#1Bank of Cyprus Group Group Financial Results for the year ended 31 December 2015 EUROMONEY AWARDS FOR EXCELLENCE 2015 Bank of Cyprus The Best Bank in Cyprus 2015 31 March 2016 Bank of Cyprus DINO#2Audited FY2015 financial results - Highlights . 90+ DPD1 down by €1,3 bn or 10% during FY2015; 90+ DPD ratio at 50% Improving Asset Quality Strong Capital Position • . • 90+ DPD provision coverage boosted by 7 percentage points to 48%; Elevated provision charges for 4Q2015 following the assumption changes in the Bank's provisioning methodology Intensify restructuring and workout activity Set up of Real Estate Management Unit (REMU) to take ownership of, manage and monetise real estate assets in settlement of customer obligations CET1 ratio (transitional basis) at 14,0%; Well above the minimum regulatory requirement of 11,75% CET1 ratio (fully loaded) at 13,1% Leverage ratio at 12,6%, one of the highest among EU peers, reflecting a very high RWA intensity of 85% Normalising Funding Structure • • • ELA reduced by €1,6 bn post 3Q2015 to a current level of €3,3 bn; Reduction of €8,1 bn since peak Customer deposits² increased by €1,6 bn or 12% during FY2015 Customer deposits increased to 61% of Total assets Income Statement Dominant Franchise in a recovering economy • Ratio of Loans to Deposits (L/D) improved to 121% Profit before provisions of €624 mn for FY2015 Provisions for impairment of loans of €630 mn for 4Q2015, with a full year charge of €959 mn for FY2015 Loss after tax from continuing operations and Loss after tax of €394 mn and €438 mn for FY2015, respectively Deposit market share of 28,2% at 31 December 2015; a 3,4 percentage points market share gain during 2015 . New lending of €0,6 bn during 2015 to support economic recovery and promising sectors Cypriot economy growing faster than expected; Exited from Troika MoU in March 2016 Bank of Cyprus (1) Loans in arrears for more than 90 days (90+ DPD) are defined as loans with a specific provision and loans past-due for more than 90 days. (2) Adjusted for the disposal of the Russian operations. 2#3Income Statement Review € mn FY2015 FY20143 4Q2015 3Q20154 qoq % Total income Total expenses 1.040 1.168 253 251 1% (416) (427) (119) (102) 16% Profit before provisions and impairments¹ 624 741 134 149 -10% Provisions for impairment of customer loans net of gain on derecognition of loans and changes in expected cash flows on acquired loans (959) (770) (630) (96) 560% Impairments of other financial and non financial assets (62) (90) (24) (6) 313% Share of profit from associates 6 5 2 1 (Loss)/profit before tax, restructuring costs and discontinued operations (391) (114) (518) 48 Tax (9) (11) 8 (8) Profit attributable to non-controlling interests 6 19 1 5 (Loss)/profit after tax from continuing operations² (394) (106) (509) 45 Restructuring costs (43) (36) (16) (5) 205% Loss from disposal group held for sale/discontinued operations (38) (166) 0 (9) -100% Net gain/(loss) on disposal of non-core assets 37 47 13 (18) -177% (Loss)/profit after tax (438) (261) (512) 13 Net interest margin Cost-to-Income ratio 379 bps 394 bps 369 bps 370 bps -1 bp 40% 37% 47% 41% +6 p.p. (1) (2) (3) ུས» (4) Profit before provisions and impairments, gains on derecognition and changes on expected cash flows on acquired loans, restructuring costs and discontinued operations. (Loss)/profit after tax and before restructuring costs, discontinued operations and net profit on disposal of non-core assets. FY2015 is not comparable to FY2014 given the significant deleveraging completed since then, including, among others, the repayment of the sovereign bond held by the Bank by the Republic of Cyprus and the disposal of the majority of the Russian operations during 3Q2015. As from 4Q2014, the Group's operations in Russia are treated as disposal group held for sale and results have been presented accordingly as discontinued operations according to IFRS5. In September 2015, the Bank completed the sale of the majority of its Russian operations. The part of the operations not disposed of, has ceased to be classified as held for sale and its results are presented as part of the continuing operations. Bank of Cyprus 3 DINO#4Net Interest Income and Net Interest Margin Net Interest Income and Net Interest Margin 423 Interest income from Laiki Recap. bond (€ mn) NIM (bps) FY2014 NIM: 394 bps NII: €969 mn Net interest income (other) (€ mn) -NIM (excluding Laiki Recap. bond) (bps) FY2015 NIM: 379 bps / 351 bps (excl recap bond) NII: €842 mn / €779 mn (excl recap bond) 394 382 381 379 370 369 <-350- 3.40. - 355 262 231 225 227 212 205 198 44 26 26 25 22 -9 -7 218 205 199 202 190 196 191 355 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 Yield of Loans, Cost of Deposits and Customer Spread in Cyprus operations (bps) 1Q2015 2Q20152 ■3Q2015 FY2015: 543 ■4Q2015 FY2015: 428 573 537 536 527 FY2015: 115 434 418 432 427 139 119 104 100 Cost of Deposits IIII Customer spread 4Q2015 Net Interest Income (NII) at €198 mn, compared to €205 mn for 3Q2015, reflecting a lower yield on restructured loans partly due to restructurings made during the 4Q2015 and deleverage actions • The reduction in NII during 2015 reflects the reduction in lending rates, the gradual repricing of deposits and the repayment of a bond by the Republic of Cyprus in June and December of 2015 • • • Net Interest Margin (NIM) remains healthy at 3,69% for 4Q2015; Adjusting for the Laiki Recapitalisation bond, the NIM remained unchanged qoq at 3,55% Customer spread in Cyprus decreased to 427 bps in 4Q2015 compared to 432 bps in 3Q2015, with the reduction reflecting a lower yield on loans partly due to loans restructuring Going forward the Bank will address the pressure on NII via new loan origination, while maintaining lending yields despite growing competition Yield on Loans (1) Includes all currencies (2) 2Q2015 and year to date 1H2015 that has been adjusted to exclude non recurring items Bank of Cyprus 4 DINO#5Analysis of Non-interest income Analysis of Non Interest Income (€ mn) – Quarterly Net fee and commission income 14% 31 10 - ■Insurance income net of insurance claims Other¹ 1 13% 16% 14% 14% 15% 50 47 49 46 55 1 5 11 54 ! 47 ! T- 10 45 9 12 11 48 ! 16 54 ! 45 43 35 36 36 38 % Net fee and commission income % Total income X Non interest income (€ mn) 1 37 X -7 -2 -16 Recurring non-interest income (€ mn) 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 Analysis of Non Interest Income (€ mn) — Annual 13% 199 15% 198 1 198 202 46 48 152 154 -4 Non-interest income stood at €55 mn for 4Q2015, compared to €46 mn for 3Q2015; Non-interest income of €198 mn for FY2015, compared to €199 mn for FY2014 • The majority of non-interest income is recurring income from fee and commission income and insurance income stood at €54 mn for 4Q2015 (about 15% of total income); Recurring income from fee and commission income and insurance income stood at €202 mn for FY2015, compared to €198 mn for FY2014 Going forward, the Bank will focus on diversifying its income streams by further developing its fee-generating activities, such as the international business services, wealth management and insurance business FY2014 FY2015 (1) Comprising (a) Net FX gains/(losses) & Net gains/(losses) on other financial instruments, (b) Losses from revaluation and disposal of investment properties and (c) other income. Bank of Cyprus 5 DINO#6Total expenses Total expenses (€ mn) FY2014: 427 115 105 104 103 102 57 47 45 44 43 33 92 92 FY2015: 416 102 119 62 43 33 58 59 59 58 59 59 59 57 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 Total expenses for 4Q2015 increased to €119 mn from €102 mn for 3Q2015, with the increase reflecting primarily higher non-recurring advisory and professional expenses and increased provisions for litigations and legal settlements. Going forward, the run-rate for other operating expenses is expected to be in line with earlier of quarters of 2015 Staff costs for 4Q2015 at €57 mn in line with the previous quarters Total expenses for FY2015 totalled €416 mn compared to €427 mn for FY2014 Staff costs Other operating expenses Cost to Income Ratio ■Group ■Cyprus 40% 38% 38% 35% 37% 35% 37% 36% 35% 35% 35% 34% 33% 33% 31% 31% 1Q2014 1H2014 9M2014 FY2014 1Q2015 1H2015 9M2015 FY2015 • The cost to income ratio for FY2015 was 40%, compared to 37% for FY2014 Actions for focused, targeted cost containment: Tangible savings through a targeted cost reduction program for operating expenses and though a program of staff exits Introduction of appropriate technology/ processes to enhance product distribution channels and reduce operating costs Introduction of HR policies aimed at enhancing productivity Bank of Cyprus 6 DINO#7Income Statement Highlights - Group vs Cyprus FY2015 Cyprus Vs Group performance (€ mn) 94% 98% 1.017 1.040 788 842 54 92% -383 -416 23 102% 634 624 58% % % contribution of Cyprus operations ■Cyprus operations -33 -10 -252 -186 ■Rest of operations ■Group -438 Net interest income Total income Total expenses Profit before provisions and impairments restructuring costs and discontinued operations Loss after tax High NIM in Cyprus operations Low Cost to Income ratio for Cyprus operations Steady Fee and commission income for Cyprus operations Total income (€ mn) (bps) 423 384 379 386 369 367 366 354 38% Other income 303 246 267 262 250 Fee and commission income 254 251 38% 35% 35% 35% 35% 12% 15% 13% 16% 13% 14% 15% 33% FY2015: 373 31% 31% FY2014: 385 88% 85% 87% 84% 87% 86% 85% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 FY13 1Q14 1H14 9M14 FY14 1Q15 1H15 9M15 FY15 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 (1) Profit before provisions and impairments, gains on derecognition and changes on expected cash flows on acquired loans, restructuring costs and discontinued operations. Bank of Cyprus 7 DINO#8Capital Position Evolution for CET1 ratio during 4Q2015 15,6% 0,6% (2,5%) 14,0% 0,2% (0,9%) 0,1% CET1 ratio Profit before Provisions 30.09.15 provisions RWAs Change Other CET1 ratio DTA (transitional) 31.12.15 (transitional) 13,1% CET1 ratio 31.12.15 (fully loaded) ■31.12.14 ■31.12.15 • CET1 ratio (transitional basis) totalled 14,0% at 31 December 2015, compared to 15,6% at 30 September 2015. Adjusting for DTA, the Fully Loaded CET1 ratio totalled 13,1% CET1 ratio remains higher than the minimum required ratio of 11,75% The reduction in the CET1 ratio reflects the losses incurred during 4Q2015 due to elevated provisions for impairment of loans following the assumption changes in the Bank's provisioning methodology in relation to the on-going regulatory dialogue with the ECB regarding the SREP. These changes relate to extending significantly the recovery periods and applying additional realisation discounts on the most stressed non-performing portfolios, with both changes being a function of the Bank's strategy for recovering delinquent exposures The changes significantly bridged the regulatory dialogue with the ECB and boosted the 90+ DPD provisioning coverage to 48% Capital Adequacy Ratios 31.03.14 ■31.03.15 ■30.06.14 ■30.09.14 ■30.06.15 ■ 30.09.15 15,4% 15,6% 15,6% 15,7% 14,9% 15,0% 14,0%13,9% 14,0% 14,2%14,1% 14,1% 11,3% 10,6% 11,5% 10,8% CET 1 ratio (transitional) Total capital ratio (transitional) DINO Bank of Cyprus 8#9Capital Position 'Clean' Fully Loaded CET1 ratio¹ (December-2015²) Clean' Fully Loaded CET1 ratio (LHS) RWA % Total Assets (RHS) 25% 20% 15% 13,3% 10% 44% 5% 0% BOC CET1 FL 13,1% RWA intensity 85% Leverage ratio³ (December-20152) Average 'Clean' Fully Loaded CET1 ratio Average (RWA % Total Assets) 20% Tangible Equity % Assets - Average 15% BOC Leverage ratio 12,6% 10% 5% 0% 90% 80% 70% 60% 50% 40% 30% 20% 10% 6,7% (1) As per SNL Financial Database, 'Clean' Fully Loaded CET1 ratio as at 31 December 2015, excludes Deferred Tax Credits, AFS and Danish Compromise Estimated Impact. (2) Bank of Cyprus data is based on Audited FY2015. (3) Leverage ratio is defined as Tangible Equity over Total Assets. Data for 1 EU bank as at 30 September 2015. "Clean" Fully loaded CET1 ratio at 13,1%, higher than average for EU peers, reflecting a very low level of Deferred Tax Assets RWA intensity of 85%, one of the highest among EU banks at Leverage ratio 12,6%, one of the strongest ratios among EU peers, compared to an average of 6,7% for EU peers DINO Bank of Cyprus 9#10ELA Reliance Reducing Fast Continuous reduction of ELA with further potential going forward Actions for further ELA reduction 11,40 11,11 9,86 9,56 9,51 8,78 34% 32% 31% 31% 31% 28% 28% 26% 23% 20% • • New deposit inflows Regaining access to wholesale and interbank market • Maturity of non-core bonds 7,68 7,40 16% 6,90 1 14% 5,90 • • Issue senior unsecured debt and enter into repos with counterparties, subject to market conditions Retention of cash profits from operations 4,90 €8,1 bn reduction of ELA since peak 3,80 . Proceeds from deleveraging 3,30 Apr Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 31 Mar 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 ELA (€ bn) ELA % Total Assets • Covered bond secured with commercial real estate assets eligible for ECB funding Full repayment of ELA by end of 2017 Bank of Cyprus DINO (1) Ratio of ELA Funding % Total Assets for 31 March 2016 is based on total assets at 31 December 2015 10#11Customer Deposits Growing customer deposit¹ base (€ bn ) Cyprus 2 ■ UK ■Russia & Other countries Improving funding structure -Customer deposits to Total Assets -Loans to deposits ratio (net) 14,97 14,07 14,18 1,02 13,80 1,24 1,25 0,83 0,86 1,25 13,33 13,17 0,80 0,55 1,29 1,31 13,61 13,63 13,61 0,00 0,61 0,61 1,36 1,39 0,00 1,49 151% 1,45 145% 148% 148% 141% 138% 136% 132% 121% 12,71 11,99 11,69 11,24 11,31 11,64 11,63 12,16 12,69 61% 49% 48% 48% 49% 49% 51% 54% 56% Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Increasing deposit market shares in Cyprus Residents Non-Residents 32,2% 30,8% 31,1% 32,5% 31,8% 28,4% 27,5% 26,7% 26,9% 26,7% 27,5% 25,5% 24,6% 24,3% 23,7% 24,1% 24,6% 25,3% 26,1% 27,0% 26,6% 26,5% Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Jan-16 Feb-16 • • Dec Mar Jun Sep Dec 2013 2014 2014 2014 2014 Mar Jun 2015 2015 2015 2015 Sep Dec Group customer deposits totalled €14,18 bn at 31 December 2015. Adjusting for the disposal of the Russian operations, customer deposits increased by €1,6 bn or 12% during FY2015 Deposit market shares in Cyprus for Residents and non-Residents reached 26,5% and 31,8% respectively, in February 2016; Ratio of Loans to deposits improved by 20 percentage points to 121% during 2015 and is in line with the EU average as reported by EBA³; Ratio of Deposits to Total Assets increased by 12 percentage points to 61% during 2015 (1) Including deposits of disposal groups held for sale/discontinued operations. (2) Other countries comprise Ukraine (until March 2014), Romania and Greece. (3) Based on EBA Risk Dashboard Report, Data as at 30 September 2015 Bank of Cyprus 11 DINO#12Asset Quality 90+ DPD 90+ DPD (bn) 90+ DPD ratio 53,2% 53,1% 52,9% 52,5% Non Performing Exposures (NPEs) NPES (€ bn) NPES ratio 62,9% 63,0% 61,9% 62,2% 61,8% 15,0 15,2 14,8 50,1% 14,2 14,0 12,7 12,8 12,6 12,0 11,3 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Evolution of 90+ DPD (€ mn) 2.723 1.329 1.399 945 5.311 386 136 -247 -164 -325 -143 -649-668 FY14: -350 FY09 FY10 FY11 FY12 FY13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 FY15: -1.324 90+ DPD¹ were reduced by €1,3 bn or 10% during FY2015, due to restructuring and deleveraging; 90+ DPD ratio at 50% at 31 December 2015 Non Performing Exposures (NPEs), as per EBA definition, were reduced by €1,0 bn during FY2015 and totalled €14,0 bn at 31 December 2015 The level of NPEs exceeds the level of 90+ DPD, primarily due to the fact that cured performing exposures are required to remain in the NPEs category until specific probation timeframes have elapsed Bank of Cyprus DINO 12 (1) Loans in arrears for more than 90 days (90+ DPD) are defined as loans with specific provisions and loans past-due for more than 90 days.#13Asset Quality 90+ DPD inflows in the Cyprus operations have been reduced significantly Group 90+ DPD by Customer type (€ bn) 90+ DPD inflows - Cyprus operations (€ bn) ■ Corporate ■SMES ■Retail other ■Retail housing 90+ DPD inflows 0,68 12,65 12,79 12,65 12,00 0,60 1,17 1,21 1,24 11,33 1,08 1,22 1,26 1,10 1,18 1,14 1,08 3,07 3,14 3,13 3,03 2,90 7,19 7,18 7,10 6,80 6,25 Average quarterly inflows. 0,34 0,36 0,22 0,11 0,39 31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 90+ DPD inflows by customer type - Cyprus operations (€ bn ) 0,29 ■3Q2014 ■4Q2014 ■1Q2105 ■2Q2105 3Q2105 ■4Q2015 Average 0,37 0,22 0,20 0,18 0,17 0,14 0,13 0,09 0,10 0,09 0,11 0.11 0,08 0.09 ,00 0,07 0,00 0,05 0,04 0,02 Corporate SMEs Retail • Most of the 90+ DPD reduction for FY2015 relates to Corporate loans, accounting for about 70% of the reduction • 90+ DPD inflows (Cyprus operations) have been reduced significantly, totalling € 0,11 bn for 4Q2015, compared to an average of €0,39 bn for the last six quarters • Although there was as reduction in 90+ DPD inflows across all types of loans, 90+ DPD inflows for Corporate loans have exhibited the most improvement Bank of Cyprus DINO 13#14Asset Quality Cost of risk¹ Cost of Risk Cyprus - Cost of Risk - Group 4,3% Accumulated provisions Accumulated provisions (€ bn) Provisions % Gross loans 24,1% 3,6% 2,8% 2,8% 2,7% 21,6% 22,2% 22,5% 21,6% 4,0% 18,6% 19,1% 19,3% 20,0% 2,1% 2,2% 2,1% 2,4% 2,4% 2,2% 1,9% 1,7% 1,5% 1,6% 5,0 5,0 1Q2014 1H2014 9M2014 FY2014 1Q2015 1H2015 9M2015 FY2015 Dec 4,9 4,9 Mar Jun Sep Dec Mar 2013 2014 2014 2014 2014 2015 5,1 5,4 5,4 4,9 5,4 Jun Sep 2015 2015 Dec 2015 Provision coverage ratios 90+ DPD provision coverage NPEs provision coverage 42% 43% 41% 41% 39% 38% 39% 38% 48% • Group annualised cost of risk for FY2015 was 4,3%; The increase in provisioning levels reflects the assumption changes in the Bank's methodology in line with the regulatory dialogue with the ECB Accumulated provisions totaled €5,4 bn and accounted for 24,1% of gross loans at 31 December 2015 The 90+ DPD provisioning coverage ratio improved to 48% at 31 December 2015; The 90+ DPD provisioning coverage ratio calculated in line with local peers, with reference to the contractual balances of customers, totalled 58%2 The NPEs provisioning coverage ratio improved to 39% at 31 December 2015. The NPEs provisioning coverage ratio calculated in line with local peers, with reference to the contractual balances of customers, totalled 49% 39% 36% 35% 35% 35% 33% 34% 34% 35% Dec Mar Jun Sep Dec 2013 2014 2014 2014 2014 Mar Jun Sep Dec 2015 2015 2015 2015 (1) Calculated as the provisions for impairment of customer loans, including provisions of discontinued operations, (in total €1.307 mn), net of gains on derecognition and changes in expected cash flows on acquired loans (totalling €305 mn) over average gross loans (2) This ratio is calculated by adjusting both the provisions stock and the customer balances to include any unrecognized interest income due on contractual balances. Bank of Cyprus 14 DINO#15Asset Quality 90+ DPD fully covered by provisions & tangible collateral Dec -14 Mar-15 Jun -15 Sep-15 Dec -15 114% 110% 109% 111% 115% 76% 71% 70% 72% 69% Total BoC- Cyprus 38% 39% 39% 39% 46% Collateral 118% 113% 112% 115% 119% 77% 71% 69% 72% 68% Corporate 41% 42% 43% 43% 51% 111% 107% 107% 108% 112% 79% 76% 75% 75% 73% SME 32% 31% 32% 33% 39% 107% 107% 105% 106% 110% 81% 81% 80% 81% 79% Retail- Housing 26% 26% 25% 25% 31% 105% 104% 102% 104% 106% 56% 52% 51% 53% 49% Retail-Other 49% 52% 51% 51% 57% Loan Loss Reserve coverage Tangible coverage For Cyprus operations, 90+ DPD provision coverage increased to 46% at 31 December 2015, compared to 39% at 30 September 2015 coverage remains broadly at the same level and stands at 69% at 31 December 2015 Overall coverage of 90+DPD loans increased to 115% at 31 December 2015, compared to 111% at 30 September 2015 Bank of Cyprus 15 DINO#16Asset Quality Restructuring Activity by quarter (€ bn) 0,64 Corporate SMEs Retail Total restructurings --Average restructurings 1,35 FY2014: €1,73 bn FY2015: €3,33 bn 0,69 0,73 0,56 0,42 0,44- 0,23 0,63 0,82 0,44 0,38 0,27 0,32 0,11 0,08 0,09 0,04 0,11 0,17 0,20 0,24 0,29 0,33 0,34 0,06 0,09 0,07 0,07 0,15 0,09 0,19 0,11 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 Performance of restructured loans (post-31 December 2013, by quarter) at 31 December 20151 79% 78% 79% 73% ■1Q2014 ■2Q2014 ■1Q2015 ■2Q2015 ■ 3Q2014 ■4Q2014 ■3Q2015 --- 73% 73% 64% 5% No arrears Average -.12% Total restructurings of €3,3 bn for FY2015; Increased restructuring activity across all lines in 4Q2015 (about 41% of FY2015 restructurings completed in 4Q2015). Restructuring of corporate loans accounted for 49% of total FY2015 restructurings Going forward, progress is expected to materialise in the corporate portfolio as well as in the SME and Retail portfolio, whilst by utilising the foreclosure legislation and insolvency framework the recoverability of older and more complex cases is expected to improve At 31 December 2015, on average about 73% of loans restructured post 31 December 2013 (restructurings performed in 4Q2015 were excluded) for Cyprus operations have no arrears, while about 12% of such restructured loans were in arrears more than 90 days Bank of Cyprus DINO 16% 26% 20% 14% 13% 2% 12% 9% 4% 5% 7% 7% 3% 4% 4% 6% 5% % 6% 5% 4% 1-30 dpd 31-90 dpd Over 90 dpd (1) The performance of loans restructured during 4Q2015 is not presented in this graph as it is too early to assess it. 16#17Asset Quality Top 20 group exposures Top 20 customer groups exposure € bn Top 20 90+DPD ratio 78% 79% 79% Top 20 90+ DPD € bn Top 20 90+DPD provision coverage 80% 73% 46% 41% 42% 41% 3,51 2,74 3,42 2,71 3,39 2,69 3,21 2,56 Dec-14 Mar-15 Jun-15 Sep-15 47% 3,15 2,30 Dec-15 Top 20 group exposures reduced by 10% during FY2015 to €3,15 bn at 31 December 2015; 90+ DPD ratio for Top 20 group was reduced to 73% at 31 December 2015, while the 90+ DPD provision coverage improved to 47% During 4Q2015, about 6 clients of the Bank's top exposures (or parts of group exposures) reached a consensual agreement for the restructuring of their lending with the Bank. Some of these cases have been executed in 4Q2015 contributing materially to the reduction of 90+ DPD, whilst further completions are expected in 1Q2016. Set up of Real Estate Management Unit (REMU) The Bank has set up REMU in order break the systemic inertia that exists today with defaulting borrowers in the real estate sector by taking ownership of assets, reducing unsustainable debt burden of both corporate and retail borrowers, and assisting also the Cyprus economy into recovery. The Bank recognises that the real estate market poses significant challenges but remains confident that with measured and professional approach underpinned by a genuine real estate focus and support from external advisors and all stakeholders, the Bank can crystallise benefits for itself and the economy. Main objectives of the REMU are: (a) provide solutions for distressed borrowers, (b) accelerate the recovery process for both the Bank and the local real estate market, (c) to strengthen the Bank's balance sheet and (d) to monetise such assets at the appropriate time. DINO Bank of Cyprus 17#18Overseas non-core exposures Overseas non-core exposures (€ mn) 1.311 31% 166 1.179 155 1.051 185 627 986 585 140 154 903 97 139 76 133 151 179 5281 132 56 512 200 49 131 477 199 22 192 173 520 439 368 354 312 164 155 155 120 114 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 ■Russia: Net exposure ■Greece Foreclosed Properties ■Romania: Net Exposure 1 Greece net off balance sheet exposure ■Greece net on balance sheet exposure Greece other The non-core overseas exposures at 31 December 2015 were as follows: Greece: The net exposure comprised: (a) Net on-balance sheet exposures (excluding foreclosed properties) totalling €22 mn; (b) 641 foreclosed properties with a book value of €173 mn; (c) off-balance sheet exposures totalling €131 mn; and (d) lending exposures to Greek entities in the normal course of business in Cyprus totalling €70 mn, and lending exposures in Cyprus with collaterals in Greece totalling €81 mn. Romania: The overall net exposure is €312 mn Russia: Following the disposal of Uniastrum Bank and certain other Russian assets the remaining net exposure (on and off balance sheet) in Russia is €114 mn (1) Lending exposures to Greek entities in the normal course of business in Cyprus and lending exposures in Cyprus with collaterals in Greece Bank of Cyprus 18 DINO#19Significant progress made on Group KPIs Well on track to meet 2017 targets - A clear plan of action to achieve new Medium Term Targets Key Pillars & Plan of action Category Key performance indicators Medium Dec- Dec- 2014 2015 Targets 2017 Term Targets <30% 1. Drastically reduce problem loans ° 90+ DPD ratio 53% 50% Intensify restructuring and workout activities of delinquent borrowers Increase pace of restructurings and focus on more complex and older cases on the back of the foreclosure law • REMU to on-board, manage and dispose of properties acquired • Boost deposit franchise, leveraging on increasing customer confidence and improving macroeconomic conditions Access Debt Capital Markets on the back of improved ratings, stronger financial soundness and better prospects Access ECB funding Direct lending into promising sectors to fund the recovery of the Cypriot economy Diversify income stream by boosting fee income from international business, wealth, and insurance Asset 90+ DPD 41% 48% 40%-50% >50% quality coverage Provisioning 3,6% 4,3% <1,0% <1,0% charge 1 ELA % Assets; 28%; 16%; € bn €7,4 bn €3,8 bn Fully repay 2. Normalise funding structure; Eliminate • • ELA ° Funding Net Loans % 141% 121% 100%-120% Deposits 3. Focus on • CET1 Capital 14,0% 14,0% >12% >15% (transitional) core markets Net interest 3,9% 3,8% ~3,25% ~3,00% margin • Fee and Margins and commission 13% 15% Increase >20% income/total efficiency income 4. Achieve a lean operating model Tangible savings through a targeted reduction program for operating expenses • • Introduce appropriate technology/processes to enhance product distribution channels and reduce operating costs Introduce HR policies aimed at enhancing productivity Cost to income ratio 37% 40% 40%-45% 40%-45% New loan origination, while maintaining lending yields Expand the UK franchise by leveraging the UK subsidiary Balance Sheet Total assets € bn €26,8 bn €23,3 bn 5. Deliver returns Deliver appropriate medium-term risk-adjusted returns >€25 bn IFRS9 impact, which is effective as from 1 January 2018, has not been taken into account for the purpose for the targets. Targets are set on the basis of the present regulatory environment. DINO Bank of Cyprus 19#20Key Takeaways Unrivalled franchise in an economy that is recovering fast; Exited from Troika MoU in March 2016 CET1 ratio (transitional basis) at 14,0%, well above the minimum regulatory requirement; Leverage ratio at 12,6%, one of the highest ratios among EU peers Improving funding structure with an increasing deposit base in Cyprus; L/D ratio at 121% and customer deposits at 61% of total assets ELA reduced by €8,1 bn or 71% to €3,3 bn through deleveraging actions, capital issue proceeds, repayment of a bond by the Republic of Cyprus and customer inflows; To fully repay by end-2017 90+ DPD down by €1,3 bn or 10% during FY2015; 90+ DPD provision coverage improved by 7 percentage points to 48% at 31 December 2015 Foreclosure legislation and insolvency framework can now be used as one of the tools for the effective management of problem loans Set-up of REMU to take ownership of, manage and monetise real estate assets in settlement of customer obligations Recurring pre-provision profitability stabilising, though bottom-line profitability affected by elevated. provisions for impairments DINO Bank of Cyprus 20#21Key Information and Contact Details Credit Ratings: Fitch Ratings: Long-term Issuer Default Rating: upgraded to "CCC" on 28 April 2015 Short-term Issuer Default Rating: affirmed at "C" on 28 April 2015 Viability Rating: upgraded to “ccc" on 28 April 2015 Moody's Investors Service: Baseline Credit Assessment: Affirmed at caa3 on 28 May 2015 (stable outlook) Short-term deposit rating: Affirmed at "Not Prime" on 17 November 2014 Long-term deposit rating: Affirmed at Caa3 on 28 May 2015 (stable outlook) Counterparty Risk Assessment: Assigned at Caa2(cr) / Not-Prime (cr) on 28 May 2015 Listing: ATHEX - BOC, CSE - BOCY, ISIN CY0104810110 Contacts Investor Relations Tel: +35722122239, Email: [email protected] Constantinos Pittalis, Investor Relations Manager, Tel: +35722122466, Email: [email protected] Annita Pavlou, ([email protected]) Elena Hadjikyriacou, (elena.hadjikyriacou @bankofcyprus.com) Marina loannou, ([email protected]) Styliani Nicolaou, ([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 DINO Bank of Cyprus 21#22BOC - At a glance Strengthened capital position Significant Balance Sheet deleveraging CET1 ratio -Leverage ratio Total Assets (€ bn) -RWA (€ bn) Improved funding structure Loans to deposits ratio Customer deposits % Total assets 33,0 30,3 145% 140% 141% 121% 14,0% 14,0% 26,8 23,3 10,5% 10,4% 12,5% 12,6% 23,5 23,5 22,7 61% 51% 49% 49% 19,7 8,4% 8,6% 2 Jun 2013 Dec 2013 Dec 2014 Dec 2015 Jun 2013 Dec 2013 Dec 2014 Dec 2015 Jun 2013 Dec 2013 Dec 2014 Dec 2015 ELA funding reduced by €8,1 bn since peak 90+ DPD formation reversed ELA (€ bn) ELA % Total Assets ■Change in 90+ DPD (€ bn) Improved asset quality 34% 31% 28% 11,4 11,1 9,6 7,4 16% 3 14% 2,7 3,8 3,3 1,3 1,4 0,9 Apr 2013 Jun 2013 Dec 2013 Dec 2014 Dec 2015 31 Mar 2016 90+ DPD ratio 90+ DPD provision coverage 5,3 48,1% 41,6% 40,6% 38,3% 38,8% 48,6% 53,2% 50,1% -0,4 Jun-2013 Dec-2013 Dec-2014 Dec-2015 -1,3 FY09 FY10 FY11 FY12 FY13 FY14 FY15 (1) Pre CRD IV (2) Proforma CRD IV (3) Ratio of ELA Funding % Total Assets for 31 March 2016 is based on total assets at 31 December 2015 Bank of Cyprus 22 DINO#23Consolidated Balance Sheet € mn % 31.12.15 31.12.14 € mn % 31.12.15 31.12.14 change change Cash and balances with 24% 1.423 1.139 Deposits by banks 49% 242 162 Central Banks Funding from central banks -46% 4.453 8.284 Loans and advances to -20% 1.314 1.647 banks Repurchase agreements -36% 368 580 Customer deposits 12% 14.181 12.624 Debt securities, treasury bills -60% 1.009 2.541 and equity investments Debt securities in issue 2% 1 1 Net loans and advances to -5% 17.192 18.168 Other liabilities -9% 948 1.046 customers Other assets -4% 2.284 2.378 Non current liabilities and disposal groups classified as held for sale -100% 0 611 Non current assets and Total liabilities -13% 20.193 23.308 disposal groups classified as -95% 49 916 held for sale Share capital 0% 892 892 Total assets -13% 23.271 26.789 Capital reduction reserve and share premium 0% 2.505 2.505 Note: Revaluation and other reserves 76% 259 147 As from 4Q2014, the Group's operations in Russia are treated as disposal group held for sale and results have been presented accordingly as discontinued operations according to IFRS 5. In September 2015, the Bank completed the sale of the majority of its Russian operations. The part of the operations not disposed of, has ceased to be classified as held for sale and its results are presented as part of the continuing operations. Accumulated losses 661% (601) (79) Shareholders' equity -12% 3.055 3.465 Non controlling interests 44% 23 16 Total equity -12% 3.078 3.481 Total liabilities and equity -13% 23.271 26.789 DINO Bank of Cyprus 23#24Income Statement Review € mn FY2015 FY20143 yoy % 4Q2015 3Q20154 qoq % Net interest income Fees and commission income Insurance income net of insurance claims Core income Other income -13% 198 205 -4% 842 969 154 152 1% 38 36 7% 48 46 5% 16 12 39% 1.044 1.167 -11% 252 253 (4) 1 1 (2) 141% Total income I I 1.040 1.168 -11% 253 251 1% Total expenses (416) (427) -3% (119) (102) 16% Profit before provisions and impairments¹ 624 741 -16% 134 149 -10% Provisions for impairment of customer loans net of gain on derecognition of loans and changes in expected cash flows on acquired loans (959) (770) 25% (630) (96) 560% Impairments of other financial and non financial assets (62) (90) -31% (24) (6) 313% Share of profit from associates 6 5 22% 2 1 (Loss)/profit before tax, restructuring costs and discontinued operations (391) (114) 244% (518) 48 Tax (9) (11) -15% 8 Loss attributable to non-controlling interests 6 19 -64% 1 (Loss)/profit after tax from continuing operations² (394) (106) 271% (509) Restructuring costs (43) (36) 20% (16) 8555 (8) 45 205% Loss from disposal group held for sale/discontinued operations (38) (166) -77% 0 (9) -100% Net gain/(loss) on disposal of non-core assets 37 47 -22% 13 (18) -177% (Loss)/profit after tax (438) (261) 68% (512) 13 Net interest margin Cost-to-Income ratio 379 bps 40% 394 bps -15 bps 369 bps 370 bps -1 bp 37% +3 p.p. 47% 41% +6 p.p. (1) Profit before provisions and impairments, gains on derecognition and changes on expected cash flows on acquired loans, restructuring costs and discontinued operations. (2) (Loss)/profit after tax and before restructuring costs, discontinued operations and net profit on disposal of non-core assets. (3) The FY2015 is not comparable to the FY2014 given the significant deleveraging completed since then, including, among others, the partial repayment of the sovereign bond held by the Bank, by the Republic of Cyprus on 1 July 2014, and the disposal of the majority of the Russian operations during 3Q2015. (4) As from 4Q2014, the Group's operations in Russia are treated as disposal group held for sale and results have been presented accordingly as discontinued operations according to IFRS5. In September 2015, the Bank completed the sale of the majority of its Russian operations. The part of the operations not disposed of, has ceased to be classified as held for sale and its results are presented as part of the continuing operations. Bank of Cyprus 24 DINO#25Consolidated Income Statement by quarter € mn Net interest income Net fee and commission income Insurance income net of insurance claims Core income Other income Total income 4Q2015 3Q2015 2Q20151 1Q20151 4Q20141 198 205 212 227 225 38 36 36 43 35 16 12 9 11 10 252 253 257 281 270 (2) 4 6 253 251 261 274 276 Staff costs Other operating expenses (57) (59) (59) (59) (59) (62) (43) (33) (43) (56) Total expenses (119) (102) (92) (102) (115) Profit before provisions and impairments, gains on derecognition and changes in expected cash I flows on acquired loans, restructuring costs and discontinued operations 134 149 169 172 161 Provisions for impairment of customer loans net of gain on derecognition of loans and changes in expected cash flows on acquired loans (630) (96) (123) (110) (312) Impairments of other financial and non-financial assets (24) (6) (30) (1) (57) Share of profit/(loss) from associates and joint ventures 2 1 3 i (Loss)/profit before tax, restructuring costs and discontinued operations (518) 48 17 62 (205) Tax 8 (1) Profit attributable to non-controlling interests 1 5 0 17 (Loss)/profit after tax and before restructuring costs, discontinued operations and net profit on disposal of non-core assets (509) 45 15 55 (189) Restructuring costs (16) (5) (14) (8) (4) Loss from disposal group held for sale / discontinued operations 0 (9) (11) (18) (131) Net (loss)/gain on disposal of non-core assets 13 (18) 41 (13) (512) 13 31 29 (337) I (Loss)/profit after tax (1) As from 4Q2014, the Group's operations in Russia are treated as disposal group held for sale and results have been presented accordingly as discontinued operations according to IFRS 5. In September 2015, the Bank completed the sale of the majority of its Russian operations. The part of the operations not disposed of, has ceased to be classified as held for sale and its results are presented as part of the continuing operations Bank of Cyprus 25 KOIND KYRPI#26Analysis of Operating Expenses € mn Operating lease rentals for property and equipment FY2015 FY2014 4Q2015 3Q2015 10 13 2 3 Advertising, marketing and communication expenses 22 24 8 8 Property related costs 43 35 16 10 Insurance expenses 15 14 14 4 Depreciation and amortisation 19 20 20 LO 5 5 Special tax levy on deposits of credit institutions in Cyprus & Contribution to depositor protection scheme 18 20 20 LO 5 Provision and settlements of litigations or claims 8 11 co 6 Consultancy and other professional services fees 16 19 4 Other operating expenses Total operating expenses 31 37 12 5 182 193 62 43 Bank of Cyprus 26 DINO#27Income Statement bridge for FY2015 € mn Net interest income Net fee and commission income Net foreign exchange gains/(losses) and net gains/(losses) on other financial instruments Per presentation Reclassification 842 Per financial statements 842 154 154 31 54 85 Insurance income net of insurance claims Losses from revaluation and disposal of investment properties Other income Total income 48 48 (53) (53) 18 1.040 18 1.094 Total expenses (416) (43) (459) ■ Profit before provisions and impairments, gain on derecognition of loans and changes in expected cash flows on acquired loans, restructuring costs and discontinued operations Provisions for impairment of customer loans 624 635 Gain on derecognition of loans and changes in expected cash flows on acquired loans Impairments of other financial and non-financial assets Share of profit from associates ■ Profit before tax, restructuring costs and discontinued operations Tax Loss attributable to non-controlling interests (1.264) 305 (62) 6 (391) (9) 6 (380) (9) 6 (1.264) 305 (62) 6 Loss after tax and before restructuring costs, discontinued operations and net profit from disposal of non-core assets (394) (383) Restructuring costs (43) 43 Net gains on disposal of non-core assets 37 37 (37) Loss from disposal group held for sale / discontinued operations, net of minority interest Loss after tax (38) (17) (55) (438) (438) Bank of Cyprus 27#28Cyprus Income Statement € mn Net interest income FY2015 FY2014 4Q2015 3Q2015 2Q2015 1Q2015 4Q2014 788 919 186 192 200 211 216 Net fee & commission income 147 145 36 34 34 42 34 Insurance income net of insurance claims 47 43 16 11 8 12 10 Core income 982 1.107 238 237 242 265 260 Other income (expenses) 35 3 13 16 8 (2) 7 !Total income 1.017 1.110 251 253 250 263 267 Staff costs (218) (220) (54) (54) (55) (55) (56) Other operating expenses Total expenses Profit before provisions and impairments Provisions1 (165) (167) (59) (38) (31) (37) (54) (383) (387) (113) (92) (86) (92) (110) 634 723 138 161 164 171 157 (847) (533) (593) (73) (102) (79) (177) Impairment of other financial assets and non financial assets (40) (81) (14) (6) (19) (1) (48) Share of profit/(loss) from associates (Loss)/profit before tax 6 5 3 0 1 2 3 (247) 114 (466) 82 44 93 (65) Tax (6) (4) 10 (6) Profit/(loss) attributable to non-controlling interests 1 1 1 0 26 (2) (8) 0 (0) 0 1 (Loss)/profit after tax and before one off items (252) 111 (455) 76 42 85 (64) (1) Provisions for impairment of customer loans and gain on derecognition of loans and changes in expected cash flows on acquired loans Bank of Cyprus 28 DINO#29Cyprus: Income Statement by business line for FY2015 € mn Consumer Banking SME Banking Corporate Banking International Banking Wealth & Brokerage & Total RRD Other Asset Management Cyprus Net interest income 243 69 76 62 7 286 45 788 Net fee & commission income 55 9 8 47 2 15 11 147 Other income 5 0 1 8 3 0 65 82 Total income 303 78 85 117 12 301 121 1.017 Total expenses (121) (12) (11) (23) (5) (33) (178) (383) 182 66 74 94 7 268 (57) 634 Profit/(loss) before provisions and I impairments L Provisions for impairment of customer loans net of gain on derecognition of loans and changes in expected cash flows on acquired loans Impairment of other financial and non financial assets Share of profits from associates Profit/(loss) before tax Tax Profit attributable to non controlling interest Profit/(loss) after tax and before one off items 32 23 23 46 (9) (2) (946) 9 (847) (40) (40) 6 6 214 89 120 85 5 (678) (82) (247) (27) (11) (15) (10) (1) 85 (27) (6) 1 1 187 78 105 75 4 (593) (108) (252) Bank of Cyprus 29 DINO#30Summary Income Statement by Geography € mn UK OTHER 2 FY2015 FY2014 FY2015 FY2014 Net interest income Net fee & commission income 31 31 40 79 5 5 9 20 22 Insurance income net of insurance claims 1 2 Other income (expenses) Total income 0 1 (19) 5 36 37 31 106 Staff costs Other operating expenses Total expenses (13) (12) (25) (38) (18) (16) (27) (54) (31) (28) (52) (92) Profit/(loss) before provisions and impairments 5 9 (21) 14 Provisions1 8 (30) (164) (359) Impairment of other financial assets and non financial assets (20) (92) Share of profit from associates I Profit/(loss) before tax Tax Profit attributable to non-controlling interests ! Profit/(loss) after tax and before one off items 13 (21) (205) (437) (1) (1) (21) 15 60 12 (22) (192) (398) (1) Provisions for impairment of customer loans and gain on derecognition of loans and changes in expected cash flows on acquired loans (2) Other countries include Ukraine, Russian, Romania and Greece Bank of Cyprus 30 DINO#31Risk Weighted Assets by Geography - Regulatory Capital Risk weighted assets by Geography (€ mn) Equity and Regulatory Capital (€ mn) 31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 Cyprus Russia 20.452 20.473 19.607 19.473 18.438 Shareholders' equity 3.465 3.502 3.506 3.518 3.055 706 813 708 46 21 United Kingdom 986 1.162 667 663 685 CET1 capital 3.191 3.201 3.205 3.231 2.748 Romania 308 294 318 315 269 Tier I capital 3.191 3.201 3.205 3.231 2.748 Greece 217 181 180 173 208 Tier II capital 42 30 32 22 30 Other1 46 49 47 47 45 Total regulatory Total RWA 22.715 22.972 21.527 20.717 19.666 capital (Tier + Tier II) 3.233 3.231 3.237 3.253 2.778 RWA intensity (%) 85% 86% 85% 86% 85% Risk weighted assets by type of risk (€ mn) 31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 Credit risk 20.625 20.881 19.426 18.830 17.618 Market risk 5 6 16 7 8 Operational risk 2.085 2.085 2.085 1.880 2.040 Total 22.715 22.972 21.527 20.717 19.666 (1) Other countries include Ukraine, Channel Islands and Netherlands Bank of Cyprus 31 DINO#32Reconciliation of Group Equity to CET 1 € mn Group Equity per financial statements Less Intangibles and other deductions Less: Deconsolidation of insurance and other entities 31.12.15 3.077 (17) (228) Less: Regulatory adjustments (Minority Interest, DTA and other items) (34) Less: Revaluation reserves and other unrealised items transferred to Tier II (50) CET 1 (transitional) 2.748 Less Adjustments to fully loaded (mainly DTA) (179) CET 1 (fully loaded) 2.569 Risk Weighted Assets CET 1 ratio (fully loaded) CET 1 ratio (transitional) 19.666 13,1% 14,0% Bank of Cyprus 32 DINO#33BOC- Main performance indicators 31 December 2015 Performance Ratios ROAA ROAE Net Interest Margin Cost to income ratio Loans to deposits 90+ DPD/90+ DPD ratio Group FY2015 (1,7%) (12,9%) 3,79% 40% Asset Quality 90+ DPD coverage Cost of risk. Provisions Gross Loans Transitional Common Equity Tier 1 capital CET1 ratio (transitional basis) 121% €11.329 mn (50,1%) 48% 4,3% 1 24,1% €2,748 mn Capital 14,0% Total Shareholder's Equity / Total Assets 13,1% Shareholder's Equity Intangible assets # shares Book Value per Tangible Book Value per (€ mn) (€ mn) (mn) share share 31/03/2014 2.689 130 4.700 0,57 0,54 30/06/2014 2.748 135 4.756 0,58 0,55 30/09/2014 3.728 135 8.922 0,42 0,40 31/12/2014 3.465 127 8.922 0,39 0,37 31/03/2015 3.502 130 8.923 0,39 0,38 30/06/2015 3.506 128 8.923 0,39 0,38 131 30/09/2015 3.518 8.923 0,39 0,38 134 31/12/2015 3.055 8.923 0,34 0,33 (1) Calculated as the provisions for impairment of customer loans, including provisions of discontinued operations, (in total €1.307 mn) net of gains on derecognition and changes in expected cash flows on acquired loans (totalling €305 mn) over average gross loans Bank of Cyprus DINO 33#34Funding Structure Analysis of Liabilities and Equity (€bn) Total equity 30,4 Other liabilities 29,4 28,6 ■ELA ECB funding ■Customer deposits 27,5 26,8 26,7 25,4 24,2 23,3 15,0 14,1 13,8 13,3 13,2 13,6 13,6 13,6 14,2 0,9 0,9 0,8 0,5 0,5 9,6 9,5 8,8 7,7 7,4 6,9 5,9 0,7 4,9 3,8 1,8 1,7 1,6 1,8 1,8 1,9 1,9 1,7 1,5 2,7 2,8 2,8 3,8 3,5 3,5 3,5 3,5 3,1 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec -15 Analysis of Liabilities and Equity (%) Total equity ■Other liabilities ■ELA ECB funding ■Customer deposits 49% 48% 48% 49% 49% 51% 54% 56% 61% 5% 5% 5% 3% 3% 3% 2% 2% 3% 28% 28% 26% 23% 31% 32% 31% 20% 16% 6% 7% 7% 7% 7% 7% 6% 6% 6% 9% 9% 10% 14% 13% 13% 14% 15% 13% Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Bank of Cyprus ADING SJWN K 34#35Analysis of Deposits by Geography and by Type Deposits by geography 31 December 2015 (%) 1 Total 16,97 ■Cyprus non-IBU 2 Cyprus IBU ■ UK ■Russia & Other countries 1,25 14,97 ■Cyprus non IBU ■Cyprus - IBU UK (€ bn) 14,07 1,30 1,02 13,80 13,33 1,24 0,83 13,17 13,61 13,63 13,61 14,18 0,87 4,75 1,25 0,79 1,25 1,29 0,55 0,61 0,61 1,30 1,36 1,39 1,45 1,49 4,05 11% 3,79 3,59 3,46 3,47 3,57 3,21 3,40 3,75 26% 9,67 8,66 8,20 8,09 7,79 7,85 8,07 8,42 8,76 8,94 63% Jun-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Total Cyprus 89% Deposits by type of deposits 31 December 2015 (%) Time deposits Savings account Current and demand account Total Time deposits Savings accounts ■Current & demand accounts 16,97 14,97 (€ bn) 14,07 3,42 13,80 13,33 13,17 13,61 13,63 13,61 14,18 0.83 3,49 3,53 3,72 0.93 3,96 4,33 4,48 4,47 4,63 4,99 0,95 0.95 0,84 0.96 0.97 1,02 1,01 1,03 35% 12,72 0,55 58% 9,59 9,13 8,53 7,88 8,16 8,14 7,97 8,16 7% Jun-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 De-15 (1) IBU- Division servicing exclusively international activity companies registered in Cyprus and abroad and non-residents (2) Other countries: Romania and Ukraine (until March 2014) DINO Bank of Cyprus 35#36Analysis of Deposits by sector for Cyprus operations Deposits by sector as per CBC classification for Cyprus operations 31 December 2015 (%) Total (€ bn) ■Households Non financial corporations Other financial corporations General Governments Market Shares ■General Governments Other financial corporations ■Non financial corporations 12,71 12,69 ■ Households 0,13 0,99 0,87 11,99 0,13 12.16 0,16 11,64 11,63 0.12 0,75 11,25 0,800,13 1.1.32 1,17 Total market shares 0,12 0,13 1,33 1,53 1,20 1,37 36,0% 3,90 3,60 3,61 3,64 3,21 2,94 3,41 2,82 2,87 29,9% 28,0% 28,2% 7,69 7,38 7,14 6,91 6,99 7,12 7,36 7,50 7,76 17,9% Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Bank of Cyprus 36 DINO#37Gross loans by Geography and by Customer Type Gross loans by geography 31 December 2015 (%) Total 25,30 24,74 23,77 24,09 23,93 ■Cyprus UK Russia Other Countries* 22,86 (€ bn) 22,59 0.80 0.70 1,2% 2,1% 1,17 1,30 0.69 0,67 0,58 5,3% 1 1,11 1,21 0.91 0,97 1,03 1,07 Other countries 1,13 1,03 0.49 0,48 0,26 1.14 1,21 0,25 Russia ■UK ■Cyprus 22,02 21,72 21,20 21,32 21,19 20,98 20,66 91,4 % Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Gross loans by customer type Total (€ bn) 31 December 2015 (%) Corporate Retail Housing SME Retail Other 25,30 9,7% 24,74 23,77 24,09 23,93 22,86 22,59 2,52 ■Retail other 2,42 2,44 2,54 2,52 2,20 2,18 19,0% 4,67 4,61 4,41 4,43 4,39 4,35 4,31 50,6% Retail 5,50 Housing 5,54 5,09 5,02 4,99 4,75 4,68 20,7% SMES 12,61 ■Corporate 12,17 11,83 12,10 12,03 11,56 11,42 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Bank of Cyprus DINO 37 i (1) Other countries: Greece and Romania#38NPEs by Geography and by Customer Type NPEs by geography Total 31 December 2015 (%) ■Cyprus ■Russia UK Other Countries* 15,17 (€ bn) 14,96 14,73 14,81 0,56 1 0,58 ■Other countries 0,57 0,47 14,22 1,8% 2,8% 0,64 13,97 ■Russia 0,52 0,5% 0,65 0,57 0.11 0.11 0,39 ■ UK 0,10 26 0,39 0,26 0,08 0.25 ■Cyprus 13,75 13,86 13,33 13,59 13,49 13,26 94,9 % Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 NPEs by customer type Total (€ bn) 31 December 2015 (%) ■Corporate SME ■Retail Housing ■Retail Other 14,73 14,96 15,17 14,81 14,22 13,97 ■Retail Other 1,45 1,45 1,49 1,51 1,36 1,37 9,8% ■Retail Housing 1,66 1,82 1,93 1,95 1,98 1,97 ■SMES 3,64 3,53 3,57 14,1% 3,60 3,51 3,44 ■Corporate 51,5 % 24,6% 7,98 8,17 8,18 7,75 7,37 7,19 Sep-14 (1) Other countries: Greece and Romania Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Bank of Cyprus DINO 38#39-2.227 Sep-13 27,9% → Dec-13 27,5% Mar-14 26,4% Jun-14 25,5% Sep-14 24,9% Dec-14 24,8% Mar-15 25.3% Jun-15 25,7% Sep-15 26,5% Dec-15 28,2% Jan-16 28.2% 40,0% Feb-16 27,9% 40,1% Total customer flows 2 per quarter (€ mn) 903 870 446 450 386 283 326 65 -11 -411 -546 1 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Market Shares and Customer flows in Cyprus Market share evolution in Cyprus Deposits Loans Cumulative Customer flows 2 (€ mn) 900 600 (1) Up to 28 March 2016 (2) Customer flows are defined as the difference between changes in the stock of customer deposits and changes in the stock of gross customer loans, taking into account, among others, provisions, write offs, accrued interest, fair value adjustments and foreign exchange fluctuations. Bank of Cyprus 39 DINO 300 0 -300 -600 -900 -1.200 -1.500 -1.800 -2.100 -2.400 -2.700 -3.000 31/03/13 30/06/13 30/09/13 31/12/13 31/03/14 30/06/14 30/09/14 31/12/14 31/03/15 30/06/15 30/09/15 31/12/15#40UK Operations Gross Loans (€ bn) 1,21 1,13 1,14 0,91 1,03 Dec 2014 Mar 2015 Jun 2015 Sept 2015 Dec 2015 Customer Deposits (€ bn) 1,49 1,45 1,39 1,36 1,30 Dec 2014 Mar 2015 Jun 2015 Sept 2015 Dec 2015 Loans by sector as at 31 December 2015 Consumer Credit Housing 2% SMES 1% 21% Corporate 76% Bank of Cyprus 40 DINO#41Asset Quality (€ mn) Dec-15 Sept-15 Jun-15 Mar-15 Dec-14 A. Gross Loans after Fair value on Initial recognition 21.385 21.597 22.575 22.540 22.206 Fair value on Initial recognition 1.207 1.266 1.351 1.545 1.566 B. Gross Loans 22.592 22.863 23.926 24.085 23.772 B1. Loans with no arrears 10.443 9.925 10.178 10.038 10.065 B2. Loans with arrears but not impaired 3.049 3.611 4.105 4.627 4.413 Up to 30 DPD 469 585 668 662 562 31-90 DPD 351 355 435 596 492 91-180 DPD 144 200 227 344 440 + + 181-365 DPD 259 374 529 758 926 + Over 1 year DPD 1.826 2.097 2.246 2.267 1.993 + B3. Impaired Loans 9.100 9.327 9.644 9.420 9.294 With no arrears 876 848 969 1.006 1.153 Up to 30 DPD 78 66 91 68 149 31-90 DPD 91-180 DPD 24 60 121 275 142 65 152 167 181 143 181-365 DPD 310 464 489 445 685 Over 1 year DPD 7.747 7.737 7.807 7.445 7.022 (90+ DPD) 1 11.329 11.998 12.646 12.789 12.653 90+ DPD ratio (90 + DPD / Gross Loans) 50,1% 52,5% 52,9% 53,1% 53,2% Accumulated provisions 5.445 4.933 5.381 5.354 5.140 Gross loans provision coverage 24,1% 21,6% 22,5% 22,2% 21,6% 90+ DPD provision coverage 48,1% 41,1% 42,5% 41,9% 40,6% Bank of Cyprus ADING SJWN K 41 ¦(1) Loans in arrears for more than 90 days (90+ DPD) are defined as loans with a specific provision and loans past-due for more than 90 days#4290+ DPD by Geography 90+ DPD by Geography (€ bn) 1 ■Cyprus ■Russia ■ UK ■ Other countries 12,98 12,79 12,59 12,65 12,65 0,57 0,55 0,52 0,58 0,47 0,26 12,00 0,28 0,55 0,09 0,11 0,09 0,51 0,60 0,61 0,39 0,51 11,33 0,26 0,08 0,38 0,250,07 11,60 11,47 11,53 11,48 11,28 11,27 10,63 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 (1) Other countries: Romania and Greece 90+ DPD ratios by Geography ■Cyprus Russia ■ UK ■ Other countries %08 54% 52% 10% 84% 54% 56% 11% 82% 54% 59% %8 83% 54% 100% 65% 53% 46% 23% 51% 39% 24% %08 7% 51% %9 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 80% 100% Bank of Cyprus 42 DINO#43Asset Quality 90+ DPD inflows in the Cyprus operations have been significantly reduced 90+ DPD inflows - Cyprus operations (€ bn) 90+ DPD inflows 0,68 0,60 90+ DPD inflows - Corporate Loans (€ bn) -Average quarterly inflows Corporate 90+ DPD inflows Average quarterly inflows 0,36 0,37 0,34 0,39 0,29 0,22 0,11 3Q2014 4Q2014 1Q2105 2Q2105 3Q2105 4Q2015 90+ DPD inflows - SMEs Loans (€ bn) SMES 90+ DPD inflows Average quarterly inflows 0,20 0,14 0,09 0,18 0,02 3Q2014 4Q2014 1Q2105 2Q2105 3Q2105 4Q2015 90+ DPD inflows - Retail (€ bn) Retail 90+ DPD inflows Average quarterly inflows 0,22 0,17 0,10 0,09 0,13 0,08 0,11 0,06 0.08 0,04 0,09 0,07 0,05 0,11 3Q2014 4Q2014 1Q2105 2Q2105 3Q2105 4Q2015 3Q2014 4Q2014 1Q2105 2Q2105 3Q2105 4Q2015 Bank of Cyprus 43 DINO#44Asset Quality Performance of restructured loans (post-31 December 2013, by quarter) as at 31 December 2015 1 • Total Bank Cyprus Corporate - 100% 95% 97% 92% Quarterly average 100% 1Q2014 ■2Q2014 3Q2014 88% 83% 79% 78% 79% 80% 73% 73% 64% 65%-----73% 4Q2014 ■1Q2015 ■3Q2015 2Q2015 86% 87% 80% 67% 60% 60% 40% 30% 40% 26% 20% 20% 4% 9%5% 16% 12% 13%2% 3% 6% 4% 5% 14% 7%6%5 5% 20% 4% 2% 12% 3% %2% 7% 5% 1% 7% 7% ,9% ,5% 7% 0% 0% No arrears 1-30 dpd 31-90 dpd Over 90 dpd No arrears 1-30 dpd 1% 2% 0% 0% 0% 0% 2%. 31-90 dpd 9% Over 90 dpd SMES Retail 100% 100% 80% 6568% 69% 80% 66% 58% 60% --58% 51% 66% 6568% 5556% 57% 63% 71% 60% 46% 84% 40% 33% 40% 20%- 8% 20% 23% 19% 20% 13% 13% 12% 10% 9% 4% 7% ·9%5% 11%. 7% 3%4% 20% 9% 13% 14% 19%99% 22% 28% 25% 16% 8% 6% 4% 10% 10% 8% 11% 8% 6% 5% 2% 13% 0% 0% No arrears 1-30 dpd 31-90 dpd Over 90 dpd No arrears 1-30 dpd 31-90 dpd Over 90 dpd. An analysis performed as at 31 December 2015 indicates that on average 73% of the loans restructured post 31 December 2013 (restructurings performed in 4Q2015 were excluded) for Cyprus operations, have no arrears; The average percentage of restructured loans with arrears more than 90 days stands at 12% • Corporate restructured loans exhibit the best performance with an average percentage loans with no arrears of 87% of restructured (1) The performance of loans restructured during 4Q2015 is not presented in this graph as it is too early to assess it. Bank of Cyprus DINO 44#4532% % of total 19% Gross loans by business line (€ bn) ■ 31.12.14 ■ 31.03.15 30.06.15 30.09.15 31.12.15 4,34 4,53 4,59 4,38 4,29 Corporate 8% Analysis of Loans and 90+ DPD ratios by Business Line¹ 2,30 2,20 2,14 1,83 1,78 SMES 16% 3,85 3,85 3,80 3,75 3,68 90+ DPD ratios by business line ■31.12.14 ■31.03.15 30.06.15 30.09.15 31.12.15 29% 27% 22% 21% Corporate 24% 27% 26% 22% 20% SMEs 16% 16% 15% 14% 13% 7% 1,75 1,83 1,80 1,48 1,43 Housing Consumer Credit 31% 31% 30% 25% 23% %69 68% 70% 71% 63% Housing Consumer Credit RRD-Mid and Large Corporates RRD-SMES 21% 5,33 5,37 5,20 4,87 4,73 6% 1,40 1,39 1,38 1,41 1,38 RRD-Mid and Large Corporates RRD-SMES 81% 81% (1) 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. Bank of Cyprus 45 DINO %08 79% 74% RRD-Recoveries 100% 100% 100% 100% 100% 23% 4,78 4,91 5,02 5,13 5,31 RRD Recoveries#4650% total ■ 31.12.14 % of 10% Gross loans by economic activity (€ bn) ■31.03.15 ■ 30.06.15 30.09.15 ■31.12.15 2,47 2,48 2,50 2,38 2,36 Trade 90+ DPD ratios by economic activity ■31.12.14 ■ 31.03.15 ■ 30.06.15 48% 48% 49% 48% 54% 54% 54% 54% 54% 59% Trade Manufacturing 4% Analysis of Loans and 90+ DPD ratios by Economic Activity 7% 0,89 0,91 0,92 0,85 0,83 1,50 1,57 1,64 1,62 1,57 3,96 4,04 4,19 4,14 4,07 3,12 3,17 18% 15% Manufacturing Hotels & Restaurants Construction Real estate Private 30.09.15 ■31.12.15 62% 57% 59% 46% 79% 77% %08 79% 76% 3,20 3,38 32% 8% 5% 3,42 7,85 7,92 7,86 7,41 7,33 1,86 1,89 2,07 1,84 1,79 2,12 2,09 1,55 1,24 1,21 Individuals Professional & other services Other sectors 48% 48% 48% 48% 47% 38% 38% 38% 36% 36% 54% 55% 57% 62% Professional Hotels & Restaurants Construction Real estate Private Individuals Other & other services sectors 57% Bank of Cyprus 46 ONLOY 67% 67% 64% 57% 56%#4712-2008 1,3 1,6 2,0 2,3 2,2 -85 321 380 329 265 FY2009 €945 m n FY2010 €1.329 mn 410 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 annual change 13,0 13,0 12,8 12,613,0 12,7 12,8 12,6 12,0 11,3 11,0 558 96 7,7 6,5 5,0 5,1 5,1 2,9 3,5 3,6 3,8 4,0 4,4 2,5 232 156 402 609 100 64 FY2011 FY2012 €1.399 mn €2.723 mn 1.319 1.240 3.319 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 03-2015 06-2015 09-2015 12-2015 (1) 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 47 -247 -164 -325 1.972 20 386 136 FY2013 €5.311 mn FY2014 -€350 m n FY2015 -€1.324 mn ONLOY -143 -649 899-#48Corporate 29% 38% 43% 42% 45% Rescheduled Loans for the Cyprus operations Rescheduled Loans by customer type (€ bn) Rescheduled Loans (€ bn) 1.332 ■Retail housing ■Retail consumer ■SMES Corporate 8,4 8,2 8,4 7,4 1,7 1,7 1,7 5,7 1,5 8.209 0,6 0,6 0,6 0,5 1,3 1,8 1,7 1,7 1,5 0,4 1,1 3,9 4,3 4,2 2,9 ■31.12.14 31.03.15 ■30.06.15 ■30.09.15 ■31.12.15 24% 34% 39% 38% 39% 34% 29% 40% 40% 39% 31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 Rescheduled Rescheduling Loans 30.09.2015 during 4Q2015 Already classified rescheduled Rescheduled loans % gross loans 1 by customer type Loans no longer classified rescheduled Other adjustment Rescheduled Loans 31.12.2015 17% 22% SMES Retail housing Retail Consumer 26% 26% 26% (1.) 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 €1,207 mn for gross loans and to €542 mn for rescheduled loans (compared to €1,266 mn and €548 mn respectively at 30 September 2015), including loans of discontinued operations/disposal group held for sale. Bank of Cyprus 48 DINO -491 -582 -76 8.392#49Credit Risk - Analysis of problem loans Analysis of problem loans - Cyprus operations (€ bn) (Dec-15) 0,4 13,3 1,5 0,7 0,1 9,7 10 10,6 0,1 0,8 €2,7 bn with arrears >90+DPD Impaired -no arrears other IFRS and Total 90+ DPD with forbearance re-forborne within forborne >30+ reclassification 2 years adj Contagion effect NPES measure 90+ DPD DPD The Bank is taking targeted action to address the €2,7 bn of NPE exposures that do not present arrears over 90 days The Bank's main focus for addressing the problem loans is the active management of the €9,7 bn of loans with arrears over 90+DPD (1) Loans in arrears for more than 90 days (90+ DPD) are defined as loans with a specific provision and loans past-due for more than 90 days. DINO Bank of Cyprus 49#50Real GDP growth - Actual (8,7%) 0,18 0,16 0,14 0,12 0,1 0,08 0,06 0,04 0,02 2010 1,4% 1 2011 2012 2013 2014 2015 I 1,6% 0,3% (2,4%) T (2,5% (5,4%) (3,4%) (3,9%) Macroeconomic overview GDP growth expected to be positive from 2015 - faster recovery than other peripheral countries GDP Growth (yoy) Cyprus 2019 (issued 06/2014) O 29/01/2010 29/03/2010 29/05/2010 29/07/2010 29/09/2010 29/11/2010 (1) Based on the Statistical Service of the Republic of Cyprus SOURCE: Statistical Service of Republic of Cyprus, Bloomberg, IMF and company reports 29/01/2011 29/03/2011 29/05/2011 29/07/2011 29/09/2011 29/11/2011 Improved rating and credit outlook as demonstrated by benchmark sovereign bond issue Initial Projections (EC) 29/01/2012 29/03/2012 29/05/2012 29/07/2012 29/09/2012 Cyprus 2022 (issued 04/2015) Cyprus 2025 (issued 11/2015) при 2Q2011 3Q2011 -0,4% 1,2% 4Q2011 -0,8% 1Q2012 -1,2% 2Q2012 -2,4% 3Q2012 -2,3% 4Q2012 -3,7% 1Q2013 -5,3% 2Q2013 -6,0% 3Q2013 -5,5% 4Q2013 -4,7% 1Q2014 -3,2% 2Q2014 -1,8% 3Q2014 -2,1% 4Q2014 -1,8% 1Q2015 0,2% 2Q2015 1,2% 3Q2015 2,3% 4Q2015 2,7% 29/11/2012 - Cyprus 2020 (issued 02/2010) 29/01/2013 29/03/2013 29/05/2013 29/07/2013 29/09/2013 29/11/2013 29/01/2014 29/03/2014 29/05/2014 29/07/2014 29/09/2014 29/11/2014 29/01/2015 29/03/2015 29/05/2015 29/07/2015 29/09/2015 29/11/2015 29/01/2016 Bank of Cyprus 50 DINO#51Non-Performing Loans definition Non-Performing Exposures (NPEs) as per the EBA definition: In 2014 the European Banking Authority (EBA) published its reporting standards on forbearance and non-performing exposures (NPEs). According to the EBA standards, a loan is considered a non- performing exposure 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 days past due, for example in case of a write off, a legal action against the borrower, or bankruptcy - (ii) the exposures are impaired i.e. in cases where there is a specific provision, or - (iii) there are material exposures which are more than 90 days past due, or - (iv) there are performing forborne exposures under probation for which additional forbearance measures are extended, or - (v) there are performing forborne exposures under probation that present more than 30 days past due within the probation period. -90+DPD: Loans in arrears for more than 90 days (90+ DPD) are defined as loans with a specific provision and loans past-due for more than 90 days. Bank of Cyprus 51 DINO#52Disclaimer 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 made 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. Some of the information in the presentation is derived from publicly available information from sources such as the Central Bank of Cyprus, the Statistical Services of the Cyprus Ministry of Finance, the IMF, Bloomberg and Company Reports and the Bank makes no representation or warranty as to the accuracy of that information. 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 52 DINO