#1Bank of Cyprus Group Group Financial Results for the year ended 31 December 2014 2014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators Key Takeaways Additional Information 31 March 2015 Bank of Cyprus 1 KOINO ΚΥΠΡΙ#2Group Financial Results FY2014 - Key Highlights Common Equity Tier 1 capital (CET1) ratio at 14,0% Further balance sheet deleverage by €694 mn during 4Q2014; Completion of sale of excess UK loan portfolio Recurring profitability stabilising; Profit before provisions and impairments for 4Q2014 and for FY2014 totalled €167 mn and €745 mn, respectively Completion of review of AQR results and methodological alignments and reduction of net exposure to Russia leads to non-recurring increase in provisions Loss after tax for 4Q2014 totalled €337 mn, negatively affected by non-recurring items; Loss after tax for FY2014 totalled €261 mn Stabilising deposit base; First quarterly increase in deposits in Cyprus since bail-in; Release of all decree deposits; ELA reduced to €6,9 bn Loan portfolio quality stabilisation signs; 90+ DPD reduced by 3% during 4Q2014; imperative for legal environment to be clarified the soonest in order to effectively engage with borrowers Capital position shields the Group from further shocks and helps in regaining trust of counterparties Bank of Cyprus 2 KOINO ΚΥΠΡΙ 2235#32014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators Key Takeaways Additional Information As from the fourth quarter of 2014, the Group's operations in Russia are treated as a disposal group held for sale and results have been presented accordingly as discontinued operations in accordance with IFRSS. Hence comparatives for the earlier financial quarters of 2014 and FY2013 have been re-presented. In order to better reflect its operating results, the Group changed its presentation for impairments of assets and for gains on derecognition and changes in expected cash flows on loans acquired. Specifically, impairments of other financial and non-financial assets and gains on derecognition and changes in expected cash flows on loans acquired from Laiki Bank are presented in line with provisions for impairment of customer loans. Comparatives have been reclassified accordingly to conform with changes in the presentation of the current period. Following the Eurogroup decisions to recapitalise the Bank via a bail-in of depositors, the Bank was placed under resolution from 25 March 2013 until 30 July 2013, a period during which it was recapitalised and restructured in accordance with a number of decrees issued by the Central Bank of Cyprus in its capacity as Resolution Authority. As a result of a number of transactions relating to these decrees, figures and financial Bank of Cyprus results of the Group are not comparable with past financial results. KOINO WKYNРIW 2235 3#41.800 1.600 1.400 1.200 1.000 800 600 400 200 0 2014 overview: Cyprus economy proving resilient & on recovery path GDP growth expected to be positive from 2015E - faster recovery than other peripheral countries Banking system deposits outflow arrested (€ bn) 2010 2011 2012 2013 2014e 2015f 2016f 2017f 1,4% 0,3% 0,2 1,6% 2,0% 0,4% (2,4%) (2,3%) (2,3%) (5,4%) (3,4%) 3,9%) (8,7%) Real GDP growth - Actual Current projections (EC & IMF) Initial Projections (EC) Improved credit outlook with significant adjustment in fiscal situation Cyprus 5YR-CDS 09-09 12-09 03-10 06-10 09-10 12-10 03-11 06-11 09-11 12-11 03-12 06-12 09-12 12-12 03-13 06-13 09-13 (1) Includes impact of bail-in of BoC - 37,5% of uninsured deposits (>€100k) converted to equity (2) Includes impact of Laiki resolution - €3,9 bn (3) Includes impact of bail-in of BoC - additional 10% of uninsured deposits converted to equity 12-13 03-14 06-14 09-14 12-14 03-15 SOURCE: Statistical Service of Republic of Cyprus, European Commission, IMF and company reports, Bloomberg 12-2012 (1,0) (1,7) (1,4) (1,040,8) (3,8) (5,3) 01-2013 02-2013 03-2013 (6,3) 04-2013 05-2013 06-2013 3 07-2013 08-2013 09-2013 10-2013 11-2013 12-2013 0,20,5 (0,20,100,210,10,5(0,2) 01-2014 02-2014 03-2014 04-2014 05-2014 Fiscal Deficit % GDP Cyprus regains Public Debt % GDP 102% 108% investor trust 79% 66% 57% Public debt levelling off 5,8% 5,8% 4,8% 4,9% Fiscal Deficit reduced to zero 0,0% 2010 2011 2012 2013 2014 Bank of Cyprus KOINO WKYNРIW 2235 4 06-2014 07-2014 08-2014 09-2014 10-2014 0,0 (0,4) (0,20,4(0,2) 11-2014 12-2014 01-2015 02-2015 0,0 0,30,4 (0,0%#52014 overview: BOC Group Strengthened capital position - Passed 2014 ECB Comprehensive Assessment Common Equity Tier 1 capital ratio (transitional basis) Total Assets (€ bn) -12% 15,4% 14,0% 30,3 29,4 11,3% 10,4% 28,6 27,5 26,8 31.12.13 30.06.14 30.09.14 31.12.14 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 • • • CET1 ratio (transitional basis) at 14% at 31 December 2014, despite the increased level of provisions in 4Q2014 related to the methodological alignments and changes in certain estimates following the completion of the review of the AQR results and to the Russian operations Balance Sheet reduced by €3,5 bn (12%) during 2014 due to the disposal of non-core assets and the deleverage of customers Passed the 2014 ECB comprehensive assessment Capital position shields the Group from further shocks Bank of Cyprus KOINO ΚΥΠΡΙ 5#62014 overview: BOC Group Improved liquidity position Total customer flows per quarter (€ mn) -2.227 65 -11 -446 -411 FY2014: €93 mn -546 net customer inflows Reduced Eurosystem funding 450 355 ■ELA funding (€ bn) ECB funding (€ bn) 11,40 11,11 11,16 10,96 10,91 10,18 1,30 1,40 1,40 1,40 8,60 8,28 7,70 11,40 11,11 0,92 0,88 9,86 9,56 9,51 0,80 8,78 7,68 7,40 6,90 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 qtd Apr-2013 Jun-2013 Sep-2013 Dec-2013 Mar-2014 Jun-2014 Sep-2014 Dec-2014 Mar-2015 • Customer inflows* in Cyprus for FY2014; Customer inflows have continued into the first quarter of 2015 despite the release of decree deposits and the full abolition of internal controls • First quarterly increase in deposits in Cyprus during 4Q2014 • ELA funding reduced by €4,5 bn since peak in April 2013 and at the same time managing to absorb a significant reduction in customer deposits Stabilising deposit base; Reduced Eurosystem funding Customer flows are defined as the difference between changes in stock of customer deposits and changes in stock of gross customer loans. Bank of Cyprus KOINO ΚΥΠΡΙ 2235 6#72014 overview: BOC Group Loan portfolio quality stabilisation signs; 90+ DPD reduced during 2014 90+ DPD formation slows down sharply € mn 2.723 1.329 1.399 945 Loan Quality Indicators 90+ DPD provision coverage 90+ DPD (€ bn) 13,0 12,8 12,6 13,0 12,7 5.311 38% 39% 39% 38% 41% -350 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 • Formation of 90+ DPD* has slowed down sharply during FY2014. 90+ DPD decreased by €350 mn during FY2014, indicating a progress in arresting the deterioration of the loan portfolio quality . • 90+ DPD stabilised below €13 bn during the last few quarters 90+ DPD provisioning coverage ratio improved to 41%, up from 38% at 30 September 2014 Restructuring and Recoveries Division showing some early successes despite the adverse legal environment 90+ DPD are loans with a specific provision (i.e. impaired loans) and loans past-due for more than 90 days but not impaired Bank of Cyprus KOINO ΚΥΠΡΙ 2235 7#82014 overview: BOC Group FY2014 Cyprus Vs Group performance (€ mn) 95% 95% 91% 1.171 1.110 919 967 97% 723 745 387 426 48 61 39 22 22 Net interest income Total income Total expenses Profit before provisions and impairments • Group profitability driven by Cyprus operations • • 358% % % contribution of Cyprus operations ■Cyprus operations 111 31 ■Rest of operations ■Group -80 Profit/(loss) after tax and before other items* Profit before provisions and impairments for the Cyprus operations of €723 mn for FY2014, compared to a Group total of €745 mn for the same period Profit after tax before restructuring costs, discontinued operations and net profit/ (loss) on disposal of non-core assets for the Cyprus operations of €111 mn for FY2014, compared to a Group profit of €31 mn for the same period Cyprus operations are the main engine for Group profitability * Profit after tax before restructuring costs, discontinued operations and net profit on disposal of non-core assets Bank of Cyprus KOINO ΚΥΠΡΙ 2235 8#92014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators Key Takeaways Additional Information Bank of Cyprus KOINO WKYNРIW 2235 9#10Income Statement Review Selected lines from Income Statement (€ mn) Net interest income Other income Total income Total expenses FY2014 4Q2014 3Q2014 qoq 2Q2014 change % 967 225 231 -3% 263 204 56 32 +96% 55 1.171 281 263 +9% 318 (426) (114) (103) +14% (104) Profit before provisions and impairments, gains on derecognition and changes in expected cash flows on acquired loans, restructuring costs and discontinued operations 745 167 160 +6% 214 Provisions for impairment of customer loans (666) (248) (115) +116% (173) Gains on derecognition and changes in expected cash flows on acquired loans Impairments of other financial and non financial assets 47 29 6 4 (89) (57) 1 (33) Share of profit/(loss) from associates 5 3 (2) 2 Profit/(loss) before tax, restructuring costs and discontinued operations 42 (106) 50 14 Tax (11) (1) (6) (2) (Loss)/profit attributable to non-controlling interests (0) 0 (0) (0) | Profit/(loss) after tax and before restructuring costs, discontinued | operations and net profit on disposal of non-core assets Restructuring costs Loss from disposal group held for sale/discontinued operations Net gain/(loss) on disposal of non-core assets* (Loss)/profit after tax Net interest margin Cost-to-Income ratio 31 (107) 44 12 (36) (3) (12) -60% (16) (303) (214) (37) -468% (6) 47 (13) 60 (261) (337) (5) 50 3,94% 3,81% 3,82% -1 b.p. 4,23% 36% 41% 39% +2p.p. 33% * Relates to the disposal of the Ukrainian operations, the disposal of the stake in Banca Transilvania, the disposal of the loans in Serbia, the early part repayment of the Cyprus Government Bond by the Republic of Cyprus and the sale of the Laiki UK loan portfolio. b.p. basis points, p.p. = percentage points; 100 b.p. = 1 p.p. Bank of Cyprus KOINO ΚΥΠΡΙ 10#11Net Interest Income and Net Interest Margin Net Interest Income (€ mn) Interest income from Laiki Recapitalisation Bond 248 263 231 225 44 43 26 26 219 205 205 199 1Q2014 2Q2014 3Q2014 4Q2014 . • • 4Q2014 Group Net Interest Income (NII) at €225 mn (compared to €231 mn for 3Q2014) primarily due to deleveraging actions Group Net Interest Margin (NIM) at 3,81% for 4Q2014 and 3,94% for FY2014. NII and NIM continue to reflect the competitive environment in Cyprus and the composition of the Group's funding, with Eurosystem funding accounting for 31% of assets as at 31 December 2014. Net Interest Margin (bp) 423 390 382 381 1Q2014 2Q2014 3Q2014 4Q2014 Bank of Cyprus 11 KOINO ΚΥΠΡΙ 2235#12Analysis of Non-interest income Analysis of Non Interest Income (€ mn) Net fee and commission Income ■Net FX gains/(losses) & Net profits/(losses) on other financial instruments 42 20% 61 13 0 1Q2014 37 40 17% 13 55 -1 2Q2014 6 37 40 10 Insurance income net of insurance claims ■Other income/(expenses) 12% 20% % Non interest income % Total income 32 56 X 37 Non interest income (€ mn) 14 10 -13 3Q2014 -2 4Q2014 • 4Q2014 non-interest income of €56 mn, compared to €32 mn for 3Q2014 • Recurring non-interest income from fee and commission income and income from the insurance business averaging around €50 mn per quarter (about 17% of total income) Recurring income from insurance business reflecting the Group's leading position in the insurance. business in Cyprus Bank of Cyprus 12 KOINO WKYNРIW 2235#13Total expenses Total expenses (€ mn) Other operating expenses Staff costs 114 105 104 103 47 45 44 56 58 59 59 58 1Q2014 2Q2014 3Q2014 4Q2014 Group Cost to Income Ratio 36% 35% 34% 33% 1Q2014 1H2014 9M2014 FY2014 • . to 4Q2014 Total expenses increased to €114 mn compared to €103 mn for 3Q2014 mainly due advertising, regulatory and ECB Comprehensive Assessment related costs, listing costs, and other advisory fees Staff costs for 4Q2014 at €58 mn broadly at the same level as in the previous quarters The cost-to-income ratio for FY2014 stands at 36% compared to 35% for the 9M2014, partly due to the increase of other operating expenses during 4Q2014 Bank of Cyprus 13 KOINO ΚΥΠΡΙ 2235#14Cyprus operations key driver of Group performance High net interest margins for Cyprus operations - supported by cheap Eurosystem funding Lower Cost to income ratio for Cyprus operations (bps) 423 377 372 384 379 354 314 50% 43% FY2014: 385 38% 35% 33% FY2013: 353 31% 31% 1H2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 Historical fee and commission income / total income for Cyprus operations 0,7 1,0 0,29 0,30 0,25 0,27 1H2013 9M2013 FY2013 1Q2014 1H2014 9M2014 FY2014 Evolution of Cost of risk* for Cyprus operations 3,9% 19% 13% 14% 12% 15% 12% 3,7% 3,7% 81% 87% 86% 88% 85% 88% 2,6% 1,9% 2,4% 2,2% 3Q2014 4Q2014 1H2013 9M2013 FY2013 1Q2014 1H2014 9M2014 FY2014 2012 2013 1Q2014 2Q2014 ■Fee and commission income Other income Total income (€ bn) * Cost of risk for the Cyprus operations has been calculated as provisions for impairment of loans / average gross loans. Gross loans are before the deduction of the fair value adjustment on initial recognition relating to loans acquired from Laiki Bank. Bank of Cyprus 14 KOINO ΚΥΠΡΙ 2235#152014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators Key Takeaways Additional Information Bank of Cyprus 15 KOINO ΚΥΠΡΙ#16Balance Sheet* Deleverage - Shrinking to Strength Jun Dec Mar Jun Sep Dec Change Since € mn 2013 2013 2014 2014 2014 2014 Jun 2013 Cash & bank placements 3.012 2.530 2.105 1.973 2.417 2.908 -104 Investments 3.413 3.433 3.475 3.538 2.578 2.541 -872 Net Loans 23.769 21.764 21.234 20.063 19.794 18.632 -5.137 Net loans reduction driven by disposal of non-core assets and the ongoing deleveraging Other assets 2.762 Total assets 2.622 2.564 2.984 2.694 32.956 30.349 29.378 28.558 27.483 2.708 -54 26.789 -6.167 Customer deposits 16.970 14.971 14.066 13.803 13.330 ECB funding - 1.400 1.400 1.400 920 880 13.169 -3.801 880 Deposit reduction less than reduction in net loans ELA 11.107 9.556 9.506 8.785 7.684 7.404 -3.703 Overall ELA reduction from peak about €4,5 bn Interbank funding 983 790 753 802 707 772 -211 Other liabilities 976 895 894 954 1.057 1.083 107 Total equity 2.920 2.737 2.759 2.814 3.785 3.481 561 Total liab. & equity 32.956 30.349 29.378 28.558 27.483 26.789 -6.167 Balance sheet -1.048 -971 -820 -1.075 -694 deleverage qoq CET1 ratio n/a 10,4% 10,6% 11,3% 15,4% 14,0% (transitional basis) Leverage ratio 11,3x 11,1x 10,6x 10,1x 7,3x 7,7x i (Assets/Equity) Consolidated Balance Sheet - ignoring classification of disposal groups as Held for Sale Steady reduction of total assets CET1 ratio and Leverage ratio strengthened by Share Capital Increase and deleverage Bank of Cyprus KOINO WKYNРIW 16#17Gross Loans Gross Loans by Geography (€ mn) Cyprus Russia UK Other countries** -16% 28.349 -6% -2% 1.268 26.743 -4% 26.263 -2% 1.459 1.230 25.300 1.180 24.742 -4% 1.794 1.284 804 1.194 23.772 706 1.172 1.429 1.290 1.112 1.304 692 914 1.208 966 23.828 22.800 22.599 22.020 21.716 21.200 30.06.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 • • Gross Loans were reduced by €0,97 bn in 4Q2014 mainly reflecting the disposal of loans in the UK and the reduction of loans in Cyprus. In constant exchange rates, gross loans were reduced by €676 mn Overall, a 16% reduction in Group gross loans since June 2013 Overseas loan book reduced by 43% since June 2013, reflecting the deliberate disposal of non- core overseas operations and assets Domestic loan book reduced by 11% since June 2013, reflecting primarily customers' efforts to deleverage by using their deposits to pay down debt *Gross loans are reported before fair value adjustment on initial recognition relating to loans acquired from Laiki Bank (difference between the outstanding contractual amount and the fair value of loans acquired) amounting to €1,6 bn (compared to €1,9 bn at 31 December 2013), including loans of discontinued operations/disposal group held for sale. ** Other countries: Romania, Ukraine (until March 2014) and Greece. Furthermore, certain loans and advances in Romania are included, that previously were reported under Cyprus. Bank of Cyprus KOINO ΚΥΠΡΙ 17#18Funding Structure Analysis of Liabilities and Equity (€ bn) Funding from Central Banks Total equity ECB funding ■Other liabilities ■ ELA ■Customer deposits ■ELA funding (€ bn) ECB funding (€ bn) 11,40 11,11 11,16 10,96 10,91 10,18 1,30 1,40 1,40 1,40 8,60 30,35 8,28 29,38 7,70 28,56 11,40 11,11 0,92 0,88 27,48 9,86 26,79 9,56 9,51 0,80 8,78 7,68 7,40 6,90 14,97 14,07 13,80 13,33 13,17 1,40 1,40 1,40 0,92 0,88 9,56 9,51 8,78 7,68 7,40 Apr-2013 Jun-2013 Sep-2013 Dec-2013 Mar-2014 Jun-2014 Sep-2014 Dec-2014 Mar-2015 1,86 Funding structure dented by the bail-in and the Laiki acquisition. At 31 December 2014, customer deposits and Eurosystem funding accounted for 49% and 31% of assets, respectively At 31 December 2014, Eurosystem funding at €8,28 bn, comprising ELA of €7,4 bn and ECB funding of €880 mn; ELA and ECB funding were reduced further by €500 mn and €80 mn, respectively, post 31 December 2014 The Group has reduced ELA by €4,5 bn since the peak of €11,4 bn at April 2013 and in tandem managed to absorb a significant reduction in its deposit base 1,76 1,68 1,64 1,77 3,79 2,74 2,76 2,81 3,48 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 Bank of Cyprus KOINO WKYпPIW 2235 18#19Eurosystem Funding Reliance reducing fast Continuous reduction of ELA and ECB funding with further potential going forward (€ bn) 36% 36% 37% 36% 31% 31% 11,40 11,16 10,96 10,91 1,30 10,18 1,40 1,40 1,40 8,60 8,28 7,70 0,92 0,88 0,80 11,4 9,86 9,56 9,51 8,78 7,68 7,40 6,90 €4,5 bn reduction of ELA since peak Apr-2013 Sep-2013 Dec-2013 Mar-2014 Jun-2014 Sep-2014 Dec-2014 Mar-2015 ELA ECB funding Eurosystem Funding as xx% of balance sheet In light of challenging market conditions given recent developments in i Greece and Russia, the Bank is maintaining an increased liquidity buffer. Once market conditions are normalized, the Bank will proceed with further ELA repayments. Bank of Cyprus KOINO WKYNРIW 2235 19#20Customer Deposits Customer Deposits by Geography (€ mn ) Loans to deposits ratio ■Russia & Other countries* Cyprus ■UK 14.971 1.022 1.244 14.066 13.803 832 1.249 863 1.252 13.330 798 1.289 13.169 550 1.305 Net loans (€ bn) Customer deposits (€ bn) Loans to deposits ratio 151% 145% 148% 148% 141% 21,8 21,2 20,4 19,8 18,7 12.705 11.985 11.688 15,0 11.243 11.314 14,1 13,8 13,3 13,2 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 Deposit market shares in Cyprus Residents Non-Residents 35,2% 32,2% 30,8% 28,4% 27,5% 27,2% 26,4% 26,7% 26,9% 27,2% 25,6% 25,5% 24,6% 24,3% 23,7% 23,7% 23,9% 24,1% 24,2% 24,7% Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 • Group customer deposits** declined by 1% during 4Q2014, compared to a 3% reduction in 3Q2014. At constant exchange rates, Group customer deposits increased by €80 mn during 4Q2014 Customer deposits in Cyprus increased for the first time since bail-in during 4Q2014. Deposit market shares in Cyprus (both for Residents and non Residents) have been increasing since November of 2014 Loans to deposits ratio improved by 7 percentage points to 141% during 4Q2014 * Other countries comprise Romania, Greece, Ukraine (until March 2014) Including deposits of discontinued operations/disposal group held for sale. Bank of Cyprus KOINO WKYпPIW 2235 20#21Capital Position Evolution of CET1 ratio since 30.09.2014 15,4% +0,2% 14,0% -1,8% 13,4% +0,2% +0,1% -0,1% -0,6% CET1 ratio Profit before Provisions 30.09.14 provisions Other adjustments Disposal of RWA Change (transitional) non core assets CET1 ratio 31.12.14 (transitional) DTA CET1 ratio 31.12.14 (fully loaded) Capital Adequacy Ratios ■31.12.13 ■ 31.03.14 ■ 30.06.14 ■ 30.09.14 ■31.12.14 11,3% 10,4%10,6% 15,4% 14,0% 11,5% 10,6% 10,8% 15,6% 14,2% CET 1 ratio (transitional) Total capital ratio (transitional) . CET1 ratio (transitional) at 14% at 31 December 2014, compared to 15,4% at 30 September 2014 mainly due to increased provisions in 4Q2014 related to the methodological alignments and changes in certain estimates following the completion of the review of the AQR results and to the Russian operations CET1 ratio (fully loaded) at 13,4% at 31 December 2014 Total capital ratio totalled 14,2% at 31 December 2014 Bank of Cyprus KOINO WKYпPIW 21#22Credit Risk - Quality of Loan portfolio Problem Loans (€ bn) 90+ DPD ■NPLS (CBC definition) INPES (EBA definition) 14,04 12,98 13,13 13,00 30.09.13 12,76 14,58 14,44 12,59 31.12.13 31.03.14 30.06.14 90+ DPD formation slows down sharply ■Change in 90+ DPD (€ mn) 2.723 1.329 1.399 945 5.311 -350 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 15,05 14,96 14,74 12,98 12,65 30.09.14 31.12.14 90+ DPD* decreased by €325 mn during 4Q2014. The decrease primarily relates to the Cypriot operations and to the disposal of the UK loan portfolio 90+ DPD formation in 2014 has slowed down sharply Non-performing exposures (NPEs) as per European Banking Authority (EBA) totalled €14,96 bn and accounted for 63% of gross loans * 90+ DPD are loans with a specific provision (i.e. impaired loans) and loans past-due for more than 90 days but not impaired Bank of Cyprus KOINO WKYNРIW 22#23Credit Risk - Provisions Group loan quality indicators 90+ DPD provision coverage NPLs ratio 90+ DPD ratio 38,8% 47,4% 52,5% 53,2% 48,6% 48,6% 49,8% 42% 37% 38% 39% 39% 38% 41% 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 Accumulated provisions Accumulated provisions (€ bn) Provisions % Gross loans 17,6% 16,2% 20,0% 18,6% 19,1% 19,3% 21,6% • • 90+ DPD ratio at 53,2% 90+ DPD provision coverage improved to 41%; Taking into account tangible collateral at fair value, 90+ DPD are fully covered Accumulated provisions at €5,1 bn or 21,6% of gross loans The Group has completed a review of its accounting estimates and methodologies in an effort to more closely align them with the observations and adjustments suggested by the SSM, resulting in an additional provisions charge for 4Q2014 4,8 5,0 5,0 4,9 4,9 5,1 4,6 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 Bank of Cyprus KOINO ΚΥΠΡΙ 2235 23#24Credit Risk - 90+ DPD by Geography and by customer type Group 90+ DPD loans by geography €bn 48,6% 90+DPD ratio (% of total loans) 13,0 0,9 48,6% 49,8% 52,5% 53,2% 12,8 12,6 13,0 0,9 12,7 0,5 0,6 0,4 0,3 0,5 0,3 0,3 0,6 0,6 0,5 0,1 11,3 11,2 31.12.13 11,3 11,6 11,5 31.03.14 30.06.14 30.09.14 31.12.14 ■Cyprus ■Russia ■ UK Other countries* Group 90+ DPD loans by customer type €bn 13,0 12,8 13,0 12,6 1,3 1,3 1,2 1,3 12,7 1,2 1,2 1,2 1,1 1,1 1,2 3,3 3,5 3,1 3,4 3,3 7,2 6,9 7,0 7,1 7,2 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 ■ Corporate ■SMES ■Retail other ■Retail housing Bank of Cyprus KOINO ΚΥΠΡΙ * Other countries include certain loans and advances in Romania that previously were reported under Cyprus 24#25Credit Risk by customer type - 90+ DPD fully covered by provisions & tangible collateral Corporate SMEs Retail Housing Retail Cyprus Other 48% 21% 21% 10% 100% 10,1 4,5 4,4 21,2 2,2 Gross loans (€ bn) 61,6% 66,1% 90+ DPD loans 50,2% 54,1% by segment 26,5% Loan Loss Reserve (LLR) 49,2% 40,8% 31,7% 26,0% 37,8% coverage Tangible coverage 77,3% 78,9% 81,3% 55,6% 76,0% Total 118,1% 110,6% 107,3% 104,8% 113,8% coverage Significant provision and collateral coverage, with additional comfort from personal guarantees XX % of total gross loans (Cyprus only) Bank of Cyprus KOINO ΚΥΠΡΙ 25#26Restructuring and Recoveries Division Good progress has been made with Restructuring efforts of top exposures¹ € bn €5,3 bn €5,0 bn 1,0 1,2 1,3 2,2 0,5 1,7 0,8 0,3 0,3 0.5 0,3 30.09.14 352 0,2 31.12.14 Restructuring implemented or be signed ■Detailed non binding heads of terms for restructuring agreed ■Good progress in agreeing heads of terms for restructuring; some commercial points still open ■Diligence ongoing; Some way to go before heads of terms to be agreed Insolvency appointment Other recovery cases Reduction of top exposure balance (bn EUR) 5,8 5,3 5,3 5,0 30.11.13 30.06.14 30.09.14 31.12.14 1 funded and unfunded exposures as of 31 December 2014 Key achievements include: • Sale of loans €355 mn Sale of assets €97 mn Cancellation of undrawn facilities of €144 mn Material Repayments of €109 mn Bank of Cyprus 26 KOINO ΚΥΠΡΙ 2235#27Overseas non-core operations Disposing of overseas operations considered as non-core • As part of its Deleveraging strategy, and through specific, deliberate and well-timed actions, the Bank has managed to reduce its risk profile, to enhance its liquidity position and to improve its capital position through the disposal of operations that are considered as non-core. During 2014, the Group sold its Ukrainian operations, its investment in Romanian Banca Transilvania, its loans in Serbia, assets in Romania and part of the UK loan portfolio acquired from Laiki Bank. The remaining non-core overseas operations as at 31 December 2014 are as follows: Greece: The net exposure comprised (a) net on-balance sheet exposures (excluding foreclosed properties) totalling €120 mn, (b) about 600 foreclosed properties with a book value of €179 mn, and (c) off-balance sheet exposures totalling €185 mn. Romania: The overall net exposure is €520 mn. ➤ Russia: In light of the deteriorating economic conditions since mid-December 2014, the Bank has proceeded to reassess its operations in that country and increased the level of provisions for impairment of its loans and other assets. This action reflects a deliberately more conservative stance regarding the Russian economic outlook and significantly reduces the Group's exposure to Russia. Post the announcement of the preliminary FY2014 Financial Results, the Bank increased the provisions for impairment of customer loans in Russia by €30 mn due to further information which became available, reducing the Group's overall next exposure to €130 mn Bank of Cyprus 27 KOINO WKYNРIW#282014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators Key Takeaways Additional Information Bank of Cyprus 28 KOINO WKYпPIW 2235#29Significant progress made on Group KPIs, with a clear plan of action to achieve medium-term targets Medium- Key Group Group Cyprus Category performance indicators 2013 2014 2014 term target (2017) * 1. Reverse 90+ DPD coverage 38% 41% 38% 40%-50% Asset quality Provisioning charge 4,0% 3,6%** 2,6% <1,0% Eurosystem Funding funding % total 36% 31% n.a. <25% balance sheet Basel 3 Capital transitional 10.4% 14,0% n.a. >12% CET1 Net interest 3,5% 3,9% 3,8% ~3,25% margin Fee and Margins and efficiency commission 14% 13% 13% Increase income/total income Key Pillars & Plan of action trend on overdue loans 2. Normalise funding; Eliminate ELA 3. Focus on core markets in Cyprus • Continue re-structuring capitalising on the foreclosure law • Seek FDI to enhance business viability • • Re-cycle re-structured loans into the lending business for continued support and service Boost deposits by leveraging on stronger capital position Access Debt Capital Markets on the back of improved ratings, stronger financial soundness and better prospects • Proceeds from exiting non-core overseas activities Direct lending into promising sectors with a view to funding the recovery of the Cypriot economy ⚫ Further diversify income stream by boosting fee income from new sources in international business and wealth 4. Achieve a lean operating model Set-out a digital vision and introduce appropriate technology to enhance product distribution channels Introduce technology and processes to reduce operating costs • Introduce HR policies aimed at enhancing productivity 5. Deliver returns Cost to income ratio 43% 36% 35% 40%-45% • Strengthen governance and risk- management to deliver appropriate medium-term risk-adjusted returns Medium term target refers to the targets set as per the latest NDR presentation that this available on the Group's website. ** Calculated as the provisions for impairment of customer loans, including provisions of discontinued operations, (in total €969 mn) net of gains on derecognition and changes in expected cash flows on acquired loans (totalling €47 mn) over average gross loans Bank of Cyprus 29 KOINO WKYПPIW 237#302014 Overview Income Statement Review Balance Sheet Review Key Performance Indicators Key Takeaways Additional Information Bank of Cyprus 30 KOINO WKYNРIW#31Key Takeaways Leading financial institution in an economy that is on the road to economic recovery CET1 ratio at 14,0% (transitional basis); capital position shields the Group from further shocks and helps in regaining trust of counterparties Completion of review of AQR results and reduction of net exposure to Russia results in increased provisions for 4Q2014 ➤ Stabilising deposit base, with 4Q2014 deposits in Cyprus increasing for the first time since bail-in; all blocked decree deposits released ahead of plan and majority of them retained with the Bank ELA reduced to €6,9 bn through deleveraging actions, capital proceeds and customer inflows RRD up and running with signs that actions are yielding results, despite the lack of the appropriate legal infrastructure Loan quality showing signs of stabilisation; 90+ DPD reduced by 3% during 4Q2014; imperative that the Bank is given the tools to engage effectively with borrowers Recurring profitability stabilising Bank of Cyprus KOINO WKYNРIW 2235 31#322014 Overview Income Statement Review Balance Sheet Review Loan Quality Key Performance Indicators Key Takeaways Additional Information Bank of Cyprus 32 KOINO WKYNРIW 2235#33Key Information and Contact Details Credit Ratings: Fitch Ratings: Long-term Issuer Default Rating: upgraded to "CC" on 4 July 2014 Short-term Issuer Default Rating: upgraded to "C" on 4 July 2014 Viability Rating: affirmed at "cc" on 4 July 2014 Moody's Investors Service: Long-term deposit ratings: Raised to Caa3 (stable outlook) from Ca on 17 November 2014 Senior unsecured debt ratings: Upgraded to (P)Caa3 (stable outlook) from (P)Ca on 17 November 2014 Short-term deposit and commercial paper ratings: Affirmed at Not Prime, no outlook Standalone BFSR: Affirmed at E, stable outlook, equivalent to a BCA of caa3 Listing: ATHEX - BOC, CSE - BOCY, ISIN CY0104810110 Contacts Investor Relations Constantinos Pittalis, Investor Relations Manager, Tel: +35722122466, Email: [email protected] Annita Pavlou, Investor Relations, Tel: +35722122740, Email: [email protected] Elena Hadjikyriacou, Investor Relations, Tel: +35722122239, Email: [email protected] Chief Financial Officer Eliza Livadiotou, Tel: +35722122344, Email: [email protected] Finance Director Dr. Chris Patsalides, Tel: +35722122456, Email: [email protected] Visit our website at: www.bankofcyprus.com Bank of Cyprus KOINO WKYNРIW 2235 33#34Consolidated Balance Sheet € mn % 31.12.14 31.12.13 € mn % 31.12.14 31.12.13 change change Cash and balances with Amounts due to banks -18% 162 196 -8% 1.139 1.240 Central Banks Funding from Central Banks -24% 8.284 10.956 Placements with banks +28% 1.647 1.290 Repurchase agreements -2% 580 594 Debt securities, treasury bills Customer deposits -16% 12.624 14.971 -26% 2.541 3.433 and equity investments Debt securities in issue 1 2 Net loans and advances to -17% 18.168 21.764 Other liabilities +17% 1.043 888 customers Subordinated loan stock Other assets -10% 2.351 2.622 5 Non current assets and disposal groups classified as 943 Non current liabilities and disposal groups classified as held for sale 614 held for sale Total liabilities -16% 23.308 27.612 Total assets -12% 26.789 30.349 Share capital -81% 892 4.743 Note: As from the fourth quarter of 2014, the Group's operations in Russia are treated as a disposal group held for sale and results have been presented accordingly as discontinued operations in accordance with IFRSS. Capital reduction reserve and share premium 2.505 Revaluation and other reserves +103% 147 72 Accumulated losses (79) (2.152) Shareholders' equity +30% 3.465 2.663 Non controlling interests -79% 16 74 Total equity +27% 3.481 2.737 Total liabilities and equity -12% 26.789 30.349 Bank of Cyprus KOINO WKYNРIW 34#35Consolidated Balance Sheet - ignoring classification of disposal groups as Held for Sale € mn % 31.12.14 31.12.13 € mn change % change 31.12.14 31.12.13 Cash and balances with Amounts due to banks -2% 192 196 -1% 1.225 1.240 Central Banks Placements with banks +30% 1.683 1.290 Funding from Central Banks Repurchase agreements -24% 8.284 10.956 -2% 580 594 Debt securities, treasury bills Customer deposits -12% 13.169 14.971 -26% 2.541 3.433 and equity investments Debt securities in issue 3 2 Net loans and advances to -14% 18.632 21.764 Other liabilities +21% 1.078 888 customers Subordinated loan stock Other assets +3% 2.708 2.622 2 5 Total assets -12% 26.789 30.349 Total liabilities -16% 23.308 27.612 Share capital -81% 892 4.743 Balance sheet (€ bn) Capital reduction reserve and share 2.505 premium Revaluation and other reserves +103% 147 72 -19% Accumulated losses (79) (2.152) -3% -3% 33,0 -3% 31,4 -3% 30,3 -4% 29,4 28,6 27,5 Shareholders' equity +30% 3.465 2.663 Non controlling interests -79% 16 74 -2% Total equity +27% 3.481 2.737 26,8 Total liabilities and equity -12% 26.789 30.349 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 Bank of Cyprus 35 KOINO WKYNРIW#36Consolidated Income Statement € mn Net interest income FY2014 FY2013 4Q2014 3Q2014 2Q2014 1Q2014 967 880 225 231 263 248 Net fee and commission income 153 140 37 37 37 42 Net foreign exchange gains/(losses) and net profits/(losses) on other financial instruments 6 (2) 14 (13) (1) 6 Insurance income net of insurance claims 46 65 Other income/(expenses) Total income Staff costs Other operating expenses Total expenses (1) (64) 150 10 10 13 13 (5) (2) 6 0 1.171 1.019 281 263 318 309 (234) (265) (58) (59) (59) (58) (192) (170) (56) (44) (45) (47) (426) (435) (114) (103) (104) (105) I ¡ Profit before provisions and impairments, gains on derecognition and changes in expected 745 584 167 160 214 2041 ected cash flows on acquired loans, restructuring costs and discontinued restructuring costs and discontinued operations Provisions for impairment of customer loans (666) (941) (248) (115) (173) (130) Gains on derecognition and changes in expected cash flows on acquired loans 47 27 29 6 4 8 Impairments of other financial and non-financial assets (89) (23) (57) 1 (33) (0) Share of profit/ (loss) from associates and joint ventures 5 3 Profit/(loss) before tax, restructuring costs and discontinued operations 42 (358) (106) 50 14 84 Tax (11) (2) (1) (6) (2 (Loss)/profit attributable to non - controlling interests (0) 1 0 (0) (0) (0) I Profit /(loss) after tax and before restructuring costs, discontinued operations and net profit on disposal of non-core assets 31 (359) (107) 44 12 82 Restructuring costs (36) (157) (3) (12) (16) (5) Loss from disposal group held for sale / discontinued operations (303) (174) (214) (37) (6) (46) Net gain (loss) on disposal of non-core assets 47 (1.366) (13) 60 (261) (2.056) (337) (5) 50 31 (Loss)/profit after tax As from the fourth quarter of 2014, the Group's operations in Russia are treated as a disposal group held for sale and results have been presented accordingly as discontinued operations in accordance with IFRS. Hence comparatives for the earlier financial quarters of 2014 and FY2013 have been re-presented. In order to better reflect its operating results, the Group changed its presentation for impairments of assets and for gains on derecognition and changes in expected cash flows on loans acquired. Specifically, impairments of other financial and non-financial assets and gains on derecognition and changes in expected cash flows on loans acquired from Laiki Bank are presented in line with provisions for impairment of customer loans. Comparatives have been reclassified accordingly to conform with changes in the presentation of the current period. Bank of Cyprus 36 KOINO WKYNРIW#37Consolidated Income Statement – Pre classification* € mn FY2014 FY2013 4Q2014 3Q2014 2Q2014 1Q2014 Net interest income 1.025 977 235 244 279 267 Net fee and commission income 170 167 39 43 43 45 Net foreign exchange gains/(losses) and net profits/(losses) on other financial instruments 6 2 11 (12) (0) 7 Insurance income net of insurance claims 46 65 11 10 12 13 Other income/(expenses) (1) (63) (7) (1) 6 1 Total income 1.246 1.148 289 284 340 333 Staff costs (268) (316) (66) (67) (68) (67) Other operating expenses (233) (221) (68) (55) (53) (57) Total expenses (501) (537) (134) (122) (121) (124) r Profit before provisions and impairments, gains on derecognition and changes I I in expected cash flows on acquired loans, restructuring costs and discontinued Loperations 745 611 155 162 219 209 Provisions for impairment of customer loans (930) (1.019) (438) (163) (183) (146) Gains on derecognition and changes in expected cash flows on acquired loans 47 27 30 6 4 7 Impairments of other financial and non-financial assets (174) (23) (141) 1 (34) (0) Share of profit/(loss) from associates and joint ventures 5 3 2 2 ! (Loss)/Profit before tax, restructuring costs and discontinued operations (307) (409) (391) 8 72 тах (25) Loss attributable to non-controlling interests 60 12 45 7 6 2 (Loss)/Profit after tax and before restructuring costs, discontinued operations (272) (392) (356) 6 6 72 I and net profit on disposal of non-core assets L Restructuring costs (36) (157) (4) (11) (16) (5) Loss from disposal group held for sale / discontinued operations 0 (141) 36 (36) Net gain/(loss) on disposal of non-core assets 47 (1.366) (13) 60 (Loss)/profit after tax (261) (2.056) (337) (5) 50 31 -- * As from the fourth quarter of 2014, the Group's operations in Russia are treated as a disposal group held for sale and results have been presented accordingly as discontinued operations in accordance with IFRS. Hence comparatives for the earlier financial quarters of 2014 and FY2013 have been re-presented. In order to better reflect its operating results, the Group changed its presentation for impairments of assets and for gains on derecognition and changes in expected cash Bank of Cyprus flows on loans acquired. Specifically, impairments of other financial and non-financial assets and gains on derecognition and changes in expected cash flows on loans acquired from Laiki Bank are presented in line with provisions for impairment of customer loans. Comparatives have been reclassified accordingly to conform with changes in the presentation of the current period. KOINO WKYNРIW 37#38Income Statement bridge for FY2014 € mn Net interest income Net fee and commission income Net foreign exchange gains (losses) and net profits (losses) on other financial instruments Insurance income net of insurance claims Other income/(expenses) Total income Total expenses Profit before provisions and impairments, gains on derecognition and changes in expected ¡ cash flows on acquired loans, restructuring costs and discontinued operations Provisions for impairment of customer loans Gains on derecognition and changes in expected cash flows on acquired loans Impairments of other financial and non-financial assets Share of profit /(loss) from associates ■ Profit/(loss) before tax, restructuring costs and discontinued operations Tax Loss attributable to non-controlling interests I Profit after tax and before restructuring costs, discontinued operations and net profit from disposal of non-core assets Restructuring costs Net gain(loss) on disposal of non-core assets Loss from disposal group held for sale / discontinued operations, net of minority interest ¡Loss)/profit after tax Per financial statements Reclassification Per presentation 967 967 153 153 214 (208) 6 46 46 0 0 1.380 1.171 (462) 36 (426) 918 745 (666) (666) 0 47 47 (90) (90) 5 5 167 41 I (11) (11) 0 0 156 31 0 (36) (36) 0 47 47 (417) 114 (261) (303) (261) Bank of Cyprus KOINO WKYNРIW 38#39Income Statement by Geography (€ mn) CYPRUS RUSSIA UK ROMANIA GREECE FY2014 FY2013 FY2014 FY2013 FY2014 FY2013 FY2014 FY2014 Net interest income 919 834 58 97 31 29 15 1 Net fee & commission income 145 132 17 28 5 5 3 Net FX income/(losses) and net 7 18 0 3 1 1 (2) (1) gains/(losses) from financial instruments Insurance income net of insurance 43 554 57 3 claims Other income (expenses) (4) (19) 2 (0) (0) 4 2 Total income 1.110 1.022 77 128 37 35 17 8 Staff costs (220) (247) (33) (51) (12) (10) (2) (1) Other operating expenses (167) (147) (39) (50) (16) (14) (3) (8) Total expenses (387) (394) (72) (101) (28) (24) (5) (8) Profit before provisions and 723 628 5 27 9 11 12 0 impairments Provisions for impairment (580) (856) (265) (79) (30) (21) (46) (10) Gains on derecognition and changes in expected cash flows on acquired loans 47 27 Impairment of other financial assets and non financial assets (81) (24) (84) (8) Share of profit/(loss) from associates 5 2 I Profit before tax 114 (223) (344) (52) __(21). (10) (34) (18) Tax (4) 3 (14) 7 (1) (1) (1) (5) Profit attributable to non-controlling interests 1 1 59 11 Profit after tax and before one off 111 (219) (299) (34) (22) (11) (35) (23) I items --Bank of Cyprus KOINO WKYпPIW w3 39#40Income Statement - Impact from reclassification of held for sale (€ mn) Income Statement as published FY2014 Held for sale classification FY2014 Net interest income Net fee & commission income Net foreign exchange income/(losses) and net gains/(losses) from financial instruments Insurance income net of insurance claims Other income /(expenses) Total income Staff costs Other operating expenses Total expenses Profit before provisions and impairments Provisions for impairment Gains on derecognition and changes in expected cash flows on acquired loans Impairment of other financial assets and non financial assets Share of profit/(loss) from associates Profit before tax Tax Profit attributable to non-controlling interests ! Profit after tax and before one off items Restructuring costs Loss from disposal group held for sale/ discontinued operations Net gain on disposal of non-core assets Loss after tax Without reflecting Russian operations as a disposal group held for sale. Consolidated Income Statement * 967 58 1.025 153 17 170 6 6 46 46 (1) (1) 1.171 75 1.246 (234) (34) (268) (192) (41) (233) (426) (75) (501) 745 0 745 (666) (264) (930) 47 47 (89) (85) (174) 5 5 42 (349) (11) (14) (307) (25) 60 60 31 (36) (303) 303 47 (303) (272) (36) 0 47 (261) (261) Bank of Cyprus KOINO WKYпPIW 2237 40#41Risk Weighted Assets by Geography - Regulatory Capital Risk weighted assets by Geography (€ mn) Equity and Regulatory Capital (€ mn) 31.03.14 30.06.14 30.09.14 31.12.14 30.06.14 30.09.14 31.12.14 Cyprus 20.124 19.807 20.296 20.452 Shareholders' equity 2.748 3.728 3.465 Russia 1.318 1.276 1.203 706 CET1 capital 2.547 3.512 3.191 United Kingdom 976 616 633 986 Romania 369 358 316 308 Tier I capital 2.547 3.512 3.191 Greece 240 381 367 217 Tier II capital 3 39 42 Other* 223 47 48 46 Total capital (Tier 1 + Tier II) 2.550 3.551 3.233 Total 23.249 22.485 22.863 22.715 Bank of Cyprus * Other countries include Ukraine, Channel Islands and Netherlands 41 KOINO WKYNРIW 2235#42Reconciliation of Group Equity to CET 1 (€ mn) Group Equity per financial statements Less Intangibles and other deductions Less: Deconsolidation of insurance and other entities 31.12.14 3.481 (16) Less: Regulatory adjustments (Minority Interest and other items) Less: Revaluation reserves and other unrealised items transferred to Tier 2 (199) (23) (52) CET 1 (transitional) 3.191 Less Adjustments to fully loaded (mainly DTA) (138) CET 1 (fully loaded) 3.055 RWA CET 1 ratio (fully loaded) 22.715 13,4% Bank of Cyprus KOINO WKYNРIW 2235 42#43Loans and Deposits by Geography € mn Gross Loans by Geography 31.12.13 30.06.14 30.09.14 31.12.14 € mn Deposits by Geography 31.12.13 30.06.14 30.09.14 31.12.14 Cyprus 22.800 22.020 21.716 21.200 Cyprus non- IBU** 8.658 8.094 7.785 7.847 UK 1.284 1.172 1.112 914 Cyprus IBU** 4.047 3.594 3.458 3.467 Cyprus - Total 12.705 11.688 11.243 11.314 Russia 1.429 1.304 1.208 966 UK 1.244 1.252 1.289 1.305 Other 1.230 804 706 692 Russia 919 845 794 545 countries* Group 26.743 25.300 24.742 23.772 Other countries* 103 18 5 *** Group 14.971 13.803 13.330 13.169 Gross Loans by Geography 4,1%. 3,9%. 2,8% ■Cyprus ■ UK Russia Other Countries* 89,2% Deposits by Geography 4,1% 0,0% 9,9%. ■Cyprus - non IBU ■Cyprus - IBU** ■ UK ■Russia 26,3% 59,7% Total Cyprus 86% * Other countries: Romania, Ukraine (until March 2014) and Greece ** IBU- Division servicing exclusively international activity companies registered in Cyprus and abroad and non-residents Bank of Cyprus *** Other countries: Romania and Ukraine (until March 2014) 43 KOINO WKYпPIW 2235#44Gross loans by Geography and by Customer Type Gross loans by geography 28,35 26,74 26,26 25,30 24,74 23,77 Total 1,27 1,23 ■ Other countries* ■Russia 1,46 1,79 1,18 0,80 1,28 1,43 0,70 (€ bn) 1,19 1,29 0,69 1,17 1,30 1,21 1,11 0,97 0,91 ■UK ■Cyprus 23,83 22,80 22,60 22,02 21,72 21,20 30.06.13 31.12.13 *Other countries: Greece, Romania and Ukraine (until March 2014) 31.03.14 30.06.14 30.09.14 31.12.14 Gross loans by customer type 28,35 26,74 26,26 25,30 24,74 23,77 Total ■Retail other 3,44 3,01 2,94 2,52 2,42 (€ bn) 5,44 2,44 5,37 5,30 4,67 4,61 ■Retail Housing 4,41 6,37 6,12 5,50 6,09 5,54 5,09 ■SMES 13,10 12,24 11,93 12,61 12,17 11,83 ■ Corporate 30.06.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 Bank of Cyprus KOINO WKYNРIW 44#45Analysis of Deposits by Geography and by Type Deposits by geography ■Russia & Other 16,97 countries* 1,25 14,97 Total 14,07 ■ UK 13,80 1,29 1,02 13,33 13,17 0,83 (€ bn) 1,24 0,87 Cyprus IBU 4,75 1,25 0,79 1,25 1,29 0,55 1,30 4,05 3,79 3,59 3,46 3,47 ■Cyprus non-IBU 9,67 8,66 8,20 8,09 7,79 7,85 30.06.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 * Other countries: Romania and Ukraine Deposits by type of deposit ■Current & demand accounts 16,97 Savings accounts 14,97 14,07 3,42 13,80 13,33 Total 13,17 0,83 3,49 ■Time deposits 3,53 (€ bn) 3,72 0,93 3,96 0,95 4,33 0,95 0,84 0.96 12,72 10,55 9,59 9,13 8,53 7,88 30.06.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 Bank of Cyprus KOINO ΚΥΠΡΙ 45#46Market Shares in Cyprus - Fresh funds Market share evolution in Cyprus -Deposits Loans 40,0% 40,5% 40,8% 41,1% 39,1% 39,5% 38,1% 38,8% 37,2% 37,3% 27,9% 27,5% 26,4% 25,5% 24,9% 24,8% 24,6% 24,8% 25,0% 25,5% Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Increasing fresh funds balance¹ (€ bn) 0,44 0,51 0,60 0,61 0,65 0,70 0,74 1,69 1,80 1,83 1,54 1,12 1,19 1,24 1,34 1,39 0,90 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 1 Funds received from abroad minus funds sent abroad per customer, post March 2013 and not subject to restrictive measures Around 1% increase in the Bank's market share in deposits since the bottom. The Bank's market share in loans remains around 37% An on-going increase in fresh funds balance1 totalling €1,83 bn at end- February 2015. The amount of fresh money is approximately 14% of total customer deposits Bank of Cyprus KOINO WKYNРIW 46#47Cyprus: Summary Income Statement and Key Indicators € mn FY2014 FY2013 4Q2014 3Q2014 2Q2014 1Q2014 Net interest income 919 834 216 216 251 236 Net fee and commission income 145 132 34 35 36 40 Net foreign exchange gains/(losses) and net profits/(losses) on other financial instruments 7 18 12 (10) (1) 6 Insurance income net of insurance claims 43 57 10 9 12 12 Other income/(expenses) (6) (19) 5 (1) Total income 1.108 1.022 267 245 303 293 Staff costs (221) (247) (56) (55) (55) (55) Other operating expenses (168) (147) (54) (38) (40) (36) Total expenses (389) (394) (110) (93) (95) (91) Profit before provisions and impairments, gains on derecognition and changes in expected cash flows on acquired loans, restructuring costs and discontinued operations 719 628 157 152 208 202 Provisions for impairment of customer loans (580) (856) (207) (101) (163) (109) Gains on derecognition and changes in expected cash flows on acquired loans 47 27 30 6 4 7 Impairments of other financial and non-financial assets (81) (24) (48) 1 (34) (0) Share of profit from associates 5 2 3 2 2 I Profit/(loss) before tax, restructuring costs and discontinued i operations 110 (223) (65) 57 16 102 L Tax (45 (Loss)/profit attributable to non - controlling interests 1 1 1 (0) (0) (0) I Profit 7(loss) after tax and before restructuring costs, discontinued I 107 (219) (64) 55 15 101 operations and net profit on disposal of non-core assets Bank of Cyprus KOINO ΚΥΠΡΙ 47#48UK: Summary Income Statement and Key Indicators (€ mn)) Net interest income FY2014 FY2013 4Q2014 3Q2014 2Q2014 1Q2014 31 29 10 9 7 Net fee & commission income 5 5 1 1 1 Net foreign exchange income and (losses)/gains from financial instruments 1 1 0 1 Other (expenses)/income (0) 0 1 (1) Total income 37 35 7 12 10 00 8 Staff costs Other operating expenses (12) (10) (3) (3) (3) (3) (16) (14) (6) (3) (3) (3) Total expenses (28) (24) (9) (6) (6) (6) ! Profit before provisions 9 11 (2) 6 2 Provisions for impairment of loans and advances (30) (21) (2) 2 (9) (21) Loss before tax (21) (10) (4) 8 (5) (19) Tax (1) (1) (0) (1) Loss after tax and before restructuring costs and i discontinued operations (22) (11) (4) 8 (6) (19) L b.p. = basis points, p.p. = percentage points ; 100 b.p. = 1 p.p. Bank of Cyprus KOINO WKYNРIW 2235 48#49UK Operations UK Loans (€ bn) ex-Laiki UK loans Loans by sector 1,46 1,38 1,28 1,19 1,17 1,11 0,83 0,72 0,65 0,91 0,56 0,45 0,40 0,30 SMEs 0,83 0,74 0,73 0,72 0,74 0,77 0,81 0,91 43% 31.12.12 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 UK Deposits (€ bn) 1,21 1,30 1,29 1,28 1,29 1,24 1,25 1,25 31.12.12 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 Consumer Credit Housing 2% 2% Corporate 53% Bank of Cyprus KOINO ΚΥΠΡΙ 2235 49#50Russian Operations Russian Loans (€ bn) 1,79 1,62 1,43 1,29 1,30 1,21 0,97 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 Russian Deposits (€ bn) 1,15 1,08 0,92 0,85 0,77 0,79 0,55 30.06.13 30.09.13 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 Based on the progress of the disposal process of the Russian operations, the said operations have been classified as a disposal group held for sale. In line with the Group's accounting policy, an impairment loss of up to the carrying value of non- current assets within IFRS 5 measurement scope (e.g. tangible and intangible assets and other non- financial assets) is recognised. As a result, the Bank has recognised an impairment loss of €84 mn, which is included in losses from discontinued operations in the Group's Income Statement. The total loss of discontinued operations for the fourth quarter was €214 mn. The total loss of discontinued operations for the year ended 31 December 2014 amounted to €303 mn. €299 mn of this loss relates to the Russian operations. Following the announcement of the Preliminary FY2014 Financial Results and as part of the disposal process, the Group's net exposure was reduced by a further €30 mn due to the increase in provisions for impairment of customer loans, reducing the Group's overall net exposure to €130 mn Bank of Cyprus 50 KOINO ΚΥΠΡΙ#51Overseas Operations – Romania & Greece Romanian Gross loans (€ mn) Total exposure in Greece 31 December 2014 € mn 657 637 631 Net Exposure from on balance sheet financial assets 120 533 518 Exposure from off balance sheet financial assets 185 About 600 foreclosed properties (book value) 179 31.12.13 31.03.14 30.06.14 30.09.14 31.12.14 The Bank has decided to gradually run down the Romanian operations (over a period of 3 years from 2015-2017) and to proceed with piecemeal sales of selected loans The overall net exposure as at 31 December 2014 totalled €520 mn. Bank of Cyprus 51 KOINO WKYNРIW 2235#52Asset Quality + + + + (€ mn) Dec-14 Sep-14 Jun-14 Mar-14 Dec-13 A. Gross Loans after Fair value on Initial recognition 22.206 23.136 23.685 24.450 24.840 Fair value on Initial recognition 1.566 1.606 1.615 1.813 1.903 B. Gross Loans 23.772 24.742 25.300 26.263 26.743 B1. Loans with no arrears 10.065 10.298 10.964 11.491 11.855 B2. Loans with arrears but not impaired 4.413 5.222 5.285 6.037 6.733 Up to 30 DPD 562 750 919 865 823 31-90 DPD 91-180 DPD 181-365 DPD Over 1 year DPD B3. Impaired Loans With no arrears Up to 30 DPD 31-90 DPD 91-180 DPD 492 716 826 1.151 1.063 440 718 674 682 1.316 926 1.058 1.145 1.635 2.099 1.993 1.980 1.721 1.704 1.432 9.294 9.221 9.051 8.735 8.155 1.153 1.145 1.133 1.051 934 149 66 104 53 168 142 168 122 344 352 143 233 398 317 423 181-365 DPD Over 1 year DPD (90+ DPD)* 685 828 1.551 1.495 1.426 7.022 6.781 5.743 5.475 4.852 12.653 12.977 12.591 12.756 13.002 90+ DPD ratio (90 + DPD / Gross Loans ) 53,2% 52,5% 49,8% 48,6% 48,6% * Loans in arrears for more than 90 days (90+ DPD) = Loans with arrears over 90 days but not impaired + Impaired Loans Bank of Cyprus KOINO ΚΥΠΡΙ 2235 52#5390+ DPD by Geography 90+ DPD by Geography (€ bn) ■Cyprus Russia ■ UK Other countries* 12,76 12,59 12,98 12,65 0,57 0,89 0,52 0,26 0,58 0,28 0,55 0,09 0,25 0,44 0,51 0,51 11,60 11,47 11,18 11,28 21% 34% 49% 90+ DPD ratios by Geography ■Cyprus Russia ■ UK ■ Other countries* 75% 24% 39% 51% 65% 53% 46% 31.03.14 30.06.14 30.09.14 31.12.14 31.03.14 30.06.14 30.09.14 31.12.14 Other countries: Romania, Ukraine (until March 2014) and Greece 23% Bank of Cyprus 53 KOINO WKYNРIW 2235 %08 54% 52% 1004 10% 84%#54Analysis of Loans and 90+ DPD ratios by Business Line* Gross loans by business line (€ bn) 30.06.14 ■ 30.09.14 ■ 31.12.14 % of total 23% 18% 10% 16% 7% 6% 20% 5,21 4,87 4,34 5,84 5,55 5,33 4,06 4,41 4,78 3,94 3,90 3,85 2,73 2,63 2,30 2,01 1,90 1,75 1,50 1,48 1,40 Corporate SMEs Housing Consumer Credit RRD-Mid and Large Corporates RRD-SMES - RRD Recoveries 90+ DPD ratios by business line 30.06.14 ■ 30.09.14 ■ 31.12.14 100% 100% 100% 79% 82% 81% 66% 68% 69% 30% 33% 32% 28% 28% 24% 31% 32% 31% 14% 17% 16% Corporate SMEs Housing Consumer Credit RRD-Mid and Large Corporates RRD-SMEs *As part of the restructuring of the Group, management is currently monitoring the loan portfolio of the Group using new business line definitions. An important component of the Group's new operational structure is the establishment of the RRD for the purposes of centralising and streamlining the management of its delinquent loans. No comparative information is available prior to June 2014. RRD-Recoveries Bank of Cyprus 54 KOINO ΚΥΠΡΙ 2235#55total 2,83 2,82 2,74 Gross loans by economic activity (€ bn) Analysis of Loans and 90+ DPD ratios by Economic Activity 31.12.13 31.03.14 30.06.14 ■30.09.14 ■ 31.12.14 % of 10% 4% 6% 17% 13% 2,70 2,47 1,00 0,95 0,96 0,95 0,89 1,89 1,85 1,82 1,61 1,50 4,25 90+ DPD ratios by economic activity ■31.12.13 ■31.03.14 ■ 30.06.14 ■ 30.09.14 ■ 31.12.14 4,21 Trade Manufacturing Hotels & Restaurants Construction Real estate Private 44,1% 44,4% 44,8% 46,7% 49,8% 49,7% 51,1% 53,3% 55,3% 54,3% 51,1% 46,8% 51,9% 59,8% 58.9% 69,6% Trade 4,13 4,09 3,96 4,20 4,12 3,63 3,59 3,12 8,54 8,41 8,05 7,96 7,85 2,31 2,18 2,44 2,32 1,86 1,73 1,72 1,53 1,53 2,12 33% 8% 9% Professional Individuals & other services sectors 72,1% 76,7% 78,3% 79,1% 51,7% 50,4% 48,0% 51,2% 48,3% 32,1% 33,0% 34,1% 36,8% 37,6% 56,8% 53,5% 54,9% 57,7% Manufacturing Hotels & Restaurants Construction Real estate Private Individuals 54,4% 64,7% 64,0% Professional & other services Other sectors Bank of Cyprus KOINO ΚΥΠΡΙ 2235 55 59,6% 60,5% 66,9% Other#56Credit Risk by line of business - 90+ DPD fully covered by provisions & tangible collateral Corporate SMEs Housing Consumer RRD Cyprus 13% 8% 18% 7% 54% 100% 21,2 Gross loans (€ bn) 11,4 2,7 1,7 3,8 1,5 83,0% 90+DPD loans 54,1% 18,3% 26,8% 27,9% by segment 15,6% Loan Loss Reserve (LLR) 44,7% 51,0% 26,4% 20,9% 38,4% 37,8% coverage 82,6% 82,6% 83,2% Tangible coverage 46,1% 76,2% 76,0% Total 127,3% 108,9% 104,2% 97,2% 114,6% 113,8% coverage Significant provision and collateral coverage, with additional comfort from personal guarantees XX % of total gross loans (Cyprus only) Bank of Cyprus 56 KOINO ΚΥΠΡΙ#5712-2008 90+ DPD and Quarterly Change of 90+ DPD 90+ DPD (€ bn) and Quarterly change of 90+ DPD (€ mn) Quarterly change of 90+ DPD (€ mn) -90+ DPD (€ bn) 90+ DPD formation 1,3 1,6 2,0 2,3 2,2 2,5 2,9 5,0 5,1 5,1 3,5 3,6 3,8 4,0 4,4 6,5 7,7 11,0 13,0 13,0 12,8 12,6 13,0 12,7 03-2009 06-2009 09-2009 12-2009 03-2010 06-2010 09-2010 12-2010 03-2011 06-2011 09-2011 12-2011 03-2012 06-2012 09-2012 12-2012 06-2013* 09-2013 12-2013 03-2014 06-2014 09-2014 12-2014 FY2009 €945 mn FY2010 €1.329 mn FY2011 €1.399 mn FY2012 €2.723 mn €5.311 mn FY2013 FY2014 -€350 mn -85 321 380 329 265 410 558 -243 69 96 232 156 56 64 1.319 1.240 3.319 1.972 20 20 325 387 * Information for 1Q2013 and 2Q2013 is not available as it has not been possible to publish the financial results for the three months ended 31 March 2013. Bank of Cyprus 57 KOINO WKYNРIW#58Non-Performing Loans definition Non-Performing Loans (NPLs) as per the Central Bank of Cyprus Directive: In accordance with the directive, a loan is considered as non-performing when it shows arrears of more than 90 days or if it has been restructured and at the time of restructuring presented arrears for a period of more than 60 days, regardless of tangible or other collateral or it has been restructured more than 2 times in a period of 18 months. More specifically a NPL is defined as a loan which has arrears (of interest or capital or any other charges) for a period of more than 90 days, an overdraft in excess of its contractual limit on a continuous basis for a period of more than 90 days and a restructured facility which at the time of restructuring was classified as NPL or has arrears/excesses for a period of more than 60 days, or has been restructured more than 2 times in the last 18 months. Restructured loans remain as NPLs for 6 months following the commencement of the new repayment schedule of capital installments or in the case of gradual increasing installments, six months from the first month from which the higher installment is due. In case of lump-sum payments at maturity, the loan remains as NPL until its maturity. Non-Performing Exposures (NPEs) as per the EBA definition: The European Banking Authority (EBA) has published its reporting standards on forbearance and non-performing exposures. In accordance with the EBA definition, the below exposures are considered as non-performing if: - (i) The debtor 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 day past due or - (ii) impaired exposures i.e. a) specific provision is kept, b) write off, c) legal, d) bankrupt, or - (iii) material exposures which are more than 90 days past due or - (iv) performing forborne exposures that re-restructured within 2 year probation period or - (v) performing forborne exposures under probation (2 years) that present more than 30 days past due after the restructuring date. -90+DPD: 90+ DPD are loans with a specific provision (i.e. impaired loans) and loans past-due for more than 90 days but not impaired Bank of Cyprus 58 KOINO WKYNРIW 2235#59Disclaimer Certain statements, beliefs and opinions in this presentation are forward-looking. Such statements can be generally identified by the use of terms such as "believes", "expects", "may", "will", “should”, “would”, “could”, “plans", "anticipates" and comparable terms and the negatives of such terms. By their nature, forward-looking statements involve risks and uncertainties and assumptions about the Group that could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. We have based these forward- looking statements on our current expectations and projections about future events. Any statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Readers are cautioned not to place undue reliance on forward-looking statements, which are based on facts known to and/ or assumptions Imade by the Group only as of the date of this presentation. We assume no obligation to update such forward-looking statements or to update the reasons that actual results could differ materially from those anticipated in such forward-looking statements. This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any security in any jurisdiction in the United States, to United States Domiciles or otherwise. The delivery of this presentation shall under no circumstances imply that there has been no change in the affairs of the Group or that the information set forth herein is complete or correct as of any date. This presentation shall not be used in connection with any investment decision regarding any of our securities, which should only be made based on expressly authorised materials from us identified as such, nor in connection with any decision whether or how to vote on any matter submitted to our stockholders. The securities issued by Bank of Cyprus Public Company Ltd have not been, and will not be, registered under the US Securities Act of 1933 ("the Securities Act"), or under the applicable securities laws of Canada, Australia or Japan. Bank of Cyprus 59 KOINO WKYNРIW 2235