Bank of Cyprus Group Preliminary Group 1 Financial Results for the - - PowerPoint PPT Presentation

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Preliminary Group1 Financial Results for the year ended 31 December 2016

Bank of Cyprus Group

1 March 2017

The Preliminary Group Financial Results have not been audited by the Group‟s external auditors (1) The Preliminary Group Financial Results referred to in this Presentation relate to the Bank of Cyprus Public Company Limited, the “Bank”, and together with its subsidiaries, the “Group”, which was listed on the Cyprus Stock Exchange (CSE) and the Athens Exchange as at 31 December 2016. On 18 January 2017, Bank of Cyprus Holdings Public Limited Company (BOC Holdings) became the new parent company of the Bank. On 19 January 2017 BOC Holdings was admitted to listing and trading on the London Stock Exchange and the CSE.

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(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 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). (2) Including Debt for asset swaps, write offs & non contractual write offs (3) Adjusted for the issuance of €250 mn Tier 2 Notes in January 2017 based on the preliminary Group financial results as at and for the year ended 31 December 2016. (4) Leverage ratio = Tangible Total Equity over Total Assets (5) As at 31 December 2016

FY2016 Financial Results - Highlights

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• Loan market share5 at 39,4%; Deposit market share5 at 31,1%; Economy growing for a second consecutive

year at 2,8% yoy (compared to 1,7% in 2015)

• New lending of c.€1,5 bn, in 2016
• Trading of shares on the LSE and the CSE commenced on 19 January 2016
• Another significant milestone in journey back to strength

Maintaining Strong Capital Position

• Total Capital ratio c.16% (pro forma3)
• CET1 ratio at 14,7%; 70 basis points added during FY2016;
• RWA intensity at 85%; Conservative leverage ratio4 of 13,2%

Normalising liability stack

• Deposits up by €867 mn or 6% qoq; up by €2,3 bn or 16% in FY2016
• Ratio of Loans to Deposits (L/D) improved to 95%

Seven consecutive quarters of NPL improvement

• 90+ DPD1 down by €459 mn or 5% qoq; down by €3,0 bn or 27% in FY2016
• NPEs down by €867 mn or 7% qoq; down by €2,9 bn or 21% in FY2016
• Loan restructurings of €6,2 bn2 in FY2016

Operating profitability directed to de-risk balance sheet

• Modest profitability of €64 mn for FY2016; €2 mn for 4Q2016
• Strong pre provision operating profitability of €148 mn for 4Q2016 and €566 mn for FY2016
• Sustained NIM at 3,47%
• Healthy C/I ratio of 41% for FY2016

Leading market Position in a Recovering Economy Key Milestones Achieved in January 2017

• Listing on LSE
• ELA fully repaid
• Successful issuance of €250 mn Tier 2 Notes

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15,6% 14,0% 14,9% 14,0% 14,4% 14,7% 14,7% 11,3% 14,2% 15,0% 14,1% 14,5% 14,8%

• c. 16%

Jun 2014 Dec 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Dec 2016 pro forma

CET 1 transitional Total Capital Ratio

Strong Capital Position Loan to Deposit Ratio at 95%

At a glance- Significant Improvement in all Financial Indicators

(1) Mainly attributable to loan restructuring activity and slower formation of new problem loans (2) Based on EBA Risk Dashboard Report, data as at 30 September 2016 (3) Leverage ratio defined as tangible equity over total assets (4) Adjusted for the issuance of €250 mn Tier 2 Notes in January 2017 based on the preliminary Group financial results as at and for the year ended 31 December 2016

145% 148% 141% 136% 121% 110% 95% Dec 2013 Jun 2014 Dec 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Loan to deposit ratio (L/D)

€2,9 bn reduction in NPEs in FY2016; Down by 27% since peak Rising coverage ratios

0,2 (0,4) (0,6) (0,2) (0,6) (0,8) (0,6) (0,9) Mar 15 Jun 15 Sept 15 Dec 15 Mar 16 Jun 16 Sept 16 Dec 16 49% 50% 53% 53% 50% 44% 41% 38% 39% 41% 43% 48% 53% 54% 35% 33% 34% 36% 39% 39% 41% Dec 2013 Jun 2014 Dec 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016

90+DPD ratio 90+DPD provision coverage NPEs provision coverage

Change in NPEs (€ bn)

EBA average L/D2: 120%

2015: (€1,0 bn) 62,9% 61,9% 61,8% 59,3% 54,8%

NPE ratio

12,5% 12,5% 12,6% 13,0% 13,2% Leverage ratio3 9,4% 2016: (€2,9bn)

3 €3,0 bn reduction in 90+DPD in FY2016; Down by 36% since peak

0,9 1,3 1,4 2,7 5,3 (0,4) 0,0 (0,0) (1,3) (2,0) (1,0) 2009 2010 2011 2012 2013 1H2014 2H2014 1H2015 2H2015 1H2016 2H2016 2014: (€0,4 bn) 2015: (€1,3 bn) 2016: (€3,0 bn)

Full repayment of ELA

11,4 11,1 9,6 8,8 7,4 5,9 3,8 2,4 1,3 0,2 0,0 34% 31% 31% 28% 23% 16% 11% 6% 1% 0% Apr 2013 Jun 2013 Dec 2013 Jun 2014 Dec 2014 Jun 2015 Dec 2015 Jun 2016 Sep 2016 Dec 2016 Jan 2017 ELA (€ bn) ELA as % of total assets Change in 90+ DPD1 (€ bn)

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13,0 13,0 12,8 12,6 13,0 12,7 12,8 12,7 12,0 11,3 10,3 9,3 8,8 8,3 47,4% 48,6% 48,6% 49,8% 52,5% 53,2% 53,1% 52,9% 52,5% 50,1% 47,1% 44,0% 42,6% 41,3% Sep 2013 Dec 2013 Mar 2014 Jun 2014 Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 90+DPD (€ bn) 90+DPD ratio

Seven consecutive quarters of material improvement in 90+DPD

High correlation between formation of problem loans & economic cycle 90+ DPD Reduction FY2016: 17% of Cyprus GDP 4 Progress on asset quality underpinned by: ̶ Robust strategy ̶ Relentless execution ̶ Economic improvement ̶ Legal improvements

11,3 8,3 FY2015 FY2016 50,1% 41,3% 90+DPD ratio 48,1% 54,4% Provision coverage ratio 90+DPD (€ bn) 48,7% 37,5% 90+DPD % of total assets

€3,0 bn or 27% drop in 90+DPDs in FY2016

€3bn/ (27%) drop 36% drop since peak 321 380 329 (85) 265 410 558 96 232 156 402 609 100 64 1.319 1.240 3.319 1.972 20 (247) (164) 386 (325) 136 (143) (649) (668) (1.041) (1.020) (501) (459) 1,6 2,0 2,3 2,2 2,5 2,9 3,5 3,6 3,8 4,0 4,4 5,0 5,1 5,1 6,5 7,7 11,0 13,0 13,0 12,8 12,6 13,0 12,7 12,8 12,6 12,0 11,3 10,3 9,3 8,8 8,3 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 03-2016 06-2016 09-2016 12-2016 Quarterly change of 90+ DPD (€ mn) 90+ DPD (€ bn) Economic crisis

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Slow deterioration Stabilisation Recovery

(1) Information for 1Q2013 and 2Q2013 is not available as it was not possible to publish the financial results for the three months ended 31 March 2013 (2) Percentage points

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0,7 0,1 0,2 0,3 0,1 0,0 0,5 0,1 1,5 0,3 0,2

2017 2018 2019+

Corporate SME Retail

15,0 15,2 14,8 14,2 14,0 13,3 12,5 11,9 11,0

62,9% 63,0% 61,9% 62,2% 61,8% 61,0% 59,3% 57,8% 54,8% Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016

NPEs (€ bn) NPE ratio

€4,0 bn drop since Dec-2014; €867 mn drop in 4Q2016

Forborne NPEs with no impairments or arrears1 (€ bn) – in pipeline to exit NPEs subject to meeting all exit criteria2

(1) Analysis provided on account basis. Accounts will not exit NPE status if not all exit criteria are met (2) Curing period of the NPEs with forbearance measures, but no impairments and no arrears, assuming no re-default (3) Percentage points

Seven consecutive quarters of material improvement in NPEs

2,2 2,4 2,0 2,3 €4,0 bn or ( 26%) drop since Dec 14 13,97 11,03 FY2015 FY2016 61,8% 54,8% NPE ratio 39,0% 41,0% Provision coverage ratio NPEs (€ bn) NPEs % of total assets

• NPEs reduction FY2016: 17% of Cyprus GDP
• NPEs reduced for 7 consecutive quarters
• For a second consecutive quarter reduction of NPEs exceeds

reduction of 90+ DPD NPEs reduced by €2,9 bn or 21% in FY2016

60,0% 49,8%

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€867 mn or (7%) drop qoq

NPEs with forbearance measures no impairments, no arrears

1,9

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(1) p.p. = percentage points (2) Provisions for impairment of customer loans and gains/(losses) on derecognition of loans and changes in expected cash flows on acquired loans over 90+ DPD (3) 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 (4) Pre-provisioning income

90+ DPD provision coverage ratio at 54%; Total Coverage (Cy) at 116%

Cost of risk3: PPI4 directed to de-risk balance sheet

2,4% 1,5% 1,7% 1,6% 4,0% 1,1% 1,3% 1,5% 1,6% 3,6% 2,1% 2,2% 2,1% 4,3% 1,4% 1,6% 1,7%

FY2014 1Q2015 1H2015 9M2015 FY2015 1Q2016 1H2016 9M2016 FY2016

Cost of Risk - Cyprus Cost of Risk - Group

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16 p.p.1 coverage ratio increase;€1,7 bn additional provisions since Sep-14 90+ DPD fully covered by Provisions and Tangible Collateral (Cyprus Operations)

229 122 169 109 219 110 123 96 630 62 96 109 103 38% 39% 39% 38% 41% 42% 43% 41% 48% 49% 53% 54% 54%

4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016

Quarterly Provisions for impairment of customer loans² (€ mn) 90+ DPD coverage ratio 68% 61% 73% 67% 79% 78% 49% 48% 69% 63% 51% 60% 39% 48% 31% 35% 57% 59% 46% 53% 119% 121% 112% 115% 110% 113% 106% 107% 115% 116% Dec-15 Dec-16 Dec-15 Dec-16 Dec-15 Dec-16 Dec-15 Dec 16 Dec-15 Dec-16

Total Tangible Coverage Total-LLR Total BoC – Cyprus Corporate SME Retail-Housing Retail-Other

€3,4 bn €2,3 bn €1,1 bn €7,8 bn 90+ DPD €1,0 bn

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(1) p.p. = percentage points (2) Analysis provided on account basis. Accounts will not exit NPE status if not all exit criteria are met

NPE provision coverage ratio at 41%; Total Coverage (Cy) at 108%

7 Adequate NPE total coverage when collateral is included(Cyprus operations)

71% 67% 76% 72% 85% 84% 53% 52% 73% 69% 44% 45% 33% 37% 17% 21% 45% 47% 37% 39% 115% 112% 109% 109% 102% 105% 98% 99% 110% 108% Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16 Dec 15 Dec 16

Total Tangible Coverage Total-LLR Total BoC –Cyprus Corporate SME Retail-Housing Retail-Other

€4,5 bn €3,0 bn €1,8 bn €1,2 bn €10,5 bn NPEs

7 p.p.1 coverage ratio increase; €1,7 bn additional provisions since Sep-14

109 219 110 123 96 630 62 96 109 103 34% 34% 35% 36% 35% 39% 38% 39% 40% 41% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Quarterly Provisions for impairment of customer loans² …

• NPEs provision coverage increases

significantly when adjusted for NPEs with forbearance measures no impairments or arrears2

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90+ DPD and NPE outflows significantly exceed inflows

90+DPD inflows in Cyprus operations (€ bn) arrested Significant increase in NPE outflows in 4Q2016 (€ bn)

0,27 0,17 0,19 0,22 (0,58) (0,68) (0,53) (0,45) (0,30) (0,26) (0,23) (0,58) (0,88) (0,94) (0,76) (1,03) 1Q2016 2Q2016 3Q2016 4Q2016 Total outflows

• Close monitoring to arrest

deterioration of portfolio

• Ramp up in restructuring efforts

0,68 0,60 0,34 0,36 0,22 0,11 0,13 0,14 0,14 0,14 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016

Average: 0,29

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• Strict monitoring of

restructurings to arrest re- defaults

Inflows Cured restructured NPEs & collections Outflows-other

2

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0,84 0,69 0,81 1,33 1,50 1,26 0,68 0,53 0,4 0,3 0,2 0,2 0,3 0,4 0,2 0,2 0,8 0,7 0,8 1,3 2,2 2,0 1,1 0,9 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Restructured loans Write offs & non contractual write offs DFAS Average2: c.1,0

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71% 65% 70% 76% 82% 75% 70% 88% 84% 85% 81% 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 % of restructured loans with no arrears

FY20161: €6,2 bn

Quarterly evolution of restructuring activity (€ bn) 81% of restructured loans5 have no arrears6 (Cyprus operations)

(1) Total restructured loans is equal to restructured loans plus write offs & non contractual write offs and debt for asset swaps for FY2016 (2) Average restructured loans excluding write offs & non contractual write offs and DFAS (3) Loans together with the associated provisions are written off when there is no realistic prospect of future recovery. Partial write-offs, including non-contractual write-offs, may occur when it is considered that there is no realistic prospect for the recovery of the contractual cash flows. In addition, write-offs may reflect restructuring activity with customers and are part of the terms of the agreement and subject to satisfactory performance. (4) Debt for asset swaps (5) Restructured loans post 31 December 2013 excluding write offs , set offs and DFAs (6) The performance of loans restructured during 4Q2016 is not presented in this graph as it is too early to assess

Total €6,2 bn of restructurings1 in 2016

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Average: 81%

• 81% of restructured loans5,6, have

no arrears

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Retail 2,0 Recoveries Retail 1,3

3,3 Dec-15

SMEs 1,5 Recoveries SMEs 1,5

3,0 Dec-16

SMEs 1,9 Recoveries SMEs 1,5

3,4 Dec-15

Corporate 4,2 Recoveries Corporate 2,4

6,6 Dec-15

• Focus area for 2017
• Increase pace of restructuring qoq
• Create a clear strategy to ensure

early and continuous engagement with clients

• Flexible products to manage

specific segments

• Sustainable solutions

Retail 1,6 Recoveries Retail 1,4

3,0 Dec-16 3,3 3,0 0,4 (0,7) Dec-15 Inflows Exits Dec-16 Net drop (€0,3 bn)

Corporate 2,6 Recoveries Corporate 1,9

4,5 Dec-16 41% 55% 45% 25% 23% 26% 45% 37% 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16 4Q-16 37% 49% 28% 37% 61% 62% 59% 32% 28% 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16 4Q-16 45% Average

Good progress across all segments (Cy operations)

Corporate SMEs Retail

Restructurings as % of total restructurings2

NPEs (€ bn)

10

• Restructuring pace increased qoq
• Re-defaults confined to small

amounts

• Product range enhanced e.g. split

& freeze

• Implement process for monitoring

client and transfers to/from RRD

• Underlying economic macro

improvements supportive

3,4 3,0 0,1 (0,5) Dec-15 Inflows Exits Dec-16

• Restructuring of corporate clients

materially progressed

• €544 mn of portfolio transferred

back to Corporate

• 93% of restructured loans have no

arrears1

• Product range enhanced, e.g. split

& freeze, DFAs and DFEs

NPE ratio Provision Coverage ratio Total Coverage 6,6 4,5 0,4 (2,5) Dec-15 Inflows Exits Dec-16 44,7% 57,1% 112,1% NPE ratio Provision Coverage ratio Total Coverage 32,1% 48,3% 102,3% Net drop (€2,1 bn) Net drop (€0,4 bn) 10% 17% 15% 14% 13% 15% 19% 27% 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16 4Q-16 16%

(1) Restructured loans post 31 December 2013. The performance of loans restructured during 4Q2016 is not taken into account as it is too early to assess (2) Excluding DFAs, write offs and non-contractual write offs

NPE ratio Provision Coverage ratio Total Coverage 37,2% 72,2% 108,6% 47,3% 21,3%

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Recoveries

• Private foreclosures commenced in late June 2016
• 23 auction events conducted relating to 76 assets
• 13 assets have been sold in total with total proceeds of €2,4 mn
• Foreclosure teams are up and running, aiming to boost foreclosure volumes
• Actions have been taken to improve awareness of auction events (flyers and mailing distribution lists)
• Servicing either completed or in progress for over 400 assets

Foreclosures

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• Results being delivered, but ongoing focus area
• €823 mn of NPEs deleverage in FY2016
• Refreshed approach in corporate contributed to 17%
• f NPE reduction for FY2016 (Cy operations)
• Retail/ SME showing slower but improving progress,

next quarters important in keeping momentum

• Foreclosure auctions important to building and

maintaining pace

Good progress across all segments (Cy operations)

Service time of Notices Servicing Time + 40 days Auction Property transfer & Distribution of proceeds 1-50 days immediately after auction TIMEFRAME Valuations 30-1151 days

TOTAL TIME UP TO AUCTION: ~ 8 MONTHS

Foreclosure Decision Service Announcement 3-5 days + Servicing Time + 30 days

• From inefficient legacy operations…

̶ Rigid legal framework with very long execution timelines ̶ Inefficient processes with significant time wasted

• To improved operating model . . .

̶ Client negotiation and client management teams ̶ Tools to support negotiations and decision making ̶ Training for all bankers on new tools and restructurings ̶ Introduce new teams to specialize on receivership and foreclosure ̶ International specialists added to teams across recoveries

(1) Additional valuations required if the valuations are not timely prepared or if values differ by >25%

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2016 movement in 90+ DPD 3x that of 2015 as momentum builds

Introducing additional tools to resolve long outstanding loan portfolios (90+ DPD Cyprus operations)

Reduction of 90+ DPD in FY2016 involved application of more complex solutions, as focus shifts towards tackling the recoveries portfolio

11,5 11,5 10,6 7,8 0,2 (0.9 ) (0.1 ) (0.0) 0,6 (1.5 ) (1.1) (0.8) Jun 2015 Inflows Restructurings / Collections Write-offs Consensual foreclosures Dec 2015 Inflows Restructurings / Collections Write-offs Consensual foreclosures Dec 2016

FY2015 Net reduction : c.€0,9 bn FY 2016 Net reduction: c.€2,8 bn

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1 (1) Value of on-boarded assets is set at a conservative 25%-30% discount from open market valuations, by two independent sources 1

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Source: Company reports

(1) The charts are not adjusted for market share

(2) Based on the preliminary Group financial results as at and for the year ended 31 December 2016 for BOC and on latest available for peer. (3) For Greek banks, NPE total coverage for Greece only (4) Calculated using NPE provisions coverage (latest available) and collateral coverage amount (as reported by EBA Transparency Exercise with reference date 30 June 2016). For BOC tangible collateral is calculated based on FY2016 preliminary results (5) Share price as at 24 February 2017

BoC compares favourably vs. peer1

13 Highest reduction of NPE as % of nominal GDP vs peer

Change in NPE as % of nominal GDP since 20142 (1,6%) (0,9%) (0,7%) (0,4%) (0,3%) (0,1%) (0,0%) 0,2% 0,4% 1,5% 2,0% BoC Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 (22,2%)

Good collateral coverage Strong progress on NPE coverage

11%1 9% 9% 7% 7% 6% 4% 4% 4% 2% 2% 1% Peer 1 Peer 2 Peer 3 BOC Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 NPE coverage progress since 20142,3 97% 73% 54% 74% 39% 50% 47% 49% 36% 47% 52% 60% 48% 59% 38% 69% 50% 47% 43% 53% 37% 31% 157% 121% 113% 112% 108% 100% 94% 92% 89% 84% 83% Peer 1 Peer 2 Peer 3 Peer 4 BoC Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Provision coverage Tangible coverage NPE Total coverage2,4 (Q2’16)

BoC valuation against peers5

0,84x 0,82x 0,81x 0,69x 0,67x 0,54x 0,40x 0,31x 0,31x 0,29x 0,24x 0,20x Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 BoC Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Average: 0,51x Valuation benchmarks: On a P/B basis5 Average: 5,50%

1 1 1

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Cyprus NPL framework proving effective

Robust foreclosure legal framework adopted in Cyprus in April 2015

• Enables the enforcement of mortgages as security rights against debtors through foreclosure
• Minimises the involvement of the Land Registry Office and procedure is driven by the secured creditors in order to expedite property foreclosures
• Ability to initiate foreclosure proceedings once the loan is terminated / repayments & instalments are overdue for over 120 days
• Access to purchase the mortgaged property after 12 months since the for-sale process begins

Cross country comparison of NPL supervisory framework Cyprus Italy Spain Greece Ireland Portugal NPL governance / workout Guidance on NPL workout practices / arrears management

     

Guidance requiring banks to have NPL strategies / action plans

     

Guidance requiring a dedicated arrears / NPL unit

     

Guidance requiring banks to have NPL operational targets

     

Debt enforcement / foreclosures Legal techniques to enable out-of-court enforcement of collateral

     

Bilateral sales of repossessed assets permitted

     

Blanket bans (moratoria) on sales/auctions/foreclosures

     

Household insolvency and restructuring framework Out-of-court mechanism

     

Bankruptcy regime for consumers/households

     

Insolvency/bankruptcy discharge period (years)

3 1 5 3 1 5

Collateral valuation Guidance of specific rules on valuation methods

     

Guidance on valuation frequency for NPL collateral

     

Requirements for appraisers

     

Requirements for data collection on collateral

     

Source: European Central Bank – “Stocktake of national supervisory practices and legal framework related to NPLs”, September 2016

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87,0% 10,7% 2,3% Cyprus Greece Others

REMU: €170 mn sales agreed; €155 mn executed on average at 104% of Book value (Cy)

(1) Includes Kermia Hotels Limited where disposal completed in June 2016 (2) Total Stock as at 31 December 2016 excludes investment properties and investment properties held for sale (3) Includes manufacturing, industrial and under construction (4) Relates to Greece and Romania (5) Number of assets shown for Cyprus only (6) Carrying value prior to the sale of property and before any tax charge

Cyprus: €1,2 bn

Property stock (31 Dec 2016)

Group: €1,4 bn 34,8% 10,8% 24,1% 26,3% 3,8% 0,2%

Nicosia Larnaca Limassol Paphos Famagusta Other

Stock movement (Group) (€ mn)

542 1.427 1.086 (166) (35)

Stock as at 01 Jan 16¹ Additions Sales¹ Impairment loss Stock as at 31 Dec 2016²

1 2

Assets stock split (carrying value, Dec 2016 € mn)

516 224 337 90 75 185

Land & plots Golf Commercial buildings³ Residential buildings Hotels Other⁴

Cyprus: €1.242 mn #739 #149 #227 #7 assets5 #1.1245 Greece & Romania 155 65,5 39,5 22,5 90 26 17 22 104% 101% 99% 117% 110% 0% 20% 40% 60% 80% 100% 120% 140% 160%

Total Sales FY2016 Hotels Commercial Residential Land

4 16 23 36 #79

Sales (Cyprus) (€ mn)

Sale price % Book Value6 Total assets5

Sales dynamics (Cyprus) for FY2016

37 5 4 5 23 25 7 2 16 69 9 13 11 36 4 4

Offers accepted Under negotiation SPA in preparation SPA signed Sold Residential Commercial Land Hotel/Touristic

€155 mn €15 mn €2 mn €197 mn €24 mn

3 4 5

15

€1.427 #2 # #

Total sale agreements €170 mn

Total

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148% 141% 138% 136% 132% 121% 119% 110% 102% 95% 124% 125% 125% 123% 121% 122% 121% 120% Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16

Loans to deposits EU average Loans to deposits ratio

Deposit growth of 16% in FY2016

16

Increasing market share in resident and non-resident deposits

(1) Based on EBA Risk Dashboard Report, Data as at 30 September 2016 (2) Percentage Points

Deposits up by €867 mn in 4Q2016 and by €2,3 bn in FY2016; L/D ratio improved to 95%

11,2 11,3 11,6 11,6 12,2 12,7 12,7 13,3 14,2 15,0 1,3 1,3 1,4 1,4 1,4 1,5 1,4 1,4 1,4 1,5 0,80 0,56 0,61 0,61 0,01 0,01 13,3 13,2 13,6 13,6 13,6 14,2 14,1 14,8 15,6 16,5 Sep 14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

Cyprus UK Other

25,6% 25,5% 24,6% 24,3% 23,7% 24,1% 24,6% 25,3% 26,1% 27,0% 26,5% 27,2% 28,8% 29,5% 35,2% 32,2% 30,8% 28,4% 27,5% 26,7% 26,9% 26,7% 27,5% 31,1% 32,9% 34,1% 34,6% 35,8% Sep 2013 Dec 2013 Mar 2014 Jun 2014 Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016

Residents Non-residents

1

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14,6% 14,7% 13,9% 0,8% (0,5%) (0,1%) (0,1%) (0,8%)

CET1 ratio 30.09.16 (transitional) Profit before provisions Provisions Other RWAs Change CET1 ratio 31.12.16 (transitional) DTA CET1 ratio 31.12.16 (fully loaded)

2 7

13,6% 13,5% 13,1% 15,1% 14,4% 13,4% 13,4%

Adequately capitalised relative to risk profile

17

(1) Based on EBA Risk Dashboard Report, Data as at 30 September 2016 (2) Transitional basis; includes unaudited profits for the year ended 31 December 2016 (3) In accordance with the legislation in Cyprus which has been set for all credit institutions through the requirements of Capital Requirement Directive (CRR)/CRD IV. The applicable rate of the CCB is 1,875% for 2018 and 2,5% for 2019 (fully phased-in). (4) Pillar 2 requirement in the form of CET1 (5) Since 2015, the Bank has been designated as an Other Systemically Important Institution (O-SII). The Central Bank of Cyprus set the O-SII buffer for the Group at 2%. This buffer will be phased-in gradually, starting from 1 January 2019 at 0.5% and increasing by 0.5% every year thereafter, until being fully implemented (2.0%) on 1 January 2022 (6) Minimum CET1 Requirement reduced from 10,75% to 9,50% following amendments in the Cypriot Banking Law on 3 February 2017 allowing the gradual phase-in of the Capital Conservation Buffer (CCB) (7) The DTA adjustments relate to Deferred Tax Assets totalling €450 mn and recognised on tax losses totalling €3,6 bn and can be set off against future profits of the Bank until 2028 at a tax rate of 12,5%. Furthermore, there are tax losses of c. €8,5 bn for which no deferred tax asset has been recognised. The recognition of deferred tax assets is supported by the Bank‟s business forecasts and takes into account the recoverability of the deferred tax assets within their expiry period.

CET1 ratio (transitional) of 14,7% compares favorably with EU average of 13,6%

14,0% 13,9% 14,9% 15,6% 14,0% 14,3% 14,4% 14,6% 14,7% 12,5% 12,4% 12,8% 13,0% 13,5% 13,4% 13,6% 14,1% Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 CET1 ratio (transitional) Average EU CET1 ratio (transitional)

1 1

13,9%

CET1 ratio (fully loaded)

Evolution for CET1 ratio2 during 4Q2016

P&L impact of 0,3% 13,8%

14,70% 4,50% 3,75% 1,25%

CET1 transitional 31.12.2016 SREP CET1 requirement

CET1 ratio vs SREP5 minimum requirement

CCB3 (phased-in) 9,50% Minimum CET1 Requirement6 Pillar 2R4 Pillar 1

SLIDE 18

0% 5% 10% 15% 20%

Tangible Total Equity % Total Assets Average BOC Leverage ratio 13,2%

18

6,6%

Total Capital position c. 16% (pro forma)

Total Capital Adequacy Ratios

10,8% 11,3% 15,5% 14,2% 14,1% 15,0% 15,7% 14,1% 14,4% 14,5% 14,7% 14,8% Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Dec-16 pro forma1

• c. 16%

4,50% 1,50% 2,00% 3,75% 1,25%

Pro forma Total Capital Ratio 31.12.2016 SREP total capital requirement 13,00% Overall Total Capital7 Requirement CCB2(CET1)

Total Capital Requirement vs SREP6 minimum requirement

Pillar 2R3 Pillar 1 (CET1) AT1 capital5 T2 capital4

Total Pillar 1

• f 8%

‘Clean’ Fully Loaded CET1 ratio8,9 Leverage ratio10,11

13,6% 42% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% 5% 10% 15% 20% 25%

'Clean' Fully Loaded CET1 ratio (LHS) Average 'Clean' Fully Loaded CET1 ratio RWA % Total Assets (RHS) Average (RWA % Total Assets)

BOC CET1 FL 13,9% RWA intensity 85%

(1) The pro forma is based on the preliminary Group financial results as at and for the year ended 31 December 2016. (2) Pillar 2 requirement in the form of CET1 (3) In accordance with the legislation in Cyprus which has been set for all credit institutions through the requirements of Capital Requirement Directive (CRR)/CRD IV. The applicable rate of the CCB is 1,875% for 2018 and 2,5% for 2019 (fully phased-in). (4) Tier 2 capital (5) Additional Tier 1 capital (6) Since 2015, the Bank has been designated as an Other Systemically Important Institution (O-SII). The Central Bank of Cyprus set the O-SII buffer for the Group at 2%. This buffer will be phased-in gradually, starting from 1 January 2019 at 0.5% and increasing by 0.5% every year thereafter, until being fully implemented (2.0%) on 1 January 2022 (7) The Group‟s overall Total Capital Requirement for 2017 has been reduced to 13,00% from 14,25% following amendments in the Cypriot Banking Law on 3 February 2017 allowing the gradual phase-in of the Capital Conservation Buffer (8) As per SNL Financial Database, „Clean‟ Fully Loaded CET1 ratio as 31 December 2016, excludes Deferred Tax Credits, AFS and Danish Compromise Estimated Impact (9) The data used is based on FY2016 financial results for 24 out of 37 EU Banks, including Bank of Cyprus, the data for the rest of the banks is based on 9M2016 financial results (10) Leverage ratio is defined as Tangible Total Equity over Total Assets (11) The data used is based on FY2016 financial results for 28 out of 44 EU Banks, including Bank of Cyprus, the data for the rest of the banks are based on 9M2016 financial results

Issuance of Tier 2 Notes c.16%

SLIDE 19

€ mn FY2016 FY2015 yoy % 4Q2016 3Q2016 qoq %

Total income 963 1.040

• 7%

246 235 5% Total expenses (397) (408)

• 3%

(98) (97) 1% Profit before provisions and impairments1 566 632

• 10%

148 138 8% Provisions for impairment of customer loans net of gains/(losses) on loan derecognition and changes in expected cash flows (370) (959)

• 61%

(103) (109)

• 5%

Impairments of other financial and non financial assets (47) (62)

• 23%

(13) (12) 12% Provision for litigation and regulatory matters (18) (8) 135% (18)

• Share of profit from associates and joint ventures

8 6 38% 5 1 216% Profit/(loss) before tax, restructuring costs, discontinued operations and net profit on disposal of non-core asset 139 (391)

• 19

18 3% Tax (16) (9) 84% (1) (4)

• 87%

(Loss)/profit attributable to non-controlling interests (4) 6

• 2
• Profit/(loss) after tax and before restructuring

costs, discontinued operations and net profit on disposal of non-core asset 119 (394)

• 18

16 11% Advisory, VEP and other restructuring costs2 (114) (43) 165% (16) (11) 47% Loss from disposal groups held for sale/discontinued operations

• (38)
• Net gain on disposal of non-core assets

59 37 62%

• Profit/(loss) after tax

64 (438)

• 2

5

• 61%

Net interest margin 3,47% 3,79%

• 32 bps

3,37% 3,35% +2 p.p. Return on tangible equity (annualised) 2,2%

• 15,0%

17,2 p.p. 0,3% 0,7%

• 0,4 p.p.

Return on Average Assets (annualised) 0,3%

• 1,7%

+2 p.p. 0,0% 0,1%

• 0,1 p.p.

Cost-to-Income ratio 41% 39% +2 p.p. 40% 41%

• 1 p.p.

Modest profitability of €64 mn for FY2016

(1) Profit before provisions and impairments, gains/(losses) on derecognition and changes on expected cash flows , restructuring costs and discontinued operations. (2) 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. (3) Debt for Asset swaps

Key Highlights QoQ change

• NIM at 3,47% for FY2016 compared to

3,51% for 9M2016 reflecting reduction in customer loan balance due to elevated loan restructuring activity, including DFAs3

• Total Income up by 5% qoq due to

increase by 43%

• f

fee and commission income, favourably affected by both new and increased charges, as well as with non-recurring fees of c.€7 mn.

• Strong operating profitability of €148

mn for 4Q2016, up by 8% qoq, a net increase in non interest income

• Provision

for litigation and regulatory matters for 4Q2016 were €18 mn primarily affected by legal and regulatory one off redress charges for UK operations

• Modest Profit after tax of €2 mn for

4Q2016 and €64 for FY2016

19

SLIDE 20

202 190 196 191 185 175 164 162 25 22 9 227 212 205 198 185 175 164 162 394 379 370 369 363 355 335 337

1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016

Interest income from Republic of Cyprus bond (€ mn) Net interest income (€ mn) NIM (bps)

Stable NIM despite negative interest rate environment

Net Interest Income and Net Interest Margin Yield on Loans and Cost of Deposits in Cyprus2 (bps)

573 537 536 527 530 527 503 508 139 119 104 100 95 91 89 87 434 418 432 427 435 436 414 421

1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016

Yield on Loans Cost of Deposits Customer spread

• Net Interest Income (NII) at €162 mn, compared to

€164 mn for 3Q2016, reflecting the reduction in customer loan balance primarily as a result of the elevated loan restructuring activity, including debt for property swaps (DFAs)

• Net Interest Margin (NIM) was marginally reduced to

3,47% for FY2016 compared to 3,51% for 9M2016 mainly due to DFAs

• Interest bearing assets of €18,9 bn as at 31

December 2016

• Customer spread increased to 421 bps in 4Q2016

mainly due to the repricing of deposits at lower deposits rates in 4Q2016

• New lending of over €1 bn, since the beginning of

the year, to promising sectors of the domestic

• economy. 43% of new lending in Cyprus relates to

corporate loans, 33% to retail loans and 15% to SME loans

(1) 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. (2) Includes all currencies

20

FY2016: NIM 347 bps FY2015: NIM 379 bps 22,8 21,8 20,8 20,1 19,7 19,3 23,9 18,9 € bn Interest bearing assets1

SLIDE 21

Recurring non- interest income (€ mn)

Analysis of Non Interest Income (€ mn) – Quarterly

36 38 36 38 38 482 12 16 14 11 10 9

• 2

1 9 14 23 20

46 55 59 63 71 77

3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016

Net fee and commission income Insurance income net of insurance claims Other 15%

16% 20% 16%

% Net fee and commission income % Total income x Non interest income (€ mn)

14% 15%

21

Increased Non Interest Income as % of Total Income

x

48 54 50 49

(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. (2) Excluding non-recurring fees of approximately €7 mn

1

48

Fee & commission income2 in Cyprus by business line

41 20 21 26 35 53 35 29 30 37

2013 - pre-Bail- in 2013 - post-Bail- in 2014 2015 2016

Incoming Payment Orders Outgoing Payment Orders

Payment Transactions are increasing

Average Number of Payment Transactions per month (thousands)

41% 33% 6% 7% 8% 1% 3%

International Banking Services Consumer SME Corporate RRD Wealth and Management Other One third of IBS fee & commission income is driven by Payment Transactions

572

SLIDE 22

Cost to Income Ratio Total expenses (€ mn)

• Total expenses for 4Q2016 were €98 mn, in line

with the previous quarter

• Staff costs for 4Q2016 were €53 mn, down by 2% qoq

mainly due to the VEP completed in 2Q2016

• Operating expenses were €45 mn broadly in line with

the previous quarter

• Cost to income ratio at 41% for FY2016
• 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

37% 36% 38% 40% 40% 42% 42% 41% 61% 59% 60% 63% 66% 63% 63% 1Q2015 1H2015 9M2015 FY2015 1Q2016 1H2016 9M2016 FY2016

Group EU average

59 59 59 57 58 59 54 53 43 31 43 56 43 42 43 45

102 90 102 113 101 101 97 98

1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016 Staff costs Operating expenses

Costs under control

(1) Based on EBA Risk Dashboard Report, Data as at 30 September 2016

22

1

SLIDE 23

Profitable Core Cypriot business

23

(1) Profit before provisions and impairments, gains/(losses) on loan derecognition and changes on expected cash flows, restructuring costs and discontinued operations. (2) Excluding non-recurring fees of approximately €7 mn.

Stable NIM in Cyprus operations Healthy Cost to Income ratio for Cyprus

• perations

386 369 367 366 359 349 332 335 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 FY15: 373 FY16: 344 35% 35% 35% 38% 40% 41% 40% 39% 1Q15 1H15 9M15 FY15 1Q16 1H16 9M16 FY16 153 232

• 86

146 44 9 14

• 12

2

• 26

162 246

• 98

148 18

Net interest income Total income Total expenses Profit before provisions and impairments, restructuring costs and discontinued

• perations

Profit after tax and before

• ne off items

Cyprus operations Rest of operations Group 94%

% % contribution of Cyprus operations

94% 88% 98% 245%

4Q2016 Cyprus Vs Group performance (€ mn)

(bps)

1

80% 77% 73% 74% 77% 75% 70% 68% 16% 13% 14% 15% 15% 17% 16% 20% 4% 10% 13% 11% 8% 8% 14% 12%

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

Net interest income Fee and commission income Other income % of total income

Improving fee income as a % of revenues

2

SLIDE 24

Gross loans and customer deposits Loans by sector as at 31 December 2016

0,67 0,74 0,78 0,83 0,88 0,93 1,01 1,09

Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016

Expansion of BOC UK operations

81% 17% 1% 1% Corporate SMEs Consumer credit Housing

24

0,92 0,93 1,00 1,04 1,08 1,13 1,19 1,26

Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016

Gross loans (£ bn) Customer deposits (£ bn)

3,9 6,0

FY2015 FY2016

Core operating profitability is rising

Operating profit (£ mn)

• Gross loans and customer deposits in the UK increased by 32% and 21% yoy to £1,09 bn and to £1,26 bn, respectively
• New lending of £370 mn during 2016
• Core operating profitability is rising, 54% increase yoy
• Loss after tax of £9,0 mn for the FY2016 primarily driven by legal and regulatory one off redress provision charges

Profit/(loss) after tax (£ mn)

3,6 (9,0)

FY2015 FY2016

Profit after tax negatively affected by legal and regulatory

• ne off redress

provision charges

SLIDE 25

Category Key performance indicators Dec- 2015 Dec- 2016 Medium Term Targets set in 2016 New Medium Term Targets Asset quality 90+ DPD ratio 50% 41% <30% <20% NPEs ratio 62% 55% <30% NPEs coverage 39% 41% >50% Provisioning charge 1 4,3% 1,7% <1,0% <1,0% Funding Net Loans % Deposits 121% 95%

100%-120% 90%-110% Capital Total Capital ratio 14,1% 14,8% >15% Margins and efficiency Net interest margin 3,8% 3,5% ~3,00% ~3,00% Fee and commission income/total income 15% 17%3 >20% >20% Cost to income ratio 39% 41% 40%-45% 40%-45% Balance Sheet Total assets €23,3 bn €22,2 bn >€25 bn >€25 bn

Significant Progress made on Group KPIs

Key Pillars & Plan of action

• Sustain momentum in restructuring
• Focus on recoveries portfolio – “accelerated consensual

foreclosures”

• Real estate management via REMU
• 1. Significantly

reduce problem loans

• Continue expansion of deposit franchise
• Increase loan pool for the Additional Credit Claim framework of

ECB

• Further diversify funding sources
• 2. Further

improveme nt funding structure;

• Targeted lending in Cyprus into promising sectors to fund

recovery

• New loan origination, while maintaining lending yields
• Revenue diversification via fee income from international

business, wealth, and insurance

• Carefully expand UK franchise by leveraging the UK subsidiary
• 3. Focus on

core markets

• Tangible savings through a targeted reduction program
• Introduce

technology/processes to improve distribution channels and reduce costs

• HR policies aimed at enhancing productivity
• 4. Achieve a

lean

• perating

model

• Deliver appropriate medium-term risk-adjusted returns
• 5. Deliver

returns

Well on track to meet targets set in 2016 – A clear plan of action to achieve new Medium Term Targets

(1) Post IFRS 9 impact (2) That is 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 (3) Excluding non-recurring fees of approximately €7 mn

25

SLIDE 26

• Key Milestones Achieved in January 2017; Listing on LSE and CSE, ELA fully repaid, successful issuance of €250 mn

Tier 2 Notes

• Satisfactory results this quarter reflecting our strategy of continued de-risking
• Leading position in a recovering economy
• 90+ DPD down by €459 mn or 5% qoq; down by €3,0 bn or 27% in FY2016
• Further NPE reduction of €867 mn or 7% qoq; €2,9 bn or 21% reduction during FY2016; Reduction in NPEs in 4Q2016

quarter of €867 mn was nearly double the in-quarter reduction of €459 mn in 90+ DPD

• Strong restructuring momentum continues with €6,2 bn1 of restructurings in FY2016
• Loans to Deposits ratio (L/D) at 95%; Customer deposits increased by €867 mn or 6% qoq and 16% yoy
• Pro forma Total Capital Ratio at c.16%2
• Strong operating profitability of €148 mn for 4Q2016 directed at increased provisions and impairment charges to faster

de-risk balance sheet

• Modest profitability of €64 mn for FY2016; €2 mn for 4Q2016

Key Takeaways

26

(1) Including Debt for asset swaps, write offs & non-contractual write offs (2) Adjusted for the issuance of €250 mn Tier 2 Notes in January 2017 based on the preliminary Group financial results as at and for the year ended 31 December 2016.

SLIDE 27

Visit our website at: www.bankofcyprus.com

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: Upgraded to caa2 on 14 December 2016 (positive outlook) Short-term deposit ratings: Affirmed at "Not Prime" on 14 December 2016 Long-term deposit ratings: Upgraded to Caa2 on 14 December 2016 (positive outlook) Counterparty Risk Assessment: Assigned at B2(cr) / Not-Prime (cr) on 14 December 2016 Listing: LSE – BOCH, CSE – BOCH/ΤΡΚΗ, ISIN IE00BD5B1Y92 Tel: +35722122239, Email: investors@bankofcyprus.com Annita Pavlou, Investor Relations Manager, Tel: +357 22 122740, Email: annita.pavlou@bankofcyprus.com Elena Hadjikyriacou, (elena.hadjikyriacou@bankofcyprus.com) Marina Ioannou, (marina.ioannou@bankofcyprus.com) Styliani Nicolaou, (styliani.nicolaou@bankofcyprus.com) Andri Rousou, (andri.rousou@bankofcyprus.com)

Investor Relations Contacts Finance Director

Eliza Livadiotou, Tel: +35722122344, Email: eliza.livadiotou@bankofcyprus.com

Key Information and Contact Details

27

SLIDE 28

Appendix – Macroeconomic overview

28

SLIDE 29

Improved rating and credit outlook, demonstrated by benchmark sovereign bond yields

SOURCE: Statistical Service of Republic of Cyprus; Bloomberg; European Commission Winter Forecasts 2017; Calculations by BOC Economic Research

29

Real GDP (SA) continued to expand in 2016 registering a yearly growth of 2,8% (1,7% in 2015)

1,4%

• 0,6%
• 0,4%
• 1,3%
• 3,1%
• 3,1%
• 5,1%
• 6,6%
• 6,9%
• 5,8%
• 4,5%
• 2,8%
• 1,4%
• 1,2%
• 0,7%
• 0,1%

1,7% 2,2% 2,9% 2,9% 2,8% 2,9% 2,8% 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016 4Q2016

Growth accelerated with broad sector participation

1

... with broad sector participation particularly from trade , tourism, and professional services, whilst…. ... on the expenditure side growth came from both domestic demand and net exports

0,2 0,2

• 0,1

0,2 0,5 0,3 0,2 0,1 0,1 0,1 0,4 0,4 1,3 0,6 0,0

• 0,5

0,4 0,3

Agriculture Construction Professional & business Financial Other

Contribution to growth in percentage points 2015 (growth 1,7%) 2016Q1-Q3 (growth 2,9%)

• 0,1
• 1,3
• 5,4
• 1,0

1,2 1,9

• 2,8
• 4,1
• 2,1
• 2,7

1,5 1,5

• 1,6

1,1

• 2,3

2,2 0,3

• 1,9

4,7 1,1 3,9

• 0,1
• 1,3

1,4 2011 2012 2013 2014 2015 q1-q32016

Contribution to growth by category of expenditure in percent points Consumption Fixed Investment Inventories Net Exports

The gov’t budget has been essentially balanced since 2014 following significant consolidation On an annual basis public debt peaked in 2015 and started to decline in 2016 relative to GDP

8,5 19,0 19,0 107,5 107,1 7 9 11 13 15 17 19 21 23 20 40 60 80 100 120 2008 2009 2010 2011 2012 2013 2014 2015 2016 Gross debt in billion euro (RHS) in % of GDP

1,0 2,0 3,0 4,0 5,0 6,0

01.01.15 03.02.15 06.03.15 08.04.15 11.05.15 11.06.15 14.07.15 14.08.15 16.09.15 19.10.15 19.11.15 22.12.15 22/01/16 24/02/16 28/03/16 28/04/16 31/05/16 01/07/16 03/08/16 05/09/16 06/10/16

Yields on Cyprus government bonds CY Feb 20 CY May 22 CY Nov 25

• 0,2
• 0,1

0,1 2,6 2,7 2,6

• 8
• 6
• 4
• 2

2 4 2008 2009 2010 2011 2012 2013 2014 2015 2016 In % of GDP, excl. recapitalisation costs

Gov't budget Primary balance (RHS)

SLIDE 30

30

SOURCES: Statistical Service of Republic of Cyprus, Eurostat; Calculations by BOC Economic Research

Key economic sectors are performing well

The unemployment rate peaked in 2013Q4 at 16,6% SA and dropped to 12,8% in 2016Q2 rising to 14,1% in 2016Q4

96,2 100,0 90,3 91,7 6,6 10,3 16,6 16,5 12,8 13,1 14,1

84,0 86,0 88,0 90,0 92,0 94,0 96,0 98,0 100,0 102,0 0,0 2,0 4,0 6,0 8,0 10,0 12,0 14,0 16,0 18,0

2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4

Employment Index 4Q averages SA 2011Q2=100 (RHS) Unemployment rate SA %

... were the rebound has been relatively uniform across sectors with the total production index up by 8,4% year-on-year in January-November Industrial production bottomed in February 2014 on a 12 month basis, from a peak in 2008, and has been rising since ...

95,6 64,9 72,7

7,1

30 40 50 60 70 80 90 100 110 120 130

• 25
• 20
• 15
• 10
• 5

5 10 15 02.09 05.09 08.09 11.09 02.10 05.10 08.10 11.10 02.11 05.11 08.11 11.11 02.12 05.12 08.12 11.12 02.13 05.13 08.13 11.13 02.14 05.14 08.14 11.14 02.15 05.15 08.15 11.15 02.16 05.16 08.16 11.16

Total Industrial production

100=Oct 2008 of 12 m. Av. (RHS) % change y-o-y 12 month averages

• 10,1
• 13,4
• 0,1

3,4 8,4

• 10,3
• 14,1
• 1,2

3,6 7,2

• 4,2
• 9,2

1,0 4,0 6,6

• 15,2
• 12,9

12,3

• 2,0

24,3

2012 2013 2014 2015 2016Jan-Nov Industrial production by sector: % change year-on-year Total Industry Manufacturing Electricity Water

In construction the main frequency indices have turned up in 2016

36,1 40,8 29,9 100,0 21,3 23,4 27,7

0,0 20,0 40,0 60,0 80,0 100,0 120,0

2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016Q1 2016Q3

Index 100=2008Q3 of 4Q moving averages/sums Production Index Local sales of cement Volume of building permits

SLIDE 31

Tourism is expanding & Residential Property Index is stabilising

31

SOURCES: Statistical Service of Republic of Cyprus; Central Bank of Cyprus; Eurostat; RICS-Cyprus; Calculations by BOC Economic Research

Tourist activity accelerated in 2016 with total arrivals up 19,8% in the year driven by a 48,9% increase from Russia and 11,2% from the UK The distribution of tourist arrivals has been shifting over time with the UK now at 36,3% and Russia at 24,5% of total arrivals

3,0

• 2,4

1,5 8,9 19,8 3,2

• 3,0

0,2 7,2 19,4

• 6,0
• 7,1
• 2,2

19,5 11,2 42,0 28,3 4,6

• 17,6

48,9 8,7 8,0

• 2,8

4,4 12,3

2012 2013 2014 2015 2016 Arrivals: % change year-on-year Total Arrivals Europe UK Russia Receipts 58,5 37,1 35,7 39,2 36,3 5,6 4,1 3,5 4,2 3,9 4,6 25,3 26,1 19,7 24,5 4,8 4,4 4,1 5,2 5,0 21,2 22,6 22,8 22,4 20,7 5,3 6,6 7,8 9,2 9,6 2003 2013 2014 2015 2016 UK Germany Russia Greece Other Europe Non-Europe

Residential property prices have started to rise year-on-year in some index series Residential property prices declined by a cumulative 32% from their peak in 2008Q3 and started to stabilise from the second half of 2015

100,0 68,0 68,0

• 1,8
• 1,7
• 1,3

60,0 65,0 70,0 75,0 80,0 85,0 90,0 95,0 100,0 105,0 110,0

• 15
• 10
• 5

5 10 15 20 Q3.08 Q4.08 Q1.09 Q2.09 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 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 Q2.16 Q3.16

CBC Residential Property Price Index (Rebased to 2008Q3)

100=2008Q4 of 4Q moving averages (RHS) RPPI % change y-o-y

• 1,3
• 3,3

0,5 1,1

• 20,0
• 15,0
• 10,0
• 5,0

0,0 5,0 10,0 15,0 20,0 25,0

2008Q2 2008Q3 2008Q4 2009Q1 2009Q2 2009Q3 2009Q4 2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3

Residential property prices: RPPI (CBC); HPI (Eurostat); RICS

RPPI HPI RICS-Apartments RICS-Houses

SLIDE 32

Consumer prices continued to drop in 2016 while on the demand side of the economy, retail trade volumes continued to increase

32

SOURCES: Statistical Service of Republic of Cyprus; Calculations by BOC Economic Research

The volume index of retail trade peaked in Oct. 2008 on a 12 month basis and dropped by about 15% by the first half of 2014 and has been rising since Regarding vehicle registration, after a 73% drop from their peak in late 2008 to early 2014, they started to rebound sharply in 2015-2016

78,2 89,0 3,2 4,9 7,4 60 70 80 90 100 110 120 130

• 20
• 15
• 10
• 5

5 10 15 04.12 06.12 08.12 10.12 12.12 02.13 04.13 06.13 08.13 10.13 12.13 02.14 04.14 06.14 08.14 10.14 12.14 02.15 04.15 06.15 08.15 10.15 12.15 02.16 04.16 06.16 08.16 10.16

Volume of retail trade

100=2008M10 of 12 month moving averages (RHS) % change y-o-y 27,2 42,6 47,4 51,3 24,6 44,7 45,6 20 30 40 50 60 70

• 80,0
• 60,0
• 40,0
• 20,0

0,0 20,0 40,0 60,0 Registration of motor vehicles 100=2008M10 of 12 month moving averages (RHS) % changes y-o-y

... driven mainly by housing and transport expenditures which are energy related. Following three consecutive years of decline, consumer prices dropped 1,4% in 2016 and rose by 0,5% in January 2017

2,4 3,3 2,4

• 0,4
• 1,4
• 2,1
• 1,6
• 1,4
• 2,1
• 2,3
• 0,4
• 1,0

0,5

• 3,0
• 2,0
• 1,0

0,0 1,0 2,0 3,0 4,0 Consumer Price Index: % changes year-on-year

• 0,24
• 0,01
• 0,04
• 0,69
• 1,11
• 0,63
• 0,15
• 0,04
• 0,07

0,15

• 0,74
• 0,75
• 0,22
• 0,01

0,01

• 0,21
• 0,18

0,05

2014 2015 2016

Increase in the CPI by category in percentage points

Food Housing Furnishings Transport Education Other

SLIDE 33

Appendix – Additional financial information

33

SLIDE 34

€ mn % change 31.12.16 31.12.15 Cash and balances with Central Banks 6% 1.506 1.423 Loans and advances to banks

• 17%

1.088 1.314 Debt securities, treasury bills and equity investments

• 33%

674 1.009 Net loans and advances to customers

• 9%

15.649 17.192 Other assets 42% 3.244 2.284 Non current assets and disposal group held for sale

• 76%

11 49 Total assets

• 5%

22.172 23.271 € mn % change 31.12.16 31.12.15 Deposits by banks 80% 435 242 Funding from central banks

• 81%

850 4.453 Repurchase agreements

• 30%

257 368 Customer deposits 16% 16.510 14.181 Debt securities in issue

• 1

Other liabilities 7% 1.014 944 Non current liabilities and disposal group held for sale

• 4

Total liabilities

• 6%

19.066 20.193 Share capital 0% 892 892 Capital reduction reserve and share premium 0% 2.505 2.505 Revaluation and other reserves

• 6%

244 259 Accumulated losses

• 5%

(570) (601) Shareholders’ equity 1% 3.071 3.055 Non controlling interests 56% 35 23 Total equity 1% 3.106 3.078 Total liabilities and equity

• 5%

22.172 23.271

Consolidated Balance Sheet

34

SLIDE 35

€ mn FY2016 FY2015 yoy +% 4Q2016 3Q2016 qoq +% 2Q2016 1Q2016 Net interest income 686 842

• 19%

162 164

• 1%

175 185 Net fee and commission income 167 154 9% 55 38 43% 38 36 Insurance income net of insurance claims 44 48

• 7%

9 10

• 3%

11 14 Core income 897 1.044

• 14%

226 212 7% 224 235 Other income 66 (4)

• 20

23

• 10%

14 9 Total income 963 1.040

• 7%

246 235 5% 238 244 Total expenses (397) (408)

• 3%

(98) (97) 1% (101) (101) Profit before provisions and impairments1 566 632

• 10%

148 138 8% 137 143 Provisions for impairment of customer loans net of gains/(losses)

• n derecognition of loans and changes in expected cash flows

(370) (959)

• 61%

(103) (109)

• 5%

(96) (62) Impairments of other financial and non financial assets (47) (62)

• 23%

(13) (12) 12% (14) (8) Provision for litigation and regulatory matters (18) (8) 135% (18)

• (2)

2 Share of profit from associates and joint ventures 8 6 38% 5 1 216% 1 1 Profit/(loss) before tax, restructuring costs and discontinued

• perations

139 (391)

• 19

18 3% 26 76 Tax (16) (9) 84% (1) (4)

• 87%

(4) (8) (Loss)/profit attributable to non-controlling interests (4) 6

• 2
• (5)

(1) Profit/(loss) after tax from continuing operations2 119 (394)

• 18

16 11% 17 67 Advisory, VEP and other restructuring costs3 (114) (43) 165% (16) (11) 47% (70) (17) Loss from disposal group held for sale/discontinued operations

• (38)
• Net gain on disposal of non-core assets

59 37 62%

• 59
• Profit/(loss) after tax

64 (438)

• 2

5

• 61%

6 50 Net interest margin 3,47% 3,79%

• 32bps

3,37% 3,35% +2bps 3,55% 3,63% Cost-to-Income ratio 41% 39% +2p.p. 40% 41%

• 1p.p.

43% 41%

(1) Profit before provisions and impairments, gains/(losses) on derecognition and changes on expected cash flows, restructuring costs and discontinued operations. (2) Profit after tax and before restructuring costs, discontinued operations and net profit on disposal of non-core assets. (3) 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.

Income Statement Review

4

35

SLIDE 36

Group Income Statement Highlights (€ mn)

253

• 113

140 244

• 101

143

• 62

50 238

• 101

137

• 96

6

235

• 97

138

• 109

5 246

• 98

148

• 103

2

Total Income Total Expenses Profit before impairments restructuring costs and discontinued operations Provisions for impairment of customer loans and gains/(losses) on loan derecognition and changes in expected cash flows Profit/(loss) after tax

4Q2015 1Q2016 2Q2016 3Q2016 4Q2016

1

• 630
• 512

Good underlying profitability continues in 4Q2016

(1) Profit before provisions and impairments, gains/(losses) on loan derecognition and changes on expected cash flows, restructuring costs and discontinued operations. (2) RoTE and RoAA are on an annualised basis.

• 1,7%

6,7% 0,9% 3,8% 0,5% 2,8% 0,4% 2,2% 0,3%

• 9,0%
• 8,0%
• 7,0%
• 6,0%
• 5,0%
• 4,0%
• 3,0%
• 2,0%
• 1,0%

0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0% 7,0% 8,0%

Return on Tangible Equity Return on Average Assets

FY2015 1Q2016 1H2016 9M2016 FY2016

• 14,9%

2 2

Return on Tangible Equity (RoTE) (%) & Return on Average Assets (RoAA)

36

SLIDE 37

€ mn Per presentation Reclassification Per financial statements Net interest income 686

• 686

Net fee and commission income 167

• 167

Net foreign exchange gains and net gains on other financial instruments 48 59 107 Insurance income net of insurance claims 44

• 44

Gains/(losses) from revaluations/disposals of investment properties 6 (1) 5 Losses on disposal of stock properties

• 1

1 Other income 12 3 15 Total income 963 62 1.025 Total expenses (397) (133) (530) Profit before provisions and impairments, gains/(losses) on derecognition of loans and changes in expected cash flows, restructuring costs and discontinued operations 566 (71) 495 Provisions for impairment of customer loans (433)

• (433)

Gains on derecognition of loans and changes in expected cash flows 63

• 63

Impairments of other financial and non-financial assets (47)

• (47)

Provision for litigation and regulatory matters (18) 18

• Share of profit from associates

8

• 8

Profit before tax, restructuring costs and discontinued operations 139 (53) 86 Tax (16) (2) (18) Loss attributable to non-controlling interests (4)

• (4)

Profit after tax and before restructuring costs, discontinued operations and net profit from disposal of non-core assets 119 (55) 64 Advisory, VEP and other restructuring costs1 (114) 114

• Net gain on disposal of non-core assets

59 (59)

• Profit after tax

64

• 64

Income Statement bridge for FY2016

(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 are not part of the effective interest rate and (iii) the contemplated listing on the London stock exchange and 2) voluntary exit plan cost.

37

SLIDE 38

€ mn Consumer Banking SME Banking Corporate Banking International Banking Wealth & Brokerage & Asset Management RRD REMU Insurance Other Total Cyprus Net interest income

247 62 81 62 11 202 (13)

• (9)

643

Net fee & commission income

46 9 10 65 2 12

• (4)

19 159

Other income

5 1 1 7 4 1 4 44 26 93

Total income

298 72 92 134 17 215 (9) 40 36 895

Total expenses

(117) (11) (11) (23) (4) (33) (9) (14) (131) (353)

Profit/(loss) before provisions and impairments

181 61 81 111 13 182 (18) 26 (95) 542

Provisions for impairment of customer loans net of gains/(losses) on derecognition

• f loans and changes in

expected cash flows

19 (11) (33) (6) (1) (286)

• 1

(317)

Impairment of other financial and non financial assets

• (20)
• (15)

(35)

Provision for litigation and regulatory matters

• (3)

(3)

Share of profits from associates

• 8

8

Profit/(loss) before tax

200 50 48 105 12 (104) (38) 26 (104) 195

Tax

(22) (6) (6) (13) (1) 16 5 (3) 13 (17)

Profit attributable to non controlling interest

• (4)

(4)

Profit/(loss) after tax and before one off items

178 44 42 92 11 (88) (33) 23 (95) 174

Cyprus: Income Statement by business line for FY2016

38

SLIDE 39

Risk Weighted Assets – Regulatory Capital

Equity and Regulatory Capital (€ mn)

31.12.15 31.03.16 30.06.16 30.09.16 31.12.16 Shareholders‟ equity 3.055 3.101 3.054 3.063 3.071 CET1 capital 2.748 2.769 2.735 2.736 2.7653 Tier I capital 2.748 2.769 2.735 2.736 2.765 Tier II capital 30 20 21 21 21 Total regulatory capital (Tier I + Tier II) 2.778 2.789 2.756 2.757 2.786 `

39

(1) The increase in Russia RWA is due to one off regulatory adjustments on operational risk in relation to disposed operations where permission to exclude it received from regulators early January 2017 (2) Other countries primarily relates to exposures in Channel Islands (3) Transitional basis; Includes profits for the year ended 31 December 2016 that have been neither audited nor reviewed, by the Group‟s external auditors.

Risk weighted assets by type of risk (€ mn)

31.12.15 31.03.16 30.06.16 30.09.16 31.12.16 Credit risk 17.618 17.326 16.921 16.747 16.859 Market risk 8 8 7 6 6 Operational risk 2.040 2.040 2.040 2.050 1.997 Total 19.666 19.374 18.968 18.803 18.863

Risk weighted assets by Geography (€ mn)

31.12.15 31.03.16 30.06.16 30.09.16 31.12.16 Cyprus 18.438 18.276 17.845 17.675 17.552 Russia 21 25 16 15 1451 United Kingdom 685 650 695 725 784 Romania 269 198 195 205 182 Greece 208 182 176 140 190 Other2 45 43 41 43 10 Total RWA 19.666 19.374 18.968 18.803 18.863 RWA intensity(%) 85% 85% 84% 84% 85% € mn 31.12.16 Group Equity per financial statements 3.106 Less: Intangibles and other deductions (20) Less: Deconsolidation of insurance and other entities (198) Less: Regulatory adjustments (DTA and other items) (69) Less: Revaluation reserves and other unrealised items transferred to Tier II (54) CET 1 (transitional) 2.765 Less: Adjustments to fully loaded (mainly DTA) (151) CET 1 (fully loaded) 2.614 Risk Weighted Assets 18.863 CET 1 ratio (fully loaded) 13,9% CET 1 ratio (transitional)3 14,7%

Reconciliation of Group Equity to CET 1

SLIDE 40

BOC - Main performance indicators

Ratios Group FY2016 Performance

ROAA (annualised) 0,3% ROTE (annualised) 2,2% Net Interest Margin 3,47% Cost to income ratio 41% Loans to deposits 95%

Asset Quality

90+ DPD / 90+ DPD ratio €8.309 mn (41%) 90+ DPD coverage 54% Cost of risk (annualised) 1,7%1 Provisions / Gross Loans 22,4%

Capital

Transitional Common Equity Tier 1 capital 2.765 CET1 ratio (transitional basis) 14,7% Total Shareholders‟ Equity / Total Assets 13,9%

(1) Provisions for impairment of customer loans and gains/(losses) on derecognition of loans and changes in expected cash flows

0,388 0,392 0,393 0,394 0,342 0,348 0,342 0,343 0,344 0,374 0,378 0,379 0,380 0,327 0,332 0,327 0,327 0,328 Dec-2014 Mar-2015 Jun-2015 Sep-2015 Dec-2015 Mar-2016 Jun-2016 Sep-2016 Dec-2016 Book Value per share (€) Tangible Book Value per share (€)

Book value evolution 40

SLIDE 41

Reduction in Overseas Non-Core Exposures

Overseas non-core exposures (€ mn)

The non-core overseas exposures at 31 December 2016 were as follows: Greece: Net exposure comprised:

• a. Net on-balance sheet exposures (excluding foreclosed

properties) totalling €17 mn;

• b. 634 foreclosed properties with a book value of €153 mn;

c.

• ff-balance sheet exposures of €113 mn; and
• d. lending exposures to Greek entities in the normal course
• f business in Cyprus of €82 mn, and lending exposures

in Cyprus with collaterals in Greece of €107 mn. Romania: Overall net exposure of €206 mn Serbia: Overall net exposure of €42 mn, in line with the previous quarter Russia: Remaining net exposure (on and off balance sheet) in Russia is further reduced to €44 mn during 4Q2016

(1) Lending exposures to Greek entities in the normal course of business in Cyprus and lending exposures in Cyprus with collaterals in Greece

120 114 119 45 45 44 354 312 274 262 221 206 54 54 54 42 42 42 192 173 168 164 161 153 49 22 16 13 12 17 132 131 122 119 115 113 139 151 158 225 225 189 1040 957 911 870 821 764 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Russia: Net exposure Romania: Net exposure Serbia Greece Foreclosed Properties Greece net on balance sheet exposure Greece net off balance sheet exposure Greece other¹ 472 512 477 464 521

41

513

SLIDE 42

8,66 8,09 7,79 7,85 8,07 8,42 8,76 8,94 9,01 9,40 10,06 10,56 4,05 3,59 3,46 3,47 3,57 3,21 3,40 3,75 3,68 3,91 4,15 4,49 1,24 1,25 1,29 1,30 1,36 1,39 1,45 1,49 1,43 1,43 1,43 1,46

1,02 0,87 0,79 0,55 0,61 0,61 0,01 0,01

14,97 13,80 13,33 13,17 13,61 13,63 13,61 14,18 14,13 14,75 15,64 16,51 Dec-13 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

Cyprus non-IBU Cyprus IBU UK Other countries

Total (€ bn)

(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).

Deposits by geography

Analysis of Deposits by Geography and by Type

31 December 2016 (%)

63,9% 27,2% 8,9% 0,0%

Cyprus - non IBU Cyprus - IBU UK Other countries

Total Cyprus 91,1%

1 2

10,55 9,13 8,53 7,88 8,16 8,14 7,97 8,16 8,15 8,31 8,93 9,27 0,93 0,95 0,84 0,96 0,97 1,02 1,01 1,03 1,01 1,04 1,01 1,06 3,49 3,72 3,96 4,33 4,48 4,47 4,63 4,99 4,97 5,40 5,70 6,18

14,97 13,80 13,33 13,17 13,61 13,63 13,61 14,18 14,13 14,75 15,64 16,51 Dec-13 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar -16 Jun-16 Sep-16 Dec-16

Time deposits Savings accounts Current & demand accounts

Total (€ bn)

Deposits by type of deposits 31 December 2016 (%)

56,2% 6,4% 37,4%

Time deposits Savings acc ount Current and demand account

1 2

42

SLIDE 43

21,20 21,32 21,19 20,98 20,66 19,98 19,27 18,77 18,27 0,91 1,03 1,13 1,14 1,21 1,17 1,18 1,23 1,30 1,66 1,74 1,61 0,75 0,72 0,70 0,63 0,60 0,56

23,77 24,09 23,93 22,86 22,59 21,85 21,08 20,60 20,13 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

Other countries UK Cyprus

1

Total (€ bn)

Gross loans by geography

Gross loans by Geography and by Customer Type

90,8% 6,4% 2,8% Cyprus UK Other countries

1

11,83 12,10 12,03 11,56 11,42 10,77 10,13 9,78 9,47 5,09 5,02 4,99 4,75 4,68 4,65 4,55 4,47 4,35 4,41 4,43 4,39 4,35 4,31 4,28 4,27 4,24 4,22

2,44 2,54 2,52 2,20 2,18 2,16 2,13 2,11 2,09 23,77 24,09 23,93 22,86 22,59 21,85 21,08 20,60 20,13 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

Retail other Retail Housing SMEs Corporate

(€ bn) Total

47,1% 21,6% 20,9% 10,4% Corporate SME Retail Housing Retail Other

31 December 2016 (%) 31 December 2016 (%) Gross loans by customer type

43

(1) Other countries: Russia (until June 2015) and Romania

SLIDE 44

13,75 13,86 13,59 13,49 13,26 12,64 11,87 11,31 10,50 0,11 0,11 0,10 0,08 0,07 0,06 0,05 0,06 0,02 1,10 1,20 1,12 0,65 0,64 0,63 0,57 0,53 0,51 14,96 15,17 14,81 14,22 13,97 13,33 12,49 11,90 11,03 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

Other countries UK Cyprus

1

Total (€ bn)

(1) Other countries: Russia (until June 2015) and Romania

NPEs by geography

NPEs by Geography and by Customer Type

95,2% 0,2% 4,6%

Cyprus UK Other countries1

45,3% 27,1% 16,1% 11,5%

Corporate SME Retail Housing Retail Other

31 December 2016 (%) 31 December 2016 (%) NPEs by customer type

8,17 8,18 7,75 7,37 7,19 6,61 5,98 5,54 5,00 3,53 3,57 3,60 3,51 3,44 3,38 3,25 3,14 2,99 1,82 1,93 1,95 1,98 1,97 1,97 1,93 1,92 1,77 1,45 1,49 1,51 1,36 1,37 1,37 1,33 1,30 1,27

14,96 15,17 14,81 14,22 13,97 13,33 12,49 11,90 11,03 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

Retail Other Retail Housing SMEs Corporate

Total (€ bn)

44

SLIDE 45

Asset Quality- 90+ DPD analysis

(€ mn) Dec-16 Sept-16 Jun - 16 Mar-16 Dec-15

• A. Gross Loans after Fair value on Initial recognition

19.202 19.607 20.040 20.719 21.385 Fair value on Initial recognition 928 989 1.043 1.130 1.207

• B. Gross Loans

20.130 20.596 21.083 21.849 22.592

• B1. Loans with no arrears

10.991 10.897 10.879 10.551 10.443

• B2. Loans with arrears but not impaired

2.238 2.488 2.607 2.901 3.049 Up to 30 DPD 455 587 574 623 469 31-90 DPD 375 344 361 386 351 91-180 DPD 129 146 121 133 144 181-365 DPD 141 144 175 183 259 Over 1 year DPD 1.138 1.267 1.376 1.576 1.826

• B3. Impaired Loans

6.901 7.211 7.597 8.397 9.100 With no arrears 472 514 647 860 876 Up to 30 DPD 62 22 25 36 78 31-90 DPD 29 52 41 57 24 91-180 DPD 50 15 95 49 65 181-365 DPD 51 106 123 157 310 Over 1 year DPD 6.237 6.502 6.666 7.238 7.747 (90+ DPD)1 8.309 8.768 9.269 10.289 11.329 90+ DPD ratio (90 + DPD / Gross Loans) 41,3% 42,6% 44,0% 47,1% 50,1% Accumulated provisions (including fair value adjustment on initial recognition2 ) 4.519 4.703 4.875 5.076 5.445 Gross loans provision coverage 22,4% 22,8% 23,1% 23,2% 24,1% 90+ DPD provision coverage 54,4% 53,6% 52,6% 49,3% 48,1%

(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). (2) Including the fair value adjustment on initial recognition (difference between the outstanding contractual amount and the fair value of loans acquired from Laiki Bank) and provisions for off-balance sheet exposures.

+ + + + =

45

SLIDE 46

Progress on top 20 group exposures

46 Top 20 exposures down by €1,7 bn since 30 Sep 2014

2,8 2,7 2,7 2,7 2,6 2,3 1,9 1,4 1,3 1,2 1,6 1,5 1,3 1,3 1,1 1,5 1,6 2,0 1,7 1,5 4,4 4,2 4,0 4,0 3,7 3,8 3,5 3,4 3,0 2,7

64% 64% 66% 67% 69% 61% 53% 42% 45% 45%

Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Sep 2016 Dec 2016

90+DPD Loans other than 90+DPD 90+DPD ratio over total exposure 1,2 0,6 0,9 Dec 16

Top 20 - total exposure split (€ bn)

2,73 90+DPD NPEs with forbearance measures, no impairments, no arrears1,2 Performing NPE €1,8 bn

• Top 20 group exposures were reduced by €0,3 bn qoq and totalled €2,7 bn at 31 Dec 2016, mainly

due to increased restructuring activity, including debt for asset swaps

• 90+ DPD ratio over total exposure remained stable at 45% at 31 December 2016
• Taking into account the provisions and tangible collateral, top 20 exposures are fully covered
• Total coverage (Provisions and MV of collateral over total exposure) of 106% at 31 December

2016

• As at 31 December 2016, c.65% of the top 20 group exposures were restructured

90+DPD reduced by 56%

€ bn3

(1) In pipeline to exit NPEs subject to meeting all exit criteria (2) Analysis based on account basis (3) Total exposures include on balance sheet and off balance sheet items

SLIDE 47

90+DPD 7,8 Forborne NPEs 2,5 Contagion² 0,2 Performing restructured 2,1 Performing 5,7 18,3 Cyprus gross loans (Dec 2016)

Aggressive target setting

Cyprus 18,3 Other 1,8 20,1 BOC Group gross loans (Dec 2016) Total NPEs in Cyprus: €10,5 bn

• c.€6,8 bn of 90+DPDs managed by RRD
• o/s c.€4,8bn is managed via RRD

recoveries Forborne NPEs:

• NPEs with forbearance measure no

impairments and no arrears1: €2,0 bn

• NPEs with forbearance measure, no

impairments and with arrears less than 90 days: €0,5 bn

• Focus on NPEs meeting exiting criteria

̶ Following high volume of restructurings performed in 2016, now is the time to capitalise on the performance of restructured loans

• Continue to drive the resolution of cases for reduction of 90+ DPD

̶ Close monitoring of progress towards targets

• Capitalise on improvements made to the Recoveries operating model and experience gained in the past year

Plans are in place to maintain positive progress

(1) In pipeline to exit NPEs subject to meeting all exit criteria; analysis based on account basis (2) Contagion effect but not restructured

47

SLIDE 48

90+ DPD by Geography (€ bn) 90+ DPD ratios by Geography

11,47 11,53 11,48 11,27 10,63 9,60 8,65 8,18 7,78 0,09 0,11 0,09 0,08 0,07 0,06 0,05 0,06 0,02 1,09 1,15 1,08 0,65 0,63 0,63 0,57 0,53 0,51 12,65 12,79 12,65 12,00 11,33 10,29 9,27 8,77 8,31 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

Cyprus UK Other countries

90+ DPD by Geography

54% 54% 54% 54% 51% 48% 45% 44% 43% 10% 11% 8% 7% 6% 5% 4% 5% 2% 66% 66% 67% 87% 87% 91% 90% 90% 90%

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

Cyprus UK Other countries

1 1

48

(1) Other countries: Russia (until June 2015) and Romania

SLIDE 49

90+ DPD by business line (€ bn)

1,31 1,23 0,95 0,88 0,84 0,67 0,59 0,53 0,58 0,56 0,41 0,35 0,32 0,31 0,26 0,21 0,63 0,59 0,54 0,48 0,45 0,43 0,43 0,41 0,56 0,53 0,37 0,33 0,31 0,28 0,28 0,27 2,41 2,43 2,38 2,00 1,65 1,26 1,12 1,03 1,26 1,20 1,10 0,97 0,60 0,44 0,41 0,35 1,12 1,10 1,12 1,02 0,94 0,84 0,74 0,64 2,20 2,24 2,31 2,40 2,23 2,13 2,04 1,94 2,72 2,77 2,82 2,90 2,95 2,91 2,90 2,93

12,79 12,65 12,00 11,33 10,29 9,27 8,77 8,31

Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep-16 Dec-16

Corporate SMEs Housing Consumer Credit RRD-Major Corporations RRD- Corporates RRD-SMEs RRD-Recoveries corporates RRD-Recoveries SMEs & Retail

(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.

Analysis 90+ DPD ratios by Business Line1

49

SLIDE 50

50

Total Bank – Cyprus

97% 1% 0% 2% 74% 1% 14% 11%

69% 0% 21% 10%

89% 4% 0% 7%

90% 0% 7% 3% 87% 0% 1% 12% 76% 1% 5% 18%

99% 0% 1% 0%

94% 2% 1% 3%

96% 0% 3% 1% 93% 0% 0% 7%

0% 20% 40% 60% 80% 100%

No arrears 1-30 dpd 31-90 dpd Over 90 dpd

Corporate SMEs

32% 4% 2% 62%

53% 4% 2% 41%

71% 0% 5% 24% 68% 12% 4% 16% 75% 9% 4% 12% 65% 10% 8% 17% 67% 13% 6% 14% 70% 12% 11% 7% 77% 9% 10% 4% 67% 14% 17% 2% 84% 6% 6% 4%

No arrears 1-30 dpd 31-90 dpd Over 90 dpd

Retail

93% 4% 69% 12%

57% 8% 3% 32% 65% 5% 2% 28% 70% 6% 3% 21% 69% 9% 3% 19% 70% 8% 1% 21%

69% 10% 5% 16%

67% 10% 8% 15% 70% 13% 8% 9% 71% 15% 7% 7% 68% 18% 9% 5%

72% 18% 7% 3%

No arrears 1-30 dpd 31-90 dpd Over 90 dpd.

69% 12% Quarterly average

• An analysis performed as at 31 December 2016 indicates that on average 81% of the loans restructured post 31 December

2013 for Cyprus operations, have no arrears (restructurings performed in 4Q2016 were excluded); The average percentage

• f restructured loans with arrears more than 90 days stands at 8%
• Corporate

restructured loans exhibit the best performance with an average percentage

• f

restructured loans with no arrears of 93%

Performance of Restructured Loans1

(1) The performance of loans restructured during 3Q2016 is not presented in this graph as it is too early to assess it.

71% 4% 1% 24% 65% 3% 7% 25% 70% 2% 12% 16% 76% 8% 2% 14% 83% 3% 5% 9% 75% 6% 4% 15% 70% 8% 6% 16% 88% 5% 4% 3% 84% 7% 5% 4% 85% 7% 6% 2% 81% 10% 4% 5%

No arrears 1-30 dpd 31-90 dpd Over 90 dpd

1Q2014 2Q2014 3Q2014 4Q2014 1Q2015 2Q2015 3Q2015 4Q2015 1Q2016 2Q2016 3Q2016

81%

8%

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90+ DPD ratios by business line Gross loans by business line (€ bn)

27% 26% 15% 30% 61% 75% 80% 100% 100% 22% 22% 14% 25% 58% 80% 79% 100% 100% 21% 20% 13% 23% 53% 69% 74% 100% 100% 20% 18% 12% 22% 37% 60% 70% 100% 100% 16% 18% 12% 21% 32% 50% 64% 100% 100% 14% 15% 12% 20% 37% 48% 58% 100% 100%

12% 13% 11% 20% 34% 49% 52% 100% 100%

Corporate SMEs Housing Consumer Credit RRD-Mid Corporates RRD-Major Corporations RRD-SMEs RRD-Recoveries corporates RRD-Recoveries SMEs and Retail

30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 30.09.16 31.12.16

4,59 2,14 3,80 1,80 1,97 3,22 1,38 2,24 2,77 4,38 1,83 3,75 1,48 1,90 2,98 1,41 2,31 2,83 4,29 1,78 3,68 1,43 1,81 2,91 1,38 2,40 2,91 4,15 1,77 3,62 1,40 1,62 2,76 1,35 2,23 2,94 4,10 1,74 3,61 1,38 1,37 2,53 1,30 2,13 2,92 4,31 1,71 3,58 1,36 1,09 2,34 1,26 2,04 2,91 4,40 1,62 3,54 1,34 1,01 2,12 1,22 1,95 2,93

Corporate SMEs Housing Consumer Credit RRD-Mid Corporates RRD-Major Corporations RRD-SMEs RRD-Recoveries corporates RRD-Recoveries SMEs and Retail

30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 30.09.16 31.12.16 % of total

(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.

22% 8% 18% 5% 9% 6%

Analysis of Loans and 90+ DPD ratios by Business Line1

7% 11% 14%

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SLIDE 52

90+ DPD ratios by economic activity

48% 54% 57% 80% 48% 38% 57% 64% 49% 54% 59% 79% 48% 36% 62% 57% 48% 54% 46% 76% 47% 36% 57% 56% 44% 49% 38% 68% 46% 35% 54% 58% 42% 50% 34% 65% 39% 35% 49% 56% 39% 46% 34% 63% 37% 35% 46% 57%

38% 46% 32% 62% 35% 35% 45% 55%

30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 30.09.16 31.12.16

Gross loans by economic activity (€ bn)

Trade Manufacturing Hotels & Restaurants Construction Real estate Private Individuals Professional & other services Other sectors

Analysis of Loans and 90+ DPD ratios by Economic Activity

52

2,50 0,92 1,64 4,19 3,20 7,86 2,07 1,55 2,38 0,85 1,62 4,14 3,38 7,41 1,84 1,24 2,36 0,83 1,57 4,07 3,42 7,33 1,79 1,21 2,26 0,82 1,47 3,92 3,32 7,25 1,64 1,17 2,23 0,80 1,45 3,43 3,33 7,17 1,55 1,12 2,19 0,71 1,42 3,22 3,30 7,11 1,48 1,17

2,12 0,70 1,42 2,97 3,30 7,03 1,50 1,09

30.06.15 30.09.15 31.12.15 31.03.16 31.06.16 30.09.16 31.12.16

Trade Manufacturing Hotels & Restaurants Construction Real estate Private Individuals Professional & other services Other sectors

16%

11%

35% 7% 6%

% of total

15% 7%

3%

SLIDE 53

Rescheduled loans % gross loans1 by customer type Rescheduled Loans by customer type (€ bn)

Rescheduled Loans for the Cyprus Operations

4,3 4,2 4,4 4,3 4,0 3,8 3,4 1,8 1,7 1,7 1,7 1,8 1,7 1,7 0,6 0,6 0,6 0,6 0,6 0,6 0,6 1,7 1,7 1,7 1,7 1,7 1,7 1,7

8,4 8,2 8,4 8,3 8,1 7,8 7,4 30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 30.09.16 31.12.16 Retail housing Retail consumer SMEs Corporate

(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 €928 mn for gross loans and to €441 mn for rescheduled loans (compared to €989 mn and €475 mn respectively at 30 September 2016), including loans of discontinued operations/disposal group held for sale.

43% 39% 40% 26% 42% 38% 40% 26% 45% 39% 39% 26% 46% 40% 40% 28% 47% 41% 41% 27% 46% 41% 42% 28% 44% 41% 40% 27%

Corporate SMES Retail housing Retail Consumer 30.06.15 30.09.15 31.12.15 31.03.16 30.06.16 30.09.16 31.12.16

Rescheduled Loans (€ bn)

8.392 7.402

3.237 (1.516) (2.044) (667)

Rescheduled Loans 31.12.15 Rescheduled loans Already classified rescheduled Loans no longer classified rescheduled Other adjustment Rescheduled Loans 31.12.16

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SLIDE 54

Reconciliation of 90+ DPD to NPES Cyprus Operations (€ bn) (Dec-16)

7,3 7,8 10,5 0,4 0,1 1,8 0,5 0,0 0,4

with arrears >90+DPD Impaired -no arrears Impaired arrears - less than 90 days Total 90+ DPD with forbearance measure<90+ DPD re-forborne within 2 years forborne >30+ DPD Contagion effect NPEs €2,7 bn

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SLIDE 55

Non-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.

The exit criteria of NPE forborne are the following: 1. The extension of forbearance measures does not lead to the recognition of impairment or default 2. One year has passed since the forbearance measures were extended 3. There is not, following the forbearance measures, any past due amount or concerns regarding the full repayment of the exposure according to the post forbearance conditions. 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).

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SLIDE 56

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.

Disclaimer

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