In view of the continuing slowdown and the uncertainty prevailing in the Cypriot and international economy, the Bank of Cyprus Group decided to significantly increase the provision for bad and doubtful debts for the year 2002, in the degree of the increase in provisions for the nine-month period of 2002.

The increased provisions for 2002 is a phenomenon widely seen in almost all the banks internationally.

In addition, in view of the continuing decline in the local stockmarket, the Group will transfer an amount of C?23 million from the Revaluation Reserves to the Profit and Loss account, representing provision for impairment of investments in accordance with the requirements of the International Accounting Standards. This transfer will have no effect on the Group's Shareholders Funds, because the valuation of the investments considered to be impaired has already been at fair value.

As a result of the above charges, i.e. increased provisions for bad and doubtful debts and provision for impairment of investments, the Group is expected to record a loss after taxation for the year 2002. Excluding the provision for impairment of investments, which as already explained represents a transfer from Revaluation Reserves and thus does not affect Shareholders' Funds, the Group is expected to record a profit for the year. It is noted that the Group's core profitability at operational level continued to improve in the fourth quarter of 2002.

As already announced, the Group's financial results for the year 2002 will be announced on 25 February 2003.