity instruments designated at FVOCI
324
25
Property revaluation reserve
208
8,642
Net fair value gains before tax
24
-
11,916
Deferred tax credit/(charge)
15
208
(3,274)
Actuarial (losses)/gains on defined benefit plans
(1,281)
839
Remeasurement (losses)/gains on defined benefit plans
12
(1,281)
839
Other comprehensive (loss)/income for the year net of taxation
(6,241)
12,478
Total comprehensive income for the year
470,325
522,293
460
461
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Statement of Changes in Equity
for the year ended 31 December 2024
Attributable to shareholders of the Company
Share
capital
(Note 32)
Retained
earnings
(Note 34)
Other capital
reserves
(Note 12)
Property
revaluation
reserve
Financial
instruments
fair value
reserve
Foreign
currency
translation
reserve
Other equity
instruments
(Note 32)
Total
equity
€000
€000
€000
€000
€000
€000
€000
€000
1 January 2024
959,794
1,036,526
917
59,926
11,311
(1,266)
220,000
2,287,208
Profit for the year
-
476,566
-
-
-
-
-
476,566
Other comprehensive (loss)/income after tax for the year
-
(1,281)
-
208
(5,168)
-
-
(6,241)
Total comprehensive income/(loss) after tax for the year
-
475,285
-
208
(5,168)
-
-
470,325
Dividends (Note 33)
-
(136,590)
-
-
-
-
-
(136,590)
Share-based benefits - cost (Note 12)
-
-
932
-
-
-
-
932
Transfers to retained earnings
-
619
-
-
(619)
-
-
-
Payment of coupon to AT1 holders (Note 32)
-
(26,125)
-
-
-
-
-
(26,125)
31 December 2024
959,794
1,349,715
1,849
60,134
5,524
(1,266)
220,000
2,595,750
462
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Statement of Changes in Equity
for the year ended 31 December 2024
Attributable to shareholders of the Company
Share
capital
(Note 32)
Retained
earnings
(Note 34)
Other capital
reserves
(Note 12)
Property
revaluation
reserve
Financial
instruments
fair value
reserve
Foreign
currency
translation
reserve
Other equity
instruments
(Note 32)
Total
equity
€000
€000
€000
€000
€000
€000
€000
€000
1 January 2023
959,794
582,647
322
51,281
8,262
(1,266)
220,000
1,821,040
Profit for the year
-
509,815
-
-
-
-
-
509,815
Other comprehensive income after tax for the year
-
839
-
8,642
2,997
-
-
12,478
Total comprehensive income after tax for the year
-
510,654
-
8,642
2,997
-
-
522,293
Dividends (Note 33)
-
(22,310)
-
-
-
-
-
(22,310)
Shared-based benefits - cost (Note 12)
-
-
595
-
-
-
-
595
Defence contribution
-
(313)
-
-
-
-
-
(313)
Payment of coupon to AT1 holders (Note 32)
-
(27,339)
-
-
-
-
-
(27,339)
Issue of other equity instruments (Note 32)
-
-
-
-
-
-
220,000
220,000
Repurchase of other equity instruments (Note 32)
-
(6,820)
-
-
-
-
(220,000)
(226,820)
Transfer to the income statement
-
-
-
62
-
-
-
62
Transfers to retained earnings
-
7
-
(59)
52
-
-
-
31 December 2023
959,794
1,036,526
917
59,926
11,311
(1,266)
220,000
2,287,208
463
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Statement of Cash Flows
for the year ended 31 December 2024
2024
2023
Notes
€000
€000
Profit before tax
554,216
576,086
Adjustments for:
Depreciation of property and equipment and amortisation of intangible assets
24,251
24,086
Impairment of stock of property and other non-financial assets
15,308
11,975
Impairment/(reversal of impairment) of balances with Group Companies
14
812
(4,468)
Credit losses on financial assets
14
31,564
73,803
Net gains on derecognition of financial assets measured at amortised cost
13
(6,361)
Amortisation of discounts/premiums and interest on debt securities
(102,922)
(64,185)
Dividend income
(23,100)
(85,249)
Net loss on disposal of investment in debt securities measured at FVOCI
-
438
Loss/(gain) from revaluation of financial instruments designated as fair value hedges
40,312
(1,655)
Interest on subordinated liabilities and debt securities in issue
64,310
39,409
Interest on reverse repurchase agreements
(27,012)
(3,219)
Interest on funding from central banks
21,842
67,194
Share-based benefits cost
932
595
Losses/(gains) on disposal/dissolution of subsidiary companies
4,712
(1,840)
Impairment of investment in subsidiaries
63,280
57,623
Net losses on balances with Group companies
-
1,347
Net gains on disposal of stock of property and investment properties
(5,276)
(10,667)
Profit on sale and write offs of property and equipment and intangible assets
(8)
(52)
Interest expense on lease liability
228
291
Net losses from revaluation of investment properties
863
360
Net exchange differences
(17,519)
8,892
646,806
684,403
Change in:
Loans and advances to banks
(429,265)
(30,487)
Deposits by banks
(103,320)
(38,051)
Obligatory balances with central banks
(58,523)
55,358
Customer deposits
1,182,361
338,596
Debit balances with Group companies
(66,165)
16,597
Credit balances with Group companies
24,424
13,574
Loans and advances to customers
(379,550)
48,533
Prepayments, accrued income and other assets
88,718
89,384
Provisions for pending litigation, claims, regulatory and other matters
(31,978)
3,179
Accruals, deferred income, other liabilities and other provisions
4,302
1,430
Derivative financial instruments
(57,534)
(1,091)
Investments measured at FVPL
(4,504)
5,589
Stock of property
65,196
88,003
880,968
1,275,017
Tax paid
(16,807)
(8,369)
Net cash from operating activities
864,161
1,266,648
Cash flows from investing activities
Purchases of debt, treasury bills and equity securities
(1,395,497)
(1,544,497)
Purchase of reverse repurchase agreements
(600,000)
(400,000)
Proceeds on disposal/redemption of investments in debt and equity securities
819,778
542,424
Interest received from debt securities
66,140
36,334
Interest received from reverse repurchase agreements
20,032
-
Dividend income from equity securities
23,100
85,249
Payment for purchase of Velocity 2
-
(3,649)
Proceeds on disposal of subsidiaries and associates
83,850
31,201
Cash contribution to subsidiaries
-
(4,894)
Purchases of property and equipment
24
(16,976)
(4,067)
Additions to intangible assets
25
(10,543)
(8,216)
Proceeds on disposals of property and equipment and intangible assets
27
108
Proceeds on disposals of investment properties
23,835
4,826
Net cash used in investing activities
(986,254)
(1,265,181)
464
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Statement of Cash Flows
for the year ended 31 December 2024
2024
2023
Notes
€000
€000
Cash flow from financing activities
Dividend paid on ordinary shares
(136,590)
(22,310)
Payment of coupon to AT1 holders
32
(26,125)
(27,339)
Issue of other equity instruments
32
-
220,000
Repurchase of other equity instruments
32
-
(226,820)
Repayment of funding from central banks
(2,065,710)
-
Proceeds from the issue of debt securities in issue (net of costs)
297,767
347,689
Interest on subordinated liabilities
(19,875)
(19,875)
Interest on debt securities in issue
(33,313)
(7,500)
Principal elements of lease payments
(8,760)
(6,759)
Net cash (used in)/from financing activities
(1,992,606)
257,086
Net (decrease)/increase in cash and cash equivalents
(2,114,699)
258,553
Cash and cash equivalents 1 January
9,806,421
9,547,868
Cash and cash equivalents 31 December
39
7,691,722
9,806,421
Additional information on the cash flow statement is provided in Note 38.
465
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
1.
Corporate information
Bank of Cyprus Public Company Limited (the Company) is the company of the Bank of Cyprus Group (the
Group). The principal activities of the Company involve the provision of banking, financial services and
management and disposal of property predominately acquired in exchange of debt.
The Company is a significant credit institution for the purposes of the SSM Regulation and has been
designated by the CBC as an 'Other Systemically Important Institution' (O-SII). The Company is subject to
joint supervision by the ECB and the CBC for the purposes of its prudential requirements.
The Company is a limited liability company incorporated in 1930 under the Cyprus Companies Law. The
Company remains a public company for the purposes of the Cyprus Income Tax Laws.
The shares of the parent company Bank of Cyprus Holdings Public Limited Company (BOCH), a company
incorporated in Ireland, are listed and trading on the Cyprus Stock Exchange (CSE) and from 23 September
2024 the shares of BOCH are also listed and trading on the Athens Stock Exchange (ATHEX). During the
year until 19 September 2024, the shares of BOCH were also listed and trading on London Stock Exchange
(LSE). On 19 September 2024, BOCH's shares were delisted and trading was suspended from the LSE.
The financial statements are available at the Bank of Cyprus Public Company Limited registered office (51
Stasinos Street, 2002 Strovolos, Nicosia, Cyprus) and on the Group's website http://www.bankofcyprus.com
(Group/Investor Relations/Financial Results).
The Annual Financial Report of Bank of Cyprus Holdings Public Limited Company is available on the Group's
website http://www.bankofcyprus.com (Group/Investor Relations/Financial Results).
Financial Statements
The Financial Statements of the Bank of Cyprus Public Company Limited for the year ended 31 December
2024 (the Financial Statements) were authorised for issue by a resolution of the Board of Directors on 26
March 2025.
2.
Summary of accounting policies
2.1
Basis of preparation
466
The Financial Statements have been prepared on a historical cost basis, except for properties held for own
use and investment properties, investments at fair value through other comprehensive income (FVOCI),
financial assets (including loans and advances to customers and investments) at fair value through profit or
loss (FVPL) and derivative financial assets and derivative financial liabilities that have been measured at fair
value, non-current assets held for sale measured at fair value less costs to sell and stock of property
measured at net realisable value where this is lower than cost. The carrying values of recognised assets and
liabilities that are hedged items in fair value hedges, and otherwise carried at cost, are adjusted to record
changes in fair value attributable to the risks that are being hedged.
Statement of compliance
The Financial Statements have been prepared in accordance with IFRS Accounting Standards as adopted by
the European Union (EU) and with the requirements of the Cyprus Companies Law, Cap. 113 applicable to
companies reporting under IFRS Accounting Standards.
Presentation of the Financial Statements
The Financial Statements are presented in Euro (€) and all amounts are rounded to the nearest thousand,
except where otherwise indicated. A comma is used to separate thousands and a dot is used to separate
decimals.
The Company presents its balance sheet broadly in order of liquidity. An analysis regarding expected
recovery or settlement of assets and liabilities within twelve months after the balance sheet date and more
than twelve months after the balance sheet date is presented in Note 41.
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
2.
Summary of accounting policies (continued)
2.1
Basis of preparation (continued)
The Financial Statements include the branch of the Company in Greece.
Comparative information
Comparative information was restated following a change in the presentation of segmental analysis as
detailed in Note 6 of the Consolidated Financial Statements of the Company for the year ended 31
December 2024. This change led to a respective restatement in Notes 21, 29, 42.2, 42.3 and 42.5 where
analysis by business line is presented. The relevant tables are identified as restated.
The restatements did not have an impact on the results for the year or equity of the Company.
Change in presentation
The Company has changed the presentation of the interest component of fair value hedging derivatives
used in accounting hedges to more appropriately reflect the impact of the accounting hedges. As a result,
the net interest income/expense on qualifying hedge derivatives designated as fair value hedges, is now
presented within ‘Interest income’ where the derivative is used to hedge an asset and as ‘Interest expense’
where the derivative is used to hedge a liability, and is presented together with the interest component of
the respective hedged asset and hedged liability. This was previously presented in 'Income similar to
interest income' and 'Expense similar to interest expense'. The comparative amounts for 2023 have been
represented.
2.2
Accounting policies and changes in accounting policies and disclosures
The accounting policies adopted in preparing the Financial Statements of the Company are consistent with
those adopted in preparing the Consolidated Financial Statements of the Company, a summary of which is
presented in Note 2 of the Consolidated Financial Statements of the Company for the year ended 31
December 2024.
In addition the following policies are adopted:
Investments in subsidiaries, associates and joint ventures
Investments in subsidiaries, associates and joint ventures are measured at cost less impairment.
The Company periodically evaluates the recoverability of the investment in subsidiary companies whenever
indicators of impairment are present. Indicators of impairment include such items as declines in revenues,
earnings or cash flows of the subsidiaries or material adverse changes in the economic or political stability
of the country that the subsidiaries operate, which may indicate that the carrying amount of the investment
in subsidiary companies is not recoverable. If facts and circumstances indicate that the investment in
subsidiary companies may be impaired, the recoverable amount of each subsidiary would be compared to
the carrying amount of the investment in the subsidiary in the Company’s financial statements to determine
if impairment of the investment is necessary. An impairment loss is recognised equal to the excess of the
carrying amount of the investment in the subsidiary over its recoverable amount.
The accounting policies adopted are consistent with those of the previous financial year, except for the
adoption of new and amended standards and interpretations as explained in Note 2.2.1 of the Consolidated
Financial Statements of the Company for the year ended 31 December 2024. These did not have an impact
on the Financial Statements of the Company.
3.
Going concern
The Directors have made an assessment of the Company’s ability to continue as a going concern for a
period of 12 months (the period of assessment) from the date of approval of these Financial Statements.
The Directors have concluded that there are no material uncertainties which would cast a significant doubt
over the ability of the Company and the Group to continue to operate as a going concern for a period of 12
months from the date of approval of these Financial Statements.
467
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
3.
Going concern (continued)
In making this assessment, the Directors have considered a wide range of information relating to present
and future conditions, including projections of profitability, cash flows, capital requirements and capital
resources, liquidity and funding position, taking also into consideration, the Group’s Financial Plan approved
by the Board in February 2025 (the ‘Plan’) and the operating environment. The Group has sensitised its
projection to cater for a downside scenario and has used reasonable economic inputs to develop its
medium-term strategy.
Capital
The Directors and management have considered the Group’s forecasted capital position, including the
potential impact of a deterioration in economic conditions. The Group has developed capital projections
under a base and an adverse scenario and the Directors believe that the Group has sufficient capital to meet
its regulatory capital requirements throughout the period of assessment.
Funding and liquidity
The Directors and management have considered the Group’s funding and liquidity position and are satisfied
that the Group has sufficient funding and liquidity throughout the period of assessment. The Group
continues to hold a significant liquidity buffer at 31 December 2024 that can be monetised in a period of
stress.
4.
Economic and geopolitical environment
Cyprus is a small, open, services-based economy, with a large external sector and high reliance on tourism
and international business and information and communication technology (ICT) services. As a result,
external factors which are beyond the control of the Group, including developments in the European Union
and in the global economy, or in specific countries with which Cyprus maintains close economic and
investment links, can have a significant impact on domestic economic activity. A number of macro and
market related risks, including weaker economic activity, a highly volatile interest rate environment, and
higher competition in the financial services industry, could negatively affect the Group’s business
environment, results, and operations.
There are heightened geopolitical tensions between the world’s largest economies adding uncertainty to the
global economy outlook. War and geopolitics can be very disruptive to the economy. Continued
uncertainties arise from the ongoing wars in Russia/Ukraine and the Middle East.
In this context, the Group is closely monitoring the developments, utilising dedicated governance structures
including a Crisis Management Committee as required, and has assessed the impact the crisis has on the
Group’s operations and financial performance. Furthermore, the Group in its models includes related events
in its stress testing scenarios in order to gain a better understanding of the potential capital impact.
Although, there have been distinct improvements in Cyprus’ risk profile after the banking crisis, substantial
risks remain. Cyprus’ overall country risk is a combination of sovereign, currency, banking, political and
economic structure risk, influenced by external developments. Given the above, the Group recognises that
unforeseen political events can have negative effects on the Group’s activities.
The Group is continuously monitoring the current affairs and the impact of the forecasted macroeconomic
conditions and geopolitical developments on the Group’s strategy to proactively manage emerging risks.
5.
Significant and other judgements, estimates and assumptions
The preparation of the Financial Statements requires the Company’s Board of Directors and management to
make judgements, estimates and assumptions that can have a material impact on the amounts recognised
in the Financial Statements and the accompanying disclosures, as well as the disclosures of contingent
liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a
material adjustment to the carrying amount of assets or liabilities affecting future periods.
468
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities are described below. The Company based its assumptions and estimates on parameters available
when the Financial Statements were prepared. Existing circumstances and assumptions about future
developments may, however, change due to market changes or circumstances beyond the control of the
Company. Such changes are reflected in the assumptions when they occur.
The most significant judgements, estimates and assumptions relate to the calculation of expected credit
losses (ECL), the estimation of the net realisable value of stock of property and the provisions for pending
litigation and claims, which are presented in Notes 5.1 to 5.3 below. Other judgements, estimates and
assumptions are disclosed in Notes 5.4 to 5.10.
5.1
Calculation of expected credit losses
The calculation of ECL requires management to apply significant judgement and make estimates and
assumptions, involving significant uncertainty at the time these are made. Changes to these estimates and
assumptions can result in significant changes to the timing and amount of ECL to be recognised. The
Company’s calculations are outputs of models, of underlying assumptions on the choice of variable inputs
and their interdependencies.
It has been the Company’s policy to regularly review its models in the context of actual loss experience and
adjust when necessary.
Elements of ECL models that are considered accounting judgements and estimates include:
Assessment of significant increase in credit risk (SICR)
IFRS 9 does not include a definition of significant increase in credit risk. The Company assesses whether
significant increase in credit risk has occurred since initial recognition using predominantly quantitative and
in certain cases qualitative information and backstop indicators. The determination of the relevant criteria to
determine whether a significant increase in credit risk has occurred, is based on statistical metrics and could
be subject to management judgement. The relevant criteria are set, monitored and updated on a yearly
basis by the Risk Management Division and endorsed by the Group Provisions Committee. Lifetime ECL
applies when a significant increase in credit risk has occurred on an individual or collective basis.
Determining the probability of default (PD) at initial recognition requires management estimates in
particular cases. Specifically, in the case of exposures existing prior to the adoption of IFRS 9, a
retrospective calculation of the PD is made in order to quantify the risk of each exposure at the time of the
initial recognition. In certain cases, estimates about the date of initial recognition might be required.
For the retail portfolio, the Company uses a PD at origination incorporating behavioural information (score
cards) whereas, for the corporate portfolio, the Company uses the internal credit rating information. For
revolving facilities, management estimates are required with respect to the lifetime and hence a behavioural
maturity model is utilised, assigning an expected maturity based on product and customer behaviour.
Scenarios and macroeconomic factors
The Company determines the ECL, which is a probability weighted amount, by evaluating a range of
possible outcomes. Management uses forward looking scenarios and assesses the suitability of weights
used. These are based on management’s assumptions taking into account macroeconomic, market and
other factors. Changes in these assumptions and in other external factors could significantly impact ECL.
Macroeconomic inputs and weights per scenario are monitored by the Economic Research Department and
are based on internal model analysis and expert judgement, considering also external forecasts.
469
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
The Cypriot economy has demonstrated remarkable resilience and growth in recent years, navigating
through global uncertainties and regional challenges. In 2024, the economy achieved a growth rate of
3.4%, driven by rising exports and strong economic activity in key sectors such as tourism, information and
communications, construction and trade. This follows a period of strong growth with an annual average of
5.1% in the period 2015-2023. The unemployment rate has remained low, dropping to 4.9% in 2024
indicating near-full employment conditions. Inflation has been successfully stabilized, with rates declining
from 3.9% in 2023 to 2.3% in 2024. General government debt metrics have significantly improved in recent
years. The government debt-to-GDP ratio dropped to 65.4% in December 2024 from 73.6% in 2023 and
113.6% at the end of 2020. Looking ahead, continued budgetary surpluses and favourable debt dynamics
are expected to further reduce the debt ratio, potentially dropping below 60% by 2026. Growth in the
medium term, is expected to continue to outpace eurozone peers. Growth is expected to average about 3%
annually in 2025-2027, driven by services exports and private consumption on the expenditure side and by
international business services and the ICT sector on the production side.
The credit profile of Cyprus has improved significantly in the more recent period, reflecting solid medium-
term growth outlook, good institutional strength and effective policy making.
However, substantial risks remain in terms of the domestic operating environment, as well as the external
environment on which it depends. Public debt has dropped in relation to GDP, but government expenditures
need more rationalisation. In the banking sector non-performing exposures need to drop further. The
current account deficit remains sizable. At the same time long-term yields may remain elevated for longer,
despite interest rate cuts by the monetary policy, if inflation pressures increase and geopolitical
uncertainties escalate.
For the ECL, the Company updated its forward-looking scenarios, factoring in updated macroeconomic
assumptions and other monetary and fiscal developments at the national and the EU level based on
developments and events as at the reporting date.
For the ECL calculations, the Company uses an unbiased and probability weighted amount that is
determined by evaluating a range of possible outcomes, as described in Note 2.17.5 of the Consolidated
Financial Statements of Company for the year ended 31 December 2024. The approach employed, involves
scenario generation, where the scenarios applied by the Bank are anchored to the baseline scenario. All
scenarios are updated on a quarterly basis for the purposes of the ECL calculation in tandem with the
baseline scenario. The updated macroeconomic inputs (incorporating any uncertainties and downside risks)
are therefore reflected in the scenario parameters, starting from the baseline and updated in turn for the
adverse and the favourable scenarios accordingly. If the baseline becomes more pessimistic, then both the
favourable and downside scenarios would be adjusted accordingly, reflecting the fact that the economic
variables used in the scenarios are not constant but are conditional on the economy’s position in the
business cycle. A dynamic scenario approach is followed as explained above where the scenario parameters
derived reflect the Company’s view of the economic conditions. The probability weights attached to the
scenarios are a function of their relative position on the distribution, with a lower probability weight
attached to the scenarios that were assessed to be more distant from the centre of the distribution. The
baseline scenario is defined over the range of values corresponding to 50% probability of equidistant
deviations around the mean of the historical distribution. The favourable and adverse scenarios are defined
over the range of values to the right and left of the distribution respectively, each corresponding to 25%
probability.
470
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
The most significant macroeconomic variables for each of the scenarios used by the Company as at 31
December 2024 and 2023 are presented in the table below. The Company uses three different economic
scenarios in the calculation of default probabilities and provisions. The scenarios factor-in updated
macroeconomic assumptions and other monetary and fiscal developments based on events as at the
reporting date. The Company has used the 30-50-20 probability structure for the adverse, baseline and
favourable scenarios respectively compared to the 25-50-25 structure derived using the method described
in Note 2.17.5 of the Consolidated Financial Statements of the Company for the year ended 31 December
2024 and above. This reflects management's view of specific characteristics of the Cyprus economy that
render it more vulnerable to external and internal shocks.
31 December 2024
Year
Scenario
Weight
%
Real GDP
(% change)
Unemployment
rate (% of
labour force)
Consumer
Price Index
(average
% change)
RICS House
Properties
Price Index
(average
% change)
2025
Adverse
30.0
-1.4
5.4
-0.7
-3.9
Baseline
50.0
3.0
4.5
1.8
2.2
Favourable
20.0
4.2
4.4
2.5
3.8
2026
Adverse
30.0
-0.9
5.6
1.2
-0.2
Baseline
50.0
2.9
4.5
2.2
2.3
Favourable
20.0
3.1
4.3
2.1
2.7
2027
Adverse
30.0
2.0
5.3
1.8
2.3
Baseline
50.0
2.8
4.5
2.0
2.2
Favourable
20.0
2.5
4.4
2.0
2.6
2028
Adverse
30.0
3.4
5.2
1.9
2.9
Baseline
50.0
2.6
4.5
1.9
2.3
Favourable
20.0
2.4
4.4
1.9
2.6
2029
Adverse
30.0
2.8
5.2
1.9
2.5
Baseline
50.0
2.5
4.5
1.8
2.2
Favourable
20.0
2.4
4.4
1.9
2.3
471
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
31 December 2023
Year
Scenario
Weight
%
Real GDP
(% change)
Unemployment
rate (% of
labour force)
Consumer
Price Index
(average
% change)
RICS House
Properties
Price Index
(average
% change)
2024
Adverse
30.0
-1.6
6.3
0.9
-3.1
Baseline
50.0
2.7
5.8
2.5
3.0
Favourable
20.0
3.5
5.6
3.1
3.7
2025
Adverse
30.0
-0.7
6.9
1.2
0.6
Baseline
50.0
2.6
5.4
2.5
2.3
Favourable
20.0
3.1
5.2
2.6
2.5
2026
Adverse
30.0
2.2
7.0
1.2
1.9
Baseline
50.0
2.6
5.1
2.1
2.2
Favourable
20.0
2.7
4.9
2.0
2.3
2027
Adverse
30.0
3.6
6.7
2.3
2.4
Baseline
50.0
2.4
4.9
2.3
2.2
Favourable
20.0
2.6
4.6
2.2
2.3
2028
Adverse
30.0
3.5
6.4
2.2
2.4
Baseline
50.0
2.3
4.6
2.2
2.3
Favourable
20.0
2.5
4.2
2.3
2.4
The adverse scenarios may outpace the base and favourable scenarios after the initial shock has been
adjusted to and the economy starts to expand from a lower base. Thus, in the adverse scenario GDP will
follow a growth trajectory that will ultimately equal and surpass the baseline before converging. Property
prices are determined by multiple factors with GDP growth featuring prominently.
The baseline scenario was updated for the 31 December 2024 reporting, considering available information
and relevant developments until then, and is described next. Growth moderated in 2023 following strong
recoveries in 2021-2022, but remained above the Euro area average, supported by the continued recovery
in tourism and expanding services activity. Real GDP increased by 2.6% on average in 2023 and growth
accelerated in 2024, averaging 3.4%. Tourist arrivals in Cyprus exceeded 4.0 million in 2024, up by an
annual 5.1%. Under the baseline scenario the economy is expected to advance by 3.0% in 2025 and
consumer price inflation will decelerate to 1.8%. House prices are expected to rise by 2.2% in 2025
following strong increases in 2022-2024.
The adverse scenario is consistent with assumptions for a global economic slowdown driven by geopolitical
tensions, tariff wars, elevated inflation expectations and the steepening of yield curves. The Cypriot
economy relies on services, particularly on tourism, international business, and information and
communication services with an outward orientation. This makes the Cypriot economy more exposed than
other economies to the international environment and terms of trade shocks. Weaker external demand will
lead to a slowdown of economic activity. The adverse scenario assumes a deeper impact of these conditions
on the real economy than under the baseline scenario. Under the adverse scenario, real GDP is expected to
drop by 1.4% in 2025 as a whole, and contract further by 0.9% in 2026. In the labour market the
unemployment rate will rise only modestly to 5.4% and inflation will actually turn negative by 0.7%. House
prices will also slow in line with the contraction in real GDP.
472
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
The Company uses actual values for the input variables. These values are sourced from the Cyprus
Statistical Service, the Eurostat, the Central Bank of Cyprus for the residential property price index, and the
European Central Bank for interest rates. Interest rates are also sourced from the Eurostat. In the case of
property prices, the Company additionally uses data from the Royal Institute of Chartered Surveyors. For
the forward reference period, the Company uses the forecast values for the same variables, as prepared by
the Company's Economic Research Department. The results of the internal forecast exercises are consistent
with publicly available forecasts from official sources including the European Commission, the International
Monetary Fund, the European Central Bank and the Ministry of Finance of the Republic of Cyprus.
Qualitative adjustments or overlays are occasionally made when inputs calculated do not capture all the
characteristics of the market. These are reviewed and adjusted, if considered necessary, by the Risk
Management Division, endorsed by the Group Provisions Committee and approved by the Board Risk and
Audit Committees. Qualitative adjustments or overlays are described in the below sections as applicable.
For Stage 3 customers, the calculation of individually assessed provisions is the weighted average of three
scenarios: base, adverse and favourable. The base scenario focuses on the following variables, which are
based on the specific facts and circumstances of each customer: the operational cash flows, the timing of
recovery of collaterals and the haircuts from the realisation of collateral. The base scenario is used to derive
additional either more favourable or more adverse scenarios. Under the adverse scenario, operational cash
flows are decreased by 50%, applied haircuts on real estate collateral are increased by 50% and the timing
of recovery of collaterals is increased by one year with reference to the baseline scenario, whereas under
the favourable scenario applied haircuts are decreased by 5%, with no change in the recovery period with
reference to the baseline scenario. Assumptions used in estimating expected future cash flows (including
cash flows that may result from the realisation of collateral) reflect current and expected future economic
conditions and are generally consistent with those used in the Stage 3 collectively assessed exposures.
The above assumptions are also influenced by the ongoing regulatory dialogue the Company maintains with
its lead regulator, the ECB, and other regulatory guidance and interpretations issued by various regulatory
and industry bodies such as the ECB and the EBA.
Any changes in these assumptions or difference between assumptions made and actual results could result
in significant changes in the estimated amount of expected credit losses of loans and advances to
customers.
For collectively assessed customers the calculation is also the weighted average of three scenarios: base,
adverse and favourable.
Assessment of loss given default (LGD)
For the estimation of loss given default (LGD) key estimates are the timing and net recoverable amount
from repossession or realisation of collaterals (including through portfolio sales) which mainly comprise real
estate assets.
Assumptions have been made about the future changes in property values, as well as the timing for the
realisation of collateral, taxes and expenses on the repossession and subsequent sale of the collateral as
well as any other applicable haircuts. Indexation has been used as the basis to estimate updated market
values of properties, supplemented by management judgement where necessary, given the difficulty in
differentiating between short-term impacts and long term structural changes and the shortage of market
evidence for comparison purposes. Assumptions were made on the basis of a macroeconomic scenario for
future changes in property prices and qualitative adjustments or overlays were applied to the projected
future property value increases to restrict the level of future property price growth to 0% for all scenarios
for loans and advances to customers which are secured by property collaterals.
473
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Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
At 31 December 2024, the weighted average haircut (including liquidity haircut and selling expenses) used
for the provision calculation for loans and advances to customers (for both Stage 1 and Stage 2 exposures
and collectively assessed Stage 3 exposures) is approximately 42% under the baseline scenario, excluding
those classified as held for sale (2023: approximately 31.3%). The increase in the haircut percentage is
primarily due to the calibration of the collateral realisation model during the first half of 2024, as explained
in section 'Calibration of IFRS 9 models and removal of overlays in relation to economic conditions'.
At 31 December 2024, the timing of recovery from real estate collaterals used for the provision calculation
for loans and advances to customers (for both Stage 1 and Stage 2 exposures and collectively assessed
Stage 3 exposures) has been estimated to be on average seven years under the baseline scenario,
excluding those classified as held for sale (2023: average of six years).
In the 2023 Financial Statements the above disclosures in relation to the weighted average haircut and
timing of recovery from real estate collaterals were by reference to exposures that were collectively
assessed and not including exposures which were assessed for staging purposes on an individual basis. The
comparative information presented above has been updated for aligning with the disclosure for the year
ended 31 December 2024.
For the calculation of individually assessed provisions of Stage 3 exposures, the timing of recovery of
collaterals as well as the haircuts used are based on the specific facts and circumstances of each case. For
specific cases judgement may also be exercised over staging during the individual assessment.
Any changes in these assumptions or variance between assumptions made and actual results could result in
significant changes in the estimated amount of expected credit losses of loans and advances to customers.
Modelling adjustments
Forward looking models have been developed for ECL parameters, (PD, EAD, LGD) for all portfolios and
segments sharing similar characteristics. Model validation (initial and periodic) is performed by the
independent validation unit within the Risk Management Division and involves assessment of a model under
both quantitative (i.e. stability and performance) and qualitative terms. The frequency and level of rigour of
model validation is commensurate to the overall use, complexity and materiality of the models, (i.e. risk
tiering). In certain cases, judgement is exercised in the form of expert judgment and/or management
overlay by applying adjustments on the modelled parameters. Governance of these models lies with the
Risk Management Division, where a governance process is in place around the determination of the
impairment measurement methodology including inputs, assumptions and overlays. Any management
overlays are prepared by the Risk Management Division, endorsed by the Group Provisions Committee and
approved by the Board Risk and Audit Committees.
Calibration of IFRS 9 models and removal of overlays in relation to economic conditions in 2024
During the year ended 31 December 2024, the Company performed a calibration of its IFRS 9 models which
involved the reassessment and update of the ECL model parameters (PDs, LGDs and cure rates) and SICR
thresholds so as to incorporate in the models the effects of the recent economic conditions and experience,
which were previously reflected in the ECL through the use of overlays. Further, the calibration involved the
Company updating and revising the LGD parameter, as part of the Company’s ongoing review and update of
models as to incorporate updated data information and to reflect an update on realisation paths and rates
applied.
More specifically, the Company proceeded with model calibrations affecting the probability of default
parameter (the ‘PD-macro’), the SICR parameter, the probability of cure model and the collateral realisation
model and introducing an LGD floor, as explained below:
474
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
i.
The calibration of the PD macro model included the introduction of inflation related variables and the
inclusion of post COVID period data to capture the low default environment as well as the integration
of a dynamic adjustment to calibrate (up or down) the model projection based on the relationship
between the past model projections and the actual observed defaults (structural breaks in the
relationship e.g. between a specific macro factor and the PD value). Refinement of the PD
adjustment factor was also made during 2024, to include a more extended observation period for the
SICR parameter. The net impact of this calibration was €4.2 million ECL release during the year
ended 31 December 2024.
ii.
As a result of the PD-macro calibration, the SICR model was revisited following a statistical model
methodology calibration, whilst introducing an absolute threshold to increase stability. The
corresponding impact was €1.4 million ECL release during the year ended 31 December 2024 and
net transfer of related loans from Stage 2 to Stage 1.
iii. With respect to the probability of cure model, a different curability period was introduced for each
macro-economic scenario following a detailed statistical analysis examining the relationship of cure
rates with macro indicators and concluding that curability should differentiate at the level of the
scenario. The respective impact was an ECL charge of €2.1 million during the year ended 31
December 2024.
iv. As a result of calibrations (i)-(iii), the Company removed the prior year overlays applied in the
context of economic conditions with the resulting impact being €15.7 million ECL release during the
year ended 31 December 2024.
v.
For the collateral realisation model, the Company has updated its LGD parameter with respect to the
path of realisation through portfolio sales, by increasing the likelihood of this realisation path. The
resulting impact was an ECL charge of €19.2 million during the year ended 31 December 2024.
vi. Lastly, the Company has incorporated a minimum LGD rate which provides for a minimum loss rate
(which acts as a floor) irrespective of the realisation path and value of collateral. This minimum LGD
was introduced as to capture the subjectivity and uncertainty involved in the value of recovery
assumptions (i.e. collateral recoverable amount, maximum recovery period, etc.) which impacts the
realisation amount. The corresponding impact was an ECL charge of €20.0 million during the year
ended 31 December 2024.
Overlays applied in the prior year:
i.
Overlays introduced in prior years in the context of economic conditions from the consequences of
the Ukrainian crisis, in the collectively assessed population for exposures that were considered to be
the most vulnerable to the implications of the crisis, were removed during 2024. The impact on the
ECL from the application of these overlays was approximately €3.4 million ECL release during the
year ended 31 December 2023.
ii.
In addition, the overlay on the PD (PD floored to the maximum of 2018/2019 level), introduced in
prior years to address specifically the high inflation environment affecting the economy, was
removed during 2024. The impact on the ECL from the application of this overlay was €7.2 million
charge during the year ended 31 December 2023.
iii. During the year ended 31 December 2023, an overlay for the LGD parameter has been integrated
through reduced curability period for Stage 2 and Stage 3 exposures with a resulting impact on the
ECL of €7 million charge during the year ended 31 December 2023.
The IFRS 9 models are reviewed regularly in order to incorporate the most recent information available and
to ensure that they perform adequately and that they are suitably representative when applied to the
current portfolio for the calculation of impairment loss allowances.
The Company has exercised critical judgement on a best effort basis, to consider all reasonable and
supportable information available at the time of the assessment of the ECL allowance as at 31 December
2024. The Company will continue to evaluate the ECL allowance and the related economic outlook each
quarter, so that any changes arising from the uncertainty on the macroeconomic outlook and geopolitical
developments are timely captured.
475
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Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.1
Calculation of expected credit losses (continued)
Portfolio segmentation
The individual assessment is performed not only for individually significant assets but also for other
exposures meeting specific criteria determined by management. The selection criteria for the individually
assessed exposures are based on management judgement and are reviewed on a quarterly basis by the
Risk Management Division and are adjusted or enhanced, if deemed necessary. Following the wars in
Ukraine and the Middle East, the selection criteria were further enhanced to include significant exposures to
customers with passport of origin or residency in Russia, Ukraine or Belarus and/or business activity within
these countries and significant exposures with repayment deriving from Israel.
Further details on impairment allowances and related credit information are set out in Note 42.
In addition to the above significant judgments and assumptions made for the calculation of the ECL, the
Company also applies judgment for the following:
Expected lifetime of revolving facilities
The expected lifetime of revolving facilities is based on a behavioural maturity model for revolving facilities
based on the Company's available historical data, where an expected maturity for each revolving facility
based on the customer's profile is assigned. The behavioural model was updated in the third quarter of
2023 to reflect updates in customers' profile whilst maintaining the same model components.
Off-balance sheet credit exposures
ECL allowances also include allowances on off-balance sheet credit exposures represented by guarantees
given and by irrevocable commitments to disburse funds. Off-balance sheet credit exposures of the
individually assessed assets require assumptions on the probability, timing and amount of cash outflows.
For the collectively assessed off-balance sheet credit exposures, the allowance for provisions is calculated
using the Credit Conversion Factor (CCF) model.
5.2
Stock of property - estimation of net realisable value
Stock of property is held by the Company either (i) directly and accounted for as stock of property and
measured at the lower of cost and net realisable value in accordance with IAS2, or (ii) held through
investments in subsidiaries and their valuation impact the recoverable amount of the investments in
subsidiaries, which are held at cost less impairment in line with IAS36. The net realisable value of the stock
of properties is determined through valuation techniques, requiring significant judgement, taking into
account all available reference points, such as expert valuation reports, current market conditions, applying
an appropriate illiquidity discount where considered necessary, taking into consideration observed sales, the
holding period of the asset, realisation strategy and any other relevant parameters. Selling expenses are
deducted from the realisable value.
More details on the stock of property and investments in subsidiaries are presented in Notes 26 and 47
respectively.
5.3
Provisions for pending litigation and claims
The accounting policy for provisions for pending litigation, claims, regulatory and other matters is described
in Note 2.36 of the Consolidated Financial Statements of the Company for the year ended 31 December
2024.
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BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.3
Provisions for pending litigation and claims (continued)
Judgement is required in determining whether a present obligation exists and in estimating the probability,
timing and amount of any outflows. Provisions for pending litigation and claims usually require a higher
degree of judgement than other types of provisions. It is expected that the Company will continue to have a
material exposure to litigation and regulatory proceedings and investigations relating to legacy issues in the
medium term. The matters for which the Company determines that the probability of a future loss is more
than remote will change from time to time, as will the matters as to which a reliable estimate can be made
and the possible loss for such matters can be estimated. Actual results may prove to be significantly higher
or lower than the estimated possible loss in those matters, where an estimate was made. In addition, loss
may be incurred in matters with respect to which the Company believed the probability of loss was remote.
For a detailed description of the nature of uncertainties and assumptions and the effect on the amount and
timing of pending litigation and claims refer to Note 36.
5.4
Tax
The Company, is subject to tax in Cyprus and in the countries that it has run down operations mainly in
Greece, Russia and Romania. Estimates are required in determining the provision for taxes at the reporting
date. The Company recognises income tax liabilities for transactions and assessments whose tax treatment
is uncertain. Where the final tax is different from the amounts initially recognised in the income statement,
such differences will impact the income tax expense, the tax liabilities and deferred tax assets or liabilities
of the period in which the final tax is agreed with the relevant tax authorities.
Deferred tax assets
In the absence of a specific accounting standard dedicated to the accounting of the asset that arose
pursuant to amendments in the Income Tax Law effected in March 2019 which provides for the
recoverability of tax assets arising from transfer of tax losses following resolution of a credit institution,
within the framework of 'The Resolution of Credit and Other Institutions', to be guaranteed the Company
had exercised judgement in applying the guidance of IAS 12 as the most relevant available standard and
accounted for this asset item on the basis of IAS 12 principles relating to deferred tax assets.
For further details on such deferred tax assets refer to Note 15.
5.5
Fair value of investments and derivatives
The best evidence of fair value is a quoted price in an actively traded market. If the market for a financial
instrument is not active, a valuation technique is used. The majority of valuation techniques employed by
the Company use primarily observable market data and so the reliability of the fair value measurement is
relatively high.
However, certain financial instruments are valued on the basis of valuation techniques that feature one or
more significant inputs that are not observable. Valuation techniques that rely on non-observable inputs
require a higher level of management judgement to calculate a fair value than those based wholly on
observable inputs.
Valuation techniques used to calculate fair values include comparisons with similar financial instruments for
which market observable prices exist, discounted cash flow analysis and other valuation techniques
commonly used by market participants. Valuation techniques incorporate assumptions that other market
participants would use in their valuations, including assumptions about interest rate yield curves, exchange
rates, volatilities and default rates. When valuing instruments by reference to comparable instruments,
management takes into account the maturity, structure and rating of the instrument with which the position
held is being compared.
477
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.5
Fair value of investments and derivatives (continued)
The Company uses models with only unobservable inputs for the valuation of certain unquoted equity
investments. In these cases, estimates are made to reflect uncertainties in fair values resulting from a lack
of market data inputs, for example, as a result of illiquidity in the market. Inputs into valuations based on
unobservable data are inherently uncertain because there is little or no current market data available from
which to determine the level at which an arm’s length transaction would occur under normal business
conditions. Unobservable inputs are determined based on the best information available.
Further details on the fair value of assets and liabilities are disclosed in Note 20.
5.6
Retirement benefits
The cost of defined benefit pension plans is determined using actuarial valuations. The actuarial valuations
involve making assumptions about discount rates, the expected rate of return on plan assets, future salary
increases, mortality rates as well as future pension increases where necessary. The Company’s
management sets these assumptions based on market expectations at the reporting date using its best
estimates for each parameter covering the period over which the obligations are to be settled. In
determining the appropriate discount rate, management considers the yield curve of high quality corporate
bonds. In determining other assumptions, a certain degree of judgement is required. Future salary
increases are based on expected future inflation rates for the specific country plus a margin to reflect the
best possible estimate relating to parameters such as productivity, workforce maturity and promotions. The
expected return on plan assets is based on the composition of each fund’s plan assets, estimating a
different rate of return for each asset class. Estimates of future inflation rates on salaries and expected
rates of return of plan assets represent management’s best estimates for these variables. These estimates
are derived after consultation with the Company’s advisors, and involve a degree of judgement. Due to the
long term nature of these plans, such estimates are inherently uncertain.
Further details on retirement benefits are disclosed in Note 12.
5.7
Classification of properties
The Company determines whether a property is classified as investment property or stock of property as
follows:
i.
Investment properties comprise land and buildings that are not occupied for use by, or in the
operations of the Company, nor for sale in the ordinary course of business, but are held primarily to
earn rental income and/or capital appreciation. These buildings are substantially rented to tenants and
not intended to be sold in the ordinary course of business. Additionally, they comprise leased
properties which are acquired in exchange of debt and are leased out under operating leases.
ii.
Stock of property comprises real estate assets held with an intention to be disposed of. This principally
relates to properties acquired through debt for property swaps and properties acquired through the
acquisition of certain operations of Laiki Bank in 2013 (except from those that are leased out and are
classified as investment properties).
5.8
Fair value of properties held for own use and investment properties
In accordance with the Company’s accounting policy, property held for own use, as well as investment
property, is measured at fair value. In the case of property held for own use, valuations are carried out
periodically so that the carrying value is not materially different from the fair value, whereas in the case of
investment property, the fair value is established at each reporting date. Valuations are carried out by
qualified valuers by applying valuation models recommended by internationally accepted valuation
standards.
478
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
5.8
Fair value of properties held for own use and investment properties (continued)
In arriving at their estimates of the fair values of properties, the valuers use their market knowledge and
professional judgement and do not rely solely on historical transactional comparable information, taking into
consideration the greater degree of uncertainty that exists compared to a more active market. Depending
on the nature of the underlying asset and available market information, the determination of the fair value
of property may require the use of estimates such as future cash flows from assets and discount rates
applicable to those assets. All these estimates are based on local market conditions existing at the reporting
date.
Further information on inputs used is disclosed in Note 20.
5.9
Leases
Incremental Borrowing Rate (IBR)
The determination of an IBR term structure which is used in the measurement of the present value of the
future lease payments as described in Note 2.25 of the Consolidated Financial Statements of the Company
for the year ended 31 December 2024, inherently involves significant judgement. The IBR used was based
on the Cyprus Government yield curve, with no further adjustment, as a fair proxy for the Company’s
secured borrowing cost, for a time horizon in accordance to the lease term. The sensitivity analysis on the
yield curve performed by the Company showed that the value of the lease liability and corresponding RoU
assets is relatively insensitive to changes in the IBR.
Lease term
In determining the lease term, management considers all facts and circumstances that could make a
contract enforceable, such as the economics of the contract. The following assumptions were made for the
duration of lease term depending on the contract terms:
i.
For cancellable leases, an assessment was made at the initial application of the standard and
subsequently updated where considered appropriate, based on the horizon used in the Company’s
financial plan. The current medium term financial plan assessment is for a duration of 4 years. The
lease term was therefore based on an assessment of either 4 years (being the medium time horizon)
or 8 years (being an assessment of a longer time horizon).
ii.
For non cancellable leases, the lease term has been assessed to be the non cancellable period.
iii. For leases with an option for renewal, the Company’s past practice regarding the period over which it
has typically used properties (whether leased or owned), and its economic reasons for doing so,
provide information that is helpful in assessing whether the lessee is reasonably certain to exercise, or
not to exercise, an option.
Low value assets
The Company has exercised judgement in determining the threshold of low value assets which was set at
€5,000.
Further details on the leases are disclosed in Note 40.
5.10
Classification of financial assets
The Company exercises judgement upon determining the classification of its financial assets, in relation to
business models and future cash flows.
Judgement is also required to determine the appropriate level at which the assessment of business models
needs to be performed. In general, the assessment for the classification of financial assets into the business
models is performed at the level of each business line. Further, the Company exercises judgement in
determining the effect of sales of financial instruments on its business model assessment.
479
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
5.
Significant and other judgements, estimates and assumptions (continued)
The Company also applies judgement upon considering whether contractual features including interest rate
could significantly affect future cash flows. Furthermore, judgement is required when assessing whether
compensation paid or received on early termination of lending arrangements results in cash flows that are
not SPPI.
6.
Interest income and income similar to interest income
Interest income
2024
2023
€000
€000
Financial assets at amortised cost:
- Loans and advances to customers
539,876
512,486
- Loans and advances to banks and central banks
296,945
321,646
- Reverse repurchase agreements
27,012
3,219
- Debt securities
97,628
56,906
- Other financial assets
16,877
19,774
Debt securities at FVOCI
22,598
18,078
1,000,936
932,109
Income similar to interest income
2024
2023
€000
€000
Loans and advances to customers measured at FVPL
9,144
16,749
Derivative financial instruments
1,322
1,303
10,466
18,052
7.
Interest expense and expense similar to interest expense
Interest expense
2024
2023
Financial liabilities at amortised cost:
€000
€000
- Customer deposits
84,161
32,344
- Funding from central banks and deposits by banks
30,549
74,393
- Debt securities in issue
50,686
22,091
- Subordinated liabilities
21,189
20,578
Interest expense on lease liabilities
228
291
186,813
149,697
Expense similar to interest expense
2024
2023
€000
€000
Derivative financial instruments
1,289
1,293
480
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
8.
Fee and commission income and expense
Fee and commission income
2024
2023
€000
€000
Credit-related fees and commissions
68,744
65,940
Other banking commissions
91,990
97,176
Fees on servicing loans disposed of under Project Helix 3
-
646
Mutual funds and asset management fees
3,736
3,193
Other commissions
3,607
3,289
168,077
170,244
Mutual funds and asset management fees relate to fiduciary and other similar activities.
Credit-related fees and commissions include commissions from credit card arrangements amounting to
€45,995 thousand (2023: €44,442 thousand). Other banking commissions include commissions from
payment orders amounting to €24,690 thousand (2023: €26,676 thousand) and account maintenance fees
of €29,462 thousand (2023: €29,420 thousand).
Fee and commission income is further divided into:
Fees earned from services that are provided over time:
2024
2023
€000
€000
Credit-related fees and commissions
25,132
26,879
Other banking commissions
43,710
44,150
Fees on servicing loans disposed of under Project Helix 3
-
646
Mutual funds and asset management fees
2,125
1,992
70,967
73,667
Fees earned from point in time services:
2024
2023
€000
€000
Credit-related fees and commissions
43,612
39,061
Other banking commissions
48,280
53,026
Mutual funds and asset management fees
1,611
1,201
Other commissions
3,607
3,289
97,110
96,577
Fee and commission expense
2024
2023
€000
€000
Banking commissions
12,548
11,923
Mutual funds and asset management fees
410
343
12,958
12,266
481
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
9.
Net foreign exchange gains
Net foreign exchange gains comprise of the conversion of monetary assets and liabilities in foreign currency
at the reporting date, realised exchange gains/(losses) from transactions in foreign currency settled during
the year, customer related foreign exchange and the revaluation of foreign exchange derivatives.
10.
Net gains on financial instruments
2024
2023
€000
€000
Trading portfolio:
- derivative financial instruments
79
26
Other investments at FVPL:
- non-equity securities
4,355
1,041
- equity securities
(85)
831
Net losses on disposal of FVOCI debt securities
-
(438)
Net losses on balances with Group companies
-
(1,347)
Net gains on loans and advances to customers measured at FVPL (Note 20)
1,232
2,401
Revaluation of financial instruments designated as fair value hedges:
- hedging instruments (Note 19)
44,132
(2,211)
- hedged items (Note 19)
(44,132)
4,329
5,581
4,632
Net losses on balances with Group companies for the year ended 31 December 2023 of €1,347 relate to net
losses from settlement of balances with Group property companies.
11.
Other income
2024
2023
€000
€000
Dividend income
142
131
Profit on sale and write-off of property and equipment and intangible assets
8
52
Rental income from investment properties
1,055
1,382
Rental income from stock of property
34
73
Net (losses)/gains on disposal/dissolution of subsidiaries and associates
(4,712)
1,840
Other income
6,920
3,669
3,447
7,147
Dividend income relates to income from third parties and to Cyprus operations.
The net gains/(losses) on disposal/dissolution of subsidiaries for the years ended 31 December 2024 and 31
December 2023 relate to the gains/(losses) on the disposal of the subsidiaries disclosed in Note 47 .
482
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
12.
Staff costs
Staff costs
2024
2023
€000
€000
Salaries
132,965
126,873
Employer’s contributions to state social insurance
24,736
21,561
Variable compensation:
Accrual for short-term incentive award (Note 12.3)
8,891
10,660
Share-based benefits expense (Note 12.2)
932
595
Retirement benefit plan costs
12,093
11,489
Exit cost and other termination benefits
7,135
6,787
186,752
177,965
The number of persons employed by the Company as at 31 December 2024 was 2,440 (2023: 2,409).
Staff cost are presented in the Income Statement net of software capitalisation costs, which amounted to
€312 thousand for the year ended 31 December 2024 (2023: €816 thousand).
The cost for the short-term incentive award comprises the cost for the short-term incentive award for the
performance year 2024 which amounts to €10,769 thousands (2023: €10,660 thousand), of which an
amount of €1,437 thousand (2023: €1,423 thousand) relates to employer's contribution accrual on 2024
STIP, and a credit amount of €1,878 thousand which relates to 2023 STIP.
During 2024, the Company provided termination benefits to 45 of the Company's full-time employees at a
total cost of €7,135 thousand. During 2023, the Company provided termination benefits to 47 of the
Company's full time employees at a total cost of €6,787 thousand.
12.1
Retirement benefits
In addition to the employer's contributions to state social insurance, the Company operates plans for the
provision of additional retirement benefits as described below:
2024
2023
€000
€000
Defined benefit plans
177
160
Defined contribution plans
11,916
11,329
12,093
11,489
Cyprus
The main retirement plan for the Company’s permanent employees in Cyprus (99% of total Company
employees) is a defined contribution plan. This plan provided for employer contributions of 9% for 2024 and
2023 and employee contributions of 3%-10% of the employees’ gross salaries for both 2024 and 2023. This
plan is managed by an Administrative Committee appointed by the members.
483
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
12.
Staff costs (continued)
12.1
Retirement benefits (continued)
United Kingdom
The Company has assumed in prior years the obligation of the defined benefit plan of employees of the
former subsidiary of the Company in the United Kingdom which was closed in December 2008 to future
accrual of benefits for active members. As at 31 December 2024 and 2023, the Company's remaining
retirement benefit obligation related to the UK pension plan.
In December 2024, the UK pension scheme undertook a bulk insurance buy-in transaction. The policy
purchased is designed to provide cash flows that match the amount and timing of the benefits payable to
the Scheme’s members, giving protection against demographic and investment risks and meet the
members’ corresponding defined benefit obligations. The buy-in policy is presented as a pension plan asset
with the fair value being equal to the present value of the scheme's defined benefit obligation.
Analysis of the results of the actuarial valuations for the defined benefit plan
Amounts recognised in the balance sheet
2024
€000
2023
€000
Liabilities (Note 31)
-
565
As at 31 December 2024, the plan has a total funded status at a surplus of €992 thousand (2023: total
funded status at a surplus of €7,141 thousand) that is not recognised as an asset on the basis that the
Company has no unconditional right to future economic benefits either via a refund or a reduction in future
contributions.
The amounts recognised in the balance sheet and the movement in the net defined benefit obligation for the
years ended 31 December 2024 and 2023 are presented below:
484
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
12.
Staff costs (continued)
12.1
Retirement benefits (continued)
Present value of
obligation
Fair value of
plan assets
Net amount
before impact of
asset ceiling
Impact of
minimum
funding
requirement/
asset ceiling
Net defined
benefit liability
€000
€000
€000
€000
€000
1 January 2024
46,999
(53,575)
(6,576)
7,141
565
Net interest expense/(income)
2,229
(2,241)
(12)
-
(12)
Administration cost
-
189
189
-
189
Total amount recognised in the income statement
2,229
(2,052)
177
-
177
Remeasurements:
Return on plan assets, excluding amounts included in net interest
expense
-
12,481
12,481
-
12,481
Actuarial gain from changes in financial assumptions
(2,058)
-
(2,058)
-
(2,058)
Demographic assumptions
(2,272)
-
(2,272)
-
(2,272)
Experience adjustments
(30)
-
(30)
-
(30)
Change in asset ceiling
-
-
-
(6,840)
(6,840)
Total amount recognised in OCI
(4,360)
12,481
8,121
(6,840)
1,281
Exchange differences
2,240
(2,954)
(714)
691
(23)
Contributions:
Employer
-
(2,000)
(2,000)
-
(2,000)
Benefits paid from the plans
(2,244)
2,244
-
-
-
31 December 2024
44,864
(45,856)
(992)
992
-
485
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
12.
Staff costs (continued)
12.1
Retirement benefits (continued)
Present value of
obligation
Fair value of plan
assets
Net amount
before impact of
asset ceiling
Impact of
minimum funding
requirement/
asset ceiling
Net defined
benefit liability
€000
€000
€000
€000
€000
1 January 2023
44,971
(52,017)
(7,046)
10,740
3,694
Net interest expense/(income)
2,248
(2,088)
160
-
160
Total amount recognised in the income statement
2,248
(2,088)
160
-
160
Remeasurements:
Return on plan assets, excluding amounts included in net interest
expense
-
884
884
-
884
Actuarial loss from changes in financial assumptions
1,200
-
1,200
-
1,200
Demographic assumptions
(605)
-
(605)
-
(605)
Experience adjustments
335
-
335
-
335
Asset adjustments
-
1,600
1,600
-
1,600
Change in asset ceiling
-
-
-
(4,253)
(4,253)
Total amount recognised in OCI
930
2,484
3,414
(4,253)
(839)
Exchange differences
893
(1,469)
(576)
654
78
Contributions:
Employer
-
(2,528)
(2,528)
-
(2,528)
Benefits paid from the plans
(2,043)
2,043
-
-
-
31 December 2023
46,999
(53,575)
(6,576)
7,141
565
486
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
12.
Staff costs (continued)
12.1
Retirement benefits (continued)
The actual return on plan assets for year 2024 was a loss of €10,429 thousand (2023: gain of €1,669
thousand) mainly due to the assets for the UK pension fund measured so that the fair value matches the
present value of the liability following the buy-in insurance policy.
The assets of funded plans are generally held in separately administered entities, either as specific assets or
as a proportion of a general fund, or as insurance contracts and are governed by local regulations and
practice in each country.
Pension plan assets are invested in different asset classes to maintain a balance between risk and return.
Investments are well diversified to limit the financial effect of the failure of any individual investment.
Through its defined benefit plan, the Company is exposed to a number of risks as outlined below:
Interest rate risk
The Company is exposed to interest rate risk due to the mismatch of the
duration of assets and liabilities.
Changes in bond yields
A decrease in corporate bond yields will increase the liabilities, although this
will be partially offset by an increase in the value of bond holdings.
Inflation risk
The Company faces inflation risk, since the liabilities are either directly
(through increases in pensions) or indirectly (through wage increases)
exposed to inflation risks. Investments to ensure inflation-linked returns (i.e.
real returns through investments such as equities, index-linked bonds and
assets whose return increases with increasing inflation) could be used to
better match the expected increases in liabilities.
Asset volatility
The liabilities are calculated using a discount rate set with reference to
corporate bond yields; if assets underperform this yield, a deficit will be
created.
The fair value of insurance policy related to buy-in transaction was estimated as the present value of the
underlying obligations covered by the insurance policy, hence the fair value of this asset at each reporting
date is impacted by the measurement uncertainty of the related scheme liabilities.
The major categories of plan assets as a percentage of total plan assets are as follows:
2024
2023
Equity securities
%
-
%
5
Debt securities
%
-
%
70
Loans and advances to banks
%
-
%
20
Funds
%
3
%
5
Buy-in insurance policies
%
97
%
-
%
100
%
100
At the end of the reporting period, the average duration of the defined benefit obligations was 13 years
(2023: 14 years).
487
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
12.
Staff costs (continued)
12.1
Retirement benefits (continued)
Principal actuarial assumptions used in the actuarial valuations
The present value of the defined benefit obligations of the retirement plan is estimated annually using the
Projected Unit Credit Method of actuarial valuation, carried out by independent actuaries. The principal
actuarial assumptions used for the valuations of the retirement plan of the Company during 2024 and 2023
are set out below:
2024
UK
Discount rate
5.15%
Inflation rate
3.05%
Future salary increases
n/a
Rate of pension increase
2.90%
Life expectancy for pensioners at age 60
n/a
Life expectancy for pensioners at age 65
22.6 years M
24.3 years F
2023
Discount rate
4.75%
Inflation rate
3.00%
Future salary increases
n/a
Rate of pension increase
2.80%
Life expectancy for pensioners at age 60
n/a
Life expectancy for pensioners at age 65
23.0 years M
24.7 years F
The discount rate used in the actuarial valuations reflects the rate at which liabilities could effectively be
settled and is set by reference to market yields at the reporting date of high quality corporate bonds of
suitable maturity and currency. For the Company’s plan in the UK which comprises 100% of the defined
benefit obligations, the Company adopted a full yield curve approach using the discount rate that has been
set based on the yields on AA- rated corporate bonds with duration consistent with the scheme’s liabilities.
Under this approach, each future liability payment is discounted by a different discount rate that reflects its
exact timing.
To develop the assumptions relating to the expected rates of return on plan assets, the Company, in
consultation with its actuaries, uses forward-looking assumptions for each asset class reflecting market
conditions and future expectations at the reporting date. Adjustments are made annually to the expected
rate of return assumption based on revised expectations of future investment performance of asset classes,
changes to local legislation that may affect investment strategy, as well as changes to the target strategic
asset allocation.
The impact of significant assumptions' fluctuations on the defined benefit obligation as at 31 December
2024 and 2023 is presented below:
2024
2023
Variable
Change
+0.5%
Change
-0.5%
Change
+0.5%
Change
-0.5%
Discount rate
%
-6.2
%
6.5
%
-6.6
%
6.9
Inflation growth rate
%
3.6
%
-3.6
%
3.8
%
-3.8
Pension growth rate
%
0.1
%
-0.1
%
0.1
%
-0.1
Plus 1 year
Minus 1 year
Plus 1 year
Minus 1 year
Life expectancy
%
4.2
%
-4.2
%
4.7
%
-4.7
488
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
12.
Staff costs (continued)
12.1
Retirement benefits (continued)
The above sensitivity analysis (with the exception of the inflation sensitivity) is based on a change in one
assumption while holding all other assumptions constant. In practice this is unlikely to occur and some
changes of the assumptions may be correlated. The inflation sensitivity includes changes to any inflation-
linked benefit increases. When calculating the sensitivity of the defined benefit obligation to significant
assumptions, the same method has been applied as when calculating the pension liability recognised on the
balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not
change compared to previous years.
12.2
Share-based compensation plan
Long-Term Incentive Plan
At the Annual General Meeting of the shareholders of BOCH which took place on 20 May 2022, a special
resolution was approved for the establishment and implementation of the share based Long-Term Incentive
Plan (the 'LTIP') of Bank of Cyprus Holdings Public Limited Company.
The LTIP is an equity-settled share-based compensation plan for executive directors and senior
management of the Group. The LTIP provides for an award in the form of ordinary shares of BOCH based on
certain non-market performance and service vesting conditions. Performance is measured over a three-year
period. The performance conditions are set by the Human Resources & Remuneration Committee (HRRC)
each year and may be differentiated at the HRRC's discretion to reflect the Group’s strategic targets and
employees' personal performance. Performance will be assessed against an evaluation scorecard consistent
with the Group’s Medium-Term Strategic Targets containing both financial and non-financial objectives, and
including targets in the areas of: (i) Profitability; (ii) Asset quality; (iii) Capital adequacy; (iv) Risk control &
compliance; (v) Environmental, Social and Governance ('ESG'); and (vi) Customer Experience (targets in
the area of Customer Experience have been introduced for non-control functions from 2024). The awards
ordinarily vest in six tranches, with 40% vesting in the year following the year the performance period ends
and the remaining 60% vesting in tranches (12%), on each of the first, second, third, fourth and fifth
anniversary of the first vesting date. For any award to vest the employee must be in the employment of the
Group up until the date of the vesting of such an award. Awards are subject to potential forfeiture under
certain leaver scenarios. Under certain circumstances the HRRC has the discretion to determine whether the
award will lapse and/or the extent to which the award will be vested.
The maximum number of shares that may be issued pursuant to the LTIP until the tenth anniversary of the
relevant resolution shall not exceed 5% of the issued ordinary share capital of BOCH, as at the date of the
resolution (being 22,309,996 ordinary shares of €0.10 each), as adjusted for any issuance or cancellation of
shares subsequently to the date of the resolution (excluding any issuances of shares pursuant to the LTIP).
Under the LTIP the following share awards were outstanding as of 31 December 2024:
i.
On 3 April 2024 (grant date) a maximum of 403,990 share awards were granted by BOCH to 21
eligible employees, comprising the Extended Executive Committee of the Group. The awards granted
in April 2024 are subject to a three-year performance period 2024-2026 (with all performance
conditions being non-market performance conditions).
ii.
On 3 October 2023 (grant date) a maximum of 479,160 share awards were granted by BOCH to 21
eligible employees, comprising the Extended Executive Committee of the Group. The awards granted
in October 2023 are subject to a three-year performance period 2023-2025 (with all performance
conditions being non-market performance conditions).
iii. On 22 December 2022 (grant date) a maximum of 819,860 share awards were granted by BOCH to 22
eligible employees, comprising the Extended Executive Committee of the Group. The awards granted
in December 2022 were subject to a three-year performance period 2022-2024 (with all performance
conditions being non-market performance conditions). The amounts awarded under this 2022 LTIP
cycle in early 2025 are disclosed in Note 46 of the financial statements.
The following table presents movements in outstanding share-based awards during 2024 and 2023.
489
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
12.
Staff costs (continued)
12.2
Share-based compensation plan (continued)
2024
2023
Number of
shares
Weighted
average
grant date
fair value
Number of
shares
Weighted
average grant
date fair value
€
€
As at 1 January
1,209,036
2.15
819,860
1.69
Granted during the year
403,990
3.70
479,160
2.95
Change in estimate of number of awards to
vest
39,004
-
-
-
Vested during the year
-
-
-
-
Forfeited during the year
-
n/a
(89,984)
n/a
31 December
1,652,030
1,209,036
Assumptions
The fair value calculations as of the granting date for each of the share awards are calculated using the
Black-Scholes model. As the award is a share award (and does not contain any market-based performance
conditions) the fair value is based on the share price at the date of the grant.
12.3
Short-term incentive plan
Short-term incentive award refers to a Short-Term Incentive Plan first introduced by the Group in 2023.
This is an annual incentive which involves variable remuneration in the form of cash, or a combination of
cash and shares, to selected employees, and is driven by both delivery of the Group's Strategy, as well as
individual performance, in the relevant year. Executive Management are also eligible to be considered for
the short-term incentive award. The short-term incentive award is generally paid in cash and is non-
deferred, however, in cases where the total variable remuneration in a year (i.e. including both amounts
under STIP and LTIP) of an employee exceeds a specified threshold as per regulatory guidelines, then at
least 50% of the total variable remuneration is awarded in shares. In cases where the total variable
remuneration threshold is exceeded, the STIP award (both the cash and share component, if any) vests
similarly to the vesting of LTIP award, i.e., 40% vests in the year following the performance year to which
the incentive award relates to, and the remaining 60% vests in tranches (12%) over five years.
Shares vesting as part of the short-term incentive award are subject to one-year retention period and 100%
of the award is subject to clawback provisions.
For the short-term incentive award for the performance year 2024 no amount is to be granted in the form
of shares (2023: €250 thousand of the total STIP for 2023 was granted in the form of shares). Further
information on the amounts awarded under the short-term incentive award for the performance year 2024
to Executive Directors and other key management personnel is disclosed in Note 46.
490
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
13.
Other operating expenses
2024
2023
€000
€000
Technology and systems
27,643
25,045
Property-related costs
12,485
12,323
Consultancy, legal and other professional services fees
16,283
15,848
Insurance
4,764
5,329
Advertising and marketing
12,039
7,966
Incentives to performing customers
2,300
2,500
Depreciation of property and equipment (Note 24)
13,461
11,468
Amortisation of intangible assets (Note 25)
10,790
12,618
Communication expenses
4,983
5,235
Printing and stationery
1,620
1,564
Cash transfer expenses
3,352
3,192
Other operating expenses
27,035
30,813
136,755
133,901
Advisory and other transformation costs (non-recurring)
-
2,253
136,755
136,154
The Company has changed the description of the first line item in the table above to more appropriately
reflect the nature of this expense and has changed this to 'Technology and systems' from 'Repairs and
Maintenance'. As a result of this change, expenses of €2,156 thousand have been included in 'Property-
related costs' and €25,045 thousand in 'Technology and systems' in respect of the comparative information.
Advisory and other transformation costs comprise mainly fees to external advisors in relation to the
transformation program and other strategic projects of the Company and are considered to be non-
recurring.
During the year ended 31 December 2024, the Company recognised €8,386 thousand relating to the
depreciation of right-of-use assets, included within 'Depreciation of property and equipment' (2023: €5,874
thousand) (Note 40).
Incentives to performing customers of €2,300 thousand during the year ended 31 December 2024 (2023:
€2,500 thousand relate to the Reward Programme launched in June 2023) relate to the Reward Programme
launched in August 2024 to reward performing borrowers through the Antamivi reward scheme.
Within total other operating expenses, an amount of €395 thousand (2023: €521 thousand) relates to
investment property that generated rental income.
Special levy on deposits and other levies/contributions as presented in the income statement are set out
below:
2024
2023
€000
€000
Special levy on deposits of credit institutions in Cyprus
29,448
23,300
Single Resolution Fund contribution
-
5,477
Guarantee fee on annual deferred tax credit (Note 15)
5,364
5,364
Contribution to Deposit Guarantee Fund
4,303
8,239
39,115
42,380
491
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
13.
Other operating expenses (continued)
The special levy on credit institutions in Cyprus (the Special Levy) is imposed on the level of deposits as at
the end of the previous quarter, at the rate of 0.0375% per quarter. Following an amendment of the
Imposition of Special Credit Institution Tax Law in 2017, the Single Resolution Fund ('SRF') contribution,
which is charged annually by the Single Resolution Board ('SRB'), reduces the charge of the Special Levy up
to the level of the total annual Special Levy charge. In February 2024, the SRB announced that no regular
annual contributions would be collected in 2024 from the institutions falling in scope of the SRF and
contributions would only be collected in the event of specific circumstances.
As from 1 January 2020 and until 3 July 2024 the Company was subject to a contribution to the Deposit
Guarantee Fund ('DGF') on a semi-annual basis. The contributions were calculated based on the Risk Based
Methodology (RBM) as approved by the management committee of the Deposit Guarantee and Resolution of
Credit and Other Institutions Schemes ('DGS') and is publicly available on the CBC’s website. In line with
the RBM, the contributions are broadly calculated on the covered deposits of all authorised institutions and
the target level was to reach at least 0.8% of covered deposits by 3 July 2024. The management committee
of the DGS can decide to collect additional ex-ante contributions to achieve a higher return.
Fees to the independent auditors of the Company, for audit and other professional services provided both in
Cyprus and overseas are presented in the table below:
PwC Cyprus
PwC Network firms
2024
2023
2024
2023
€000
€000
€000
€000
Audit of the individual and the Group financial
statements
1,159
1,065
187
301
Other assurance services
692
355
66
140
Tax compliance and advisory services
66
74
12
12
Other non-assurance services
273
175
81
127
1,031
604
159
279
2,190
1,669
346
580
Fees are exclusive of VAT.
492
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
14.
Credit losses on financial assets and impairment net of reversals on non-financial assets
2024
2023
Credit losses on financial assets
€000
€000
Credit losses to cover credit risk on loans and advances to customers
Impairment net of reversals on loans and advances to customers (Note
42.5)
47,422
81,670
Recoveries of loans and advances to customers previously written off
(13,520)
(15,057)
Changes in expected cash flows
(1,080)
4,824
Financial guarantees and commitments (Note 42.6)
(1,006)
1,763
31,816
73,200
Credit losses on other financial instruments
Amortised cost debt securities (Note 18)
(256)
(531)
FVOCI debt securities (Note 18)
(242)
(376)
Balances with Group companies (Note 22)
812
(4,468)
Loans and advances to banks (Note 17)
19
14
Balances with central banks (Note 17)
(403)
330
Reverse repurchase agreements
9
20
Other financial assets
621
1,146
560
(3,865)
32,376
69,335
2024
2023
Impairment net of reversals on non-financial assets
€000
€000
Stock of property (Note 26)
14,883
11,913
Investments in subsidiaries (Note 47)
63,280
57,623
Other non-financial assets
425
62
78,588
69,598
The impairment of investment in subsidiaries for the year ended 31 December 2024 amounts to €63,280
thousand (2023: €57,623 thousand) and represents the difference between the carrying value of the
investment in the subsidiary companies compared to their recoverable amount and arises primarily on
property companies subsidiaries.
The impairment of balances with Group companies which are measured at amortised cost is computed
following the same ECL principles adopted by the Group in preparing the Consolidated Financial Statements
of the Company.
15.
Income tax
2024
2023
€000
€000
Current tax
41,518
40,029
Cyprus special defence contribution
21
15
Deferred tax charge
35,111
25,990
Other tax charges
1,000
237
77,650
66,271
493
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
15.
Income tax (continued)
The reconciliation between the income tax expense and the profit before tax as estimated using the current
income tax rates is set out below:
2024
2023
€000
€000
Profit before tax
554,216
576,086
Income tax at the normal tax rates in Cyprus
69,277
72,011
Income tax effect of:
- expenses not deductible for income tax purposes
23,557
12,577
- income not subject to income tax
(9,937)
(15,152)
- other allowable deductions
(6,268)
(3,417)
76,629
66,019
Cyprus special defence contribution
21
15
Other tax charges
1,000
237
77,650
66,271
The Corporate income tax rate in Cyprus is 12.5% (2023: 12.5%) and in Greece is 22% (2023: 22%) on
taxable income.
Special defence contribution is payable on the 75% of rental income at a rate of 3% (2023: 3%) and on
interest income from activities outside the ordinary course of business at a rate of 17% (2023: 30%).
The Company is subject to income tax in the jurisdictions in which it operates and the calculation of the
Company’s income tax charge, top-up tax liability under Cyprus Pillar Two Law and provisions for income
tax necessarily involves a degree of estimation and judgement. There are transactions and calculations for
which the ultimate income tax treatment is uncertain and cannot be determined until resolution has been
reached with the relevant tax authority. The Company has a number of open income tax returns with
various income tax authorities and liabilities relating to these judgemental matters which are based on
estimates of whether additional income taxes will be due. In case the final income tax outcome of these
matters is different from the amounts that were initially recorded, such differences will impact the current
and deferred income tax assets and liabilities in the period in which such determination is made.
On 22 December 2022, the European Commission approved Directive 2022/2523 which provides for a
minimum effective tax rate of 15% for the global activities of large multinational groups (Pillar Two tax).
The Directive (EU) 2022/2523 that follows closely the OECD Inclusive Framework on Base Erosion and Profit
Shifting was voted into Law 151(Ι)/2024 (the 'Cyprus Pillar Two Law') in December 2024, effective for
financial years starting from 31 December 2023. The Bank of Cyprus Holdings Group is in scope of the
Cyprus Pillar Two Law for the year ended 31 December 2024. The Bank of Cyprus Holdings Group is eligible
for the transitional provision under Article 55 of the Cyprus Pillar Two Law which results in zeroing any top
up tax liability in Cyprus computed in accordance with the rules laid out in the Cyprus Pillar Two Law for the
year ended 31 December 2024. The Bank of Cyprus Holdings Group does not anticipate any top-up tax
liability arising from the foreign jurisdiction in which it operates.
494
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
15.
Income tax (continued)
Deferred tax
The movement of the net deferred tax assets is set out below:
Differences
between
capital
allowances
and
depreciation
Own property
revaluation
Stock of
property and
Investment
Properties
Unutilised
income tax
losses carried
forward
(guaranteed
deferred tax
asset)
Other
temporary
differences
(net)
Total
2024
€000
€000
€000
€000
€000
€000
Net deferred tax
asset/(liability) as at 1
January 2024
(9,067)
(13,569)
10,389
189,546
1,248
178,547
Income Statement - tax
(charge)/credit
(656)
-
3,002
(37,909)
452
(35,111)
Other comprehensive
income - tax credit
-
208
-
-
-
208
Other transfers
-
-
(471)
-
-
(471)
31 December 2024
(9,723)
(13,361)
12,920
151,637
1,700
143,173
Deferred tax assets
-
-
12,920
151,637
1,700
166,257
Deferred tax liabilities
(9,723)
(13,361)
-
-
-
(23,084)
31 December 2024
(9,723)
(13,361)
12,920
151,637
1,700
143,173
2023
Net deferred tax
asset/(liability) as at 1
January 2023
(9,349)
(10,295)
-
227,455
-
207,811
Income Statement - tax
credit/(charge)
282
-
10,389
(37,909)
1,248
(25,990)
Other comprehensive
income - tax charge
-
(3,274)
-
-
-
(3,274)
31 December 2023
(9,067)
(13,569)
10,389
189,546
1,248
178,547
Deferred tax assets
-
-
10,389
189,546
1,248
201,183
Deferred tax liabilities
(9,067)
(13,569)
-
-
-
(22,636)
31 December 2023
(9,067)
(13,569)
10,389
189,546
1,248
178,547
The deferred tax assets (DTA) relate to Cyprus operations.
The Company offsets income tax assets and liabilities only if it has a legally enforceable right to set-off
current income tax assets and current income tax liabilities.
Income Tax Law Amendment 28 (I) of 2019
On 1 March 2019 the Cyprus Parliament adopted legislative amendments to the Income Tax Law (the 'Law')
which were published in the Official Gazette of the Republic on 15 March 2019 ('the amendments').
The Company has DTA that meets the requirements of the Income Tax Law Amendment 28(I) of 2019
relating to income tax losses transferred to the Company as a result of the acquisition of certain operations
of Laiki Bank, on 29 March 2013, under ‘The Resolution of Credit and Other Institutions Law’. The DTA
recognised upon the acquisition of certain operations of Laiki in 2013 amounted to €417 million
(corresponding to €3.3 billion tax losses) for which the Company paid a consideration as part of the
respective acquisition. The period of utilisation of the tax losses which may be converted into tax credits is
eleven years following the amendment of the Law in 2019, starting from 2018, i.e., by end of 2028.
495
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
15.
Income tax (continued)
As a result of the above Law, the Company has DTA amounting to €151,637 thousand as at 31 December
2024 (2023: €189,546 thousand) that meet the requirements under this Law, the recovery of which is
guaranteed. On an annual basis an amount is either converted to annual tax credit and is reclassified from
the DTA to current tax receivables or it is used in the determination of the taxable income of the relevant
year, as the annual instalment can be claimed as a deductible expense in which case the annual instalment
is reflected as a charge in the income statement.
The DTA subject to the Law is accounted for on the same basis, as described in Note 2.11 of the
Consolidated Financial Statements of the Company for the year ended 31 December 2024.
The Law provides that an annual fee is charged on an annual basis until expiration of such losses in 2028.
The Company estimates that such fees could range to €5,300 thousand per year (for each tax year in scope
i.e., since 2018) although the Company understands that such fee may fluctuate annually as to be
determined by the Ministry of Finance. An amount of €5,364 thousand that relates to the tax credit of year
2024 (2023: €5,364 thousand) was recorded during the year ended 31 December 2024.
Accumulated income tax losses
The accumulated income tax losses are presented in the table below:
Total income
tax losses
Income tax
losses for
which a
deferred tax
asset was
recognised
Income tax
losses for
which no
deferred tax
asset was
recognised
2024
€000
€000
€000
Utilisation in annual instalments up to 2028
1,213,091
1,213,091
-
1,213,091
1,213,091
-
2023
Expiring within 5 years
44,261
-
44,261
Utilisation in annual instalments up to 2028
1,516,364
1,516,364
-
1,560,625
1,516,364
44,261
16.
Earnings per share
Basic and diluted profit per share attributable to the owners of the
Company
2024
2023
Profit for the year attributable to the owners of the Company (€ thousand)
476,566
509,815
Weighted average number of shares in issue during the year, excluding
treasury shares (thousand)
9,597,945
9,597,945
Basic and diluted profit per share (€ cent)
5.0
5.3
496
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
17.
Cash, balances with central banks and loans and advances to banks
2024
2023
€000
€000
Cash
94,987
92,509
Balances with central banks
7,458,316
9,522,335
Allowance for expected credit losses (Note 14)
(120)
(523)
7,553,183
9,614,321
Loans and advances to banks
787,345
353,105
Allowance for expected credit losses (Note 14)
(41)
(22)
787,304
353,083
Balances with central banks are classified as Stage 1.
The ECL release (Note 14) on balances with central banks for the year ended 31 December 2024 amounted
to €403 thousand (2023: ECL charge of €330 thousand).
An analysis of the movement of the gross carrying amount before ECL and ECL of loans and advances to
banks is presented in the table below:
2024
2023
Gross
carrying
amount
ECL
Gross
carrying
amount
ECL
€000
€000
€000
€000
1 January
353,105
(22)
166,697
(8)
Net increase/(decrease)
434,240
-
186,408
-
Changes to models and inputs used for ECL
calculation (Note 14)
-
(19)
-
(14)
31 December
787,345
(41)
353,105
(22)
All loans and advances to banks are classified as Stage 1.
Balances with central banks include obligatory deposits for liquidity purposes which amount to €117,702
thousand as at 31 December 2024 (2023: €59,179 thousand) (Note 39). The average balance of obligatory
deposits that should be maintained with central banks was set at €194,636 thousand for the period of
December 2024 to February 2025 (2023: €186,794 thousand for the period of December 2023 to January
2024).
The credit rating analysis of balances with central banks and loans and advances to banks by independent
credit rating agencies is set out in Note 42.11.
Loans and advances to banks earn interest based on the interbank rate of the relevant term and currency.
497
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
18.
Investments
The analysis of the Company's investments is presented in the table below:
2024
2023
€000
€000
Investments at FVPL
7,627
3,123
Investments at FVOCI
384,495
433,901
Investments at amortised cost
3,805,637
3,116,714
4,197,759
3,553,738
Out of these, the amounts pledged as collateral are shown below:
2024
2023
Investments pledged as collateral
€000
€000
Investments at FVOCI
-
25,458
Investments at amortised cost
39,958
234,553
39,958
260,011
Investments pledged as collateral as at 31 December 2024 are mainly used as supplementary assets for the
covered bond (Note 44). As at 31 December 2023, debt securities collateralised were primarily used for the
amounts borrowed from the ECB Targeted Longer-Term Refinancing Operations (TLTRO III) (Note 28) which
was fully repaid in the year ended 31 December 2024. Encumbered assets are disclosed in Note 44.
The maximum exposure to credit risk for debt securities is disclosed in Note 42.1 and the debt securities
price risk sensitivity analysis is disclosed in Note 43.
The increase in the investment portfolio as at 31 December 2024 is consistent with the strategy of the
Company to grow the fixed income portfolio.
The credit rating analysis of investments is disclosed in Note 42.11.
Investments at fair value through profit or loss
Investments
mandatorily measured at
FVPL
2024
2023
€000
€000
Other non-equity securities
6,790
2,286
Equity securities
837
837
7,627
3,123
Investments at FVOCI
2024
2023
€000
€000
Debt securities
375,693
424,230
Equity securities
8,802
9,671
384,495
433,901
498
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
18.
Investments (continued)
Investments at amortised cost
2024
2023
€000
€000
Debt securities
3,805,637
3,116,714
Further analysis of the Company's investments is provided in the tables below.
Equity securities
FVPL
FVOCI
Total
2024
€000
€000
€000
Listed on the Cyprus Stock Exchange
-
-
-
Listed on other stock exchanges
837
60
897
Unlisted
-
8,742
8,742
837
8,802
9,639
FVPL
FVOCI
Total
2023
€000
€000
€000
Listed on the Cyprus Stock Exchange
-
722
722
Listed on other stock exchanges
837
58
895
Unlisted
-
8,891
8,891
837
9,671
10,508
The Company irrevocably made the election to classify its equity investments as equity investments at
FVOCI on the basis that these are not held for trading. Their carrying value amounts to €8,802 thousand at
31 December 2024 and is equal to their fair value (2023: €9,671 thousand).
Equity investments at FVOCI comprise mainly investments in private Cyprus registered companies, acquired
through loan restructuring activity and specifically through debt for equity swaps.
Dividend income amounting to €142 thousand has been received and recognised during the year ended 31
December 2024 in other income (2023: €131 thousand) (Note 11).
During the year ended 31 December 2024, holdings of equity investments measured at FVOCI with a
carrying value of €812 thousand have been disposed of (2023: €702 thousand).
Debt securities and other non-equity securities
Analysis by issuer type
FVPL
FVOCI
Amortised
cost
Total
2024
€000
€000
€000
€000
Cyprus government
-
280,070
735,617
1,015,687
Other governments
-
10,261
1,056,915
1,067,176
Financial institutions
-
65,822
1,084,888
1,150,710
Other financial corporations
6,790
-
57,258
64,048
Supranational organisations
-
19,580
696,260
715,840
Other non-financial corporations
-
-
175,431
175,431
Allowance for expected credit losses
-
(40)
(732)
(772)
6,790
375,693
3,805,637
4,188,120
499
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
18.
Investments (continued)
FVPL
FVOCI
Amortised
cost
Total
2023
€000
€000
€000
€000
Cyprus government
-
313,952
611,199
925,151
Other governments
-
10,317
751,399
761,716
Financial institutions
-
81,803
1,046,525
1,128,328
Other financial corporations
2,286
-
47,483
49,769
Supranational organisations
-
18,439
550,441
568,880
Other non-financial corporations
-
-
110,655
110,655
Allowance for expected credit losses
-
(281)
(988)
(1,269)
2,286
424,230
3,116,714
3,543,230
Geographic dispersion by country of
issuer
FVPL
FVOCI
Amortised
cost
Total
2024
€000
€000
€000
€000
Cyprus
-
280,070
737,640
1,017,710
Greece
-
11,097
78,492
89,589
Germany
-
-
217,589
217,589
France
-
22,111
344,597
366,708
Other European Union countries
-
19,809
1,129,546
1,149,355
United Kingdom
-
-
18,094
18,094
USA and Canada
6,790
-
291,982
298,772
Other countries
-
23,066
292,169
315,235
Supranational organisations
-
19,580
696,260
715,840
Allowance for expected credit losses
-
(40)
(732)
(772)
6,790
375,693
3,805,637
4,188,120
FVPL
FVOCI
Amortised cost
Total
2023
€000
€000
€000
€000
Cyprus
-
313,952
621,617
935,569
Greece
-
18,793
60,516
79,309
Germany
-
-
210,519
210,519
France
-
31,662
283,256
314,918
Other European Union countries
-
19,475
741,331
760,806
United Kingdom
-
-
18,098
18,098
USA and Canada
2,286
-
273,471
275,757
Other countries
-
22,190
358,453
380,643
Supranational organisations
-
18,439
550,441
568,880
Allowance for expected credit losses
-
(281)
(988)
(1,269)
2,286
424,230
3,116,714
3,543,230
'Other countries' include exposures in Israel amounting to €31,065 thousand as at 31 December 2024
(2023: €46,715 thousand).
500
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
18.
Investments (continued)
Analysis by currency
FVPL
FVOCI
Amortised
cost
Total
2024
€000
€000
€000
€000
Euro
-
356,151
3,510,264
3,866,415
US dollar
6,790
19,581
283,963
310,334
Pound sterling
-
-
12,142
12,142
Allowance for expected credit losses
-
(39)
(732)
(771)
6,790
375,693
3,805,637
4,188,120
FVPL
FVOCI
Amortised
cost
Total
2023
€000
€000
€000
€000
Euro
-
406,073
2,877,334
3,283,407
US dollar
2,286
18,438
228,779
249,503
Pound sterling
-
-
11,589
11,589
Allowance for expected credit losses
-
(281)
(988)
(1,269)
2,286
424,230
3,116,714
3,543,230
Listing analysis
FVPL
FVOCI
Amortised
cost
Total
2024
€000
€000
€000
€000
Listed on the Cyprus Stock Exchange
-
-
33,884
33,884
Listed on other stock exchanges
-
375,733
3,772,485
4,148,218
Unlisted
6,790
-
-
6,790
Allowance for expected credit losses
-
(40)
(732)
(772)
6,790
375,693
3,805,637
4,188,120
FVPL
FVOCI
Amortised
cost
Total
2023
€000
€000
€000
€000
Listed on the Cyprus Stock Exchange
-
-
4,567
4,567
Listed on other stock exchanges
-
424,511
3,113,135
3,537,646
Unlisted
2,286
-
-
2,286
Allowance for expected credit losses
-
(281)
(988)
(1,269)
2,286
424,230
3,116,714
3,543,230
The Company uses fair value hedging to manage the interest rate risk in relation to its FVOCI bonds (Note
19).
501
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
18.
Investments (continued)
An analysis of the movement in the gross debt securities at FVOCI before ECL and the ECL of debt securities
is presented in the table below:
2024
2023
Gross debt
securities
ECL
Gross debt
securities
ECL
€000
€000
€000
€000
1 January
424,511
(281)
447,073
(657)
New assets acquired in the year
7,000
-
72,080
-
Assets derecognised and/or redeemed in the
year (Note 14)
(61,031)
68
(115,687)
39
Interest accrued and amortisation
(3,027)
-
(1,728)
-
Foreign exchange adjustments
1,187
-
(640)
-
Changes to models and inputs used for ECL
calculations (Note 14)
-
174
-
337
Changes in fair value
7,092
-
23,413
-
31 December
375,732
(39)
424,511
(281)
All debt securities measured at FVOCI are classified as Stage 1 as at 31 December 2024 and 31 December
2023.
An analysis of the movement in the gross carrying amount and ECL of the debt securities at amortised cost
is presented in the table below:
2024
2023
Gross debt
securities
ECL
Gross debt
securities
ECL
€000
€000
€000
€000
1 January
3,117,702
(988)
2,047,638
(1,519)
New assets acquired in the year
1,388,497
-
1,472,417
-
Assets derecognised and/or redeemed in the
year (Note 14)
(758,747)
177
(428,958)
102
Fair value due to hedging relationship
2,362
-
2,674
-
Interest accrued and amortisation
39,809
-
31,326
-
Changes to models and inputs used for ECL
calculation (Note 14)
-
79
-
429
Foreign exchange adjustments
16,746
-
(7,395)
-
31 December
3,806,369
(732)
3,117,702
(988)
All debt securities measured at amortised cost are classified as Stage 1 as at 31 December 2024 and 31
December 2023.
There were no reclassifications of investments during the year ended 31 December 2024 and 2023.
The fair value of the financial assets that have been reclassified out of FVPL to FVOCI on transition to IFRS 9
is nil at 31 December 2024 (2023: €722 thousand). The fair value loss that would have been recognised in
the income statement during the year ended 31 December 2024 if these financial assets had not been
reclassified as part of the transition to IFRS 9, amounts to €722 thousand (2023: €68 thousand).
502
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
19.
Derivative financial instruments
The contract amount and fair value of the derivative financial instruments is set out below:
2024
2023
Fair value
Fair value
Contract
amount
Assets
Liabilities
Contract
amount
Assets
Liabilities
€000
€000
€000
€000
€000
€000
Trading
derivatives
Forward exchange
rate contracts
23,232
171
126
23,960
205
184
Currency swaps
927,180
7,662
518
987,459
137
13,278
Interest rate swaps
-
-
-
13,460
189
181
Currency options
472
455
17
44
2
42
Interest rate
caps/floors
18,130
945
945
166,075
1,843
1,844
969,014
9,233
1,606
1,190,998
2,376
15,529
Derivatives
qualifying for
hedge accounting
Fair value hedges -
interest rate swaps
1,637,500
58,299
2,918
1,401,531
48,679
2,451
Portfolio fair value
hedges - interest
rate swaps
2,914,362
27,741
140
-
-
-
4,551,862
86,040
3,058
1,401,531
48,679
2,451
Total
5,520,876
95,273
4,664
2,592,529
51,055
17,980
The use of derivatives is an integral part of the Company’s activities. Derivatives are used to manage the
Company’s own exposure to fluctuations in interest rates and foreign currency exchange rates. Derivatives
are also sold to customers as risk management products.
Credit risk for derivatives arises from the possibility of the counterparty’s failure to meet the terms of any
contract. In the case of derivatives, credit losses are a significantly smaller amount compared to the
derivatives' notional amount. In order to manage credit risk, the Group sets derivative limits based on the
creditworthiness of the involved counterparties and uses credit mitigation techniques such as netting,
collateralisation, margin calls and clearing through Central Clearing House (CCP) where applicable.
Interest rate risk is explained in Note 43. The interest rate risk is managed through the use of own balance
sheet solutions such as plain vanilla interest rate swaps and interest rate options. In fair value hedging of
interest rate risk, fixed rate assets/liabilities are converted to floating. In cash flow hedging of interest rate
risk, the Company converts floating rate assets/liabilities to fixed.
Currency risk is explained in Note 43. In order to manage currency risk, the Company hedges its open
position by entering into foreign exchange deals such as: foreign exchange spot, foreign exchange forwards,
foreign exchange swaps or foreign exchange options. The foreign currency risk mainly arises from
customer-driven transactions on deposits and loans and advances.
Forward exchange rate contracts are irrevocable agreements to buy or sell a specified quantity of foreign
currency on a specified future date at an agreed rate.
Currency swaps involve the exchange of two currencies at the current market rate and the commitment to
re-exchange them at a specified rate upon maturity of the swap. Cross-currency swaps are interest rate
swaps in which the cash flows are in different currencies.
503
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
19.
Derivative financial instruments (continued)
Interest rate swaps are contractual agreements between two parties to exchange fixed rate and floating
rate interest, by means of periodic payments, based upon a notional principal amount and the interest rates
defined in the contract.
Currency options are contracts that grant the holder the right, but not the obligation, to buy or sell currency
at a specified exchange rate during a specified period of time.
Interest rate caps/floors protect the buyer from fluctuations of interest rates above or below a specified
interest rate for a specified period of time.
The credit exposure of derivative financial instruments represents the cost to replace these contracts at the
reporting date. The exposure arising from these transactions is managed as part of the Company’s credit
risk management process for credit facilities granted to customers and financial institutions.
The contract amount of certain types of derivative financial instruments provides a basis for comparison
with other instruments recognised on the balance sheet, but does not necessarily indicate the amount of
future cash flows involved or the current fair value of the instruments and, consequently, does not indicate
the Company’s exposure to credit or market risk.
The fair value of the derivatives can be either positive (asset) or negative (liability) as a result of
fluctuations in market interest rates and foreign currency exchange rates, in accordance with the terms of
the relevant contract. The aggregate net fair value of derivatives may fluctuate significantly over time.
Hedge accounting
The Company elected, as a policy choice permitted by IFRS 9, to continue to apply hedge accounting in
accordance with IAS 39.
The Company applies hedge accounting using derivatives when the required criteria for hedge accounting
are met. The Company also uses derivatives for economic hedging (hedging the changes in interest rates,
foreign currency exchange rates or other risks) which do not meet the criteria for hedge accounting. As a
result, these derivatives are accounted for as trading derivatives and the gains or losses arising from
revaluation are recognised in the income statement.
Derivatives held for trading comprise derivatives entered into with economic hedging intent to which the
Group does not apply hedge accounting or derivative positions arise as a result of activity generated by
corporate customers. Derivatives classified as held for hedging comprise only those derivatives to which the
Group applies hedge accounting.
Fair value hedges
The Company uses interest rate swaps to hedge the interest rate risk arising as a result of the possible
adverse movement in the fair value of fixed rate debt securities measured at FVOCI, debt securities in issue
and subordinated liabilities, as well as customer deposits.
As part of its structural interest rate risk management, during the year ended 31 December 2024, the
Company has contracted fixed-rate receiver swaps to hedge interest rate risk by setting up fair value
hedges for a portfolio of liabilities being the core NMDs. This strategy is designated as a fair value hedge,
under the IAS39 as adopted by the EU (IAS 39 carve-out) and its effectiveness is assessed by comparing
changes in the fair value of the designated hedged item, attributable to changes in the benchmark interest
rate, with the respective changes in the fair value of the interest rate swaps used as hedging instruments.
Changes in the fair value of derivatives designated as fair value hedges (both for micro hedges and macro
hedges) and the fair value of the hedged items in relation to the risk being hedged are recognised in the
income statement.
504
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
19.
Derivative financial instruments (continued)
In the case of fair value macro hedges, fair value changes of the hedged portfolios are recognised in the
liability side of the consolidated balance sheet under caption ‘Changes in the fair value of hedged items in
portfolio hedges of interest rate risk’, which as at 31 December 2024 amounted to a cumulative fair value
change of €44,074 thousand (2023: n/a).
Gains/(losses) attributable
to hedged risk
Hedge in-
effectiveness
2024
Hedged
items
Hedging
instruments
Derivatives qualifying for hedge accounting
€000
€000
€000
Fair value hedges - interest rate swaps
-debt securities - investments
8,763
(8,763)
-
-debt securities in issue
(8,914)
8,914
-
-subordinated liabilities
93
(93)
-
-customer deposits (macro hedge)
(44,074)
44,074
-
Total
(44,132)
44,132
-
2023
Derivatives qualifying for hedge accounting
€000
€000
€000
Fair value hedges - interest rate swaps
-debt securities - investment
22,840
(20,722)
2,218
-debt securities in issue
(14,274)
14,274
-subordinated liabilities
(4,237)
4,237
-
Total
4,329
(2,211)
2,218
505
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
19.
Derivative financial instruments (continued)
The accumulated fair value adjustment arising from the hedging relationships is presented in the table
below:
Carrying amount of
hedged items
Accumulated amount of fair
value hedging adjustments
gains/(losses) on the
hedged item
2024
Assets
Liabilities
Assets
Liabilities
Derivatives qualifying for hedge
accounting
€000
€000
€000
€000
Fair value hedges - interest rate swaps
-debt securities - investments
379,937
-
(28,498)
-
-debt securities in issue
-
989,435
-
(18,335)
- subordinated liabilities
-
307,955
-
(4,144)
- customer deposits (macro hedge)
-
2,914,362
-
(44,074)
Total
379,937
4,211,752
(28,498)
(66,553)
2023
Derivatives qualifying for hedge
accounting
€000
€000
€000
€000
Fair value hedges - interest rate swaps
-debt securities - investments
439,043
-
(43,441)
-
-debt securities in issue
-
671,632
-
(9,421)
-subordinated liabilities
-
308,049
-
(4,237)
Total
439,043
979,681
(43,441)
(13,658)
For assets hedged using fair value hedges the applicable average rates of hedging instruments is 2.35%
fixed rate as at 31 December 2024 (2023: 2.05%). For liabilities hedged using fair value hedges, the
average fixed rate is 3.55% as at 31 December 2024 (2023: 5.44%).
506
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
19.
Derivative financial instruments (continued)
The maturity of the Company's contract amount of the derivatives is presented in the table below:
On demand
and up to one
month
Between one
and three
months
Between
three months
and one year
Between one
and five
years
Over five
years
Total
contract
amount
2024
€000
€000
€000
€000
€000
€000
Trading
derivatives
Forward
exchange rate
contracts
8,040
9,870
5,322
-
-
23,232
Currency
swaps
720,749
206,213
218
-
-
927,180
Currency
options
472
-
-
-
-
472
Interest rate
caps/floors
-
-
-
18,130
-
18,130
729,261
216,083
5,540
18,130
-
969,014
Derivatives
qualifying for
hedge
accounting
Fair value
hedges -
interest rate
swaps
-
-
69,000
1,404,000
164,500
1,637,500
Portfolio fair
value hedges -
interest rate
swaps
-
-
-
2,914,362
-
2,914,362
-
-
69,000
4,318,362
164,500
4,551,862
Total
729,261
216,083
74,540
4,336,492
164,500
5,520,876
507
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
19.
Derivative financial instruments (continued)
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
contract
amount
2023
€000
€000
€000
€000
€000
€000
Trading
derivatives
Forward
exchange rate
contracts
9,734
9,657
4,569
-
-
23,960
Currency
swaps
854,163
132,603
693
-
-
987,459
Interest rate
swaps
-
4,372
9,088
-
-
13,460
Currency
options
44
-
-
-
-
44
Interest rate
caps/floors
-
-
-
166,075
-
166,075
863,941
146,632
14,350
166,075
-
1,190,998
Derivatives
qualifying for
hedge
accounting
Fair value
hedges -
interest rate
swaps
-
15,000
56,031
1,166,000
164,500
1,401,531
Total
863,941
161,632
70,381
1,332,075
164,500
2,592,529
508
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
20.
Fair value measurement
The following table presents the carrying value and fair value of the Company's financial assets and
liabilities.
2024
2023
Carrying
value
Fair value
Carrying
value
Fair value
Financial assets
€000
€000
€000
€000
Cash and balances with central banks
7,553,183
7,553,183
9,614,321
9,614,321
Loans and advances to banks
787,304
779,966
353,083
339,136
Investments at FVPL
7,627
7,627
3,123
3,123
Investments at FVOCI
384,495
384,495
433,901
433,901
Investments at amortised cost
3,805,637
3,837,774
3,116,714
3,119,618
Reverse repurchase agreements
1,010,170
1,026,046
403,199
411,654
Derivative financial assets
95,273
95,273
51,055
51,055
Loans and advances to customers
10,114,273
10,114,612
9,821,533
9,971,977
Balances with Group companies
65,785
65,785
28,327
28,327
Financial assets classified as held for sale
23,143
23,143
-
-
Other financial assets
255,867
260,841
347,776
366,134
24,102,757
24,148,745
24,173,032
24,339,246
Financial liabilities
Funding from central banks and deposits by
banks
360,010
330,178
2,507,198
2,464,737
Derivative financial liabilities
4,664
4,664
17,980
17,980
Customer deposits
20,519,276
20,494,544
19,336,915
19,300,867
Balances with Group companies
135,511
135,511
111,087
111,087
Debt securities in issue
989,435
1,024,400
671,632
655,428
Subordinated liabilities
307,955
314,195
308,049
300,098
Other financial liabilities and lease liabilities
207,631
207,631
195,568
195,568
22,524,482
22,511,123
23,148,429
23,045,765
The fair value of financial assets and liabilities in the above table is as at the reporting date and does not
represent any expectations about their future value.
The Company uses the following hierarchy for determining and disclosing fair value:
Level 1: investments valued using quoted prices in active markets.
Level 2: investments valued using models for which all inputs that have a significant impact on fair value
are market observable.
Level 3: investments valued using models for which inputs that have a significant impact on fair value are
not based on market observable data.
Observable inputs to the models for the valuation of unquoted equity and debt securities include, where
applicable, current and expected market interest rates, market expected default rates, market implied
country and counterparty credit risk and market liquidity discounts.
For assets and liabilities that are recognised in the Financial Statements at fair value, the Company
determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation
at the end of each reporting period.
509
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
20.
Fair value measurement (continued)
The following table presents the fair value measurement hierarchy of the Company's assets and liabilities
recorded at fair value and financial assets and financial liabilities for which fair value is disclosed, by level of
the fair value hierarchy:
Level 1
Level 2
Level 3
Total
2024
€000
€000
€000
€000
Assets measured at fair value
Investment properties
Residential
-
-
4,584
4,584
Offices and other commercial properties
-
-
4,255
4,255
Manufacturing and industrial properties
-
-
7,312
7,312
-
-
16,151
16,151
Freehold property
Offices and other commercial properties
-
-
200,851
200,851
Loans and advances to customers measured
at FVPL
-
-
131,008
131,008
Trading derivatives
Forward exchange rate contracts
-
171
-
171
Currency swaps
-
7,662
-
7,662
Currency options
-
455
-
455
Interest rate caps/floors
-
945
-
945
-
9,233
-
9,233
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps
-
58,299
-
58,299
Portfolio fair value hedges - interest rate
swaps
-
27,741
-
27,741
-
86,040
-
86,040
Investments at FVPL
837
-
6,790
7,627
Investments at FVOCI
375,753
-
8,742
384,495
Prepayments, accrued income and other
assets
-
-
25,500
25,500
376,590
95,273
389,042
860,905
Financial assets not measured at fair
value
Loans and advances to banks
-
779,966
-
779,966
Balances with Group companies
-
-
65,785
65,785
Investments at amortised cost
3,604,367
233,407
-
3,837,774
Reverse repurchase agreements
-
1,043,130
-
1,043,130
Loans and advances to customers
-
-
9,983,604
9,983,604
3,604,367
2,056,503
10,049,389
15,710,259
The discount rate used in the determination of the fair value of the loans and advances to customers
measured at FVPL as at 31 December 2024 is 6.79% (2023: 7.56%).
For loans and advances to customers measured at FVPL categorised as Level 3 as at 31 December 2024, an
increase in the discount factor by 10% would result in a decrease of €2,460 thousand in their fair value and
a decrease in the discount factor by 10% would result in an increase of €591 thousand in their fair value.
510
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
20.
Fair value measurement (continued)
For one investment included in other non-equity securities mandatorily measured at FVPL as a result of the
SPPI assessment and categorised as Level 3 with a carrying amount of €6,790 thousand as at 31 December
2024, a change in the conversion factor by 10% would result in a change in the value of the other non-
equity securities by €679 thousand.
For additional disclosures on sensitivity analysis of equity securities refer to Note 43.
Level 1
Level 2
Level 3
Total
2024
€000
€000
€000
€000
Liabilities measured at fair value
Trading derivatives
Forward exchange rate contracts
-
126
-
126
Currency swaps
-
518
-
518
Interest rate swaps
-
-
-
-
Currency options
-
17
-
17
Interest rate caps/floors
-
945
-
945
-
1,606
-
1,606
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps
-
2,918
-
2,918
Portfolio fair value hedges - interest rate
swaps
-
140
-
140
-
3,058
-
3,058
-
4,664
-
4,664
Financial liabilities not measured at fair
value
Deposits by banks
-
330,178
-
330,178
Customer deposits
-
-
20,494,544
20,494,544
Balances with Group companies
-
-
135,511
135,511
Debt securities in issue
1,024,400
-
-
1,024,400
Subordinated liabilities
-
314,195
-
314,195
1,024,400
644,373
20,630,055
22,298,828
511
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
20.
Fair value measurement (continued)
Level 1
Level 2
Level 3
Total
2023
€000
€000
€000
€000
Assets measured at fair value
Investment properties
Residential
-
-
5,933
5,933
Offices and other commercial properties
-
-
8,163
8,163
Manufacturing and industrial properties
-
-
8,560
8,560
-
-
22,656
22,656
Freehold property
Offices and other commercial properties
-
-
192,941
192,941
Loans and advances to customers measured
at FVPL
-
-
138,727
138,727
Trading derivatives
Forward exchange rate contracts
-
205
-
205
Currency swaps
-
137
-
137
Interest rate swaps
-
189
-
189
Currency options
-
2
-
2
Interest rate caps/floors
-
1,843
-
1,843
-
2,376
-
2,376
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps
-
48,679
-
48,679
Investments at FVPL
837
-
2,286
3,123
Investments at FVOCI
425,010
-
8,891
433,901
425,847
51,055
365,501
842,403
Financial assets not measured at fair
value
Loans and advances to banks
-
339,136
-
339,136
Balances with Group companies
-
-
28,327
28,327
Investments at amortised cost
2,958,793
160,825
-
3,119,618
Reverse repurchase agreements
-
411,654
-
411,654
Loans and advances to customers
-
-
9,833,250
9,833,250
2,958,793
911,615
9,861,577
13,731,985
For loans and advances to customers measured at FVPL categorised as Level 3, as at 31 December 2023, an
increase in the discount factor by 10% would result in a decrease of €2,714 thousand in their fair value and
a decrease in the discount factor by 10% would result in an increase of €622 thousand in their fair value.
For one investment included in other non-equity securities mandatorily measured at FVPL as a result of the
SPPI assessment and categorised as Level 3 with a carrying amount of €2,286 thousand as at 31 December
2023, a change in the conversion factor by 10% would result in a change in the value of the other non-
equity securities by €229 thousand.
512
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
20.
Fair value measurement (continued)
Level 1
Level 2
Level 3
Total
2023
€000
€000
€000
€000
Liabilities measured at fair value
Trading derivatives
Forward exchange rate contracts
-
184
-
184
Currency swaps
-
13,278
-
13,278
Interest rate swaps
-
181
-
181
Currency options
-
42
-
42
Interest rate caps/floors
-
1,844
-
1,844
-
15,529
-
15,529
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps
-
2,451
-
2,451
-
17,980
-
17,980
Financial liabilities not measured at fair
value
Funding from central banks
-
2,043,868
-
2,043,868
Deposits by banks
-
420,869
-
420,869
Customer deposits
-
-
19,300,867
19,300,867
Balances with Group companies
-
-
111,087
111,087
Debt securities in issue
655,428
-
-
655,428
Subordinated liabilities
-
300,098
-
300,098
655,428
2,764,835
19,411,954
22,832,217
The cash and balances with central banks are financial instruments whose carrying value is a reasonable
approximation of fair value because they are mostly short-term in nature or are repriced to current market
rates frequently. The carrying value of other financial assets, other than the deferred purchase payment
consideration (Note 27), and other financial liabilities is a close approximation of their fair value and they
are categorised as Level 3.
During the years ended 31 December 2024 and 2023 there were no significant transfers between Level 1
and Level 2.
513
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
20.
Fair value measurement (continued)
Movements in Level 3 assets measured at fair value
Transfers from Level 3 to Level 2 occur when the market for some securities becomes more liquid, which eliminates the need for the previously required
significant unobservable valuation inputs. Following a transfer to Level 2 the instruments are valued using valuation models incorporating observable market
inputs. Transfers into Level 3 reflect changes in market conditions as a result of which instruments become less liquid and consequently, the Company requires
significant unobservable inputs to calculate their fair value.
The movement in Level 3 assets which are measured at fair value is presented below:
2024
2023
Investment
properties
Own use
properties
Loans and
advances to
customers
Financial
instruments
Other financial
assets
Investment
properties
Own use
properties
Loans and
advances to
customers
Financial
instruments
Balances
with Group
Companies
€000
€000
€000
€000
€000
€000
€000
€000
€000
€000
1 January
22,656
192,941
138,727
11,177
-
26,351
164,593
214,359
16,723
532,793
Additions
198
9,403
-
-
25,500
30
822
-
-
2,456
Disposals
(5,840)
-
-
-
-
(4,163)
-
-
-
-
Transfers from own use properties to investment properties (Note 24)
-
-
-
-
-
798
(798)
-
-
-
Net transfers to stock of property
-
-
-
-
-
-
(2,743)
-
-
-
Contribution from subsidiary
-
-
-
-
-
-
20,570
-
-
-
Conversion of instruments into common shares
-
-
-
-
-
-
-
-
(6,521)
-
Depreciation charge for the year
-
(1,493)
-
-
-
-
(1,419)
-
-
-
Fair value (losses)/gains
(863)
-
-
4,206
-
(360)
11,916
-
1,079
-
Net gains on loans and advances to customers measured at FVPL (Note
10)
-
-
1,232
-
-
-
-
2,401
-
-
Repayments/derecognition of loans/loans to subsidiaries
-
-
(17,792)
-
-
-
-
(89,522)
-
(540,509)
Interest on loans
-
-
8,841
-
-
-
-
11,489
-
5,260
Foreign exchange adjustments
-
-
-
149
-
-
-
-
(104)
-
31 December
16,151
200,851
131,008
15,532
25,500
22,656
192,941
138,727
11,177
-
Valuation policy and sensitivity analysis
Investment properties and own use properties
The valuation technique mainly applied by the Company is the market comparable approach, adjusted for market and property specific conditions. In certain
cases, the Company also utilises the income capitalisation approach. The key inputs used for the valuations of the investment properties and own use
properties are presented in the tables below:
514
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
20.
Fair value measurement (continued)
Analysis of investment properties
Type and country
2024
Estimated
rental value
per m2 per
annum
Estimated
building cost
per m2
Yield
Estimated fair
value per m2
Estimated
land value
per m2
Land
Building
area
Age of
building
Residential
€000
m2
m2
Years
Cyprus
1,638
€41-€108
€1,250-€1,542
3.0%-5.0%
€473-€1,886
€130-€380
607-725
142-420
12-59
Greece
2,946
€15-€118
€229-€3,018
2.7%-9.4%
€45-€2,088
€26-€479
24-5,147
51-825
16-52
4,584
Offices and other commercial properties
Cyprus
1,482
€64-€111
n/a
4%-6.4%
€579-€1,800 €500-€1,000
348-619
37-471
18-69
Greece
2,773
€9-€219
€193-€161
4.9%-8.8%
€73-€3,648 €558-€3,451
100-8,582
6-4,692
20-66
4,255
Manufacturing and industrial
Cyprus
1,328
€45
n/a
6%
€920
€400
2,935
1,608
n/a
Greece
5,984
€1-€71
€214-€1,199 4.5%-10.3%
€12-€464
€52-€521
57-34,495
349-5,858
15-86
7,312
Total
16,151
Analysis of own use properties
Type and country
2024
Estimated
rental value
per m2 per
annum
Estimated
building cost
per m2
Yield
Estimated
fair value
per m2
Estimated
land value
per m2
Land
Building
area
Age of
building
Offices and other commercial properties
€000
m2
m2
Years
Cyprus
200,851
€36-€264
€1,063-€3,162
6%
€475-€5,254 €150-€1,700
390-51,947
210-24,035
20-100
Total
200,851
515
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
20.
Fair value measurement (continued)
Valuation policy and sensitivity analysis (continued)
Analysis of investment properties
Type and country
2023
Estimated
rental value
per m2 per
annum
Estimated
building cost
per m2
Yield
Estimated fair
value per m2
Estimated
land value
per m2
Land
Building
area
Age of
building
Residential
€000
m2
m2
Years
Cyprus
2,024
€41-€98
€1,090-€1,673
4.5%-5.5%
€380-€2,338
€130-€380
607-725
89-594
10-58
Greece
3,909
€6-€113
€164-€2,961
2%-9.4%
€46-€1,878
€16-€1,910
24-5,147
51-825
16-51
5,933
Offices and other commercial properties
Cyprus
5,091
€36-€183
€470
4%-6%
€578-€2,616 €150-€1,000
348-1,114
37-1,107
11-68
Greece
3,072
€9-€219
€193-€1,404
4.9%-8.8%
€72-€3,648
€261-€289
100-8,582
6-4,692
19-65
8,163
Manufacturing and industrial
Cyprus
1,630
€41-€67
n/a
5.5%
€506-€1,106
n/a
2,202-6,320
743-1,608
n/a
Greece
6,930
€1-€99
€172-€684 4.4%-10.4%
€12-€439
€10-€191
57-34,495
349-5,858
14-85
8,560
Total
22,656
Analysis of own use properties
Type and country
2023
Estimated
rental value
per m2 per
annum
Estimated
building cost
per m2
Yield
Estimated fair
value per m2
Estimated
land value
per m2
Land
Building
area
Age of
building
Offices and other commercial properties
€000
m2
m2
Years
Cyprus
192,941
€30-€315
€1,063-€3,162
6%-6.5%
€475-€5,254 €150-€1,700
390-51,947
210-24,035
20-100
Total
192,941
516
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
20.
Fair value measurement (continued)
Valuation policy and sensitivity analysis (continued)
Sensitivity analysis
The fair value of the Company’s properties have been classified as Level 3 in the fair value measurement
hierarchy. Significant increases/decreases in estimated values per square meter for properties valued with
the comparable approach or significant increases/decreases in estimated rental values or yields for
properties valued with the income capitalisation approach could result in a significantly higher/lower fair
value of the properties.
21.
Loans and advances to customers
2024
2023
€000
€000
Gross loans and advances to customers at amortised cost
10,130,088
9,861,838
Allowance for ECL for impairment of loans and advances to customers
(Note 42.5)
(146,823)
(179,032)
9,983,265
9,682,806
Loans and advances to customers measured at FVPL
131,008
138,727
10,114,273
9,821,533
The following tables present the Company’s gross loans and advances to customers at amortised cost by
staging.
Stage 1
Stage 2
Stage 3
POCI
Total
2024
€000
€000
€000
€000
€000
Gross loans at amortised cost
before residual fair value
adjustment on initial
recognition
9,176,273
785,674
169,010
59,810
10,190,767
Residual fair value adjustment
on initial recognition
(49,916)
(10,594)
1,579
(1,748)
(60,679)
Gross loans at amortised
cost
9,126,357
775,080
170,589
58,062
10,130,088
Stage 1
Stage 2
Stage 3
POCI
Total
2023
€000
€000
€000
€000
€000
Gross loans at amortised cost
before residual fair value
adjustment on initial
recognition
8,334,756
1,168,745
327,674
100,197
9,931,372
Residual fair value adjustment
on initial recognition
(59,340)
(7,474)
(1,294)
(1,426)
(69,534)
Gross loans at amortised
cost
8,275,416
1,161,271
326,380
98,771
9,861,838
Residual fair value adjustment
The residual fair value adjustment on initial recognition mainly relates to the loans and advances to
customers acquired as part of the acquisition of certain operations of Laiki Bank in 2013. In accordance with
the provisions of IFRS 3, this adjustment decreased the gross balance of loans and advances to customers.
The residual fair value adjustment is included within the gross balances of loans and advances to customers
as at each balance sheet date. However, for credit risk monitoring, the residual fair value adjustment as at
each balance sheet date is presented separately from the gross balances of loans and advances, as shown
in the tables above.
Loans and advances to customers measured at FVPL are managed in Cyprus.
517
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
21.
Loans and advances to customers (continued)
The following tables present the Company’s gross loans and advances to customers at amortised cost by
staging and by business line concentration.
2024
Stage 1
Stage 2
Stage 3
POCI
Total
By business line
€000
€000
€000
€000
€000
Corporate
2,897,542
409,697
30,103
9,879
3,347,221
IBU & International corporate
- IBU
104,327
16,124
126
117
120,694
- International corporate
935,383
25,634
-
4
961,021
SMEs
886,726
68,843
7,898
4,270
967,737
Retail
- housing
3,327,631
179,619
18,206
9,893
3,535,349
- consumer, credit cards and
other
959,787
61,415
8,463
10,729
1,040,394
Restructuring
- corporate
1,424
3,184
2,469
10,357
17,434
- SMEs
6,447
3,928
8,205
1,966
20,546
- retail housing
5,062
5,898
24,281
1,143
36,384
- retail other
2,014
738
11,698
754
15,204
Recoveries
- corporate
-
-
3,873
307
4,180
- SMEs
-
-
8,671
993
9,664
- retail housing
-
-
30,358
4,494
34,852
- retail other
14
-
16,238
3,156
19,408
9,126,357
775,080
170,589
58,062
10,130,088
518
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
21.
Loans and advances to customers (continued)
2023 (restated)
Stage 1
Stage 2
Stage 3
POCI
Total
By business line
€000
€000
€000
€000
€000
Corporate
2,709,523
519,134
95,982
32,799
3,357,438
IBU & International corporate
- IBU
99,009
21,409
320
140
120,878
- International corporate
744,955
17,220
38
15
762,228
SMEs
824,330
109,865
5,387
9,042
948,624
Retail
- housing
3,038,339
345,135
23,508
9,897
3,416,879
- consumer, credit cards and
other
836,679
103,710
9,814
13,839
964,042
Restructuring
- corporate
3,770
21,747
13,461
10,073
49,051
- SMEs
9,831
8,089
13,715
2,431
34,066
- retail housing
6,450
12,429
39,696
1,912
60,487
- retail other
2,471
2,533
13,474
733
19,211
Recoveries
- corporate
-
-
6,378
967
7,345
- SMEs
-
-
15,812
1,587
17,399
- retail housing
-
-
65,070
10,255
75,325
- retail other
59
-
23,725
5,081
28,865
8,275,416
1,161,271
326,380
98,771
9,861,838
During 2023, the Company entered into an agreement with Cyprus Asset Management Company
('KEDIPES') to acquire a portfolio of performing and restructured loans with gross book value of
approximately €58 million with reference date 31 December 2022 (the 'Transaction'). The Transaction was
completed in March 2024.
Loans and advances to customers pledged as collateral are disclosed in Note 44.
Additional analysis and information regarding credit risk and analysis of the allowance for ECL of loans and
advances to customers are set out in Note 42.
The following portfolio of loans and advances to customers was classified as held for sale as at 31 December
2024. There were no loans and advances to customers classified as held for sale as at 31 December 2023.
2024
2023
€000
€000
Gross loans and advances to customers (Note 42.3)
54,921
-
Allowance for ECL for impairment of loans and advances to customers (Note
42.5)
(31,778)
-
23,143
-
Disposal Group
The loans classified as held for sale comprises a portfolio of loans and advances to customers known as
Project River, classified as held for sale as at 31 December 2024. The Company entered into agreement
with funds associated with Cerberus Global Investments B.V. to sell two non-performing loan portfolios with
a total gross book value of approximately €55 million as at 31 December 2024 (the ‘Sale transaction’). The
Sale transaction is subject to the necessary approvals and is expected to be completed within the first half
of 2025.
519
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
21.
Loans and advances to customers (continued)
The analysis of the gross book value and the allowance for ECL of loans and advances to customers
classified as held for sale by staging is provided below:
Stage 3
POCI
Total
2024
€000
€000
€000
Gross loans and advances to customers
49,589
5,332
54,921
Allowance for ECL for impairment of loans and advances to
customers
(29,003)
(2,775)
(31,778)
31 December
20,586
2,557
23,143
The disposal portfolio relates mainly to corporate and retail exposures under the Restructuring & Recoveries
business line.
22.
Balances and transactions with Group companies
Receivable balances with Group companies
2024
2023
Name of Group company
€000
€000
Balances with Group companies at amortised cost
Bank of Cyprus Holding Public Limited Company
2,774
1,339
The Cyprus Investment and Securities Corporation Ltd (CISCO)
2,781
3,483
General Insurance of Cyprus Ltd
305
359
EuroLife Ltd
1,876
1,451
Jinius Ltd
11,602
4,168
S.Z. Eliades Leisure Ltd
9,406
8,869
Hydrobius Ltd
1,715
1,971
BOC Asset Management Romania S.A.
1,006
1,006
JCC Payment Systems Ltd
27,878
-
Kyprou Properties S.A.
69
45
Fortuna Astrum Ltd
-
656
Stamoland Properties Ltd
1,707
2,655
Group property companies in Cyprus
4,666
2,325
Total
65,785
28,327
2024
2023
Gross
carrying
amount
ECL
Gross carrying
amount
ECL
€000
€000
€000
€000
Stage 1
54,035
(377)
16,046
(221)
Stage 3
2,721
-
2,977
-
POCI
12,779
(3,373)
11,785
(2,260)
Total balances with Group Companies at
amortised cost
69,535
(3,750)
30,808
(2,481)
69,535
(3,750)
30,808
(2,481)
The classification of the receivable balances with related companies depends on how these are managed as
part of the business model the Company operates under, and their contractual cash flow characteristics
(whether the cash flows represent solely payments of principal and interest (SPPI)).
520
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
22.
Balances and transactions with Group companies (continued)
Balances with Group companies which are measured at FVPL are mandatorily classified because they failed
to meet the SPPI criteria and represent in substance arrangements in which repayment of the balance is
dependent on the performance of the underlying asset held by the subsidiary. The Company holds these
underlying assets for sale in its ordinary course of business. The cash flows for repayment of the receivable
balances are dependent on the disposal value of the underlying assets; hence the exposure of the Company
is to changes in market property prices that will affect the disposal price of those underlying assets.
Following the conversion of the receivable balances into equity contribution during the year ended 31
December 2023, no balances are classified as at FVPL as at 31 December 2024 and 31 December 2023.
Receivable balances with Group companies measured at amortised cost are denominated in Euro, except
from balances of a carrying value of €1,715 thousand as at 31 December 2024 which are denominated in
Russian Rouble (2023: €1,971 thousand).
As at 31 December 2024, an amount of €27,895 thousand receivable from JCC Payment Systems Ltd
relates to the ancillary services agreement (2023: nil).
During the year ended 31 December 2024 credit losses of €812 thousand have been recognised in relation
to these receivable balances (2023: reversal of credit losses of €4,468 thousand).
The balances are uncollateralised. The location of the Group companies’ operations is disclosed in Note 47.
Payable balances with Group companies
2024
2023
Name of Group company
€000
€000
JCC Payment Systems Ltd
24,883
33,059
The Cyprus Investment and Securities Corporation Ltd (CISCO)
6,377
4,168
General Insurance of Cyprus Ltd
11,108
11,684
EuroLife Ltd
8,325
7,761
Kermia Properties & Investments Ltd
22,293
22,363
Kermia Ltd
2,661
2,345
Kyprou Zois (branch of EuroLife Ltd)
-
1,267
Kyprou Commercial S.A.
1,529
1,579
BOC Asset Management Romania S.A.
563
644
MC Investment Assets Management LLC
1,664
2,046
S.Z. Eliades Leisure Ltd
15
68
Bank of Cyprus Holdings Public Limited Company
11,833
2,809
BOC Terra AIF V.C.I.C. Plc
482
505
Obafemi Holdings Ltd
-
179
Jinius Ltd
103
53
Group property companies in Cyprus
39,573
12,497
Other Group companies in Cyprus
4,102
8,060
Total
135,511
111,087
Amounts included above comprise mainly of deposits from the Group companies, which are made on normal
business terms.
521
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
22.
Balances and transactions with Group companies (continued)
Dividend income from subsidiaries
2024
2023
Name of Group company
€000
€000
EuroLife Ltd
12,000
62,000
General Insurance of Cyprus Ltd
4,500
12,000
JCC Payment Systems Ltd
6,000
9,000
Kermia Properties & Investments Ltd
-
353
Group property companies in Cyprus
438
1,156
Stamoland Properties Ltd
-
600
Auction Yard Ltd
20
9
22,958
85,118
Transactions with Group companies
2024
2023
€000
€000
Interest income and income similar to interest income
1,882
6,958
Interest expense
(19,880)
(19,879)
Fee and commission income
21,517
20,299
Fee and commission expense
(5,867)
(5,143)
Other income
3,484
2,754
Other operating expenses
(8,045)
(13,522)
23.
Investments in associates
Carrying value of the investments in associates
Percentage
holdings
(%)
Aris Capital Management LLC
30.0
Fairways Automotive Holdings Ltd
45.0
During the year ended 31 December 2024, Rosequeens Properties Limited (33.3% holding) was dissolved.
The carrying values of the investments in associates are assessed as fully impaired and their value has been
restricted to zero.
522
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
24.
Property and equipment
Property
Equipment
Total
2024
€000
€000
€000
Net book value at 1 January
209,840
23,632
233,472
Additions
10,445
6,531
16,976
Disposals and write-offs
-
(11)
(11)
Depreciation charge for the year (Note 13)
(7,265)
(6,196)
(13,461)
New leases (Note 40)
1,398
895
2,293
Re-assessment of RoU assets (Note 40)
16,158
-
16,158
Derecognition of RoU assets (Note 40)
(370)
-
(370)
Net book value at 31 December
230,206
24,851
255,057
1 January 2024
Cost or valuation
276,616
80,366
356,982
Accumulated depreciation
(66,776)
(56,734)
(123,510)
Net book value
209,840
23,632
233,472
31 December 2024
Cost or valuation
303,767
87,412
391,179
Accumulated depreciation
(73,561)
(62,561)
(136,122)
Net book value
230,206
24,851
255,057
Property
Equipment
Total
2023
€000
€000
€000
Net book value at 1 January
187,860
12,876
200,736
Additions
365
3,702
4,067
Revaluation
11,916
-
11,916
Disposals and write-offs
-
(52)
(52)
Transfer to investment properties (Note 20)
(798)
-
(798)
Net transfers to stock of property (Note 26)
(2,743)
-
(2,743)
Contribution from subsidiary company
20,570
-
20,570
Contribution to subsidiary company
-
(98)
(98)
Depreciation charge for the year (Note 13)
(7,487)
(3,981)
(11,468)
New leases (Note 40)
157
11,185
11,342
Net book value at 31 December
209,840
23,632
233,472
1 January 2023
Cost or valuation
251,272
102,971
354,243
Accumulated depreciation
(63,412)
(90,095)
(153,507)
Net book value
187,860
12,876
200,736
31 December 2023
Cost or valuation
276,616
80,366
356,982
Accumulated depreciation
(66,776)
(56,734)
(123,510)
Net book value
209,840
23,632
233,472
523
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
24.
Property and equipment (continued)
As at 31 December 2024 the net book value of the Company's equipment includes an amount of €9,169
thousand that relates to RoU asset - Computer hardware (2023: €11,462 thousand).
The net book value of the Company's property comprises:
2024
2023
€000
€000
Freehold property
200,851
192,941
Improvements on leasehold property
1,691
1,223
RoU assets (Note 40)
27,664
15,676
Total
230,206
209,840
Freehold property includes land amounting to €81,335 thousand (2023: €81,335 thousand) for which no
depreciation is charged. Further, freehold property includes an amount of €22,507 thousand (2023:
€20,876 thousand) which relates to a property under construction.
The Company’s policy is to revalue its properties periodically (between 3 to 5 years) but more frequent
revaluations may be performed where there are significant and volatile movements in values. The Company
performed revaluations during the year ended 31 December 2023. The valuations were carried out by
independent qualified valuers, on the basis of market value using observable prices and/or recent market
transactions depending on the location of the property. Details on valuation techniques and inputs are
presented in Note 20.
There were no charges against the freehold property of the Company as at 31 December 2024 and 2023.
The net book value of freehold property, on a cost less accumulated depreciation basis, as at 31 December
2024 amounts to €142,089 thousand (2023: €134,179 thousand).
25.
Intangible assets
2024
2023
€000
€000
Net book value at 1 January
29,504
38,379
Additions
10,543
8,216
Contribution to subsidiary company
-
(4,469)
Disposals and write-offs
(433)
(4)
Amortisation charge for the year (Note 13)
(10,790)
(12,618)
Net book value at 31 December
28,824
29,504
1 January
Cost
217,923
214,180
Accumulated amortisation and impairment
(188,419)
(175,801)
Net book value
29,504
38,379
31 December
Cost
227,672
217,923
Accumulated amortisation and impairment
(198,848)
(188,419)
Net book value
28,824
29,504
Computer software includes internally developed computer software with a net carrying amount of €523
thousand as at 31 December 2024 (2023: €409 thousand).
524
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
26.
Stock of property
The carrying amount of stock of property is determined as the lower of cost and net realisable value.
Impairment is recognised if the net realisable value is below the cost of the stock of property. During the
year ended 31 December 2024 an impairment loss of €14,883 thousand (2023: €11,913 thousand) was
recognised in 'Impairment net of reversals on non-financial assets' in the income statement. At 31
December 2024, stock of property of €148,484 thousand (2023: €156,824 thousand) is carried at net
realisable value.
There is no stock of property pledged as collateral.
The carrying amount of the stock of property is analysed in the tables below:
2024
2023
€000
€000
Net book value at 1 January
346,531
441,816
Additions
15,142
11,959
Disposals
(60,142)
(98,074)
Transfers to subsidiaries
(4,786)
-
Net transfers from property and equipment (Note 24)
-
2,743
Impairment for the year (Note 14)
(14,883)
(11,913)
Net book value at 31 December
281,862
346,531
The result on the disposal of stock of property in the year is presented in the table below:
2024
2023
€000
€000
Net consideration
65,196
108,078
Carrying value of stock of property disposed of
(60,142)
(98,074)
Net gains on disposal of stock of property
5,054
10,004
Analysis by type and country
Cyprus
Greece
Total
2024
€000
€000
€000
Residential properties
42,238
3,216
45,454
Offices and other commercial properties
24,347
5,059
29,406
Manufacturing and industrial properties
2,160
3,993
6,153
Hotels
2,272
340
2,612
Land (fields and plots)
195,265
2,972
198,237
Total
266,282
15,580
281,862
Cyprus
Greece
Total
2023
€000
€000
€000
Residential properties
46,751
8,091
54,842
Offices and other commercial properties
28,026
9,978
38,004
Manufacturing and industrial properties
5,837
9,263
15,100
Hotels
2,272
437
2,709
Land (fields and plots)
232,310
3,566
235,876
Total
315,196
31,335
346,531
525
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
27.
Prepayments, accrued income and other assets
2024
2023
€000
€000
Financial assets
Debtors
5
7
Receivable relating to tax
2,772
3,263
Deferred purchase payment consideration
143,604
243,013
Other assets
109,486
101,493
255,867
347,776
Non-financial assets
Current tax receivable
60,681
72,716
Prepaid expenses
61
72
Other assets
53,158
51,068
113,900
123,856
369,767
471,632
An analysis of the movement of the gross carrying amount of the financial assets included in prepayments,
accrued income and other assets measured at amortised cost is presented in the table below:
Stage 1
Stage 3
Total
2024
€000
€000
€000
1 January
345,819
34,648
380,467
Net decrease
(116,668)
(511)
(117,179)
31 December
229,151
34,137
263,288
2023
1 January
364,266
35,963
400,229
Net increase
(18,447)
(1,315)
(19,762)
31 December
345,819
34,648
380,467
An analysis of the movement of the ECL of the above financial assets is presented in the table below:
Stage 1
Stage 3
Total
2024
€000
€000
€000
1 January
2,101
30,590
32,691
Changes to models and inputs used for ECL calculations
229
1
230
31 December
2,330
30,591
32,921
2023
1 January
2,107
30,632
32,739
Write-offs
-
(82)
(82)
Changes to models and inputs used for ECL calculations
(6)
40
34
31 December
2,101
30,590
32,691
There were no financial assets classified as Stage 2 as at 31 December 2024 and 2023. In addition, financial
assets amounting to €25,500 thousand were measured at FVPL as at 31 December 2024 (2023: nil).
526
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
27.
Prepayments, accrued income and other assets (continued)
Within other non-financial assets an amount of €18,550 thousand as at 31 December 2024 (2023: €18,550
thousand) relates to contract assets from contracts with customers.
On the completion date of the sale of Project Helix 2 (the ‘Transaction’) in June 2021, the Company
recognised an amount of €381,567 thousand in other financial assets, which represented the fair value of
the deferred consideration receivable from the Transaction (the ‘DPP’). The remaining amount outstanding
is payable by December 2025. An amount of €16,042 thousand, which represents the interest income on
the DPP has been recognised in the Income Statement for the year ended 31 December 2024 (2023:
€19,774 thousand) within 'Interest income - Financial assets at amortised cost - Other financial assets'
(Note 6). There are no other conditions attached. The DPP is classified as Stage 1 as at 31 December 2024
and 2023.
28.
Funding from central banks
Funding from central banks comprises funding from the ECB under Eurosystem monetary policy operations
as set out in the table below:
2024
2023
€000
€000
Targeted Longer-Term Refinancing Operations (TLTRO III)
-
2,043,868
As at 31 December 2024, there was no outstanding ECB funding (2023: €2 billion) as the amount
outstanding as at 31 December 2023 was fully repaid during the year ended 31 December 2024.
Details on encumbered assets are disclosed in Note 44.
29.
Customer deposits
2024
2023
€000
€000
By type of deposit
Demand
10,737,484
10,167,622
Savings
3,091,475
2,979,275
Time or notice
6,690,317
6,190,018
20,519,276
19,336,915
By geographical area
Cyprus
16,422,089
15,355,445
Greece
1,558,482
1,473,491
United Kingdom
396,972
386,057
United States
129,823
166,673
Germany
80,796
77,288
Romania
38,408
29,729
Russia
88,710
128,489
Ukraine
212,662
183,316
Belarus
1,583
3,762
Israel
214,547
195,580
Other countries
1,375,204
1,337,085
20,519,276
19,336,915
Deposits by geographical area are based on the country of residence of the Ultimate Beneficial Owner.
527
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
29.
Customer deposits (continued)
2024
2023
€000
€000
By currency
Euro
18,559,339
17,514,400
US Dollar
1,589,240
1,448,753
British Pound
309,083
300,867
Russian Rouble
1,080
1,322
Swiss Franc
8,315
8,947
Other currencies
52,219
62,626
20,519,276
19,336,915
2024
2023
(restated)
€000
€000
By business line
Corporate
2,310,165
2,086,753
IBU & International corporate
– IBU
4,139,368
3,779,571
– International corporate
174,370
121,454
SMEs
1,161,464
1,019,245
Retail
12,600,526
12,216,209
Restructuring
– corporate
10,000
12,565
– SMEs
2,854
5,954
– retail other
6,306
9,428
Recoveries
– corporate
979
1,098
Institutional Wealth Management and Custody
113,244
84,638
20,519,276
19,336,915
30.
Debt securities in issue and Subordinated liabilities
2024
2023
Nominal
value
Carrying
value
Nominal
value
Carrying
value
Subordinated liabilities
Contractual
interest rate
€000
€000
€000
€000
Subordinated Tier 2 Capital
Note - April 2021
6.625% up to
23 October 2026
300,000
307,955
300,000
308,049
Debt securities in issue
Senior Preferred Notes -
June 2021
2.50% up to
24 June 2026
300,000
305,274
300,000
303,466
Senior Preferred Notes - July
2023
7.375% up to
25 July 2027
350,000
368,714
350,000
368,166
Green Senior Preferred
Notes - May 2024
5% up to
2 May 2028
300,000
315,447
-
-
950,000
989,435
650,000
671,632
528
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
30.
Debt securities in issue and Subordinated liabilities (continued)
BOCH and the Company maintain a Euro Medium Term Note (ΕΜΤΝ) Programme with an aggregate nominal
amount up to €4,000 million.
Subordinated Liabilities
Subordinated Tier 2 Capital Note - April 2021
In April 2021, BOCH issued a €300 million unsecured and subordinated Tier 2 Capital Note under the EMTN
Programme and immediately after, BOCH and the Company entered into an agreement pursuant to which
BOCH on-lent to the Company the entire €300 million proceeds of the issue of the Note (the 'T2 Loan') on
terms substantially identical to the terms and conditions of the Note issued by BOCH. The T2 Loan was
priced at par with a coupon of 6.625% per annum payable annually in arrear and resettable on 23 October
2026 at the then prevailing 5-year swap rate plus a margin of 6.902% per annum up to 23 October 2031,
payable annually. The T2 Loan matures on 23 October 2031. The Company has the option to redeem the T2
Loan early on any day during the six-month period from 23 April 2026 to 23 October 2026, subject to
applicable regulatory consents.
The fair value of the subordinated liabilities as at 31 December 2024 and 2023 is disclosed in Note 20.
Debt securities in issue
Senior Preferred Notes - June 2021
In June 2021, the Company issued a €300 million senior preferred note under the EMTN Programme. The
note was priced at par with a fixed coupon of 2.50% per annum, payable annually in arrear and resettable
on 24 June 2026. The note matures on 24 June 2027. The Company has the option to redeem the note
early on 24 June 2026, subject to applicable regulatory consents. The note is listed on the Luxembourg
Stock Exchange’s Euro MTF market. The note complies with the criteria for the minimum requirement for
own funds and eligible liabilities (MREL) and contributes towards the Company’s MREL requirements.
Senior Preferred Notes - July 2023
In July 2023, the Company issued a €350 million senior preferred note under the EMTN Programme. The
note was priced at par with a fixed coupon of 7.375% per annum, payable annually in arrear and resettable
on 25 July 2027. The note matures on 25 July 2028. The Company has the option to redeem the note early
on 25 July 2027, subject to applicable regulatory consents. The note is listed on the Luxembourg Stock
Exchange’s Euro MTF market. The note complies with the criteria for the minimum requirement for own
funds and eligible liabilities (MREL) and contributes towards the Company’s MREL requirements.
Green Senior Preferred Notes - May 2024
In May 2024, the Company issued a €300 million green senior preferred note under the EMTN Programme.
The note was priced at par with a fixed coupon of 5.00% per annum, payable annually in arrear and
resettable on 2 May 2028. The note matures on 2 May 2029. The Company has the option to redeem the
note early on 2 May 2028, subject to applicable regulatory consents. The note is listed on the Luxembourg
Stock Exchange’s Euro MTF market. The note complies with the criteria for the minimum requirement for
own funds and eligible liabilities (MREL) and contributes towards the Company’s MREL requirements.
The fair value of the debt securities in issue as at 31 December 2024 and 2023 is disclosed in Note 20.
529
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
31.
Accruals, deferred income, other liabilities and other provisions
2024
2023
€000
€000
Income tax payable and related provisions
71,699
59,333
Special defence contribution payable
1,322
1,308
Retirement benefit plan liabilities (Note 12.1)
-
565
Provisions for financial guarantees and commitments (Note 42.6.1)
17,893
19,192
Accrued expenses and other provisions
70,434
68,479
Deferred income
20,130
19,569
Items in the course of settlement
60,974
69,138
Lease liabilities (Note 40)
30,528
22,835
Other liabilities
46,898
35,116
319,878
295,535
Other liabilities include an amount of €10,385 thousand (2023: €10,385 thousand) relating to the
guarantee fee for the conversion of DTA into tax credits (Note 15).
32.
Share capital
2024
2023
Number of
shares
(thousand)
€000
Number of
shares
(thousand)
€000
Authorised
Ordinary shares of €0.10 each
47,677,593
4,767,759
47,677,593
4,767,759
Issued
1 January and 31 December
9,597,945
959,794
9,597,945
959,794
Authorised and issued share capital
All issued ordinary shares carry the same rights.
The authorised share capital of the Company is €4,767,759 thousand divided into 47,677,593 thousand
shares of a nominal value of €0.10 each. There were no changes to the authorised or issued share capital
during the years ended 31 December 2024 and 2023.
Other equity instruments
2024
2023
€000
€000
2023 Reset Perpetual Additional Tier 1 Capital Securities
220,000
220,000
220,000
220,000
530
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
32.
Share capital (continued)
In June 2023, BOCH issued €220,000 thousand Fixed Rate Reset Perpetual Additional Tier 1 Capital
Securities (the ‘2023 Capital Securities'). On the same date, the Company and BOCH entered into an
agreement pursuant to which BOCH on-lent to the Company the entire €220,000 thousand proceeds of the
issue of the BOCH Capital Securities (‘2023 Capital Securities Loan’) on terms substantially identical to the
terms and conditions of the BOCH 2023 Capital Securities. The 2023 Capital Securities Loan constitutes an
unsecured and subordinated obligation of the Company, is perpetual and is issued at par. The 2023 Capital
Securities Loan carries an initial coupon of 11.875% per annum, payable semi-annually, and resettable on
21 December 2028 and every five years thereafter. The Company may elect to cancel any interest payment
for an unlimited period, on a non-cumulative basis, whereas it mandatorily cancels interest payment under
certain conditions. The 2023 Capital Securities Loan is perpetual and has no fixed date of redemption, but
can be redeemed (in whole but not in part) at the Company's option from, and including, 21 June 2028 to,
and including, 21 December 2028 and on each interest payment date thereafter, subject to applicable
regulatory consents and the relevant conditions to redemption.
In addition, in June 2023 BOCH invited the holders of its outstanding €220,000 thousand 2018 Reset
Perpetual Additional Tier 1 Capital Securities (the '2018 Capital Securities') to tender for cash purchase by
BOCH at a price equal to 103% of the principal amount. At the same time the Company invited BOCH to
tender its outstanding €220,000 thousand 2018 Capital Securities Loan for cash purchase by the Company,
at a price equal to 103% of the principal amount, on same terms as the tender by BOCH of its external
2018 Capital Securities. As a result of the tender offer, €204,483 thousand in aggregate nominal amount
were purchased and cancelled by the Company as at 30 June 2023. In July 2023, the Company purchased
approximately €7,000 thousand of the outstanding nominal amount of the 2018 Capital Securities Loan. In
November 2023, the Board of Directors resolved to exercise the option to redeem the remaining nominal
amount outstanding of the 2018 Capital Securities Loan in December 2023. As a result of the buyback, a
total cost of €6,820 thousand was recorded directly in equity during the year ended 31 December 2023.
During the year ended 31 December 2024, coupon payments for the total amount of €26,125 thousand
(2023: €27,339 thousand) were made to the holders of the AT1 Capital Securities and have been
recognised in retained earnings.
33.
Distributions
Based on the relevant SREP decisions applicable in the years 2023 and 2024, any equity dividend
distribution was subject to regulatory approval, both for the Company and BOCH. The requirement for
approval did not apply if the distributions were made via the issuance of new ordinary shares to the
shareholders which were eligible as Common Equity Tier 1 Capital nor to the payment of coupons on any
AT1 capital instruments issued by the Company or BOCH. Following the SREP decision received in December
2024, the requirement for approval was lifted effective from 1 January 2025.
In March 2024, the Company obtained the approval of the European Central Bank to pay a dividend in
respect of earnings for the year ended 31 December 2023 of €136,590 thousand in total, comprising a cash
dividend. The AGM, on 17 May 2024, approved a final cash dividend of €0.01 per ordinary share in respect
of earnings for the year ended 31 December 2023.
In April 2023, the Company obtained the approval of the European Central Bank to pay a dividend in
respect of earnings for the year ended 31 December 2022. The AGM, on 26 May 2023, declared a final cash
dividend of €0.002 per ordinary share in respect of earnings for the year ended 31 December 2022. The
dividend amounted to €22,310 thousand in total.
Information on distribution in respect of 2024 earnings is disclosed in Note 49 of the Financial Statements.
34.
Retained earnings
For the purpose of dividend distribution, retained earnings determined at the Company level are the only
distributable reserve.
531
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
34.
Retained earnings (continued)
Companies, tax resident in Cyprus, which do not distribute at least 70% of their profits after tax as defined
by the Special Defence Contribution Law during the two years after the end of the year of assessment to
which the profits refer, will be deemed to have distributed this amount as dividend. Special defence
contribution (SDC) at 17% is payable on such deemed dividend distribution to the extent that the
shareholders of the Company at the end of the period of two years from the end of the year of assessment
to which the profits refer, are directly or indirectly Cyprus tax residents and/or individuals who are Cyprus
tax resident and domiciled in Cyprus. Deemed dividend distribution does not apply in respect of profits that
are directly or indirectly attributable to shareholders that are non-Cyprus tax residents and individual
shareholders who are not domiciled in Cyprus. The deemed dividend distribution is subject to 2.65%
contribution to the General Health System (GHS).
The amount of this deemed dividend distribution is reduced by any actual dividend paid out of the profits of
the relevant year.
This SDC and GHS are paid by the Company on account of the shareholders. During the year ended 31
December 2024, no SDC and GHS on deemed dividend distribution were accrued by the Company (2023:
SDC and GHS of €313 thousand were accrued).
35.
Fiduciary transactions
The Company offers fund management and custody services that result in holding or investing financial
assets on behalf of its customers. The Company is not liable to its customers for any default by other banks
or organisations. The assets under management and custody are not included in the balance sheet of the
Company unless they are placed with the Company. Total assets under management at 31 December 2024,
measured at fair value, amounted to €1,477,538 thousand (2023: €1,193,159 thousand).
36.
Provisions for pending litigation, claims, regulatory and other matters
The Company, in the ordinary course of business, is involved in various disputes and legal proceedings and
is subject to enquiries and examinations, requests for information, audits, investigations and other
proceedings by regulators, governmental and other public bodies, actual and threatened, relating to the
suitability and adequacy of advice given to clients or the absence of advice, lending and pricing practices,
selling and disclosure requirements, reporting and information security requirements and a variety of other
matters. In addition, as a result of the deterioration of the Cypriot economy and banking sector in 2012 and
the subsequent restructuring of the Company in 2013 as a result of the bail-in Decrees, the Company is
subject to a number of proceedings that either precede or result from the events that occurred during the
period of the bail-in Decrees.
Apart from what is described below, the Company considers that none of these matters are material, either
individually or in aggregate. Nevertheless, provisions have been made where: (a) there is a present
obligation (legal or constructive) arising from past events, (b) the settlement of the obligation is expected
to result in an outflow of resources embodying economic benefits, and (c) a reliable estimate of the amount
of the obligation can be made. The Company has not disclosed an estimate of the potential financial effect
on its contingent liabilities arising from these matters where it is not practicable to do so, because it is too
early or the outcome is too uncertain or, in cases where it is practicable, where disclosure could prejudice
conduct of the matters. Provisions have been recognised for those cases where the Company is able to
reliably estimate probable losses (Note 5.3). Where an individual provision is material, the fact that a
provision has been made is stated except to the extent that doing so would be prejudicial. Any provision
recognised does not constitute an admission of wrongdoing or legal liability. There are also situations where
the Company may enter into a settlement agreement. This may occur only if such settlement is in the
Company's interest (such settlement does not constitute an admission of wrongdoing) and only takes place
after obtaining legal advice and all approvals by the appropriate bodies of management. While the outcome
of these matters is inherently uncertain, management believes that, based on the information available to
it, appropriate provisions have been made in respect of legal proceedings, regulatory and other matters as
at 31 December 2024 and hence it is not believed that such matters, when concluded, will have a material
impact upon the financial position of the Company.
532
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
36.
Provisions for pending litigation, claims, regulatory and other matters (continued)
36.1
Pending litigation and claims
Investigations and litigation relating to securities issued by the Company
A number of institutional and retail customers have filed various separate actions against the Company
alleging that the Company is guilty of misselling in relation to securities issued by the Company between
2007 and 2011. Remedies sought include the return of the money investors paid for these securities. Claims
are currently pending before the courts in Cyprus and in Greece.
The bonds and capital securities in respect of which claims have been brought are the following: 2007
Capital Securities, 2008 Convertible Bonds, 2009 Convertible Capital Securities (CCS) and 2011 Convertible
Enhanced Capital Securities (CECS).
The Company is defending these claims, particularly with respect to institutional investors and retail
purchasers who received investment advice from independent investment advisors. In the case of retail
investors, if it can be demonstrated that the relevant Company's officers 'persuaded' them to proceed with
the purchase and/or purported to offer 'investment advice', the Company may face significant difficulties.
To date, a number of cases have been tried in Greece. The Company has appealed against any such cases
which were not ruled in its favour, except for cases adjudicated against the Company at Areios Pagos
(Supreme Court of Greece) which are deemed as concluded.
Similarly, a number of cases have been tried in Cyprus and some are pending at appeal. It is to be noted
that the statutory limitation period for filing claims in the courts of Cyprus with respect to this for which the
cause of action arose prior and up to 31 December 2015, expired on 31 December 2021.
The resolution of the claims brought in the courts of Greece and Cyprus is expected to take a number of
years.
Provision has been made based on management's best estimate of probable outflows for capital securities
related litigation.
Bail-in related litigation
Depositors
A number of the Company’s depositors, who allege that they were adversely affected by the bail-in, filed
claims against the Company and other parties (such as the CBC and the Ministry of Finance of Cyprus)
including against the Company as the alleged successor of Laiki Bank on the grounds that, inter alia, the
‘Resolution Law of 2013’ and the Bail-in Decrees were in conflict with the Constitution of the Republic of
Cyprus and the European Convention on Human Rights. They are seeking damages for their alleged losses
resulting from the bail-in of their deposits. Cases could relate to bail-in related litigation (on failure to follow
instructions), bail-in decree related cases and bail-in wrongful application. The Company is defending these
actions. In relation to the bail-in decree related cases, the court ruled in favour of the Company on the
grounds that the measures that the government implemented were necessary to prevent the collapse of the
financial sector, which would have detrimental consequences for the country’s economy. Under the
circumstances the government could rely on the doctrine of necessity when it imposed the bail-in. To date,
a number of cases have been tried however the resolution of the claims brought is expected to take a
number of years.
Provision has been made based on management's best estimate of probable outflows for depositors related
litigation.
Shareholders
A number of actions for damages have been filed with the District Courts of Cyprus alleging either the
unconstitutionality of the Resolution Law and the Bail-in Decrees, or a misapplication of same by the
Company (as regards the way and methodology whereby such Decrees have been implemented), or that
the Company failed to follow instructions promptly prior to the bail-in coming into force. As at the present
date, both the Resolution Law and the Bail-in Decrees have not been annulled by a court of law and thus
remain legally valid and in effect. The Company contests all of these claims.
533
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
36.
Provisions for pending litigation, claims, regulatory and other matters (continued)
36.1
Pending litigation and claims (continued)
Legal position of the Company
All of the above claims are being vigorously disputed by the Company, in close consultation with the
appropriate state and governmental authorities. The position of the Company is that the Resolution Law and
the Decrees take precedence over all other laws. As matters now stand, both the Resolution Law and the
Decrees issued thereunder are constitutional and lawful, in that they were properly enacted and have not so
far been annulled by any court.
Provident fund case
In December 2015, the Bank of Cyprus Employees Provident Fund (the Provident Fund) filed an action
against the Company claiming €70 million allegedly owed as part of the Company’s contribution by virtue of
an agreement with the Union dated 31 December 2011. Towards the end of 2024, the Company has
reached a final settlement arrangement, which has received final court approval so that the case was
permanently withdrawn with no right to be reinstated, and as a result of which, the Company has
recognised a provision as at 31 December 2024. The financial settlement took place early in 2025. This
matter is now concluded, without anything pending at court.
Employment litigation
Former employees of the Company have instituted a number of employment claims including unfair
dismissals. The Company does not consider that the pending cases in relation to employment will have a
material impact on its financial position. A judgment has been issued in one of the unfair dismissal cases
and the Company lost. The Company has filed an appeal with respect to this case and similarly, the plaintiff
has also filed an appeal. The facts of this case are unique and it is not expected to affect the rest of the
cases where unfair dismissal is claimed.
Additionally, a number of former employees have filed claims against the Company contesting entitlements
received relating to the various voluntary exit plans. As at the reporting date most of these cases have been
withdrawn with only two such cases remaining. The Company does not expect that these actions will have a
material impact on its financial position.
Banking business cases
There is a number of banking business cases where the amounts claimed are significant. These cases
primarily concern allegations as to the Company's standard policies and procedures allegedly resulting to
damages and other losses for the claimants (including cases where it is alleged that the Company misled
borrowers and/or misrepresented matters, in violation of applicable laws for matters such as foreign
currency lending and advancing/misselling loans for the purchase of property in Cyprus by UK nationals).
Further, there are several other banking claims, where the amounts involved are not as significant.
Management has assessed either the probability of loss as remote and/or does not expect any future
outflows with respect to these cases to have a material impact on the financial position of the Company.
Such matters arise as a result of the Company’s activities and management appropriately assesses the facts
and the risks of each case accordingly.
General criminal investigations and proceedings
The Attorney General and the Cypriot Police (the Police) are conducting various investigations and inquiries
following and relating to the financial crisis which culminated in March 2013. The Company is cooperating
fully with the Attorney General and the Police and is providing all information requested of it. Based on the
currently available information, the Company is of the view that any further investigations or claims
resulting from these investigations will not have a material impact on its financial position.
534
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
36.
Provisions for pending litigation, claims, regulatory and other matters (continued)
36.2
Regulatory matters
The Hellenic Capital Market Commission (HCMC) Investigation
The HCMC has been in the process of investigating matters concerning the Company's investment in Greek
Government Bonds from 2009 to 2011, including, inter alia, related non-disclosure of material information
in the Company's CCS, CECS and rights issue prospectuses (tracking the investigation carried out by CySEC
in 2013), Greek government bonds' reclassification, ELA disclosures and allegations by some investors
regarding the Company's non-compliance with Markets in Financial Instruments Directive (MiFID) in respect
of investors' direct investments in Greek Government Bonds.
A specific estimate of the outcome of the investigations or of the amount of possible fines cannot be given
at this stage, though it is not expected that any resulting liability or damages will have a material impact on
the financial position of the Company.
Central Bank of Cyprus (CBC)
The CBC had conducted an investigation in the past into the Company's issuance of capital securities and
concluded that the Company breached certain regulatory requirements concerning the issuance of
Convertible Capital Securities (Perpetual) in 2009, but not in relation to the CECS in 2011. The CBC had, in
2013, imposed a fine of €4 thousand upon the Company, who filed a recourse. The Administrative Court
cancelled both the CBC’s decision and the fine that was imposed upon the Company in a respective
judgment dated in 2020. In 2021, CBC decided to re-examine this matter and to re-open the investigation.
This matter is still pending as at the year end.
Commission for the Protection of Competition Investigation (CPC)
In April 2014, following an investigation which began in 2010, CPC issued a statement of objections,
alleging violations of Cypriot and EU competition law relating to the activities and/or omissions in respect of
card payment transactions by, among others, the Company and JCC Payment Systems Ltd (JCC), a card
processing business currently 75% owned by the Company. There was also an allegation concerning the
Company's arrangements with American Express, namely that such exclusive arrangements violated Cypriot
and EU competition law. On both matters, the CPC has concluded that the Company (in common with other
banks and JCC) has breached the relevant provisions of the applicable law for the protection of competition
and imposed a fine of €18 million upon the Company. The Company filed a recourse against the decision
and the fine. In June 2018, the Administrative Court accepted the Company’s position and cancelled the
decision as well as the fine imposed upon the Company. During 2018, the Attorney General has filed an
appeal before the Supreme court with respect to such decision. Following the decision of the appeal court in
the CySEC case mentioned above, the Attorney General acting on behalf of CPC withdrew his appeal. In July
2024, the Company was informed that the CPC had resolved to refrain from re-opening the investigation
and the matter is now considered closed.
Consumer Protection Service (CPS)
In July 2017, CPS imposed a fine of €170 thousand upon the Company after concluding an ex officio
investigation regarding some terms in both the Company's and Marfin Popular Bank's loan documentation,
that were found to constitute unfair commercial practices. Decisions of the CPS (according to rulings of the
Administrative Court) are not binding but merely an expression of opinion. The Company has filed a
recourse before the Administrative Court against this decision. The Administrative Court has issued its
judgment in 2022 in favour of the Company, and the CPS decision along with the fine have been cancelled.
An appeal has been submitted by CPS with regards to this judgment, which is still pending as at 31
December 2024.
In March 2020, the Company has been served with an application by the director of CPS seeking for an
order of the court, with immediate effect, the result of which will be for the Company to cease the use of a
number of terms in the contracts of the Company relating to 2006-2007 deemed to be unfair under the said
order. This application was withdrawn in November 2024 and the matter is considered closed.
535
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
36.
Provisions for pending litigation, claims, regulatory and other matters (continued)
36.2
Regulatory matters (continued)
In April 2021, the director of CPS filed an application for the issuance of a court order against the Company,
prohibiting the use of a number of contractual terms included in the Company’s consumer contracts and
requiring the amendment of any such contracts (present and future) so as to remove such unfair terms.
This matter is still pending before the court as at 31 December 2024.
Cyprus Consumers’ Association (CCA)
In March 2021, the Company was served with an application filed by the CCA for the issuance of a court
order prohibiting the use of a number of contractual terms included in the Company’s consumer contracts
and requiring the amendment of any such contracts (present and future) so as to remove such terms
deemed as unfair. The said contractual terms were determined as unfair pursuant to the decisions issued by
the Consumer Protection Service of the Ministry of Energy, Commerce, Industry and Tourism against the
Company in 2016 and 2017. The Company will take all necessary steps for the protection of its interests.
This matter is still pending before the court as at 31 December 2024.
The Consumer Protection Law 2021 brings under one umbrella the existing legislation on unfair contract
terms and practices with some enhanced powers vested in the Consumer Protection Service, i.e. power to
impose increased fines which are immediately payable. The Consumer Protection Law 2021 has a
retrospective effect in that it also applies to all contracts/practices entered into and/or terminated prior to
this law coming into effect as opposed to contracts/practices which are only entered into/adopted as from
the date of publication of the new Law on Consumer Protection.
There are many factors that may affect the range of outcomes, and the resulting financial impact of these
matters is unknown.
UK regulatory matters
During the year ended 31 December 2024, the obligation undertaken in regards to UK regulatory matters as
part of the sale of Bank of Cyprus UK Ltd expired and was terminated, thus the respective provision balance
was released.
36.3
Other matters
Other matters include among others, provisions for various other open examination requests by
governmental and other public bodies, legal matters and provisions for warranties and indemnities related
to the disposal process of certain operations of the Company.
36.4
Provisions for pending litigation, claims, regulatory and other matters
Pending
litigation and
claims
(Note 36.1)
Regulatory
matters
(Note 36.2)
Other matters
(Note 36.3)
Total
2024
€000
€000
€000
€000
1 January
55,784
12,993
55,794
124,571
Net increase in provisions including unwinding
of discount
42,380
-
11,374
53,754
Utilisation of provisions
(18,814)
-
(29,802)
(48,616)
Release of provisions
(10,896)
(9,897)
(16,601)
(37,394)
Transfer
-
-
234
234
Foreign exchange adjustments
-
44
-
44
31 December
68,454
3,140
20,999
92,593
Provisions expected to be settled within 12
months post reporting date
39,897
-
7,661
47,558
536
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
36.
Provisions for pending litigation, claims, regulatory and other matters (continued)
36.4
Provisions for pending litigation, claims, regulatory and other matters (continued)
Pending
litigation and
claims
(Note 36.1)
Regulatory
matters
(Note 36.2)
Other matters
(Note 36.3)
Total
2023
€000
€000
€000
€000
1 January
58,763
13,119
48,743
120,625
Net increase in provisions including unwinding
of discount
36,227
147
4,940
41,314
Utilisation of provisions
(28,777)
(297)
(109)
(29,183)
Release of provisions
(10,429)
-
-
(10,429)
Transfer
-
-
2,220
2,220
Foreign exchange adjustments
-
24
-
24
31 December
55,784
12,993
55,794
124,571
Provisions expected to be settled within 12
months post reporting date
24,814
-
29,606
54,420
Provisions for pending litigation, claims, regulatory and other matters recorded in the income statement
during the year ended 31 December 2024 amounted to €14,288 thousand (2023: €28,084 thousand),
include a credit amount of €2,072 thousand representing an amount recovered on the conclusion of open
examinations of governmental bodies and amounts from litigation settled, directly recognised in the income
statement (2023: €2,801 thousand).
Some information required by IAS 37 'Provisions, Contingent Liabilities and Contingent Assets' is not
disclosed on the grounds that it can be expected to prejudice seriously the outcome of the litigation or the
outcome of the negotiation in relation to provisions for warranties and indemnities related to the disposal
process of certain operations of the Company.
37.
Contingent liabilities and commitments
As part of the services provided to its customers, the Company enters into various irrevocable commitments
and contingent liabilities. These consist of financial and other guarantees, letters of credit and other
undrawn commitments to lend.
Even though these obligations may not be recognised on the balance sheet, they do entail credit risk and
are therefore part of the overall credit risk exposure of the Company (Notes 42.1 and 42.6).
37.1
Capital commitments
Capital commitments for the acquisition of property, equipment and intangible assets as at 31 December
2024 amount to €22,376 thousand (2023: €19,827 thousand).
37.2
Contingent liabilities
The Company, as part of the disposal process of certain of its operations, has provided various
representations, warranties and indemnities to the buyers. These relate to, among other things, the
ownership of the loans, the validity of the liens, tax exposures and other matters agreed with the buyers. As
a result, the Company may be obliged to compensate the buyers in the event of a valid claim by the buyers
with respect to the above representations, warranties and indemnities.
A provision has been recognised, based on management’s best estimate of probable outflows, where it was
assessed that such an outflow is probable (Note 36.3).
537
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
38.
Additional information on cash flow statement
Non-cash transactions
Repossession of collaterals
During the year ended 31 December 2024, the Company acquired properties by taking possession of
collaterals held as security for loans and advances to customers of €25,833 thousand (2023: €20,540
thousand).
Recognition of RoU assets and lease liabilities
During 2024 the Company recognised RoU assets and corresponding lease liabilities of €2,293 thousand
(2023: €11,342 thousand).
Net cash flow from operating activities - interest and dividends
2024
2023
€000
€000
Interest paid
(156,510)
(120,667)
Interest received
996,168
1,044,934
Dividends received (Note 22)
22,958
85,249
862,616
1,009,516
Changes in liabilities arising from financing activities
Funding from
central banks
(Note 28)
Debt securities
in issue and
Subordinated
liabilities
(Note 30)
Total
2024
€000
€000
€000
1 January
2,043,868
979,681
3,023,549
Cash flows
(2,065,710)
244,579
(1,821,131)
Other non-cash movements
21,842
73,130
94,972
31 December
-
1,297,390
1,297,390
2023
1 January
1,976,674
601,448
2,578,122
Cash flows
-
320,314
320,314
Other non-cash movements
67,194
57,919
125,113
31 December
2,043,868
979,681
3,023,549
Further information relating to the change in Lease liabilities is disclosed in Note 40.
39.
Cash and cash equivalents
Cash and cash equivalents comprise:
2024
2023
€000
€000
Cash and non-obligatory balances with central banks
7,435,481
9,555,142
Loans and advances to banks with original maturity less than three months
256,241
251,279
7,691,722
9,806,421
538
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
39.
Cash and cash equivalents (continued)
Analysis of cash and balances with central banks and loans and advances to banks
2024
2023
€000
€000
Cash and non-obligatory balances with central banks
7,435,481
9,555,142
Obligatory balances with central banks (Note 17)
117,702
59,179
Total cash and balances with central banks (Note 17)
7,553,183
9,614,321
Loans and advances to banks with original maturity less than three months
256,241
251,279
Loans and advances to banks with original maturity more than three months
472,163
-
Restricted loans and advances to banks
58,900
101,804
Total loans and advances to banks (Note 17)
787,304
353,083
Restricted loans and advances to banks include nil collaterals under derivative transactions (2023: €13,970
thousand) which are not immediately available for use by the Company, but are released once the
transactions are terminated. As at 31 December 2024, €6,685 thousand were placed as collateral for the
reverse repurchase agreements (2023: €29,524 thousand) (Note 42.11).
539
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
40.
Leases
The Company is a lessee for commercial properties such as office and branch buildings. The basic terms for
lease contracts relating to the branch network are primarily uniform, irrespective of lessors, with the non-
cancellable rental period being two years. The Company has the option to extend the tenancy for four
further periods of two years each. The Company has the right at any time after the expiry of the initial term
to terminate the present rental agreement by providing notice (usually 3 or 6 months’ notice) to the lessor.
Depending on the terms agreed, the rent is adjusted at the end of each renewal period, according to the
current rates of the area and considering the relevant legislation.
Office buildings are leased by the Company for the operation of administrative functions. The basic terms
for new lease contracts and the current practice are substantially the same with those for lease contracts of
branches.
As at 31 December 2024 the lease term for branches and other buildings was re-assessed using the
assumptions as detailed in Note 5.9, resulting in a remeasurement of the lease liability for those contracts.
The carrying amounts of the Company’s RoU assets and lease liabilities and the movement during the year
ended 31 December 2024 and the year ended 31 December 2023 is presented in the table below:
2024
RoU
assets
(Note 24)
Lease
Liabilities
(Note 31)
€000
€000
1 January
27,138
(22,835)
Depreciation charge for the year (Note 13)
(8,386)
-
New leases (Note 24)
2,293
(1,780)
Re-assessment of lease terms (Note 24)
16,158
(16,158)
Assets derecognised (Note 24)
(370)
1,713
Interest expense (Note 7)
-
(228)
Cash outflows-payments
-
8,760
31 December
36,833
(30,528)
2023
RoU
assets
(Note 24)
Lease
Liabilities
(Note 31)
€000
€000
1 January
21,670
(22,201)
Depreciation charge for the year (Note 13)
(5,874)
-
New leases (Note 24)
11,342
(7,102)
Interest expense (Note 7)
-
(291)
Cash outflows-payments
-
6,759
31 December
27,138
(22,835)
As at 31 December 2024 RoU assets comprised of leases of buildings of a carrying amount of €27,664
thousand (2023: €15,676 thousand) and computer hardware of a carrying amount of €9,169 thousand
(2023: €11,462 thousand), and are presented within Property and equipment in Note 24.
Cash outflows relate to lease payments made during the year.
The analysis of lease liabilities based on remaining contractual maturity is disclosed in Note 44.
540
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
41.
Analysis of assets and liabilities by expected maturity
2024
2023
Less than
one year
Over one
year
Total
Less than
one year
Over one year
Total
Assets
€000
€000
€000
€000
€000
€000
Cash and balances with
central banks
7,435,481
117,702
7,553,183
9,555,142
59,179
9,614,321
Loans and advances to
banks
728,404
58,900
787,304
251,279
101,804
353,083
Derivative financial assets
8,742
86,531
95,273
859
50,196
51,055
Investments
626,703
3,571,056
4,197,759
652,270
2,901,468
3,553,738
Reverse repurchase
agreements
-
1,010,170
1,010,170
-
403,199
403,199
Loans and advances to
customers
1,214,100
8,900,173
10,114,273
1,192,495
8,629,038
9,821,533
Balances with Group
companies
34,072
31,713
65,785
24,680
3,647
28,327
Prepayments, accrued
income and other assets
301,894
67,873
369,767
273,829
197,803
471,632
Stock of property
74,622
207,240
281,862
51,000
295,531
346,531
Investment properties
4,000
12,151
16,151
4,500
18,156
22,656
Deferred tax assets
37,909
128,348
166,257
37,909
163,274
201,183
Property, equipment and
intangible assets
-
283,881
283,881
-
262,976
262,976
Investment in subsidiaries
-
427,422
427,422
-
552,577
552,577
Non-current assets and
disposal groups held for sale
23,143
-
23,143
-
-
-
10,489,070
14,903,160
25,392,230
12,043,963
13,638,848
25,682,811
Liabilities
Deposits by banks
136,621
223,389
360,010
194,817
268,513
463,330
Funding from central banks
-
-
-
2,043,868
-
2,043,868
Derivative financial liabilities
798
3,866
4,664
14,079
3,901
17,980
Customer deposits
6,528,640
13,990,636
20,519,276
5,984,800
13,352,115
19,336,915
Changes in the fair value of
hedged items in portfolio
hedges of interest rate risk
-
44,074
44,074
-
-
-
Balances with Group
companies
135,511
-
135,511
111,087
-
111,087
Accruals, deferred income,
other liabilities and other
provisions and provisions for
pending litigation, claims,
regulatory and other matters
291,599
120,872
412,471
306,096
114,010
420,106
Debt securities in issue and
subordinated liabilities
-
1,297,390
1,297,390
-
979,681
979,681
Deferred tax liabilities
-
23,084
23,084
-
22,636
22,636
7,093,169
15,703,311
22,796,480
8,654,747
14,740,856
23,395,603
The main assumptions used in determining the expected maturity of assets and liabilities are set out below.
Cash and balances with central banks, loans and advances to banks and reverse repurchase agreements are
classified in the relevant time band based on the contractual maturity, with the exception of obligatory
balances with central banks and restricted balances with other banks which are classified in the 'Over one
year' time band.
The investments are classified in the relevant time band based on expectations as to their realisation. In
most cases this is the maturity date, unless there is an indication that the maturity will be prolonged or
there is an intention to sell, roll or replace the security with a similar one.
541
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
41.
Analysis of assets and liabilities by expected maturity (continued)
Performing loans and advances to customers in Cyprus are classified based on the contractual repayment
schedule. Overdraft accounts are classified in the ‘Over one year’ time band. The Stage 3 loans are
classified in the ‘Over one year’ time band except cash flows from expected receipts which are included
within time bands, according to historic amounts of receipts in the recent months.
Stock of property and investment property are classified in the relevant time band based on expectations as
to their realisation.
A percentage of customer deposits maturing within one year is classified in the ‘Over one year’ time band,
based on the observed behavioural analysis.
Deposits by banks are classified based on contractual maturity.
The expected maturity of all prepayments, accrued income and other assets and accruals, deferred income
and other liabilities is the same as their contractual maturity. If they do not have a contractual maturity, the
expected maturity is based on the timing the asset is expected to be realised and the liability is expected to
be settled.
42.
Risk management - Credit risk
Credit risk is the risk that arises from the possible failure of one or more customers to discharge their credit
obligations towards the Company, together with the counterparty credit risk arising from investment in debt
securities.
In the ordinary course of its business the Company is exposed to credit risk which is monitored through
various control mechanisms across all Group entities in order to identify and measure credit risk, control
risk taking including preventing undue risk concentrations.
In order to manage this risk, management has in place established credit risk policies on which the Group's
lending and investment procedures are based on. The credit risk policies are complemented by the
methods/models used for the assessment of the customers' credit worthiness (credit rating and credit
scoring systems) as disclosed in Note 42.4.
Management and structure
The Credit Risk Management department, develops and sets credit risk policies, guidelines and approval
limits which are necessary to manage and control or mitigate the credit and concentration risk of the
Company. The Credit Risk Control and Monitoring department monitors compliance with credit risk policies
applicable to each business line and the quality of the Company’s loans and advances portfolio. The credit
exposures of related accounts are aggregated and monitored on a consolidated basis.
The Credit Risk Management department, in co-operation with the Credit Risk Control and Monitoring
department, also safeguards the effective management of credit risk at all stages of the credit cycle,
monitors the quality of decisions and processes and ensures that the credit sanctioning function is being
properly managed.
The credit risk exposure of the Company is diversified across the various sectors of the economy. Credit
Risk Management department determines concentration limits for each sector, sets prohibited sectors and
defines sectors which may require prior approval before credit applications are submitted.
The loan portfolio is analysed on the basis of the customers' creditworthiness, their economic sector of
activity and geographical concentration.
The debt securities portfolio is managed by the Treasury Division in line with limits and parameters set in
the various policies and frameworks. The Market & Liquidity Risk department assesses the credit risk
relating to exposures to credit institutions and governments and other exposures of both the debt securities
portfolio as well as reverse repurchase agreements.
542
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
The Company sets credit risk control limits and country risk exposure limits to mitigate concentration risk.
Models and limits are presented to and approved by the Board of Directors, through the relevant authority
based on the authorisation level limits.
The Company’s significant judgements, estimates and assumptions regarding the determination of the level
of provisions for impairment are described in Note 5.
Monitoring process and credit risk mitigation
Loans and advances to customers
The Credit Risk Management department determines the effective credit standards required for the granting
of new loans to customers. The assessment of financial position/repayment ability is the determining factor
when assessing the granting of a new loan. Furthermore, post-approval monitoring is in place to ensure
adherence to both terms and conditions set in the approval process and credit risk policies and procedures.
A key aspect of credit risk is credit risk concentration which is defined as the risk that arises from the
uneven distribution of exposures to individual borrowers, specific industry or economic sectors, geographical
regions, product types or currencies. The monitoring and control of concentration risk is achieved by limit
setting (e.g. sector and name limits) and reporting them to senior management. In addition, the Company
obtains collaterals which are used for risk mitigation as they act as a secondary source of repayment.
The main types of collateral obtained by the Company are mortgages on real estate, cash collateral/blocked
deposits, bank guarantees, government guarantees, pledges of equity securities and debt instruments of
public companies, fixed and floating charges over corporate assets, assignment of life insurance policies,
assignment of rights on contracts of sale and personal and corporate guarantees.
The Company regularly monitors the changes in the market value of the collateral and, where necessary,
requests the pledging of additional collateral in accordance with the relevant agreement.
The Company's requirements on obtaining collateral, valuation and management of collateral are set out in
relevant policies of the Company.
Off-balance sheet exposures
The Company enters into various irrecoverable commitments and contingent liabilities, by offering
guarantee facilities, documentary credits and other commitments to extend credit lines of its customers to
secure their liquidity needs. Even though these obligations may not be recognised on the statement of
financial position, such commitments expose the Company to risks similar to those of loans and advances
and are therefore monitored by the same policies and control processes.
The Company makes available to its customers guarantees that may require that the Company makes
payments on their behalf. The Company also enters into commitments, such as documentary credits which
commit the Company makes payments on behalf of customers in the event of a specific act, generally
related to the import or export of goods.
Policies and procedures for managing, monitoring and mitigating credit risk on off balance sheet exposures
apply as for loans and advances to customers.
Other financial instruments
Collateral held as security for financial assets other than loans and advances to customers and off-balance
sheet exposures is determined by the nature of the financial instrument. Debt securities and other eligible
bills are generally unsecured with the exception of asset-backed securities and similar instruments, which
are secured by pools of financial assets. In addition, some debt securities are government-guaranteed.
Reverse repurchase agreements are generally secured by bonds.
The Market & Liquidity Risk Unit monitors the debt security investment and reverse repo arrangement limits
in place for governing the level of riskiness of the overall portfolio, as well as the credit limits per issuer.
Analysis of the positions the Company maintains per issuer type is presented in Note 18 and information for
the credit quality is presented in Note 42.11.
543
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
The Company has chosen the ISDA Master Agreement for documenting its derivatives activity. It provides
the contractual framework within which dealing activity across a full range of over-the-counter (OTC)
products is conducted and contractually binds both parties to apply close-out netting across all outstanding
transactions covered by an agreement, if either party defaults. In most cases the parties execute a Credit
Support Annex (CSA) in conjunction with the ISDA Master Agreement. Under a CSA, the collateral is passed
between the parties in order to mitigate the market contingent counterparty risk inherent in their open
positions. As at 31 December 2024, the majority of derivative exposures are covered by ISDA netting
arrangements. The effect of potential effect of netting arrangements on the Company's financial position is
presented in Note 48. An analysis of derivative asset and liability exposures is available in Note 19.
Information about the Company's level of collateral under derivative transactions as at 31 December is
provided in Note 39.
42.1
Maximum exposure to credit risk and collateral and other credit enhancements
The table below presents the maximum exposure to credit risk, the tangible and measurable collateral and
credit enhancements held and the net exposure to credit risk, that is the exposure after taking into account
the impairment loss and tangible and measurable collateral and credit enhancements held. Personal
guarantees are an additional form of collateral, but are not included in the information below since it is
impracticable to estimate their fair value.
The fair value of the collateral presented in the tables below is capped to the carrying value of the loans and
advances to customers.
544
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.1
Maximum exposure to credit risk and collateral and other credit enhancements (continued)
Fair value of collateral and credit enhancements held by the Company
Maximum
exposure to
credit risk
Cash
Securities
Letters
of credit/
guarantee
Property
Other
Surplus collateral
Net collateral
Net exposure to
credit risk
2024
€000
€000
€000
€000
€000
€000
€000
€000
€000
Balances with central banks (Note 17)
7,458,196
-
-
-
-
-
-
-
7,458,196
Loans and advances to banks (Note 17)
787,304
-
-
-
-
-
-
-
787,304
Reverse repurchase agreements (Note 42.11)
1,010,170
13,068
1,006,856
-
-
-
(9,754)
1,010,170
-
FVPL non-equity securities (Note 18)
6,790
-
-
-
-
-
-
-
6,790
Debt securities classified at amortised cost and
FVOCI (Note 18)
4,181,330
-
-
-
-
-
-
-
4,181,330
Derivative financial instruments (Note 19)
95,273
-
-
-
-
-
-
-
95,273
Loans and advances to customers (Note 21)
10,114,273
577,972
659,723
233,160
17,140,948
292,621
(10,036,877)
8,867,547
1,246,726
Loans and advances to customers classified as
held for sale (Note 21)
23,143
-
-
-
-
-
-
-
23,143
Debtors (Note 27)
5
-
-
-
-
-
-
-
5
Balances with group companies (Note 22)
65,785
-
-
-
-
-
-
-
65,785
Deferred purchase payment consideration
(Note 27)
143,604
-
-
-
-
-
-
-
143,604
Other financial assets (Note 27)
112,258
57,481
-
-
-
-
-
57,481
54,777
On-balance sheet total
23,998,131
648,521
1,666,579
233,160
17,140,948
292,621
(10,046,631)
9,935,198
14,062,933
Contingent liabilities
Acceptances and endorsements
5,271
-
-
-
5,269
2
-
5,271
-
Guarantees
706,496
72,744
209
4,099
148,199
224
-
225,475
481,021
Commitments
Documentary credits
14,768
844
-
-
166
-
-
1,010
13,758
Undrawn formal stand-by facilities, credit lines
and other commitments to lend
2,041,468
26,529
20,349
2,459
439,691
22,722
-
511,750
1,529,718
Off-balance sheet total
2,768,003
100,117
20,558
6,558
593,325
22,948
-
743,506
2,024,497
26,766,134
748,638
1,687,137
239,718
17,734,273
315,569
(10,046,631)
10,678,704
16,087,430
545
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.1
Maximum exposure to credit risk and collateral and other credit enhancements (continued)
Fair value of collateral and credit enhancements held by the Company
Maximum
exposure to
credit risk
Cash
Securities
Letters of credit/
guarantee
Property
Other
Surplus collateral
Net collateral
Net exposure to
credit risk
2023
€000
€000
€000
€000
€000
€000
€000
€000
€000
Balances with central banks (Note 17)
9,521,812
-
-
-
-
-
-
-
9,521,812
Loans and advances to banks (Note 17)
353,083
39,344
-
-
-
-
-
39,344
313,739
Reverse repurchase agreements (Note 42.11)
403,199
-
426,419
-
-
-
(29,524)
396,895
6,304
FVPL non-equity securities (Note 18)
2,286
-
-
-
-
-
-
-
2,286
Debt securities classified at amortised cost and FVOCI
(Note 18)
3,540,944
-
-
-
-
-
-
-
3,540,944
Derivative financial instruments (Note 19)
51,055
-
-
-
-
-
-
-
51,055
Loans and advances to customers (Note 21)
9,821,533
475,241
743,890
149,415
16,755,231
275,344
(9,615,340)
8,783,781
1,037,752
Debtors (Note 27)
7
-
-
-
-
-
-
-
7
Balances with group companies (Note 22)
28,327
-
-
-
-
-
-
-
28,327
Deferred purchase payment consideration (Note 27)
243,013
-
-
-
-
-
-
-
243,013
Other financial assets (Note 27)
104,756
-
-
-
-
-
-
-
104,756
On-balance sheet total
24,070,015
514,585
1,170,309
149,415 16,755,231
275,344
(9,644,864)
9,220,020
14,849,995
Contingent liabilities
Acceptances and endorsements
2,580
8
-
-
2,570
2
-
2,580
-
Guarantees
708,943
71,752
1,874
6,797
145,545
255
-
226,223
482,720
Commitments
Documentary credits
10,251
140
-
-
21
-
-
161
10,090
Undrawn formal stand-by facilities, credit lines and
other commitments to lend
1,987,455
22,980
10,648
9,764
455,964
17,231
-
516,587
1,470,868
Off-balance sheet total
2,709,229
94,880
12,522
16,561
604,100
17,488
-
745,551
1,963,678
26,779,244
609,465
1,182,831
165,976 17,359,331
292,832
(9,644,864)
9,965,571
16,813,673
546
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.2
Credit risk concentration of loans and advances to customers
There are restrictions on loan concentrations which are imposed by the Banking Law in Cyprus, the relevant
CBC Directives and CRR. The Company’s Risk Appetite Statement may impose stricter concentration limits
which are monitored by the Company.
The credit risk concentration, which is based on industry (economic activity) and business line, as well as
the geographical concentration, is presented below.
The geographical analysis, for credit risk concentration purposes, is based on the Company’s Country Risk
Policy which is followed for monitoring the Company's exposures. Market and Liquidity Risk department is
responsible for analysing the country risk of exposures. ALCO reviews the country risk of exposures on a
quarterly basis and the Board, through its Risk Committee, reviews the country risk of exposures and any
breaches of country risk limits on a regular basis and at least annually.
The table below presents the geographical concentration of loans and advances to customers by country of
risk based on the country of residency for individuals and the country of registration for companies.
2024
Cyprus
Greece
United
Kingdom
Russia
Other
countries
Gross loans at
amortised cost
By economic activity
€000
€000
€000
€000
€000
€000
Trade
880,142
8,405
1
-
15,283
903,831
Manufacturing
275,779
9,691
193
-
31,412
317,075
Hotels and catering
914,460
33,500
38,355
-
36,329
1,022,644
Construction
453,362
36,629
-
-
17
490,008
Real estate
757,099
114,289
2
-
34,565
905,955
Private individuals
4,670,608
7,842
34,513
7,534
40,083
4,760,580
Professional and other services
568,294
567
5,171
6
61,513
635,551
Shipping
36,874
12
-
-
302,279
339,165
Other sectors
606,598
106,116
-
5
42,560
755,279
9,163,216
317,051
78,235
7,545
564,041
10,130,088
2024
Cyprus
Greece
United
Kingdom
Russia
Other
countries
Gross loans at
amortised cost
By business line
€000
€000
€000
€000
€000
€000
Corporate
3,286,902
59,961
195
-
163
3,347,221
IBU & International corporate
- IBU
92,206
1,638
4,769
5,214
16,867
120,694
- International corporate
147,180
251,140
43,245
-
519,456
961,021
SMEs
964,412
402
1,054
-
1,869
967,737
Retail
- housing
3,496,469
2,544
22,185
80
14,071
3,535,349
- consumer, credit cards and other
1,033,208
1,339
337
-
5,510
1,040,394
Restructuring
- corporate
16,015
-
1,241
112
66
17,434
- SMEs
20,289
-
157
-
100
20,546
- retail housing
35,644
-
534
126
80
36,384
- retail other
15,169
2
3
-
30
15,204
Recoveries
- corporate
3,627
-
32
144
377
4,180
- SMEs
7,760
4
390
876
634
9,664
- retail housing
25,795
5
3,571
907
4,574
34,852
- retail other
18,540
16
522
86
244
19,408
9,163,216
317,051
78,235
7,545
564,041
10,130,088
547
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.2
Credit risk concentration of loans and advances to customers (continued)
2023
Cyprus
Greece
United
Kingdom
Russia
Other
countries
Gross loans at
amortised cost
By economic activity
€000
€000
€000
€000
€000
€000
Trade
868,039
277
40
-
15,340
883,696
Manufacturing
287,524
43,971
192
-
31,194
362,881
Hotels and catering
928,910
29,454
36,704
-
39,368
1,034,436
Construction
486,622
8,332
14
-
-
494,968
Real estate
871,544
108,635
1,863
-
51,348
1,033,390
Private individuals
4,543,985
9,680
56,074
12,075
48,080
4,669,894
Professional and other services
535,994
572
5,242
28
54,809
596,645
Shipping
20,622
15
-
-
222,422
243,059
Other sectors
512,666
-
-
2
30,201
542,869
9,055,906
200,936
100,129
12,105
492,762
9,861,838
2023 (restated)
Cyprus
Greece
United
Kingdom
Russia
Other
countries
Gross loans at
amortised cost
By business line
€000
€000
€000
€000
€000
€000
Corporate
3,326,556
30,487
193
-
202
3,357,438
IBU & International corporate
- IBU
87,127
1,688
6,544
6,901
18,618
120,878
- International corporate
115,212
164,103
43,401
-
439,512
762,228
SMEs
945,018
482
1,177
-
1,947
948,624
Retail
- housing
3,369,111
2,320
27,728
86
17,634
3,416,879
- consumer, credit cards and other
956,834
1,775
480
-
4,953
964,042
Restructuring
- corporate
48,440
-
611
-
-
49,051
- SMEs
33,212
-
261
532
61
34,066
- retail housing
57,685
-
2,468
122
212
60,487
- retail other
19,164
22
2
-
23
19,211
Recoveries
- corporate
6,079
-
182
173
911
7,345
- SMEs
13,419
1
1,173
1,623
1,183
17,399
- retail housing
50,927
50
14,718
2,399
7,231
75,325
- retail other
27,122
8
1,191
269
275
28,865
9,055,906
200,936
100,129
12,105
492,762
9,861,838
The loans and advances to customers include lending exposures in Cyprus with collaterals in Greece with a
carrying value as at 31 December 2024 of €176,890 thousand (2023: €128,705 thousand).
The loans and advances to customers reported within 'Other countries' as at 31 December 2024 include
exposures of €0,6 million in Ukraine (2023: €1,7 million) and €4,9 million in Israel (2023: €4,9 million).
548
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.3
Analysis of loans and advances to customers
The movement of the gross loans and advances to customers at amortised cost by staging, including the
loans and advances to customers classified as held for sale is presented in the tables below:
Stage 1
Stage 2
Stage 3
POCI
Total
2024
€000
€000
€000
€000
€000
1 January
8,275,416
1,161,271
326,380
98,771
9,861,838
Transfers to stage 1
565,289
(564,134)
(1,155)
-
-
Transfers to stage 2
(228,889)
265,111
(36,222)
-
-
Transfers to stage 3
(14,037)
(19,442)
33,479
-
-
Write offs
(801)
(619)
(46,787)
(4,951)
(53,158)
Interest accrued and other
adjustments
417,918
74,717
43,137
7,703
543,475
New loans originated or
purchased and drawdowns of
existing facilities
2,252,251
69,200
1,877
11,336
2,334,664
Loans derecognised or repaid
(excluding write offs)
(2,140,560)
(212,439)
(100,651)
(49,241)
(2,502,891)
Changes to contractual cash
flows due to modifications
(230)
1,415
120
(224)
1,081
31 December
9,126,357
775,080
220,178
63,394
10,185,009
Stage 1
Stage 2
Stage 3
POCI
Total
2023
€000
€000
€000
€000
€000
1 January
7,867,037
1,565,603
368,939
113,458
9,915,037
Transfers to stage 1
786,990
(785,026)
(1,964)
-
-
Transfers to stage 2
(514,415)
546,249
(31,834)
-
-
Transfers to stage 3
(38,959)
(83,436)
122,395
-
-
Foreign exchange and other
adjustments
-
-
(1)
-
(1)
Write offs
(594)
(588)
(77,699)
(5,282)
(84,163)
Interest accrued and other
adjustments
388,970
39,662
47,804
8,001
484,437
New loans originated or
purchased and drawdowns of
existing facilities
1,827,530
89,118
8,125
1,847
1,926,620
Loans derecognised or repaid
(excluding write offs)
(2,038,343)
(210,331)
(107,490)
(22,753)
(2,378,917)
Changes to contractual cash
flows due to modifications
(2,800)
20
(1,895)
(149)
(4,824)
Acquisition of Velocity 2
portfolio
-
-
-
3,649
3,649
31 December
8,275,416
1,161,271
326,380
98,771
9,861,838
As at 31 December 2023 no loans and advances to customers were classified as held for sale.
For revolving facilities, overdrafts and credit cards the net positive change in balance by stage excluding
write-offs is reported in ‘New loans originated’ and the net negative change is reported in ‘Loans
derecognised or repaid'.
The analysis of gross loans and advances to customers at amortised cost by staging and by business line
concentration is included in Note 21.
549
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.3
Analysis of loans and advances to customers (continued)
The movement of gross loans and advances to customers at amortised cost, in the Corporate, IBU &
International corporate, SME and Retail business lines in Cyprus (the country where the loans are
managed), are presented in the tables below:
Corporate
IBU &
International
corporate
SME
Retail
2024
€000
€000
€000
€000
1 January
3,357,438
883,106
948,624
4,380,921
Transfers (out of)/in business line
(19,504)
(3,596)
21,822
(5,792)
Write offs
(4,597)
(189)
(144)
(1,458)
Interest accrued
179,997
77,373
44,709
201,869
New loans originated or purchased
933,201
426,906
204,860
761,804
Loans derecognised or repaid (excluding write
offs)
(1,098,155)
(302,429)
(252,530)
(762,789)
Changes to contractual cash flows due to
modifications not resulting in derecognition
(1,159)
544
396
1,188
31 December
3,347,221
1,081,715
967,737
4,575,743
Corporate
IBU &
International
corporate
SME
Retail
2023 (restated)
€000
€000
€000
€000
1 January
3,398,492
823,182
1,026,608
4,264,777
Transfers in/(out of) business line
111,905
(35,005)
(38,809)
36,081
Write offs
(25,277)
(173)
(142)
(1,165)
Interest accrued
166,290
56,142
59,465
159,108
New loans originated or purchased
748,197
218,979
192,439
696,146
Loans derecognised or repaid (excluding write
offs)
(1,037,422)
(179,763)
(291,534)
(775,774)
Changes to contractual cash flows due to
modifications not resulting in derecognition
(4,747)
(256)
597
1,748
31 December
3,357,438
883,106
948,624
4,380,921
42.4
Credit quality of loans and advances to customers based on the internal credit rating
Credit scoring is the primary risk rating system for assessing obligor and transaction risk for the key
portfolios of the Company. For the purposes of credit scoring, these portfolios are Corporate, Retail and
SMEs. Corporate and SME portfolios include legal entities. Retail portfolio includes individuals.
Scoring models use internal and external data to assess and 'score' borrowers and their credit quality, in
order to provide further input on managing limits for existing loans and collection activities. The data is
specific to the borrower but additional data which could affect the borrower’s behaviour is also used.
Credit score is one of the factors employed on new clients and management of existing clients. The credit
score of the borrower is used to assess the credit quality for each independent acquisition or account
management action, leading to an automated decision or guidance for an adjudicator. Credit scoring
enhances the credit decision quality and facilitates risk-based pricing where feasible.
Borrower score defines the rating of the borrower from a range of 1-8 where 8 is defined as defaulted. The
12 months probability of default (PD) is calculated per rating. The following table presents weighted PD per
risk level's rating for corporate, retail and SME exposures.
550
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.4
Credit quality of loans and advances to customers based on the internal credit rating
(continued)
Unrated corporate exposures are assessed using the Company's in-house behavioural scorecard model for
corporate legal entities. Unrated retail exposures include qualifying revolving facilities without scoring (i.e.
prepaid cards) and other revolving facilities (i.e. financial guarantees) which are assigned a more generic
curve. Similarly unrated SME exposures are assigned a more generic segment curve.
New customers' lending to corporate and SME legal entities and new lending to retail individuals are
separately disclosed since a time span of seven months is necessary in order to provide an accurate rating.
The portfolios weighted PD per rating is presented below.
2024
12-month PD
Rating
Corporate legal entities
%
Retail individuals
%
SME legal entities
%
1
0.52
0.04
0.08
2
0.55
0.06
0.17
3
0.71
0.11
0.35
4
0.98
0.16
1.26
5
1.43
0.50
3.73
6
1.74
3.34
8.44
7
2.07
8.80
15.62
2023
12-month PD
Rating
Corporate legal entities
%
Retail individuals
%
SME legal entities
%
1
1.32
0.10
0.18
2
1.42
0.17
0.46
3
1.75
0.28
0.96
4
2.38
0.42
3.37
5
3.68
0.89
8.92
6
3.82
7.20
18.16
7
4.88
15.21
36.65
Lower rating exposures demonstrate a better capacity to meet financial commitments, with lower
probability of default, whereas higher rating exposures require varying degrees of special attention and
default risk is of greater concern.
As disclosed in Note 5.1 under section ‘Calibration of IFRS 9 models and removal of overlays in relation to
economic conditions', the Group during 2024 proceeded with model calibrations affecting the probability of
default parameter (the ‘PD-macro’) which led to a reduction in portfolios weighted PDs, when compared to
last year.
The tables below show the gross loans and advances to customers at amortised cost which are managed in
Cyprus, using the corporate legal entities, SMEs legal entities and retail individuals definition as per the
internal rating of the Company.
551
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.4
Credit quality of loans and advances to customers based on the internal credit rating
(continued)
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Corporate legal entities
€000
€000
€000
€000
€000
€000
Rating 1
795,970
7,675
803,645
654,192
8,681
662,873
Rating 2
414,627
12,266
426,893
404,127
2,604
406,731
Rating 3
840,468
17,460
857,928
857,583
17,943
875,526
Rating 4
617,084
181,452
798,536
420,299
75,912
496,211
Rating 5
446,603
85,994
532,597
593,987
210,143
804,130
Rating 6
58,029
61,365
119,394
97,182
176,247
273,429
Rating 7
6,217
21,329
27,546
30,182
10,713
40,895
Unrated
231,861
22,225
254,086
230,024
34,157
264,181
New customers
654,183
48,048
702,231
397,922
14,956
412,878
4,065,042
457,814 4,522,856
3,685,498
551,356
4,236,854
Total Stage 3 and POCI
58,188
157,472
4,581,044
4,394,326
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Retail individuals
€000
€000
€000
€000
€000
€000
Rating 1
404,639
1,263
405,902
410,510
886
411,396
Rating 2
309,996
898
310,894
296,784
1,182
297,966
Rating 3
539,982
1,155
541,137
531,271
8,583
539,854
Rating 4
1,523,523
12,369 1,535,892
1,387,960
59,067
1,447,027
Rating 5
1,107,575
48,957 1,156,532
915,585
195,178
1,110,763
Rating 6
59,245
81,998
141,243
63,506
91,634
155,140
Rating 7
82,361
120,555
202,916
104,288
121,092
225,380
Unrated
-
2,215
2,215
-
2,099
2,099
New customers
380,491
6,629
387,120
308,043
13,166
321,209
4,407,812
276,039 4,683,851
4,017,947
492,887
4,510,834
Total Stage 3 and POCI
146,115
230,837
4,829,966
4,741,671
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
SMEs legal entities
€000
€000
€000
€000
€000
€000
Rating 1
125,714
1,235
126,949
120,165
3,360
123,525
Rating 2
260,609
2,266
262,875
210,856
47,818
258,674
Rating 3
125,330
8,654
133,984
108,742
29,117
137,859
Rating 4
47,228
15,261
62,489
45,841
14,490
60,331
Rating 5
10,668
4,285
14,953
13,021
5,771
18,792
Rating 6
3,414
4,361
7,775
5,300
3,328
8,628
Rating 7
3,172
1,415
4,587
3,324
2,534
5,858
Unrated
-
670
670
-
6,312
6,312
New customers
77,368
3,080
80,448
64,722
4,298
69,020
653,503
41,227
694,730
571,971
117,028
688,999
Total Stage 3 and POCI
24,348
36,842
719,078
725,841
552
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.5
Credit losses of loans and advances to customers
The movement in ECL of loans and advances to customers, including those classified as held for sale is as
follows:
Stage 1
Stage 2
Stage 3
POCI
Total
2024
€000
€000
€000
€000
€000
1 January
24,205
30,257
103,575
20,995
179,032
Transfers to stage 1
11,706
(11,386)
(320)
-
-
Transfers to stage 2
(660)
4,411
(3,751)
-
-
Transfers to stage 3
(131)
(984)
1,115
-
-
Impact on transfer between
stages during the year*
(8,970)
1,221
7,638
(173)
(284)
Foreign exchange and other
adjustments
-
-
41
-
41
Write offs
(801)
(619)
(46,784)
(4,951)
(53,155)
Interest (provided) not
recognised in the income
statement
-
-
4,156
1,105
5,261
New loans originated or
purchased*
5,043
-
-
385
5,428
Loans derecognised or repaid
(excluding write offs)*
(4,390)
(1,177)
(14,213)
(801)
(20,581)
Write offs*
748
325
12,096
295
13,464
Changes to models and inputs
(changes in PDs, LGDs and
EADs) used for ECL
calculations*
(14,380)
15,373
43,693
3,684
48,370
Changes to contractual cash
flows due to modifications not
resulting in derecognition*
(365)
1,318
77
(5)
1,025
31 December
12,005
38,739
107,323
20,534
178,601
Individually assessed
3,378
17,069
21,090
10,485
52,022
Collectively assessed
8,627
21,670
86,233
10,049
126,579
12,005
38,739
107,323
20,534
178,601
* Individual components of the ‘Impairment net of reversals on loans and advances to customers’ (Note
14).
The main driver of the ECL charge are the ‘Changes to models and inputs (changes in PDs, LGDs and EADs)
used for ECL calculations’ which includes the calibration of the provisioning models as set out in Note 5.1
together with the impact of the agreement for disposal of NPE portfolio (Project River).
As at 31 December 2023 no loans and advances to customers were classified as held for sale.
553
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.5
Credit losses of loans and advances to customers (continued)
Stage 1
Stage 2
Stage 3
POCI
Total
2023
€000
€000
€000
€000
€000
1 January
22,288
27,041
111,606
15,540
176,475
Transfers to stage 1
10,985
(10,504)
(481)
-
-
Transfers to stage 2
(1,532)
6,677
(5,145)
-
-
Transfers to stage 3
(481)
(2,576)
3,057
-
-
Impact on transfer between
stages during the year*
(8,860)
3,450
24,794
-
19,384
Foreign exchange and other
adjustments
-
-
144
-
144
Write offs
(594)
(588)
(77,699)
(5,282)
(84,163)
Interest (provided) not
recognised in the income
statement
-
-
3,827
1,079
4,906
New loans originated or
purchased*
5,953
-
-
992
6,945
Loans derecognised or repaid
(excluding write offs)*
(2,798)
(782)
(5,433)
(162)
(9,175)
Write offs*
455
340
7,981
1,118
9,894
Changes to models and inputs
(changes in PDs, LGDs and
EADs) used for ECL
calculations*
258
7,021
39,891
7,935
55,105
Changes to contractual cash
flows due to modifications not
resulting in derecognition*
(1,469)
178
1,033
(225)
(483)
31 December
24,205
30,257
103,575
20,995
179,032
Individually assessed
8,287
11,983
44,757
13,480
78,507
Collectively assessed
15,918
18,274
58,818
7,515
100,525
24,205
30,257
103,575
20,995
179,032
*Individual components of the ‘Impairment net of reversals on loans and advances to customers’ (Note 14).
554
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.5
Credit losses of loans and advances to customers (continued)
The analysis of credit losses of loans and advances to customers by business line, excluding those classified
as held for sale is presented in the table below:
Stage 1
Stage 2
Stage 3
POCI
Total
2024
€000
€000
€000
€000
€000
Corporate
4,468
17,645
14,830
323
37,266
IBU & International corporate
- IBU
84
378
51
5
518
- International corporate
1,925
1,070
-
-
2,995
SMEs
958
3,209
3,107
142
7,416
Retail
- housing
2,604
10,895
4,911
526
18,936
- consumer, credit cards and other
1,836
4,856
4,790
750
12,232
Restructuring
- corporate
2
127
1,627
10,178
11,934
- SMEs
47
123
2,997
515
3,682
- retail housing
53
371
10,686
341
11,451
- retail other
28
65
7,524
475
8,092
Recoveries
- corporate
-
-
2,053
158
2,211
- SMEs
-
-
4,714
470
5,184
- retail housing
-
-
11,686
2,600
14,286
- retail other
-
-
9,344
1,276
10,620
12,005
38,739
78,320
17,759
146,823
Stage 1
Stage 2
Stage 3
POCI
Total
2023 (restated)
€000
€000
€000
€000
€000
Corporate
12,993
11,727
32,536
5,169
62,425
IBU & International corporate
- IBU
161
323
40
5
529
- International corporate
1,498
816
38
6
2,358
SMEs
2,424
2,403
1,004
303
6,134
Retail
- housing
3,098
6,435
3,804
486
13,823
- consumer, credit cards and other
3,693
5,665
4,969
1,164
15,491
Restructuring
- corporate
21
1,635
6,962
9,964
18,582
- SMEs
134
589
4,334
553
5,610
- retail housing
75
440
12,393
204
13,112
- retail other
108
224
7,060
489
7,881
Recoveries
- corporate
-
-
3,342
267
3,609
- SMEs
-
-
4,794
150
4,944
- retail housing
-
-
13,772
1,094
14,866
- retail other
-
-
8,527
1,141
9,668
24,205
30,257
103,575
20,995
179,032
555
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.5
Credit losses of loans and advances to customers (continued)
The movement of the ECL allowance for the loans and advances to customers in the Corporate, IBU &
International corporate and SME Retail business lines in Cyprus (the country where the loans are managed),
is presented in the table below:
Corporate
IBU &
International
corporate
SME
Retail
2024
€000
€000
€000
€000
1 January
62,425
2,887
6,134
29,314
Transfer (out of)/in the business line
(10,684)
91
921
(1,409)
Write offs
(4,597)
(189)
(144)
(1,458)
Interest (provided) not recognised in the
income statement
987
2
116
458
New loans originated or purchased
1,998
1,029
287
1,688
Loans derecognised or repaid (excluding write
offs)
(10,004)
(487)
(216)
(2,183)
Write offs
10
21
79
979
Changes to models and inputs (changes in
PDs, LGDs and EADs) used for ECL
calculations
(1,078)
(52)
105
4,317
Changes to contractual cash flows due to
modifications not resulting in derecognition
800
(2)
174
64
Impact on transfer between stages during the
year
(2,591)
213
(40)
(602)
31 December
37,266
3,513
7,416
31,168
Corporate
IBU &
International
corporate
SME
Retail
2023 (restated)
€000
€000
€000
€000
1 January
56,359
1,087
5,879
24,827
Transfer in/(out of) the business line
(660)
112
76
(1,813)
Write offs
(25,276)
(173)
(142)
(1,165)
Interest (provided) not recognised in the
income statement
287
-
-
464
New loans originated or purchased
4,058
470
616
1,804
Loans derecognised or repaid (excluding write
offs)
(2,627)
(315)
-
(1,615)
Write offs
18
28
135
740
Changes to models and inputs (changes in
PDs, LGDs and EADs) used for ECL
calculations
12,120
885
242
6,236
Changes to contractual cash flows due to
modifications not resulting in derecognition
481
4
(469)
(283)
Impact on transfer between stages during the
year
17,665
789
(203)
119
31 December
62,425
2,887
6,134
29,314
During the year ended 31 December 2024 the total non-contractual write-offs recorded by the Company
amounted to €25,391 thousand (2023: €66,547 thousand). The contractual amount outstanding on financial
assets that were written off during the year ended 31 December 2024 and that are still subject to
enforcement activity is €187,288 thousand (2023: €566,451 thousand).
Sensitivity analysis
The Company has performed sensitivity analysis relating to its loan portfolio with reference date 31
December 2024 and 2023.
556
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.5
Credit losses of loans and advances to customers (continued)
The Company has applied sensitivity analysis to the below parameters and the impact on the ECL, for both
individually and collectively assessed ECL calculations, is presented in the table below:
Increase/(decrease) on ECL
for loans and advances to
customers at amortised cost
2024
2023
€000
€000
Increase the adverse weight by 5% and decrease the favourable weight
by 5%
1,560
1,297
Decrease the adverse weight by 5% and increase the favourable weight
by 5%
(1,677)
(1,629)
Increase the expected recovery period by 1 year
1,965
6,090
Decrease the expected recovery period by 1 year
(2,047)
(7,863)
Increase the collateral realisation haircut by 5%
4,429
8,816
Decrease the collateral realisation haircut by 5%
(3,771)
(9,495)
Increase in the PDs of stages 1 and 2 by 20%*
18,232
5,424
Decrease in the PDs of stages 1 and 2 by 20%*
(8,273)
(5,880)
The increase/(decrease) on ECL, for loans and advances to customers at amortised cost is presented, per
stage in the table below:
Stage 1
Stage 2
Stage 3
Total
2024
€000
€000
€000
€000
Increase the adverse weight by 5% and decrease
the favourable weight by 5%
186
931
443
1,560
Decrease the adverse weight by 5% and increase
the favourable weight by 5%
(213)
(522)
(942)
(1,677)
Increase the expected recovery period by 1 year
139
870
956
1,965
Decrease the expected recovery period by 1 year
(111)
(687)
(1,249)
(2,047)
Increase the collateral realisation haircut by 5%
265
1,579
2,585
4,429
Decrease the collateral realisation haircut by 5%
(182)
(1,067)
(2,522)
(3,771)
Increase in the PDs of stages 1 and 2 by 20%*
1,810
16,422
-
18,232
Decrease in the PDs of stages 1 and 2 by 20%*
(2,059)
(6,214)
-
(8,273)
Stage 1
Stage 2
Stage 3
Total
2023
€000
€000
€000
€000
Increase the adverse weight by 5% and decrease
the favourable weight by 5%
295
204
798
1,297
Decrease the adverse weight by 5% and increase
the favourable weight by 5%
(235)
(267)
(1,127)
(1,629)
Increase the expected recovery period by 1 year
727
1,201
4,162
6,090
Decrease the expected recovery period by 1 year
(695)
(1,121)
(6,047)
(7,863)
Increase the collateral realisation haircut by 5%
1,037
1,692
6,087
8,816
Decrease the collateral realisation haircut by 5%
(900)
(1,406)
(7,189)
(9,495)
Increase in the PDs of stages 1 and 2 by 20%*
2,624
2,800
-
5,424
Decrease in the PDs of stages 1 and 2 by 20%*
(1,325)
(4,555)
-
(5,880)
*The impact on the ECL also includes the transfer between stages of the loans and advances to customers
following the increase/decrease in the PD.
557
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.5
Credit losses of loans and advances to customers (continued)
The sensitivity analysis performed on the collateral realisation haircut and its impact on the ECL by business
line is presented in the table below:
Increase
the
collateral
realisation
haircut by
5%
Decrease
the
collateral
realisation
haircut by
5%
Increase the
collateral
realisation
haircut by
5%
Decrease the
collateral
realisation
haircut by
5%
2024
2024
2023
(restated)
2023
(restated)
€000
€000
€000
€000
Corporate
553
(1,061)
2,708
(2,521)
IBU & International corporate
- IBU
3
(2)
9
(6)
- International corporate
17
(14)
65
(55)
SMEs
464
(382)
365
(324)
Retail
- housing
940
(638)
1,128
(811)
- consumer, credit cards and other
200
(137)
336
(286)
Restructuring
- corporate
34
(29)
1,029
(3,337)
- SMEs
109
(88)
233
(300)
- retail housing
660
(576)
694
(616)
- retail other
148
(140)
196
(175)
Recoveries
- corporate
22
(87)
123
(111)
- SMEs
209
(146)
932
(319)
- retail housing
671
(346)
693
(455)
- retail other
399
(125)
305
(179)
4,429
(3,771)
8,816
(9,495)
42.6
Contingent liabilities and commitments
The Company enters into various irrevocable commitments and contingent liabilities. These consist of
acceptances and endorsements, guarantees, documentary credits and undrawn formal stand-by facilities,
credit lines and other commitments to lend.
42.6.1
Contingent liabilities
An analysis of changes in the outstanding nominal amount of exposures and the corresponding ECL are
disclosed in the tables below:
Stage 1
Stage 2
Stage 3
Total
2024
€000
€000
€000
€000
Exposures
1 January
489,730
184,827
36,966
711,523
Transfers to stage 1
51,626
(51,626)
-
-
Transfers to stage 2
(16,549)
17,453
(904)
-
Transfers to stage 3
(135)
(3,133)
3,268
-
Net increase/(decrease)
39,968
(32,724)
(7,000)
244
31 December
564,640
114,797
32,330
711,767
558
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.6
Contingent liabilities and commitments (continued)
42.6.1
Contingent liabilities (continued)
Stage 1
Stage 2
Stage 3
Total
2023
€000
€000
€000
€000
Exposures
1 January
515,186
110,626
36,582
662,394
Transfers to stage 1
8,820
(8,755)
(65)
-
Transfers to stage 2
(88,817)
91,722
(2,905)
-
Transfers to stage 3
(585)
(3,763)
4,348
-
Net increase/(decrease)
55,126
(5,003)
(994)
49,129
31 December
489,730
184,827
36,966
711,523
Stage 1
Stage 2
Stage 3
Total
2024
€000
€000
€000
€000
ECL
1 January
-
18
19,174
19,192
Net decrease
-
-
(293)
(293)
Credit for the year
-
(4)
(1,002)
(1,006)
31 December
-
14
17,879
17,893
Individually assessed
-
-
17,879
17,879
Collectively assessed
-
14
-
14
-
14
17,879
17,893
Stage 1
Stage 2
Stage 3
Total
2023
€000
€000
€000
€000
ECL
1 January
119
110
17,013
17,242
Transfers to stage 3
(35)
(4)
39
-
Charge/(credit) for the year
(84)
(88)
2,122
1,950
31 December
-
18
19,174
19,192
Individually assessed
-
-
19,174
19,174
Collectively assessed
-
18
-
18
-
18
19,174
19,192
559
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.6
Contingent liabilities and commitments (continued)
42.6.1
Contingent liabilities (continued)
The credit quality of contingent liabilities as per the internal rating system of the Company is disclosed in
the table below.
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Corporate legal
entities
€000
€000
€000
€000
€000
€000
Rating 1
98,914
2,161
101,075
136,335
266
136,601
Rating 2
17,055
151
17,206
16,168
2
16,170
Rating 3
92,078
63
92,141
33,253
29,663
62,916
Rating 4
27,905
421
28,326
26,279
2,686
28,965
Rating 5
73,886
17,939
91,825
25,253
30,270
55,523
Rating 6
1,768
5,700
7,468
19,494
281
19,775
Rating 7
1,817
66
1,883
6,485
33
6,518
Unrated
64,565
23,683
88,248
26,003
33,737
59,740
New customers
56,061
500
56,561
102,235
6,174
108,409
434,049
50,684
484,733
391,505
103,112
494,617
Total Stage 3
6,038
8,314
490,771
502,931
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
SME legal entities
€000
€000
€000
€000
€000
€000
Rating 1
57,714
1,147
58,861
42,683
2,796
45,479
Rating 2
20,390
74
20,464
6,435
8,181
14,616
Rating 3
3,149
536
3,685
1,599
1,950
3,549
Rating 4
672
916
1,588
329
907
1,236
Rating 5
6
2
8
31
7
38
Rating 6
17
2
19
3
14
17
Rating 7
27
136
163
4
137
141
Unrated
-
43,046
43,046
-
50,393
50,393
New customers
48,616
1,213
49,829
47,141
122
47,263
130,591
47,072
177,663
98,225
64,507
162,732
Total Stage 3
26,190
28,232
203,853
190,964
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Retail individuals
€000
€000
€000
€000
€000
€000
Unrated
-
17,041
17,041
-
17,208
17,208
-
17,041
17,041
-
17,208
17,208
Total Stage 3
102
420
17,143
17,628
560
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.6
Contingent liabilities and commitments (continued)
42.6.2
Commitments
An analysis of changes in the outstanding exposures and the corresponding ECL are disclosed in the tables
below:
Stage 1
Stage 2
Stage 3
Total
2024
€000
€000
€000
€000
Exposure
1 January
1,704,452
271,766
21,488
1,997,706
Transfers to stage 1
156,132
(155,983)
(149)
-
Transfers to stage 2
(23,419)
23,754
(335)
-
Transfers to stage 3
(441)
(2,736)
3,177
-
Net increase/(decrease)
55,413
7,353
(4,236)
58,530
31 December
1,892,137
144,154
19,945
2,056,236
Stage 1
Stage 2
Stage 3
Total
2023
€000
€000
€000
€000
Exposure
1 January
1,634,939
319,114
43,033
1,997,086
Transfers to stage 1
121,814
(121,602)
(212)
-
Transfers to stage 2
(100,140)
102,838
(2,698)
-
Transfers to stage 3
(4,872)
(3,783)
8,655
-
Net increase/(decrease)
52,711
(24,801)
(27,290)
620
31 December
1,704,452
271,766
21,488
1,997,706
2023
ECL
1 January
90
97
-
187
Charge/(credit) for the year
(90)
(97)
-
(187)
31 December
-
-
-
-
There is no ECL on commitments as at 31 December 2024 and 2023.
561
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.6
Contingent liabilities and commitments (continued)
42.6.2
Commitments (continued)
The credit quality of commitments, as per the internal rating system of the Company is disclosed in the
table below.
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Corporate legal
entities
€000
€000
€000
€000
€000
€000
Rating 1
319,271
4,488
323,759
319,809
10,252
330,061
Rating 2
48,996
2,543
51,539
63,694
1,672
65,366
Rating 3
90,481
1,897
92,378
78,107
8,560
86,667
Rating 4
106,090
6,608
112,698
77,465
3,669
81,134
Rating 5
63,889
12,487
76,376
45,954
22,251
68,205
Rating 6
1,691
4,919
6,610
14,720
4,892
19,612
Rating 7
1,883
555
2,438
2,074
336
2,410
Unrated
131,778
45,041
176,819
90,986
51,113
142,099
New customers
91,060
2,359
93,419
86,953
707
87,660
855,139
80,897
936,036
779,762
103,452
883,214
Total Stage 3
11,035
11,981
947,071
895,195
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
SME legal entities
€000
€000
€000
€000
€000
€000
Rating 1
306,438
17,151
323,589
275,684
34,643
310,327
Rating 2
104,628
1,473
106,101
54,993
56,903
111,896
Rating 3
18,280
1,916
20,196
11,146
13,215
24,361
Rating 4
3,529
1,196
4,725
2,698
1,811
4,509
Rating 5
558
100
658
530
322
852
Rating 6
128
152
280
173
152
325
Rating 7
13
9
22
7
192
199
Unrated
-
5,242
5,242
-
8,577
8,577
New customers
11,375
692
12,067
16,658
915
17,573
444,949
27,931
472,880
361,889
116,730
478,619
Total Stage 3
5,125
5,742
478,005
484,361
562
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.6
Contingent liabilities and commitments (continued)
42.6.2
Commitments (continued)
2024
2023
Stage 1
Stage 2
Total
Stage 1
Stage 2
Total
Retail individuals
€000
€000
€000
€000
€000
€000
Rating 1
143,334
8,115
151,449
145,977
11,477
157,454
Rating 2
83,886
4,617
88,503
85,690
5,503
91,193
Rating 3
136,728
6,649
143,377
135,923
10,084
146,007
Rating 4
88,827
3,502
92,329
90,081
6,541
96,622
Rating 5
27,224
1,519
28,743
22,724
5,899
28,623
Rating 6
4,704
1,778
6,482
5,317
2,645
7,962
Rating 7
931
1,213
2,144
1,142
1,459
2,601
Unrated
30
7,038
7,068
-
6,832
6,832
New customers
106,385
895
107,280
75,947
1,144
77,091
592,049
35,326
627,375
562,801
51,584
614,385
Total Stage 3
3,785
3,765
631,160
618,150
42.7
Collateral and other credit enhancements obtained
The carrying value of assets obtained during 2024 and 2023 by taking possession of collateral held as
security, was as follows:
2024
2023
€000
€000
Residential property
7,968
5,980
Commercial and other property
11,388
14,560
Land (fields and plots)
6,477
-
25,833
20,540
The total carrying value of stock of property and investment properties obtained over the years by taking
possession of collateral held as security for customer loans and advances and held by the Company (either
directly as stock of properties or investment properties by the Company or through subsidiary property
companies of the Company) as at 31 December 2024, including any expenses capitalised during the year,
amounted to €659,976 thousand (2023: €861,675 thousand).
The disposals of repossessed assets (including both sales of repossessed properties directly held by the
Company and sale of repossessed properties held through subsidiary property companies) during 2024
amounted to €174,840 thousand (2023: €173,587 thousand).
42.8
Currency concentration of loans and advances to customers
The following table presents the currency concentration of the Company's loans and advances to customers
at amortised cost.
563
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.8
Currency concentration of loans and advances to customers (continued)
2024
2023
Gross loans at amortised cost
€000
€000
Euro
9,475,162
9,336,476
US Dollar
573,140
409,555
British Pound
72,361
87,610
Swiss Franc
8,935
27,358
Other currencies
490
839
10,130,088
9,861,838
42.9
Modified loans and advances to customers
Modified loans and advances to customers are those loans where the original contractual terms of the loans
i.
have been modified due to financial difficulties of the borrower and are considered as
forborne/restructured (as explained in Note 42.10), and
ii.
have been modified due to commercial renegotiations and such loans are considered as non-forborne
Customers classified as Stage 2 and Stage 3 as at 31 December 2023, that had facilities modified (in a prior
or the current period), and are classified as Stage 1 as at 31 December 2024 amount to €157,066 thousand
(2023: €137,357 thousand) and their corresponding ECL amount to €251 thousand (2023: €547 thousand).
Previously classified Stage 2 and Stage 3 customers (with a carrying amount as at 31 December 2023 of
€95,331 thousand (2022: €30,012 thousand)) that had facilities modified during the year and are classified
as Stage 1 at 31 December 2024 amount to €88,935 thousand (2023: €19,113 thousand) and their
corresponding ECL amount to €118 thousand (2023: €36 thousand). Their related modification loss
amounted to €277 thousand (2023: €55 thousand).
Stage 2 and Stage 3 loans that were forborne during the year amounted to €148,112 thousand (2023:
€44,827 thousand). Their related modification loss amounted to €5,941 thousand (2023: €3,036 thousand).
Facilities that reverted to Stage 2 and Stage 3 having once cured during the year amount to €44,655
thousand (2023: €51,720 thousand) and their corresponding ECL amount to €3,243 thousand (2023:
€1,984 thousand) as at 31 December 2024.
42.10
Forbearance/Restructuring
Forborne/restructured loans and advances are those loans and advances that have been modified because
the borrower is considered unable to meet the terms and conditions of the contract due to financial
difficulties. Taking into consideration these difficulties, the Company decides to modify the terms and
conditions of the contract to provide the borrower with the ability to service the debt or refinance the
contract, either partially or fully. They include the facilities for which the Group has modified the repayment
programme (e.g. provision of a grace period, suspension of the obligation to repay one or more
instalments, reduction in the instalment amount and/or elimination of overdue instalments relating to
capital or interest).
The practice of extending forbearance/restructuring measures constitutes a grant of a concession whether
temporarily or permanently to that borrower. A concession may involve restructuring the contractual terms
of a debt or payment in some form other than cash, such as an arrangement whereby the borrower
transfers collateral pledged to the Group.
For an account to qualify for forbearance/restructuring it must meet certain criteria including the viability of
the customer. The extent to which the Company reschedules accounts that are eligible under its existing
policies may vary depending on its view of the prevailing economic conditions and other factors which may
change from year to year. In addition, exceptions to policies and practices may be allowed in specific
situations in response to legal or regulatory requirements.
564
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.10
Forbearance/Restructuring (continued)
Forbearance/restructuring activities may include measures that restructure the borrower's business
(operational restructuring) and/or measures that restructure the borrower's financing (financial
restructuring).
Forbearance/restructuring options may be of a short or long-term nature or a combination thereof. The
Company has developed and deployed sustainable restructuring solutions, which are suitable for the
borrower and acceptable for the Company.
Short-term restructuring solutions are defined as restructured repayment solutions of duration of less than
two years. In the case of loans for the construction of commercial property and project finance, a short-
term solution may not exceed one year.
Short-term restructuring solutions can include the following:
i.
Suspension of capital or capital and interest: granting to the borrower a grace period in the payment
of capital (i.e. during this period only interest is paid) or capital and interest, for a specific period of
time.
ii.
Reduced payments: decrease of the amount of repayment instalments over a defined short-term
period in order to accommodate the borrower’s new cash flow position.
iii. Arrears and/or interest capitalisation: capitalisation of the arrears and of any unpaid interest to the
outstanding principal balance for repayment under a rescheduled program.
Long-term restructuring solutions can include the following:
i.
Interest rate reduction: permanent or temporary reduction of interest rate (fixed or variable) into a
fair and sustainable rate.
ii.
Extension of maturity: extension of the maturity of the loan which allows a reduction in instalment
amounts by spreading the repayments over a longer period.
iii. Sale of Assets: Part of the restructuring can be the agreement with the borrower for immediate or
over time sale of assets (mainly real estate) to reduce borrowing.
iv. Modification of existing terms of previous decisions: In the context of the new sustainable
restructuring solution, any terms of previous decisions that are assessed not feasible to be met are
revisited.
v.
Consolidation/refinancing of existing facilities that: In cases where the borrower maintains several
separate loans with different collaterals, these can be consolidated and a new repayment schedule
can be set and the new loan can be secured with all existing collaterals.
vi. Hard Core Current Account Limit: In such cases a loan with a longer repayment may be offered to
replace /reduce the current account limit.
vii. Split and freeze: the customer’s debt is split into sustainable and unsustainable parts. The
sustainable part is restructured to a sustainable repayment program. The unsustainable part is
‘frozen’ for the restructured duration of the sustainable part. At the maturity of the restructuring, the
frozen part is either forgiven pro rata (based on the actual repayment of the sustainable part) or
restructured.
viii. Rescheduling of payments: the existing contractual repayment schedule is adjusted to a new
sustainable repayment program based on a realistic, current and forecasted, assessment of the cash
flow generation of the borrower.
ix. Liquidation Collateral: An agreement between the Company and a borrower for the voluntary sale of
mortgaged assets, for partial or full repayment of the debt.
x.
Currency Conversion: This solution is provided to match the credit facility currency and the
borrower's income currency.
xi. Additional Financing: This solution can be granted, simultaneously with the restructuring of the
existing credit facilities of the borrower, to cover any financing gap.
xii. Partial or total write off: This solution corresponds to the Company forfeiting the right to legally
recover part or the whole of the amount of debt outstanding by the borrower.
xiii. Debt/equity swaps: debt restructuring that allows partial or full repayment of the debt in exchange
of obtaining an equivalent amount of equity in the company by the Company, with the remaining
debt right sized to the cash flows of the borrower to allow repayment. This solution is used only in
exceptional cases and only where all other efforts for restructuring are exhausted and after ensuring
compliance with the banking law.
565
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.10
Forbearance/Restructuring (continued)
xiv. Debt/asset swaps: agreement between the Company and the borrower to voluntarily transfer the
mortgaged asset or other immovable property to the Group, to partially or fully repay the debt. Any
residual debt may be restructured with an appropriate repayment schedule in line with the
borrower’s reassessed repayment ability.
The loans forborne continue to be classified as Stage 3 in the case they are performing forborne exposures
under probation for which additional forbearance measures are extended, or performing forborne
exposures, previously classified as NPEs that present more than 30 days past due within the probation
period.
Forbearance modifications of loans and advances that do not affect payment arrangements, such as
restructuring of collateral or security arrangements, are not regarded as sufficient to categorise the facility
as credit impaired, as by themselves do not necessarily indicate credit distress affecting payment ability
such that would require the facility to be classified as NPE.
The forbearance characteristic contributes in two specific ways for the calculation of lifetime ECL for each
individual facility. Specifically, it is taken into consideration in the scorecard development, where, if this
characteristic is identified as statistically significant it affects negatively the rating of each facility. It also
contributes in the construction through the cycle probability of default and cure curves, where when feasible
a specific curve for the forborne products is calculated and assigned accordingly.
The below table presents the movement of the Company’s forborne loans and advances to customers
measured at amortised cost.
2024
2023
€000
€000
1 January
455,416
1,105,986
New loans and advances forborne in the year
148,348
47,274
Loans no longer classified as forborne and repayments
(249,742)
(705,103)
Write-off of forborne loans and advances
(11,654)
(41,996)
Interest accrued on forborne loans and advances
24,427
49,102
Foreign exchange adjustments
44
153
31 December
366,839
455,416
The forborne loans classification is discontinued when all EBA criteria for the discontinuation of the
classification as forborne exposure are met. The criteria are set out in the EBA Final draft Implementing
Technical Standards (ITS) on supervisory reporting and non-performing exposures.
The below tables present the Company’s forborne loans and advances to customers by staging, economic
activity and business line classification as well as the ECL allowance and tangible collateral held for such
forborne loans.
2024
2023
€000
€000
Stage 1
-
-
Stage 2
253,862
261,091
Stage 3
86,639
173,404
POCI
26,338
20,921
366,839
455,416
566
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.10
Forbearance/Restructuring (continued)
Fair value of collateral
2024
2023
€000
€000
Stage 1
-
-
Stage 2
234,794
241,893
Stage 3
75,515
154,051
POCI
24,965
19,734
335,274
415,678
The fair value of collateral presented above has been computed to the extent that the collateral mitigates
credit risk.
Credit risk concentration
2024
2023
By economic activity
€000
€000
Trade
10,155
15,578
Manufacturing
3,325
10,195
Hotels and catering
6,058
60,129
Construction
132,011
82,849
Real estate
26,614
61,550
Private individuals
116,063
187,537
Professional and other services
36,621
34,873
Other sectors
35,992
2,705
366,839
455,416
2024
2023
By business line
€000
€000
Corporate
224,271
207,210
IBU & International corporate
- IBU
944
2,386
- International corporate
653
768
SMEs
19,046
20,823
Retail
- housing
47,506
67,087
- consumer, credit cards and other
8,411
17,265
Restructuring
- corporate
12,555
33,098
- SMEs
7,726
11,749
- retail housing
18,818
34,538
- retail other
4,764
7,399
Recoveries
- corporate
966
2,480
- SMEs
2,511
6,157
- retail housing
13,960
34,496
- retail other
4,708
9,960
366,839
455,416
567
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.10
Forbearance/Restructuring (continued)
2024
Stage 1
Stage 2
Stage 3
POCI
Total
By business line
€000
€000
€000
€000
€000
Corporate
-
189,064
25,745
9,462
224,271
IBU & International corporate
- IBU
-
943
1
-
944
- International corporate
-
653
-
-
653
SMEs
-
13,519
5,527
-
19,046
Retail
- housing
-
34,818
10,508
2,180
47,506
- consumer, credit cards and
other
-
5,942
2,413
56
8,411
Restructuring
- corporate
-
1,431
1,006
10,118
12,555
- SMEs
-
2,507
4,350
869
7,726
- retail housing
-
4,444
13,458
916
18,818
- retail other
-
541
3,825
398
4,764
Recoveries
- corporate
-
-
934
32
966
- SMEs
-
-
2,280
231
2,511
- retail housing
-
-
12,356
1,604
13,960
- retail other
-
-
4,236
472
4,708
-
253,862
86,639
26,338
366,839
2023
Stage 1
Stage 2
Stage 3
POCI
Total
By business line
€000
€000
€000
€000
€000
Corporate
-
136,097
71,006
107
207,210
IBU & International corporate
- IBU
-
2,091
295
-
2,386
- International corporate
-
768
-
-
768
SMEs
-
19,414
1,409
-
20,823
Retail
- housing
-
51,588
13,479
2,020
67,087
- consumer, credit cards and
other
-
13,047
4,089
129
17,265
Restructuring
- corporate
-
21,254
1,807
10,037
33,098
- SMEs
-
3,686
6,760
1,303
11,749
- retail housing
-
11,341
21,633
1,564
34,538
- retail other
-
1,805
5,249
345
7,399
Recoveries
- corporate
-
-
2,250
230
2,480
- SMEs
-
-
5,668
489
6,157
- retail housing
-
-
30,643
3,853
34,496
- retail other
-
-
9,116
844
9,960
-
261,091
173,404
20,921
455,416
568
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.10
Forbearance/Restructuring (continued)
ECL allowance
2024
2023
€000
€000
Stage 1
-
-
Stage 2
9,525
8,643
Stage 3
36,603
47,615
POCI
12,462
11,510
58,590
67,768
42.11
Credit quality of the Company assets exposed to credit risk other than loans and
advances to customers-analysis by rating agency designation
Balances with central banks and loans and advances to banks
Balances with central banks and loans and advances to banks are analysed by Moody’s Investors Service
rating as follows:
2024
2023
€000
€000
Aaa - Aa3
468,981
227,075
A1 - A3
7,684,100
23,647
Baa1 - Baa3
2,627
9,526,168
Ba1 - Ba3
1,218
4,467
Unrated
20,046
59,007
Other receivables from banks
68,528
34,531
8,245,500
9,874,895
All balances with central banks and loans and advances to banks are classified as Stage 1 (Note 17).
Reverse repurchase agreements
Reverse repurchase agreements counterparties are analysed by Moody's Investors Service rating as follows:
2024
2023
€000
€000
A1 - A3
306,053
-
Unrated
704,117
403,199
1,010,170
403,199
The average rating of the collateral received was Aa2 as at 31 December 2024 (2023: Aa1).
In accordance with the terms of the reverse repurchase agreements of a carrying value of €1,010 million
(2023: €403 million) that are held by the Company as at 31 December 2024, the Company accepts
collateral that it is permitted to sell. At 31 December 2024, the total fair value of the collateral received was
€1,007 million (2023: €426 million), none of which had been resold or repledged. As at 31 December 2024,
cash collateral of €7 million has been placed with counterparties and €13 million has been received from the
counterparties (2023: cash collateral of €30 million was placed with the counterparties). The effective yield
of the reverse repurchase agreements is approximately 3% p.a. (2023: 3% p.a.) and the average duration
is estimated at approximately 2.1 years (2023: 2.8 years).
569
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
42.
Risk management - Credit risk (continued)
42.11
Credit quality of the Company assets exposed to credit risk other than loans and
advances to customers-analysis by rating agency designation (continued)
Debt securities and other non-equity securities
Investments in debt securities and other non-equity securities are analysed by Moody's Investors Service
rating as follows:
2024
2023
Moody's rating
€000
€000
Aaa - Aa3
2,433,855
1,965,134
A1 - A3
1,497,553
441,255
Baa1 - Baa3
254,698
1,047,437
Ba1 - Ba3
2,014
89,404
4,188,120
3,543,230
The tables below present the Moody's Investors Service rating of the Company's investments in debt
securities:
FVOCI
Amortised
cost
Stage 1
Stage 1
2024
€000
€000
Aaa - Aa3
54,000
2,373,065
A1 - A3
310,606
1,186,947
Baa1 - Baa3
11,087
243,611
Ba1 - Ba3
-
2,014
Β1 - Β3
-
-
375,693
3,805,637
FVOCI
Amortised cost
Stage 1
Stage 1
2023
€000
€000
Aaa - Aa3
59,235
1,903,613
A1 - A3
32,521
408,734
Baa1 - Baa3
313,749
733,688
Ba1 - Ba3
18,725
70,679
424,230
3,116,714
The ratings are provided for the ISIN or if not available for the specific issuance the rating of the
counterparty is used.
43.
Risk management - Market risk
Market risk is the risk of loss from adverse changes in market prices namely from changes in interest rates,
credit spreads, foreign currency exchange rates, property and security prices. The Market and Liquidity Risk
department is responsible for monitoring the risk on financial instruments resulting from such changes with
the objective to minimise the impact on earnings and capital. The department also monitors property price
risk, liquidity risk and credit risk from counterparties and countries. It is also responsible for monitoring
compliance with the various market risk policies and procedures.
570
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
43.
Risk management - Market risk (continued)
Interest rate risk
Interest rate risk refers to the current or prospective risk to the Company's capital and earnings arising
from adverse movements in interest rates that affect the Company's banking book positions.
Interest rate fluctuations affect the economic value of the Company’s assets, liabilities and off-balance sheet
items, through corresponding changes in the cash flow amounts and discount rates and therefore their
present value. Changes in interest rates also affect the earnings by increasing or decreasing the net interest
income of other interest rate-sensitive items. As such, interest rate risk is measured primarily by reference
to the impact on net interest income and impact on economic value.
The Company’s balance sheet composition is characterised by floating rate assets and fixed or non rate
sensitive liabilities, resulting in an increased volatility on net interest income, with a negative impact when
interest rates decrease and a positive impact when interest rates increase. In addition, this balance sheet
composition results in relatively low volatility of the Economic Value. This is due to the floating rate nature
of assets which are longer term in terms of maturity, such as loans and advances and the short-term nature
of the sizable central bank balances. On the liability side, term deposits, although fixed rate in nature, have
short contractual maturities (mainly up to one year). In addition, the economic value impact from fixed rate
assets is mitigated by the impact of core NMDs which behave as fixed rate liabilities.
Interest rate risk is managed through internal and regulatory limits on the change in net interest income
and economic value of equity under various adverse interest rate shock scenarios. Internal limits on net
interest income are set as a percentage of the annualised net interest income while regulatory limits on net
interest income and economic value of equity are set as a percentage of the Group Tier 1 regulatory capital.
Treasury is responsible for the management of the interest rate risk arising from the banking book and
asset and liability positions, effected through the hedging strategy. This involves the set of techniques and
the financial instruments used to manage the risk of adverse changes in interest rates, affecting the net
interest income and the economic value of the Company and aims to ensure financial stability and robust
risk management. The Company uses derivatives and currently applies fair value hedge accounting. The
Company applies macro fair value hedging to NMDs and micro fair value hedging to fixed rate debt
securities measured at FVOCI, debt securities in issue and subordinated liabilities. For fair value hedges the
Company uses interest rate swaps to manage the fair value movements of fixed rate financial instruments
due to changes in the benchmark rate.
The Company assesses and measures hedge effectiveness of a hedging relationship based on the change in
the fair value of the derivative instrument relative to the change in the fair value of the hedged item
attributable to the hedged risk.
The Market and Liquidity Risk department is responsible to measure, monitor and control the interest rate
risk on the banking book (IRRBB) based on the established Risk Appetit Framework (RAF) of the Group. One
of the risk metrics that Market and Liquidity Risk department uses for monitoring and controlling the IRRBB
is the Net Interest Income Sensitivity, which measures changes to net interest income under varying
interest rate scenarios over a one-year horizon and assuming a constant balance sheet over this period. Its
main purpose is to measure the vulnerability of the profitability to changing interest rate conditions. In
addition, another risk metric employed by the Company for this purpose is the Economic Value of Equity
Sensitivity. This represents the change in the net present value of all cash flows in the balance sheet under
a set of interest rate stress scenarios and is calculated on the entire balance sheet under a run-off
assumption, i.e., no replenishment of matured transactions.
The Company does not maintain a trading book.
Sensitivity analysis
The table below sets out the impact on the Company’s net interest income, over a one-year period, from
reasonably possible changes in the interest rates of the Euro and the US Dollar, being the main currencies,
using the assumptions of the prevailing market risk policy as at 31 December 2024 and 2023 respectively.
571
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
43.
Risk management - Market risk (continued)
Impact on Net Interest
Income
Currency
Interest Rate Scenario
2024
(+135 bps/-
100 bps for
Euro and
+160 bps/-
100 bps for
US Dollar)
2023
(+140 bps/-
120 bps for
Euro and
+170 bps/-
110 bps for
US Dollar)
€000
€000
All
Parallel up
102,061
147,348
All
Parallel down
(84,200)
(135,973)
All
Steepening
(51,175)
(81,265)
All
Flattening
79,770
112,104
All
Short up
106,190
150,679
All
Short down
(88,788)
(140,778)
Euro
Parallel up
98,728
142,318
Euro
Parallel down
(82,267)
(132,297)
Euro
Steepening
(51,731)
(79,595)
Euro
Flattening
79,588
108,998
Euro
Short up
104,647
145,795
Euro
Short down
(88,085)
(137,046)
US Dollar
Parallel up
3,333
5,030
US Dollar
Parallel down
(1,932)
(3,676)
US Dollar
Steepening
556
(1,670)
US Dollar
Flattening
182
3,106
US Dollar
Short up
1,543
4,884
US Dollar
Short down
(703)
(3,732)
572
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
43.
Risk management - Market risk (continued)
The above sensitivities incorporate assumptions on the pass-through rate of time deposits of 40% for the
upside scenario and 50% for the downside scenario for Euro denominated deposits for the year ended 31
December 2024 (2023: 40% for the upside scenario and 50% for the downside scenario for Euro
denominated deposits). The above sensitivities are computed under the assumption of a constant balance
sheet and that all market rates move upwards or downwards in parallel.
The table below sets out the impact on the Company’s equity, from reasonably possible changes in the
interest rates under various interest rate scenarios for the Euro and the US Dollar in line with the EBA
guidelines.
Impact on Equity
Currency
Interest Rate Scenario
2024
(+135 bps/-
100 bps for
Euro and
+160 bps/-
100 bps for
US Dollar)
2023
(+140 bps/-
120 bps for
Euro and
+170 bps/-
110 bps for
US Dollar)
€000
€000
All
Parallel up
(16,380)
62,584
All
Parallel down
613
(89,615)
All
Steepening
41,074
(511)
All
Flattening
(113,840)
(11,035)
All
Short up
(112,972)
14,117
All
Short down
40,990
(40,727)
Euro
Parallel up
(15,355)
114,640
Euro
Parallel down
953
(60,469)
Euro
Steepening
78,258
6,669
Euro
Flattening
(107,390)
20,775
Euro
Short up
(106,983)
48,756
Euro
Short down
78,078
(27,450)
US Dollar
Parallel up
(1,025)
10,529
US Dollar
Parallel down
273
(29,146)
US Dollar
Steepening
3,890
(3,846)
US Dollar
Flattening
(6,450)
(21,422)
US Dollar
Short up
(5,990)
(10,261)
US Dollar
Short down
3,903
(13,277)
The aggregation of the impact on equity was performed as per the EBA guidelines by adding the negative
and 50% of the positive impact of each scenario. The increased IRRBB hedging that took place during the
year ended 31 December 2024 and the different magnitude of the shocks impact the sensitivity scenarios
year-on-year.
In addition to the above fluctuations in net interest income, interest rate changes can result in fluctuations
in the fair value of investments at FVPL (including investments held for trading) and in the fair value of
derivative financial instruments impacting the profit and loss of the Company.
The equity of the Company is also affected by changes in market interest rates. The impact on the
Company’s equity arises from changes in the fair value of mainly fixed rate debt securities classified at
FVOCI.
573
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
43.
Risk management - Market risk (continued)
The sensitivity analysis is based on the assumption of a parallel shift of the yield curve. The table below sets
out the impact on the Company’s profit/loss before tax and equity as a result of reasonably possible
changes in the interest rates of the major currencies.
Parallel change in interest rates
Impact on profit/loss
before tax
Impact on equity
2024
€000
€000
+1.6% for US Dollar
+1.35% for Euro
+3% for British Pound
(934)
(300)
-1% for US Dollar
-1% for Euro
-3% for British Pound
692
222
2023
+1.7% for US Dollar
+1.4% for Euro
+3% for British Pound
(2,468)
(502)
-1.1% for US Dollar
-1.2% for Euro
-3% for British Pound
2,115
430
The hedging relationships have been taken into account in the Net Interest Income (NII) and Economic
Value of Equity (EVE) Sensitivity tables.
Currency risk
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in foreign currency exchange rates.
In order to manage currency risk, the ALCO has approved open position limits for the total foreign currency
positions. The foreign currency position limits are lower than those prescribed by the regulator. These limits
are managed by Treasury Division and monitored daily by Market and Liquidity Risk department.
The Company does not maintain a currency trading book.
The table below sets out the Company's currency risk resulting from the Company's open FX position. The
analysis assumes reasonably possible changes in the exchange rates of major currencies against the Euro,
based mainly on historical price fluctuations. The impact on profit/loss after tax includes the change in net
interest income that arises from the change of currency rate.
The impact on equity arises from the hedging instruments that are used to hedge part of the net assets of
the subsidiaries whose functional currency is not the Euro. The net assets of foreign operations are also
revalued and affect equity (by an approximately equal and opposite impact), but their impact is not taken
into account in the below sensitivity analysis as the below relates only to financial instruments which have a
direct impact either on profit/loss after tax or on equity.
574
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
43.
Risk management - Market risk (continued)
Change in foreign
exchange rate
Impact on profit/loss
after tax
Impact on equity
2024
%
€000
€000
US Dollar
+5
1,492
-
Russian Rouble
+60
(1,241)
-
Romanian Lei
+5
9
(49)
Swiss Franc
+5
91
-
British Pound
+5
235
-
Japanese Yen
+5
1
-
Other currencies
+5
32
-
US Dollar
-5
(1,350)
-
Russian Rouble
-30
191
-
Romanian Lei
-5
(8)
44
Swiss Franc
-5
(82)
-
British Pound
-5
(212)
-
Japanese Yen
-5
(1)
-
Other currencies
-5
(29)
-
2023
US Dollar
+5
1,563
-
Russian Rouble
+60
(1,476)
-
Romanian Lei
+5
18
(63)
Swiss Franc
+5
92
-
British Pound
+5
307
-
Japanese Yen
+5
2
-
Other currencies
+5
28
-
US Dollar
-5
(1,414)
-
Russian Rouble
-30
227
-
Romanian Lei
-5
(16)
57
Swiss Franc
-5
(84)
-
British Pound
-5
(278)
-
Japanese Yen
-5
(2)
-
Other currencies
-5
(26)
-
Price risk
Equity securities price risk
The risk of loss from changes in the price of equity securities arises when there is an unfavourable change in
the prices of equity securities held by the Company as investments.
Investments in equities are outside the Company's risk appetite, but may be acquired in the context of
delinquent loan workouts. The Company monitors the current portfolio mostly acquired by the Company as
part of the acquisition of certain operations of Laiki Bank, or through delinquent loan workouts, with the
objective to gradually liquidate all positions for which there is a market. Equity securities are disposed of by
the Company as soon as practicable.
Changes in the prices of equity securities that are classified as investments at FVPL affect the results of the
Company, whereas changes in the value of equity securities classified as FVOCI affect directly the equity of
the Company.
The table below shows the impact on the profit/loss before tax and on equity of the Company from a change
in the price of the equity securities held, as a result of reasonably possible changes in the relevant stock
exchange indices.
575
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
43.
Risk management - Market risk (continued)
Change in index
Impact on profit/loss
before tax
Impact on equity
2024
%
€000
€000
Cyprus Stock Exchange
+40
-
503
Athens Exchange
+50
419
-
New York Exchange
+40
-
-
Other stock exchanges and
unlisted
+40
-
189
Non-listed (Real Estate)
+10
-
693
Cyprus Stock Exchange
-40
-
(503)
Athens Exchange
-50
(419)
-
New York Exchange
-10
-
-
Other stock exchanges and
unlisted
-40
-
(189)
Non-listed (Real Estate)
-10
-
(693)
Change in index
Impact on profit/loss
before tax
Impact on equity
2023
%
€000
€000
Cyprus Stock Exchange
+40
-
898
Athens Exchange
+50
419
-
New York Exchange
+45
-
-
Other stock exchanges and
unlisted
+40
-
200
Non-listed (Real Estate)
+25
-
1,732
Cyprus Stock Exchange
-40
-
(898)
Athens Exchange
-50
(419)
-
New York Exchange
-10
-
-
Other stock exchanges and
unlisted
-40
-
(200)
Non-listed (Real Estate)
-10
-
(693)
Debt securities price risk
Debt securities price risk is the risk of loss as a result of adverse changes in the prices of debt securities
held by the Company. Debt security prices change as the credit risk of the issuer changes and/or as the
market interest rates change mainly for fixed rate securities. The Company invests a significant part of its
liquid assets in highly rated debt securities. The average Moody’s Investors Service rating of the debt
securities portfolio of the Company as at 31 December 2024 was Aa2 (2023: A1). Further information on
ratings of debt securities is disclosed in Note 42.11.
Changes in the prices of debt securities classified as investments at FVPL, affect the profit or loss of the
Company, whereas changes in the value of debt securities classified as FVOCI affect directly the equity of
the Company.
576
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
43.
Risk management - Market risk (continued)
The table below indicates how the profit/loss before tax and equity of the Company will be affected from
reasonably possible changes in the price of the debt securities held, based on Value at Risk.
Impact on profit/loss
before tax
Impact on equity
2024
€000
€000
Up scenario:
Aa3 and above rated bonds
-
1,241
A3 and above rated bonds
-
640
Baa1 and below rated bonds
-
437
Cyprus Government bonds
-
11,919
Down scenario:
Aa3 and above rated bonds
-
(1,241)
A3 and above rated bonds
-
(640)
Baa1 and below rated bonds
-
(437)
Cyprus Government bonds
-
(11,919)
Impact on profit/loss
before tax
Impact on equity
2023
€000
€000
Up scenario:
Aa3 and above rated bonds
-
3,820
A3 and above rated bonds
-
1,866
Baa1 and below rated bonds
-
430
Cyprus Government bonds
-
27,514
Down scenario:
Aa3 and above rated bonds
-
(3,820)
A3 and above rated bonds
-
(1,866)
Baa1 and below rated bonds
-
(430)
Cyprus Government bonds
-
(27,514)
Other non-equity instruments price risk
The table below shows the impact on the profit/loss before tax and equity of the Company from a change in
the price of other non-equity instruments held, as a result of reasonably possible changes in the price index
of the relevant instruments.
Change in index
Impact on profit/loss
before tax
Impact on equity
2024
%
€000
€000
Other non-equity instruments
+40
2,716
-
Other non-equity instruments
-10
(679)
-
2023
Other non-equity instruments
+45
1,029
-
Other non-equity instruments
-10
(229)
-
Property price risk
A significant part of the Company’s loan portfolio is secured by real estate, the majority of which is located
in Cyprus. Furthermore, the Company holds a substantial number of properties mainly arising from loan
restructuring activities, the enforcement of loan collateral and debt for asset swaps. These properties are
held by the Company primarily as stock of properties and some are held as investment properties.
Property risk is the risk that the Company’s business and financial position will be affected by adverse
changes in the demand for, and prices of, real estate, or by regulatory capital requirements relating to
increased charges with respect to the stock of property held.
577
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
44.
Risk management - Liquidity and funding risk
Liquidity Risk
Liquidity risk is the risk that the Company is unable to fully or promptly meet current and future payment
obligations as and when they fall due. This risk includes the possibility that the Company may have to raise
funding at high cost or sell assets at a discount to fully and promptly satisfy its obligations.
It reflects the potential mismatch between incoming and outgoing payments, taking into account
unexpected delays in repayment and unexpectedly high payment outflows. Liquidity risk involves both the
risk of unexpected increases in the cost of funding of the portfolio of assets and the risk of being unable to
liquidate a position in a timely manner on reasonable terms.
In order to limit this risk, management has in place an established Liquidity Risk Policy of managing assets,
taking liquidity into consideration and monitoring cash flows and liquidity on a regular basis. The Company
has developed internal control processes and contingency plans for managing liquidity risk.
Management and structure
The Board of Directors sets the Group's Liquidity Risk Appetite which defines the level of risk at which the
Group and the Company should operate.
The Board of Directors, through its Risk Committee, approves the Liquidity Risk Policy and reviews at
frequent intervals the liquidity position of the Company.
The ALCO is responsible for setting the policies for the effective management and monitoring of liquidity risk
across the Company.
The Treasury Division is responsible for liquidity management at Group level, ensuring compliance with
internal policies and regulatory liquidity requirements and providing direction as to the actions to be taken
regarding liquidity needs. The Treasury Division assesses on a regular basis the adequacy of the liquid
assets and takes the necessary actions to ensure adequate liquidity position.
Liquidity is also monitored by Market and Liquidity Risk department, to ensure compliance with both internal
policies and limits, and with the limits set by the regulatory authorities. Market and Liquidity Risk
department reports the liquidity position to ALCO at least monthly. It also provides the results of various
stress tests to ALCO and the Board Risk Committee at least quarterly.
Liquidity is monitored and managed on an ongoing basis through:
(i)
Risk appetite: establishes the Group's Risk Appetite Statement together with the appropriate limits
for the management of all risks including liquidity risk.
(ii)
Liquidity Risk Policy: sets the principles, the roles and responsibilities for managing liquidity risk as
well as the liquidity and funding risk management framework, stress testing and the reporting on
liquidity and funding.
(iii)
Liquidity limits: a number of internal and regulatory limits are monitored on a regular basis. Where
applicable, a traffic light system (RAG) is used for ratios, in order to raise flags and take action
when the ratios deteriorate.
(iv)
Early Warning Indicators: monitoring of a range of indicators for early signs of liquidity risk in the
market or specific to the Company. These are designed to immediately identify the emergence of
increased liquidity risk so as to maximise the time available to execute appropriate mitigating
actions.
(v)
Liquidity Contingency Plan: maintenance of a Liquidity Contingency Plan (LCP) which is designed to
provide a framework where a liquidity stress could be effectively identified and managed. The LCP
provides a communication plan and includes management actions to respond to liquidity stresses.
(vi)
Recovery Plan: the Company has developed a Recovery Plan (RP), the key objectives of which are,
among others, to set key Recovery and Early Warning Indicators and to set in advance a range of
recovery options to enable the Company to be adequately prepared to respond to stressed
conditions and restore the Company’s liquidity position.
578
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
44.
Risk management - Liquidity and funding risk (continued)
Monitoring process
Daily
The daily monitoring of the stock of highly liquid assets is important to safeguard and ensure the
uninterrupted operations of the Company’s activities. Market and Liquidity Risk department prepares a daily
report analysing the internal liquidity buffer and comparing it to the previous day’s buffer. Results are made
available to members of the Risk and Treasury Divisions. In addition, Treasury monitors daily and intraday
the customer inflows and outflows in the main currencies used by the Company.
The liquidity buffer is made up of: Banknotes, CBC balances (excluding the Minimum Reserve Requirements
(MRR)), unpledged cash and nostro current accounts, as well as money market placements up to the stress
horizon, available ECB credit line and market value net of haircut of unencumbered/available liquid bonds.
The designing of the stress tests follows guidance and is based on the liquidity risk drivers which are
recognised internationally by both the Prudential Regulation Authority (PRA) and EBA. In addition, it takes
into account SREP recommendations as well as the Annual Risk Identification Process of the Company. The
stress test assumptions are reviewed on an annual basis and approved by the Board of Directors through its
Risk Committee. Whenever it is considered appropriate to amend the assumptions during the year, approval
is requested from ALCO and the Board Risk Committee. The main items shocked in the different scenarios
are: deposit outflows, wholesale funding, loan repayments, off-balance sheet commitments, marketable
securities, own issue covered bond, additional credit claims, interbank takings and cash collateral for
derivatives and repos.
Weekly
Market and Liquidity Risk department prepares a report indicating the level of liquid assets including Credit
Institutions Money Market Placements as per LCR definitions.
Market and Liquidity Risk department also prepares the liquidity stress testing for bank specific, market
wide and combined scenarios on a weekly basis. The requirement is to have sufficient liquidity buffer to
enable the Company to survive a twelve-month stress period, including capacity to raise funding under all
scenarios.
Furthermore, a report is submitted to the regulator on a weekly basis. The report includes information on
deposits breakdown, cash flow information, survival period, LCR ratio, rollover of funding, funding gap
(through the Maturity Ladder analysis), concentration of funding and collateral details. It concludes on the
overall liquidity position the Company and describes the measures already implemented and those which
will be implemented in the short-term to improve liquidity position if needed.
Monthly
Market and Liquidity Risk department prepares reports monitoring compliance with internal and regulatory
liquidity requirements and submits them to the ALCO, the Executive Committee and the Board Risk
Committee. It also calculates the surplus liquidity buffer following stress outflows. The fixed deposit renewal
rates, the percentage of International business unit deposits over total deposits and the percentage of
instant access deposits are also presented. The liquidity mismatch in the form of the Maturity Ladder report
(for both contractual and behavioural flows) is presented to ALCO and the resulting mismatch between
assets and liabilities is compared to previous month’s mismatch.
Market and Liquidity Risk department also reports the Liquidity Coverage Ratio (LCR) and Additional
Liquidity Monitoring Metrics (ALMM) to the CBC/ECB on a monthly basis.
Quarterly
The results of the stress testing scenarios are reported to ALCO and the Board Risk Committee quarterly as
part of the quarterly Internal Liquidity Adequacy Assessment Process (ILAAP) review. Market and Liquidity
Risk department also reports the Net Stable Funding Ratio (NSFR) to the CBC/ECB quarterly.
579
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
44.
Risk management - Liquidity and funding risk (continued)
Annually
The Company prepares on an annual basis its ILAAP package. The ILAAP package provides a holistic view of
the Company’s liquidity adequacy under normal and stress conditions. Within ILAAP, the Company evaluates
its liquidity risk in the context of established policies and processes for the identification, measurement,
management and monitoring of liquidity risk as implemented by the institution.
The Market and Liquidity Risk department also prepares annually an ECB/SRB liquidity report, the 'Joint
liquidity template' that runs for five consecutive days. The report includes information on deposits
breakdown, cash flow information, survival period, LCR ratio, rollover of funding, funding gap (through the
Maturity Ladder analysis), concentration of funding and collateral details. It concludes on the overall
liquidity position of the Company and describes the measures implemented and to be implemented in the
short-term to improve liquidity position if needed.
As part of the Group's procedures for monitoring and managing liquidity risk, there is a Group Liquidity
Contingency Plan (LCP) for handling liquidity difficulties. The LCP details the steps to be taken in the event
that liquidity problems arise, which escalate to a special meeting of the Crisis Management Committee for
LCP (CMC-LCP). The LCP sets out the members of this committee and a series of the possible actions that
can be taken. The LCP is reviewed and tested at least annually.
Liquidity ratios
The LCR is calculated based on the Delegated Regulation (EU) 2015/61. It is designed to establish a
minimum level of high quality liquid assets sufficient to meet an acute stress lasting for 30 calendar days.
The minimum regulatory requirement is 100%. The Company also calculates its NSFR as per Capital
Requirements Regulation II CRR II, with the limit set at 100%. The NSFR is the ratio of available stable
funding to required stable funding. NSFR has been developed to promote a sustainable maturity structure of
assets and liabilities.
Funding risk
Funding risk is the risk that the Company does not have sufficiently stable sources of funding or access to
sources of funding may not always be available at a reasonable cost, and thus the Company may fail to
meet its obligations, including regulatory ones (e.g. MREL).
Main sources of funding
As at 31 December 2024, the Company’s main sources of funding were its deposit base and wholesale
funding. Wholesale funding is becoming an important source of funding, with the issuance of Tier 2 of a
nominal amount of €300 million, the issuances of senior preferred debt of an aggregate nominal amount of
€950 million and the AT1 issuance for €220 million. As at 31 December 2024, the wholesale funding
nominal amount was €1,470 million (2023: €1,170 million) as further described in Notes 30 and 32.
With respect to funding from TLTRO III operations, this was fully repaid in the year ended 31 December
2024.
Funding to subsidiaries
The funding provided by the Company to its subsidiaries for liquidity purposes is repayable as per the terms
of the respective agreements.
The subsidiaries may proceed with dividend distributions in the form of cash to the Company, provided that
they are not in breach of their regulatory capital and liquidity requirements, where applicable.
580
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
44.
Risk management - Liquidity and funding risk (continued)
Collateral requirements and other disclosures
Collateral requirements
The carrying values of the Company's encumbered assets as at 31 December 2024 and 2023 are
summarised below:
2024
2023
€000
€000
Cash and other liquid assets
55,434
72,800
Investments
39,958
260,011
Loans and advances
3,470,859
3,349,118
3,566,251
3,681,929
Cash is mainly used to cover collateral required for derivatives, trade finance transactions and guarantees
issued. It may also be used as part of the supplementary assets for the covered bond.
As at 31 December 2024 investments are used as supplementary assets for the covered bond. As at 31
December 2023 investments were mainly used as collateral for ECB funding or as supplementary assets for
the covered bond.
As at 31 December 2024, loans and advances indicated as encumbered are mainly pledged for any potential
use of the funding facilities of the ECB and for the covered bond. As at 31 December 2023, loans and
advances indicated as encumbered were mainly used as collateral for funding from the ECB and the covered
bond.
Loans and advances to customers include mortgage loans of a nominal amount of €1,010 million as at 31
December 2024 (2023: €1,008 million) in Cyprus, pledged as collateral for the covered bond issued by the
Company in 2011 under its Covered Bond Programme. As at 31 December 2024, although there is no
outstanding funding from the ECB, housing loans of a nominal amount of €2,431 million (2023: €2,329
million) in Cyprus, remain in the collateral pool of the CBC as part of the available credit line.
The Company maintains a Covered Bond Programme set up under the Cyprus Covered Bonds legislation and
the Covered Bonds Directive of the CBC. Under the Covered Bond Programme, the Company has in issue
covered bonds of €650 million secured by residential mortgages originated in Cyprus. The Covered Bonds
have a maturity date of 12 December 2026 and pay an interest rate of 3-month Euribor plus 1.25% on a
quarterly basis. On 9 August 2022, the Company proceeded with an amendment to the terms and
conditions of the covered bonds following the implementation of Directive (EU) 2019/2162 in Cyprus. The
covered bonds are listed on the Luxemburg Bourse. The covered bonds have a conditional Pass-Through
structure. All the bonds are held by the Company. The covered bonds are eligible collateral for the
Eurosystem credit operations and are placed as collateral for accessing funding from the ECB.
In addition to the encumbered assets presented above, as at 31 December 2024 cash collateral of €7
million has been placed with counterparties in relation to the reverse repurchase agreements (2023: €30
million) (Note 42.11).
Other disclosures
Deposits by banks include balances of €13,870 thousand as at 31 December 2024 (2023: €20,462
thousand) relating to borrowings from international financial and similar institutions for funding, aiming to
facilitate access to finance and improve funding conditions for small or medium sized enterprises, active in
Cyprus. The carrying value of the respective loans and advances granted to such enterprises serving this
agreement amounts to €27,341 thousand as at 31 December 2024 (2023: €40,049 thousand).
Analysis of financial assets and liabilities based on remaining contractual maturity
The analysis of the Company's financial assets and liabilities based on the remaining contractual maturity at
31 December is based on undiscounted cash flows, analysed in time bands according to the number of days
remaining from 31 December to the contractual maturity date.
581
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
44.
Risk management - Liquidity and funding risk (continued)
Financial assets
The analysis of financial assets does not include any interest receivable cash flows. Financial assets have a
much longer duration than financial liabilities and non-discounted interest receivable cash flows are higher
than non-discounted interest payable cash flows (based on remaining contractual maturity). As a result,
non-discounted cash inflows from interest receivable would have greatly exceeded non-discounted cash
outflows on interest payable, thus artificially improving liquidity.
Cash and balances with central banks are classified in the relevant time band based on the contractual
maturity, with the exception of obligatory balances with central banks, which are assigned to different time
bands proportionally according to the allocation of customer deposits and deposits by banks.
Current accounts, overdrafts and amounts in arrears are included within the first maturity time band which
reflects their contractual maturity. All other loans and advances to customers are analysed according to
their contractual repayment schedule.
Loans and advances to banks are analysed in the time bands according to the number of days remaining
from 31 December until their contractual maturity date. Amounts placed as collateral (primarily for
derivatives) are assigned to different time bands based on either their maturity, or proportionally according
to the maturities of derivatives (where the collateral had no fixed maturity).
Financial assets with no contractual maturity (such as equity securities) are included in the 'Over five years'
time band, unless classified as at FVPL, in which case they are included in the 'On demand and up to one
month' time band.
The investments are classified in the relevant time band according to their contractual maturity.
Financial liabilities
All financial liabilities for the repayment of which notice is required, are included in the relevant time bands
as if notice had been given on 31 December, despite the fact that the Company expects that the majority of
its customers will not demand repayment of such liabilities on the earliest possible date. Fixed deposits are
classified in time bands based on their remaining contractual maturity. Although customers may demand
repayment of time deposits (subject to penalties depending on the type of the deposit account), the
Company has the discretion not to accept such early termination of deposits.
Debt securities in issue and subordinated liabilities are classified in the relevant time band according to the
remaining contractual maturity.
The amounts presented in the table below are not equal to the amounts presented on the balance sheet,
since the table below presents all cash flows (including interest to maturity) on an undiscounted basis.
Derivative financial instruments
The fair value of the derivatives is included in financial assets or in financial liabilities in the time band
corresponding to the remaining maturity of the derivative.
Gross settled derivatives are presented in a separate table and the corresponding cash flows are classified
accordingly in the time bands which relate to the number of days until their receipt or payment.
Contingent liabilities and Commitments
Amounts of contingent liabilities and commitments are included in the time band on the basis of their
remaining contractual maturities except for amounts of undrawn facilities and guarantees, which are
included in the earliest date on which the Group can be required to pay. For guarantees to give rise to a
payment obligation to the Group, certain conditions must be met specific to the guarantee contract in order
for an outflow to arise. Given that guarantees could be called at any time by the counterparty, subject to
the occurrence of the relevant event they are included in the 'On demand and up to one month' time band.
The analysis in the time bands of the amounts for the guarantees for the comparative period has been
changed from being included in the time bands on the basis of their remaining contractual maturities to the
‘On demand and up to one month’ time band to align to the above. The total amount presented for
guarantees for the comparative period is not impacted.
As a significant portion of the contingent liabilities and commitments expire without being utilised the total
of the nominal principal amounts is not indicative of future liquidity requirements.
582
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
44.
Risk management - Liquidity and funding risk (continued)
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
2024
€000
€000
€000
€000
€000
€000
Financial assets
Cash and balances with
central banks
7,512,612
14,536
23,759
2,061
215
7,553,183
Loans and advances to
banks
256,210
1,219
472,188
57,687
-
787,304
Reverse repurchase
agreements
-
-
-
1,010,170
-
1,010,170
Fair value of derivative
assets
7,907
332
503
75,197
11,334
95,273
Investments at FVPL
837
-
5,335
1,455
-
7,627
Investments not at FVPL
119,232
97,899
398,119
1,949,042
1,625,840
4,190,132
Loans and advances to
customers
1,057,022
214,529
743,938
3,078,961
5,019,823
10,114,273
Balances with Group
companies
27,056
-
7,016
-
31,713
65,785
Other assets
41,095
2,098
158,058
44,346
10,270
255,867
9,021,971
330,613
1,808,916
6,218,919
6,699,195
24,079,614
Financial liabilities
Deposits by banks
96,321
11,533
32,434
207,342
23,271
370,901
Customer deposits
16,439,268
1,550,780
2,535,228
15,440
-
20,540,716
Balances with Group
companies
126,561
8,703
247
-
-
135,511
Debt securities in issue
-
-
48,313
1,104,057
-
1,152,370
Subordinated liabilities
-
-
19,875
102,615
356,162
478,652
Fair value of derivative
liabilities
585
34
178
2,077
1,790
4,664
Lease liabilities
796
1,154
3,844
16,995
9,845
32,634
Other liabilities
176,335
110
92
566
-
177,103
16,839,866
1,572,314
2,640,211
1,449,092
391,068
22,892,551
Net financial
(liabilities)/assets
(7,817,895)
(1,241,701)
(831,295)
4,769,827
6,308,127
1,187,063
583
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
44.
Risk management - Liquidity and funding risk (continued)
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
2023
€000
€000
€000
€000
€000
€000
Financial assets
Cash and balances with
central banks
9,571,852
14,661
23,159
3,995
654
9,614,321
Loans and advances to
banks
260,827
1,609
467
79,899
10,281
353,083
Reverse Repurchase
Agreements
-
-
-
403,199
-
403,199
Fair value of derivative
assets
220
99
540
35,263
14,933
51,055
Investments at FVPL
837
-
-
2,286
-
3,123
Investments not at FVPL
86,322
76,184
483,759
1,810,771
1,093,579
3,550,615
Loans and advances to
customers
1,100,075
188,261
723,362
2,798,404
5,011,431
9,821,533
Balances with Group
companies
17,673
-
7,007
-
3,647
28,327
Other assets
62,131
45
123,280
147,232
15,088
347,776
11,099,937
280,859
1,361,574
5,281,049
6,149,613
24,173,032
Financial liabilities
Deposits by banks
145,701
18,737
35,481
210,135
69,479
479,533
Funding from central banks
-
1,752,836
313,174
-
-
2,066,010
Customer deposits
15,175,687
1,538,792
2,424,392
214,190
-
19,353,061
Balances with Group
companies
89,259
16,269
5,559
-
-
111,087
Debt securities in issue
-
-
33,323
779,464
-
812,787
Subordinated liabilities
-
-
19,885
94,663
384,739
499,287
Fair value of derivative
liabilities
13,362
516
201
2,515
1,386
17,980
Lease liabilities
1,630
2,055
3,945
15,205
-
22,835
Other liabilities
113,644
17,227
31,611
6,834
3,417
172,733
15,539,283
3,346,432
2,867,571
1,323,006
459,021
23,535,313
Net financial
(liabilities)/assets
(4,439,346)
(3,065,573)
(1,505,997)
3,958,043
5,690,592
637,719
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
2024
€000
€000
€000
€000
€000
€000
Gross settled derivatives
Financial assets
Contractual amounts
receivable
667,289
181,962
2,991
-
-
852,242
Contractual amounts payable
(659,663)
(181,323)
(2,927)
-
-
(843,913)
7,626
639
64
-
-
8,329
Financial liabilities
Contractual amounts
receivable
144,527
34,120
2,549
-
-
181,196
Contractual amounts payable
(144,633)
(34,119)
(2,605)
-
-
(181,357)
(106)
1
(56)
-
-
(161)
584
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
44.
Risk management - Liquidity and funding risk (continued)
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
2024
€000
€000
€000
€000
€000
€000
Contingent liabilities and
commitments
Contingent liabilities
Acceptances and
endorsements
4,097
711
463
-
-
5,271
Guarantees
706,496
-
-
-
-
706,496
Commitments
Documentary credits
7,318
1,539
5,911
-
-
14,768
Undrawn formal standby
facilities, credit lines and
other commitments to lend
2,041,468
-
-
-
-
2,041,468
2,759,379
2,250
6,374
-
-
2,768,003
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
2023
€000
€000
€000
€000
€000
€000
Gross settled derivatives
Financial assets
Contractual amounts
receivable
56,545
6,059
2,646
-
-
65,250
Contractual amounts payable
(56,310)
(5,992)
(2,599)
-
-
(64,901)
235
67
47
-
-
349
Financial liabilities
Contractual amounts
receivable
907,453
136,201
2,617
-
-
1,046,271
Contractual amounts payable
(920,105)
(136,063)
(2,637)
-
-
(1,058,805)
(12,652)
138
(20)
-
-
(12,534)
On demand
and up to one
month
Between one
and three
months
Between three
months and
one year
Between one
and five years Over five years
Total
2023 (restated)
€000
€000
€000
€000
€000
€000
Contingent liabilities and
commitments
Contingent liabilities
Acceptances and
endorsements
1,321
879
380
-
-
2,580
Guarantees
708,943
-
-
-
-
708,943
Commitments
Documentary credits
1,242
3,830
5,179
-
-
10,251
Undrawn formal standby
facilities, credit lines and
other commitments to lend
1,987,455
-
-
-
-
1,987,455
2,698,961
4,709
5,559
-
-
2,709,229
45.
Capital management
The primary objective of the Company’s capital management is to ensure compliance with the relevant
regulatory capital requirements and to maintain healthy capital adequacy ratios to cover the risks of its
business, support its strategy and maximise shareholders’ value.
585
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
45.
Capital management (continued)
The capital adequacy framework, as in force, was incorporated through the Capital Requirements Regulation
(CRR) and Capital Requirements Directive (CRD) which came into effect on 1 January 2014 with certain
specified provisions implemented gradually. The CRR and CRD transposed the capital, liquidity and leverage
standards of Basel III into the European Union’s legal framework. CRR establishes the prudential
requirements for capital, liquidity and leverage for credit institutions. It is directly applicable in all EU
member states. CRD governs access to deposit-taking activities and internal governance arrangements
including remuneration, board composition and transparency. Unlike the CRR, member states were required
to transpose the CRD into national law and national regulators were allowed to impose additional capital
buffer requirements.
On 27 June 2019, the revised rules on capital and liquidity (Regulation (EU) 2019/876 (CRR II) and
Directive (EU) 2019/878 (CRD V)) came into force. As an amending regulation, the existing provisions of
CRR apply unless they are amended by CRR II. Certain provisions took immediate effect (primarily relating
to Minimum Requirement for Own Funds and Eligible Liabilities (MREL)), but most changes became effective
as of June 2021. The key changes introduced consist of, among others, changes to qualifying criteria for
Common Equity Tier 1 (CET1), Additional Tier 1 (AT1) and Tier 2 (T2) instruments, introduction of
requirements for MREL and a binding Leverage Ratio requirement (as defined in the CRR) and a Net Stable
Funding Ratio (NSFR).
The amendments that came into effect on 28 June 2021 are in addition to those introduced in June 2020
through Regulation (EU) 2020/873, which among other, brought forward certain CRR II changes in light of
the COVID-19 pandemic. The main adjustments of Regulation (EU) 2020/873 that had an impact on the
Company’s capital ratio relate to the acceleration of the implementation of the new SME discount factor
(lower RWAs), extending the IFRS 9 transitional arrangements and introducing further relief measures to
CET1 allowing to fully add back to CET1 any increase in ECL recognised in 2020 and 2021 for non credit
impaired financial assets and phasing-in this starting from 2022 (phasing-in at 25% in 2022, 50% in 2023
and 75% in 2024) and advancing the application of prudential treatment of software assets as amended by
CRR II (which came into force in December 2020).
In October 2021, the European Commission adopted legislative proposals for further amendments to the
CRR, CRD and the BRRD (the ‘2021 Banking Package’). Amongst other things, the 2021 Banking Package
would implement certain elements of Basel III that had not yet been transposed into EU law. In addition, in
the case of the proposed amendments to CRD and the BRRD, their terms and effect will depend, in part, on
how they are transposed in each member state. In December 2023, the preparatory bodies of the Council
and European Parliament endorsed the amendments to the CRR and the CRD and the legal texts were
published on the Council and the Parliament websites. In April 2024, the European Parliament voted to
adopt the amendments to the CRR and the CRD; Regulation (EU) 2024/1623 (known as CRR III) and
Directive (EU) 2024/1619 (known as CRD VI) were published in the EU's official journal in June 2024, with
entry into force 20 days from the date of the publication. Most provisions of CRR III have become effective
on 1 January 2025 with certain measures subject to transitional arrangements or to be phased-in over time.
Member states shall adopt and publish, by 10 January 2026, the laws, regulations and administrative
provisions necessary to comply with CRD VI and shall apply most of those measures by 11 January 2026.
The Group and the Company have complied with the minimum capital requirements (Pillar I and Pillar II).
46.
Related party transactions
Related parties of the Company include Group companies, associates and joint ventures, key management
personnel, members of the Board of Directors and their connected persons. Connected persons for the
purpose of this disclosure include spouses, minor/dependent children and companies in which the
directors/key management personnel, hold directly or indirectly, at least 50% of the voting shares in a
general meeting, or act as executive director or exercise control of the entities in any way.
586
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
46.
Related party transactions (continued)
Aggregate amounts outstanding at year end and additional transactions
2024
2023
€000
€000
Loans and advances as at 31 December
Board of Directors
71
77
Key management personnel
1,695
1,843
Connected persons-Board of Directors
73
85
Connected persons - key management personnel
524
491
2,363
2,496
Deposits as at 31 December
Board of Directors
644
1,919
Key management personnel
2,289
1,874
Connected persons - Board of Directors
308
969
Connected persons - Key management personnel
3,235
2,334
6,476
7,096
Interest income for the year
113
104
Interest expense for the year
37
8
Insurance premium income for the year
451
463
Insurance expenses for the year
6
3
The above table does not include year-end balances for members of the Board of Directors, key
management personnel and their connected persons who resigned during the year, nor balances of
customers that do not meet the definition of connected persons as at 31 December 2024.
As at 31 December 2024 there were nine Directors in office (2023: seven) and 17 key management
personnel in office (2023: 17).
Interest income and expense are disclosed for the period during which they were members of the Board of
Directors or served as key management personnel.
During the year ended 31 December 2024 an amount of €871 thousand has been paid to connected persons
of key management personnel for the cost of services capitalised within property and equipment. These
services were rendered on normal business terms as for comparable services received from third parties.
In addition to loans and advances, there were contingent liabilities and commitments in respect of members
of the Board of Directors and their connected persons, mainly in the form of documentary credits,
guarantees and commitments to lend, amounting to €114 thousand as at 31 December 2024 (2023: €116
thousand).
There were also contingent liabilities and commitments to other key management personnel and their
connected persons amounting to €1,240 thousand as at 31 December 2024 (2023: €1,138 thousand).
The total unsecured amount of the loans and advances and contingent liabilities and commitments to
members of the Board of Directors, key management personnel and other connected persons (using forced-
sale values for tangible collaterals, and assigning no value to other types of collaterals) at 31 December
2024 amounted to €1,328 thousand (2023: €1,415 thousand).
There were no other transactions during the years ended 31 December 2024 and 2023 with connected
persons of the current members of the Board of Directors or with any members who resigned during the
year.
587
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
46.
Related party transactions (continued)
All transactions with members of the Board of Directors and their connected persons are made on normal
business terms as for comparable transactions, including interest rates, with customers of a similar credit
standing. A number of loans and advances have been extended to key to management personnel on the
same terms as those applicable to the rest of the Company's employees and their connected persons on the
same terms as those of customers of a similar credit standing.
Fees and emoluments of members of the Board of Directors and key management personnel
2024
2023
Directors' emoluments
€000
€000
Executives
Salaries and other short-term benefits
1,151
1,061
Variable remuneration - STIP
72
400
Variable remuneration - LTIP
1,180
-
Retirement benefit plans costs
102
94
Total directors' emoluments
2,505
1,555
Key management personnel emoluments
Salaries and other short-term benefits
2,944
2,846
Variable remuneration - STIP
545
610
Variable remuneration - LTIP
2,050
-
Retirement benefit plan costs
251
244
Total key management personnel emoluments
5,790
3,700
Total
8,295
5,255
Fees and emoluments of members of the Board of Directors and key management personnel are included
for the period that they serve as members of the Board of Directors and as key management personnel
respectively.
The retirement benefit plan costs relate to contributions paid for defined contributions plans.
Variable remuneration amounts (amounts for STIP and LTIP) presented in the tables above and further
below in the tables in this Note represent the award amount awarded in respect of the performance year
2024 for STIP and of the performance period 2022-2024 for the 2022 LTIP (2022 LTIP cycle awarded), and
include both amounts expected to vest in 2025 and amounts to be deferred in following years. In respect of
the 2022 LTIP, the amount of the award disclosed is different from the annual cost amount recorded in the
income statement as the annual cost is calculated under the IFRS 2 provisions as per the accounting policy
disclosed in Note 2.32 of the Consolidated Financial Statements of the Company. The LTIP amount included
in the tables in this Note represents the amount awarded, calculated as the final amount of common shares
of BOCH to be delivered (subject to continuing employment) (determined by reference to the performance
scorecard assessment outcome) based on the average closing share price on the Cyprus Stock Exchange for
the period from 1 December 2024 to 17 January 2025 of €4.62. The final number of BOCH shares to be
delivered to the CEO have been set to 192,883, to the EDF to 62,614 and for the key management
personnel to 467,662. No LTIP cycle had a performance period ending in the year ended 31 December 2023
and therefore no amounts are included in the tables in respect of variable remuneration under LTIP for the
comparative period. The annual expense amounts recorded in the income statement for the year ended 31
December 2024 and 2023 in accordance with IFRS 2 in respect of the Executive Directors and key
management personnel are disclosed below.
588
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
46.
Related party transactions (continued)
Fees and emoluments of members of the Board of Directors and key management personnel
(continued)
As disclosed in Note 12.3 the short-term incentive award is primarily awarded in the form of cash. Where
the total amount of variable remuneration for a financial year awarded under STIP and LTIP for an individual
exceeds a threshold as per regulatory guidelines, then at least 50% of the variable remuneration must be
awarded in the form of shares. In the case of the Executive Directors and key management personnel for
the year ended 31 December 2024, the amounts awarded under STIP will be in the form of cash as the LTIP
award is awarded in the form of shares and it is in excess of 50% of the variable remuneration for 2024
(2023: in the case of the Executive Directors, the 2023 STIP award was 50% in the form of cash and 50%
in the form of shares and in the case of the other key management personnel an amount of €560 thousand
was in the form of cash and an amount of €50 thousand in the form of shares). In the context of
establishing the final amount of variable remuneration for the performance year 2024, following the
outcome of the assessment of the predetermined performance targets, the amounts awarded under the
2022 LTIP cycle were determined first, followed by the STIP amount to be awarded so that the total variable
remuneration is within the 100% fixed to variable remuneration ratio threshold. Therefore, for year 2024,
where for a participant the entire of the 100% threshold was utilised for the LTIP, no STIP amount has been
awarded.
In case the total variable remuneration award to an individual exceeds a certain regulatory threshold, then
vesting conditions as described in Note 12.3 apply for both the cash and the share component and remain
subject to malus and clawback conditions as per the applicable regulatory framework and the LTIP Plan
rules.
Executive Directors' emoluments
A cost of €317 thousand has been recorded by the Company in its Income Statement in relation to awards
granted in 2022, 2023 and 2024 to the Executive Directors under the Long-Term Incentive Plan (LTIP) as
described in Note 12.2 (2023: cost of €235 thousand for awards granted in 2022 and 2023). The
recognition of such cost is in accordance with the accounting policy described in Note 2.32 of the
Consolidated Financial Statements of the Company.
Key management personnel
The emoluments of key management personnel include the remuneration of the members of the Executive
Committee and the emoluments of other members of the Senior Management team (Extended EXCO) since
the date of their appointment to the Committees.
Further, employer's contributions in relation to the emoluments of key management personnel of €354
thousand have been recorded in the Income Statement during the year ended 31 December 2024 (2023:
€326 thousand). Such amounts are not considered part of the remuneration, but rather an incremental cost
to the Group, and as such not included in the table above.
Further, a cost of €615 thousand has been recorded by the Company in its Income Statement in relation to
awards granted in 2022, 2023 and 2024 to the key management personnel under the Long-Term Incentive
Plan (LTIP) as described in Note 12.2 (2023: cost of €360 thousand for awards granted in 2022 and 2023).
The recognition of such cost is in accordance with the Group accounting policy described in Note 2.32 of the
Consolidated Financial Statements of the Company.
Executive Directors
The fees and emoluments of the Executive Directors are analysed as follows:
589
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
46.
Related party transactions (continued)
Fees and emoluments of members of the Board of Directors and key management personnel
(continued)
2024
2023
€000
€000
Panicos Nicolaou (Chief Executive Officer)
Salaries and other short-term benefits
819
761
Variable remuneration - STIP
-
300
Variable remuneration - LTIP
891
-
Retirement benefit plan costs
73
68
1,783
1,129
Eliza Livadiotou (Executive Director Finance)
Salaries and other short-term benefits
332
300
Variable remuneration - STIP
72
100
Variable remuneration - LTIP
289
-
Retirement benefit plan costs
29
26
722
426
Total
2,505
1,555
The share-based benefits expense recorded in the Income Statement during the year ended 31 December
2024 for the share awards granted under the LTIP for LTIP Cycles 2022, 2023 and 2024 amounts to €240
thousand (2023: €186 thousand) for the Chief Executive Officer and to €77 thousand (2023: €49 thousand)
for the Executive Director Finance.
Further, employer's contributions of €63 thousand have been recorded in the Income Statement during the
year ended 31 December 2024, of which €34 thousand relate to the Chief Executive Officer and €29
thousand relate to the Executive Director Finance (2023: total employer's contributions of €64 thousand, of
which €38 thousand relate to the Chief Executive Officer and €26 thousand to the Executive Director
Finance). Such amounts are not considered part of the remuneration of Directors, but rather an incremental
cost to the Company, and as such have not been included in the table above.
Non-executive Directors
Non-executive director fees are expensed by Bank of Cyprus Holdings Public Limited Company and as a
result no non-executive director fees are disclosed. However, these are recharged by the holding company
back to the Company and the recharge cost is included within ‘Other operating expenses’.
Balances and transactions with Group Companies are disclosed in Note 22. Further, the subordinated
liability and the fixed Rate Reset Perpetual Additional Tier 1 Capital Securities with the holding company are
disclosed in Notes 30 and 32 respectively.
590
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
47.
Subsidiary companies
The main subsidiary companies and branches of the Company, their country of incorporation, their activities
and the percentage held by the Company (directly or indirectly) as at 31 December 2024 are:
Company
Country
Activities
Percentage
holding
(%)
EuroLife Ltd
Cyprus
Life insurance
100
General Insurance of Cyprus Ltd
Cyprus
Non-life insurance
100
JCC Payment Systems Ltd
Cyprus
Development of inter-banking
systems, acquiring and processing of
card transactions, other payment
services and other activities
75
The Cyprus Investment and
Securities Corporation Ltd
(CISCO)
Cyprus
Investment banking, brokerage,
discretionary asset management and
investment advice services
100
Jinius Ltd
Cyprus
Digital Economy Platform
100
LCP Holdings and Investments
Public Ltd
Cyprus
Investments in securities and
participations in companies and
schemes that are active in various
business sectors and projects
67
Kermia Ltd
Cyprus
Property trading and development
100
Kermia Properties & Investments
Ltd
Cyprus
Property trading and development
100
S.Z. Eliades Leisure Ltd
Cyprus
Land development and operation of a
golf resort
70
Auction Yard Ltd
Cyprus
Auction company
100
BOC Secretarial Company Ltd
Cyprus
Secretarial services
100
Bank of Cyprus Public Company
Limited (branch of the Company)
Greece
Administration of guarantees and
holding of real estate properties
n/a
BOC Asset Management Romania
S.A.
Romania
In run-down
100
MC Investment Assets
Management LLC
Russia
Problem asset management company -
In run-down
100
Fortuna Astrum Ltd
Serbia
Problem asset management company -
In run-down
100
591
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
47.
Subsidiary companies (continued)
In addition to the above companies, as at 31 December 2024 the Company had 100% shareholding, either
directly or indirectly, in the companies listed below, whose activity is the ownership and management of
immovable property:
Cyprus: Tolmeco Properties Ltd, Pelika Properties Ltd, Cobhan Properties Ltd, Nalmosa Properties Ltd,
Emovera Properties Ltd, Blodar Properties Ltd, Cranmer Properties Ltd, Les Coraux Estates Ltd, Natakon
Company Ltd, Oceania Ltd, Dominion Industries Ltd, Ledra Estate Ltd, Laiki Lefkothea Center Ltd, Labancor
Ltd, Joberco Ltd, Domita Estates Ltd, Memdes Estates Ltd, Kernland Properties Ltd, Jobelis Properties Ltd,
Melsolia Properties Ltd, Spacous Properties Ltd, Solomaco Properties Ltd, Linaland Properties Ltd, Unital
Properties Ltd, Neraland Properties Ltd, Wingstreet Properties Ltd, Nolory Properties Ltd, Lisbo Properties
Ltd, Mantinec Properties Ltd, Provezaco Properties Ltd, Hillbay Properties Ltd, Forenaco Properties Ltd,
Hovita Properties Ltd, Astromeria Properties Ltd, Barosca Properties Ltd, Fogland Properties Ltd, Tebasco
Properties Ltd, Valecross Properties Ltd, Altco Properties Ltd, Olivero Properties Ltd, Jaselo Properties Ltd,
Elosa Properties Ltd, Flona Properties Ltd, Toreva Properties Ltd, Resoma Properties Ltd, Mostero Properties
Ltd, Helal Properties Ltd, Pendalo Properties Ltd, Frontyard Properties Ltd, Bonsova Properties Ltd,
Thermano Properties Ltd, Venicous Properties Ltd, Lorman Properties Ltd, Eracor Properties Ltd, Rulemon
Properties Ltd, Maledico Properties Ltd, Balasec Properties Ltd, Diafor Properties Ltd, Kartama Properties
Ltd, Paramina Properties Ltd, Nouralia Properties Ltd, Resocot Properties Ltd, Soblano Properties Ltd,
Talamon Properties Ltd, Weinar Properties Ltd, Zemialand Properties Ltd, Coeval Properties Ltd, Finevo
Properties Ltd, Mazima Properties Ltd, Riveland Properties Ltd, Rosalica Properties Ltd, Secretsky Properties
Ltd, Senadaco Properties Ltd, Tasabo Properties Ltd, Venetolio Properties Ltd, Zandexo Properties Ltd,
Odolo Properties Ltd, Molemo Properties Ltd, Samilo Properties Ltd, Alezia Properties Ltd, Enelo Properties
Ltd, Monata Properties Ltd, Amary Properties Ltd, Aparno Properties Ltd, Lomenia Properties Ltd, Midelox
Properties Ltd, Montira Properties Ltd, Orilema Properties Ltd, Carilo Properties Ltd, Olisto Properties Ltd,
Holstone Properties Ltd, Gelimo Properties Ltd, Larizemo Properties Ltd and Philiki Ltd.
Romania: Otherland Properties Dorobanti SRL.
Further, at 31 December 2024 the Company had 100% shareholding in Stamoland Properties Ltd, Unoplan
Properties Ltd, Petrassimo Properties Ltd and Gosman Properties Ltd.
The main activities of the above companies are the holding of shares and other investments and the
provision of services.
At 31 December 2024, the Company had 100% shareholding in BOC Terra AIF V.C.I.C. Plc which is a real
estate alternative investment fund, currently inactive.
At 31 December 2024 the Company had 100% shareholding, either directly or indirectly, in the companies
listed below which are reserved to accept property:
Cyprus: Rifelo Properties Ltd, Dadela Properties Ltd, Leziga Properties Ltd, Bavara Properties Ltd, Fernia
Properties Ltd, Wolfenia Properties Ltd, Ortizelo Properties Ltd and Ellagio Properties Ltd.
In addition, the Company holds 100% of the following intermediate holding companies:
Cyprus: Otherland Properties Ltd, Battersee Properties Ltd, Bonayia Properties Ltd, Janoland Properties Ltd,
Imoreth Properties Ltd, Inroda Properties Ltd, Zunimar Properties Ltd, Nikaba Properties Ltd, Allioma
Properties Ltd and Hydrobius Ltd.
The Company also holds 100% of the following companies which are inactive:
Cyprus: Laiki Bank (Nominees) Ltd, Paneuropean Ltd, Nelcon Transport Co. Ltd, Canosa Properties Ltd,
Hοmirova Properties Ltd and Finerose Properties Ltd.
Greece: Kyprou Zois (branch of EuroLife Ltd), Kyprou Asfalistiki (branch of General Insurance of Cyprus
Ltd), Kyprou Commercial SA and Kyprou Properties SA.
The Company also holds indirectly 75% of Settle Cyprus Ltd, which is inactive.
All companies listed above have share capital consisting of ordinary shares.
592
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
47.
Subsidiary companies (continued)
Acquisitions of subsidiaries
During the years ended 31 December 2024 and 2023 there were no acquisitions of subsidiaries.
Dissolution and disposal of subsidiaries
There were no material disposals of subsidiaries during the year ended 31 December 2024. CYCMC IV Ltd,
Blindingqueen Properties Ltd, Prodino Properties Ltd, Ensolo Properties Ltd, Fairford Properties Ltd, Sylvesta
Properties Ltd and Iperi Property Ltd were dissolved during the year ended 31 December 2024. Regetona
Properties Ltd, Soluto Properties Ltd, Camela Properties Ltd, Baleland Properties Ltd, Ramendi Properties
Ltd, Fitrus Properties Ltd, Estaga Properties Ltd, Avaleto Properties Ltd, Zecomex Ltd, Bendolio Properties
Ltd, Cramonco Properties Ltd, Zenoplus Properties Ltd, Hamura Properties Ltd, Vertilia Properties Ltd, Colar
Properties Ltd, Koralmon Properties Ltd and Skellom Properties Ltd were disposed of during the year ended
31 December 2024.
As at 31 December 2024, the following subsidiaries were in the process of dissolution or in the process of
being struck off: Fantasio Properties Ltd, Demoro Properties Ltd, Bramwell Properties Ltd, Battersee Real
Estate SRL, Thryan Properties Ltd, Obafemi Holdings Ltd, Birkdale Properties Ltd, Green Hills Properties
SRL, Imoreth Properties SRL, Inroda Properties SRL, Zunimar Properties SRL, Allioma Properties SRL,
Landanafield Properties Ltd and Nikaba Properties SRL.
During the year ended 31 December 2024 net losses on disposal/dissolution of subsidiary companies of
€4,712 thousand (2023: net gains of €1,840 thousand) were recorded in the income statement (Note 11)
and relates primarily to disposal of entities holding properties managed under the REMU portfolio.
Carrying value of investments in subsidiaries
2024
2023
€000
€000
1 January
552,577
161,550
Contribution/transfer from Balances with Group Companies (net)
-
531,672
Additions
13,522
7,288
Disposals/dissolution of subsidiaries
(88,562)
(73,700)
Contribution to/(from) subsidiaries-net
13,165
(16,610)
Impairment of investments in subsidiaries (Note 14)
(63,280)
(57,623)
31 December
427,422
552,577
48.
Offsetting financial assets and liabilities
The following tables set out the effect or potential effect of netting arrangements on the Company's financial
position. This includes the effect or potential effect of rights of set off associated with the Company's
recognised financial assets and recognised financial liabilities that are subject to an enforceable master
netting arrangement, irrespective of whether they are set off in accordance with paragraph 42 of IAS 32.
The 'Amounts subject to master netting agreements' column identifies financial assets and liabilities that are
subject to set off under netting provisions included in counterparties' agreements such as an ISDA Master
Agreement.
The agreement between the Company and the counterparty allows for net settlement of the relevant
financial assets and liabilities when both elect to settle on a net basis. In the absence of such an election,
financial assets and liabilities are settled on a gross basis; however each party, for which the netting
provisions apply under an ISDA Master Agreement, has the option to settle all such amounts on a net basis
in the event of default of the other party.
593
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
48.
Offsetting financial assets and liabilities (continued)
Related amounts
not set off in the
balance sheet
Assets
Gross
amounts of
recognised
financial
assets
Gross
amounts of
recognised
financial
liabilities
set off in
the balance
sheet
Net
amounts of
financial
assets
presented
in the
balance
sheet
Amounts
subject to
master
netting
agreements
Financial
collateral
(including
cash
collateral)
Net
amount
2024
€000
€000
€000
€000
€000
€000
Derivative financial
assets
95,273
-
95,273
(3,421)
(91,202)
650
Reverse repurchase
agreements
1,010,170
-
1,010,170
-
(13,068)
997,102
Total
1,105,443
-
1,105,443
(3,421)
(104,270)
997,752
2023
Derivative financial
assets
51,055
-
51,055
(3,705)
(47,179)
171
Reverse repurchase
agreements
403,199
-
403,199
-
-
403,199
Total
454,254
-
454,254
(3,705)
(47,179)
403,370
The gross amounts of recognised derivative financial assets, include amounts of €3,421 thousand that do
not meet the offsetting criteria, but are subject to enforceable master netting arrangements (2023: €3,705
thousand). Financial collateral (including cash collateral) disclosed is limited to the net position exposure
and hence may differ from the maximum collateral available for offset and is reported in 'Deposits by
banks'.
Related amounts
not set off in the
balance sheet
Liabilities
Gross
amounts of
recognised
financial
liabilities
Gross
amounts of
recognised
financial
assets
set off in
the balance
sheet
Net
amounts of
financial
liabilities
presented
in the
balance
sheet
Amounts
subject to
master
netting
agreements
Financial
collateral
(including
cash
collateral)
Net
amount
2024
€000
€000
€000
€000
€000
€000
Derivative financial
liabilities
4,664
-
4,664
(3,421)
-
1,243
Total
4,664
-
4,664
(3,421)
-
1,243
2023
Derivative financial
liabilities
17,980
-
17,980
(3,705)
(11,896)
2,379
Total
17,980
-
17,980
(3,705)
(11,896)
2,379
594
BANK OF CYPRUS PUBLIC COMPANY LIMITED
Annual Financial Report 2024
Notes to the Financial Statements
48.
Offsetting financial assets and liabilities (continued)
The gross amounts of recognised derivative financial liabilities, include amounts of €3,421 thousand that do
not meet the offsetting criteria, but are subject to enforceable master netting arrangements (2023: €3,705
thousand). Financial collateral (including cash collateral) disclosed is limited to the net position exposure
and hence may differ from the maximum collateral available for offset and is reported in 'Loans and
advances to banks'.
49.
Events after the reporting period
Distribution in respect of 2024 earnings
The Board of Directors of the Company has resolved to propose to the AGM that will be held on 16 May
2025 for approval, a final cash dividend of €0.03 per ordinary share in respect of earnings for the year
ended 31 December 2024, which amounts to an aggregate distribution of €241 million. The financial
statements for the year ended 31 December 2024 do not reflect this dividend, which will be accounted for in
shareholders’ equity as an appropriation of retained earnings in the year ending 31 December 2025.
Dividends are funded out of distributable reserves.
No other significant non-adjusting events have taken place since 31 December 2024.
595
Alternative Performance Measures Disclosures 2024
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
597
DEFINITIONS
Adjusted recurring
profitability
The Group’s profit after tax before non-recurring items (attributable to the
owners of the Company) taking into account distributions under other equity
instruments such as the annual AT1 coupon.
Advisory and other
transformation costs -
organic
Comprise mainly of fees of external advisors in relation to the transformation
program and other strategic projects of the Group.
Allowance for
expected loan credit
losses
Comprises (i) allowance for expected credit losses (ECL) on loans and advances
to customers (including allowance for expected credit losses on loans and
advances to customers held for sale, where applicable), (ii) the residual fair value
adjustment on initial recognition of loans and advances to customers (including
residual fair value adjustment on initial recognition of loans and advances to
customers classified as held for sale, where applicable), (iii) allowance for
expected credit losses on off-balance sheet exposures (financial guarantees and
commitments) disclosed on the balance sheet within other liabilities, and (iv) the
aggregate fair value adjustment on loans and advances to customers classified
and measured at FVPL.
Basic profit per share
(attributable to the
owners of the
Company)
Basic profit per share (attributable to the owners of the Company) is the
Profit/(loss) after tax (attributable to the owners of the Company) divided by the
weighted average number of ordinary shares in issue during the period/year,
excluding treasury shares. The term ‘Basic earnings per share (attributable to
the owners of the Company)’ is used interchangeably with this term in the
Annual Financial Report.
Carbon neutral
The reduction and balancing (through a combination of offsetting investments
or emission credits) of greenhouse gas emissions from own operations.
Cost to Income ratio
Cost to income ratio is calculated as total expenses (as defined), divided by total
income (as defined).
Digital transactions
ratio
This is the ratio of the number of digital transactions performed by individuals
and legal entity customers to the total number of transactions. Transactions
include deposits, cash withdrawals, internal and external transfers. Digital
channels include mobile banking app, browser and ATMs.
Digitally engaged
customers ratio
This is the ratio of digitally engaged individual customers to the total number of
individual customers. Digitally engaged customers are the individuals who use
the digital channels of the Bank (mobile banking app, browser and ATMs) to
perform banking transactions, as well as digital enablers such as a bank-issued
card to perform online card purchases, based on an internally developed
scorecard.
Diluted earnings per
share (attributable to
the
owners
of
the
Company)
Diluted earnings per share is the Profit/(loss) after tax (attributable to the
owners of the Company) divided by the weighted average number of ordinary
shares in issue during the period/year, excluding treasury shares, adjusted to
take into account the potential dilutive effect for the ordinary shares that may
arise in respect of share awards granted to executive directors and senior
management of the Group under the Long-Term Incentive Plan and Short-Term
Incentive Plan, where applicable. The term ‘Diluted profit per share (attributable
to the owners of the Company)’ is used interchangeably with this term in the
Annual Financial Report.
Green Asset ratio
The proportion of a credit institution’s assets financing and invested in EU
Taxonomy-aligned economic activities as a share of total covered assets.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
598
Green Mortgage ratio
The proportion of a credit institution’s assets financing EU Taxonomy-aligned
mortgages (acquisition, construction or renovation of buildings) as a share of
total mortgage assets.
Gross loans
Gross loans comprise: (i) gross loans and advances to customers measured at
amortised cost before the residual fair value adjustment on initial recognition
(including loans and advances to customers classified as non-current assets held
for sale, where applicable) and (ii) loans and advances to customers classified and
measured at FVPL adjusted for the aggregate fair value adjustment.
The residual fair value adjustment on initial recognition relates mainly to loans
acquired from Laiki Bank (calculated as the difference between the outstanding
contractual amount and the fair value of loans acquired at acquisition date).
Interest earning
assets
Interest earning assets include: cash and balances with central banks, loans and
advances to banks, reverse repurchase agreements, net loans and advances to
customers (as defined), net loans and advances to customers classified as non-
current assets held for sale (where applicable), deferred consideration receivable
(‘DPP’), and investments (excluding equities, mutual funds and other non-interest
bearing investments).
Legacy exposures
Legacy exposures are exposures relating to (i) Restructuring and Recoveries
Division (RRD), (ii) Real Estate Management Unit (REMU), and (iii) Non-core
overseas exposures.
Leverage ratio
The leverage ratio is the ratio of tangible total equity to total assets as presented
on the balance sheet. Tangible total equity comprises of equity attributable to the
owners of the Company and other equity instruments minus intangible assets.
Loan credit losses
(PL)
Loan credit losses comprise: (i) credit losses to cover credit risk on loans and
advances to customers (including credit losses on loans and advances to
customers classified as non-current assets held for sale, where applicable), (ii)
net gains/(losses) on derecognition of financial assets measured at amortised cost
relating to loans and advances to customers and (iii) net gains/(losses) on loans
and advances to customers at FVPL, for the reporting period/year.
Loan credit losses
charge (cost of risk)
Loan credit losses charge (cost of risk) (year-to-date) is calculated as the loan
credit losses (as defined) (annualised based on year-to-date days) divided by the
average gross loans. The average gross loans are calculated as the average of the
opening balance and the closing balance of Gross loans (as defined), for the
reporting period/year.
Market Shares
Both deposit and loan market shares are based on data from the CBC.
Net Interest Margin
Net interest margin is calculated as the net interest income (annualised based on
year-to-date days) divided by the quarterly average interest earning assets (as
defined).
Net loans and
advances to
customers
Net loans and advances to customers comprise gross loans (as defined) net of
allowance for expected loan credit losses (as defined, but excluding allowance
for expected credit losses on off-balance sheet exposures disclosed on the
balance sheet within other liabilities).
Net loans to
deposits ratio
Net loans to deposits ratio is calculated as gross loans (as defined) net of
allowance for expected loan credit losses (as defined), divided by customer
deposits.
Net performing loan
book
Net performing loan book is the total net loans and advances to customers (as
defined) excluding net loans included in the legacy exposures (as defined).
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
599
Net zero emissions
The reduction of greenhouse gas emissions to net zero through a combination of
reduction activities and offsetting investments.
New lending
New lending includes the disbursed amounts of the new and existing non-
revolving facilities (excluding forborne or re-negotiated accounts) as well as the
average year-to-date change (if positive) of the current accounts and overdraft
facilities between the balance at the beginning of the period and the end of the
period. Recoveries are excluded from this calculation since their overdraft
movement relates mostly to accrued interest and not to new lending.
Non-interest income
Non-interest income comprises: Net fee and commission income, Net foreign
exchange gains/(losses) and net gains/(losses) on financial instruments
(excluding net gains/(losses) on loans and advances to customers at FVPL), Net
insurance result, Net gains/(losses) from revaluation and disposal of investment
properties and on disposal of stock of properties, and Other income.
Non-performing
exposures (NPEs)
As per the EBA standards and the ECB’s Guidance to Banks on Non-Performing
Loans (which was published in March 2017), NPEs are defined as those exposures
that satisfy one of the following conditions:
(i)
The borrower is assessed as unlikely to pay its credit obligations in full
without the realisation of the collateral, regardless of the existence of
any past due amount or of the number of days past due.
(ii)
Defaulted or impaired exposures as per the approach provided in the
Capital Requirement Regulation (CRR), which would also trigger a
default under specific credit adjustment, diminished financial obligation
and obligor bankruptcy.
(iii) Material exposures as set by the CBC, which are more than 90 days
past due.
(iv) Performing forborne exposures under probation for which additional
forbearance measures are extended.
(v)
Performing forborne exposures previously classified as NPEs that
present more than 30 days past due within the probation period.
From 1 January 2021 two regulatory guidelines came into force that affect NPE
classification and Days-Past-Due calculation. More specifically, these are the RTS
on the Materiality Threshold of Credit Obligations Past-Due (EBA/RTS/2016/06)
and the Guideline on the Application of the Definition of Default under article 178
(EBA/RTS/2016/07).
The Days-Past-Due (DPD) counter begins counting DPD as soon as the arrears
or excesses of an exposure reach the materiality threshold (rather than as of the
first day of presenting any amount of arrears or excesses). Similarly, the counter
will be set to zero when the arrears or excesses drop below the materiality
threshold. Payments towards the exposure that do not reduce the
arrears/excesses below the materiality threshold, will not impact the counter.
For retail debtors, when a specific part of the exposures of a customer that fulfils
the NPE criteria set out above is greater than 20% of the gross carrying amount
of all on balance sheet exposures of that customer, then the total customer
exposure is classified as non-performing; otherwise only the specific part of the
exposure is classified as non-performing. For non-retail debtors, when an
exposure fulfils the NPE criteria set out above, then the total customer exposure
is classified as non-performing.
Material arrears/excesses are defined as follows:
-
Retail exposures: Total arrears/excess amount greater than €100,
-
Exposures other than retail: Total arrears/excess amount greater than
€500
and the amount in arrears/excess is at least 1% of the customer’s total exposure.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
600
The NPEs are reported before the deduction of allowance for expected loan credit
losses (as defined).
Non-recurring items
Non-recurring items as presented in the ‘Consolidated Income Statement –
Underlying basis’ relate to ‘Advisory and other transformation costs - organic’, if
applicable.
NPE coverage ratio
The NPE coverage ratio is calculated as the allowance for expected loan credit
losses (as defined) over NPEs (as defined).
NPE ratio
NPE ratio is calculated as the NPEs (as defined) divided by Gross loans (as
defined).
Operating profit
Operating profit on the underlying basis comprises profit before loan credit losses
(as defined), impairments of other financial and non-financial assets, provisions
for pending litigation, claims, regulatory and other matters (net of reversals),
tax, (profit)/loss attributable to non-controlling interests and non-recurring
items (as defined).
Operating profit
return on average
assets
Operating profit return on average assets is calculated as the operating profit
(as defined) (annualised based on year-to-date days) divided by the quarterly
average of total assets for the relevant period. Average total assets exclude
total assets of discontinued operations at each quarter end, if applicable.
Profit/(loss) after tax
and before non-
recurring items
(attributable to the
owners of the
Company)
Profit/(loss) after tax and before non-recurring items (attributable to the owners
of the Company) is the operating profit (as defined) adjusted for loan credit
losses (as defined), impairments of other financial and non-financial assets,
provisions for litigation, claims, regulatory and other matters (net of reversals),
tax and (profit)/loss attributable to non-controlling interests.
Profit/(loss) after tax
– organic
(attributable to the
owners of the
Company)
Profit/(loss) after tax - organic (attributable to the owners of the Company) is
the profit/(loss) after tax and before non-recurring items (attributable to the
owners of the Company) (as defined), adjusted for the ‘Advisory and other
transformation costs – organic’, if applicable.
Return on Tangible
equity (ROTE)
Return on Tangible Equity (ROTE) is calculated as Profit/(loss) after tax
(attributable to the owners of the Company) (annualised based on year-to-date
days), divided by the quarterly average of Shareholders’ equity (as defined)
minus intangible assets at each quarter end.
Return on Tangible
equity (ROTE)
excluding amounts
reserved for
distributions
Return on Tangible equity (ROTE) excluding amounts reserved for distributions
is calculated as Profit/(loss) after tax (attributable to the owners of the
Company) (as defined) (annualised based on year-to-date days), divided by the
quarterly average of Shareholders’ equity (as defined) minus intangible assets
and the amounts approved/recommended for distribution in respect of earnings
of the relevant year the distribution relates to.
Return on Tangible
equity (ROTE) on
15% CET1 ratio
Return on Tangible equity (ROTE)
on 15% CET1 ratio is calculated as
Profit/(loss) after tax (attributable to the owners of the Company) (annualised
based on year-to-date days), divided by the quarterly average of Shareholders’
equity (as defined) minus intangible assets and after deducting the excess CET1
capital on a 15% CET1 ratio from the tangible book value at each quarter end.
Shareholders’ equity
Shareholders’ equity comprises total equity adjusted for non-controlling interest
and other equity instruments. It is represented by equity attributable to the
owners of the Company (as per statutory basis).
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
601
Tangible book value
per share
Tangible book value per share is calculated as Shareholders’ equity (as defined)
less intangible assets at each quarter end, divided by the number of ordinary
shares in issue at the end of the period/year, excluding treasury shares.
Tangible equity
Tangible equity comprises of equity attributable to the owners of the Company
(as per statutory basis) and other equity instruments minus intangible assets.
Time deposits
pass-through
Calculated as a percentage of the cost (interest expense) of Time and Notice
deposits over the average 6-month Euribor rate for the period.
Total expenses
Total expenses on the underlying basis comprise the total staff costs, special
levy on deposits and other levies/contributions and other operating expenses
(excluding ‘Advisory and other transformation costs-organic’, (on an underlying
basis)).
Total income
Total income on the underlying basis comprises the total of Net interest income,
Net fee and commission income, Net foreign exchange gains/(losses), Net
gains/(losses) on financial instruments (excluding net gains/(losses) on loans and
advances to customers at FVPL), Net insurance result, Net gains/(losses) from
revaluation and disposal of investment properties and on disposal of stock of
property and Other income (on an underlying basis). A reconciliation of these
amounts between the statutory and the underlying basis is disclosed in the
Management Report under section ‘Group financial results on the underlying
basis’.
Underlying basis
The underlying basis is computed by adjusting the results as per the statutory
basis for the reclassification of certain items as explained in the ‘Reconciliation
of the Consolidated Income Statement for the year ended 31 December 2024
between the statutory basis and the underlying basis’ within the Management
Report.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
602
Reconciliations
Reconciliation between the Consolidated Income Statement under the statutory basis and the underlying
basis in the Management Report is included in Section ‘Reconciliation of the Consolidated Income Statement
for the year ended 31 December 2024 between the statutory basis and the underlying basis’ of the
Management Report.
Reconciliations between the non-IFRS performance measures and the most directly comparable IFRS
measures which allow for the comparability of the underlying basis to the statutory basis are disclosed
below.
For the purpose of the ‘Alternative Performance Measures Disclosures’, reference to ‘Note’ relates to the
respective note in the Consolidated Financial Statements for the year ended 31 December 2024.
1.
Reconciliation of Gross loans and advances to customers
2024
2023
€000
€000
Gross loans and advances to customers as per the underlying basis (as
defined above)
10,374,056
10,069,828
Reconciling items:
Residual fair value adjustment on initial recognition (Note 23)
(60,679)
(69,534)
Loans and advances to customers classified as held for sale (Note 23)
(54,921)
-
Residual fair value adjustment on initial recognition on loans and
advances to customers classified as held for sale
778
-
Loans and advances to customers measured at FVPL (Note 23)
(131,008)
(138,727)
Aggregate fair value adjustment on loans and advances to customers
measured at FVPL
2,179
947
Gross loans and advances to customers at amortised cost as per
the Consolidated Financial Statements (Note 23)
10,130,405
9,862,514
2.
Reconciliation of Allowance for expected credit losses (ECL) on loans and advances to
customers
2024
2023
€000
€000
Allowance for expected credit losses (ECL) on loans and advances to
customers as per the underlying basis (as defined above)
254,412
267,232
Reconciling items:
Residual fair value adjustment on initial recognition (Note 23)
(60,679)
(69,534)
Allowance for expected credit losses on loans and advances to
customers classified as held for sale
(31,778)
-
Residual fair value adjustment on initial recognition on loans and
advances to customers classified as held for sale
778
-
Aggregate fair value adjustment on loans and advances to customers
measured at FVPL
2,179
947
Provisions for financial guarantees and commitments (Note 33)
(17,893)
(19,192)
Allowance for ECL for loans and advances to customers as per
the Consolidated Financial Statements (Note 23)
147,019
179,453
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
603
Reconciliations (continued)
3.
Reconciliation of NPEs
2024
2023
€000
€000
NPEs as per the underlying basis (as defined above)
255,251
365,450
Reconciling items:
Loans and advances to customers (NPEs) classified as held for sale (as
per table 1 above)
(54,921)
-
Residual fair value adjustment on initial recognition of loans and
advances to customers (NPEs) classified as held for sale (as per table 1
above)
778
-
POCI (NPEs) (Note 1 below)
(31,919)
(37,273)
Residual fair value adjustment on initial recognition on loans and
advances to customers (NPEs) classified as Stage 3 (Note 23)
1,579
(1,294)
Stage 3 gross loans and advances to customers at amortised
cost as per the Consolidated Financial Statements (Note 23)
170,768
326,883
NPE ratio
2024
2023
NPEs (as per table above) (€000)
255,251
365,450
Gross loans and advances to customers (as per table 1 above) (€000)
10,374,056
10,069,828
Ratio of NPEs/Gross loans (%)
2.5%
3.6%
NPE Coverage ratio
2024
2023
Allowance for expected credit losses (ECL) on loans and advances to
customers (as per table 2 above) (€000)
254,412
267,232
NPEs (as per table above) (€000)
255,251
365,450
NPE Coverage ratio (%)
100%
73%
Note 1: Gross loans and advances to customers at amortised cost before residual fair value adjustment on
initial recognition include an amount of €31,919 thousand POCI - NPEs (out of a total of €59,810 thousand
POCI loans) (2023: €37,273 thousand POCI - NPEs (out of a total of €100,197 thousand POCI loans)) as
disclosed in Note 23.
4.
Reconciliation of Gross Loans – Pro forma
2024
€000
Gross Loans (as per table 1 above)
10,374,056
Reconciling items:
Loans and advances to customers classified as held for sale (as per table 1 above)
(54,921)
Residual fair value adjustment on initial recognition on loans and advances to
customers classified as held for sale (as per table 1 above)
778
Gross loans and advances to customers – pro forma
10,319,913
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
604
Reconciliations (continued)
5.
Reconciliation of NPEs – Pro forma
2024
€000
NPEs (as per table 3 above)
255,251
Reconciling items:
Loans and advances to customers (NPEs) classified as held for sale (as per table 3
above)
(54,921)
Residual fair value adjustment on initial recognition on loans and advances to
customers (NPEs) classified as held for sale (as per table 3 above)
778
NPEs - pro forma
201,108
NPE ratio – Pro forma
2024
NPEs - Pro forma (as per table above) (€000)
201,108
Gross loans and advances to customers - Pro forma (as per table 4 above) (€000)
10,319,913
Ratio of NPE/Gross loans – Pro forma (%)
1.9%
6.
Reconciliation of Loan credit losses
2024
2023
€000
€000
Loan credit losses as per the underlying basis
30,368
62,749
Loan credit losses (as defined) are reconciled to the statutory
basis as follows:
Credit losses to cover credit risk on loans and advances to customers
(Note 16)
31,913
73,294
Net gains on derecognition of financial assets measured at amortised
cost – loans and advances to customers (see further below)
(313)
(8,144)
Net gains on loans and advances to customers measured at FVPL
(Note 11)
(1,232)
(2,401)
30,368
62,749
Net losses on derecognition of financial assets measured at amortised cost in the Consolidated Income
Statement amount to €13 thousand (2023: net gains of €6,361 thousand) and comprise €313 thousand
(2023: €8,144 thousand) net gains on derecognition of loans and advances to customers and €326 thousand
(2023: €1,783 thousand) net losses on derecognition of debt securities measured at amortised cost.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
605
Reconciliations (continued)
7.
Reconciliation of Adjusted recurring profitability to Profit after tax for the year
attributable to the owners of the Company
2024
2023
€000
€000
Adjusted recurring profitability as per the underlying basis (as defined
above)
484,496
448,866
Reconciling items:
Payment of coupon to AT1 holders (Note 34)
26,125
27,339
Cost for repurchase of other instruments* (Note 34)
-
6,820
Advisory and other transformation costs (non-recurring) (Note 15)
-
(2,253)
Profit after tax for the year attributable to the owners of the
Company as per the Consolidated Income Statement
510,621
480,772
* Comprises accrued AT1 coupon as at the date of the repurchase and amount paid for the repurchase in
excess of the nominal price
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
606
Key Performance Ratios Information
For the purpose of the ‘Alternative Performance Measures Disclosures’, reference to ‘Note’ relates to the
respective note in the Consolidated Financial Statements for the year ended 31 December 2024.
1.
Net Interest Margin (NIM)
The components for the calculation of net interest margin are provided below:
2024
2023
1.1. Net interest income used in the calculation of NIM
€000
€000
Net interest income as per the underlying basis/statutory basis
822,124
793,192
1.2. Interest
earning
assets
31 December
2024
30 September
2024
30 June
2024
31 March
2024
31 December
2023
€000
€000
€000
€000
€000
Cash and balances with
central banks (Note 19)
7,600,726
7,517,002
7,287,221
7,217,046
9,614,502
Loans and advances to banks
(Note 19)
820,574
337,399
384,112
383,707
384,802
Reverse repurchase
agreements
1,010,170
1,022,515
1,014,858
707,526
403,199
Loans and advances to
customers (Note 23)
10,117,168
10,034,740 10,086,237
10,029,470
9,823,127
Loans and advances to
customers held for sale
(Note 23)
23,143
12,290
-
-
-
Prepayments, accrued
income and other assets –
Deferred consideration
receivable (‘DPP’) (Note 28)
143,604
255,400
251,244
247,107
243,013
Investments
Debt securities (Note 20)
4,212,177
4,061,291
3,828,083
3,742,838
3,547,782
Total interest earning
assets
23,927,562
23,240,637 22,851,755
22,327,694
24,016,425
1.3. Quarterly average
interest earning
assets (€000)
-
2024
23,272,815
-
2023
23,217,213
1.4.
Net Interest Margin (NIM)
2024
2023
Net interest income (as per table 1.1. above) (€000)
822,124
793,192
Quarterly average interest earning assets (as per table 1.3. above)
(€000)
23,272,815
23,217,213
NIM (%)
3.53%
3.42%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
607
Key Performance Ratios Information (continued)
2.
Cost to income ratio
2.1
Reconciliation of the components of total expenses used in the cost to income ratio calculation from
the underlying basis to the statutory basis is provided below:
2.1.1 Reconciliation of Staff costs
2024
2023
€000
€000
Staff costs as per the underlying basis/statutory basis
203,062
192,266
2.1.2 Reconciliation of Other operating expenses
2024
2023
€000
€000
Other operating expenses as per the underlying basis
161,876
156,292
Reclassifications for:
Advisory and other transformation costs – organic, separately presented
under the underlying basis (Note 15)
-
2,253
Other operating expenses as per the statutory basis (Note 15)
161,876
158,545
2.1.3 Total Expenses as per the underlying basis
2024
2023
€000
€000
Staff costs as per the underlying basis/statutory basis (as per table
2.1.1 above)
203,062
192,266
Special levy on deposits and other levies/contributions as per the
underlying basis/statutory basis
39,115
42,380
Other operating expenses as per the underlying basis (as per table
2.1.2 above)
161,876
156,292
Total Expenses as per the underlying basis
404,053
390,938
2.2
Reconciliation of the components of total income used in the cost to income ratio calculation from
the underlying basis to the statutory basis is provided below:
2.2.1 Total Income as per the underlying basis
2024
2023
€000
€000
Net interest income as per the underlying basis/statutory basis (as per
table 1.1 above)
822,124
793,192
Net fee and commission income as per the underlying basis/statutory
basis
176,943
181,023
Net foreign exchange gains, Net gains on financial instruments and Net
gains on derecognition of financial assets measured at amortised cost
as per the underlying basis (as per table 2.2.2 below)
36,399
37,184
Net insurance result* (as per the statutory basis)
46,191
53,488
Net (losses)/gains from revaluation and disposal of investment
properties and Net gains on disposal of stock of properties (as per the
statutory basis)
(1,214)
10,015
Other income (as per the statutory basis)
14,381
18,337
Total Income as per the underlying basis
1,094,824
1,093,239
*Net insurance result comprises the aggregate of captions ‘Net insurance finance income/(expense) and net reinsurance
finance income/(expense)’, ‘Net insurance service result’ and ‘Net reinsurance service result’ per the statutory basis.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
608
Key Performance Ratios Information (continued)
2.
Cost to income ratio (continued)
2.2.2 Reconciliation of Net foreign exchange gains, Net gains on
financial instruments and Net gains on derecognition of
financial assets measured at amortised cost between the
statutory basis and the underlying basis
2024
2023
€000
€000
Net foreign exchange gains, Net gains on financial instruments and Net
gains on derecognition of financial assets measured at amortised cost as
per the underlying basis
36,399
37,184
Reclassifications for:
Net gains on loans and advances to customers measured at FVPL
disclosed within ‘Loan credit losses’ per the underlying basis (as per table
6 in Section ‘Reconciliations’ above)
1,232
2,401
Net gains on derecognition of financial assets measured at amortised
cost - loans and advances to customers, disclosed within ‘Loan credit
losses’ per the underlying basis (as per table 6 in Section ‘Reconciliations’
above)
313
8,144
Net foreign exchange gains, Νet gains on financial instruments and Net
gains on derecognition of financial assets measured at amortised cost as
per the statutory basis (see below)
37,944
47,729
Net foreign exchange gains, Net gains on financial instruments and Net
gains on derecognition of financial assets measured at amortised cost (as
per table above) are reconciled to the statutory basis as follows:
Net foreign exchange gains
27,285
28,588
Net gains on financial instruments
10,672
12,780
Net (losses)/gains on derecognition of financial assets measured at
amortised cost
(13)
6,361
37,944
47,729
2024
2023
Cost to income ratio
€000
€000
Total expenses (as per table 2.1.3 above) (€000)
404,053
390,938
Total income (as per table 2.2.1 above) (€000)
1,094,824
1,093,239
Total expenses / Total income (%)
37%
36%
Cost to income ratio excluding special levy on deposits and other
levies/contributions
Total expenses (as per table 2.1.3 above) (€000)
404,053
390,938
Less: Special levy on deposits and other levies/contributions (as per
table 2.1.3 above) (€000)
(39,115)
(42,380)
Total expenses excluding special levy on deposits and other
levies/contributions (€000)
364,938
348,558
Total income (as per table 2.2.1 above) (€000)
1,094,824
1,093,239
Total expenses excluding special levy on deposits and other
levies/contributions / Total income (%)
33%
32%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
609
Key Performance Ratios Information (continued)
3.
Operating profit return on average assets
The components used in the determination of the operating profit return on average assets are provided
below:
31 December
2024
30 September
2024
30 June
2024
31 March
2024
31 December
2023
€000
€000
€000
€000
Total assets used in the
computation of the
operating profit return
on average assets per
the Consolidated
Balance Sheet
26,486,122
25,866,467
25,467,187
24,941,739
26,629,813
Quarterly average total
assets (€000)
-
2024
25,878,266
-
2023
25,878,025
2024
2023
Total income (as per table 2.2.1 above) (€000)
1,094,824
1,093,239
Total expenses (as per table 2.1.3 above) (€000)
(404,053)
(390,938)
Operating profit (€000)
690,771
702,301
Quarterly average total assets (as per table above) (€000)
25,878,266
25,878,025
Operating profit return on average assets (%)
2.7%
2.7%
4.
Cost of Risk
2024
2023
€000
€000
Loan credit losses (as per table 6 in Section ‘Reconciliations’ above)
30,368
62,749
Average gross loans (as per table 1 in Section ‘Reconciliations’ above)
10,221,942
10,143,641
Cost of Risk (CoR) %
0.30%
0.62%
5.
Basic profit per share attributable to the owners of the Company
The components used in the determination of the ‘Basic profit per share attributable to the owners of the
Company (€ cent)’ are provided below:
2024
2023
Profit after tax (attributable to the owners of the Company) per the
underlying basis/statutory basis for the year ended 31 December (€000)
510,621
480,772
Weighted average number of shares in issue during the year, excluding
treasury shares (thousand) (Note 18)
9,597,945
9,597,945
Basic profit per share attributable to the owners of the Company (€ cent)
5.3
5.0
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
610
Key Performance Ratios Information (continued)
6.
Return on tangible equity (ROTE)
The components used in the determination of ‘Return on tangible equity (ROTE)’ are provided below:
2024
2023
Profit after tax (attributable to the owners of the Company) per the
underlying basis/statutory basis for the year ended 31 December
(€000)
510,621
480,772
Quarterly average tangible shareholders’ equity as at 31 December (as
per table 6.2 below) (€000)
2,371,894
1,964,761
ROTE (%)
21.5%
24.5%
6.1 Tangible
shareholders’
equity
31 December
2024
30 September
2024
30 June
2024
31 March
2024
31 December
2023
€000
€000
€000
€000
Equity attributable to
the owners of the
Company (as per the
statutory basis)
2,593,210
2,502,766
2,370,288
2,381,403
2,247,933
Less: Intangible assets
(as per the statutory
basis)
(49,747)
(45,451)
(45,686)
(46,609)
(48,635)
Total tangible
shareholders’ equity
2,543,463
2,457,315
2,324,602
2,334,794
2,199,298
6.2 Quarterly
average
tangible
shareholders’
equity (€000)
-
2024
2,371,894
-
2023
1,964,761
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
611
Key Performance Ratios Information (continued)
7.
Return on tangible equity (ROTE) on 15% CET1 ratio
The components used in the determination of ‘Return on tangible equity (ROTE) on 15% CET1 ratio’, are
provided below:
2024
2023
Profit after tax (attributable to the owners of the Company) per the
underlying basis/statutory basis for the year ended 31 December
(€000)
510,621
480,772
Quarterly average tangible shareholders’ equity adjusted for excess
CET1 capital on a 15% CET1 ratio as at 31 December (as per table 7.2
below) (€000)
1,839,347
1,778,138
ROTE on 15% CET1 (%)
27.8%
27.04%
7.1 Tangible
shareholders’
equity on 15%
CET1 ratio
31 December
2024
30 September
2024
30 June
2024
31 March
2024
31 December
2023
€000
€000
€000
€000
€000
Equity attributable to the
owners of the Company
(as per the statutory
basis)
2,593,210
2,502,766
2,370,288
2,381,403
2,247,933
Less: Intangible assets
(as per the statutory
basis)
(49,747)
(45,451)
(45,686)
(46,609)
(48,635)
Less: proposed FY2024/
approved FY2023
distribution**
(241,032)
-
-
(136,590)
(136,590)
Less: excess CET1
capital* on a 15% CET1
ratio
(453,925)
(623,886)
(480,716)
(342,017)
(247,982)
Total tangible
shareholders’ equity
on 15% CET1 ratio
1,848,506
1,833,429
1,843,886
1,856,187
1,814,726
*Includes amount of foreseeable charge for shareholders’ distribution accrual at the top-end range of the Group’s
approved distribution policy deducted from CET1 ratio as applicable.
**Approved FY2023 distribution is adjusted to the extent not already deducted from the Equity attributable to the owners
of the Company (as per the statutory basis) at each period end. As at 30 September 2024 and 30 June 2024, only an
amount relating to the approved share buyback of €25 million not yet executed is adjusted. For prior periods, the full
amount of the FY2023 distribution is adjusted.
7.2 Quarterly average tangible shareholders’ equity on 15% CET1 ratio
(€000)
-
2024
1,839,347
-
2023
1,778,138
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Alternative Performance Measures Disclosures
612
Key Performance Ratios Information (continued)
8.
Tangible book value per share
2024
2023
€000
€000
Tangible shareholder’s equity (as per table 6.1 above) (€000)
2,543,463
2,199,298
Number of shares in issue at the end of the year, excluding treasury
shares (thousand) (Note 34)
9,597,945
9,597,945
Tangible book value per share (€)
0.27
0.23
9.
Leverage ratio
2024
2023
Tangible total equity (including Other equity instruments) (as per table
9.1 below) (€000)
2,763,463
2,419,298
Total assets as per the statutory basis (€000)
26,486,122
26,629,813
Leverage ratio
10.4%
9.1%
9.1 Tangible total equity
2024
2023
€000
€000
Equity attributable to the owners of the Company (as per the statutory
basis)
2,593,210
2,247,933
Other equity instruments per the Statutory basis
220,000
220,000
Less: Intangible assets per the statutory basis
(49,747)
(48,635)
Tangible total equity
2,763,463
2,419,298
Additional Information – EU Taxonomy Disclosure
Tables
2024
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
614
EU Taxonomy Disclosure Tables
Introduction
These disclosures represent the EU Taxonomy disclosures of Bank of Cyprus Public Company Limited ('the Group')
as at 31 December 2024 and 31 December 2023. They have been prepared in accordance with the requirements
of Article 8 of Regulation (EU) 2020/852 which requires undertakings that are subject to Articles 19a or 29a of
Directive 2013/34/EU of the European Parliament and of the Council to disclose how and to what extent their
activities are associated with environmentally sustainable economic activities.
Information based on Annex VI in the Disclosures Delegated Act - Regulation (EU) 2021/2178
Credit institutions shall disclose the information referred to in Article 8(1) of Regulation (EU) 2020/852 as
specified in Annexes V and XI of the Disclosures Delegated Act - Regulation (EU) 2021/2178 which supplements
Regulation (EU) 2020/852. Article 8(1) of Regulation (EU) 2020/852 requires undertakings that are subject to
Articles 19a or 29a of Directive 2013/34/EU of the European Parliament and of the Council to disclose how and
to what extent their activities are associated with environmentally sustainable economic activities. Article 8(2) of
Regulation (EU) 2020/852 requires non-financial undertakings to disclose information on the proportion of the
turnover, capital expenditure and operating expenditure of their activities related to assets or processes
associated with environmentally sustainable economic activities. That provision, however, does not specify
equivalent key performance indicators for financial undertakings, that is credit institutions, asset managers,
investment firms and insurance and reinsurance undertakings. For credit institutions this information shall be
presented in tabular form by using the template set out in Annex VI in the Disclosures Delegated Act - Regulation
(EU) 2021/2178.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
615
EU Taxonomy Disclosure Tables (continued)
1.1 Assets for the calculation of GAR (Turnover Based)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
Million EUR
Key:
31 December 2024
Total gross
carrying amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable (Taxonomy-aligned)
`
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt
securities and equity
instruments not HfT eligible for
GAR calculation
8,416
4,188
90
91
79
12
0
0
0
0
-
-
-
-
1
-
-
-
3
-
-
-
-
-
-
-
4,193
91
90
79
12
2
Financial undertakings
3,224
393
72
72
72
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
393
72
72
72
-
3
Credit institutions
2,854
358
66
66
66
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
358
66
66
66
-
4
Loans and advances
1,235
118
7
7
7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
118
7
7
7
-
5
Debt securities, including UoP
1,619
240
59
59
59
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
240
59
59
59
-
6
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
=
-
7
Other financial corporations
370
35
6
6
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
35
6
6
6
-
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11 Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12 of which management
companies
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13 Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15 Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16 of which insurance
undertakings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17 Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19 Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
(subject to NFRD disclosure
obligations)
261
22
19
19
7
12
0
0
0
0
-
-
-
-
1
-
-
3
-
-
-
-
-
-
-
26
19
19
7
12
21
Loans and advances
85
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
-
-
-
-
-
-
3
-
-
-
-
22
Debt securities, including UoP
175
22
19
19
7
12
0
0
0
0
-
-
-
-
1
-
-
-
-
-
-
-
-
-
-
-
22
19
19
-
12
23
Equity instruments
1
0
0
-
0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
0
-
0
24 Households
4,862
3,773
-
-
-
-
-
-
-
-
-
-
-
-
3,773
-
-
-
-
25 of which loans collateralised by
residential immovable property
3,762
3,761
-
-
-
-
-
-
-
-
-
-
-
-
3,762
-
-
-
-
26 of which building renovation loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27 of which motor vehicle loans
152
11
-
-
-
-
11
-
-
-
-
28 Local governments financing
69
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
29 Housing financing
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
30 Other local government financing
68
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking
possession: residential and
commercial immovable
properties
408
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32 TOTAL GAR ASSETS
8,824
4,188
91
90
79
12
0
0
0
0
-
-
-
-
1
-
-
-
3
-
-
-
-
-
-
-
4,193
91
90
79
12
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
616
EU Taxonomy Disclosure Tables (continued)
1.1 Assets for the calculation of GAR (Turnover Based) (continued)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
Million EUR
Key:
31 December 2024
Total gross carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Assets excluded from the numerator for GAR calculation (covered
in the denominator)
6,951
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
--
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33Non-financial undertakings
4,957
34EU SMEs and NFCs (other than SMEs) not subject to NFRD
disclosure obligations
4,570
35Loans and advances
4,562
36 of which loans collateralised by commercial immovable property
3,500
37 of which building renovation loans
-
38 Debt securities
-
39 Equity instruments
8
40 Non-EU country counterparties not subject to NFRD disclosure
obligations
387
41 Loans and advances
387
42Debt securities
-
43Equity instruments
-
44Derivatives
86
45On demand interbank loans
283
46Cash and cash-related assets
95
47 Other categories of assets (e.g. Goodwill, commodities etc.)
1,530
48TOTAL ASSETS IN THE DENOMINATOR (GAR)
15,774
4,188
91
90
79
12
0
0
0
0
-
-
-
-
1
-
-
-
3
-
-
-
-
-
-
-
4,193
91
90
79
12
49Assets not covered for GAR calculation
9,846
50Central governments and Supranational issuers
2,331
51Central banks exposure
7,506
52Trading book
9
53Total assets
25,621
Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations
54 Financial guarantees
451
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55 Assets under management1
4,299
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56 Of which debt securities
57 Of which equity instruments
1 For the 2024 report Assets Under Management has been provided. Future reports will provide detail on AUM split across Debt Securities and Equity Instruments. In addition, EU Taxonomy Eligible and EU Taxonomy Aligned information will be provided, where possible, after collaboration with third party data vendors regarding existing data limitations faced in the area of
EU Taxonomy.
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
617
EU Taxonomy Disclosure Tables (continued)
1.2 Assets for the calculation of GAR (CapEx Based)
a
b
c
D
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
Million EUR
Key:
31 December 2024
Total gross
carrying amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable (Taxonomy-aligned)
`
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt
securities and equity
instruments not HfT eligible for
GAR calculation
8,416
4,028
40
40
30
10
1
0
0
0
-
-
-
-
1
-
-
-
-
-
-
-
-
-
-
-
4,030
40
40
30
10
2
Financial undertakings
3,224
227
23
23
23
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
227
23
23
23
-
3
Credit institutions
2,854
189
18
18
18
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
189
18
18
18
-
4
Loans and advances
1,235
41
2
2
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41
2
2
2
-
5
Debt securities, including UoP
1,619
148
16
16
16
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
148
16
16
16
-
6
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7
Other financial corporations
370
38
5
5
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
38
5
5
5
-
8
of which investment firms
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11 Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12 of which management
companies
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13 Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15 Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16 of which insurance
undertakings
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17 Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19 Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
(subject to NFRD disclosure
obligations)
261
27
17
17
8
10
1
0
0
0
-
-
-
-
1
-
-
-
-
-
-
-
-
-
-
29
17
17
8
10
21
Loans and advances
85
4
0
0
0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
0
0
0
-
22
Debt securities, including UoP
175
24
17
17
7
10
1
0
0
0
-
-
-
-
1
-
-
-
-
-
-
-
-
-
-
-
25
17
17
7
10
23
Equity instruments
1
0
0
0
0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
0
0
-
24 Households
4,862
3,773
-
-
-
-
-
-
-
-
-
-
-
-
3,773
-
-
-
-
25 of which loans collateralised by
residential immovable property
3,762
3,761
-
-
-
-
-
-
-
-
-
-
-
-
3,762
-
-
-
-
26 of which building renovation loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27 of which motor vehicle loans
152
11
-
-
-
-
11
-
-
-
-
28 Local governments financing
69
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
29 Housing financing
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
30 Other local government financing
68
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking
possession: residential and
commercial immovable
properties
408
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32 TOTAL GAR ASSETS
8,824
4,028
40
40
30
10
1
0
0
0
-
-
-
-
1
-
-
-
-
-
-
-
-
-
-
-
4,030
40
40
30
10
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
618
EU Taxonomy Disclosure Tables (continued)
1.2 Assets for the calculation of GAR (CapEx Based) (continued)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
Million EUR
Key:
31 December 2024
Total gross carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Assets excluded from the numerator for GAR calculation (covered
in the denominator)
6,951
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
--
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33Non-financial undertakings
4,957
34EU SMEs and NFCs (other than SMEs) not subject to NFRD
disclosure obligations
4,570
35Loans and advances
4,562
36 of which loans collateralised by commercial immovable property
3,500
37 of which building renovation loans
-
38 Debt securities
-
39 Equity instruments
8
40 Non-EU country counterparties not subject to NFRD disclosure
obligations
387
41 Loans and advances
387
42Debt securities
-
43Equity instruments
-
44Derivatives
86
45On demand interbank loans
283
46Cash and cash-related assets
95
47 Other categories of assets (e.g. Goodwill, commodities etc.)
1,530
48TOTAL ASSETS IN THE DENOMINATOR (GAR)
15,774
4,028
40
40
30
10
1
0
0
0
-
-
-
-
1
-
-
-
-
-
-
-
-
-
-
-
4,030
40
40
30
10
49Assets not covered for GAR calculation
9,846
50Central governments and Supranational issuers
2,331
51Central banks exposure
7,506
52Trading book
9
53Total assets
25,621
Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations
54
Financial guarantees
451
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55 Assets under management1
4,299
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56
Of which debt securities
57
Of which equity instruments
1 For the 2024 report Assets Under Management has been provided. Future reports will provide detail on AUM split across Debt Securities and Equity Instruments. In addition, EU Taxonomy Eligible and EU Taxonomy Aligned information will be provided, where possible, after collaboration with third party data vendors regarding existing data limitations faced in the area of
EU Taxonomy.
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
619
EU Taxonomy Disclosure Tables (continued)
1.3 GAR sector information (Turnover Based)
A
b
e
f
i
j
m
n
q
r
u
v
y
z
31 December 2024
Breakdown by sector - NACE 4 digits level (code
and label)
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC +
BIO)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which environmentally
sustainable (CCM)
Mn EUR
Of which environmentally
sustainable (CCA)
Mn EUR
Of which environmentally
sustainable (WTR)
Mn EUR
Of which environmentally
sustainable (CE)
Mn EUR
Of which environmentally
sustainable (PPC)
Mn EUR
Of which environmentally
sustainable (BIO)
Mn EUR
Of which environmentally
sustainable (CCM + CCA +
WTR + CE + PPC + BIO)
1
C.24.2 - Manufacture of tubes, pipes, hollow
profiles and related fittings, of steel
0
0
-
-
-
-
-
-
-
-
-
-
0
0
2
D.35.1 - Electric power generation,
transmission and distribution
17
17
-
-
-
-
-
-
-
-
-
-
17
17
3
J.61.9 - Other Telecommunications activities
5
2
0
0
-
-
1
-
-
-
-
-
6
2
4
Q.86.9 - Other human health activities
-
-
-
-
-
-
-
-
4
-
-
-
4
-
1.4 GAR sector information (CapEx Based)
A
b
e
f
i
j
m
n
q
r
u
v
y
z
31 December 2024
Breakdown by sector - NACE 4 digits level (code and
label)
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC +
BIO)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which environmentally
sustainable (CCM)
Mn EUR
Of which environmentally
sustainable (CCA)
Mn EUR
Of which environmentally
sustainable (WTR)
Mn EUR
Of which environmentally
sustainable (CE)
Mn EUR
Of which environmentally
sustainable (PPC)
Mn EUR
Of which environmentally
sustainable (BIO)
Mn EUR
Of which environmentally
sustainable (CCM + CCA +
WTR + CE + PPC + BIO)
1
C.14.1 - Manufacture of wearing apparel,
except fur apparel
4
0
-
-
-
-
-
-
-
-
-
-
4
0
2
C.24.2 - Manufacture of tubes, pipes,
hollow profiles and related fittings, of steel
0
0
-
-
-
-
-
-
-
-
-
-
0
0
3
D.35.1 - Electric power generation,
transmission and distribution
17
16
-
-
-
-
-
-
-
-
-
-
17
16
4
J.61.9 - Other Telecommunications
activities
2
1
1
0
-
-
1
-
-
-
-
-
4
1
5
Q.86.1 - Hospital activities
1
0
-
-
-
-
-
-
-
-
-
-
1
0
6
Q.86.9 - Other human health activities
3
0
-
-
-
-
-
-
-
-
-
-
3
0
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
620
EU Taxonomy Disclosure Tables (continued)
1.5 GAR KPI stock (Turnover Based)
A
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
% (compared to total covered
assets in the denominator)
Key:
31 December 2024
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total
assets covered
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-aligned)
GAR - Covered assets in
both numerator and
denominator
1
Loans and advances, debt
securities and equity
instruments not HfT
eligible for GAR calculation
50%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
50%
1%
1,07%
1%
0,14%
33%
2
Financial undertakings
12%
2%
2%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
12%
2%
2%
2%
0%
13%
3
Credit institutions
13%
2%
2%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
13%
2%
2%
2%
0%
11%
4
Loans and advances
10%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10%
1%
1%
1%
0%
5%
5
Debt securities, including UoP
15%
4%
4%
4%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
15%
4%
4%
4%
0%
6%
6
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7
Other financial
corporations
9%
2%
2%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9%
2%
2%
2%
0%
1%
8
of which investment firms
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
11 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
12 of which management
companies
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
13 Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
14 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
15 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
16 of which insurance
undertakings
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
17 Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
19 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
20
Non-financial undertakings
(subject to NFRD
disclosure obligations)
8%
7%
7%
3%
4%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
10%
7%
7%
3%
4%
1%
21 Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
4%
0%
0%
0%
0%
0%
0%
0%
4%
0%
0%
0%
0%
0%
22 Debt securities, including UoP
12%
11%
11%
4%
7%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
13%
11%
11%
4%
7%
1%
23 Equity instruments
41%
25%
0%
25%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
41%
25%
0%
25%
0%
24 Households
78%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
78%
0%
0%
0%
0%
19%
25
of which loans collateralised
by residential immovable
property
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
15%
26 of which building renovation
loans
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27 of which motor vehicle loans
7%
0%
0%
0%
0%
7%
0%
0%
0%
0%
1%
28 Local governments
financing
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
29 Housing financing
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
0%
30 Other local government
financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
31
Collateral obtained by
taking possession:
residential and commercial
immovable properties
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
32 Total GAR assets
27%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27%
0,6%
0,57%
1%
0,07%
62%
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
621
EU Taxonomy Disclosure Tables (continued)
1.6 GAR KPI stock (Turnover Based)
A
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
% (compared to total covered
assets in the denominator)
Key:
31 December 2024
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total
assets covered
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
GAR - Covered assets in
both numerator and
denominator
1
Loans and advances,
debt securities and equity
instruments not HfT
eligible for GAR calculation
48%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
48%
0%
0%
0%
0%
33%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
48%
2
Financial undertakings
7%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7%
1%
1%
0%
0%
13%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7%
3
Credit institutions
7%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7%
1%
1%
0%
0%
11%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7%
4
Loans and advances
3%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
3%
0%
0%
0%
0%
5%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
3%
5
Debt securities, including UoP
9%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9%
1%
1%
0%
0%
6%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9%
6
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7
Other financial
corporations
10%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10%
1%
1%
0%
0%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10%
8
of which investment firms
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
11 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
12 of which management
companies
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
13 Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
14 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
15 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
16 of which insurance
undertakings
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
17 Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
19 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
20
Non-financial undertakings
(subject to NFRD
disclosure obligations)
10%
7%
7%
0%
4%
0%
0%
0%
0%
0%
0%
0%
0%
11%
7%
7%
0%
4%
1%
7%
0%
4%
0%
0%
0%
0%
0%
0%
0%
0%
11%
21 Loans and advances
5%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
5%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
5%
22 Debt securities, including UoP
13%
10%
10%
0%
5%
0%
0%
0%
0%
1%
0%
0%
0%
14%
10%
10%
0%
6%
1%
10%
0%
5%
0%
0%
0%
0%
1%
0%
0%
0%
14%
23 Equity instruments
46%
37%
0%
0%
0%
0%
0%
0%
0%
0%
46%
37%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
46%
24 Households
78%
0%
0%
0%
0%
0%
0%
0%
0%
78%
0%
0%
0%
0%
0%
0%
0%
0%
78%
25
of which loans collateralised
by residential immovable
property
100%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
0%
0%
0%
0%
100%
26 of which building renovation
loans
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27 of which motor vehicle loans
7%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7%
28 Local governments
financing
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
29 Housing financing
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
30 Other local government
financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
31
Collateral obtained by
taking possession:
residential and commercial
immovable properties
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
32 Total GAR assets
26%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
26%
0%
0%
0%
0%
62%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
26%
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
622
EU Taxonomy Disclosure Tables (continued)
1.7 GAR KPI flow (Turnover Based)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
% (compared to total covered assets in the
denominator)
Key:
31 December 2024
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt
securities and equity instruments
not HfT eligible for GAR calculation
33%
2%
2%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
33%
2%
2%
1%
1%
55%
2
Financial undertakings
16%
2%
2%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
16%
2%
2%
2%
0%
32%
3
Credit institutions
18%
2%
2%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18%
2%
2%
2%
0%
24%
4
Loans and advances
25%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
25%
1%
1%
1%
0%
12%
5
Debt securities, including UoP
11%
2%
2%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
11%
2%
2%
2%
0%
12%
6
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7
Other financial corporations
10%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10%
1%
1%
1%
0%
8%
8
of which investment firms
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
11
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
12
of which management companies
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
13
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
14
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
15
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
16
of which insurance undertakings
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
17
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
19
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
20
Non-financial undertakings
14%
13%
13%
5%
8%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
15%
13%
13%
5%
8%
4%
21
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2%
22
Debt securities, including UoP
25%
22%
22%
8%
14%
1%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
26%
22%
22%
8%
14%
2%
23
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
24
Households
65%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
65%
0%
0%
0%
0%
19%
25
of which loans collateralised by
residential immovable property
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
12%
26
of which building renovation loans
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27
of which motor vehicle loans
11%
0%
0%
0%
0%
11%
0%
0%
0%
0%
2%
28
Local governments financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
29
Housing financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
30
Other local government financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
31
Collateral obtained by taking
possession: residential and
commercial immovable properties
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
32
Total GAR assets
21%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
21%
1%
1%
1%
0%
88%
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
623
EU Taxonomy Disclosure Tables (continued)
1.8 GAR KPI flow (CapEx Based)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
% (compared to total covered assets in the
denominator)
Key:
31 December 2024
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion
of total
assets
covered
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-aligned)
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt
securities and equity instruments
not HfT eligible for GAR
calculation
29%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
29%
1%
1%
1%
0%
55%
2
Financial undertakings
9%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9%
1%
1%
1%
0%
32%
3
Credit institutions
9%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9%
1%
1%
1%
0%
24%
4
Loans and advances
9%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9%
0%
0%
0%
0%
12%
5
Debt securities, including UoP
9%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9%
1%
1%
1%
0%
12%
6
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7
Other financial corporations
11%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
11%
1%
1%
1%
0%
8%
8
of which investment firms
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
11
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
12
of which management companies
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
13
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
14
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
15
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
16
of which insurance undertakings
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
17
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
19
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
20
Non-financial undertakings
14%
12%
12%
5%
7%
1%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
16%
12%
12%
5%
7%
4%
21
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2%
22
Debt securities, including UoP
24%
20%
20%
8%
12%
1%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27%
20%
20%
8%
12%
2%
23
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
24
Households
65%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
65%
0%
0%
0%
0%
19%
25
of which loans collateralised by
residential immovable property
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
12%
26
of which building renovation loans
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27
of which motor vehicle loans
11%
0%
0%
0%
0%
11%
0%
0%
0%
0%
2%
28
Local governments financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
29
Housing financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
30
Other local government financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
31
Collateral obtained by taking
possession: residential and
commercial immovable properties
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
32
Total GAR assets
18%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18%
1%
1%
1%
0%
88%
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
624
EU Taxonomy Disclosure Tables (continued)
1.9 KPI stock off-balance sheet exposures (Turnover Based)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
% (compared to total eligible off-balance
sheet assets)
31 December 2024
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
1
Financial guarantees (FinGuar KPI)
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
2
Assets under management (AuM KPI)1
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1.10 KPI stock off-balance sheet exposures (CapEx Based)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
% (compared to total eligible off-balance
sheet assets)
31 December 2024
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-aligned)
1
Financial guarantees (FinGuar KPI)
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
2
Assets under management (AuM
KPI)1
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1.11 KPI flow off-balance sheet exposures (Turnover Based)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
% (compared to total eligible off-balance
sheet assets)1
31 December 2024
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-aligned)
1
Financial guarantees (FinGuar KPI)
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
2
Assets under management (AuM KPI)
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1.12 KPI flow off-balance sheet exposures (CapEx Based)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
% (compared to total eligible off-balance sheet
assets)1
31 December 2024
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-aligned)
1
Financial guarantees (FinGuar KPI)
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
2
Assets under management (AuM KPI)
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1 Future reports will provide detail on AUM EU Taxonomy Eligible and Aligned information, where possible, after collaboration with third party data vendors regarding existing data limitations.
Of which use of proceeds
Of which transitional
Of which enabling
Of which use of proceeds
Of which transitional
Of which enabling
Of which use of proceeds
Of which transitional
Of which enabling
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
625
EU Taxonomy Disclosure Tables (continued)
1.1 Assets for the calculation of GAR (Turnover Based)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
Million EUR
Key:
31 December 2023
Total gross
carrying amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable (Taxonomy-aligned)
`
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt
securities and equity
instruments not HfT eligible for
GAR calculation
7,249
3,881
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,881
-
-
-
-
2
Financial undertakings
2,279
148
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
148
-
-
-
-
3
Credit institutions
1,971
146
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
146
-
-
-
-
4
Loans and advances
505
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
-
-
-
-
5
Debt securities, including UoP
1,465
141
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
141
-
-
-
-
6
Equity instruments
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7
Other financial corporations
308
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
-
-
-
8
of which investment firms
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11 Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12 of which management
companies
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13 Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15 Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16 of which insurance
undertakings
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17 Loans and advances
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19 Equity instruments
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
(subject to NFRD disclosure
obligations)
154
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21
Loans and advances
43
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
Debt securities, including UoP
111
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24 Households
4,781
3,732
-
-
-
-
-
-
-
-
-
-
-
-
3,732
-
-
-
-
25 of which loans collateralised by
residential immovable property
3,726
3,726
-
-
-
-
-
-
-
-
-
-
-
-
3,726
-
-
-
-
26 of which building renovation loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27 of which motor vehicle loans
139
6
-
-
-
-
6
-
-
-
-
28 Local governments financing
35
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
29 Housing financing
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
30 Other local government financing
34
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking
possession: residential and
commercial immovable
properties
560
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32 TOTAL GAR ASSETS
7,809
3,881
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,881
-
-
-
-
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
626
EU Taxonomy Disclosure Tables (continued)
1.1 Assets for the calculation of GAR (Turnover Based) (continued)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
Million EUR
Key:
31 December 2023
Total gross
carrying amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable (Taxonomy-
aligned)
Assets excluded from the
numerator for GAR
calculation (covered in the
denominator)
6,688
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
--
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33Non-financial undertakings
4,900
34
EU SMEs and NFCs (other
than SMEs) not subject to
NFRD disclosure
obligations
4,576
35Loans and advances
4,565
36
of which loans collateralised
by commercial immovable
property
3,706
37 of which building renovation
loans
-
38 Debt securities
-
39 Equity instruments
11
40
Non-EU country
counterparties not subject
to NFRD disclosure
obligations
324
41 Loans and advances
324
42Debt securities
-
43Equity instruments
-
44Derivatives
49
45On demand interbank
loans
275
46Cash and cash-related
assets
93
47
Other categories of assets
(e.g. Goodwill,
commodities etc.)
1,371
48TOTAL ASSETS IN THE
DENOMINATOR (GAR)
14,497
3,881
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,881
-
-
-
-
49Assets not covered for GAR
calculation
11,444
50Central governments and
Supranational issuers
1,920
51Central banks exposure
9,522
52Trading book
2
53Total assets
25,941
Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations
54
Financial guarantees
451
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55
Assets under management
4,031
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56
Of which debt securities
57 Of which equity instruments
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
627
EU Taxonomy Disclosure Tables (continued)
1.1 Assets for the calculation of GAR (CapEx Based)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
Million EUR
Key:
31 December 2023
Total gross
carrying amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-
eligible)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable (Taxonomy-aligned)
`
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt
securities and equity
instruments not HfT eligible for
GAR calculation
7,249
3,886
1
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,886
1
1
1
-
2
Financial undertakings
2,279
150
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150
-
-
-
-
3
Credit institutions
1,971
146
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
146
-
-
-
-
4
Loans and advances
505
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
-
-
-
-
5
Debt securities, including UoP
1,465
141
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
141
-
-
-
-
6
Equity instruments
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7
Other financial corporations
308
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
-
-
-
-
8
of which investment firms
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
Loans and advances
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11 Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12 of which management
companies
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13 Loans and advances
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15 Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16 of which insurance
undertakings
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17 Loans and advances
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18 Debt securities, including UoP
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19 Equity instruments
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20
Non-financial undertakings
(subject to NFRD disclosure
obligations)
154
4
1
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
1
1
1
-
21
Loans and advances
43
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
22
Debt securities, including UoP
111
4
1
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
1
1
1
-
23
Equity instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24 Households
4,781
3,732
-
-
-
-
-
-
-
-
-
-
-
-
3,732
-
-
-
-
25 of which loans collateralised by
residential immovable property
3,726
3,726
-
-
-
-
-
-
-
-
-
-
-
-
3,726
-
-
-
-
26 of which building renovation loans
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
27 of which motor vehicle loans
139
6
-
-
-
-
6
-
-
-
-
28 Local governments financing
35
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
29 Housing financing
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
30 Other local government financing
34
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
Collateral obtained by taking
possession: residential and
commercial immovable
properties
560
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32 TOTAL GAR ASSETS
7,809
3,886
1
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,886
1
1
1
-
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
628
EU Taxonomy Disclosure Tables (continued)
1.1 Assets for the calculation of GAR (CapEx Based) (continued)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
Million EUR
Key:
31 December 2023
Total gross
carrying amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Of which towards taxonomy relevant sectors (Taxonomy-eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which towards taxonomy relevant sectors
(Taxonomy-eligible)
Of which environmentally sustainable (Taxonomy-
aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which environmentally
sustainable (Taxonomy-aligned)
Of which environmentally sustainable
(Taxonomy-aligned)
Assets excluded from the numerator for GAR calculation (covered in the
denominator)
6,688
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
--
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33Non-financial undertakings
4,900
34EU SMEs and NFCs (other than SMEs) not subject to NFRD disclosure
obligations
4,576
35Loans and advances
4,565
36 of which loans collateralised by commercial immovable property
3,706
37 of which building renovation loans
-
38 Debt securities
-
39 Equity instruments
11
40 Non-EU country counterparties not subject to NFRD disclosure obligations
324
41 Loans and advances
324
42Debt securities
-
43Equity instruments
-
44Derivatives
49
45On demand interbank loans
275
46Cash and cash-related assets
93
47 Other categories of assets (e.g. Goodwill, commodities etc.)
1,371
48TOTAL ASSETS IN THE DENOMINATOR (GAR)
14,497
3,886
1
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,886
1
1
1
-
49Assets not covered for GAR calculation
11,444
50Central governments and Supranational issuers
1,920
51Central banks exposure
9,522
52Trading book
2
53Total assets
25,941
Off-balance sheet exposures - Undertakings subject to NFRD disclosure obligations
54
Financial guarantees
451
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55 Assets under management
4,031
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56
Of which debt securities
57
Of which equity instruments
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
629
EU Taxonomy Disclosure Tables (continued)
1.3 GAR sector information (Turnover Based) - Restated
a
b
e
f
i
j
m
n
q
r
u
v
y
z
31 December 2023
Breakdown by sector - NACE 4 digits level (code and
label)
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC +
BIO)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which environmentally
sustainable (CCM)
Mn EUR
Of which environmentally
sustainable (CCA)
Mn EUR
Of which environmentally
sustainable (WTR)
Mn EUR
Of which environmentally
sustainable (CE)
Mn EUR
Of which environmentally
sustainable (PPC)
Mn EUR
Of which environmentally
sustainable (BIO)
Mn EUR
Of which environmentally
sustainable (CCM + CCA +
WTR + CE + PPC + BIO)
Note:
1.
There were no EU taxonomy eligible or aligned exposures as at 31 December 2023.
2.
The 1.3 GAR sector information (Turnover Based) has been restated to disclose only NFRD taxonomy eligible and aligned sectors.
1.4 GAR sector information (CapEx Based) - - Restated
a
b
e
f
i
j
m
n
q
r
u
v
y
z
31 December 2023
Breakdown by sector - NACE 4 digits level (code and
label)
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC +
BIO)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Non-Financial corporates (Subject to NFRD)
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Mn EUR
Of which environmentally
sustainable (CCM)
Mn EUR
Of which environmentally
sustainable (CCA)
Mn EUR
Of which environmentally
sustainable (WTR)
Mn EUR
Of which environmentally
sustainable (CE)
Mn EUR
Of which environmentally
sustainable (PPC)
Mn EUR
Of which environmentally
sustainable (BIO)
Mn EUR
Of which environmentally
sustainable (CCM + CCA +
WTR + CE + PPC + BIO)
1
C.14.1 - Manufacture of wearing apparel,
except fur apparel
3
0
-
-
-
-
-
-
-
-
-
-
3
-
2
C.21.1 - Manufacture of basic
pharmaceutical products
1
0
-
-
-
-
-
-
-
-
-
-
1
-
Note:
1.
The 1.3 GAR sector information (CapEx Based) has been restated to disclose only NFRD taxonomy eligible and aligned sectors.
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
630
EU Taxonomy Disclosure Tables (continued)
1.5 GAR KPI stock (Turnover Based)
A
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
% (compared to total covered assets
in the denominator)
Key:
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total
assets covered
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
GAR - Covered assets in
both numerator and
denominator
1
Loans and advances, debt
securities and equity
instruments not HfT eligible
for GAR calculation
54%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
54%
0%
0%
0%
0%
28%
2
Financial undertakings
6%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
6%
0%
0%
0%
0%
9%
3
Credit institutions
7%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7%
0%
0%
0%
0%
8%
4
Loans and advances
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
1%
5
Debt securities, including UoP
10%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10%
0%
0%
0%
0%
6%
6
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7
Other financial corporations
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
1%
8
of which investment firms
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
11 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
12 of which management
companies
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
13 Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
14 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
15 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
16 of which insurance undertakings
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
17 Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
19 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
20
Non-financial undertakings
(subject to NFRD disclosure
obligations)
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
21 Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
22 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
23 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
24 Households
78%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
78%
0%
0%
0%
0%
18%
25 of which loans collateralised by
residential immovable property
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
14%
26 of which building renovation
loans
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27 of which motor vehicle loans
4%
0%
0%
0%
0%
4%
0%
0%
0%
0%
1%
28 Local governments financing
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2%
0%
0%
0%
0%
0%
29 Housing financing
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
0%
30 Other local government
financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
31
Collateral obtained by taking
possession: residential and
commercial immovable
properties
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2%
32 Total GAR assets
27%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27%
0%
0%
0%
0%
30%
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
631
EU Taxonomy Disclosure Tables (continued)
1.6 GAR KPI stock (CapEx Based)
A
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
% (compared to total covered assets in
the denominator)
Key:
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors (Taxonomy-
eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total
assets covered
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt
securities and equity
instruments not HfT eligible
for GAR calculation
54%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
54%
0%
0%
0%
0%
28%
2
Financial undertakings
7%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7%
0%
0%
0%
0%
9%
3
Credit institutions
7%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7%
0%
0%
0%
0%
8%
4
Loans and advances
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
2%
5
Debt securities, including UoP
10%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10%
0%
0%
0%
0%
6%
6
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7
Other financial corporations
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
1%
8
of which investment firms
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
11 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
12 of which management
companies
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
13 Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
14 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
15 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
16 of which insurance undertakings
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
17 Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18 Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
19 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
20
Non-financial undertakings
(subject to NFRD disclosure
obligations)
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2%
0%
0%
0%
0%
1%
21 Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
22 Debt securities, including UoP
3%
1%
1%
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
3%
1%
1%
1%
0%
0%
23 Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
24 Households
78%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
78%
0%
0%
0%
0%
18%
25 of which loans collateralised by
residential immovable property
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
14%
26 of which building renovation
loans
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27 of which motor vehicle loans
4%
0%
0%
0%
0%
4%
0%
0%
0%
0%
1%
28 Local governments financing
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2%
0%
0%
0%
0%
0%
29 Housing financing
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
0%
30 Other local government financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
31
Collateral obtained by taking
possession: residential and
commercial immovable
properties
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2%
32 Total GAR assets
27%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27%
0%
0%
0%
0%
30%
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
632
EU Taxonomy Disclosure Tables (continued)
1.7 GAR KPI flow (Turnover Based)
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
% (compared to total covered assets in the
denominator)
Key:
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
GAR - Covered assets in both numerator
and denominator
1
Loans and advances, debt securities
and equity instruments not HfT eligible
for GAR calculation
30%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
30%
0%
0%
0%
0%
45%
2
Financial undertakings
4%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
4%
0%
0%
0%
0%
24%
3
Credit institutions
4%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
4%
0%
0%
0%
0%
22%
4
Loans and advances
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
13%
5
Debt securities, including UoP
9%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9%
0%
0%
0%
0%
9%
6
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7
Other financial corporations
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2%
0%
0%
0%
0%
2%
8
of which investment firms
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
11
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
12
of which management companies
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
13
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
14
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
15
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
16
of which insurance undertakings
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
17
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
19
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
20
Non-financial undertakings
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
21
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
22
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
23
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
24
Households
64%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
64%
0%
0%
0%
0%
20%
25
of which loans collateralised by residential
immovable property
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
13%
26
of which building renovation loans
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27
of which motor vehicle loans
12%
0%
0%
0%
0%
12%
0%
0%
0%
0%
1%
28
Local governments financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
29
Housing financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
30
Other local government financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
31
Collateral obtained by taking
possession: residential and commercial
immovable properties
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
32
Total GAR assets
18%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18%
0%
0%
0%
0%
46%
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
633
EU Taxonomy Disclosure Tables (continued)
1.8 GAR KPI flow (CapEx Based)
a
b
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d
e
f
g
h
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m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
af
% (compared to total covered assets in the
denominator)
Key:
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total assets
covered
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
GAR - Covered assets in both
numerator and denominator
1
Loans and advances, debt securities
and equity instruments not HfT
eligible for GAR calculation
31%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
31%
0%
0%
1%
0%
45%
2
Financial undertakings
4%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
4%
0%
0%
0%
0%
24%
3
Credit institutions
4%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
4%
0%
0%
0%
0%
22%
4
Loans and advances
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
13%
5
Debt securities, including UoP
9%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9%
1%
0%
0%
0%
9%
6
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
7
Other financial corporations
5%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
5%
0%
0%
0%
0%
2%
8
of which investment firms
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
9
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
11
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
12
of which management companies
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
13
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
14
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
15
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
16
of which insurance undertakings
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
17
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
18
Debt securities, including UoP
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
19
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
20
Non-financial undertakings
10%
2%
2%
2%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
10%
2%
2%
2%
0%
1%
21
Loans and advances
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
22
Debt securities, including UoP
20%
3%
3%
3%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
20%
3%
3%
3%
0%
1%
23
Equity instruments
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
24
Households
64%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
64%
0%
0%
0%
0%
20%
25
of which loans collateralised by residential
immovable property
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
100%
0%
0%
0%
0%
13%
26
of which building renovation loans
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
27
of which motor vehicle loans
12%
0%
0%
0%
0%
12%
0%
0%
0%
0%
1%
28
Local governments financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
29
Housing financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
30
Other local government financing
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
31
Collateral obtained by taking
possession: residential and
commercial immovable properties
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
32
Total GAR assets
19%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
19%
0%
0%
0%
0%
46%
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
634
EU Taxonomy Disclosure Tables (continued)
1.9 KPI stock off-balance sheet exposures (Turnover Based) - Restated
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
% (compared to total eligible off-balance sheet
assets)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
1
Financial guarantees (FinGuar KPI)
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
2
Assets under management (AuM KPI)1
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Note: The 1.9 KPI stock off-balance sheet exposures (Turnover Based) has been restated to reflect minor updates in 2023 counterparty’s taxonomy eligibility and alignment ratios.
1.10 KPI stock off-balance sheet exposures (CapEx Based) – Restated
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
% (compared to total eligible off-balance sheet
assets)
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-aligned)
1
Financial guarantees (FinGuar KPI)
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
2
Assets under management (AuM KPI)1
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Note: The 1.9 KPI stock off-balance sheet exposures (Turnover Based) has been restated to reflect minor updates in 2023 counterparty’s taxonomy eligibility and alignment ratios.
1.11 KPI flow off-balance sheet exposures (Turnover Based) - Restated
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
% (compared to total eligible off-balance sheet
assets)1
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-aligned)
1 Financial guarantees (FinGuar KPI)
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
2 Assets under management (AuM KPI)
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Note: The 1.9 KPI stock off-balance sheet exposures (Turnover Based) has been restated to reflect minor updates in 2023 counterparty’s taxonomy eligibility and alignment ratios.
1.12 KPI flow off-balance sheet exposures (CapEx Based) - Restated
a
b
c
d
e
f
g
h
i
j
k
l
m
n
o
p
q
r
s
t
u
v
w
x
z
aa
ab
ac
ad
ae
% (compared to total eligible off-balance sheet
assets)1
31 December 2023
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Water and marine resources (WTR)
Circular economy (CE)
Pollution (PPC)
Biodiversity and Ecosystems (BIO)
TOTAL (CCM + CCA + WTR + CE + PPC + BIO)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant sectors
(Taxonomy-eligible)
Proportion of total covered assets funding taxonomy
relevant sectors (Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-
aligned)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-aligned)
1
Financial guarantees (FinGuar KPI)
1%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
1%
0%
0%
0%
0%
2
Assets under management (AuM KPI)
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Note: The 1.9 KPI stock off-balance sheet exposures (Turnover Based) has been restated to reflect minor updates in 2023 counterparty’s taxonomy eligibility and alignment ratios.
1 Future reports will provide detail on AUM EU Taxonomy Eligible and Aligned information, where possible, after collaboration with third party data vendors regarding existing data limitations.
Of which use of proceeds
Of which transitional
Of which enabling
Of which use of proceeds
Of which transitional
Of which enabling
Of which use of proceeds
Of which transitional
Of which enabling
Of which use of proceeds
Of which transitional
Of which enabling
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
635
EU Taxonomy Disclosure Tables (continued)
Information based on Annex XII in the Disclosures Delegated Act - Regulation (EU) 2021/2178
The disclosure requirements of Article 8(6) and (7) along with Annex XII of Regulation (EU) 2021/2178 were
inserted by the Complimentary Climate Delegated Act and applied from 1 January 2023. This Act included specific
nuclear and gas energy activities in the list of economic activities covered by the EU taxonomy. The criteria for
the specific gas and nuclear activities are in line with EU climate and environmental objectives and will help
accelerate the shift from solid or liquid fossil fuels, including coal, towards a climate-neutral future.
Row
Nuclear energy related activities
1
The undertaking carries out, funds or has exposures to
research, development, demonstration and deployment
of innovative electricity generation facilities that
produce energy from nuclear processes with minimal
waste from the fuel cycle.
NO
2
The undertaking carries out, funds or has exposures to
construction and safe operation of new nuclear
installations to produce electricity or process heat,
including for the purposes of district heating or
industrial processes such as hydrogen production, as
well as their safety upgrades, using best available
technologies.
NO
3
The undertaking carries out, funds or has exposures to
safe operation of existing nuclear installations that
produce electricity or process heat, including for the
purposes of district heating or industrial processes such
as hydrogen production from nuclear energy, as well as
their safety upgrades.
NO
Fossil gas related activities
4
The undertaking carries out, funds or has exposures to
construction or operation of electricity generation
facilities that produce electricity using fossil gaseous
fuels.
YES
5
The undertaking carries out, funds or has exposures to
construction, refurbishment, and operation of combined
heat/cool and power generation facilities using fossil
gaseous fuels.
YES
6
The undertaking carries out, funds or has exposures to
construction, refurbishment and operation of heat
generation facilities that produce heat/cool using fossil
gaseous fuels.
NO
The Group does not carry out any nuclear and fossil gas related activities. The Group has limited funding to fossil
gas related activities.
636
EU Taxonomy Disclosure Tables (continued)
Template 2 Taxonomy-aligned economic activities (denominator)
31 December 2024
Economic activities based on KPI Turnover
Amount and proportion (the information is to be presented in monetary amounts
and as percentages)
CCM + CCA
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
€ million
%
€ million
%
€ million
%
1
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
2
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
3
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
4
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
5
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
6
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
7
Amount and proportion of other taxonomy-aligned economic activities not
referred to in rows 1 to 6 above in the denominator of the applicable KPI
91
2%
91
1%
0
0%
8
Total applicable KPI
91
2%
91
1%
0
0%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
637
EU Taxonomy Disclosure Tables (continued)
Template 2 Taxonomy-aligned economic activities (denominator)
31 December 2024
Economic activities based on KPI CapEx
Amount and proportion (the information is to be presented in monetary amounts
and as percentages)
CCM + CCA
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
€ million
%
€ million
%
€ million
%
1
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in
the denominator of the applicable KPI
-
-
-
-
-
-
2
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in
the denominator of the applicable KPI
-
-
-
-
-
-
3
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in
the denominator of the applicable KPI
-
-
-
-
-
-
4
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in
the denominator of the applicable KPI
-
-
-
-
-
-
5
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in
the denominator of the applicable KPI
-
-
-
-
-
-
6
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in
the denominator of the applicable KPI
-
-
-
-
-
-
7
Amount and proportion of other taxonomy-aligned economic activities not
referred to in rows 1 to 6 above in the denominator of the applicable KPI
40
0%
40
0%
0
0%
8
Total applicable KPI
40
0%
40
0%
0
0%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
638
EU Taxonomy Disclosure Tables (continued)
Template 3 Taxonomy-aligned economic activities (numerator)
31 December 2024
Economic activities based on KPI Turnover
Amount and proportion (the information is to be presented in monetary amounts
and as percentages)
CCM + CCA
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
€ million
%
€ million
%
€ million
%
1
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
2
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
3
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
4
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
5
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
6
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
7
Amount and proportion of other taxonomy-aligned economic activities not
referred to in rows 1 to 6 above in the denominator of the applicable KPI
91
100%
91
100%
0
0%
8
Total applicable KPI
91
100%
91
100%
0
0%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
639
EU Taxonomy Disclosure Tables (continued)
Template 3 Taxonomy-aligned economic activities (numerator)
31 December 2024
Economic activities based on KPI CapEx
Amount and proportion (the information is to be presented in monetary amounts
and as percentages)
CCM + CCA
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
€ million
%
€ million
%
€ million
%
1
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
2
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
3
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
4
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
5
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
6
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
7
Amount and proportion of other taxonomy-aligned economic activities not
referred to in rows 1 to 6 above in the denominator of the applicable KPI
40
100%
40
100%
0
0%
8
Total applicable KPI
40
100%
40
1
0
0
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
640
EU Taxonomy Disclosure Tables (continued)
Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities
31 December 2024
Economic activities based on KPI Turnover
Amount and proportion (the information is to be presented in monetary amounts and
as percentages)
CCM + CCA
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
€ million
%
€ million
%
€ million
%
1
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
-
-
-
-
2
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
-
-
-
-
3
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
-
-
-
-
4
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
-
-
-
-
5
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
-
-
-
-
6
Amount and proportion of taxonomy aligned economic activity referred to
in Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139
in the denominator of the applicable KPI
-
-
-
-
-
-
7
Amount and proportion of other taxonomy-aligned economic activities
not referred to in rows 1 to 6 above in the denominator of the applicable
KPI
4,097
100%
4,097
100%
0
0%
8
Total amount and proportion of taxonomy eligible but not
taxonomy aligned economic activities in the denominator of the
applicable KPI
4,097
100%
4,097
100%
0
0%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
641
EU Taxonomy Disclosure Tables (continued)
Template 4 Taxonomy-eligible but not taxonomy-aligned economic activities
31 December 2024
Economic activities based on KPI CapEx
Amount and proportion (the information is to be presented in monetary amounts and
as percentages)
CCM + CCA
Climate change
mitigation (CCM)
Climate change
adaptation (CCA)
€ million
%
€ million
%
€ million
%
1
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.26 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
2
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.27 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
3
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.28 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
4
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.29 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
5
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.30 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
6
Amount and proportion of taxonomy aligned economic activity referred to in
Section 4.31 of Annexes I and II to Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
-
-
-
-
-
-
7
Amount and proportion of other taxonomy-aligned economic activities not
referred to in rows 1 to 6 above in the denominator of the applicable KPI
3,989
100%
3,988
100%
1
0%
8
Total amount and proportion of taxonomy eligible but not taxonomy
aligned economic activities in the denominator of the applicable KPI
3,989
100%
3,988
100%
79%
0%
BANK OF CYPRUS PUBLIC COMPANY LIMITED Annual Financial Report 2024
Additional Information – EU Taxonomy Disclosure Tables
642
EU Taxonomy Disclosure Tables (continued)
Template 5 Taxonomy non-eligible economic activities (Turnover)
31 December 2024
€ million
%
1
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.26 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
2
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.27 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
3
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.28 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
4
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.29 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
53
0%
5
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.30 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
6
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.31 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
7
Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the
denominator of the applicable KPI
11,529
100%
8
Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of
theapplicable KPI
11,582
100%
Template 5 Taxonomy non-eligible economic activities (CapEx)
31 December 2024
€ million
%
1
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.26 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
2
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.27 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
3
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.28 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
4
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.29 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
53
0%
5
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.30 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
6
Amount and proportion of taxonomyaligned economic activity referred to in Section 4.31 of Annexes I and II to
Delegated Regulation 2021/2139 in the denominator of the applicable KPI
-
-
7
Amount and proportion of other taxonomy-aligned economic activities not referred to in rows 1 to 6 above in the
denominator of the applicable KPI
11,692
100%
8
Total amount and proportion of taxonomy-non-eligible economic activities in the denominator of the
applicable KPI
11,745
100%