#1Bank of Cyprus Group Group Financial Results for the six months ended 30 June 2016 EUROMONEY AWARDS FOR EXCELLENCE 2016 Bank of Cyprus The Best Bank in Cyprus 2016 The Financial Statements for the six months ended 30 June 2016 have been audited by the Bank's external auditors. 30 August 2016 Bank of Cyprus KOINO KYMPI#21H2016 Financial Results - Highlights . Positive momentum continued in 2Q2016 Declining Problem Loans • Problem loans (90+ DPD) 1 down by €1 bn (or 10%) qoq and by €2 bn (or 18%) in 1H2016 • 90+ DPD ratio reduced to 44% and provisioning coverage ratio increased to 53% . Loan restructurings of €2,76 bn during 1H2016 Normalising Funding Structure ELA reduced by €2,3 bn year to date to €1,5 bn Customer deposits increased by €619 mn to 65% of total assets in 2Q2016 Ratio of Loans to Deposits (L/D) improved to 110% Strong Capital Position Profitable Quarter . • CET1 ratio (transitional basis) at 14,4% RWA intensity at 84% Conservative leverage ratio² of 13,0% Profit before provisions of €135 mn for 2Q2016 directed at increased provisions and impairment charges, to faster de-risk balance sheet Profit after tax of €6 mn for 2Q2016; €56 mn for 1H2016 Sustained NIM at 3,59% Strong Franchise in a recovering economy • Loans and deposit market shares increased to 41,4% and 29,0%, respectively Further support to the recovery of Cypriot economy with new lending of €547 mn of new loans were granted during the first seven months of the year Cypriot GDP growing by an annual 2,7% 3 for 2Q2016 (1) Problem loans (90+ DPD) are loans in arrears for more than 90 days (90+ DPD) and are defined as loans past-due for more than 90 days and those that are impaired (impaired loans are recognition or customers in Debt Recovery). those which are not considered fully collectable and for which a provision for impairment has been recognised on an individual basis or for which incurred losses exist at their initial Bank of Cyprus (2) Leverage ratio = Tangible Total Equity over Total Assets 2 (3) Based on flash estimates published on 12 August 2016 by the Statistical Service of the Republic of Cyprus, seasonally adjusted KOINO KYMPI#3Reduction in problem loans for a fifth consecutive quarter 90+ DPD dropped by €2,0 bn or (18%) in 1H2016 90+ DPD (€ bn) 90+ DPD ratio NPEs reduced by €1,47 bn or (11%) in 1H2016 ENPES with forbearance measures, no impairments, no arrears NPES (€ bn) Quarterly reduction of 90+ DPD Quarterly reduction of NPES NPEs ratio Forborne NPES with no impairments or 53,2% 53,1% 52,9% 52,5% 63,0% 62,2% 50,1% 61,9% 61,8% 47,1% 62,9% 61,0% 59,3% arrears (€bn) - Expected to exit NPEs per year¹ 15,17 12,65 12,79 12,65 12,00 11,33 -1% 10,29 18% reduction in problem loans 44,0% 14,81 14,96 14,22 13,97 1,34 13,33 1,3 1,46 12,49 ,86 0,8 2,18 0,3 2,44 --------- -2% -4% -2% 2016 2017 2018+ -5% -6% -5% 9,27 -6% -9% -10% Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Problem loans formation mirrors economic cycle Quarterly change of 90+ DPD (€ mn) 90+ DPD (€ bn) Economic Slow deterioration Stabilisation Recovery crisis 03-2009 06-2009 1,6 321 2,0 380 09-2009 2,3329 12-2009 03-2010 06-2010 -85 2,2 265 2,5 410 2,9 09-2010 558 3,5 12-2010 96 3,6 03-2011 232 3,8 06-2011 156 4,0 09-2011 402 4.4 12-2011 609 5,0 03-2012 100 06-2012 64 5,1 09-2012 12-2012 1.319 6,5 1.240 77 06-2013 3.319 11,0 09-2013 12-2013 1.972 13,0 20 13,0 03-2014 06-2014 06-2014 -247 12,8 -164 12,6 09-2014 12-2011 2202-60 386 13.0 13,0 +107-ZL -325 12.7 03-2015 CLOZ-SO 136 12,8 12.8 06-2015 GLOZ-90 -143 12,6 09-2015 12-2015 03-2016-1.041 06-2016-1.020 -649 12,0 899- 11,3 10,3 . Non-performing loans (90+ DPD) reduced by €1,0 bn (or 10%) qoq and by €2 bn (or 18%) in 1H2016 Non Performing Exposures (NPEs), as per EBA definition, reduced by €0,8 bn during 2Q2016 and totalled €12,5 bn at 30 June 2016 Reduction of NPEs accounted for 69% of 90+ DPD reduction NPES with forbearance measures, no impairments and no arrears totalled €2,4 bn at 30 June 2016; Around 85% is expected to exit the NPE classification by the end 2017, subject to no re-default (1) Curing period of the NPEs with forbearance measures, but no impairments and no arrears, assuming no re-default. (2) 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 KOINO KYMPI 3#4Slower 90+ DPD formation supports reduction of problem loans Group 90+ DPD by Customer type (€ bn) Slower formation of new problem loans (€ bn) ■Corporate ■SMES ■Retail other ■Retail housing 12,65 12,79 12,65 12,00 11,33 1,17 1,21 1,24 1,08 10,29 1,22 1,26 1,18 1,10 1,14 9,27 1,08 1,11 3,07 3,14 1,07 1,09 3,13 3,03 2,90 1,04 2,79 2,65 0,68 0,60 0,36 0.34 90+ DPD inflows - Cyprus operations Average quarterly inflows 0,28 7,19 7,18 7,10 6,80 6,25 5,33 4,49 0,22 0,13 0,14 0,11 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun-16 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 90+ DPD inflows by customer type - Cyprus operations (€ bn ) 0,29 3Q2014 ■4Q2014 3Q2105 ■4Q2015 ■1Q2105 ■1Q2016 ■2Q2105 2Q2016 0,37 0,14 0,20 0,18 0,17 0,09 0,18,08,08 0,02 0,02 0,04 Corporate 0.08 ,06 0,04 0,05,05 SMEs 0,22 Average 0,13,11 0,10 0,00,07,050,06 0,05 Retail • 82% of the 90+ DPD reduction for 2Q2016 relates to corporate loans 90+ DPD inflows at €0,14 bn for 2Q2016 Bank of Cyprus KOINO KYMPI 4#5Conservative provisioning policy - Increasing coverage levels Coverage ratio improvement of 12 p.p³ driven by over €1,3 bn additional cumulative provisions since Dec-14 Quarterly Provisions for impairment of customer loans¹ (€ mn) 110 90+ DPD coverage ratio NPEs provision coverage Adjusted NPEs provision coverage 2 12 p.p³ increase in 90+DPD coverage ratio 48% 53% 49% 48% 42% 43% 41% 41% 45%- 39% 39% 38% 38% 39% 39% 38% 38% 630 35% 36% 35% 35% 35% 33% 34% 34% 229 122 169 109 219 110 123 96 62 96 Dec 13 Mar 14 Jun 14 Sept 14 Dec 14 Mar 15 Jun 15 Sept 15 Dec 15 Mar 16 Jun 16 Cost of risk4 Cost of Risk Cyprus Cost of Risk - Group 4,3% 3,6% 4,0% 2,1% 2,2% 2,1% 2,4% 1,7% 1,5% 1,6% Accumulated provisions of 23,1% of Gross Loans Accumulated provisions (€ bn) Provisions % Gross loans 24,1% 21,6% 22,2% 22,5% 23,2% 23,1% 19,3% 20,0% 21,6% 1.4% 1,3% 1,1% 4,9 4,9 5,1 5,4 5,4 4,9 5,4 5,1 4,9 FY2014 1Q2015 1H2015 9M2015 FY2015 1Q2016 1H2016 (1) Jun Sep Dec 2014 2014 Mar Jun Sep 2014 (2) (3) p.p. percentage points Provisions for impairment of customer loans and gains/(losses) on derecognition of loans and changes in expected cash flows Adjusted NPEs provision coverage excludes NPEs with forbearance measures, no impairments and no arrears. 2015 2015 2015 Dec Mar 2015 Jun 2016 2016 (4) Provisions for impairment of customer loans and gains/(losses) on derecognition of loans and changes in expected cash flows on acquired loans over average gross loans Bank of Cyprus 5 KOINO KYMPI#642% 43% 43% 51% 52% Analysis of 90+ DPD coverage for Cyprus operations 90+ DPD Fully Covered by Provisions & Tangible collateral Corporate SME Retail-Housing Retail-Other Total BoC Cyprus - 113%112% 115% 119%117% 119% 112%112% 114% 114%113% 107% 107% 108% 107% 105% 106% 110% 104% 102% 104% 106%107% 106% 110%109% 111% 115%114%115% Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 59% 31% 32% 33% 39% 41% 43% 60% 68% 65% 71% 69% 72% 73% 71% 71% 49% 49% 48% 76% 75% 75% 79% 79% 79% 52% 51% 53% 81% 80% 81% 71% 70% 72% 69% 67% 64% Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 ■Total-LLR • Collateral coverage stood at 64% at 30 June 2016 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 26% 25% 25% 31% 35% 34% 52% 51% 51% 57% 58% 58% 39% 39% 39% 46% 47% 51% Total Tangible Coverage Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 90+ DPD provision coverage for Cyprus operations increased to 51% at 30 June 2016, compared to 47% at 31 March 2016 Mar-15 Jun-15 Sep-15 Dec-15 • As at 30 June 2016, overall coverage of 90+DPD increased to 115%, compared to 114% at 31 March 2016 and to 109% a year earlier Bank of Cyprus KOINO KYMPI 6 Mar-16 Jun -16#7Strong Momentum in Loan Restructurings continues €2,76 bn of Restructurings in 1H2016 Corporate SMEs Retail Total restructurings --Average restructurings Total restructurings of €2,76 bn 1H2016 1,50 1,35 0,95 1,26 0,73 0,82 0,56 0,32 0,29 0,33 0,34 0,35 0,24 0,15 0,19 0,19 0,74 0,78 0,33 0,19 0,07 0,09 0,11 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 0,69 0,44 0,38 0,20 0,17 0,07 4Q2014 79% of Restructured loans demonstrate no arrears 1 88%85% 79% 75% 80% ----74% 227.3% 59% 65% No arrears 1Q2014 ■2Q2015 ■2Q2014 ■3Q2015 ■3Q2014 ■4Q2015 4Q2014 1Q2016 1Q2015 14% 3% 8% 7% 9% 7% 4% 1-30 dpd 7% 10% Average 9% 1% 2% 8% • Total restructurings of €1,26 bn for 2Q2016; Restructuring of corporate loans accounted for 59% of total 2Q2016 restructurings At 30 June, 79% of loans restructured post 31 December 2013 for Cyprus operations have no arrears 31% 24% 16% 93% 9% 6% 2% 4% 5% 4% 4% 8% 5% 4% 3% Over 90 dpd 31-90 dpd (1) The performance of loans restructured during 2Q2016 is not presented in this graph as it is too early to assess it. Bank of Cyprus 7 KOINO KYMPI#8Sustainable Asset Quality Improvement across the RRD book Bespoke tactical plans are in place for each segment within RRD, delivering asset quality improvements ... Major Corporate Management Corporate Management ⚫ c. 70 experienced restructuring officers Business unit summary (€ bn) Key management actions Reduction of €0,7 bn ⚫23 connections 2,9 2,8 2,5 • >€100 mn debt 2,0 1,7 1.3 Large diversified Dec Mar- Jun- 15 16 16 Dec Mar- Jun- groups 15 16 16 Gross loans 90+ DPD 1,8 1,6 1,4 Dec Mar Jun- 15 16 16 Gross loans Reduction of €0,6 bn 1,0 0.6 0.4 Dec Mar Jun- 15 16 16 90+ DPD ⚫ c170 connections • €6-100 mn debt • Mid market businesses • Portfolios assigned based on size/complexity • Sustainable solutions using (amongst others): Debt: Equity & Debt: Asset swaps - Re-tranching, including 'equity like' PIK • Support from internationally experienced restructuring specialists and external lawyers (UK & CY) used extensively • Comprehensive improvements to lending documents, security, step in rights, monitoring & covenants Progress Good progress €350 mn of portfolio transferred back to Corporate Line Active negotiations ongoing with all major borrowers Good prospects to conclude and execute deals Reduction of €0,2 bn 1,0 0,9 0,8 SME 1,4 1,3 1,3 Dec Mar Jun- 15 16 16 Gross loans Dec Mar- Jun- 15 16 16 90+ DPD • c.1900 connections <€6 mn debt Small OMBs1 • 8 specialist geographically spread BU's • • New team added in 1Q2016 to drive pace Portfolio analysis with targeted campaigns • Product range enhanced e.g. split & freeze Close monitoring & clearing of early arrears Rapidly improving progress • New team and approach delivering results, with pace improved QvQ • Underlying economic improvements helping (1) Owned Medium Businesses. Bank of Cyprus KOINO KYMPI 8#9Sustainable Asset Quality Improvement across the RRD book Focus in unlocking the Recoveries portfolio. Results are encouraging Business unit summary (€ bn) 5,3 5,2 5,1 0,6 Inflows/ Outflows to Recoveries (€ bn) in 1H2016 0,7 0,8 0,7 0,8 0,8 0,4 ■Rec- Retail Housing ⚫ Retail €1,5 bn, 21k customers 1,5 1,5 1,5 ■Rec-Retail Other 0,2 • SME €1,5 bn, 4k customers ■Rec-SMEs 2,4 2,2 2,1 Corporate €2,1 bn c.250 connections ■Rec-Corporates Dec 15 Mar 16 Gross Loans Jun 16 Inflows to Recoveries Deleverage Key management actions • Management focus in improving skills and infrastructure to effectively manage the portfolio Further support from international specialists from 4Q2015. Additional skills/experience transferred internally from other teams and specialised units have been set up/enhanced (eg receivership and foreclosure team) Analysis and segmentation of the Retail/SME portfolio Recoveries • ° Increased focus on faster consensual deals (eg Debt: Asset Swaps) Step up aggressive actions for non co-operative borrowers. Ramping up the pace in dealing with old unworkable portfolio Foreclosures Commencement of private foreclosures in late June 2016. So far 7 auction events conducted relating to 22 assets Process without major impediments and some sales achieved (5 properties) Additional tool added to the armory used to unlock solutions with problematic cases and non cooperative borrowers Progress Encouraging progress • Refreshed approach in corporate is delivering results with significant contribution to the NPEs reduction Retail/ SME showing slower but improving progress. Next quarters are important in keeping the momentum • Foreclosure actions are important to building & maintaining pace Bank of Cyprus 9 KOINO KYMPI#10Progress on top 20 Group Exposures Top 20 group exposures as at 30 September 2014 and their progress since then Total Exposure (€ bn) 1 Loans other than 90+ DPD (€ bn) 90+ DPD (€bn) NPES over Total Exposure 90+ DPD over Total Exposure Restructured loans over Total Exposure Total coverage (Provisions and MV of collateral over Total exposure) 107% 104% 103% 97% 96% 95% 95% 102% 75% 74% 73% 71% 69% 70% 71% 65% 65% 69% 64% 61% 66% 67% 64% 64% 59% 4,4 4,2 4,0 4,0 53% 3,7 3,8 45% 43% 46% 3,5 46% 3,4 1,6 42% 1,5 1,3 1,3 1,1 32% 1,5 1,6 2,0 2,8 2,7 2,7 2,7 2,6 2,3 1,9 1,4 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 (1) Total Exposures include on balance sheet and off balance sheet items. Top 20 group exposures (as at 30 September 2014) totalled €3,4 bn as at 30 June 2016, down by €1 bn compared to €4,4 bn at 30 September 2014; ■ Ratio of 90+ DPD to total exposure reduced by 11 percentage points to 42% during 2Q2016. Taking into account the provisions and tangible collateral, the top 20 exposures are fully covered Ratio of NPE to total exposures reduced to 65% ■ As at 30 June 2016, 64% of the top 20 group exposures were restructured Bank of Cyprus KOINO KYMPI 10#11Real Estate Management Unit (REMU) On boarded assets and sales dynamics-Cyprus operations (Carrying value € mn) Hotels Residential ■Land & Plots Manufacturing & Industrial & under construction Offices & Commercial #no. of properties Stock 1 January 20161 • Property movement of 1H2016 (€ mn) Cyprus Greece Other countries 3 Total Group 336 171 35 542 #760 Additions 689 689 (92) 2 691 #14 (4) 63 #2 9 #6 (1) #1.124 929 (89) Sales1 #4 (92) (2) (94) 44 #80 (2) 64 #56 (12) #6 72 #6 Impairment loss #1 (4) (5) (9) 31 #14 #3 68 #149 Total Stock 30 June 2016² 929 164 37 1.130 177 #111 509 #616 336 #378 99 #8 23 #8 26 #75 114 #56 74 #231 31/12/2015 Additions 581 #844 Disposals Impairments 30/06/2016 €689 mn of assets on boarded during the 1H2016 Cyprus Property Stock Analysis 0,1% 5,2% ■Nicosia ■Larnaca 31,4% ■Limassol 32,5% ■Paphos ■Famagusta ■ Other 22,1% 8,7% During 1H2016, the Bank completed the disposal of 14 properties amounting to €92 mn, mostly relating to hotels Post 30 June 2016 5 sales & purchase agreements are in progress with total consideration of c.€45 m n (1) Includes Kermia Hotels Limited where disposal completed in June 2016. (2) Total Stock as at 30 June 2016 excludes investment properties and investment properties held for sale. (3) Other Countries relate to Romania Bank of Cyprus 11 KOINO KYMPI#12Rapid reduction of ELA €2,3 bn Reduction of ELA during 2016 11,40 11,11 9,86 9,56 9,51 8,78 34% 32% 31% -- 31% 31% 28% 28% 26% 23% 20% 7,68 7,40 16% 6,90 15% 5,90 4,90 11% €9,9 bn reduction of ELA since peak Apr Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 Jun 30 2016 Aug 2016 3,80 3,30 7% 2,40 1,50 ELA (€ bn) ELA % Total Assets Plans to fully eliminate ELA • Deposit Growth • Wholesale and interbank market access • Retention of cash profits from operations • Proceeds from deleveraging • O Increase loan pool for the Additional Credit Claim ECB framework Full repayment of ELA during 2017 (1) Ratio of ELA Funding % Total Assets for 30 August 2016 is based on total assets at 30 June 2016 Bank of Cyprus KOINO KYOPI 12#13Increasing Deposits and Improving Loan to Deposit ratio Growing customer deposit base (€ bn ) Improving funding structure ■Cyprus ■ UK 1 Other countries 11 Customer deposits to Total Assets Loans to deposits ratio (net) EU average Loans to deposits ratio 2 14,18 14,13 14,75 148% 13,80 13,33 0,86 1,25 13,17 0,80 0,55 1,29 1,31 13,61 13,63 13,61 0,61 0,61 1,36 1,39 0,01 1,49 1,43 0,01 1,43 141% 138% 136% 132% 121% 119% 1,45 110% 124% 125% 125% 123% 121% 122% 11,69 11,24 11,31 11,64 11,63 12,16 12,69 12,69 13,31 61% 62% 65% 49% 49% 51% 54% 56% Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Increased deposit market shares in Cyprus Residents Non-Residents • Group customer deposits totalled €14,75 bn at 30 June 2016. 35,2% 34,1% 32,9% 32,2% 30,8% 31,1% 28,4% 27,5% 27,5% 26,7% 26,9% 26,7% 27,0% 27,2% 25,6% 25,5% 24,6% 24,3% 23,7% 24,1% 24,6% 25,3% 26,1% 26,5% Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 • Customer deposits in Cyprus increased by €0,62 bn (or 5%) qoq, and by €1,68 bn (or 14%) yoy Loans to deposits ratio improved to 110% Deposit market shares in Cyprus at 30 June 2016 for Residents and non-Residents were 27,2% and 34,1% respectively (1) Other countries comprise Russia (until June 15) and Romania (2) Based on EBA Risk Dashboard Report, Data as at 31 March 2016 Bank of Cyprus KOINO KYMPI 13#14CET1 ratio 31.03.16 (transitional) Profit before provisions Provisions Other Liabilities and Equity structure- CET1 ratio Analysis of Liabilities and Equity (€ bn) ■Total equity Other liabilities ELA ECB funding Customer deposits 26,8 26,7 25,4 24,2 23,3 22,7 22,7 13,2 13,6 13,6 13,6 14,2 14,1 14,7 0,9 0,8 0,5 0.5 7,4 6,9 5,9 0.7 0.5 4,9 0,7 3,8 3,3 1,8 1,9 1,9 1,7 1.5 1,7 1,8 3,5 3,5 3,5 3,5 3,1 3,1 3,1 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar 16 Jun-16 Evolution for CET1 ratio¹ during 2Q2016 RWAs Change (1) 23 Transitional basis; includes audited profits for the six months ended 30 June 2016. (2) Based on EBA Risk Dashboard Report, Data as at 31 March 2016 (3) Minimum Requirement for Own Funds and Eligible Liabilities. DTA and other equity movements • The Bank considers that it is appropriately capitalised, taking into account its risk profile, level of non-performing loans, the macro- economic environment and applicable regulatory requirements Although the precise calibration and ultimate designation of the Bank's MREL³ liabilities have not yet been finalised, the Bank continues to consider various funding opportunities (including both senior debt and/or subordinated capital instruments) in anticipation of such upcoming requirements Capital Adequacy Ratios Pillar II capital requirement 0,7% 14,3% (0,4%) 14,4% CET 1 ratio (transitional) ----Average EU CET 1 ratio (transitional) CET1 ratio (Fully loaded) 2 15,6% (0,3%) 0,2% (0,1%) 13,6% 14,9% (0,8%) P&L impact of 14,3% 14,4% 14,0% 15,1% 13,9% 14,0% 0,3% 11,75% 14,4% 13,5% 43,6% 13,4% 13,4% 13,4% 13,6% 13,0% 13,1% 12,8% 12,5% 12,4% CET1 ratio 30.06.16 (transitional) DTA2 CET1 ratio 30.06.16 (fully loaded) 31.12.14 31.03.15 30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 Bank of Cyprus KOINO KYMPI 14#15Capital Position Compares well with Peers 'Clean' Fully Loaded CET1 ratio (March 2016²) 'Clean' Fully Loaded CET1 ratio (LHS) RWA % Total Assets (RHS) Average 'Clean' Fully Loaded CET1 ratio Average (RWA % Total Assets) 25% 20% 15% 13,2% 10% 42% 5% 0% BOC CET1 FL 13,6% RWA intensity 84% Leverage ratio³ (March 20162) 20% BOC Leverage ratio 13,0% 15% 10% 5% 0% Tangible Total Equity % Total Assets Average 90% 80% 70% 60% 50% 40% 30% 20% 10% "Clean" Fully loaded CET1 ratio at 13,6%, higher than average for EU peers, reflecting a very low level of DTA RWA intensity of 84%, compared to an average of 42% Conservative Leverage ratio at 13,0%, compared to an average of 6,8% 6,8% (1) (2) (3) Leverage ratio is defined as Tangible Total Equity over Total Assets. As per SNL Financial Database, 'Clean' Fully Loaded CET1 ratio as 31 March 2016, excludes Deferred Tax Credits, AFS and Danish Compromise Estimated Impact Bank of Cyprus data is based on 1H2016 financial results. Bank of Cyprus 15 KOINO KYMPI#16Income Statement Review € mn Total income Total expenses Profit before provisions and impairments¹ Provisions for impairment of customer loans net of gains/(losses) on loan derecognition and changes in expected cash flows (158) (234) -33% (96) (62) 53% • Impairments of other financial and non financial assets (22) (31) -31% (14) (8) 71% Share of profit from associates and joint ventures 2 3 -53% 1 1 1% • Profit before tax, restructuring costs, discontinued operations and net profit on disposal of non-core asset 102 79 29% 26 76 -65% Tax (Loss)/profit attributable to non-controlling interests (12) (10) 17% (4) (8) (6) 1 (5) 81 -49% (1) 1H2016 1H20152 yoy % 2Q2016 1Q2016 qoq % 482 535 -10% 238 244 -3% (202) (194) 4% (103) (99) 5% 280 341 -18% 135 145 -7% Profit after tax and before restructuring costs, discontinued operations and net profit on disposal of non-core asset 84 70 20% 17 67 -75% Advisory, VEP and other restructuring costs³ (87) (22) 302% (70) (17) 301% Loss from disposal groups held for sale/discontinued operations 0 (29) -100% 0 0 Net gain on disposal of non-core assets 59 41 45% 59 0 Profit after tax 56 60 -6% 6 50 Net interest margin 3,59% 3,88% -29 bps 3,55% 3,63% -8 bps Return on average assets (annualised) 0,5% 0,5% 0,1% 0,9% -0,8 p.p • Return on tangible equity (annualised) 3,8% 3,6% +0,2 p.p 0,8% 6,7% -5,9 p.p -88% • • Key Highlights QoQ change Total Income down by 3% qoq driven by reduction in customer loan balance primarily due to elevated loan restructuring activity NIM maintained at 3,59% for 1H2016 Total Expenses up by 5% qoq due operating to increased expenses compared with 1Q2016 attributed to lower provision charge for litigation in 1Q2016 following legal settlements Cost to Income ratio at 42% for 1H2016 Profit before provisions of €135 mn for 2Q2016 directed at increased provisions and impairment charges to faster de-risk balance sheet Profit after tax of €6 mn for 2Q2016 Cost-to-Income ratio 42% 36% +6 p.p 43% 40% +3 p.p (1) i (2) (3) Profit before provisions and impairments, gains/(losses) on derecognition and changes on expected cash flows, restructuring costs and discontinued operations. See Note 2.32 to the Interim Consolidated Financial Statements for the six months ended 30 June 2016, Comparative information. Advisory, VEP and other restructuring costs comprise mainly: 1) fees of external advisors in relation to: (i) disposal of operations (ii) customer loan restructuring activities which are not part of the effective interest rate and (iii) the contemplated listing on the London stock exchange and 2) voluntary exit plan cost. Bank of Cyprus KOINO KYMPI 16#17Profitable 1H2016 Group Income Statement Highlights (€ mn) 261 251 253 244 238 ■2Q2015 ■3Q2015 ■4Q2015 ■1Q2016 ■2Q2016 169 149 134 145 135 50 31 13 6 -92-102-119 -99-103 Total Expenses Total Income Profit before impairments¹ restructuring costs and discontinued operations -62 -96 -96 -123 -512 -630 Provisions for impairment of Profit/(loss) after tax customer loans and gains/(losses) on loan derecognition and changes in expected cash flows Return on Tangible Equity (ROTE) (%) & Return on Average Assets (ROAA) ■1Q2015 ■1H2015 ■9M 2015 ■FY2015 ■1Q2016 ■ 1H2016 3,4% 3,6% 2,9% 6,7% 3,8% -14,9% Return on Tangible Equity 2 0,4% 0,5% 0,9% 0,4% 0,5% -1,7% Return on Average Assets 2 Bank of Cyprus 17 KOINO KYMPI (1) (2) Profit before provisions and impairments, gains/(losses) on loan derecognition and changes on expected cash flows, restructuring costs and discontinued operations. ROTE and ROAA are on an annualised basis.#18Healthy NIM and Customer Spread in a Competitive Market Net Interest Income and Net Interest Margin Interest income from Republic of Cyprus bond (€ mn) € bn Net interest income (€ mn) NIM (bps) Interest bearing assets² 22,8 21,8 20,8 20,1 19,7 1H2015: NIM 388 bps 1H2016: NIM 359 bps 379 370 369 363 355 212 205 198 185 175 22 190 196 191 185 175 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 Yield on Loans and Cost of Deposits in Cyprus¹ (bps) Yield on Loans Cost of Deposits Customer spread • • • Net Interest Income (NII) at €175 mn, compared to €185 mn for 1Q2016, reflecting the reduction in customer loan balance primarily due to the increased activity in loan restructuring Net Interest Margin (NIM) remains healthy at 3,59% for 1H2016 Interest bearing assets decreased by 2% to €19,7 bn • 573 537 536 527 530 527 Customer spread in Cyprus maintained at 436 bps in 2Q2016 despite competitive pressures • 434 418 432 427 435 436 €547 mn of new loans were granted during the first seven months of the year 139 119 104 100 95 91 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 (1) Includes all currencies (2) Interest bearing assets include placements with banks and central banks, reverse repurchase agreements and net loans and advances to customers and investments excluding equity and mutual funds. Bank of Cyprus KOINO KYMPI 18#19Growing Non-interest Income Analysis of Non Interest Income (€ mn) – Quarterly ■Net fee and commission income ■Insurance income net of insurance claims Other 1 % Net fee and commission income % Total income 16% 14% 14% 15% 15% 16% 59 63 47 49 55 46 9 14 11 I 54! I 54 I 16 9 1 45 12 II 48 50 49 1 mn) 43 36 -7 1Q2015 2Q2015 36 38 36 -2 3Q2015 4Q2015 1Q2016 Fee & commission income by business line ■International Banking Services ■Consumer ■SME 7% Corporate 6% RRD Wealth and Management Other 2% 10% 9% 31% 38 2Q2016 X Non interest income (€ X Recurring non-interest income (€ mn) Payment Transactions are increasing Average Number of Payment Transactions per month (thousands) ■Incoming Payment Orders Outgoing Payment Orders 53 One third of IBS 41 35% fee & commission income is driven by Payment Transactions 35 33 35 29 30 26 20 21 2013 pre-Bail- 2013 - post-Bail- in 2014 2015 2016 ytd in (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 KOINO KYMPI 19#20Costs under control Total expenses (€ mn) Staff costs ■Operating expenses 119 115 103 102 102 103 99 92 92 57 62 44 43 43 33 41 44 59 58 59 59 59 59 57 59 58 59 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 Cost to Income Ratio Group EU average 66% 63% 63% 61% 59% 60% 42% 40% 40% 37% 37% 38% 36% FY2014 1Q2015 1H2015 9M2015 FY2015 1Q2016 1H2016 (1) Based on EBA Risk Dashboard Report, Data as at 31 March 2016 • Total expenses in line with previous quarters Staff costs in line with previous quarters; Following the completion of the voluntary exit plan (VEP) during the first half of 2016, an annual saving of 12% of personnel expenses is expected Operating expenses for 2Q2016 in line with previous quarters • Cost to income ratio stable at 42% Actions for focused, targeted cost containment: Tangible savings through a targeted cost reduction program for operating expenses 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 KOINO KYMPI 20#21Core Profitability Residing in the Cyprus Operations 2Q2016 Cyprus Vs Group performance (€ mn) 93% 92% 238 220 164 175 11 18 -92 89% -103 -11 Net interest income Total income Total expenses 95% 214% 128 135 7 Profit before provisions and impairments, restructuring costs and discontinued operations 1 % % contribution of Cyprus operations ■Cyprus operations 36 17 ■Rest of operations -19 Profit after tax and before one off items ■Group Healthy NIM in Cyprus operations Healthy Cost to Income ratio for Cyprus operations Steady Fee and commission income for Cyprus operations Total income (€ mn) (bps) Other income Fee and commission income 379 386 367 369 366 359 349 262 250 254 251 224 220 40% 41% 38% 16% 13% 14% 15% 15% 17% 35% 35% 35% 35% FY15: 373 1H16: 353 84% 87% 86% 85% 85% 83% 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 FY14 1Q15 1H15 9M15 FY15 1Q16 1H16 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 (1) Bank of Cyprus KOINO KYMPI Profit before provisions and impairments, gains/(losses) on loan derecognition and changes on expected cash flows, restructuring costs and discontinued operations. 21#22Expansion of UK operations • BOC UK is growing its lending business in order to improve profitability; Self funded growth through retail deposits BOC UK has a branch in North London and business centres in Central London, South London and Birmingham and focuses on meeting the needs of entrepreneurs and owner-managed businesses • Executive team strengthened with a new CFO, CRO, Chief Customer & Commercial Officer and MD Consumer Gross loans and customer deposits (bn) Key figures £mn 1H2016 1H2015 2Q2016 1Q2016 Euro (€) Sterling pound (£) 1,49 Operating profit 3.342 2.178 1,43 1,43 1.21 Increase 9% 1.200 2.142 1,14 1,17 Increase 12% 1,04 1,08 1,13 Profit before tax 3.629 1.839 0,83 0,88 0,93 1.408 2.221 Loans by sector as at 30 June 2016 1% 2% 19% Dec Mar Jun- 15 16 16 Dec 15 Mar Jun- 16 16 Dec Mar- Jun- 15 16 16 Dec Mar- Jun- 15 16 16 Gross Loans Customer Deposits Gross Loans Customer Deposits ■ Corporate 78% ■SMES ■Consumer credit Housing Bank of Cyprus KOINO KYMPI 22#23Significant Progress made on Group KPIs A clear plan of action to achieve Medium Term Targets Category Key performance indicators Dec- 2015 Jun- 2016 Medium Term Targets 1. Significantly 90+ DPD ratio 50% 44% <30% reduce problem loans Asset quality 90+ DPD coverage 48% 53% >50% Provisioning charge 1 4,3% 1,4% <1,0% ELA % Assets; 16%; € bn €3,8 bn 11%; €2,4 bn Fully repay ELA Funding Net Loans % Deposits 121% 110% 100%-120% • 3. Focus on • 14,0% 14,4% >15% core 2. Normalise funding structure; Eliminate markets Key Pillars & Plan of action ° Intensify restructuring and workout activity of delinquent borrowers Maintain increased 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 Deposit Growth; Wholesale and interbank market access Retention of cash profits from operations; Proceeds from deleveraging Increase loan pool for the Additional Credit Claim ECB framework 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 New loan origination, while maintaining lending yields Expand the UK franchise by leveraging the UK subsidiary Capital CET1 (transitional) Net interest margin 3,8% 3,6% ~3,00% • Margins and efficiency Fee and commission income/total income 15% 15% >20% 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 40% 42% 40%-45% Balance Sheet Total assets 5. Deliver returns Deliver appropriate medium-term risk-adjusted returns €23,3 bn €22,7 bn >€25 bn 1) 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. Bank of Cyprus KOINO KYMPI 23#24Key Takeaways . BOC franchise remains strong in an economy that is recovering quickly Problem loans (90+ DPD) down by €1,0 bn (or 10%) qoq and by €2 bn (or 18%) during 1H2016 ; Provision coverage improved to 53% Strong Restructuring momentum continues with €2,76 bn of restructurings in 1H2016 Further normalisation of funding structure; Loans to Deposits ratio (L/D) at 110% and customer deposits accounting for 65% of total assets ELA reduced by €2,3 bn year to date to €1,5 bn CET1 ratio (transitional basis) at 14,4%; Pre-provision profitability of €135 mn for 2Q2016 directed at increased provisions and impairment charges to faster de-risk balance sheet Profit after tax of €6 mn for 2Q2016 and €56 mn for 1H2016 Bank of Cyprus KOINO KYMPI 24#25Key Information and Contact Details Credit Ratings: Fitch Ratings: Long-term Issuer Default Rating: upgraded to "B-" on 25 April 2016 (stable outlook) Short-term Issuer Default Rating: upgraded to "B" on 25 April 2016 Viability Rating: upgraded to "b-" on 25 April 2016 Moody's Investors Service: Baseline Credit Assessment: Affirmed at caa3 on 15 June 2016 (positive outlook) Short-term deposit rating: Affirmed at "Not Prime" on 15 June 2016 Long-term deposit rating: Affirmed at Caa3 on 15 June 2016 (positive outlook) Counterparty Risk Assessment: Assigned at Caa1(cr) / Not-Prime (cr) on 15 June 2016 Listing: ATHEX-BOC, CSE - BOCY, ISIN CY0104810110 Contacts Investor Relations Tel: +35722122239, Email: [email protected] Annita Pavlou, ([email protected]) Elena Hadjikyriacou, ([email protected]) Marina loannou, ([email protected]) Styliani Nicolaou, ([email protected]) Finance Director Eliza Livadiotou, Tel: +35722122344, Email: [email protected] Visit our website at: www.bankofcyprus.com Bank of Cyprus 25 KOINO KYMPI#26Appendix - Macroeconomic overview Bank of Cyprus 26 KOINO KYMPI#270 0,05 0,1 0,15 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 0,2 Growth accelerated in 1H2016 and fiscal conditions are improving Real GDP continued to expand in the first quarter -0,4% -0,8% 1,2% 2Q2012 3Q2012 -1,2% -2,4% -2,3% 4Q2012 -3,7% 1Q2013 -5,3% 2Q2013 -6,0% 3Q2013 -5,5% 4Q2013 -4,7% 1Q2014 2Q2014 3Q2014 4Q2014 -3,2% -1,8% 1Q2015 -2,1% -1,8% 0,1% 2Q2011 3Q2011 4Q2011 1Q2012 1,2% 2,3% 2,8% 2,7% 2,7% 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 ... with broad sector participation particularly from trade, tourism, professional services, whilst.... 0,0 Contribution to growth by sector in percentage 0,1 0,2 0,4 0,8 0,8 0,7 points 0,40,4 ... on the expenditure side growth came from net exports reflecting exceptional items such as ships deregistering. Contribution to growth by category of expenditure in percent points 1,4 4,0 12,8 0,4 1,9 1,5 2,7 0,6 0.2 1,8 0,2 0,2 -1,2 0,2 -1,3 0,1 0,0 -4,2 -4,6 -1,2 -11,9 0,0 -3,2 -4,0 -1,5 -0,2 Agriculture Construction Professional & admin -0,3 Financial Other 2011 2012 2013 2014 2015 2016Q1 2015 (growth 1,6%) ■Consumption Investment ■Net Exports Improved rating and credit outlook as demonstrated by benchmark sovereign bond issue Cyprus 2019 (issued 06/2014) Cyprus 2022 (issued 04/2015) Cyprus 2025 (issued 11/2015) Cyprus 2020 (issued 02/2010) Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 (1) Based on the Statistical Service of the Republic of Cyprus ======= ============= SOURCE: Statistical Service of Republic of Cyprus, Bloomberg, and statistics based on Central Bank of Cyprus 2008Q4 2009Q2 2009Q4 2010Q2 2016Q1 (growth 2,6%) The budget was totally balanced in 2015 on a yearly basis excluding recapitalisation costs, and 6 3,5 4 2,2 2 0,9 0 -2 -0,3 -4 was positive in Q1 2016 Budget balance and primary balance as 4 quarter moving sums -5,9-5,7 -4,5 -6,0 Expenditures dropped by 18,6% and revenues only by 3,6% between 2011Q4 and 2016Q1 on a 4Q moving sums basis Government expenditures and revenues index: 100-2011Q4 of 4 Q moving sums 3,7 2,8 105,0 2.1 0,9 100,0 100,0 TT -0,2 0.0 95,0 -0,9 90,4 90,0 92,3 89,3 85,0 Gov. Expenditure index Gov. Revenue index 97,6 96,4 81,4 2010Q4 2011Q2 2011Q4 2012Q2 2012Q4 Budget balance % of GDP2 2013Q2 2013Q4 2014Q2 2014Q4 2015Q2 2015Q4 80,0 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 Bank of Cyprus 27 2015Q3 2015Q4 2016Q1 KOINO ΚΥΠΡΙ#282008 Q4 2009Q1 2009 Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010 Q4 2011Q1 2011Q2 2011 Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013 Q3 2013Q4 2014Q1 2014Q2 2014 Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 The unemployment rate dropped to 11,9% in Q2 from 12,9% in Q1 and a peak rate of 16,5% in Q4 of 2013. Key economic sectors are performing well In construction the main indices may have bottomed in the first half of 2015 and started to rise from there 18,0 16,5 16,3 100 Unemployment rate and unemployed persons Index 100=2008Q2 of 4Q moving averages/sums 13,5 90 16,0 12,9 120,0 80 14,0 71 71 100,0 11,9 70 56 100,0 12,0 52 60 10,0 80,0 48 50 8,0 6,0 40 60,0 6,0 30 3,7 40,0 4,0 2,0 15 0,0 20 25 20,0 10 35,6 34,3 27,2 22.5 25,3 0 0,0 Unemployed persons SA in thousands (RHS) Unemployment rate SA % Industrial production bottomed in February 2014 on a 12 month basis, from a peak in 2008, and has been rising since ... Production Index Local sales of cement Volume of building permits were the rebound has been relatively uniform across sectors with the total production index up by 10,5% in Jan-Apr Industrial production by sector: % change year-on-year 50,0 Total Industrial production 100,0 40,0 30,0 20,0 10,0 0,0 -10,0 -20,0 -30,0 120,0 100,0 12,3 69,0 80,0 65,4 60,0 16,3 11,8 10,5' 3,4 3,7 4,0 1,0 3,5 40,0 -0.1.1,2 -2,3 -4,2 20,0 -9,2 00 -10,110,3 0,0 06.0 09.08 03.09 09.09 12.09 03.10 06.1 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 12.13 03.14 06.14 09.14 12.14 03.15 06.15 09.15 12.15 03.16 -13,44,1 -12,9 -15,2 2012 2013 2014 2015 2016Jan-Apr 100 Oct 2008 of 12 m. Av. (RHS) * Projections are per IMF 9th Review dated January 2016 % change y-o-y 12 month averages ■Total Industry ■Manufacturing Elctricity ■Water Bank of Cyprus KOINO KYMPI SOURCES: Central Bank of Cyprus, Statistical Service of Republic of Cyprus, European Commission, Bloomberg, IMF and company reports; Calculations by BOC Economic Research 28 2003Q4 2004Q2 2004Q4 2005Q2 2005Q4 2006Q2 2006Q4 2007Q2 2007Q4 2008Q2 2008Q4 2009Q2 2009Q4 2010Q2 2010Q4 2011Q2 2011Q4 2012Q2 2012Q4 2013Q2 2013Q4 2014Q2 2014Q4 2015Q2 2015Q4 2016Q2#29-15 -10 Q4.08 -5 Q1.09 Q2.09 0 5 100,0 10 3,0 3,2 42,0 Tourism is expanding & Residential Property Index is stabilising -2,4-3,0 -6,0 -7,1 28,3 Tourist activity accelerated in 2015 and 2016 with total arrivals up 21,2% in the first half driven by a 48% increase from Russia Arrivals: % change year-on-year The distribution of tourist arrivals has been shifting over time with the UK now at 37,1% and Russia at 23,8% -17.6 5,3 6,6 7,8 9,2 8,6 45,0 21,2 22,6 22,8 20,3 22,4 4.8 6.1 4,4 4.6 4,1 5,2 19,8 5,6 19,5 19,2 25,3 26,1 19,7 23,8 13,6 8,9 7,2 4,2 4.0 4.1 4,6 3.5 1,5 0,2 58,5 39,2 37,1 37,1 35,7 -2,2 2003 2013 2014 2015 1H2016 2012 2013 2014 2015 2016 Jan-Jul UK Germany Russia ■Greece ■Other Europe Non-Europe ■Total Arrivals Europe UK ■Russia Residential property prices declined by a cumulative 30% from their peak and started to stabilise from the second half of 2015 15 Central Bank Residential Property Index (Rebased to 2008Q4) Residential property prices appear correlated with GDP growth with a lag, and might thus turn higher in the next few quarters Residential property prices and real GDP in 4Q moving averages Q3.09 Q4.09 Q1.10 Q2.10 Q3.10 Q4.10 Q1.11 Q2.11 Q3.11 Q4.11 Q1.12 Q2.12 Q3.12 Q4.12 110,0 105,0 4,0 100,0 2,0 95,0 0,0 90,0 -2,0 -1,6 -1,8 85,0 -4,0 -3,7 80,0 -6,0 75,0 70,7 70,1 -8,0 70,0 -10,0 65,0 60,0 Q1.13 Q2.13 Q3.13 Q4.13 Q1.14 Q2.14 Q3.14 Q4.14 Q1.15 Q2.15 Q3.15 Q4.15 Q1.16 1100-2008Q4 of 4Q moving averages (RHS) Residential Property Index % change y-o-y SOURCES: Statistical Service of Republic of Cyprus, European Commission, Bloomberg, IMF and company reports, Calculations by BOC Economic Research Q3.09 Q4.09 Q1.10 Q2.10 Q3.10 Q4.10 Q1.11 Q2.11 Residential property prices % change Q3.11 Q4.11 Q1.12 Q2.12 Q3.12 Q4.12 Q1.13 Q2.13 Q3.13 Q4.13 Q1.14 Q2.14 Q3.14 ༢༠,G Q4.14 Q1.15 Q2.15 Q3.15 Q4.15 Real GDP % changes Q1.16 Bank of Cyprus 29 KOINO KYMPI#30Consumer prices continued to drop while on the demand side of the economy, retail trade volumes continued to increase Following three consecutive years of decline, consumer prices dropped by 2,2% in the first half of the current year ... 4,0 Consumer 3,0 2,0 1,0 0,0 -1,0 -2,0 -3,0 2,4 nsumer Price Index: % changes year-on-year 2,4 ili 2010 2011 2012 2013 -0,4 -1,4 -1,7 -2,1 -2,2 2014 2015 2016F 2016Jan-Jun 2016M03 2016M04 driven mainly by housing and transport expenditures which are energy related, and by food. Increase in the CPI by category in percentage points 0,07 0,15 -0,01 0,06 -0,24 -0,44 -1,11 -0,69 -0,94 -0,04 -0.05 -0,15 -0,22 -0,74 -0,89 -2,1 -2,2 -0,21 2016M05 2016M06 The volume index of retail trade peaked in Oct. 2008 on a 12 month basis and dropped 15% by the first half of 2014 15 Volume of retail trade 10 -0,01 -0,18 2014 2015 1H2016 Food Housing Furnishings Transport Education Other Regarding vehicle registration, after a 73% drop from their peak in late 2008 to early 2014, they started to rebound 130 60,0 9,6 Registration of motor vehicles 5 120 40,0 0 95,0 -5 02110 20,0 100 0,0 -10 91.3 ми 45 41,8 40 37,9 30.3 20, 35 85,0 90 -20,0 27,2 -15 80 -40,0 -20 01.12 03.12 05.12 07.12 10.12 11.12 01.13 03.13 05.13 20 07.13 09.13 11.13 0111 01.14 03. 14 03.14 05. 14 03.14 Oz 11 07.14 10 14 1100-2008 M10 of 12 month moving averages (RHS) % change y-o-y SOURCES: Statistical Service of Republic of Cyprus, European Commission, Bloomberg, IMF and company reports, Eurostat, Calculations by BOC Economic Research 11 14 01.15 03.15 05.15 07.15 10.15 11.15 01.16 03.16 05.16 70 -60,0 70 01.13 03.13 05.13 07.13 09.13 11.13 01.14 03.14 05.14 07.14 100=2008 M10 of 12 month moving averages (RHS) % changes y-o-y Bank of Cyprus 130 10.14 11.14 01.15 03.15 05.15 07.15 10.15 11.15 01.16 03.16 04.16 30 25 20 20 KOINO KYMPI#31Appendix - Additional financial information Bank of Cyprus 31 KOINO KYMPI#32Consolidated Balance Sheet % % € mn 30.06.16 31.12.15 change € mn change 30.06.16 31.12.15 Cash and balances with 7% 1.519 1.423 Deposits by banks 42% 343 242 Central Banks Funding from central banks -30% 3.101 4.453 Loans and advances to -11% 1.174 1.314 banks Repurchase agreements 8% 398 368 Customer deposits 4% 14.746 14.181 Debt securities, treasury bills -17% 840 1.009 and equity investments Debt securities in issue -100% 0 1 Net loans and advances to -5% 16.253 17.192 Other liabilities 5% 996 944 customers Other assets 26% 2.883 2.284 Non current liabilities and disposal group held for sale -100% 0 4 Non current assets and -76% 11 49 Total liabilities -3% 19.584 20.193 disposal group held for sale Share capital 0% 892 892 Total assets -3% 22.680 23.271 Capital reduction reserve and share premium 0% 2.505 2.505 Revaluation and other reserves -7% 240 259 Accumulated losses -3% (583) (601) Shareholders' equity 0% 3.054 3.055 Non controlling interests 89% 42 23 Total equity 1% 3.096 3.078 Total liabilities and equity -3% 22.680 23.271 Bank of Cyprus KOINO KYMPI 32#33Income Statement Review € mn Net interest income Net fee and commission income Insurance income net of insurance claims Core income Other income 1H2016 1H2015 yoy represented³ +% qoq 2Q2016 1Q2016 +% 360 439 -18% 175 185 -5% 74 79 -7% 38 36 5% 25 20 22% 11 14 -19% 459 538 -15% 224 235 -4% 23 23 -3 14 9 33% i Total income 482 535 -10% 238 244 -3% Total expenses (202) (194) 4% (103) (99) 5% Profit before provisions and impairments1 280 341 -18% 135 145 -7% Provisions for impairment of customer loans net of gains on derecognition of loans and changes in expected cash flows (158) (234) -33% (96) (62) 53% Impairments of other financial and non financial assets (22) (31) -31% (14) (8) 71% Share of profit from associates and joint ventures 2 3 -53% 1 1 1% Profit before tax, restructuring costs and discontinued operations 102 79 29% 26 76 -65% Tax (12) (10) 17% (4) (8) -49% (Loss)/profit attributable to non-controlling interests (6) 1 (5) (1) Profit after tax from continuing operations 2 84 70 20% 17 67 -75% Advisory, VEP and other restructuring costs4 (87) (22) 302% (70) (17) 301% Loss from disposal group held for sale/discontinued operations (29) -100% Net gain on disposal of non-core assets 59 41 45% 59 i Profit after tax 56 60 -6% 6 50 -88% Net interest margin 3,59% 3,88% -29 bps 3,55% 3,63% -8 bps Cost-to-Income ratio 42% 36% +6 p.p 43% 40% +3 p.p (1) (2) (3) (4) Profit before provisions and impairments, gains/(losses) on derecognition and changes on expected cash flows, restructuring costs and discontinued operations. Profit/(loss) after tax and before restructuring costs, discontinued operations and net profit on disposal of non-core assets. See Note 2.32 to the Interim Consolidated Financial Statements for the six months ended 30 June 2016, Comparative information. Advisory, VEP and other restructuring costs comprise mainly: 1) fees of external advisors in relation to: (i) disposal of operations (ii) customer loan restructuring activities which are not part of the effective interest rate and (iii) the contemplated listing on the London stock exchange and 2) voluntary exit plan cost. Bank of Cyprus 33 KOINO#34Income Statement bridge for 1H2016 € mn Net interest income Net fee and commission income Per presentation Reclassification 360 Per financial statements 360 74 74 Net foreign exchange gains and net gains on other financial instruments 15 59 74 Insurance income net of insurance claims 25 25 Gains/(losses) from revaluations/disposals of investment properties 2 4 6 Losses on disposal of stock properties (4) (4) Other income 6 2 8 Total income 482 61 543 ---- Total expenses Profit before provisions and impairments, gains/(losses) on derecognition of loans and changes in expected cash flows, restructuring costs and discontinued operations Provisions for impairment of customer loans Gains on derecognition of loans and changes in expected cash flows Impairments of other financial and non-financial assets Share of profit from associates Profit before tax, restructuring costs and discontinued operations (202) (87) (289) 280 (26) 254 (180) (180) 22 22 22 (22) (22) 2 2 102 (26) 76 Tax (12) (2) (14) Loss attributable to non-controlling interests (6) (6) Profit after tax and before restructuring costs, discontinued operations and net profit from disposal of non-core assets 84 (28) Advisory, VEP and other restructuring costs¹ Net gain on disposal of non-core assets Profit after tax (87) 59 (59) 56 ེ་ཆ (56) 56 Bank of Cyprus KOINO KYOPI (1) Advisory, VEP and other restructuring costs comprise mainly: 1) fees of external advisors in relation to: (i) disposal of operations (ii) customer loan restructuring activities which 34 are not part of the effective interest rate and (iii) the contemplated listing on the London stock exchange and 2) voluntary exit plan cost.#35Cyprus: Income Statement by business line for 1H2016 € mn Consumer SME Corporate Banking Banking Banking International Banking Wealth & Brokerage & RRD REMU Insurance Other Asset Management Total Cyprus Net interest income 126 33 39 32 4 114 (5) (7) 336 Net fee & commission income 22 4 5 25 1 7 71 Other income 2 0 0 3 2 1 (3) 25 6 36 Total income 150 37 44 60 7 122 (8) 23 8 443 Total expenses (60) (6) (5) (13) (3) (18) (5) (7) (64) (181) Profit/(loss) before provisions i and impairments 90 31 39 47 4 104 (13) 16 (56) 262 Provisions for impairment of customer loans net of gains/(losses) on derecognition 28 (17) 11 2 0 (148) (2) (126) of loans and changes in expected cash flows Impairment of other financial and non financial assets (4) (13) (17) Share of profits from associates 2 2 Profit/(loss) before tax 118 14 50 49 49 4 (44) (17) 16 (69) 121 Tax (12) (2) (6) (7) (1) 7 2 (1) 9 (11) Profit attributable to non controlling interest (6) ---- | Profit/(loss) after tax and i before one off items 106 12 44 42 3 (37) (15) 15 (66) 104 Bank of Cyprus KOINO KYMPI 35#36Risk Weighted Assets - Regulatory Capital Risk weighted assets by Geography (€ mn) Equity and Regulatory Capital (€ mn) 31.03.15 30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 31.03.15 30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 Cyprus Russia 20.473 19.607 19.473 18.438 18.276 17.845 Shareholders' equity 3.502 3.506 3.518 3.055 3.101 3.054 813 708 46 21 25 16 United Kingdom 1.162 667 663 685 650 695 CET1 capital 2 3.201 3.205 3.231 2.748 2.769 2.735 Romania 294 318 315 269 198 195 Tier I capital 3.201 3.205 3.231 2.748 2.769 2.735 Greece 181 180 173 208 182 176 Other¹ 49 47 47 45 43 41 Tier II capital 30 32 22 30 20 21 Total RWA 22.972 21.527 20.717 19.666 19.374 18.968 RWA Total regulatory capital (Tier I + Tier II) 3.231 3.237 3.253 2.778 2.789 2.756 intensity (%) 86% 85% 86% 85% 85% 84% Risk weighted assets by type of risk (€ mn) Reconciliation of Group Equity to CET 1 € mn 30.06.16 31.03.15 30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 Group Equity per financial statements 3.096 Less: Intangibles and other deductions (18) Credit risk 20.881 19.426 18.830 17.618 17.326 16.921 Less: Deconsolidation of insurance and other entities (213) Market risk 6 16 7 8 8 7 Operational risk 2.085 2.085 1.880 2.040 2.040 2.040 Less: Regulatory adjustments (Minority Interest, DTA and other items) Less: Revaluation reserves and other unrealised items transferred to Tier II CET 1 (transitional) (78) (52) 2.735 Less: Adjustments to fully loaded (mainly DTA) (155) Total 22.972 21.527 20.717 19.666 19.374 18.968 CET 1 (fully loaded) Risk Weighted Assets 2.580 18.968 CET 1 ratio (fully loaded) CET 1 ratio (transitional)1 13,6% 14,4% Bank of Cyprus KOINO KYMPI €2 (1) Other countries primarily relates to exposures in Channel Islands (2) Transitional basis; includes audited profits for the six months ended 30 June 2016. 36#37BOC- Main performance indicators 30 June 2016 Ratios ROAA (annualised) ROTE (annualised) Performance Net Interest Margin Cost to income ratio Loans to deposits 90+ DPD/90+ DPD ratio Group 1H2016 0,5% 3,8% 3,59% 42% 110% €9.269 mn (44%) 90+ DPD coverage Asset Quality Capital Cost of risk (annualised) Provisions Gross Loans Transitional Common Equity Tier 1 capital CET1 ratio (transitional basis) Total Shareholder's Equity / Total Assets 52,6% 1,4%1 23,1% €2,735 mn 14,4% 13,5% Shareholder's Equity Intangible assets # shares Book Value per Tangible Book Value per (€ mn) (€ mn) (mn) share share 30/09/2014 3.728 135 8.922 0,418 0,403 31/12/2014 3.465 127 8.922 0,388 0,374 31/03/2015 3.502 130 8.923 0,392 0,378 30/06/2015 3.506 128 8.923 0,393 0,379 30/09/2015 3.518 131 8.923 0,394 0,380 31/12/2015 3.055 134 8.923 0,342 0,327 31/03/2016 3.101 141 8.923 0,348 0,332 30/06/2016 3.054 139 8.923 0,342 0,327 Bank of Cyprus KOINO KYMPI 37 (1) That is Provisions for impairment of customer loans and gains/(losses) on derecognition of loans and changes in expected cash flows.#38Reduction in Overseas Non-Core Exposures Overseas non-core exposures (€ mn) The non-core overseas exposures at 30 June 2016 were as follows: Greece: Net exposure comprised: 639 foreclosed properties with a book value of €164 mn; off-balance sheet exposures of €119 mn; and lending exposures to Greek entities in the normal course of business in Cyprus of (a) Net on-balance sheet exposures (excluding foreclosed properties) totalling €13 mn; 1.105 (b) 1.040 140 528 957 139 512 911 (c) 870 35 133 477 (d) 151 132 464 56 158 49 131 521 199 122 225 22 192 16 119 173 54 168 I 13 54 54 54 164 368 42 354 312 274 262 155 120 114 119 Jun-15 Sep-15 Dec-15 Greece other¹ Mar-16 45 Jun-16 Greece net off balance sheet exposure ■Greece net on balance sheet exposure Greece Foreclosed Properties ■ Serbia ■Russia: Net exposure ■Romania: Net Exposure €81 mn, and lending exposures in Cyprus with collaterals in Greece of €144 mn. Romania: Overall net exposure of €262 mn Serbia: Overall net exposure of €42 mn Russia: Remaining net exposure (on and off balance sheet) in Russia significantly reduced to €45 mn during 2Q2016 following the full settlement in cash of the deferred component of the asset swap arrangement which resulted from the agreement for the disposal of the Russian operations As part of the Group's strategy of focusing on its core businesses and markets, the Group decided to close the operations of Bank of Cyprus Channel Islands Ltd (BOC CI) and to relocate its business to other Group locations. As at 30 June 2016 the gross loans and deposits of BOC CI amounted to €24,5 mn and €69,4 mn respectively. BOC CI operates through one branch and has one employee. (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 KOINO KYMPI 38#39Analysis of Deposits by Geography and by Type Deposits by geography 30 June 2016 (%) 1 Total ■Cyprus non-IBU Cyprus IBU¹ ■ UK Other countries² ■Cyprus non IBU ■ UK Cyprus - IBU Other countries 2 (€ bn) 14,97 13,80 13,33 1,02 13,17 13,61 13,63 14,13 13,61 14,18 14,75 ,0,1% 0,01 0,01 1,24 0,87 0,61 0,61 0,79 1,25 1,29 1:38 1,36 1,39 1,45 1,49 1,43 1,43 9,7% 4,05 3,59 3,46 3,47 3,57 3,21 3,40 3,75 3,68 3,91 26,5% 63,7% 8,66 8,09 7,79 7,85 8,07 8,42 8,76 8,94 9,01 9,40 Dec-13 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Total Cyprus 90% Deposits by type of deposits Total Time deposits Savings accounts ■Current & demand accounts 30 June 2016 (%) Time deposits Savings account Current and demand account 14,97 (€ bn) 13,80 13,33 13,17 13,61 13,63 13,61 14,18 14,13 14,75 3,49 3,72 0.93 3,96 4,33 4,48 4,47 4,63 4,99 4,97 5,40 0.95 0,84 0.96 0,97 1,02 1,01 1,03 1.01 1,04 36,6% 0,55 9,13 8,53 7,88 8,16 8,14 7,97 8,16 8,15 8,31 56,4 % 7,0% Dec-13 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 De-15 Mar-16 Jun-16 (1) IBU- Division servicing exclusively international activity companies registered in Cyprus and abroad and non-residents (2) Other countries: Russia (until June 2015), Romania, and Ukraine (until March 2014). Bank of Cyprus KOINO KYMPI 39#40Analysis of Deposits by sector for Cyprus operations Deposits by sector as per CBC classification for Cyprus operations Total (€ bn) ■Households Non financial corporations Other financial corporations General Governments 30 June 2016 (%) Market Shares ■General Governments Other financial corporations ■Non financial corporations 13,31 ■ Households 12,71 12,69 12,69 0,14 0,13 11,99 12,16 0,16 0,12 1,18 ■Total market shares 0,99 11,69 11,64 11,63 0,13 0,12 0,87 0.16 11,25 11,32 1,17 1,11 0,12 0,13 0,75 0,13 0,14 1,33 0,80 1,53 1,20 37,2% 1,37 3,90 3,90 3,60 3,62 3,61 3,64 3,21 3,41 2,94 2,82 2,87 28,9% 29,0% 27,6% 7,69 7,38 7,14 6,91 6,99 7,12 7,36 7,50 7,76 7,84 8,09 18,1% Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Bank of Cyprus KOINO KYMPI 40#41Gross loans by Geography and by Customer Type Gross loans by geography 30 June 2016 (%) Total (€ bn) Other countries ■ UK 24,74 23,77 24,09 23,93 22,86 1 1.11 1,91 22,59 0.91 1,66 1.03 1,74 1,13 1,61 21,85 1,14 0,75 0,72 21,08 1.21 0,70 0,63 1.18 ■Cyprus ■ UK 3,0% Other countries 5,6% 91,4 21,72 21,20 21,32 21,19 20,98 20,66 19,98 19,27 % ■Cyprus Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Gross loans by customer type Total (€ bn) 30 June 2016 (%) Corporate Retail Housing SME Retail Other 24,74 23,77 24,09 23,93 22,86 22,59 10,1 21,85 ■Retail other 2,42 21,08 % 2,44 2,54 2,52 2,20 2,18 4,61 4,41 4,43 2,16 4,39 2,13 4,35 Retail 4,31 20,3% 4,28 4,27 48,0% Housing 5,54 5,09 5,02 4,99 4,75 4,68 4,65 SMES 4,55 21,6% ■Corporate 12,17 11,83 12,10 12,03 11,56 11,42 10,77 10,13 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Bank of Cyprus KOINO KYMPI (1) Other countries: Russia, Greece and Romania 41#42NPEs by Geography and by Customer Type NPEs by geography 30 June 2016 (%) Total (€ bn) Other countries 1 ■ UK 1 ■Cyprus ■ UK Other countries 14,96 15,17 14,81 14,22 1,20 13,97 0,11 1,10 0,11 0,10 1,12 13,33 0,08 0,65 0,07 0,64 12,49 0,06 0,63 0,05 0,57 4,6% 0,4% 13,75 13,86 13,59 13,49 13,26 12,64 11,87 ■Cyprus 95,0% Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 NPEs by customer type Total (€ bn) 30 June 2016 (%) ■Corporate ■Retail Housing SME ■Retail Other 14,96 15,17 14,81 14,22 13,97 ■Retail Other 13,33 1,45 1,49 1,51 12,49 1,36 1,37 ■Retail Housing 1,82 1,93 1,95 1,37 10,6% 1,98 1,97 1,33 1,97 ■SMES 3,53 3,57 1,93 3,60 15,5% 3,51 3,44 47,9% 3,38 ■Corporate 3,25 26,0% 8,17 8,18 7.75 7,37 7,19 6,61 5,98 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Bank of Cyprus KOINO KYMPI 42 (1) Other countries: Russia (until June 2015) and Romania#43Asset Quality- 90+ DPD analysis (€ mn) Jun - 16 Mar-16 Dec-15 Sept-15 Jun-15 A. Gross Loans after Fair value on Initial recognition 20.040 20.719 21.385 21.597 22.575 Fair value on Initial recognition 1.043 1.130 1.207 1.266 1.351 B. Gross Loans 21.083 21.849 22.592 22.863 23.926 B1. Loans with no arrears 10.879 10.551 10.443 9.925 10.178 B2. Loans with arrears but not impaired 2.607 2.901 3.049 3.611 4.105 Up to 30 DPD 574 623 469 585 668 31-90 DPD 361 386 351 355 435 91-180 DPD 121 133 144 200 227 + + + 181-365 DPD Over 1 year DPD 175 183 259 374 529 1.376 1.576 1.826 2.097 2.246 + B3. Impaired Loans 7.597 8.397 9.100 9.327 9.644 With no arrears Up to 30 DPD 31-90 DPD 91-180 DPD 647 860 876 848 969 25 36 78 66 91 41 57 24 60 121 95 49 65 152 167 181-365 DPD 123 157 310 464 489 Over 1 year DPD 6.666 7.238 7.747 7.737 7.807 (90+ DPD) 1 9.269 10.289 11.329 11.998 12.646 90+ DPD ratio (90 + DPD / Gross Loans) 44,0% 47,1% 50,1% 52,5% 52,9% Accumulated provisions 4.875 5.076 5.445 4.933 5.381 Gross loans provision coverage 23,1% 23,2% 24,1% 21,6% 22,5% 90+ DPD provision coverage 52,6% 49,3% 48,1% 41,1% 42,5% (1) Loans in arrears for more than 90 days (90+ DPD) are defined as loans past-due for more than 90 days and those that are impaired (impaired loans are those which are not considered fully collectable and for which a provision for impairment has been recognised on an individual basis or for which incurred losses exist at their initial recognition or customers in Debt Recovery). Bank of Cyprus KOINO KYMPI 43#44Asset Quality - NPEs analysis Cyprus NPES - 30.06.16 INPES with forbearance measures, no impairments, no arrears not included in Recoveries NPES with forbearance measures, no impairments, 90dpd not included in Recoveries Not specifically provided not included in Recoveries Specifically provided not included in Recoveries Total Coverage for NPES Cyprus – Adequately provided Provision Coverage Tangible Collateral Total Coverage (capped MV 30.06.16) ■Recoveries 11.873 2.436 123,3% 112,0% 90,6% 551 67,4% 79,6% 1.872 62,7% 2.070 55,9% 4.944 49,3% 97,7% 74,8% 94,7% 77,8% 15,8% Jun 16 Recoveries Specifically provided Not specifically provided 1,8% NPEs with forbearance measures, no 3,1% NPEs with forbearance measures, no impairments, no arrears impairments, < 90dpd Bank of Cyprus KOINO KYMPI 44#4590+ DPD by Geography 90+ DPD by Geography (€ bn) 1 ■Cyprus ■ UK ■ Other countries 12,79 12,65 12,65 12,00 1,15 1,09 1,08 0,65 11,33 0,09 0.11 0.09 27% reduction yoy 0,08 0,63 0,07 10,29 0,63 0,06 9,27 0,57 0,05 11,47 11,53 11,48 11,27 10,63 9,60 8,65 10% 90+ DPD ratios by Geography ■Cyprus ■ UK 54% 54% 54% 66% 66% 67% 54% 7% 1 ■ Other countries 91% 45% 87% 51% %9 87% 48% 5% Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 (1) Other countries:, Russia Romania and Greece 11% %8 4% Mar-16 Jun-16 Bank of Cyprus KOINO KYMPI 45 %06#46Analysis 90+ DPD ratios by Business Line¹ 90+ DPD by business line (€ bn) ■Corporate ■Consumer Credit ■RRD-SMEs ■SMES ■RRD-Major Corporations ■RRD-Recoveries corporates ■Housing RRD-Corporates RRD-Recoveries SMEs & Retail 2,20 2,24 2,31 12,79 12,65 12,00 11,33 2,72 2,77 10,29 2,82 2,90 9,27 2,95 2,91 1,12 1,10 2,40 1,12 1,26 2,23 1,20 1,02 1,10 2,13 0,97 0,94 2,41 2,43 0,60 0,84 2,38 0,56 2,00 0,44 0,53 1,65 0,63 1,26 0,59 0,37 0,33 0,58 0,56 0,54 0,31 0,48 0,45 0.28 0,41 0,35 0.43 0.32 1,31 0.31 1,23 0,95 0,88 0,84 0,67 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 (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 46 KOINO KYMPI#47RRD - Important Actions Throughout the Organisation A results focused culture continues to be driven top down throughout the organisation via a number of important actions... Star chamber sessions RRD asset quality benefits tracking . Department 'stretch' targets, focused on materially outperforming budget for all key asset quality metrics, are set at the outset of each quarter Stretch targets are supported by specifically identified and measurable actions Star chamber sessions are held by the CEO, GCRO and D-RRD with all departments fortnightly Performance continuously assessed with immediate corrective actions taken Quarterly asset quality 'stretch' targets embedded in a benefits tracker update daily - deal by deal granularity Provides continuous visibility on expected quarterly results, with ‘gap' analysis identifying urgent action areas RRD weekly pipeline calls Daily monitoring • Weekly pipeline calls are held by D-RRD with all team leaders across SME, Recoveries Retail/SME and Recoveries Corporate Provides visibility on weekly applications, approvals and deal executions over the entire 'small ticket' book and the strategically important large ticket Corporate Recoveries book • Weekly ‘promises' are closely monitored driving ‘results focused' behavior across the book Risk lead a continuous review of early arrears and re-defaults across the book allowing issues to be identified early of early arrears • Corrective actions immediately taken where relevant Bank of Cyprus KOINO KYMPI 47#48Further break down of 90+ DPD coverage by business line - Cyprus Corporate 119% SMES 108% Consumer Housing 110% 55% 73% 96% 46% 84% 53% 64% 47% 52% 53% 50% 26% 28% 35% 26% 27% 26% Dec-15 Mar-16 Jun 16 Tangible Total Provision Coverage collateral coverage Dec-15 Mar-16 Provision Coverage Jun -16 Tangible Total collateral coverage Dec-15 Mar-16 Jun-16 Provision Coverage Tangible Total collateral coverage Dec-15 Mar-16 Jun -16 Tangible Total Provision Coverage collateral coverage RRD Corporations 72% 117% RRD Major Corporations 54% RRD-SMES 112% 78% 101% RRD Recoveries Corporate 59% 38% 42% 45% 44% 48% 61% 58% 61% Dec-15 Mar-16 Provision Coverage Jun - 16 Tangible Total collateral coverage Dec-15 Mar-16 Jun 16 Tangible Total Provision Coverage collateral coverage 22% 24% Dec-15 Mar-16 Jun -16 Provision Coverage 23% Tangible Total collateral coverage Dec-15 Mar-16 Jun -16 Provision Coverage RRD Recoveries SMEs 52% 53% 56% Dec-15 Mar-16 Provision Coverage 65% 121% RRD Recoveries Retail 62% Total Cyprus 113% 64% 115% 48% 51% 51% 46% 47% 51% Jun -16 Tangible Total collateral coverage Dec-15 Mar-16 Provision Coverage Jun -16 Tangible Total collateral coverage Dec-15 Mar-16 Jun -16 Provision Coverage Tangible Total collateral coverage 62% 123% Tangible Total collateral coverage Bank of Cyprus KOINO KYMPI 48#4932% Performance of Restructured Loans¹ Total Bank Cyprus - %69 No arrears SMES 49% 6.4% 58% 168% 82% 7268% ■1Q2014 ■2Q2014 ■3Q2014 88% 85% ■2Q2015 ■3Q2015 4Q2015 4Q2014 ■1Q2015 1Q2016 好好.79% 68% 13% 18% 17% No arrears 1-30 dpd 8% 7% 4% 9% 7% 14% 13% 7% 10% 1-30 dpd 16% 12,3% 6%% 14% 2% %8 31-90 dpd 58% 5% 4% 31% 24% 16% 13% %6 %9 %6 Corporate 74% 85% 81% 94% 91% 98% 82% 98% 95% Over 90 dpd No arrears 1-30 dpd Retail 37% 31% 21% 10% 10% 31-90 dpd Over 90 dpd 14% No arrears 12% %6 64% 11% 15% 18% 21% 20% 19% 21% 92% Quarterly average 20% 11% 11% %9 31-90 dpd Over 90 dpd An analysis performed as at 30 June 2016 indicates that on average 79% of the loans restructured post 31 December 2013 for Cyprus operations, have no arrears (restructurings performed in 2Q2016 were excluded); The average percentage of restructured loans with arrears more than 90 days stands at 8% Corporate restructured loans exhibit the . loans with no arrears of 95% best performance with an average percentage of restructured (1) The performance of loans restructured during 2Q2016 is not presented in this graph as it is too early to assess it 1-30 dpd %9 %8 31% 31-90 dpd Over 90 dpd. Bank of Cyprus KOINO KYMPI 49 10% 14% %7#5027% 22% 21% 20% 16% 26% 20% 2,20 4,53 4,59 4,38 4,29 4,15 4,10 2,14 1,83 8% 17% Analysis of Loans and 90+ DPD ratios by Business Line1 Gross loans by business line (€ bn) ■31.03.15 % of total ■30.06.15 30.09.15 31.12.15 ■31.03.16 ■ 30.06.16 90+ DPD ratios by business line 30.06.15 30.09.15 31.12.15 ■31.03.16 ■ 30.06.16 22% Corporate SMES Housing Consumer Credit RRD-Mid Corporates RRD-Major Corporations 1,78 1,77 1,74 3,85 3,80 3,75 3,68 3,62 3,61 1,83 1,80 1,4 1,43 1,40 1,38 2,01 1,97 1,90 1,81 1,62 1,37 3,36 3,22 2,98 2,91 2,76 2,53 1,39 1,38 1,38 1,35 1,30 2,20 2,24 2,31 2,40 2,23 2,13 2,77 2,71 2,83 2,91 2,94 2,92 20% 18% 18% 15% 14% 13% 12% 12% 30% 25% 23% 22% 21% 61% 58% 53% 37% 32% 75% %08 69% 7% 6% 12% 6% 10% 14% Corporate SMEs Housing Consumer Credit RRD-Mid Corporates RRD-Major Corporations RRD-SMES RRD-Recoveries corporates RRD-Recoveries SMEs and Retail %09 50% %08 79% (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 50 74% 70% 64% 100% KOINO KYMPI 100% RRD-SMES RRD-Recoveries corporates RRD-Recoveries SMEs and Retail 100% 100% 100% 100% 100% 100% 100% 100%#51Trade 48% 49% ■ 30.06.15 total 2,50 2,38 2,36 2,26 Trade 11% 2,23 0,92 0,85 0,83 4% 7% Analysis of Loans and 90+ DPD ratios by Economic Activity Gross loans by economic activity (€ bn) 30.06.15 % of 30.09.15 ■31.12.15 ■31.03.16 ■ 30.06.16 Manufacturing 90+ DPD ratios by economic activity 48% 44% 42% 30.09.15 ■31.12.15 0,82 0,80 1,64 1,62 1,57 1,47 1,45 4,19 4,14 4,07 3,92 3,43 3,20 3,38 Hotels & Restaurants ■31.03.16 ■ 30.06.16 54% 54% 54% 49% 50% 57% 59% 46% 38% 34% %08 79% 76% 68% 16% 16% 3,42 34% 3,32 3,33 7,86 7,41 7,33 7,25 Construction Real estate Private ☐ 2,07 7,17 7% 5% Individuals Professional & other services Other sectors 65% 48% 48% 47% 46% 39% 38% 36% 36% 35% 35% 57% 62% 57% 54% Professional Manufacturing Hotels & Restaurants Construction Real estate Private Individuals & other services Other sectors Bank of Cyprus KOINO KYMPI 51 49% 64% 57% 56% 58% 56% 1,84 1,79 1,64 1,55 1,55 1,24 1,21 1,17 1,12#52Rescheduled Loans for the Cyprus Operations Rescheduled Loans by customer type (€ bn) Retail housing Retail consumer ■ SMES ■ Corporate Rescheduled Loans (€ bn) 8,4 8,2 8,4 8,3 -1.130 8,1 7,4 2.304 1,7 1,7 1,7 1,7 1,7 8.392 1,5 0,6 0,6 0,6 0,6 0,6 0,5 1,8 1,7 1,7 1,7 1,5 1,8 3,9 4,3 4,2 4.4 4,3 4,0 31.03.15 30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 Rescheduled loans % gross loans 1 by customer type 31.03.15 30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 38% 43% 42% 45% 46% 47% 34% 39% 38% 39% 40% 41% 34% Corporate SMES 22% 26% 26% 26% 28% 27% Retail housing Retail Consumer -1.137 8.102 -327 Rescheduled Rescheduled Loans loans 31.12.15 Already classified rescheduled Loans no longer Other adjustment classified rescheduled Rescheduled Loans 30.06.16 (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 €1,043 mn for gross loans and to €497 mn for rescheduled loans (compared to €1.130 mn and €534 mn respectively at 31 March 2016), including loans of discontinued operations/disposal group held for sale. Bank of Cyprus KOINO KYMPI 52#53Reconciliation of 90+ DPD to NPES Cyprus Operations (€ bn) (Jun-16) 11,9 0,4 0,7 0,0 8,7 2,1 8,0 0,1 0,6 €3,2 bn with arrears Impaired -no >90+DPD arrears other IFRS and Total 90+ DPD reclassification adj with forbearance re-forborne within forborne >30+ measure 90+ 2 years DPD Contagion effect NPES DPD 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 past-due for more than 90 days and those that are impaired (impaired loans are those which are not considered fully collectable and for which a provision for impairment has been recognised on an individual basis or for which incurred losses exist at their initial recognition or customers in Debt Recovery). Bank of Cyprus KOINO KYMPI 53#54Disclaimer 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 KOINO KYMPI 54