A country's ability to grow sustainably is defined by indicators such as the real performance of its economy. How far does Cyprus have to go at this level?

 I would add that the issue for any country is sustainable growth rates, which at the same time are beneficial for as many of our fellow citizens as possible. Cyprus has recorded remarkable resilience to all kinds of challenges in recent years. At the same time, significant progress is also recorded in relation to most of the United Nations Sustainable Development Goals.

Having said that, it does not mean that we should be complacent. Cyprus still has structural weaknesses which need to be addressed quickly and properly. Both the Recovery and Resilience Plan and the "Vision 2035" can solve long-term problems faced by the Cypriot economy and modernize problematic procedures that create unnecessary burdens and a controversial impression for both Cypriots and foreigners. 

How does the support provided by the Bank of Cyprus to its customers and, by extension, to the Cypriot economy for 2023 translate into numbers and what are the forecasts for 2024?  

It is proven that the Bank of Cyprus has always been by the side of its customers in order to support them in easy and difficult times. 

We are well aware of the crucial and complex role we have to play. In other words, to be the financier, the consultant and, above all, the partner of Cypriot businesses. In the first half of 2023, new lending granted by the bank amounted to €1.1 billion and at the same time we continue to be by far the bank that is most trusted by citizens and businesses for their deposits. 

At the Bank of Cyprus, we can offer tailor-made solutions by making full use of the knowledge and experiences of the organisation's human resources. In combination with the constantly upgraded technological infrastructure and solutions we offer, we cover every modern need of our customers. The Bank of Cyprus is a pioneer in digital banking, providing its customers with the speed and flexibility they desire through its digital channels. Using cutting-edge technology, it constantly invests in renewing, improving, enhancing and enriching them with new innovative products and services, with BoC Mobile App being the flagship of its digital service. The use of digital channels by the Bank's private customers reached 83.44% at the end of August 2023, while active users in Internet and Mobile Banking reached 443,000. 

For 2024, our commitment to continuous and substantial support for our customers and all citizens remains strong and non-negotiable. We will continue to provide quality products and services tailored to modern requirements, while maintaining our leading role in the market.

What situation do high interest rates create for Cypriot banks and how can banks use this profitability constructively?

The rise in interest rates is due to the monetary policy pursued by the ECB aimed at taming inflation. Until a few years ago, the policy was exactly the opposite and ECB interest rates were negative, with the result that banks like ours, with a large volume of deposits, were forced to pay large sums to safeguard their customers' money.

The profitability of a bank is an indicator of health. To put it simply, when a bank, or any business, does not make a profit, it means that it is facing problems. Especially for banks which are responsible for managing the money of others, demands are enormous. Therefore, profitability strengthens and shields the bank's capital, liquidity and balance sheet in general, especially in times of such high uncertainty. At the same time, we should create a return for our shareholders who for many years supported the bank without benefit.

Social actors insist that banks appear to be quite cautious concerning loan restructurings that actually provide relief to people and make it easier to repay debts. How do you comment on this?

Let me disagree. Banks are not non-profit organizations but organizations integrated into society to assist its development. Therefore, we have done and continue to do a lot to help our customers. Let me remind you that in view of the decision of the European Central Bank to raise interest rates, the Bank renegotiated the terms of loans amounting to €2 billion. in 2023.

In addition, we have announced a scheme to reward approximately 19,000 of our customers who are consistent in making payments for primary home mortgages worth up to €350,000 through the "Reward" program. The cost of the above action for the Bank is estimated to approach €4 million.

In addition, we have introduced new plans with attractive interest rates for home purchase with many interest rate options. One such option is a mortgage loan with a fixed interest rate and instalment for 25 years, which protects young couples from fluctuations in interest rates.

In addition, we have given our consent to the continued suspensions of foreclosures, even though this is a practice that is very damaging both for banks and for the economy in general.

To what extent can Cypriot banks help attract investments from abroad? And to what extent do rising interest rates affect this effort? 

In recent years, significant investments in Cypriot banks have been recorded by foreign institutional investors. Both directly in their share capital and indirectly through the various bond issues they carry out. We also find particular interest in the Bank of Cyprus during the various road shows we hold for institutional investors, with the last one in London. The fact that Cypriot banks have regained their investment attractiveness is a very positive development as it is tangible proof of the improvement in their asset quality and the progress made by the Cypriot economy in general in recent years. We should finally change this mentality that it is a bad thing for banks to do well. As far as the rise of interest rates is concerned, it does not create any comparative advantage or disadvantage with banks in other eurozone countries since the same policy is applied everywhere.

What are your predictions for the global economy in the new year and how will the international economic environment and the war in our neighbourhood affect the Cypriot economy?

I wish it were that simple to make predictions, but unfortunately, we live in a time of enormous uncertainty and volatility. For instance, the war in neighbouring Israel and the Gaza Strip was something we did not expect and we do not know how it will develop and how long it will last.

The economic environment is now so internationalized that any large-scale event anywhere in the world can affect us too. The challenge is to be well prepared and for our economy to continue showing strong resilience and adaptability, despite the fact that it is affected by international developments and it is particularly extroverted

What are the Bank of Cyprus' big bets and challenges for 2024?

Recently, the Bank received a double upgrade from Fitch Ratings – reflecting its enhanced capitalization, the reduction of past risks in its assets, its structurally enhanced profitability and its strong deposit position – and is now at "BB" with a positive outlook. This is another sign that we are moving in the right direction. At the Bank of Cyprus, we proceed based on a specific plan and the needs of our customers. We will continue to enhance our products and services, implement our digital transformation, reduce the problems of the past and support the Cypriot economy as a whole. We always focus our efforts on the customer and we make sure to serve him with the greatest possible ease through the various service channels of the Bank.

Dr. Charis Pouangare, Deputy CEO