Performance and Capital Position Overview

Significant Progress made on Group KPIs A clear plan of action to achieve Medium Term Targets Medium Category Key performance indicators Dec- 2015 Mar- 2016 Term Targets 1. Significantly reduce problem loans 2. Normalise funding structure; Eliminate Key Pillars & Plan of action 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 • Deposit Growth; Wholesale and interbank market access Maturity of non-core bonds; Retention of cash profits from operations; Proceeds from deleveraging Covered bond eligible for ECB funding Use loans as collateral for ECB funding through the Additional Credit Claim 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 90+ DPD ratio 50% 47% <30% Asset quality 90+ DPD coverage 48% 49% >50% Provisioning charge 1 4,3% 1,1% <1,0% ELA % Assets; 16%; € bn €3,8 bn 15%; €3,3 bn Fully repay ELA Funding Net Loans % Deposits 121% 119% 100%-120% 3. Focus on • 14,0% 14,3% >15% core markets Capital CET1 (transitional) Net interest margin 3,8% 3,6% ~3,00% • Margins and efficiency Fee and commission 15% 15% >20% income/total 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 40% 40% 40%-45% Balance Sheet 5. Deliver returns Deliver appropriate medium-term risk-adjusted returns Total assets € bn €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 20 DINO

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