Group Financial Results

Group Financial Results for the year ended 31 December 2020 Glossary & Definitions Net loans to deposits ratio New lending Non-interest income Non-recurring items NPES Net loans to deposits ratio is calculated as gross loans (as defined) net of allowance for expected loan credit losses (as defined) divided by customer deposits. New lending includes the disbursed amounts of the new and existing non-revolving facilities (excluding forborne or re-negotiated accounts) as well as the average year to date change (if positive) of the current accounts and overdraft facilities between the balance at the beginning of the period and the end of the period. Recoveries are excluded from this calculation since their overdraft movement relates mostly to accrued interest and not to new lending. Non-interest income comprises Net fee and commission income, Net foreign exchange gains and net gains on financial instrument transactions and disposal/dissolution of subsidiaries and associates (excluding net gains on loans and advances to customers at FVPL), Insurance income net of claims and commissions, Net gains/(losses) from revaluation and disposal of investment properties and on disposal of stock of properties, and Other income. Non-recurring items as presented in the 'Unaudited Consolidated Income Statement - Underlying basis' relate to the following items, as applicable: (i) advisory and other restructuring costs - organic, (ii) restructuring costs – Voluntary Staff Exit Plan (VEP), (iii) Provisions/net loss relating to NPE sales, including restructuring expenses, (iv) (DTC levy)/reversal of impairment of DTA and impairment of other tax receivables and (v) Loss on remeasurement of investment in associate upon classification as held for sale (CNP) net of share of profit from associates (for the year ended 31 December 2019 only). According to the EBA standards and ECB's Guidance to Banks on Non-Performing loans, NPEs are defined as those exposures that satisfy one of the following conditions: (i) The borrower is assessed as unlikely to pay its credit obligations in full without the realisation of the collateral, regardless of the existence of any past due amount or of the number of days past due. (ii)Defaulted or impaired exposures as per the approach provided in the CRR, which would also trigger a default under specific credit adjustment, distress restructuring and obligor bankruptcy. (iii) Material exposures as set by the CBC, which are more than 90 days past due. (iv)Performing forborne exposures under probation for which additional forbearance measures are extended. (v)Performing forborne exposures under probation that present more than 30 days past due within the probation period. Exposures include all on and off balance sheet exposures, except those held for trading, and are categorised as such for their entire amount without taking into account the existence of collateral. The following materiality criteria are applied: •When a specific part of the exposures of a customer that fulfils the NPE criteria set out above is greater than 20% of the gross carrying amount of all on balance sheet exposures of that customer, then the total customer exposure is classified as non-performing; otherwise only the problematic part of the exposure is classified as non-performing. •If a non-retail debtor has an exposure with significant arrears of more than 90 days, the total customer exposure is classified as non-performing, irrespective of the 20% threshold. •Material arrears/excesses are defined as follows: -Retail exposures: Total arrears/excesses amount greater than €100 -Exposures other than retail: Total arrears/excesses are greater than €500 and the amount in arrears/excess in relation to the customer's total exposure is at least 1%. •If unlikeliness to pay is not identified at an earlier stage, it is deemed to occur when an exposure is 90 days past due, even where regulatory rules permit default to be defined based on 180 days past due. •The definitions of credit impaired and default are aligned so that stage 3 represents all loans which are considered defaulted or otherwise credit impaired. •When a financial asset has been identified as credit impaired, ECLS are measured as the difference between the asset's gross carrying amount and the present value of estimated future cash flows discounted at the instrument's original effective interest rate. Bank of Cyprus Holdings 77

View entire presentation