BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.1 Basis of preparation (continued)

Comparative information

Comparative information was restated following a change in the presentation of segmental analysis as

detailed in Note 6. This change led to a respective restatement in Notes 14, 23, 30, 44.2, 44.3 and 44.5

where analysis by business line is presented. The relevant tables are identified as restated.

The restatements did not have an impact on the results for the year or equity of the Group.

Change in presentation

The Group has changed the presentation of the interest component of fair value hedging derivatives used in

accounting hedges to more appropriately reflect the impact of the accounting hedges. As a result the net

interest income/expense on qualifying hedge derivatives designated as fair value hedges, is now presented

within ‘Interest income’ where the derivative is used to hedge an asset and as ‘Interest expense’ where the

derivative is used to hedge a liability, and is presented together with the interest component of the

respective hedged asset and hedged liability. This was previously presented in 'Income similar to interest

income' and 'Expense similar to interest expense'. The comparative amounts for 2023 have been

represented.

2.2 Accounting policies and changes in accounting policies and disclosures

The Consolidated Financial Statements contain a summary of the accounting policies adopted in the

preparation of the Consolidated Financial Statements.

The accounting policies adopted are consistent with those of the previous year, except for macro fair value

hedging as explained below in Note 2.21, which was applied in 2024. The adoption of new and amended

standards and interpretations that became effective on or after 1 January 2024 did not have an impact on

the financial statements as explained in Note 2.2.1.

2.2.1 New and amended standards and interpretations

The Group applied for the first time certain standards and amendments, which are effective for annual

periods beginning on or after 1 January 2024 and which are explained below. The Group has not early

adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance

Arrangements (amendments)

These amendments require the disclosures of an entity’s supplier finance arrangements that would enable

the users of financial statements to assess the effects of those arrangements on the entity’s liabilities and

cash flows and on the entity’s exposure to liquidity risk, thus enhancing the transparency of the supplier

finance arrangements. The amendments did not affect recognition or measurement principles. These

amendments did not have an impact on the financial position and results of the Group during the year

ended 31 December 2024.

IFRS 16 Leases: Lease Liability in a Sale and Leaseback (amendments)

The amendment to IFRS 16 Leases specifies the requirements that a seller-lessee uses in measuring the

lease liability arising in a sale and leaseback transaction, to ensure the seller-lessee does not recognise any

amount of the gain or loss that relates to the right of use it retains. A sale and leaseback transaction

involves the transfer of an asset by an entity (the seller-lessee) to another entity (the buyer-lessor) and the

leaseback of the same asset by the seller-lessee. The amendment did not have an impact on the financial

position and results of the Group during the year ended 31 December 2024.

IAS 1 Presentation of Financial Statements: classification of Liabilities as Current or Non-current

(amendments)

The IASB issued amendments to IAS 1 Presentation of Financial Statements to specify the requirements for

classifying liabilities as current or non-current. The amendments clarify: (a) what is meant by a right to

defer settlement, (b) that a right to defer must exist at the end of the reporting period and (c) that

classification is unaffected by the likelihood that an entity will exercise its deferral right. Terms of a liability

that could, at the option of the counterparty, result in its settlement by the transfer of the entity’s own

equity instruments do not affect its classification as current or non-current if, the entity classifies the option

as an equity instrument, recognising it separately from the liability as an equity component of a compound

financial instrument. These amendments did not have an impact on the financial position and results of the

Group during the year ended 31 December 2024.

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BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.3 Standards and Interpretations that are issued but not yet effective

2.3.1 Standards and Interpretations issued by the IASB and adopted by the EU

IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (amendments)

These amendments help entities assess exchangeability between two currencies and determine the spot

exchange rate, when exchangeability is lacking. An entity is impacted by the amendments when it has a

transaction or an operation in a foreign currency that is not exchangeable into another currency at a

measurement date for a specified purpose. The amendments to IAS 21 do not provide detailed

requirements on how to estimate the spot exchange rate. Instead, they set out a framework under which an

entity can determine the spot exchange rate at the measurement date. When applying the new

requirements, it is not permitted to restate comparative information. Rather, it is required to translate the

affected amounts at estimated spot exchange rates at the date of initial application, with an adjustment to

retained earnings or to the reserve for cumulative translation differences. The amendments will be effective

for annual reporting periods beginning on or after 1 January 2025. Earlier application is permitted. The

Group does not expect these amendments to have a material impact on its results and financial position.

2.3.2 Standards and Interpretations issued by the IASB but not yet adopted by the EU

IFRS 18 Presentation and Disclosure in Financial Statements (new standard)

The new standard on presentation and disclosure in financial statements focuses on updates to the

statement of profit or loss. The key new concepts introduced in IFRS 18 relate to the structure of the

statement of profit or loss, required disclosures in the financial statements for certain profit or loss

performance measures that are reported outside an entity’s financial statements (that is, management-

defined performance measures) and enhanced principles on aggregation and disaggregation which apply to

the primary financial statements and notes in general. IFRS 18 will not impact the recognition or

measurement of items in the financial statements, but it might change what an entity reports as its

‘operating profit or loss’. IFRS 18 will apply for reporting periods beginning on or after 1 January 2027 and

will also apply to comparative information. The Group does not expect these amendments to have an

impact on its results and financial position; however, presentational changes and additional disclosures may

be required upon adoption.

IFRS 19 Subsidiaries without Public Accountability: Disclosures (new standard)

The IASB issued a new accounting standard for subsidiaries. IFRS 19 Subsidiaries without Public

Accountability will enable subsidiaries to keep only one set of accounting records in order to meet the needs

of both their parent company and the users of their financial statements. In addition, the IFRS 19 will

permit reduced disclosures better suited to the needs of the users of the financial statements while still

maintaining the usefulness of the information. The new standard will be effective for annual periods

beginning on or after 1 January 2027. The new standard does not apply to the financial statements of the

Group.

IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures (amendments)

The IASB issued targeted amendments to report the financial effects of nature-dependent electricity

contracts, which are often structured as power purchase agreements (PPAs). The amendments include

clarifying the application of the ‘own-use’ requirements, permitting hedge accounting if these contracts are

used as hedging instruments; and adding new disclosure requirements to enable investors to understand

the effect of these contracts on a company’s financial performance and cash flows. The amendments will be

effective for annual periods beginning on or after 1 January 2026. The Group does not expect these

amendments to have a material impact on its results and financial position.

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BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.3 Standards and Interpretations that are issued but not yet effective (continued)

2.3.2 Standards and Interpretations issued by the IASB but not yet adopted by the EU

(continued)

Annual Improvements to IFRS Accounting Standards — Volume 11

The amendments contained in the Annual Improvements relate to:

(i) IFRS 1 First-time Adoption of International Financial Reporting Standards - Hedge Accounting by

a First-time Adopter

(ii) IFRS 7 Financial Instruments: Disclosures and its accompanying Guidance on implementing IFRS

7

(iii) IFRS 9 Financial Instruments - Derecognition of lease liabilities and Transaction price

(iv) IFRS 10 Consolidated Financial Statements - Determination of a ‘de facto agent’

(v) IAS 7 Statement of Cash Flows - Cost Method.

These amendments will be effective for annual reporting periods beginning on or after 1 January 2026.

Earlier application is permitted. The Group will be assessing the impact that these amendments might have

on its results and financial position.

IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures - Classification and

Measurement of financial Instruments (amendments)

The IASB issued amendments to IFRS 9 and IFRS 7. The amendments: (a) clarify the date of recognition

and derecognition of some financial assets and liabilities, with a new exception for some financial liabilities

settled through an electronic cash transfer system, (b) add further guidance for assessing whether a

financial asset meets the solely payments of principal and interest (SPPI) criterion, (c) add new disclosures

for certain instruments with contractual terms that can change cash flows, (d) update the disclosures for

equity instruments designated at fair value through other comprehensive income (FVOCI). These

amendments to IFRS 9 and IFRS 7 will be effective for annual reporting periods beginning on or after 1

January 2026. Earlier application is permitted. The Group will be assessing the impact that these

amendments might have on its results and financial position.

2.4 Basis of consolidation

The Consolidated Financial Statements comprise the Consolidated Financial Statements of the Group as at

and for the year ended 31 December 2024. The financial statements of the subsidiaries are prepared as of

the same reporting date as that of the Company, using consistent accounting policies.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Specifically,

the Group controls an investee only if the Group has:

i. power over an investee (i.e. existing rights that give it the current ability to direct the relevant

activities of the investee)

ii. exposure, or rights, to variable returns from its involvement with the investee

iii. the ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights results in control. To support this

presumption and in cases the Group has less than a majority of the voting rights of an investee, the Group

considers all relevant facts and circumstances in assessing whether it has power over an investee including

any contractual arrangements with the other vote holders, rights arising from other contractual

arrangements, and the Group’s voting and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts indicate that there are changes to any

of the three elements of control.

Assets, liabilities, income and expenses of subsidiaries acquired or disposed of during the year are included

in the Consolidated Financial Statements from the date of acquisition or up to the date of disposal,

respectively. Profit or loss and each component of other comprehensive income (OCI) are attributed to the

equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-

controlling interests having a deficit balance. Non-controlling interests represent the portion of profit or loss

and net assets not held by the Group, directly or indirectly. The non-controlling interests are presented

separately in the consolidated income statement and within equity from the Company owners’ equity.

All intra-group balances and transactions are eliminated on consolidation.

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BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.4 Basis of consolidation (continued)

A change in the ownership interest of a subsidiary, without loss of control, is accounted for as a transaction

between the owners, which affects equity. As a result, no goodwill arises and no gain/loss is recognised in

the consolidated income statement from such transactions. The foreign exchange differences which relate to

the share of non-controlling interests being sold/acquired are reclassified between the foreign currency

reserve and non-controlling interests.

2.5 Foreign currency translation

The Consolidated Financial Statements are presented in Euro (€), which is the functional and presentation

currency of the Company and its operating subsidiaries in Cyprus. Each subsidiary, overseas branch or

overseas subsidiary of the Group determines its own functional currency and items included in the financial

statements of each entity are measured using that functional currency. The Group uses the direct method of

consolidation and on disposal of a foreign operation, the gain or loss that is reclassified to profit or loss

reflects the amount that arises from using this method.

2.5.1 Transactions and balances

Transactions in foreign currencies are recorded using the functional currency rate of exchange ruling at the

date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency

rate of exchange ruling at the reporting date. All differences are taken to ‘Net foreign exchange gains’ in the

consolidated income statement, with the exception of differences on foreign currency assets/liabilities that

provide a hedge against the net investments in subsidiaries and overseas branches. These differences are

recognised in other comprehensive income in the ‘Foreign currency translation reserve’ until the disposal or

liquidation of the net investment, at which time the cumulative amount is reclassified to the consolidated

income statement.

Non-monetary items that are measured at historic cost in a foreign currency are translated using the

exchange rates ruling as at the dates of the initial transactions. Non-monetary items measured at fair value

in a foreign currency are translated using the exchange rates ruling at the date when the fair value is

determined. The retranslation of non-monetary assets carried at fair value is reported as part of the fair

value change.

2.5.2 Subsidiary companies and branches

At the reporting date, the assets and liabilities of subsidiaries (including special purpose entities that the

Group consolidates) and branches whose functional currency is other than the Group’s presentation

currency are translated into the Group’s presentation currency at the rate of exchange ruling at the

reporting date, and their income statements are translated using the average exchange rates for the year.

Foreign exchange differences arising on translation are recognised in other comprehensive income in the

‘Foreign currency translation reserve’. On disposal or liquidation of a subsidiary or branch, the cumulative

amount of the foreign exchange differences relating to that particular overseas operation, is reclassified to

the consolidated income statement as part of the profit/loss on disposal/dissolution of subsidiaries.

2.6 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief

operating decision-maker. The chief operating decision-maker is the person or group of persons that

allocate resources to and assess the performance of the operating segments.

The chief operating decision-maker of the Group is the Group Executive Committee.

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BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.7 Turnover

Group turnover is represented by the Total operating income which comprises of net interest income, net

fee and commission income, net foreign exchange gains, net gains/(losses) on financial instruments, net

gains/(losses) on derecognition of financial assets measured at amortised cost, net insurance result, net

gains/(losses) from revaluation and disposal of investment properties, net gains/(losses) on disposal of

stock of property and other income as these are presented in the Consolidated Income Statement and is

presented in Note 6.

2.8 Revenue from contracts with customers

The Group recognises revenue when control of the promised goods or services is transferred to customers

in return of an amount that reflects the consideration to which the Group expects to be entitled in exchange

for those goods or services. The revenue recognition model applies the following five steps:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognise revenue when (or as) the Group satisfies a performance obligation.

The performance obligation notion in effect represents a promise in a contract with a customer to transfer

to the customer either: (a) a good or service (or a bundle of goods or services) that is distinct; or (b) a

series of distinct goods or services that are substantially the same and that have the same pattern of

transfer to the customer.

Contract balances

A contract asset is the right to consideration in exchange for services transferred to the customer. If the

Group performs by transferring services to a customer before the customer pays consideration or before

payment is due, a contract asset is recognised for the earned consideration that is conditional.

Receivables are recorded where the Group provides services to clients, consideration is due immediately

upon satisfaction of a point in time service or at the end of a prespecified period for an over the time

service. It is the Group’s right to an amount of consideration that is unconditional (i.e. only the passage of

time is required before payment of the consideration is due). The initial recognition and subsequent

measurement of such receivables is disclosed in Notes 2.13 to 2.17.

Contract liabilities relate to payments received from customers where the Group is yet to satisfy its

performance obligation. Contract liabilities are recognised as revenue when the Group performs under the

contract.

Contract assets and receivables are recorded within ‘Prepayments, accrued income and other assets’ and

contract liabilities within ‘Accruals, deferred income, other liabilities and other provisions’ in the

consolidated balance sheet.

2.8.1 Fee and commission income

The Group earns fee income from a diverse range of services it provides to its clients. Fee income can be

divided into two broad categories:

i. fees earned from services that are provided over a certain period of time, such as asset or portfolio

management, custody services and certain advisory services; and

ii. fees earned from point in time services such as executing transactions and brokerage fees (e.g.

securities and derivative execution and clearing).

Over time services

For fees earned from services that are provided over a certain period of time revenue is recognised pro-rata

over the service period, provided the fees are not contingent on successfully meeting specified performance

criteria that are beyond the control of the Group. Costs to fulfil over time services are recorded in the

consolidated income statement immediately, because such services are considered to be a series of services

that are substantially the same from day to day and have the same pattern of transfer.

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BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.8 Revenue from contracts with customers (continued)

2.8.1 Fee and commission income (continued)

Point in time services

For fees earned from providing transaction-type services, revenue is recognised when the service has been

completed, provided such fees are not subject to refund or another contingency beyond the control of the

Group. Incremental costs to fulfil services provided at a point in time are typically incurred and recorded at

the same time as the performance obligation is satisfied and revenue is earned, and are therefore not

recognised as an asset, e.g. brokerage commissions.

Fee and commission income is measured based on consideration specified in a legally enforceable contract

with a customer, excluding amounts such as taxes collected on behalf of third parties. Consideration can

include both fixed and variable amounts. Variable consideration includes refunds, discounts and other

amounts that are contingent on the occurrence or non-occurrence of a future event. Variable consideration

that is contingent on an uncertain event can only be recognised to the extent that it is highly probable that

a significant reversal in the amount of cumulative revenue for a contract will not occur.

In relation to sales of services for card processing activities the Group acts as an agent and therefore

income is recognised on a net basis.

2.8.2 Dividend income

Dividend income is recognised in the consolidated income statement when the Group’s right to receive

payment is established, i.e. upon approval by the general meeting of the shareholders.

2.8.3 Rental income

Rental income from investment properties and stock of property is accounted for on a straight-line basis

over the period of the lease and is recognised in the consolidated income statement in ‘Other income’.

2.8.4 Gains on disposal of investment property

Gains on disposal of investment property are recognised in the consolidated income statement in ‘Net

gains/(losses) from revaluation and disposal of investment properties’ when the buyer accepts delivery and

the control of the property is transferred to the buyer.

2.8.5 Gains on disposal of stock of property

Gains on disposal of stock of property are recognised in the consolidated income statement in 'Net gains on

disposal of stock of property' when the buyer accepts delivery and the control of the property is transferred

to the buyer.

387

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.9 Recognition of interest income/expense and income/expense similar to interest

The Group calculates interest income/expense by applying the effective interest rate (EIR) to the gross

carrying amount of financial assets, unless the asset is credit-impaired. For financial assets and financial

liabilities measured at FVPL which accrue interest, the Group follows the principles of the effective interest

method with the only difference being the treatment of fees that are integral to the financial asset/financial

liabilities. That is, for financial assets and financial liabilities classified at FVPL the fees are recognised as

revenue or expense when the instrument is initially recognised and not as part of the EIR calculation.

When a financial asset becomes credit-impaired and is therefore classified as Stage 3, interest income is

calculated by applying the EIR to the amortised cost of the financial asset, being the gross carrying amount

of the financial asset less any loss allowance. If the financial asset cures and is no longer credit-impaired,

the Group reverts to calculating interest income on the gross carrying amount. In such cases, the Group

unwinds the discount on the expected credit losses (ECL) through the 'Credit losses on financial assets' line

in the consolidated income statement.

Interest income on purchased or originated credit-impaired (POCI) financial assets is recognised using the

credit adjusted effective interest rate (CAEIR) calculated at initial recognition. The CAEIR is applied on the

amortised cost of the financial asset, being the gross carrying amount of the financial asset less any loss

allowance.

Interest income from financial assets at amortised cost and financial assets at FVOCI is presented within the

caption ‘Interest income’, while interest income on financial instruments at FVPL is presented within the

caption ‘Income similar to interest income’ in the consolidated income statement. Interest expense on

financial liabilities at amortised cost is presented within the caption ‘Interest expense’, while interest

expense on financial instruments at FVPL is presented within the caption ‘Expense similar to interest

expense’ in the consolidated income statement. All form part of the ‘Net interest income’.

The effective interest rate method

Interest income and expense are recognised in the consolidated income statement by applying the effective

interest rate (EIR) for all financial instruments measured at amortised cost and debt instruments at FVOCI.

The EIR is the rate that exactly discounts estimated future cash payments or receipts through the expected

life of the financial instrument to the gross carrying amount of the financial asset or the amortised cost of

the financial liability.

The EIR, and therefore the amortised cost of the asset, is calculated by taking into account any discount or

premium on acquisition, fees and costs that are an integral part of the EIR. Fees and incremental costs that

are directly attributable to loans and advances to customers are also deferred and amortised as part of

interest income using the effective interest rate method.

For floating-rate financial instruments, periodic re-estimation of cash flows to reflect the movements in the

market rates of interest also alters the EIR, but when instruments were initially recognised at an amount

equal to the principal, re-estimating the future interest payments does not significantly affect the carrying

amount of the asset or the liability.

The carrying amount of a financial asset or liability is adjusted if the Group revises its estimates of

payments or receipts for reasons other than credit risk. The adjusted carrying amount is calculated based

on the original effective interest rate and the change in carrying amount is recorded in ‘Net gains/(losses)

on financial instruments' for debt securities, or in ‘Changes in expected cash flows’ component of the 'Credit

losses to cover credit risk on loans and advances to customers' for loans and advances to customers

included within 'Credit losses on financial assets'.

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BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.10 Employee benefits

2.10.1 Retirement benefits

The Group operates both defined contribution and defined benefit retirement plans.

Defined contribution plans

The Group recognises obligations in respect of the accounting period in the consolidated income statement.

Any unpaid contributions at the reporting date are included as a liability.

Defined benefit plans

The cost of providing benefits for defined benefit plans is estimated separately for each plan using the

Projected Unit Credit Method of actuarial valuation.

The defined benefit asset or liability comprises the present value of the defined benefit obligations (using a

discount rate based on high quality corporate bonds), reduced by the fair value of plan assets out of which

the obligations are to be settled. Plan assets are assets that are held by a funded plan or qualifying

insurance policies. Any net defined benefit surplus is limited to the present value of available refunds and

reductions in future contributions to the plan. Fair value is based on market price information and in the

case of quoted securities it is the published bid price.

The net charge to the consolidated income statement mainly comprises the service costs and the net

interest on the net defined benefit asset or liability, and is presented in staff costs. Service costs comprise

current service costs, past service costs, gains and losses or curtailments and non-routine settlements. Re-

measurements, comprising actuarial gains and losses, the effect of the asset ceiling (excluding net interest),

and the return on plan assets (excluding net interest), are recognised immediately on the consolidated

balance sheet with a corresponding debit or credit in other comprehensive income. Re-measurements are

not reclassified to profit or loss in subsequent periods.

Actuarial gains and losses comprise experience adjustments (the effects of differences between the previous

actuarial assumptions and what has actually occurred), as well as the effects of changes in actuarial

assumptions.

2.10.2 Short-term employee benefits

Short-term employee benefits, such as salaries and other benefits, are accounted for on an accrual basis

over the period during which employees have provided services. Bonuses are recognised to the extent that

the Group has a legal or constructive obligation to its employees that can be measured reliably.

2.10.3 Exit cost benefits

Exit cost benefits refer to termination benefits and are recognised as an expense at the earlier of when the

Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a

restructuring under IAS 37 Provisions, Contingent Liabilities and Contingent Assets, which includes the

payment of termination benefits.

For termination benefits which become payable as a result of an employee’s decision to accept an offer of

voluntary redundancy, which is not within the scope of IAS 37 Provisions, Contingent Liabilities and

Contingent Assets, the Group recognises the expense at the earlier of when the employee accepts the offer

and when a restriction on the Group’s ability to withdraw the offer takes effect.

2.11 Tax

Current income tax and deferred tax

Tax on income is provided in accordance with the fiscal regulations and rates which apply in the countries

where the Group operates and is recognised as an expense in the period in which the income arises.

Deferred tax is provided using the liability method. Current income tax assets and liabilities are measured

at the amount expected to be recovered from or paid to the tax authorities. Current income tax and

deferred tax relating to items recognised directly in equity is recognised directly in equity.

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BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.11 Tax (continued)

Deferred tax liabilities are recognised for taxable temporary differences between the tax basis of assets and

liabilities and their carrying amounts at the reporting date, which will give rise to taxable amounts in future

periods. Deferred tax liabilities are recognised for taxable temporary differences associated with

investments in subsidiary and associate companies and branches, except where the timing of the reversal of

the temporary differences can be controlled and it is probable that the temporary differences will not

reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and carry-forward of unutilised tax

losses to the extent that it is probable that taxable profit will be available, against which the deductible

temporary differences and carry-forward of unutilised tax losses can be utilised. The carrying amount of

deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer

probable that sufficient taxable profit will be available to utilise all or part of the deductible temporary

differences or tax losses. Unrecognised deferred tax assets are reassessed at each reporting date and are

recognised to the extent that it has become probable that future taxable profit will allow the deferred tax

asset to be recovered.

Deferred tax assets and liabilities are measured at the amount that is expected to be paid to or recovered

from the tax authorities, after taking into account the tax rates and legislation that have been enacted or

substantially enacted by the reporting date.

The deferred tax assets arising from specific tax losses and which are subject to the Income Tax Law

Amendment 28 (I) of 2019, are accounted for on the same basis as other deferred tax assets and can be

converted into tax credits. These tax losses are converted into 11 equal annual instalments and each

instalment could be claimed as a deductible expense in the determination of the taxable income for the

relevant year. Any amount of the annual instalment not utilised is converted into a tax credit and can be

utilised in the tax year following the tax year to which this tax credit relates to. Any unutilised tax credit in

the relevant year is converted into a receivable from the Cyprus Government. Further details are disclosed

in Note 17.

Current and deferred tax assets and liabilities are offset when they arise from the same tax reporting entity

and relate to the same tax authority and when the legal right to offset exists.

Indirect tax-Value Added Tax (VAT)

Expenses and assets are recognised net of the amount of VAT, except:

i. when the VAT incurred on a purchase of assets or services is not recoverable from the tax

authorities, in which case, the VAT suffered is recognised as part of the cost of acquisition of the

asset or as part of the expense item, as applicable.

ii. when receivables and payables are stated with the amount of VAT charged. The amount of VAT

recoverable from, or payable to the tax authorities, is included as part of receivables or payables in

the consolidated balance sheet.

2.12 Financial instruments - initial recognition

2.12.1 Date of recognition

‘Balances with central banks’, ‘Loans and advances to banks’, ‘Loans and advances to customers’, ‘Deposits

by banks’, ‘Funding from central banks’ and ‘Customer deposits’ are recognised when cash is received by

the Group or advanced to the borrowers. All other financial assets and financial liabilities are initially

recognised on the trade date. Purchases or sales of financial assets, where delivery is required within a time

frame established by regulations or by market convention, are also recognised on the trade date, i.e. the

date that the Group commits to purchase or sell the asset. Derivatives are also recognised on a trade date

basis.

2.12.2 Initial recognition and measurement of financial instruments

The classification of financial assets on initial recognition depends on their contractual terms and the

business model for managing the instruments, as described in Note 2.13.

All financial instruments are measured initially at their fair value plus, in the case of financial assets and

liabilities not measured at FVPL, any directly attributable incremental costs of acquisition or issue.

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BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.12 Financial instruments - initial recognition (continued)

2.12.2 Initial recognition and measurement of financial instruments (continued)

When the fair value of financial instruments at initial recognition differs from the transaction price, the

Group accounts for the Day 1 profit or loss, as described in Note 2.12.3 below.

2.12.3 Day 1 profit or loss

When the transaction price of the instrument differs from the fair value at origination and the fair value is

based on a valuation technique using only inputs observable in market transactions, the Group recognises

the difference between the transaction price and fair value in 'Net gains/(losses) on financial instruments'

caption. In the cases, where the fair value is based on models for which some of the inputs are not

observable, the difference between the transaction price and the fair value is deferred and is only

recognised in profit or loss when the inputs become observable, or when the instrument is derecognised.

2.12.4 Measurement categories of financial assets and financial liabilities

Financial assets are measured either at amortised cost, FVOCI or FVPL.

The Group classifies and measures its derivatives and trading portfolios at FVPL. The Group may designate

financial instruments at FVPL, if doing so eliminates or significantly reduces measurement or recognition

inconsistencies.

Financial liabilities, other than loan commitments and financial guarantees, are measured at amortised cost

or at FVPL when they are held for trading or relate to derivative instruments.

2.13 Classification and measurement of financial assets and financial liabilities

The classification and measurement of financial assets depends on how these are managed as part of the

business models the Group operates and their contractual cash flow characteristics (whether the cash flows

represent solely payments of principal and interest (SPPI)).

Business model assessment

The Group assesses the business model at a portfolio level. The portfolio level is determined at the

aggregation level that reflects how the Group manages its financial assets and the business model is based

on observable factors which include:

i. How the performance of the business model and the financial assets held within that business model

are evaluated and reported to the Group's key management personnel;

ii. The risks that affect the performance of the business model (and the financial assets held within that

business model) and, in particular, the way in which those risks are managed;

iii. How managers of the business are compensated (for example, whether the compensation is based

on the fair value of the assets managed or on the contractual cash flows collected);

iv. The expected frequency, value and timing of sales are also important aspects of the Group’s

assessment.

If cash flows after initial recognition are realised in a way that is different from the Group’s original

expectations, the Group does not change the classification of the remaining financial assets held in that

business model, but incorporates such information when assessing newly originated or newly purchased

financial assets going forward.

Contractual cash flows characteristics assessment (SPPI test)

The Group assesses whether the individual financial assets’ cash flows represent solely payments of

principal and interest on the principal amount outstanding at origination (SPPI test).

For the purposes of this assessment, principal is defined as the fair value of the financial asset on initial

recognition and may change over the life of the financial asset (for example, if there are repayments of

principal or amortisation of the premium/discount).

Interest is defined as consideration for the time value of money, for the credit risk associated with the

principal amount outstanding during a particular period of time and for other basic lending risks and costs

(e.g. liquidity risk and administrative costs), as well as a profit margin.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.13 Classification and measurement of financial assets and financial liabilities (continued)

In assessing whether contractual cash flows are SPPI, the Group applies judgement and considers the terms

that could change the contractual cash flows so that they would not meet the condition for SPPI, and be

inconsistent to a basic lending arrangement, including: (i) contingent and leverage features, (ii) interest

rates which are beyond the control of the Group or variable interest rate consideration, (iii) features that

could modify the time value of money, (iv) prepayment and extension options, (v) non-recourse

arrangements, and (vi) convertibility features.

Where the contractual terms of a financial asset introduce a more than de-minimis exposure to risks or

volatility that are inconsistent with a basic lending arrangement, the related financial asset will be measured

at FVPL.

2.13.1 Derivative financial instruments

Derivatives are recorded at fair value and classified as assets when their fair value is positive and as

liabilities when their fair value is negative. Subsequently, derivatives are measured at fair value.

Revaluations of trading derivatives are included in the consolidated income statement in ‘Net foreign

exchange gains’ in the case of currency derivatives and in ‘Net gains/(losses) on financial instruments’ in

the case of all other derivatives. Interest income and expense for derivatives not in accounting hedges are

included in the ‘Income similar to interest income’ and ‘Expense similar to interest expense’ captions

respectively in the consolidated income statement.

An embedded derivative is a component of a hybrid instrument that also includes a non-derivative host

contract with the effect that some of the cash flows of the combined instrument vary in a way similar to a

stand-alone derivative.

For hybrid contracts where the host contract is a financial asset within the scope of IFRS 9, the classification

and measurement criteria are based on the business model and SPPI assessment as described in the

classification of financial assets section of Note 2.13 and applied to the entire hybrid instrument.

Derivatives embedded in financial liabilities and non-financial host contracts, are treated as separate

derivatives and recorded at fair value if their economic characteristics and risks are not closely related to

those of the host contract, and the host contract is not itself measured at fair value with revaluation

recognised in the consolidated income statement. The embedded derivatives separated from the host are

carried at fair value, with revaluations recognised in ‘Net gains/(losses) on financial instruments' in the

consolidated income statement. The host contract is accounted for in accordance with the relevant

standards.

2.13.2 Financial assets measured at amortised cost

Financial assets are measured at amortised cost if they meet both of the following conditions:

i. The financial asset is held within a business model with the objective to hold financial assets in order

to collect contractual cash flows;

ii. The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI

on the principal amount outstanding.

This classification relates to cash and balances with central banks, loans and advances to banks, reverse

repurchase agreements, loans and advances to customers that pass the SPPI test, debt securities held

under the ‘Hold to collect’ business model and other financial assets that pass the SPPI test.

After their initial recognition, financial instruments measured at amortised cost are measured at amortised

cost using the effective interest rate method, less allowances for expected credit losses (ECL). Amortised

cost is calculated by taking into account any discount or premium on acquisition and fees that are an

integral part of the effective interest rate. The amortisation is included in ‘Interest income’ in the

consolidated income statement. The losses arising from impairment are recognised in the consolidated

income statement in ‘Credit losses on financial assets'.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.13 Classification and measurement of financial assets and financial liabilities (continued)

2.13.3 Debt instruments measured at FVOCI

Debt instruments are measured at FVOCI if they meet both of the following conditions:

i. The financial asset is held within a business model the objective of which is achieved by both

collecting contractual cash flows and selling financial assets;

ii. The contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI

on the principal amount outstanding.

This classification relates to debt securities held under the ‘Hold to collect and sell’ business model that pass

the SPPI test.

FVOCI debt instruments are subsequently measured at fair value with gains and losses due to changes in

fair value recognised directly in other comprehensive income in the ‘Net gains/(losses) on investments in

debt instruments measured at FVOCI’ caption. Upon derecognition of these instruments, any accumulated

balances in other comprehensive income are reclassified to the consolidated income statement and reported

within ‘Net gains/(losses) on financial instruments' caption. The interest income, foreign exchange

differences and ECL are recognised in the consolidated income statement in the respective lines in the same

manner as for financial assets at amortised cost.

2.13.4 Financial assets or financial liabilities held for trading

Financial assets or financial liabilities held for trading represent assets and liabilities acquired or incurred

principally for the purpose of selling or repurchasing them in the near term and are recognised in the

consolidated balance sheet at fair value. Changes in the fair value are recognised in ‘Net gains/(losses) on

financial instruments' in the consolidated income statement. Interest income and expense are included in

the captions ‘Income similar to interest income’ and ‘Expense similar to interest expense’ respectively in the

consolidated income statement according to the terms of the relevant contract, while dividend income is

recognised in ‘Other income’ when the right to receive payment has been established.

This classification relates to debt and equity instruments that have been acquired principally for the

purposes of sale or repurchase in the near term.

2.13.5 Financial assets or financial liabilities at FVPL

Financial assets and financial liabilities, other than those held for trading, classified in this category are

those that are designated by management on initial recognition or are mandatorily required to be measured

at fair value under IFRS 9.

Management only designates an instrument at FVPL at initial recognition when one of the following criteria

are met:

(a) the designation eliminates or significantly reduces the inconsistency that would otherwise arise

from the measurement of the assets or liabilities or the recognition of gains or losses on them on a

different basis, or

(b) the liabilities are part of a group of financial liabilities or financial assets and financial liabilities

which are managed and their performance is evaluated on a fair value basis, in accordance with a

documented risk management or investment strategy, or

(c) the liabilities contain an embedded derivative, unless the embedded derivative does not

significantly modify the cash flows of the instrument or it is clear, with little or no analysis, that the

embedded derivative could not be separated.

Such designation is determined on an instrument-by-instrument basis.

Assets held under unit-linked insurance contracts, certain non-linked insurance contracts and investment

contracts issued by insurance subsidiaries are designated at FVPL.

Financial assets mandatorily classified at FVPL include certain loans and advances to customers, certain

investment fund holdings and other securities and other assets for which the contractual cash flows do not

meet the SPPI test, or the financial assets are part of a portfolio held within a business model under which

they are managed and their performance is evaluated on a fair value basis.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.13 Classification and measurement of financial assets and financial liabilities (continued)

2.13.5 Financial assets or financial liabilities at FVPL (continued)

Financial assets and financial liabilities at FVPL are recorded in the consolidated balance sheet at fair value.

Changes in the fair value are recognised in ‘Net gains/(losses) on financial instruments' in the consolidated

income statement. Interest income and expense are included in the captions ‘Income similar to interest

income’ and ‘Expense similar to interest expense’ respectively in the consolidated income statement.

Dividend income is recognised in ‘Other income’ in the consolidated income statement when the right to

receive payment has been established.

2.13.6 Equity instruments measured at FVOCI

At initial recognition, the Group can make an irrevocable election to classify an investment in an equity

instrument at FVOCI, when that meets the definition of equity under IAS 32 Financial Instruments:

'Presentation', and is not held for trading. Such classification is determined on an instrument-by-instrument

basis.

Fair value gains and losses on these equity instruments are recognised in other comprehensive income and

are not recycled to profit or loss upon derecognition, but are transferred directly to retained earnings.

Dividends on equity investments are recognised in the consolidated income statement and reported within

‘Other Income’ when the right to receive payment has been established, except when the Group benefits

from such proceeds as a recovery of part of the cost of the instrument, in which case it is recorded in other

comprehensive income. Equity instruments measured at FVOCI are not subject to an impairment

assessment.

2.13.7 Debt securities in issue and Subordinated liabilities

Debt securities in issue and Subordinated liabilities are initially measured at the fair value of the

consideration received, net of any issue costs. They are subsequently measured at amortised cost using the

effective interest rate method, in order to amortise the difference between the cost at inception and the

redemption value, over the period to the earliest date that the Group has the right to redeem those

instruments.

Interest on debt securities in issue and subordinated liabilities is included in ‘Interest expense’ in the

consolidated income statement.

2.13.8 Other financial liabilities

Other financial liabilities include ‘Customer deposits’, ‘Deposits by banks’, ‘Funding from central banks’ and

other financial liabilities.

Financial liabilities are recognised when the Group enters into the contractual provisions of the

arrangements with counterparties, which is generally on trade date, and initially measured at fair value,

which is normally the consideration received, net of directly attributable transaction costs incurred.

Subsequent measurement of other financial liabilities is at amortised cost, using the effective interest

method.

2.13.9 Determination of fair value - Valuation techniques

The following is a description of the determination of fair value for financial instruments which are recorded

at fair value and for financial instruments which are not measured at fair value but for which fair value is

disclosed, using valuation techniques. These incorporate the Group’s estimate of assumptions that a market

participant would make when valuing the instruments.

Derivative financial instruments

Derivative financial instruments valued using a valuation technique with market observable inputs are

mainly interest rate swaps, currency swaps, currency rate options, forward foreign exchange rate contracts

and interest rate collars. The most frequently applied valuation techniques include forward pricing and swap

models, using present value calculations. The models incorporate various inputs, including foreign exchange

spot and forward rates and interest rate curves.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.13 Classification and measurement of financial assets and financial liabilities (continued)

2.13.9 Determination of fair value - Valuation techniques (continued)

Credit Valuation Adjustments (CVA) and Debit Valuation Adjustments (DVA)

The CVA and DVA are incorporated into derivative valuations to reflect the impact on fair value of

counterparty risk and BOC PCL’s own credit quality respectively.

The Group calculates the CVA by applying the PD of the counterparty, conditional on the non-default of the

Group, to the Group’s expected positive exposure to the counterparty and multiplying the result by the loss

expected in the event of default. Conversely, the Group calculates the DVA by applying BOC PCL's PD,

conditional on the non-default of the counterparty, to the expected positive exposure of the counterparty to

the Group and multiplying the result by the loss expected in the event of default.

The expected exposure of derivatives is calculated as per the CRR and takes into account the netting

agreements where they exist. A standard Loss Given Default (LGD) assumption in line with industry norm is

adopted. Alternative LGD assumptions may be adopted when both the nature of the exposure and the

available data support this.

The Group does not hold any significant derivative instruments which are valued using a valuation technique

with significant non-market observable inputs.

Investments at FVPL, investments at FVOCI and investments at amortised cost

Investments which are valued using a valuation technique or pricing models, primarily consist of unquoted

equity securities and debt securities. These assets are valued using valuation models which sometimes only

incorporate market observable data and at other times use both observable and non-observable data. The

rest of the investments are valued using quoted prices in active markets.

Loans and advances to customers

The fair value of loans and advances to customers is based on the present value of expected future cash

flows. Future cash flows have been based on the future expected loss rate per loan portfolio, taking into

account expectations for the credit quality of the borrowers. The discount rate includes components that

capture the risk-free rate per currency, funding cost, servicing cost and the cost of capital, considering the

risk weight of each loan.

Customer deposits

The fair value of customer deposits is determined by calculating the present value of future cash flows. The

discount rate takes into account current market rates and the credit profile of BOC PCL. The fair value of

deposits repayable on demand and deposits protected by the Deposit Protection Guarantee Scheme are

approximated by their carrying values.

Loans and advances to banks

Loans and advances to banks with maturity over one year are discounted using an appropriate risk-free rate

plus the appropriate credit spread. For short-term lending, the fair value is approximated by the carrying

value.

Reverse repurchase agreements

Fair values of reverse repurchase agreements that are held on a non-trading basis are determined by

calculating the present value of future cash flows. The cashflows are discounted using an appropriate risk-

free rate plus the appropriate credit spread.

Cash flows relating to reverse repurchase agreements (including interest received) are presented as

investing activities in the Consolidated Statement of Cash Flows.

Deposits by banks and funding from central banks

Deposits by banks and funding from central banks with maturity over one year are discounted using an

appropriate risk-free rate plus the appropriate credit spread. For short-term funding, the fair value is

approximated by the carrying value.

Debt securities in issue and Subordinated liabilities

Debt securities and subordinated liabilities issuances are traded in an active market with quoted prices.

Further details on the fair value of assets and liabilities are disclosed in Note 22.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.14 Reclassification of financial assets and liabilities

The Group does not reclassify its financial assets subsequent to their initial recognition, apart from

exceptional circumstances in which the Group changes its business model for managing financial assets and

acquires, disposes of, or terminates a business line. Reclassification is applied prospectively from the

reclassification date, which is the first day of the first reporting period following the change in business

model that results in the reclassification. Any previously recognised gains, losses or interest are not

restated.

Financial liabilities are never reclassified.

2.15 Derecognition of financial assets and financial liabilities

2.15.1 Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial

assets) is derecognised when the contractual rights to the cash flows from the financial asset have expired.

The Group also derecognises a financial asset if it has both transferred the financial asset and the transfer

qualifies for derecognition.

The Group transfers a financial asset if, and only if, either:

i. The Group transfers its contractual rights to receive cash flows from the financial asset; or

ii. The Group retains the rights to the cash flows, but assumes an obligation to pay the received cash

flows in full without material delay to a third party under a ‘pass-through’ arrangement.

A transfer only qualifies for derecognition if either:

i. The Group transfers substantially all the risks and rewards of the asset; or

ii. The Group neither transfers nor retains substantially all the risks and rewards of the asset, but it

transfers control of the asset.

2.15.2 Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or

expired. Modifications to, and exchanges of, financial liabilities are treated as extinguishments and

derecognised, when the revised terms are substantially different to the original term. The difference

between the carrying amount of the original financial liability and the consideration paid is recognised in

profit or loss.

2.16 Modification of financial assets

The contractual terms of a financial asset may be modified due to various reasons, either due to commercial

renegotiations or as a response to a borrower's financial difficulties (forborne modified loans) with a view to

maximise recovery.

In the event that the terms and conditions of a financial asset are renegotiated or otherwise modified, the

Group considers whether the modification results in derecognition of the existing financial asset and the

recognition of a new financial asset. A derecognition of a financial asset (or part of a financial asset) and a

recognition of a new financial asset would occur where there has been a substantial modification on the

revised terms to the original cash flows.

Judgement is required to assess whether a change in the contractual terms is substantial enough to lead to

derecognition. The Group considers a series of factors of both qualitative and quantitative nature when

making such judgements on a modification in the contractual cash flows, including change in the currency,

change in counterparty, introduction of substantially different terms such as addition of equity conversion

features, changes in the legal framework and other.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.16 Modification of financial assets (continued)

Where the modification does not result in derecognition, the Group recognises a modification gain or loss,

based on the difference between the modified cash flows discounted at the original EIR and the existing

gross carrying value of the financial asset. The financial asset continues to be subject to the same

assessments for significant increase in credit risk relative to initial recognition and credit-impairment. A

modified financial asset will transfer out of Stage 3 if the conditions that led to it being identified as credit-

impaired, as defined in Note 2.17.2, are no longer present. A modified financial asset will transfer out of

Stage 2 when it no longer meets the criteria for significant increase in credit risk such as it satisfies relative

thresholds, which are based on changes in its lifetime probability of default (PD), days past due are not

considered to be forborne, and other considerations. The financial asset continues to be monitored for

significant increases in credit risk and credit impairment.

Where the modification results in derecognition, the new financial asset is classified at amortised cost or

FVOCI and an assessment is performed on whether it should be classified as Stage 1 or POCI for ECL

measurement. For the purposes of assessing significant increases in credit risk, the date of initial

recognition for the new financial asset is the date of the modification.

2.17 Impairment of financial assets

2.17.1 Overview of ECL principle

The Group uses a forward looking ECL model, requiring judgement, estimates and assumptions in

determining the level of ECL. ECL is recorded for all financial assets measured at amortised cost and FVOCI,

lease receivables, loan commitments and financial guarantee contracts. Equity instruments are not subject

to impairment.

At initial recognition, impairment allowance (or provision in the case of commitments and guarantees) is

required for ECL resulting from default events that are possible within the next 12 months (12-month ECL),

unless assets are deemed as POCI whereby the ECL is measured on a lifetime basis. In the event of a

significant increase in credit risk since initial recognition, impairment allowance is required resulting from all

possible default events over the expected life of the financial instrument (lifetime ECL). The Group’s policies

for determining if there has been a significant increase in credit risk are set out in Note 2.17.3.

The Group categorises its financial assets into Stage 1, Stage 2, Stage 3 and POCI for ECL measurement as

described below:

Stage 1: Financial assets which did not have a significant increase in credit risk since initial recognition are

considered to be Stage 1 and 12-month ECL is recognised.

Stage 2: Financial assets which are considered to have experienced a significant increase in credit risk since

initial recognition are considered to be Stage 2 and lifetime ECL is recognised.

Stage 3: Financial assets which are considered to be credit-impaired (refer to Note 2.17.2 on how the Group

defines credit-impaired and default) and lifetime ECL is recognised.

POCI: These are purchased or originated financial assets that are credit-impaired on initial recognition. POCI

assets include loans purchased or originated at a deep discount that reflects incurred credit losses. Changes

in lifetime ECL since initial recognition are recognised until a POCI loan is derecognised.

ECL is recognised in profit or loss with a corresponding ECL allowance reported as a decrease in the carrying

value of financial assets measured at amortised cost on the balance sheet. For financial assets measured at

FVOCI the carrying value is not reduced, but the accumulated amount of ECL allowance is recognised in

OCI. For off-balance sheet instruments, accumulated provisions for ECL are reported in ‘Accruals, deferred

income, other liabilities and other provisions’, except in the case of loan commitments where ECL on the

loan commitment is recognised together with the loss allowance of the relevant on balance-sheet exposure,

as the Group cannot separately identify the ECL on the loan commitment from those on the on-balance

sheet exposure component. ECL for the period is recognised within the consolidated income statement in

'Credit losses on financial assets' and further analysed in Note 16 in ‘Credit losses to cover credit risk on

loans and advances to customers’ for loans and advances to customers and loan commitments and financial

guarantees, and in ‘Credit losses on other financial instruments’ for all other financial instruments.

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Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.17 Impairment of financial assets (continued)

2.17.2 Credit impaired and definition of default

Loans and advances to customers, loan commitments and financial guarantees

The Group considers loans and advances to customers that meet the non-performing exposure (NPE)

definition as per the European Banking Authority (EBA) standards to be in default and hence stage 3 (credit-

impaired). Therefore such loans have ECL calculated on a lifetime basis and are considered to be in default

for credit risk management purposes.

As per the EBA standards and European Central Bank’s (ECB) Guidance to Banks on Non-Performing Loans

(which was published in March 2017), NPEs are defined as those exposures that satisfy one of the following

conditions:

i. The borrower 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.

ii. Defaulted or impaired exposures as per the approach provided in the Capital Requirement

Regulation (CRR), which would also trigger a default under specific credit adjustment, diminished

financial obligation and obligor bankruptcy.

iii. Material exposures as set by the Central Bank of Cyprus (CBC), which are more than 90 days past

due.

iv. Performing forborne exposures under probation for which additional forbearance measures are

extended.

v. Performing forborne exposures previously classified as NPEs that present more than 30 days past

due within the probation period.

From 1 January 2021 two regulatory guidelines came into force that affect NPE classification and Days-Past-

Due calculation. More specifically, these are the RTS on the Materiality Threshold of Credit Obligations Past-

Due (EBA/RTS/2016/06), and the Guideline on the Application of the Definition of Default under article 178

(EBA/RTS/2016/07).

The Days-Past-Due (DPD) counter begins counting DPD as soon as the arrears or excesses of an exposure

reach the materiality threshold (rather than as of the first day of presenting any amount of arrears or

excesses). Similarly, the counter will be set to zero when the arrears or excesses drop below the materiality

threshold. Payments towards the exposure that do not reduce the arrears/excesses below the materiality

threshold, will not impact the counter.

For retail debtors, when a specific part of the exposures of a customer that fulfils the NPE criteria set out

above is greater than 20% of the gross carrying amount of all on-balance sheet exposures of that customer,

then the total customer exposure is classified as non-performing; otherwise only the specific part of the

exposure is classified as non-performing.

For non-retail debtors, when an exposure fulfils the NPE criteria set out above, then the total customer

exposure is classified as non-performing.

Material arrears/excesses are defined as follows:

i. Retail exposures: Total arrears/excess amount greater than €100

ii. Exposures other than retail: Total arrears/excess amount greater than €500

and the amount in arrears/excess is at least 1% of the customer's total exposure.

The definitions of credit-impaired and default are aligned so that stage 3 represents loans which are

considered defaulted or otherwise credit-impaired.

Exposures are classified as forborne when concessions are made to debtors who are facing or about to face

financial difficulties and cannot meet their contractual obligations.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.17 Impairment of financial assets (continued)

2.17.2 Credit impaired and definition of default (continued)

Non-performing forborne exposures cease to be considered as NPEs and in such case are transferred out of

Stage 3, only when all of the following conditions are met:

i. The extension of forbearance measures does not lead to the recognition of impairment or default.

ii. A period of one year has passed since the latest of the following events:

a. The restructuring date

b. The date the exposure was classified as non-performing

c. The end of the grace period included in the restructuring arrangements.

iii. Following the forbearance measures and according to the post-forbearance conditions, there is no

past due amount or concerns regarding the full repayment of the exposure.

iv. No Unlikely-to-Pay criteria exist for the debtor.

v. The debtor has made post-forbearance payments of a non-insignificant amount of capital (different

capital thresholds exist according to the facility type).

Non-performing non-forborne exposures cease to be considered as NPEs only when all of the following

conditions are met:

i. At least three months have passed since the date that the conditions for which the exposure was

classified as non-performing cease to be met, and within these three months there are no default

triggers, and

ii. During the three-month period, the behaviour of the obligor should be taken into account, i.e. there

are no arrears/excesses and instalments are being repaid normally, and

iii. During the three-month period, the financial situation of the obligor should be taken into account,

i.e. the financial situation of the obligor has improved, and

iv. During the three-month period an Unlikely-to-Pay criteria assessment is carried out and it is

assessed that the obligor can fulfil their obligations without resorting to the liquidation of collateral

and there are no other Unlikely-to-Pay criteria, and

v. The obligor does not have any amount past due by more than 90 days.

When a loan facility exits Stage 3, it is transferred to Stage 2 for a probationary period of 6 months. At the

end of this period, the significant increase in credit risk (SICR) assessment is performed by comparing the

PD at the reporting date with the PD at initial recognition as described in Note 2.17.3 and if PD is assessed

to have deteriorated beyond the set thresholds, the loan remains in Stage 2, otherwise the loan is

transferred to Stage 1. The reversal of previous unrecognised interest on loans and advances to customers

that no longer meet Stage 3 criteria is presented in 'Credit losses to cover credit risk on loans and advances

to customers' within 'Credit losses on financial assets'.

Debt securities, reverse repurchase agreements, loans and advances to banks and balances with central

banks

Debt securities, reverse repurchase agreements, loans and advances to banks and balances with central

banks are considered defaulted and transferred to Stage 3 if the issuers have failed to pay either interest or

principal. Moody’s ratings indicate these exposures with a grade C which is the lowest Moody’s rating

category. In addition, a number of other criteria are considered such as adverse changes in business,

financial and economic conditions as well as external market indicators (credit spreads, credit default swap

(CDS) prices) in determining whether there has been a significant deterioration in the financial position that

could lead to unlikeliness to pay.

2.17.3 Significant increase in credit risk (SICR)

IFRS 9 requires that in the event of a significant increase in credit risk since initial recognition, the

calculation basis of the loss allowance would change from 12-month ECL to lifetime ECL.

The assessment of whether credit risk has increased significantly since initial recognition is performed at

each reporting date, by considering the change in the risk of default occurring over the remaining life of the

financial instrument since initial recognition.

399

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.17 Impairment of financial assets (continued)

2.17.3 Significant increase in credit risk (SICR) (continued)

Significant increase in credit risk for loans and advances to customers

Primarily, the Group uses the lifetime probability of default (PD) as the quantitative metric in order to

assess transition from Stage 1 to Stage 2 for all portfolios. The Group considers an exposure to have

experienced significant increase in credit risk (SICR) by comparing the PD at the reporting date with the PD

at initial recognition to compute the relative increase in regards to the corresponding threshold. The

threshold has been determined by using statistical analysis on historical information of credit migration

exposures on the basis of days past due, for the different segments. The Group applies the thresholds

presented in the table below to each portfolio/segment, based on the following characteristics: customer

type, product type and rating at origination. The threshold is then assigned to each facility according to the

facility's portfolio/segment.

The SICR trigger is activated based on the comparison of the ratio of current lifetime PD to the remaining

Lifetime PD at origination (PD@O) to the pre-established threshold. If the resulting ratio is higher than the

pre-established threshold then deterioration is assumed to have occurred and the exposure is transferred to

Stage 2. In addition, to minimize Stage 2 volatility caused by facilities with small PD, the Group introduced

during the first half of 2024 an absolute threshold where the annualized lifetime reporting PD of each facility

should increase more than 1,06% with respect to the corresponding origination PD. The PD cut-off is based

on the weighted PD of Stage 1.

The table below summarises the quantitative measure of the SICR trigger which varies depending on the

credit quality at origination as follows, applied on 31 December 2024 and 2023:

Segment
	Rating at
	origination
		PD Deterioration
		thresholds applied at
		31 December 2024
		(median across
		IFRS 9 segments)
			PD Deterioration
			thresholds applied at
			31 December 2023
			(median across
			IFRS 9 segments)
Retail	1-7	3 X PD@O	3 X PD@O
SME	1-7	3 X PD@O	6 X PD@O
Corporate	1-7	2 X PD@O	2 X PD@O

During the year ended 31 December 2024 PDs were calibrated and consequently the PD deterioration

thresholds were also updated.

For exposures which are subject to individual impairment assessment, the following qualitative factors in

addition to the ones incorporated in the PD calculation, are considered:

i. significant change in collateral value or guarantee or financial support provided by

shareholders/directors,

ii. significant adverse changes in business, financial and/or economic conditions in which the borrower

operates.

SICR is automatically triggered upon the granting of forbearance measures to performing borrowers. Stage

1 exposures that are classified as 'performing forborne' are automatically transferred to Stage 2.

The Group also considers, as a backstop criterion, that a significant increase in the credit risk occurs when

contractual payments are more than 30 days past due (past due materiality is applied). Loans that meet

this condition are classified in Stage 2. The transfer to Stage 2 does not take place in cases where certain

exposures are past due for more than 30 days but certain materiality limits are not met (such as arrears up

to €100 and the amount in arrears is lower than 1% of the customer's total exposure, in the case of retail

exposures and arrears up to €500 and the amount in arrears is lower than 1% of the customer's total

exposure, on all exposures other than retail). The materiality levels are set in accordance with the ECB

Regulation (EU) 2018/1845.

The thresholds for movement between Stage 1 and Stage 2 are symmetrical. After a financial asset has

been transferred to Stage 2, if its credit risk is no longer considered to have significantly increased relative

to its initial recognition, the financial asset will move back to Stage 1.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.17 Impairment of financial assets (continued)

2.17.3 Significant increase in credit risk (SICR) (continued)

Significant increase in credit risk for financial instruments other than loans and advances to customers

Low credit risk simplification is adopted for debt securities, loans and advances to banks, reverse

repurchase agreements and balances with central banks with external credit ratings that are rated as

investment grade. The assessment of low credit risk is based on both the external credit rating and the

internal scoring (which considers latest available information on the instrument and issuer). The

combination of the two provides an adjusted credit rating. An adjusted credit rating which remains

investment grade is considered as having low credit risk.

For debt securities, loans and advances to banks, reverse repurchase agreements and balances with central

banks which are below investment grade, the low credit risk exemption does not apply and therefore an

assessment of significant credit deterioration takes place, by comparing their credit rating at origination

with the credit rating on the reporting date. Significant deterioration in credit risk is considered to have

occurred when the adjusted rating of the exposures drops to such an extent that the new rating relates to a

riskier category (i.e. from a non-investment grade to speculative and then to highly speculative), or when

the PD of the exposure at the origination date compared to the PD at the reporting date has increased by a

level greater than the pre-set threshold.

2.17.4 Measurement of ECLs

IFRS 9 ECL reflects an unbiased, probability-weighted estimate based on either loss expectations resulting

from default events either over a maximum 12-month period from the reporting date, or over the remaining

life of a financial instrument. The Group calculates lifetime ECL and 12-month ECL either on an individual

basis or a collective basis, depending on the nature of the underlying portfolio of financial instruments.

The Group calculates ECL based on three-weighted scenarios to measure the expected cash flow shortfalls,

discounted at an approximation to the EIR as calculated at initial recognition. A cash flow shortfall is the

difference between the cash flows that are due in accordance with the contract and the cash flows expected

to be received.

The Group calculates ECL using the following three components:

i. exposure at default (EAD),

ii. probability of default (PD), and

iii. loss given default (LGD).

Exposure at default (EAD)

EAD represents the expected exposure in the event of a default during the life of a financial instrument,

considering expected repayments, interest payments and accruals. EAD definition is differentiated for the

following categories: revolving and non-revolving exposures.

For non-revolving exposures the term is based on the contractual term of the exposure and both on-balance

sheet and off-balance sheet exposures are amortised in accordance with the principal contractual payment

schedule of each exposure. For revolving exposures, the projected EAD is the carrying value plus the credit

conversion factor applied on the undrawn amount. The credit conversion factor model is derived based on

empirical data from 2014 onwards.

In regards to the credit-impaired exposures, the EAD is equal to the on balance sheet amount as at the

reporting date.

Probability of default (PD)

PD represents the probability an exposure defaults and is calculated based on statistical rating models,

calculated per segment and taking into consideration each individual’s exposure rating as well as forward

looking information based on macroeconomic inputs.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.17 Impairment of financial assets (continued)

2.17.4 Measurement of ECLs (continued)

For each exposure, lifetime PD represents the probability of default within the lifetime horizon and is based

on the underlying models of marginal probability of default through the cycle (MPD TTC), MPD individual,

MPD individual (embedding also the NPE overlay), MPD point in time and Marginal Probability of Paid-off

(MPP). In particular, the first element, MPD TTC is constructed per segment, illustrating the probability of

default status depending on number of months since the origination date. The PD for each month since the

origination date is calculated under the condition that exposures survived until the prior month. The MPD

individual is allocated to linked individual exposures through a scaling factor constructed based on the

current individual risk assessment, which is represented by the Group’s PD per rating grade. It also embeds

the NPE overlay, which is an add-on factor that calibrates the underlying models, such that they are aligned

with the NPE definition. MPD is adjusted to reflect the current and forward looking information based on the

macroeconomic inputs. The MPP Component is the curve that shows the probability of full payment of a

particular exposure based on specific period in months since the open date of the exposure. MPP is

estimated for each particular segment and depends on the contractual terms of the exposure. For revolving

facilities where there is no contractual survival maturity, curves based on product type are developed. The

combination of these models gives rise to a PD value for each month for the lifetime of the exposure.

BOC PCL's internal rating process is summarised in Note 44.

Loss given default (LGD)

LGD represents an estimate of the loss if default occurs at a given time. It is usually expressed as a

percentage of the EAD. Two distinct paths are taken into consideration for the LGD parameter. The first one

is that of a cured facility where there is a full recovery thus no losses occur. In the second scenario, the

facility remains non-performing resulting in BOC PCL proceeding with collateral liquidation actions. To this

end, the LGD model considers parameters such as historical loss and/or recovery rates as well as the

collateral value which is discounted to the present value determining the amount of the expected shortfall.

LGD rates are estimated for the Stage 1, Stage 2, Stage 3 and POCI segments of each asset class.

The structure of the LGD model considers the following:

i. Curing where the probability of cure model was derived based on historical observations.

ii. Non-curing including cash recovery, realisation through portfolio sales or realisation of collaterals,

either voluntarily i.e. debt for asset swap, or through forced sale, auctions and foreclosure and

receivership.

A model monitoring process is followed for PD, EAD and LGD models, where model outputs are back-tested

against recent data points.

Individually assessed loans

The individual assessment is performed not only for individually significant performing and non-performing

exposures, but also for other exposures meeting specific criteria and thresholds determined by Credit Risk

Management. A risk-based approach is used on the selection criteria of the individually assessed population

which include, among others, forborne exposures, exposures with significant decrease in the yearly credit

turnover and/or in assigned collaterals. Also, significant Stage 1 exposures within sectors assessed by

Credit Risk Management to be highly impacted by one or more factors or events (such as a global or local

economic/market/regulatory/geopolitical development) are assessed for potential increase in credit risk and

significant exposures that have transitioned to Stage 2 from Stage 1 are assessed for potential indications

of unlikeness to pay.

The ECL for individually assessed Stage 3 assets is calculated on an individual basis and all relevant

considerations of the expected future cash flows are taken into account (for example, the business

prospects for the customer, the realisable value of collateral, the Group’s position relative to other

claimants, the reliability of customer information and the likely cost and duration of the work out process).

Collectively assessed loans

All customer exposures that are not individually assessed are assessed on a collective basis. For the

purposes of calculating ECL, exposures are grouped into granular portfolios/segments with shared risk

characteristics. The granularity is based on different levels of segmentation which, among other factors

include customer type, exposure class and portfolio type. The granularity of the IFRS 9 segments is aligned

with the Internal Rating Based (IRB) segmentation of the CRR.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.17 Impairment of financial assets (continued)

2.17.4 Measurement of ECLs (continued)

When a financial asset has been identified as credit-impaired, ECL are measured as the difference between

the asset’s gross carrying amount and the present value of estimated future cash flows discounted at the

instrument’s original effective interest rate.

2.17.5 Scenarios and scenario weights

The Group uses reasonable and supportable information, including forward-looking information, in the

calculation of ECL. ECL are the unbiased probability-weighted credit losses determined by evaluating a

range of possible outcomes and considering future economic conditions. ECL are calculated for three

macroeconomic scenarios, baseline, adverse and favourable and the output is the weighted average ECL

based on the assigned probability of each scenario (Note 44).

Macroeconomic scenarios impact both the probability of default (PD) and the loss given default (LGD).

Specifically, forward looking information is embedded in the PD based on regression equations derived on

the basis of historical data. Using statistical analysis, the most significant and relevant macro-variables have

been selected in order to predict more accurately the expected default rates. In regard to the LGD, the

forward looking information is incorporated via the property indices for the relevant categories of properties

(residential, commercial, industrial). In particular, for each collateral a forward-looking projection of the

realisable value is calculated before discounting back to reporting date to quantify the expected cash

shortfall.

Each macroeconomic scenario used in the ECL calculation includes a projection of all relevant

macroeconomic variables used in the models for a five-year period, subsequently reverting to projections of

long-run growth averages based on estimates of potential growth, and behavioural relationships between

the targeted variables.

Regarding the scenario weights, these are determined using probability theory and severity analysis.

Historical data for GDP growth (1995-2024) is analysed and a frequency distribution is produced. From that

distribution probabilities are derived for all possible outcomes. Deviations of actual outcomes from the mean

are calculated in terms of standard deviation ratios, and severity is higher at higher deviation ratios. The

baseline scenario is defined over the range of values that correspond to 50% probability of equidistant

deviations around the mean of the historical distribution. The favourable scenario is defined over the range

of values to the right of the distribution that correspond to 25% probability. The adverse scenario is defined

over the range of values to the left of the distribution that correspond to 25% probability. These benchmark

probability points (50%, 25% and 25%), are decided using severity analysis which incorporates the average

and standard deviation of the distribution.

The macroeconomic forecasts for the baseline, favourable and adverse scenarios are determined by the

Economic Research Department of BOC PCL. This process utilises a variety of external actual and forecast

information (International Monetary Fund (IMF), European Commission and other). The corresponding

weights are also determined by the Economic Research Department, as described above, by also applying

discretion and expert judgement where necessary. The resulting scenarios and weights are reviewed and

proposed by the Chief Risk Officer (CRO) and are submitted to the Provisions Committee for their

endorsement.

Qualitative adjustments or overlays are occasionally made when inputs calculated do not capture all the

characteristics of the market at the reporting date. Overlays performed are set out in Note 5.1 and are

assessed/reconfirmed at each reporting date.

2.17.6 ECL measurement period

The period for which expected credit losses are determined (either for 12-month or lifetime horizon) is

based on the stage classification of the facility and its contractual life. For non-revolving exposures the

expected lifetime is the period from the reporting date to the termination date of the facility. For irrevocable

loan commitments and financial guarantee contracts, the measurement period is determined similar to the

period of the revolving facilities.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.17 Impairment of financial assets (continued)

2.17.6 ECL measurement period (continued)

For revolving facilities, credit cards and corporate and retail overdrafts, BOC PCL has the right to cancel

and/or reduce the facilities with two months’ notice. BOC PCL does not limit its exposure to credit losses to

the contractual notice period, but instead a behavioural maturity model is utilised where each revolving

facility is assigned an expected time period to termination.

2.17.7 Purchased or originated credit-impaired financial assets (POCI)

POCI financial assets are recorded at fair value on initial recognition. ECL are only recognised or released to

the extent that there is a subsequent change in the lifetime expected credit losses. For POCI financial

assets, the Group only recognises the cumulative changes in lifetime ECL since initial recognition in the loss

allowance. POCI remain a separate category until derecognition.

2.18 Write-offs

The Group reduces the gross carrying amount of a financial asset when there is no reasonable expectation

of recovering it. In such case, financial assets are written-off either partially or in full. Write-off refers to

both contractual and non-contractual write-offs. A non-contractual write-off is defined as the accounting

reduction of a debt, without waiving the legal claim against the debtor. BOC PCL continues to seek recovery

of the debt (e.g. restructuring arrangements, debt-for-assets swaps, full settlement, etc.) and the amount

written-off for financial assets that are still subject to enforcement activity.

Indicative conditions for writing-off part or the full amount of the exposure include, but are not limited to,

the following list of criteria. The criteria are applicable to both contractual and non-contractual write-offs

and are not by default applicable to all cases, as individual assessment and judgement is required in order

to evaluate each case on its own merits.

i. Cases which are close to realisation of a security or collateral may be deemed necessary to be

considered for write-off. With regards to such financial assets for which the security or collateral has

not yet been realised (but may be close to agreement or other arrangement for realising), BOC PCL

forms a reasonable expectation of future cash flows which would also take into account the

collateral’s realisable value.

ii. When BOC PCL ceases all collection and debt enforcement actions, such remaining debt can be

assessed for write-off. However, debt can be written-off even while collection and enforcement

activities are proceeding.

iii. Debtor status is another indicator for assessment for write-off; for example, the debtor’s insolvency

status, or whether the debtor is deceased or cannot be traced. While such loans may already be

impaired, BOC PCL might be unable to form a reasonable expectation of future cash flows.

Nevertheless, BOC PCL takes all the legally available steps to recover the debt, where appropriate.

iv. Customers with exposures with significant number of days past due, provided that all other efforts

for restructuring are exhausted and the exposure or part of the exposure is deemed as

unrecoverable / uncollectable, are also assessed for write-off.

Write-offs are subject to the Groups internal governance process for review and approval.

Write-offs and partial write-offs represent derecognition/partial derecognition events. If the amount of

write-off is greater than the amount of accumulated loss allowance, the difference is first treated as an

addition to the allowance that is then applied against the gross carrying amount. Recoveries in part or in

full, of amounts previously written-off are credited to the consolidated income statement in 'Credit losses on

financial assets' and separately identified in Note 16 within ‘Credit losses to cover credit risk on loans and

advances to customers’.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.19 Financial guarantees, letters of credit and undrawn loan commitments

The Group issues financial guarantees to its customers, consisting of letters of guarantee and acceptances.

Financial guarantees are initially recognised at fair value being the premium received, and presented on the

consolidated balance sheet within ‘Accruals, deferred income, other liabilities and other provisions’.

Subsequently, the Group’s liability under each guarantee is measured at the higher of: (a) the amount

initially recognised reduced by the cumulative amortised premium which is periodically recognised in the

consolidated income statement in ‘Fee and commission income’ in accordance with the terms of the

guarantee, and (b) the amount of ECL provision.

ECL relating to financial guarantees is recorded in 'Credit losses on financial assets' and further identified in

Note 16 in ‘Credit losses to cover credit risk on loans and advances to customers’. The balance of the

liability for financial guarantees that remains is recognised in ‘Fee and commission income’ in the

consolidated income statement when the guarantee is fulfilled, cancelled or expired.

Undrawn loan commitments and letters of credit are commitments under which, over the duration of the

commitment the Group is required to provide a loan with pre-specified terms to the customer.

Corresponding ECL are presented within ‘Accruals, deferred income, other liabilities and other provisions’ on

the Group’s balance sheet, except in the case of loan commitments where ECL on the loan commitment is

recognised together with the loss allowance of the relevant on balance-sheet exposure as the Group cannot

separately identify the ECL on the loan commitment from those on the on-balance sheet exposure

component. ECL relating to loan commitments and letters of credit is recorded in ‘Credit losses on financial

assets' and further identified in Note 16 in 'Credit losses to cover credit risk on loans and advances to

customers'.

When a customer draws on a commitment, the resulting loan is presented within (i) financial assets at fair

value held for trading, consistent with the associated derivative loan commitment, (ii) financial assets at fair

value not held for trading, following loan commitments designated at FVPL, or (iii) loans and advances to

customers, when the associated loan commitment is not fair valued through profit or loss.

2.20 Offsetting financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated balance

sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an

intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. The legally

enforceable right must not be contingent on future events and must be enforceable in the normal course of

business and in the event of default, insolvency or bankruptcy of either party.

2.21 Hedge accounting

The Group elected, as a policy choice permitted by IFRS 9, to continue to apply hedge accounting in

accordance with IAS 39, including the provisions related to macro fair value hedge accounting (IAS 39

'carve-out').

The Group uses derivative financial instruments to hedge exposures to interest rate and foreign exchange

risks and in the case of the hedge of net investments, the Group uses also non-derivative financial liabilities.

The Group applies hedge accounting for transactions which meet the specified criteria.

Transactions that are entered into in accordance with the Group's hedging objectives, but do not qualify for

hedge accounting, are referred to as economic hedge relationships.

At inception of the hedging relationship, the Group formally documents the relationship between the hedged

item and the hedging instrument, including the nature of the risk and the objective and strategy for

undertaking the hedge. The method that will be used to assess the effectiveness, both at the inception and

at ongoing basis, of the hedging relationship also forms part of the Group’s documentation.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.21 Hedge accounting (continued)

At inception of the hedging relationship and at each hedge effectiveness assessment date, a formal

assessment is undertaken to ensure that the hedging relationship is highly effective regarding the offsetting

of the changes in fair value or the cash flows attributable to the hedged risk. A hedge is regarded as highly

effective if the changes in fair value or cash flows attributable to the hedged risk of the hedging instrument

and the hedged item during the period for which the hedge is designated, are expected to offset in a range

of 80% to 125%. In the case of cash flow hedges where the hedged item is a forecast transaction, the

Group assesses whether the transaction is highly probable and presents an exposure to variations in cash

flows that could ultimately affect the consolidated income statement.

Portfolio Hedging (Macro-Hedging)

The Group applies macro fair value hedging to non-maturing deposits (NMDs), in accordance with IAS 39,

as adopted by the EU (IAS 39 carve-out). The hedged items are determined through behavioural modelling

identifying the ‘core’ Non-Maturing Deposits (NMDs), which are stable demand deposits with behavioural

maturity of up to ten years. Deposits within the identified portfolios are allocated to repricing/maturity time

buckets based on expected, rather than contractual, maturity dates. The hedging instruments (pay

floating/receive fixed rate interest rate swaps) are designated appropriately to those repricing/maturity

time buckets. Hedge effectiveness is measured by comparing fair value movements of the hedged amount

attributable to the hedged risk, against the fair value movements of the hedging derivatives, to ensure that

they are within an 80% to 125% range.

2.21.1 Fair value hedges

In the case of fair value hedges that meet the criteria for hedge accounting, the change in the fair value of a

hedging instrument is recognised in the consolidated income statement in ‘Net gains/(losses) on financial

instruments'. The change in the fair value of the hedged item attributable to the risk hedged is recorded as

part of the carrying value of the hedged item and is also recognised in the consolidated income statement in

‘Net gains/(losses) on financial instruments'.

If the hedging instrument expires or is sold, terminated or exercised, or where the hedge no longer meets

the criteria for hedge accounting, the hedging relationship is discontinued prospectively. For hedged items

recorded at amortised cost, the difference between the carrying value of the hedged item on termination

and the face value is amortised to the consolidated income statement, over the remaining term of the

original hedge. If the hedged item is derecognised, the unamortised fair value adjustment is recognised

immediately in the consolidated income statement.

2.21.2 Hedges of net investments in foreign operations

Hedges of net investments in overseas branches or subsidiaries are accounted for in a way similar to cash

flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are

recognised in other comprehensive income in the 'Foreign currency translation reserve', while gains or

losses relating to the ineffective portion are recognised in ‘Net foreign exchange gains’ in the consolidated

income statement.

On disposal or liquidation of an overseas branch or subsidiary, the cumulative gains or losses recognised in

other comprehensive income are transferred in the consolidated income statement as part of the gain/(loss)

on the disposal or liquidation.

2.22 Cash and cash equivalents

Cash and cash equivalents for the purposes of the consolidated statement of cash flows consist of cash,

non-obligatory balances with central banks, loans and advances to banks and other securities that are

readily convertible into known amounts of cash and are repayable within three months of the date of their

acquisition.

2.23 Insurance business

The Group undertakes both life insurance and non-life insurance business and issues insurance and

investment contracts. An insurance contract is a contract under which one party (the insurer) accepts

significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder

if a specified uncertain future event (the insured event) adversely affects the policyholder.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.23 Insurance business (continued)

Once a contract has been classified as an insurance contract, it remains an insurance contract until expiry or

until all the rights and obligations under the contract have been fulfilled, even if the insurance risk has been

significantly reduced during its term.

Investment contracts are those contracts that transfer financial risk. Investment contracts can, however, be

reclassified as insurance contracts after inception, if insurance risk becomes significant.

Identifying contracts

When identifying contracts there is a need to assess whether contracts need to be treated as a single

contract and whether embedded derivatives, investment components and goods and services components

need to be separated and accounted for under another standard.

Level of aggregation

Individual insurance contracts that are managed together and are subject to similar risks are identified as a

group.

Contracts that are managed together usually belong to the same product line and have similar

characteristics, such as being subject to a similar pricing framework or similar product management, and

are issued by the same legal entity. If a contract is exposed to more than one risk, the dominant risk of the

contract is used to assess whether the contract features similar risks.

Each group of contracts is then divided into annual cohorts (i.e. by year of issue) and each cohort into three

groups, based on expected profitability: (i) contracts that are onerous at initial recognition; (ii) contracts

that at initial recognition have no significant possibility of becoming onerous subsequently; and (iii) the

remaining contracts.

The groups of insurance contracts are established at initial recognition without subsequent reassessment

and form the unit of account at which the contracts are measured.

Recognition

Groups of insurance contracts issued are initially recognised from the earliest of the following:

i. the beginning of the coverage period;

ii. the date when the first payment from the policyholder is due or actually received, if there is no due

date; and

iii. when the Group determines that a group of contracts becomes onerous.

The Group adds new contracts to the group in the reporting period in which that contract meets one of the

criteria set out above.

Contract boundaries

The measurement of a group of insurance contracts includes all the future cash flows within the boundary of

each contract in the group. Cash flows are within the boundary of an insurance contract if they arise from

substantive rights and obligations that exist during the reporting period in which the Group can compel the

policyholder to pay the premiums, or in which the Group has a substantive obligation to provide the

policyholder with services. For multi-year (more than one year) non-life contracts, the Group has assessed

that they are expected to equal their duration as the Group cannot reprice or terminate the insurance

contract during the coverage period.

Measurement

The General Measurement Model (GMM) is the standard measurement model and the Premium Allocation

Approach (PAA) is the simplified approach for the measurement of the contracts that fall under the scope of

IFRS 17. The Variable Fee Approach (VFA) is mandatory to apply for insurance contracts with direct

participation features upon meeting the eligibility criteria. While the GMM is the default measurement

model, the Group applies the VFA primarily to insurance contracts in the unit-linked life portfolio. The PAA is

an optional simplification applicable for measuring the Liability for Remaining Coverage (LRC) for contracts

with coverage periods of one year or less, or when doing so approximates the GMM; it is primarily applied

by the Group to non-life insurance contracts and to non-individual life insurance contracts, as well as to

reinsurance contracts of the Group, except for the individual life reinsurance agreement, for which the GMM

is applied. For the rest of the insurance contracts (individual protection life contracts, the acquired portfolio

and health long-term portfolio), the Group applies the GMM approach.

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Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.23 Insurance business (continued)

Initial measurement

Groups of insurance contracts under the GMM or the VFA are initially measured as the total of:

a. Fulfilment cash flows, which comprise:

i. an estimate of the present value of future cash flows that are expected to arise as the Group

fulfils its service under the insurance contracts; and

ii. an explicit risk adjustment for non-financial risk (i.e., the risk adjustment held on balance

sheet).

b. Contractual Service Margin (CSM) which represents the unearned profit that the Group will recognise as

it provides insurance contract services.

The fulfilment cash flows comprise unbiased and probability-weighted estimates of future cash flows,

discounted to present value to reflect both the time value of money and financial risks, plus a risk

adjustment for non-financial risk. The discount rate applied reflects the time value of money, the

characteristics of the cash flows, the liquidity characteristics of the insurance contracts and, where

appropriate, is consistent with observable current market prices.

The risk adjustment for non-financial risk for a group of insurance contracts is the compensation required

for bearing the uncertainty in relation to the amount and timing of the cash flows that arises from non-

financial risk. The risk adjustment is explicit and determined separately from other fulfilment cash flows.

A CSM arises when, for a group of contracts, the sum of the discounted cash flows and the risk adjustment

is a net inflow. If the sum of these is a net outflow, then the group of contracts is onerous and a loss equal

to the net outflow is recognised in the consolidated income statement.

Under the PAA, the liability for remaining coverage is initially recognised as the premiums received at initial

recognition, minus any insurance acquisition cash flows.

Subsequent measurement

GMM

At the end of each reporting period, insurance contracts are measured as the sum of:

i. Liability for remaining coverage (LRC), comprising fulfilment cash flows related to future service and

the CSM at the reporting date; and

ii. Liability for incurred claims (LIC), comprising fulfilment cash flows related to past service at the

reporting date (claims and expenses not yet paid, including claims incurred but not yet reported).

The fulfilment cash flows of groups of insurance contracts are measured at the reporting date using current

estimates of future cash flows, current discount rates and current estimates of the risk adjustment for non-

financial risk. Changes in fulfilment cash flows are recognised as follows:

i. Changes related to future service are adjusted against the CSM, unless the group of contracts is

onerous, in which case such changes are recognised in the net insurance service result in the

consolidated income statement

ii. Changes related to past or current service are recognised in the net insurance service result in the

consolidated income statement

iii. The effects of the time value of money and financial risk are recognised as net insurance finance

income or expense in the consolidated income statement.

The amount of CSM recognised in income statement for services in a period is determined by the allocation

of the CSM remaining at the end of the reporting period (before any allocation) over the current and

remaining expected coverage period of the group of insurance contracts based on coverage units. These

coverage units reflect the quantity of benefits and the coverage duration. Adjustments relating to future

service and thus adjust the CSM using locked-in discount rates (i.e. those that reflect the characteristics of

the cash flows of initial recognition) except for changes in the risk adjustment for non-financial risk that

relate to future service.

VFA

The VFA is applied for contracts with direct participation features (contracts where returns are based on the

performance of underlying assets). For insurance contracts under the VFA, changes in the Group’s share of

the underlying items, and economic experience and economic assumption changes adjust the CSM, whereas

these changes do not adjust the CSM under the GMM but are recognised in profit or loss as they arise.

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BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.23 Insurance business (continued)

PAA

Subsequently to initial measurement, the carrying amount of the LRC is increased with premiums received

in the period, minus insurance acquisition cash flows, plus amortisation of acquisition cash flows, minus the

amount recognised as insurance revenue for coverage provided in that period. The LRC is not discounted,

since at initial recognition, it is expected that the time between providing each part of the coverage and the

due date of the related premium is not more than a year.

Reinsurance contracts

The Group applies the same accounting policies to measure a group of reinsurance contracts under PAA,

with the following modifications to reflect features that differ from those of insurance contracts. The Group

establishes a loss-recovery component on the carrying amount of the asset for remaining coverage for a

group of reinsurance contracts, depicting the recovery of losses, where the Group recognises a loss on initial

recognition of an onerous group of underlying insurance contracts or when further onerous underlying

insurance contracts are added to a group.

The Group calculates the loss-recovery component by multiplying the loss recognised on the underlying

insurance contracts and the percentage of claims on the underlying insurance contracts the Group expects

to recover from the group of reinsurance contracts. The loss-recovery component adjusts the carrying

amount of the asset for remaining coverage.

The subsequent measurement of reinsurance contracts follows the same principles as those for insurance

contracts issued and has been adapted to reflect the specific features of reinsurance. Where the Group has

established a loss-recovery component, the Group subsequently reduces the loss-recovery component to

zero in line with reductions in the onerous group of underlying insurance contracts in order to reflect that

the loss-recovery component shall not exceed the portion of the carrying amount of the loss component of

the onerous group of underlying insurance contracts that the entity expects to recover from the group of

reinsurance contracts.

The measurement of reinsurance contracts under the individual life reinsurance agreement follows the same

principles as those for insurance contracts measured under the GMM. The carrying amount of the

reinsurance contracts at each reporting date is the sum of the asset for remaining coverage and the asset

for incurred claims. The asset for remaining coverage comprises (a) the fulfilment cash flows that relate to

services that will be received under the contracts in future periods, and (b) any remaining CSM at that date.

The risk adjustment for non-financial risk represents the amount of risk being transferred by the Group to

the reinsurer.

The CSM of a group of reinsurance contracts represents a net cost or net gain on purchasing reinsurance.

The Group has made the below elections in relation to the measurement of insurance and reinsurance

contract assets and liabilities and related income/expense:

i. Recognition of total insurance finance income or expenses in the consolidated income statement in

the period in which they arise i.e. not to apply disaggregation,

ii. Deferral of insurance acquisition cash flows for non-life insurance business other than the health

insurance business, when applying the premium allocation approach, and

iii. Disaggregation of the change in risk adjustment for non-financial risk between the net insurance

service result and net insurance finance income/(expense).

Contract derecognition

The Group derecognises an insurance contract issued when the obligation specified in the contract expires,

is discharged, or is cancelled, or if its terms are modified significantly. When a contract is modified

significantly, a new contract based on the modified terms is recognised.

On derecognition of an insurance contract, the Group:

i. adjusts the fulfilment cash flows to eliminate the present value of future cash flows and risk

adjustment for non-financial risk relating to the rights and obligations that have been derecognised

from the group of contracts,

ii. adjusts the CSM of the group of contracts for the change in the fulfilment cash flows, except where

such changes are allocated to a loss component; and

iii. adjusts the number of coverage units for the expected remaining services, to reflect the number of

coverage units derecognised from the group of contracts.

409

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.23 Insurance business (continued)

Onerous groups of contracts

For portfolios measured under the PAA, the Company assumes that no contracts in the portfolio are onerous

at initial recognition unless facts and circumstances indicate otherwise. For contracts not measured under

the PAA, that are not onerous, the Group assesses, at initial recognition, that there is no significant

possibility of becoming onerous subsequently by assessing the likelihood of changes in applicable facts and

circumstances. The Group considers facts and circumstances to identify whether a group of contracts are

onerous based on:

i. major shifts in economic and regulatory environment;

ii. combined Loss Ratio (Claims plus expenses divided by premium);

iii. pricing strategy leading to loss;

iv. changes in claims handling policy (e.g. time – stamped period) etc.

The Group has based its assessment on the Combined Loss Ratio as one of the key indicators of whether

there are facts and circumstances to conclude that a group of contracts is onerous, as it takes into account

economic shifts, the Group’s decision on the pricing strategy, as well as the Group’s claims' handling

processes.

For the portfolios measured under GMM and VFA models, the Group performs profitability assessment to

assess the portfolio of insurance contracts issued into three profitability groups, if applicable, for the

purpose of calculating the CSM. The grouping is performed per set of contracts at initial recognition based

on assumed profitability (profit testing exercise).

Insurance acquisition cash flows

The Group includes the following acquisition cash flows within the insurance contract boundary that arise

from selling and starting a group of insurance contracts and that are:

a. costs directly attributable to individual contracts and groups of contracts; and

b. costs directly attributable to the portfolio of insurance contracts to which the group belongs, which

are allocated on a reasonable and consistent basis to measure the group of insurance contracts.

Directly attributable expenses

Expenses directly attributable to a group of insurance contracts, which include both acquisition and

maintenance costs, are incorporated in actual and estimated future cash flows and recognised in the net

insurance result. Insurance acquisition cash flows are amortised. Expenses that are not directly attributable

are excluded from the measurement of insurance contract liabilities and are recognised in profit and loss as

incurred.

2.24 Repurchase and reverse repurchase agreements

Securities sold under agreements to repurchase (repos) at a specific future date are not derecognised from

the consolidated balance sheet as the Group retains substantially all risks and rewards of ownership. The

corresponding cash received, including accrued interest, is recognised on the consolidated balance sheet as

‘Repurchase agreements’, reflecting its economic substance as a loan to the Group. The difference between

the sale price and repurchase price is treated as interest expense and is accrued over the life of the

agreement using the effective interest rate method. The investments pledged as security for the repurchase

agreements can be sold or repledged by the counterparty. When the counterparty has the right to sell or

repledge the securities, the Group discloses those securities as ‘Investments pledged as collateral’.

Securities purchased under agreements to resell (reverse repos) at a specific future date, are not

recognised on the consolidated balance sheet, rather are recorded as 'Reverse Repurchase agreements' on

the consolidated balance sheet. The difference between the purchase and the resale price is treated as

interest income and is accrued over the life of the agreement using the effective interest rate method.

Reverse repos outstanding at the reporting date relate to agreements with financial institutions. The

investments received as security under reverse repurchase agreements can either be sold or repledged by

the Group.

2.25 Leases

Group as a lessee

The Group recognises right of use assets (RoU assets) and lease liabilities for contracts that convey the

right to control the use of an identified asset for a period of time in exchange for consideration.

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BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.25 Leases (continued)

The Group has the right to direct the use of an identified asset throughout the period of use when it has the

right to direct how and for what purpose the asset is used and has the right to change the purpose,

throughout the period of use (i.e. the decision-making rights that most significantly affect the economic

benefits that can be derived from the use of the underlying asset). Essentially, this right permits the Group

to change its decisions throughout the contract term without approval from the lessor.

The lease liabilities are initially measured at the present value of the future lease payments, discounted at

the lessee’s incremental borrowing rate (IBR) given that the interest rate implicit in the lease cannot be

readily determined. Subsequently, the lease liability is adjusted for interest and lease payments, as well as

the impact of lease modifications. Interest is computed by unwinding the present value of the lease liability

and charged to the consolidated income statement within 'Interest expense'.

RoU assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted

for any remeasurement of lease liabilities. The cost of the RoU asset comprises the amount of the initial

measurement of the lease liability, initial direct costs and the provision for restoration costs, adjusted for

any related prepaid or accrued lease payments previously recognised. Depreciation is computed on a

straight line basis up to the end of the lease term, and recognised in the consolidated income statement

within 'Other operating expenses'. RoU assets are subject to impairment under IAS 36.

The Group elected to use the recognition exemption for lease contracts that, at the commencement date,

have a lease term of 12 months or less and do not contain a purchase option (‘short-term leases’), and

lease contracts for which the underlying asset is of low value (‘low value assets’). Payments associated with

short-term leases and leases of low value assets are recognised on a straight line basis as an expense in the

consolidated income statement.

Leases are monitored for significant changes that could trigger a change in the lease term and at the end of

each reporting period the impact on the lease liability and the RoU asset is reassessed. Lease liability is

remeasured if there is a change in future lease payments, a change in the lease term, or as appropriate, a

change in the assessment of whether an extension option is reasonably certain to be exercised or a

termination option is reasonably certain not to be exercised. When the lease liability is remeasured, a

corresponding adjustment is made to the RoU asset and/or profit or loss, as appropriate.

The lease term is calculated as the non-cancellable term of the lease, together with any periods covered by

an option to extend the lease (if reasonably certain to be exercised), or any periods covered by an option to

terminate the lease (if reasonably certain not to be exercised). The assessment of whether the Group is

reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of

lease liabilities and RoU assets recognised. Judgement is used in calculating the lease term, as further

disclosed in Note 5.12.

Lease payments generally include fixed payments and variable payments that depend on an index (such as

an inflation index).

Variable lease payments that are determined by reference to an index or a rate are taken into account in

the lease liability only when there is a change in the cash flows resulting from a change in the reference

index or rate. In cases where the lease contract includes a term relating to increase in the lease payment

based on variable lease payments, this increase is applied on the lease when it becomes effective (when the

actual cash outflow occurs). The assessment is performed at each reporting date. In cases where the lease

contract includes a term with fixed increments in the lease payments, the increase is accounted for in the

initial recognition of lease liability.

When a lease contains an extension or termination option that the Group considers reasonably certain to be

exercised, the expected lease payments or costs of termination are included within the lease payments in

determining the lease liability.

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership

of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis

over the lease terms and is included in ‘Other income’ in the consolidated income statement due to its

operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to

the carrying amount of the leased asset and recognised over the lease term on the same basis as rental

income.

411

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.26 Property and equipment

Owner-occupied property is property held by the Group for use in the supply of services or for

administrative purposes. Investment property is property held by the Group to earn rentals and/or for

capital appreciation, as further disclosed in Note 2.27. If a property of the Group includes a portion that is

owner-occupied and another portion that is held to earn rentals or for capital appreciation, the classification

is based on whether or not these portions can be sold separately. Otherwise, the whole property is classified

as owner-occupied property unless the owner-occupied portion is insignificant. The classification of property

is reviewed on a regular basis to account for major changes in its use.

Owner-occupied property is initially measured at cost and subsequently measured at fair value less

accumulated depreciation and impairment. Valuations are carried out periodically between 3 to 5 years,

(but more frequent revaluations may be performed where there are significant and volatile movement in

values), by independent, qualified valuers or by the internal qualified valuers of the Group applying a

valuation model recommended by internationally accepted valuation standards. At the date of the

revaluation, the accumulated depreciation is eliminated against the gross carrying amount of the property.

Depreciation is calculated on the revalued amount less the estimated residual value of each building on a

straight line basis over its estimated useful life. Gain from revaluations are recognised in other

comprehensive income in ‘Property revaluation reserve', however to the extent it reverses an impairment

previously recognised in the consolidated income statement, the increase is recognised in the consolidated

income statement. A revaluation loss is recognised in the consolidated income statement, except to the

extent it offsets an existing revaluation reserve surplus.

Useful life is in the range of 30 to 67 years. Freehold land is not depreciated. On disposal of freehold land

and buildings, the relevant revaluation reserve balance is transferred to ‘Retained earnings’.

The cost of adapting/improving leasehold property is amortised over 5 years.

Equipment is measured at cost less accumulated depreciation. Depreciation of equipment is calculated on a

straight line basis over its estimated useful life of 5 to 10 years.

RoU assets recognised as property are measured at cost less accumulated depreciation and adjusted for

certain remeasurements of lease liabilities. Depreciation of the recognised RoU assets is calculated on a

straight line basis over the lease term, as further disclosed in Note 2.25.

At the reporting date, when events or changes in circumstances indicate that the carrying value may not be

recovered, property and equipment is assessed for impairment. Where the recoverable amount is less than

the carrying amount, property and equipment is written down to its recoverable amount.

2.27 Investment properties

Investment properties comprise land and buildings that are not occupied for use by, or in the operations of

the Group, nor for sale in the ordinary course of business, but are held primarily to earn rental income

and/or for capital appreciation. Additionally, leased properties which are acquired in exchange for debt and

are leased out under operating leases are also usually classified as 'Investment properties'.

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial

recognition, investment properties are measured at fair value as at the reporting date. Gains or losses

arising from changes in the fair values of investment properties are included in ‘Net gains/(losses) from

revaluation and disposal of investment properties’ in the consolidated income statement. Valuations are

carried out by independent, qualified valuers or by the Group's internal qualified valuers applying a

valuation model recommended by internationally accepted valuation standards.

Transfers are made to (or from) investment property only when there is a change in use. For a transfer

from owner-occupied property to investment property, the Group accounts for such property in accordance

with the policy described in Note 2.26 ‘Property and equipment’ up to the date of change in use. For a

transfer from investment property to stock of property, the property’s deemed cost for subsequent

accounting is its fair value at the date of change in use.

412

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.28 Stock of property

The Group in its normal course of business acquires properties in exchange of debt, which are held either

directly by BOC PCL or by entities set up and controlled by the Group for the sole purpose of managing

these properties with an intention to be disposed of. These properties are recognised in the Consolidated

Financial Statements as ‘Stock of property’, reflecting the substance of these transactions. Transfers from

stock of property are made at their carrying value when there is a change in use of property.

Stock of property is initially measured at cost and subsequently measured at the lower of cost and net

realisable value. Net realisable value is the estimated selling price, less the estimated costs necessary to

make the sale.

If net realisable value is below the cost of the stock of property, impairment is recognised in ‘Impairment

net of reversals on non-financial assets’ in the consolidated income statement.

2.29 Non-current assets held for sale and discontinued operations

The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be

recovered principally through a sale or distribution rather than through continuing use.

The condition for such classification is regarded as met only when the sale is highly probable and the asset

or disposal group is available for immediate sale in its present condition. Actions required to complete the

sale should indicate that it is unlikely that significant changes to the plan will be made or that the plan will

be withdrawn. Management must be committed to the sale, which should be expected to qualify for

recognition as a completed sale within one year from the date of classification.

Such non-current assets and disposal groups held for sale are measured at the lower of their carrying

amount and fair value less costs to sell, except for those assets and liabilities that are not within the scope

of the measurement requirements of IFRS 5 ‘Non-current assets held for sale and discontinued operations’

such as deferred taxes, financial instruments, investment properties measured at fair value, insurance

contracts and assets and liabilities arising from employee benefits. These are measured in accordance with

the Group’s relevant accounting policies described elsewhere in this note.

Immediately before the initial classification as held for sale, the carrying amount of the asset (or assets and

liabilities in the disposal group) is measured in accordance with applicable IFRS Accounting Standards. On

subsequent remeasurement of a disposal group, the carrying amounts of the assets and liabilities noted

above that are not within the scope of the measurement requirements of IFRS 5 are remeasured in

accordance with applicable IFRS Accounting Standards.

Assets and liabilities classified as held for sale are presented separately in the consolidated balance sheet.

A disposal group qualifies as a discontinued operation if an entity or a component of an entity has been

disposed of or is classified as held for sale and a) represents a separate major line of business or

geographical area of operations, b) is part of a single coordinated plan to dispose of a separate major line of

business or geographical area of operations, or c) is a subsidiary acquired exclusively with a view to resale.

Net profit/loss from discontinued operations includes the net total of operating profit and loss before tax

from discontinued operations (including net gain or loss on sale before tax and gain or loss on measurement

to fair value less cost to sell of a disposal group constituting a discontinued operation) and discontinued

operations tax expense.

Discontinued operations are excluded from the results of continuing operations and are presented as a

single amount, as profit or loss after tax from discontinued operations in the consolidated income

statement.

413

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.30 Intangible assets

Intangible assets comprise computer software (including internally developed software). Intangible assets

acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a

business combination is their fair value as at the date of acquisition. The Group recognises an intangible

asset that arises from development or the development phase of an internal project if, and only if, it can

demonstrate all of the following:

i. The technical feasibility of completing the intangible asset so that it will be available for use or sale;

ii. Its intention to complete the intangible asset and use or sell it;

iii. Its ability to use or sell the intangible asset;

iv. How the intangible asset will generate probable future economic benefits;

v. The availability of adequate technical, financial and other resources to complete the development and

to use or sell the intangible asset; and

vi. Its ability to reliably measure the expenditure attributable to the intangible asset during its

development.

The expenditure arising on research or the research phase of an internal project are expensed as incurred

and cannot be subsequently capitalised.

Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any

accumulated impairment losses.

Amortisation is calculated on a straight line basis over the estimated useful life of the assets which is 3 to 8

years for computer software, including internally developed computer software.

Intangible assets are reviewed for impairment when events relating to changes in circumstances indicate

that the carrying value may not be recoverable. If the carrying amount exceeds the recoverable amount

then the intangible assets are written down to their recoverable amount and an impairment loss is

recognised in 'Impairment net of reversals on non-financial assets' in the consolidated income statement.

2.31 Share capital

Ordinary shares are classified as equity.

Any difference between the issue price of share capital and the nominal value is recognised as share

premium. The costs incurred attributable to the issue of share capital are deducted from equity.

414

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

2. Summary of accounting policies (continued)

2.32 Share-based compensation plans

The Group recognises expenses for deferred compensation awards over the period that the employee is

required to provide service to become entitled to the award. Whereby employees render services in

exchange for equity instruments these arrangements are classified as equity-settled transactions.

Share-based compensation benefits are provided to employees (senior management of the Group) via the

Long-Term Incentive Plan, an employee share arrangement which satisfies an incentive based award

through the issue of shares (equity-settled).

Share-based compensation expense is measured by reference to the fair value of the equity instruments on

the date of grant, with a corresponding increase in equity (other capital reserves), taking into account the

terms and conditions inherent in the award, including, where relevant, dividend rights, transfer restrictions

in effect beyond the vesting date, market conditions, and non-vesting conditions. For equity-settled awards,

fair value is not remeasured unless the terms of the award are modified such that there is an incremental

increase in value.

The total expense is recognised on a per-tranche basis, over the service period based on an estimate of the

number of shares expected to vest and are adjusted to reflect the actual outcomes of service or

performance conditions. At the end of each reporting period, the Group revises its estimates of the number

of shares that are expected to vest and recognises the impact of the revision to original estimates, if any, in

the consolidated income statement, with a corresponding adjustment to equity (other capital reserves). The

cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date

reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of

shares that will ultimately vest. The expense or credit in the consolidated income statement for a period

represents the movement in cumulative expense recognised as at the beginning and end of that period. No

expense is recognised for awards that do not ultimately vest because non-market performance and/or

service conditions have not been met.

The vesting period for these schemes may commence before the legal grant date if the employees have

started to render services in respect of the award before the legal grant date, where there is a shared

understanding of the terms and conditions of the arrangement. Expenses are recognised when the

employee starts to render service to which the award relates.

2.33 Other equity instruments

An instrument is an equity instrument if the instrument includes no contractual obligation to deliver cash or

another financial asset to another entity, or to exchange financial assets or financial liabilities with another

entity under conditions that are potentially unfavourable to the issuer.

Other equity instruments are recorded at their residual amount and are not subject to any re-measurement

after initial recognition. The cost incurred attributable to the issue of other equity instruments is deducted

from retained earnings. Any subsequent write-down or write-up results to a credit or debit in retained

earnings respectively. Coupon payments are recorded directly in retained earnings.

2.34 Treasury shares

Own equity instruments which are acquired by the Company or by any of its subsidiaries are presented as

treasury shares at their acquisition cost. Treasury shares are deducted from equity until they are cancelled

or reissued. No gain or loss is recognised in the consolidated income statement on the purchase, sale, issue

or cancellation of the Company’s own equity shares.

2.35 Dividends on ordinary shares

Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved

by the Company’s shareholders. Interim dividends are deducted from equity when they are declared and

are no longer at the discretion of the Company. Dividends for the year that are approved after the reporting

date, are disclosed as an event after the reporting date.

415

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.1 Calculation of expected credit losses (continued)

Assessment of significant increase in credit risk (SICR)

IFRS 9 does not include a definition of significant increase in credit risk. The Group assesses whether

significant increase in credit risk has occurred since initial recognition using predominantly quantitative and

in certain cases qualitative information and backstop indicators. The determination of the relevant criteria to

determine whether a significant increase in credit risk has occurred, is based on statistical metrics and could

be subject to management judgement. The relevant criteria are set, monitored and updated on a yearly

basis by the Risk Management Division and endorsed by the Group Provisions Committee. Lifetime ECL

applies when a significant increase in credit risk has occurred on an individual or collective basis.

Determining the probability of default (PD) at initial recognition requires management estimates in

particular cases. Specifically, in the case of exposures existing prior to the adoption of IFRS 9, a

retrospective calculation of the PD is made in order to quantify the risk of each exposure at the time of the

initial recognition. In certain cases, estimates about the date of initial recognition might be required.

For the retail portfolio, the Group uses a PD at origination incorporating behavioural information (score

cards) whereas, for the corporate portfolio, the Group uses the internal credit rating information. For

revolving facilities, management estimates are required with respect to the lifetime and hence a behavioural

maturity model is utilised, assigning an expected maturity based on product and customer behaviour.

Scenarios and macroeconomic factors

The Group determines the ECL, which is a probability weighted amount, by evaluating a range of possible

outcomes. Management uses forward looking scenarios and assesses the suitability of weights used. These

are based on management’s assumptions taking into account macroeconomic, market and other factors.

Changes in these assumptions and in other external factors could significantly impact ECL. Macroeconomic

inputs and weights per scenario are monitored by the Economic Research Department and are based on

internal model analysis and expert judgement, considering also external forecasts.

The Cypriot economy has demonstrated remarkable resilience and growth in recent years, navigating

through global uncertainties and regional challenges. In 2024, the economy achieved a growth rate of

3.4%, driven by rising exports and strong economic activity in key sectors such as tourism, information and

communications, construction and trade. This follows a period of strong growth with an annual average of

5.1% in the period 2015-2023. The unemployment rate has remained low, dropping to 4.9% in 2024

indicating near-full employment conditions. Inflation has been successfully stabilized, with rates declining

from 3.9% in 2023 to 2.3% in 2024. General government debt metrics have significantly improved in recent

years. The government debt-to-GDP ratio dropped to 65.4% in December 2024 from 73.6% in 2023 and

113.6% at the end of 2020. Looking ahead, continued budgetary surpluses and favourable debt dynamics

are expected to further reduce the debt ratio, potentially dropping below 60% by 2026. Growth in the

medium term, is expected to continue to outpace eurozone peers. Growth is expected to average about 3%

annually in 2025-2027, driven by services exports and private consumption on the expenditure side and by

international business services and the ICT sector on the production side.

The credit profile of Cyprus has improved significantly in the more recent period, reflecting a solid medium-

term growth outlook, good institutional strength and effective policy making.

However, substantial risks remain in terms of the domestic operating environment, as well as the external

environment on which it depends. Public debt has dropped in relation to GDP, but government expenditures

need more rationalisation. In the banking sector non-performing exposures need to drop further. The

current account deficit remains sizable. At the same time long-term yields may remain elevated for longer,

despite interest rate cuts by the monetary policy, if inflation pressures increase and geopolitical

uncertainties escalate.

For the ECL, the Group updated its forward-looking scenarios, factoring in updated macroeconomic

assumptions and other monetary and fiscal developments at the national and the EU level based on

developments and events as at the reporting date.

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Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.1 Calculation of expected credit losses (continued)

For the ECL calculations, the Group uses an unbiased and probability-weighted amount that is determined

by evaluating a range of possible outcomes, as described in Note 2.17.5. The approach employed, involves

scenario generation, where the scenarios applied by the Group are anchored to the baseline scenario. All

scenarios are updated on a quarterly basis for the purposes of the ECL calculation in tandem with the

baseline scenario. The updated macroeconomic inputs (incorporating any uncertainties and downside risks)

are therefore reflected in the scenario parameters, starting from the baseline and updated in turn for the

adverse and the favourable scenarios accordingly. If the baseline becomes more pessimistic, then both the

favourable and downside scenarios would be adjusted accordingly, reflecting the fact that the economic

variables used in the scenarios are not constant but are conditional on the economy’s position in the

business cycle. A dynamic scenario approach is followed as explained above where the scenario parameters

derived, reflect the Group’s view of the economic conditions. The probability weights attached to the

scenarios are a function of their relative position on the distribution, with a lower probability weight

attached to the scenarios that were assessed to be more distant from the centre of the distribution. The

baseline scenario is defined over the range of values corresponding to 50% probability of equidistant

deviations around the mean of the historical distribution. The favourable and adverse scenarios are defined

over the range of values to the right and left of the distribution respectively, each corresponding to 25%

probability.

The most significant macroeconomic variables for each of the scenarios used by the Group as at 31

December 2024 and 2023 are presented in the table below. The Group uses three different economic

scenarios in the calculation of default probabilities and provisions. The scenarios factor-in updated

macroeconomic assumptions and other monetary and fiscal developments based on events as at the

reporting date. The Group has used the 30-50-20 probability structure for the adverse, baseline and

favourable scenarios respectively compared to the 25-50-25 structure derived using the method described

in Note 2.17.5 and above. This reflects management's view of specific characteristics of the Cyprus

economy that render it more vulnerable to external and internal shocks.

31 December 2024

Year	Scenario	Weight %
			Real GDP (%
			change)
				Unemployment
				rate (% of
				labour force)
					Consumer
					Price Index
					(average %
					change)
						RICS House
						Properties
						Price Index
						(average %
						change)
2025	Adverse	30.0	-1.4	5.4	-0.7	-3.9
	Baseline	50.0	3.0	4.5	1.8	2.2
	Favourable	20.0	4.2	4.4	2.5	3.8
2026	Adverse	30.0	-0.9	5.6	1.2	-0.2
	Baseline	50.0	2.9	4.5	2.2	2.3
	Favourable	20.0	3.1	4.3	2.1	2.7
2027	Adverse	30.0	2.0	5.3	1.8	2.3
	Baseline	50.0	2.8	4.5	2.0	2.2
	Favourable	20.0	2.5	4.4	2.0	2.6
2028	Adverse	30.0	3.4	5.2	1.9	2.9
	Baseline	50.0	2.6	4.5	1.9	2.3
	Favourable	20.0	2.4	4.4	1.9	2.6
2029	Adverse	30.0	2.8	5.2	1.9	2.5
	Baseline	50.0	2.5	4.5	1.8	2.2
	Favourable	20.0	2.4	4.4	1.9	2.3

419

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.1 Calculation of expected credit losses (continued)

31 December 2023

Year	Scenario	Weight %
			Real GDP (%
			change)
				Unemployment
				rate (% of
				labour force)
					Consumer
					Price Index
					(average %
					change)
						RICS House
						Properties
						Price Index
						(average %
						change)
2024	Adverse	30.0	-1.6	6.3	0.9	-3.1
	Baseline	50.0	2.7	5.8	2.5	3.0
	Favourable	20.0	3.5	5.6	3.1	3.7
2025	Adverse	30.0	-0.7	6.9	1.2	0.6
	Baseline	50.0	2.6	5.4	2.5	2.3
	Favourable	20.0	3.1	5.2	2.6	2.5
2026	Adverse	30.0	2.2	7.0	1.2	1.9
	Baseline	50.0	2.6	5.1	2.1	2.2
	Favourable	20.0	2.7	4.9	2.0	2.3
2027	Adverse	30.0	3.6	6.7	2.3	2.4
	Baseline	50.0	2.4	4.9	2.3	2.2
	Favourable	20.0	2.6	4.6	2.2	2.3
2028	Adverse	30.0	3.5	6.4	2.2	2.4
	Baseline	50.0	2.3	4.6	2.2	2.3
	Favourable	20.0	2.5	4.2	2.3	2.4

The adverse scenarios may outpace the base and favourable scenarios after the initial shock has been

adjusted to and the economy starts to expand from a lower base. Thus, in the adverse scenario GDP will

follow a growth trajectory that will ultimately equal and surpass the baseline before converging. Property

prices are determined by multiple factors with GDP growth featuring prominently.

The baseline scenario was updated for the 31 December 2024 reporting, considering available information

and relevant developments until then, and is described next. Growth moderated in 2023 following strong

recoveries in 2021-2022, but remained above the Euro area average, supported by the continued recovery

in tourism and expanding services activity. Real GDP increased by 2.6% on average in 2023 and growth

accelerated in 2024, averaging 3.4%. Tourist arrivals in Cyprus exceeded 4.0 million in 2024, up by an

annual 5.1%. Under the baseline scenario the economy is expected to advance by 3.0% in 2025 and

consumer price inflation will decelerate to 1.8%. House prices are expected to rise by 2.2% in 2025

following strong increases in 2022-2024.

The adverse scenario is consistent with assumptions for a global economic slowdown driven by geopolitical

tensions, tariff wars, elevated inflation expectations and the steepening of yield curves. The Cypriot

economy relies on services, particularly on tourism, international business, and information and

communication services with an outward orientation. This makes the Cypriot economy more exposed than

other economies to the international environment and terms of trade shocks. Weaker external demand will

lead to a slowdown of economic activity. The adverse scenario assumes a deeper impact of these conditions

on the real economy than under the baseline scenario. Under the adverse scenario, real GDP is expected to

drop by 1.4% in 2025 as a whole, and contract further by 0.9% in 2026. In the labour market the

unemployment rate will rise only modestly to 5.4% and inflation will actually turn negative by 0.7%. House

prices will also slow in line with the contraction in real GDP.

The Group uses actual values for the input variables. These values are sourced from the Cyprus Statistical

Service, the Eurostat, the Central Bank of Cyprus for the residential property price index, and the European

Central Bank for interest rates. Interest rates are also sourced from the Eurostat. In the case of property

prices, the Group additionally uses data from the Royal Institute of Chartered Surveyors. For the forward

reference period, the Group uses the forecast values for the same variables, as prepared by the BOC PCL's

Economic Research Department. The results of the internal forecast exercises are consistent with publicly

available forecasts from official sources including the European Commission, the International Monetary

Fund, the European Central Bank and the Ministry of Finance of the Republic of Cyprus.

Qualitative adjustments or overlays are occasionally made when inputs calculated do not capture all the

characteristics of the market. These are reviewed and adjusted, if considered necessary, by the Risk

Management Division, endorsed by the Group Provisions Committee and approved by the Board Risk and

Audit Committees. Qualitative adjustments or overlays are described in the below sections as applicable.

420

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.1 Calculation of expected credit losses (continued)

For Stage 3 customers, the calculation of individually assessed provisions is the weighted average of three

scenarios: base, adverse and favourable. The base scenario focuses on the following variables, which are

based on the specific facts and circumstances of each customer: the operational cash flows, the timing of

recovery of collaterals and the haircuts from the realisation of collateral. The base scenario is used to derive

additional either more favourable or more adverse scenarios. Under the adverse scenario, operational cash

flows are decreased by 50%, applied haircuts on real estate collateral are increased by 50% and the timing

of recovery of collaterals is increased by one year with reference to the baseline scenario, whereas under

the favourable scenario applied haircuts are decreased by 5%, with no change in the recovery period with

reference to the baseline scenario. Assumptions used in estimating expected future cash flows (including

cash flows that may result from the realisation of collateral) reflect current and expected future economic

conditions and are generally consistent with those used in the Stage 3 collectively assessed exposures.

The above assumptions are also influenced by the ongoing regulatory dialogue BOC PCL maintains with its

lead regulator, the ECB, and other regulatory guidance and interpretations issued by various regulatory and

industry bodies such as the ECB and the EBA.

Any changes in these assumptions or difference between assumptions made and actual results could result

in significant changes in the estimated amount of expected credit losses of loans and advances to

customers.

For collectively assessed customers the calculation is also the weighted average of three scenarios: base,

adverse and favourable.

Assessment of loss given default (LGD)

For the estimation of loss given default (LGD) key estimates are the timing and net recoverable amount

from repossession or realisation of collaterals (including through portfolio sales) which mainly comprise real

estate assets.

Assumptions have been made about the future changes in property values, as well as the timing for the

realisation of collateral, taxes and expenses on the repossession and subsequent sale of the collateral as

well as any other applicable haircuts. Indexation has been used as the basis to estimate updated market

values of properties, supplemented by management judgement where necessary, given the difficulty in

differentiating between short-term impacts and long-term structural changes and the shortage of market

evidence for comparison purposes. Assumptions were made on the basis of a macroeconomic scenario for

future changes in property prices and qualitative adjustments or overlays were applied to the projected

future property value increases to restrict the level of future property price growth to 0% for all scenarios

for loans and advances to customers which are secured by property collaterals.

At 31 December 2024, the weighted average haircut (including liquidity haircut and selling expenses) used

for the provision calculation for loans and advances to customers (for both Stage 1 and Stage 2 exposures

and collectively assessed Stage 3 exposures) is approximately 42% under the baseline scenario, excluding

those classified as held for sale (2023: approximately 31.3%). The increase in the haircut percentage is

primarily due to the calibration of the collateral realisation model during the first half of 2024, as explained

in section 'Calibration of IFRS 9 models and removal of overlays in relation to economic conditions'.

At 31 December 2024, the timing of recovery from real estate collaterals used for the provision calculation

for loans and advances to customers (for both Stage 1 and Stage 2 exposures and collectively assessed

Stage 3 exposures) has been estimated to be on average seven years under the baseline scenario,

excluding those classified as held for sale (2023: average of six years).

In the 2023 Financial Statements the above disclosures in relation to the weighted average haircut and

timing of recovery from real estate collaterals were by reference to exposures that were collectively

assessed and not including exposures which were assessed for staging purposes on an individual basis. The

comparative information presented above has been updated for aligning with the disclosure for the year

ended 31 December 2024.

For the calculation of individually assessed provisions of Stage 3 exposures, the timing of recovery of

collaterals as well as the haircuts used, are based on the specific facts and circumstances of each case. For

specific cases judgement may also be exercised over staging during the individual assessment.

421

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.1 Calculation of expected credit losses (continued)

Any changes in these assumptions or variance between assumptions made and actual results could result in

significant changes in the estimated amount of expected credit losses of loans and advances to customers.

Modelling adjustments

Forward looking models have been developed for ECL parameters (PD, EAD, LGD) for all portfolios and

segments sharing similar characteristics. Model validation (initial and periodic) is performed by the

independent validation unit within the Risk Management Division and involves assessment of a model under

both quantitative (i.e. stability and performance) and qualitative terms. The frequency and level of rigour of

model validation is commensurate to the overall use, complexity and materiality of the models, (i.e. risk

tiering). In certain cases, judgement is exercised in the form of expert judgment and/or management

overlay by applying adjustments on the modelled parameters. Governance of these models lies with the

Risk Management Division, where a governance process is in place around the determination of the

impairment measurement methodology including inputs, assumptions and overlays. Any management

overlays are prepared by the Risk Management Division, endorsed by the Group Provisions Committee and

approved by the Board Risk and Audit Committees.

Calibration of IFRS 9 models and removal of overlays in relation to economic conditions in 2024

During the year ended 31 December 2024, the Group performed a calibration of its IFRS 9 models which

involved the reassessment and update of the ECL model parameters (PDs, LGDs and cure rates) and SICR

thresholds so as to incorporate in the models the effects of the recent economic conditions and experience,

which were previously reflected in the ECL through the use of overlays. Further, the calibration involved the

Group updating and revising the LGD parameter, as part of the Group’s ongoing review and update of

models as to incorporate updated data information and to reflect an update on realisation paths and rates

applied.

More specifically, the Group proceeded with model calibrations affecting the probability of default parameter

(the ‘PD-macro’), the SICR parameter, the probability of cure model and the collateral realisation model and

introducing an LGD floor, as explained below:

i. The calibration of the PD-macro model included the introduction of inflation related variables and the

inclusion of post-COVID period data to capture the low-default environment as well as the

integration of a dynamic adjustment to calibrate (up or down) the model projection based on the

relationship between the past model projections and the actual observed defaults (structural breaks

in the relationship e.g. between a specific macro factor and the PD value). Refinement of the PD

adjustment factor was also made during 2024, to include a more extended observation period for the

SICR parameter. The net impact of this calibration was €4.2 million ECL release during the year

ended 31 December 2024.

ii. As a result of the PD-macro calibration, the SICR model was revisited following a statistical model

methodology calibration, whilst introducing an absolute threshold to increase stability. The

corresponding impact was €1.4 million ECL release during the year ended 31 December 2024 and

net transfer of related loans from Stage 2 to Stage 1.

iii. With respect to the probability of cure model, a different curability period was introduced for each

macro-economic scenario following a detailed statistical analysis examining the relationship of cure

rates with macro indicators and concluding that curability should differentiate at the level of the

scenario. The respective impact was an ECL charge of €2.1 million during the year ended 31

December 2024.

iv. As a result of calibrations (i)-(iii), the Group removed the prior year overlays applied in the context

of economic conditions with the resulting impact being €15.7 million ECL release during the year

ended 31 December 2024.

v. For the collateral realisation model, the Group has updated its LGD parameter with respect to the

path of realisation through portfolio sales, by increasing the likelihood of this realisation path. The

resulting impact was an ECL charge of €19.2 million during the year ended 31 December 2024.

vi. Lastly, the Group has incorporated a minimum LGD rate which provides for a minimum loss rate

(which acts as a floor) irrespective of the realisation path and value of collateral. This minimum LGD

was introduced as to capture the subjectivity and uncertainty involved in the value of recovery

assumptions (i.e. collateral recoverable amount, maximum recovery period, etc.) which impacts the

realisation amount. The corresponding impact was an ECL charge of €20.0 million during the year

ended 31 December 2024.

422

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.1 Calculation of expected credit losses (continued)

Overlays applied in the prior year:

i. Overlays introduced in prior years in the context of economic conditions from the consequences of

the Ukrainian crisis, in the collectively assessed population for exposures that were considered to be

the most vulnerable to the implications of the crisis, were removed during 2024. The impact on the

ECL from the application of these overlays was approximately €3.4 million ECL release during the

year ended 31 December 2023.

ii. In addition, the overlay on the PD (PD floored to the maximum of 2018/2019 level), introduced in

prior years to address specifically the high inflation environment affecting the economy, was

removed during 2024. The impact on the ECL from the application of this overlay was €7.2 million

charge during the year ended 31 December 2023.

iii. During the year ended 31 December 2023, an overlay for the LGD parameter has been integrated

through reduced curability period for Stage 2 and Stage 3 exposures with a resulting impact on the

ECL of €7 million charge during the year ended 31 December 2023.

The IFRS 9 models are reviewed regularly in order to incorporate the most recent information available and

to ensure that they perform adequately and that they are suitably representative when applied to the

current portfolio for the calculation of impairment loss allowances.

The Group has exercised critical judgement on a best effort basis, to consider all reasonable and

supportable information available at the time of the assessment of the ECL allowance as at 31 December

2024. The Group will continue to evaluate the ECL allowance and the related economic outlook each

quarter, so that any changes arising from the uncertainty on the macroeconomic outlook and geopolitical

developments, are timely captured.

Portfolio segmentation

The individual assessment is performed not only for individually significant assets but also for other

exposures meeting specific criteria determined by management. The selection criteria for the individually

assessed exposures are based on management judgement and are reviewed on a quarterly basis by the

Risk Management Division and are adjusted or enhanced, if deemed necessary. Following the wars in

Ukraine and the Middle East, the selection criteria were further enhanced to include significant exposures to

customers with passport of origin or residency in Russia, Ukraine or Belarus and/or business activity within

these countries and significant exposures with repayment deriving from Israel.

Further details on impairment allowances and related credit information are set out in Note 44.

In addition to the above significant judgments and assumptions made for the calculation of the ECL, the

Group also applies judgment for the following:

Expected lifetime of revolving facilities

The expected lifetime of revolving facilities is based on a behavioural maturity model for revolving facilities

based on BOC PCL's available historical data, where an expected maturity for each revolving facility based

on the customer's profile is assigned. The behavioural model was updated in the third quarter of 2023 to

reflect updates in customers' profile whilst maintaining the same model components.

Off-balance sheet credit exposures

ECL allowances also include allowances on off-balance sheet credit exposures represented by guarantees

given and by irrevocable commitments to disburse funds. Off-balance sheet credit exposures of the

individually assessed assets require assumptions on the probability, timing and amount of cash outflows.

For the collectively assessed off-balance sheet credit exposures, the allowance for provisions is calculated

using the Credit Conversion Factor (CCF) model.

5.2 Stock of property - estimation of net realisable value

Stock of property is measured at the lower of cost and net realisable value. The net realisable value is

determined through valuation techniques, requiring significant judgement, taking into account all available

reference points, such as expert valuation reports, current market conditions, applying an appropriate

illiquidity discount where considered necessary, taking into consideration observed sales, the holding period

of the asset, realisation strategy and any other relevant parameters. Selling expenses are deducted from

the realisable value.

More details on the stock of property are presented in Note 27.

423

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.3 Provisions for pending litigation and claims

The accounting policy for provisions for pending litigation, claims, regulatory and other matters is described

in Note 2.36.

Judgement is required in determining whether a present obligation exists and in estimating the probability,

timing and amount of any outflows. Provisions for pending litigation and claims usually require a higher

degree of judgement than other types of provisions. It is expected that the Group will continue to have a

material exposure to litigation and regulatory proceedings and investigations relating to legacy issues in the

medium term. The matters for which the Group determines that the probability of a future loss is more than

remote will change from time to time, as will the matters as to which a reliable estimate can be made and

the possible loss for such matters can be estimated. Actual results may prove to be significantly higher or

lower than the estimated possible loss in those matters, where an estimate was made. In addition, loss may

be incurred in matters with respect to which the Group believed the probability of loss was remote.

For a detailed description of the nature of uncertainties and assumptions and the effect on the amount and

timing of pending litigation and claims refer to Note 38.

5.4 Tax

The Group, is subject to tax in Cyprus and in the countries that it has run-down operations mainly in

Greece, Russia and Romania. Estimates are required in determining the provision for taxes at the reporting

date. The Group recognises income tax liabilities for transactions and assessments whose tax treatment is

uncertain. Where the final tax is different from the amounts initially recognised in the consolidated income

statement, such differences will impact the income tax expense, the tax liabilities and deferred tax assets or

liabilities of the period in which the final tax is agreed with the relevant tax authorities.

Deferred tax assets

In the absence of a specific accounting standard dedicated to the accounting of the asset that arose

pursuant to amendments in the Income Tax Law effected in March 2019 which provides for the

recoverability of tax assets arising from transfer of tax losses following resolution of a credit institution,

within the framework of 'The Resolution of Credit and Other Institutions', to be guaranteed (Note 17), BOC

PCL had exercised judgement in applying the guidance of IAS 12 as the most relevant available standard

and accounted for this asset item on the basis of IAS 12 principles relating to deferred tax assets.

For further details on such deferred tax assets refer to Note 17.

5.5 Fair value of investments and derivatives

The best evidence of fair value is a quoted price in an actively traded market. If the market for a financial

instrument is not active, a valuation technique is used. The majority of valuation techniques employed by

the Group use primarily observable market data and so the reliability of the fair value measurement is

relatively high.

However, certain financial instruments are valued on the basis of valuation techniques that feature one or

more significant inputs that are not observable. Valuation techniques that rely on non-observable inputs

require a higher level of management judgement to calculate a fair value than those based wholly on

observable inputs.

Valuation techniques used to calculate fair values include comparisons with similar financial instruments for

which market observable prices exist, discounted cash flow analysis and other valuation techniques

commonly used by market participants. Valuation techniques incorporate assumptions that other market

participants would use in their valuations, including assumptions about interest rate yield curves, exchange

rates, volatilities and default rates. When valuing instruments by reference to comparable instruments,

management takes into account the maturity, structure and rating of the instrument with which the position

held is being compared.

The Group uses models with only unobservable inputs for the valuation of certain unquoted equity

investments. In these cases, estimates are made to reflect uncertainties in fair values resulting from a lack

of market data inputs, for example, as a result of illiquidity in the market. Inputs into valuations based on

unobservable data are inherently uncertain because there is little or no current market data available from

which to determine the level at which an arm’s length transaction would occur under normal business

conditions. Unobservable inputs are determined based on the best information available.

424

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.5 Fair value of investments and derivatives (continued)

Further details on the fair value of assets and liabilities are disclosed in Notes 2.13.9 and 22.

5.6 Retirement benefits

The cost of defined benefit pension plans is determined using actuarial valuations. The actuarial valuations

involve making assumptions about discount rates, the expected rate of return on plan assets, future salary

increases, mortality rates as well as future pension increases where necessary. The Group’s management

sets these assumptions based on market expectations at the reporting date using its best estimates for

each parameter covering the period over which the obligations are to be settled. In determining the

appropriate discount rate, management considers the yield curve of high quality corporate bonds. In

determining other assumptions, a certain degree of judgement is required. Future salary increases are

based on expected future inflation rates for the specific country plus a margin to reflect the best possible

estimate relating to parameters such as productivity, workforce maturity and promotions. The expected

return on plan assets is based on the composition of each fund’s plan assets, estimating a different rate of

return for each asset class. Estimates of future inflation rates on salaries and expected rates of return of

plan assets represent management’s best estimates for these variables. These estimates are derived after

consultation with the Group’s advisors, and involve a degree of judgement. Due to the long-term nature of

these plans, such estimates are inherently uncertain.

Further details on retirement benefits are disclosed in Note 14.

5.7 Non-life insurance business

The Group is engaged in the provision of non-life insurance services. Risks under these policies usually

cover a period of 12 months.

A summary of the significant judgements and estimates made in the measurement of insurance and

reinsurance contract assets and liabilities is included in Note 5.9.

Further information on non-life insurance business is disclosed in Note 12.

5.8 Life insurance business

The Group is engaged in the provision of life insurance services. Whole life insurance plans (life plans) are

unit-linked contracts associated with assets where the amount payable in the case of death is the greater of

the sum insured and the value of investment units. Simple insurance or temporary term plans (term plans)

relate to fixed term duration plans for protection against death. In case of death within the coverage period,

the insured sum will be paid. Endowment insurance (such as investment plans/horizon plans/Capital builder

and Lifestart) refer to specific duration plans linked to investments, to create capital through systematic

investment in association with death insurance coverage whereby the higher of the sum insured and the

value of investment units is payable on death within the contract term.

A summary of the significant judgements and estimates made in the measurement of insurance and

reinsurance contract assets and liabilities is included in Note 5.9.

Further information on life insurance business is disclosed in Note 12.

5.9 Insurance and reinsurance contracts

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting

date, that have a significant risk of causing a material adjustment to the carrying amounts of insurance and

reinsurance assets and liabilities within the next financial year are discussed below. The Group based its

assumptions and estimates on parameters available by the reporting date. Existing circumstances and

assumptions about future developments, however, may change due to market changes or circumstances

arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they

occur.

425

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.9 Insurance and reinsurance contracts (continued)

Estimates of future cash flows

In estimating future cash flows, the Group incorporates, in an unbiased way, all reasonable and supportable

information that is available without undue cost or effort at the reporting date. This information includes

both internal and external historical data about claims and other experience, updated to reflect current

expectations of future events.

Cash flows within the boundary of a contract are those that relate directly to the fulfilment of the contract,

including those for which the Group has discretion over the amount or timing. These include payments to

(or on behalf of) policyholders and other costs that are incurred in fulfilling contracts. These comprise both

an allocation of fixed and variable overheads.

The estimates of future cash flows reflect the Group’s view of current conditions at the reporting date, as

long as the estimates of any relevant market variables are consistent with observable market prices.

The following key assumptions were used when estimating future cash flows in relation to life insurance

contracts:

a) Mortality and morbidity rates

b) Expenses and inflation

c) Lapse and surrender rates

Mortality and morbidity rates

Assumptions are based on standard international tables of mortality and morbidity, according to the type of

contract. In addition, a study is performed based on the actual experience (actual deaths) of the insurance

company for comparison purposes and if sufficient evidence exists which is statistically reliable, the results

are incorporated in these tables. An increase in mortality rates will lead to a larger expected number of

claims (or claims could occur sooner than anticipated), which will increase the expenditure and reduce

profits for shareholders.

The table below sets out the percentage estimated to apply to industry mortality and morbidity tables in

estimating fulfilment cash flows:

	Mortality Rates	Mortality rates*
		31 December
		2024
			31 December
			2023
Males	Smokers	61% A67/70	68% A67/70
	Non-Smokers	43% A67/70	48.25% A67/70
	Smokers
		61% A67/70
		rated down by 4
		years
			68% A67/70
			rated down by 4
			years
Females
	Non-Smokers
		43% A67/70
		rated down by 4
		years
			48.25% A67/70
			rated down by 4
			years

* The Group uses A67/70 UK standard mortality table in setting the mortality assumption, since the Group’s

own claim experience is not sufficient to allow the development of its own mortality table. To reflect the

Group’s specific claims experience more accurately, a percentage is applied on the A67/70 UK standard

mortality table.

Expense and inflation

Expense assumptions are based on the actual costs of the insurance activities of the Group incurred within

the year. To derive the per-policy expense assumption, every year the Group performs an expense analysis

which is based on the Group’s insurance subsidiaries actual expenses. For the purpose of the expense

analysis, expenses are split into expenses which are attributable and non-attributable. The Group produces

various metrics/ratios to allocate the costs to the underlying products. Non-attributable expenses are

excluded from the analysis as these are not directly related to a group of insurance contracts.

An assumption is also made for the rate of increase in expenses in relation to the annual inflation rate. An

increase in the level of expenses would reduce profitability.

426

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.9 Insurance and reinsurance contracts (continued)

	31 December
	2024
		31 December
		2023
	€000	€000
Inflation rate	4,00%	4,00%

Lapse and surrender rates

An analysis of contract termination rates is performed every year, using actual data from the insurance

company incorporation until the immediate preceding year. Rates vary according to the type and duration of

the plan.

	Unit-Linked
	(protection)
			Unit-Linked
			(savings)
					Non-Linked
					(term)
							Non-Linked
							(Cap. Builder &
							Lifestart)
	2024	2023	2024	2023	2024	2023	2024	2023
Year 1	3%	4%	6%	6%	5%	4%	3%	3%
Year 2	4%	5%	6%	6%	6%	6%	6%	7%
Year 3	4%	5%	5%	6%	5%	6%	6%	7%
Year 4	4%	5%	5%	6%	6%	7%	6%	6%
Year 5	4%	5%	4%	6%	6%	7%	6%	6%
Year 6+	4%	5%	4%	5%	6%	8%	5%	6%

Discount rates

Discount rates are applied to adjust the estimates of future cash flows to reflect the time value of money

and the financial risks related to those cash flows, to the extent that the financial risks are not included in

the estimates of cash flows.

Discount rates should:

i. Reflect the time value of money, characteristics of the cash flows and liquidity characteristics of the

insurance contract

ii. Be consistent with observable current market prices (if any) for financial instruments with cash flows

whose characteristics are consistent with those of the insurance contracts (e.g., timing, currency and

liquidity)

iii. Exclude the effect of factors that influence such observable market prices, but do not affect the

future cash flows of the insurance contracts

IFRS 17 does not require a particular estimation technique for determining discount rates but provides two

alternative approaches that may be used to derive discount rates. The determination of discount rates may

be derived from a yield curve that reflects the current market rates of return of an actual or reference

portfolio of assets, adjusted to eliminate any factors that are not relevant to the insurance contracts (top-

down approach), or discount rates may be derived based on a liquid risk-free yield curve adjusted for an

illiquidity premium (bottom-up approach). The Group has elected to apply a bottom-up approach whereby

discount rates are derived based on a liquid risk free yield curve adjusted for an illiquidity premium which is

derived from each insurance subsidiary's own bond portfolio assets. Under the bottom-up approach, the risk

free yield curve should be based on interest rates that are risk-free without including any component of

credit risk and should be derived from each insurance subsidiary at which two parties are willing to

exchange interest obligations. It is therefore necessary for these to be available for different times

reflecting the liabilities of the insurance contracts. It should also be based on information from financial

markets. The Group has elected to use the EIOPA risk-free rate curve as the liquid risk-free curve as it

covers all the above requirements. An illiquidity premium is then added which is calculated by subtracting

the credit risk premium and risk-free rate from the Yield to Maturity ('YTM') of the own bond portfolio of

assets for each insurance subsidiary. The YTM represents the interest rate that would be required for the

portfolio’s future cash flows to equal its market price.

427

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.9 Insurance and reinsurance contracts (continued)

The rates applied for discounting future cash flows are listed below:

	Year 1		Year 3		Year 5		Year 10		Year 20
	31
	December
	2024
		31
		December
		2023
			31
			December
			2024
				31
				December
				2023
					31
					December
					2024
						31
						December
						2023
							31
							December
							2024
								31
								December
								2023
									31
									December
									2024
										31
										December
										2023
Life insurance
contracts (unit-
linked)	2.5%	3.5%	2.4%	2.5%	2.4%	2.4%	2.5%	2.5%	2.5%	2.5%
Life insurance
contracts (non-
linked)	2.5%	3.5%	2.4%	2.6%	2.4%	2.5%	2.6%	2.5%	2.5%	2.5%
Non-life insurance
contracts	2.8%	4.6%	2.5%	3.8%	2.5%	3.7%	2.6%	3.7%	2.6%	3.7%

Investment return

The investment returns are the same as the discount rates applied.

Risk adjustment for non-financial risk

IFRS 17 provides limited prescriptive requirements as to the methodology to be used to calculate the risk

adjustment for non-financial risk and allows an entity to apply judgement in determining an appropriate

estimation technique.

Life insurance business and health insurance business

The Group has applied judgement in estimating the risk adjustment, in the following areas:

i. Risks included within the risk adjustment calculation – the risk adjustment for non-financial risk is

the compensation that is required for bearing the uncertainty about the amount and timing of cash

flows that arises from insurance risk and other non-financial risks as the insurance contract is

fulfilled. In estimating the risk adjustment, the Group has considered the non-market risks which are

also allowed in the calculation of the Solvency II Risk Margin. These include life and health

underwriting risks whereas, as specified by the standard, counterparty and operational risks are

excluded.

ii. Method of calculation - the Group calculates a margin, above best estimate assumptions, for each

non-financial risk to which the Group is exposed through issuing insurance contracts. The margins

are set so that (in combination) they would cover potential losses from movements in non-financial

risks within a specified confidence level. The total of these margins is the risk adjustment. The Group

has applied judgement in setting the confidence level applied in the risk adjustment calculation,

based on the Group’s appetite for accepting the risk inherent in writing insurance contracts and the

compensation required for doing so.

The Group has estimated the risk adjustment using a hybrid of Cost of Capital (CoC) and Value at Risk

(VaR) techniques. The Group first uses the CoC technique to calculate Risk Adjustment, which is then scaled

up/down using the VaR technique, to reflect the Group’s risk appetite and overall strategy.

The CoC methodology assesses the cost of holding capital sufficient to cover the relevant risks over the

lifetime of the business. It determines a required compensation amount by discounting the projected cost of

the calculated capital and translating that compensation amount to a corresponding confidence level. The

Group uses the CoC technique to produce a normal distribution with:

i. the Best Estimate Liabilities (BEL) as the mean of the distribution, and

ii. the Best Estimate Liabilities plus the solvency capital requirement (SCR) as the 99,5% percentile of the

distribution.

The Group estimated the probability distribution of the expected present value of the future cash flows from

the contracts at each reporting date and calculates the risk adjustment for non-financial risk at value at risk

of the target confidence level. The Group uses a target 90% (2023: 90%) percentile for the confidence

level.

Non-life insurance business other than the health insurance business

For non-life insurance business the risk adjustment forms a key component of the LIC.

428

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

5. Significant and other judgements, estimates and assumptions (continued)

5.9 Insurance and reinsurance contracts (continued)

The risk adjustment for LRC forms part of the loss component calculation which is used to determine the

groupings of contracts that are expected to be onerous.

Risk adjustment for non-financial risk is determined to reflect the compensation that the Group would

require for bearing non-financial risk and its degree of risk aversion. It is determined separately for each

non-life line of business and allocated to groups of contracts based on the total premiums for each group. It

reflects the effects of the diversification benefits between the different lines of business, which are

determined using a correlation matrix technique available from EIOPA.

The risk adjustment for non-financial risk is determined using a confidence level technique which stems

from a hybrid CoC and VaR approach. To determine the risk adjustment for non-financial risk for non-life

reinsurance contracts, the Group applies this technique to the gross amounts and then by using gross to net

ratios it derives the amount of risk being transferred to the reinsurer as the difference between the two

results.

The Group estimates the probability distribution of the expected present value of the future cash flows from

the contracts at each reporting date and calculates the risk adjustment for non-financial risk at value at risk

of the target confidence level. The Group uses a target 75% (2023:75%) percentile for the confidence level.

CSM

The CSM of a group of contracts is recognised in the consolidated income statement to reflect services

provided in each year, by identifying the coverage units in the group, allocating the CSM remaining at the

end of the year equally to each coverage unit provided in the year and expected to be provided in future

years, and recognising in consolidated income statement the amount of the CSM allocated to coverage units

provided in the year. The number of coverage units is the quantity of services provided by the contracts in

the group, determined by considering for each contract the quantity of the benefits and its expected

coverage period. The coverage units are reviewed and updated at each reporting date.

Further details on insurance liabilities are disclosed in Note 31.

5.10 Classification of properties

The Group determines whether a property is classified as investment property or stock of property as

follows:

i. Investment properties comprise land and buildings that are not occupied for use by, or in the

operations of the Group, nor for sale in the ordinary course of business, but are held primarily to earn

rental income and/or capital appreciation. These buildings are substantially rented to tenants and not

intended to be sold in the ordinary course of business. Additionally, they comprise leased properties

which are acquired in exchange of debt and are leased out under operating leases.

ii. Stock of property comprises real estate assets held with an intention to be disposed of. This principally

relates to properties acquired through debt-for-property swaps and properties acquired through the

acquisition of certain operations of Laiki Bank in 2013 (except from those that are leased out and are

classified as investment properties).

5.11 Fair value of properties held for own use and investment properties

In accordance with the Group’s accounting policy, property held for own use, as well as investment

property, is measured at fair value. In the case of property held for own use, valuations are carried out

periodically so that the carrying value is not materially different from the fair value, whereas in the case of

investment property, the fair value is established at each reporting date. Valuations are carried out by

qualified valuers by applying valuation models recommended by internationally accepted valuation

standards.

In arriving at their estimates of the fair values of properties, the valuers use their market knowledge and

professional judgement and do not rely solely on historical transactional comparable information, taking into

consideration the greater degree of uncertainty that exists compared to a more active market. Depending

on the nature of the underlying asset and available market information, the determination of the fair value

of property may require the use of estimates such as future cash flows from assets and discount rates

applicable to those assets. All these estimates are based on local market conditions existing at the reporting

date.

429

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

6. Segmental analysis (continued)

As from the first quarter of 2024, following an internal re-organisation, the activities previously reported

under segment ‘Wealth Management’ were reorganised and are now reported as follows: part of the

activities were undertaken by the newly set up unit, Affluent Banking which is presented and monitored

under ‘Retail’ and part of the activities are carried out by the Institutional Wealth Management and Custody,

which was transferred under and is now presented and monitored as part of ‘Treasury’. As a result of the

changes, ‘Wealth Management’ no longer comprises a separately reportable segment. The activities of the

subsidiary companies of the Group, CISCO and its subsidiary, which were part of the 'Wealth Management'

segment and whose activities relate to investment banking, brokerage, discretionary asset management

and investment advice services do not qualify as a material segment and are now presented within ‘Other’.

Comparative information in ‘Analysis by business line’, ‘Analysis of total revenue’ and ‘Analysis of assets and

liabilities’ in this note and comparative information in the ‘By business line’ analysis in Notes 14, 23, 30,

44.2, 44.3 and 44.5 was restated to reflect this change.

The operating segments are analysed below:

i. The Corporate, Small and Medium-sized Enterprises (SME) and Retail business lines are managing

loans and advances to customers. As from the first quarter of 2024, retail business line also includes

the Affluent Banking unit, which offers banking and investment services to its clients. Categorisation

of loans per customer group is detailed further below.

ii. IBU & International Corporate comprises of:

1. IBU, which specialises in the offering of banking services to the international corporate

customers based in Cyprus, particularly international business companies whose ownership

and business activities lie outside Cyprus, and non resident individual customers of BOC PCL.

2. International Corporate, which comprises of International Corporate Banking, Project Finance

& Loan Syndication and Shipping Centre. International Corporate Banking provides financing

from Cyprus in respect of projects based overseas with main focus being in Greece and the

United Kingdom. Project Finance & Loan Syndication acts as arranger or participant in large

international loan syndication transactions. Shipping Centre provides shipping financing

primarily for ocean-going cargo vessels.

iii. Restructuring and Recoveries is the specialised unit which was set up to tackle the Group’s loan

portfolio quality and manages exposures to borrowers in distress situation through innovative

solutions.

iv. The Real Estate Management Unit (REMU) manages properties acquired through debt-for-property

swaps and properties acquired through the acquisition of certain operations of Laiki Bank in 2013

and executes exit strategies in order to monetise these assets. REMU also includes other subsidiary

property companies of the Group.

v. Treasury is responsible for managing assets and liabilities within the Risk Appetite Framework set by

the Board of Directors. Treasury manages the Group’s liquid assets, investing in fixed income

securities and in the interbank market. This business line manages the interest rate and foreign

exchange risks to which the Group is exposed to and is also responsible for liquidity management

and for ensuring compliance with internal and regulatory liquidity guidelines. It is also responsible for

raising funding through the issuance of debt in the wholesale markets. As from the first quarter of

2024, Treasury also reports and monitors the Institutional Wealth Management and Custody unit,

which comprises of market execution and custody unit services along with asset management.

vi. The Insurance business line is involved in both life and non-life insurance business.

vii. Payment Services comprise the subsidiary company JCC, which is involved in the development of

inter-banking systems, acquiring and processing of debit and credit card transactions, other payment

services and other activities.

viii. The segment 'Other' includes central functions of BOC PCL such as finance, risk management,

compliance, legal, information technology, corporate affairs, human resources and other. These

functions provide services to the operating segments. Segment 'Other' also includes the subsidiary

company, CISCO and other small subsidiary companies in Cyprus (excluding the insurance

subsidiaries, property companies under REMU and the payment services subsidiary of the Group

(JCC)), as well as the overseas legacy activities of the Group.

BOC PCL broadly categorises its loans per customer group, in the following customer sectors:

i. Retail – all individuals, regardless of the facility amount, and legal entities with facilities from BOC

PCL of up to €500 thousand, excluding business property loans, and/or annual credit turnover up to

€1 million.

ii. Small and medium-sized enterprises (SME) – any company or group of companies (including

personal and housing loans to the directors or shareholders of a company) with facilities from BOC

PCL in the range of €500 thousand to €4 million and/or annual credit turnover in the range of €1

million to €10 million.

431

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

6. Segmental analysis (continued)

iii. Corporate – any company or group of companies (including personal and housing loans to the

directors or shareholders of a company) with available credit lines with BOC PCL of over €4 million

and/or having a minimum annual credit turnover of over €10 million. These companies are either

local larger corporations or international companies or companies in the shipping sector. Lending

includes direct lending or through syndications.

Management monitors the operating results of each business segment separately for the purposes of

performance assessment and resource allocation. Segment performance is evaluated based on profit after

tax and non-controlling interests. Inter-segment transactions and balances are eliminated on consolidation.

Operating segment disclosures are provided as presented to the Group Executive Committee.

Income and expenses associated with each business line are included within the business line results for

determining its performance. Fund transfer pricing and internal charges methodologies are applied between

the business lines as to reflect the performance of each business line. Income and expenses incurred

directly by the business lines are allocated to the business lines as incurred. Indirect income and expenses

are re-allocated from the central functions to the business lines. For the purposes of the Cyprus analysis by

business line, notional tax rate is charged/credited to the profit or loss before tax of each business line.

The loans and advances to customers, the customer deposits and the related income and expense are

generally included in the segment where the business is managed, instead of the segment where the

transaction is recorded.

432

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

6. Segmental analysis (continued)

Analysis by business line

	Corporate
		IBU &
		International
		corporate
			SME	Retail
					Restructuring
					and recoveries
						REMU	Insurance	Treasury
									Payment
									services
										Other	Total
2024
	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Net interest income/(expense)	157,910	159,223	58,978	419,895	14,656	(23,185)	19	38,009	-	(4,041)	821,464
Net fee and commission income/(expense)	20,203	48,744	9,698	66,834	2,178	(99)	(8,796)	4,324	28,271	5,586	176,943
Net foreign exchange gains/(losses)	1,351	6,813	775	2,683	36	-	-	15,546	(18)	99	27,285
Net gains on financial instruments	1,232	-	-	-	-	4	2,372	-	2,587	4,477	10,672
Net (losses)/gains on derecognition of financial assets measured at amortised cost	(8,843)	(670)	(309)	(1,416)	11,559	-	-	(326)	-	(8)	(13)
Net insurance result	-	-	-	-	-	-	46,191	-	-	-	46,191
Net losses from revaluation and disposal of investment properties	-	-	-	-	-	(118)	(446)	-	-	(866)	(1,430)
Net gains/(losses) on disposal of stock of property	-	-	-	-	-	693	-	-	-	(477)	216
Other income
	14	10	14	219	70	4,321	2,647	-	3,828	3,258	14,381
Total operating income	171,867	214,120	69,156	488,215	28,499	(18,384)	41,987	57,553	34,668	8,028	1,095,709
Staff costs	(7,869)	(14,513)	(5,960)	(59,808)	(9,621)	(3,408)	(3,657)	(3,017)	(9,591)	(85,618)	(203,062)
Special levy on deposits and other levies/contributions	(4,439)	(7,843)	(2,143)	(24,355)	(40)	-	-	(295)	-	-	(39,115)
Provisions for pending litigation, claims, regulatory and other matters (net of reversals)	-	-	-	-	13,651	-	-	-	1,721	(27,147)	(11,775)
Other operating expenses
	(32,501)	(19,885)	(15,170)	(100,734)	(8,900)	(14,827)	(5,058)	(12,711)	(13,974)	60,111	(163,649)
Operating profit/(loss) before credit losses and impairment	127,058	171,879	45,883	303,318	23,589	(36,619)	33,272	41,530	12,824	(44,626)	678,108
Credit losses on financial assets	10,879	(807)	(847)	(9,956)	(30,580)	(1,047)	(312)	869	-	4	(31,797)
Impairment net of reversals on non-financial assets
	-	-	-	-	-	(50,041)	-	-	-	(5,999)	(56,040)
Profit/(loss) before tax
	137,937	171,072	45,036	293,362	(6,991)	(87,707)	32,960	42,399	12,824	(50,621)	590,271
Income tax
	(17,242)	(21,384)	(5,629)	(36,670)	874	9,531	(2,894)	(5,300)	(1,381)	(1,033)	(81,128)
Profit/(loss) after tax
	120,695	149,688	39,407	256,692	(6,117)	(78,176)	30,066	37,099	11,443	(51,654)	509,143
Non-controlling interests-(profit)/loss
	-	-	-	-	-	2,215	-	-	(2,856)	(314)	(955)
Profit/(loss) after tax attributable to the owners of the Company
	120,695	149,688	39,407	256,692	(6,117)	(75,961)	30,066	37,099	8,587	(51,968)	508,188

433

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

6. Segmental analysis (continued)

Analysis by business line (continued)

	Corporate
		IBU &
		International
		corporate
			SME	Retail
					Restructuring
					and recoveries
						REMU	Insurance	Treasury
									Payment
									services
										Other	Total
2023 (restated)
	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Net interest income/(expense)	165,640	155,678	56,351	394,125	17,702	(34,263)	(2)	39,264	-	(2,278)	792,217
Net fee and commission income/(expense)	19,798	51,679	10,452	65,020	2,844	(212)	(8,350)	3,838	29,537	6,417	181,023
Net foreign exchange gains/(losses)	2,010	5,212	700	2,372	(171)	(14)	-	18,897	(287)	(131)	28,588
Net gains on financial instruments	2,401	-	-	-	-	7	5,648	3,583	1,007	134	12,780
Net gains/(losses) on derecognition of financial assets measured at amortised cost	4,400	(246)	(2,299)	(461)	6,770	-	-	(1,783)	-	(20)	6,361
Net insurance result	-	-	-	-	-	-	53,350	-	-	138	53,488
Net gains/(losses) from revaluation and disposal of investment properties	-	-	-	-	-	1,548	(331)	-	-	(174)	1,043
Net gains on disposal of stock of property	-	-	-	-	-	8,476	-	-	-	496	8,972
Other income
	24	5	16	209	67	7,551	5,594	12	3,775	1,084	18,337
Total operating income	194,273	212,328	65,220	461,265	27,212	(16,907)	55,909	63,811	34,032	5,666	1,102,809
Staff costs	(7,559)	(13,156)	(5,908)	(52,548)	(8,929)	(3,917)	(3,791)	(4,272)	(7,307)	(84,879)	(192,266)
Special levy on deposits and other levies/contributions	(4,340)	(8,765)	(2,176)	(26,789)	(109)	-	-	(201)	-	-	(42,380)
Provisions for pending litigation, claims, regulatory and other matters (net of reversals)	-	-	-	-	-	-	-	-	(380)	(28,084)	(28,464)
Other operating expenses
	(36,392)	(18,959)	(14,597)	(85,511)	(11,506)	(15,341)	(4,591)	(9,057)	(12,342)	57,203	(151,093)
Operating profit/(loss) before credit losses and impairment	145,982	171,448	42,539	296,417	6,668	(36,165)	47,527	50,281	14,003	(50,094)	688,606
Credit losses on financial assets	(36,553)	(2,130)	625	(4,337)	(30,419)	(5,737)	(229)	548	-	(1,598)	(79,830)
Impairment net of reversals on non-financial assets
	-	-	-	-	-	(46,307)	-	-	-	(545)	(46,852)
Profit/(loss) before tax
	109,429	169,318	43,164	292,080	(23,751)	(88,209)	47,298	50,829	14,003	(52,237)	561,924
Income tax
	(13,679)	(21,165)	(5,395)	(36,512)	2,969	16,296	(4,201)	(6,354)	(2,070)	(2,869)	(72,980)
Profit/(loss) after tax
	95,750	148,153	37,769	255,568	(20,782)	(71,913)	43,097	44,475	11,933	(55,106)	488,944
Non-controlling interests-(profit)/loss
	-	-	-	-	-	1,252	-	-	(2,984)	(5)	(1,737)
Profit/(loss) after tax attributable to the owners of the Company
	95,750	148,153	37,769	255,568	(20,782)	(70,661)	43,097	44,475	8,949	(55,111)	487,207

434

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

6. Segmental analysis (continued)

Analysis of total revenue

Total revenue includes net interest income, net fee and commission income, net foreign exchange gains, net gains/(losses) on financial instruments, net

gains/(losses) on derecognition of financial assets measured at amortised cost, net insurance result, net gains/(losses) from revaluation and disposal of

investment properties, net gains/(losses) on disposal of stock of property and other income. There was no revenue deriving from transactions with a single

external customer that amounted to 10% or more of Group revenue.

	Corporate
		IBU &
		International
		corporate
			SME	Retail
					Restructuring
					and recoveries
						REMU	Insurance	Treasury
									Payment
									Services
										Other	Total
2024
	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Revenue from third parties	193,280	118,263	60,097	255,129	29,720	5,707	50,580	343,314	28,801	10,818	1,095,709
Inter-segment (expense)/revenue
	(21,413)	95,857	9,059	233,086	(1,221)	(24,091)	(8,593)	(285,761)	5,867	(2,790)	-
Total revenue
	171,867	214,120	69,156	488,215	28,499	(18,384)	41,987	57,553	34,668	8,028	1,095,709
2023 (restated)
Revenue from third parties	219,193	124,579	56,574	250,424	27,719	17,778	64,101	307,002	28,889	6,550	1,102,809
Inter-segment (expense)/revenue
	(24,920)	87,749	8,646	210,841	(507)	(34,685)	(8,192)	(243,191)	5,143	(884)	-
Total revenue
	194,273	212,328	65,220	461,265	27,212	(16,907)	55,909	63,811	34,032	5,666	1,102,809

Analysis of assets and liabilities

	Corporate
		IBU &
		International
		corporate
			SME	Retail
					Restructuring
					and recoveries
						REMU	Insurance	Treasury
									Payment
									Services
										Other	Total
2024
	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Assets
Assets	3,506,922	1,078,202	960,321	4,544,575	113,338	742,194	1,053,971	13,640,957	133,198	914,216	26,687,894
Inter-segment assets
	(65,959)	-	-	-	-	(67,834)	(19,446)	-	(24,883)	(26,180)	(204,302)
Total assets
	3,440,963	1,078,202	960,321	4,544,575	113,338	674,360	1,034,525	13,640,957	108,315	888,036	26,483,592
2023 (restated)
Assets
Assets	3,469,090	880,219	942,490	4,351,607	213,477	895,374	919,427	13,971,313	93,536	1,055,699	26,792,232
Inter-segment assets
	(35,367)	-	-	-	-	(39,843)	(19,443)	-	(33,058)	(35,944)	(163,655)
Total assets
	3,433,723	880,219	942,490	4,351,607	213,477	855,531	899,984	13,971,313	60,478	1,019,755	26,628,577

435

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

6. Segmental analysis (continued)

Analysis of assets and liabilities (continued)

	Corporate
		IBU &
		International
		corporate
			SME	Retail
					Restructuring
					and recoveries
						REMU	Insurance	Treasury
									Payment
									Services
										Other	Total
2024
	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Liabilities
Liabilities	2,445,790	4,313,738	1,161,464	12,600,526	20,139	21,366	895,120	1,818,808	104,856	476,019	23,857,826
Inter-segment liabilities
	(135,625)	-	-	-	-	(14,636)	(2,275)	-	(27,895)	(23,871)	(204,302)
Total liabilities
	2,310,165	4,313,738	1,161,464	12,600,526	20,139	6,730	892,845	1,818,808	76,961	452,148	23,653,524
2023 (restated)
Liabilities
Liabilities	2,197,945	3,901,025	1,019,245	12,216,209	29,045	24,695	803,319	3,588,480	40,635	483,293	24,303,891
Inter-segment liabilities
	(111,192)	-	-	-	-	(11,667)	(16,404)	-	-	(24,392)	(163,655)
Total liabilities
	2,086,753	3,901,025	1,019,245	12,216,209	29,045	13,028	786,915	3,588,480	40,635	458,901	24,140,236

Segmental analysis of customer deposits and loans and advances to customers is presented in Notes 30 and Notes 23, 44.2 and 44.5 respectively.

436

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

12. Net insurance result

	2024			2023
	Life
	insurance
		Non-life
		insurance
			Total
				Life
				insurance
					Non-life
					insurance
						Total
	€000	€000	€000	€000	€000	€000
Insurance finance
income/(expense)
	(60,640)	(1,725)	(62,365)	(43,820)	(1,269)	(45,089)
Reinsurance finance
income/(expense)
	(1,375)	647	(728)	2,114	449	2,563
Return on assets backing
insurance liabilities
	59,186	-	59,186	43,486	-	43,486
Net insurance finance
income/(expense) and net
reinsurance finance
income/(expense)
	(2,829)	(1,078)	(3,907)	1,780	(820)	960
Insurance revenue	54,150	95,920	150,070	57,081	88,694	145,775
Insurance service expenses	(20,252)	(52,921)	(73,173)	(25,259)	(46,273)	(71,532)
Other insurance related
income/(expense)
	(106)	-	(106)	(715)	-	(715)
Net insurance service result
	33,792	42,999	76,791	31,107	42,421	73,528
Allocation of reinsurance
premiums
	(18,340)	(37,685)	(56,025)	(14,824)	(34,498)	(49,322)
Amounts recoverable from
reinsurers for incurred claims
	12,325	17,007	29,332	11,853	16,469	28,322
Net reinsurance service result
	(6,015)	(20,678)	(26,693)	(2,971)	(18,029)	(21,000)
Net insurance result
	24,948	21,243	46,191	29,916	23,572	53,488

The analysis of the insurance revenue recognised during the year is presented below:

	2024	2023
	€000	€000
Life insurance contracts
Amounts relating to the changes in the liability for remaining coverage
Expected incurred claims and insurance service expenses incurred in the year	34,183	37,129
Change in the risk adjustment for non-financial risk	1,047	1,306
Amount of CSM recognised in profit or loss	8,893	7,792
Other amounts, including experience adjustments for premium receipts	859	1,160
Amounts relating to recovery of insurance acquisition cash flows
Allocation of the portion of premiums that relate to the recovery of insurance
acquisition cash flows
	349	228
Insurance revenue from contracts measured under GMM and VFA	45,331	47,615
Insurance revenue from contracts measured under PAA
	8,819	9,466
Insurance revenue - life
	54,150	57,081
Non-life insurance contracts
Insurance revenue from contracts measured under PAA
	95,920	88,694
Insurance revenue - non-life
	95,920	88,694
Insurance revenue
	150,070	145,775

440

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

12. Net insurance result (continued)

The analysis of the insurance service expenses recognised during the year is presented below:

	2024			2023
	Life
	insurance
		Non-life
		insurance
			Total
				Life
				insurance
					Non-life
					insurance
						Total
	€000	€000	€000	€000	€000	€000
Incurred claims and directly
attributable expenses
	(19,462)	(39,840)	(59,302)	(24,446)	(32,964)	(57,410)
Amortisation of insurance
acquisition cash flows
	(349)	(6,945)	(7,294)	(227)	(5,541)	(5,768)
Insurance acquisition cash flows
expensed as incurred
	(2,750)	(6,317)	(9,067)	(2,581)	(5,907)	(8,488)
Reversals of losses/(losses) on
onerous contracts
	413	(337)	76	1,145	(108)	1,037
Changes to liabilities for incurred
claims (LIC)
	1,896	518	2,414	850	(1,753)	(903)
Insurance service expenses
	(20,252)	(52,921)	(73,173)	(25,259)	(46,273)	(71,532)

The analysis of the net reinsurance service result from reinsurance contracts held, recognised during the

year is presented below:

	2024	2023
Reinsurance contracts - life contracts	€000	€000
Amounts relating to the changes in the assets for remaining coverage
Expected recovery for insurance service expenses incurred in the year	(12,924)	(10,087)
Change in the risk adjustment for non-financial risk	(23)	41
Net cost/gain recognised in profit or loss
	(2,665)	(1,559)
Allocation of reinsurance premiums from contracts measured under GMM	(15,612)	(11,605)
Allocation of reinsurance premiums from contracts measured under PAA
	(2,728)	(3,219)
Allocation of reinsurance premiums
	(18,340)	(14,824)
Amounts recoverable for claims and other expenses incurred in the year	12,810	12,247
Changes in amounts recoverable arising from changes in liability for incurred
claims
	(883)	(394)
Changes in fulfilment cash flows which relate to onerous underlying contracts
	398	-
Amounts recoverable from reinsurers for incurred claims
	12,325	11,853
Net reinsurance service result - life
	(6,015)	(2,971)
Reinsurance contracts - non-life contracts
Allocation of reinsurance premiums from contracts measured under PAA
	(37,685)	(34,498)
Allocation of reinsurance premiums
	(37,685)	(34,498)
Amounts recoverable for claims and other expenses incurred in the year	12,106	13,346
Changes in amounts recoverable arising from changes in liability for incurred
claims
	4,715	3,072
Changes in fulfilment cash flows which relate to onerous underlying contracts
	186	51
Amounts recoverable from reinsurers for incurred claims
	17,007	16,469
Net reinsurance service result - non-life
	(20,678)	(18,029)
Net reinsurance service result
	(26,693)	(21,000)

441

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

14. Staff costs

Staff costs

	2024	2023
	€000	€000
Salaries	143,115	137,390
Employer's contributions	26,604	23,301
Variable compensation:
Accrual for short-term incentive award (Note 14.3)	10,090	11,488
Share-based benefits expense (Note 14.2)	932	595
Retirement benefit plan costs	12,782	12,072
Exit cost and other termination benefits
	9,539	7,420
	203,062	192,266

The number of persons employed by the Group as at 31 December 2024 was 2,880 (2023: 2,830).

Staff costs are presented in the Consolidated Income Statement net of software capitalisation costs and

costs included in the insurance contracts fulfilment cash flow liabilities under IFRS 17. An analysis of

expenses by nature incurred by the Group is included in Note 15.1.

The cost for the short-term incentive award comprises the cost for the short-term incentive award for the

performance year 2024 which amounts to €11,968 thousand (2023: €11,488 thousand), of which an

amount of €1,597 thousand (2023: €1,533 thousand) relates to employers' contributions accrual on 2024

STIP, and a credit amount of €1,878 thousand which relates to 2023 STIP.

During 2024, the Group provided for termination benefits to 57 (2023: 50) of the Group's full time

employees at a total cost of €9,539 thousand (2023: €7,420 thousand).

The following table shows the analysis per geographical location of the Group’s average number of

employees (full time) and analysis of the average number of employees in Cyprus per business line for 2024

and 2023.

	2024
		2023
		(restated)
Corporate	52	53
IBU & International corporate
- IBU	212	211
- International corporate	7	14
Small and medium-sized enterprises	83	82
Retail	879	912
Restructuring and recoveries	120	132
REMU	39	41
Insurance	209	200
Treasury	37	30
Payment services	117	113
Other (primarily head office functions)
	1,096	1,088
Total Cyprus	2,851	2,876
Other countries
	7	7
	2,858	2,883

443

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

14. Staff costs (continued)

14.1 Retirement benefits

In addition to the employer's contributions to state social insurance, the Group operates plans for the

provision of additional retirement benefits as described below:

	2024	2023
	€000	€000
Defined benefit plans	261	512
Defined contribution plans
	13,624	12,226
	13,885	12,738

During the year ended 31 December 2024 retirement benefit costs of €1,103 thousand are included within

net insurance service result as directly attributable expenses for the fulfilment of insurance contracts within

the scope of IFRS 17 (2023: €666 thousand) (Note 15.1).

Cyprus

The main retirement plan for the Group’s permanent employees in Cyprus (85% of total Group employees)

is a defined contribution plan. This plan provided for employer contributions of 9% for 2024 and 2023 and

employee contributions of 3%-10% of the employees’ gross salaries for both 2024 and 2023. This plan is

managed by an Administrative Committee appointed by the members.

A small number of employees of Group subsidiaries in Cyprus are also members of defined benefit plans.

These plans are funded with assets backing the obligations held in separate legal vehicles.

Greece

Following IFRIC’s decision in May 2021 about the periods of service to which an entity attributes benefit for

a particular defined benefit plan, the Group as at 31 December 2024 and 2023 does not have any

retirement benefits obligation for its employees in Greece, and as a result the accumulated actuarial

gains/losses attributable to these plans were derecognised since 31 December 2021.

United Kingdom

The Group has assumed in prior years the obligation of the defined benefit plan of employees of the former

subsidiary of the Group in the United Kingdom which was closed in December 2008 to future accrual of

benefits for active members. As at 31 December 2024 and 2023 the Group's remaining retirement benefit

obligation related to the UK pension plan.

In December 2024, the UK pension scheme undertook a bulk insurance buy-in transaction. The policy

purchased is designed to provide cash flows that match the amount and timing of the benefits payable to

the Scheme’s members giving protection against demographic and investment risks and meet the members’

corresponding defined benefit obligations. The buy-in policy is presented as a pension plan asset with the

fair value being equal to the present value of the scheme's defined benefit obligation.

Analysis of the results of the actuarial valuations for the defined benefit plans

	2024	2023
Amounts recognised in the consolidated balance sheet	€000	€000
Liabilities (Note 33)	-	565
Assets (Note 28)
	(1,767)	(669)
	(1,767)	(104)

Total funded status at a surplus, amounts to €992 thousand (2023: total funded status at a surplus of

€7,141 thousand) that is not recognised as an asset on the basis that the Group has no unconditional right

to future economic benefits either via a refund or a reduction in future contributions.

444

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

14. Staff costs (continued)

14.1 Retirement benefits (continued)

The amounts recognised in the consolidated balance sheet and the movement in the net defined benefit obligation for the years ended 31 December 2024 and

2023 are presented below:

	Present value of
	obligation
		Fair value of
		plan assets
			Net amount
			before impact of
			asset ceiling
				Impact of
				minimum
				funding
				requirement/
				asset ceiling
					Net defined
					benefit liability
	€000	€000	€000	€000	€000
1 January 2024
	58,018	(65,263)	(7,245)	7,141	(104)
Current service cost	119	-	119	-	119
Net interest expense/(income)	2,590	(2,637)	(47)	-	(47)
Administration cost
	-	189	189	-	189
Total amount recognised in the consolidated income
statement
	2,709	(2,448)	261	-	261
Remeasurements:
Return on plan assets, excluding amounts included in
net interest expense
	-	11,695	11,695	-	11,695
Actuarial gain from changes in financial assumptions	(2,697)	-	(2,697)	-	(2,697)
Demographic assumptions	(2,272)	-	(2,272)	-	(2,272)
Experience adjustments	298	-	298	-	298
Change in asset ceiling
	-	-	-	(6,840)	(6,840)
Total amount recognised in the consolidated OCI
	(4,671)	11,695	7,024	(6,840)	184
Exchange differences	2,806	(2,951)	(145)	691	546
Contributions:
Employer	-	(2,654)	(2,654)	-	(2,654)
Plan participants	180	(180)	-	-	-
Benefits paid from the plans
	(2,347)	2,347	-	-	-
31 December 2024
	56,695	(59,454)	(2,759)	992	(1,767)

445

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

14. Staff costs (continued)

14.1 Retirement benefits (continued)

	Present value of
	obligation
		Fair value of plan
		assets
			Net amount before
			impact of asset
			ceiling
				Impact of minimum
				funding
				requirement/ asset
				ceiling
					Net defined
					benefit liability
	€000	€000	€000	€000	€000
1 January 2023
	54,743	(62,605)	(7,862)	10,740	2,878
Current service cost	395	-	395	-	395
Net interest expense/(income)
	2,624	(2,507)	117	-	117
Total amount recognised in the consolidated income
statement
	3,019	(2,507)	512	-	512
Remeasurements:
Return on plan assets, excluding amounts included in
net interest expense
	-	394	394	-	394
Actuarial loss from changes in financial assumptions	1,623	-	1,623	-	1,623
Demographic assumptions	(605)	-	(605)	-	(605)
Experience adjustments	621	-	621	-	621
Asset adjustment	-	1,600	1,600	-	1,600
Change in asset ceiling
	-	-	-	(4,253)	(4,253)
Total amount recognised in the consolidated OCI
	1,639	1,994	3,633	(4,253)	(620)
Exchange differences	889	(1,465)	(576)	654	78
Contributions:
Employer	-	(2,952)	(2,952)	-	(2,952)
Plan participants	177	(177)	-	-	-
Benefits paid from the plans
	(2,449)	2,449	-	-	-
31 December 2023
	58,018	(65,263)	(7,245)	7,141	(104)

446

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

14. Staff costs (continued)

14.1 Retirement benefits (continued)

The actual return on plan assets for year 2024 was a loss of €9,247 thousand (2023: gain of €2,113

thousand) mainly due to the assets for the UK pension fund measured so that the fair value matches the

present value of the liability following the buy-in insurance policy.

The assets of funded plans are generally held in separately administered entities, either as specific assets or

as a proportion of a general fund, or as insurance contracts and are governed by local regulations and

practice in each country.

Pension plan assets are invested in different asset classes in order to maintain a balance between risk and

return. Investments are well diversified to limit the financial effect of the failure of any individual

investment. Through its defined benefit plans, the Group is exposed to a number of risks as outlined below:

Interest rate risk
	The Group is exposed to interest rate risk due to the mismatch of the duration
	of assets and liabilities.
Changes in bond yields
	A decrease in corporate bond yields will increase the liabilities, although this
	will be partially offset by an increase in the value of bond holdings.
Inflation risk
	The Group faces inflation risk, since the liabilities are either directly (through
	increases in pensions) or indirectly (through wage increases) exposed to
	inflation risks. Investments to ensure inflation-linked returns (i.e. real returns
	through investments such as equities, index-linked bonds and assets whose
	return increases with increasing inflation) could be used to better match the
	expected increases in liabilities.
Asset volatility
	The liabilities are calculated using a discount rate set with reference to
	corporate bond yields; if assets underperform this yield, a deficit will be
	created.

The fair value of insurance policy related to buy-in transaction was estimated as the present value of the

underlying obligations covered by the insurance policy, hence the fair value of this asset at each reporting

date is impacted by the measurement uncertainty of the related scheme liabilities.

The major categories of plan assets as a percentage of total plan assets are as follows:

	2024	2023
Equity securities	8%	10%
Debt securities	11%	66%
Loans and advances to banks	6%	21%
Funds	4%	3%
Buy-in insurance policy
	71%	-%
	100%	100%

The assets held by the funded plans include equity securities issued by the Company, the fair value of which

as at 31 December 2024 is €257 thousand (2023: €186 thousand).

The Group expects to make additional contributions to defined benefit plans of €622 thousand during 2025.

At the end of the reporting period, the average duration of the defined benefit obligations was 13 years

(2023: 14 years).

447

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

14. Staff costs (continued)

14.1 Retirement benefits (continued)

Principal actuarial assumptions used in the actuarial valuations

The present value of the defined benefit obligations of the retirement plans is estimated annually using the

Projected Unit Credit Method of actuarial valuation, carried out by independent actuaries. The principal

actuarial assumptions used for the valuations of the retirement plans of the Group during 2024 and 2023 are

set out below:

2024	Cyprus	UK
Discount rate	3.35%	5.15%
Inflation rate	2.00%	3.05%
Future salary increases	2.00%	n/a
Rate of pension increase	n/a	2.90%
Life expectancy for pensioners at age 60	n/a	n/a
Life expectancy for pensioners at age 65
	n/a
		22.6 years M
		24.3 years F
2023
Discount rate	3.27%	4.75%
Inflation rate	2.25%	3.00%
Future salary increases	2.25%	n/a
Rate of pension increase	n/a	2.80%
Life expectancy for pensioners at age 60
	23.5 years M
	29.6 years F	n/a
Life expectancy for pensioners at age 65
	n/a
		23.0 years M
		24.7 years F

The discount rate used in the actuarial valuations reflects the rate at which liabilities could effectively be

settled and is set by reference to market yields at the reporting date of high quality corporate bonds of

suitable maturity and currency. For the Group’s plans in the Eurozone which comprise 21% of the defined

benefit obligations, the Group adopted a full yield curve approach using AA- rated corporate bond data from

the iBoxx Euro Corporates AA10+ index. For the Group’s plan in the UK which comprises 79% of the defined

benefit obligations, the Group adopted a full yield curve approach using the discount rate that has been set

based on the yields on AA- rated corporate bonds with duration consistent with the scheme’s liabilities.

Under this approach, each future liability payment is discounted by a different discount rate that reflects its

exact timing.

To develop the assumptions relating to the expected rates of return on plan assets, the Group, in

consultation with its actuaries, uses forward-looking assumptions for each asset class reflecting market

conditions and future expectations at the reporting date. Adjustments are made annually to the expected

rate of return assumption based on revised expectations of future investment performance of asset classes,

changes to local legislation that may affect investment strategy, as well as changes to the target strategic

asset allocation.

The impact of significant assumptions' fluctuations on the defined benefit obligation as at 31 December

2024 and 2023 is presented below:

	2024		2023
Variable
	Change
	+0.5%
		Change
		-0.5%
			Change
			+0.5%
				Change
				-0.5%
Discount rate	-5.8%	6.2%	-6.4%	6.8%
Inflation growth rate	3.8%	-3.7%	4.2%	-4.1%
Salary growth rate	0.9%	-0.8%	1.1%	-1.0%
Pension growth rate	0.1%	-0.1%	0.1%	-0.1%
	Plus 1 year	Minus 1 year	Plus 1 year	Minus 1 year
Life expectancy	3.3%	-3.3%	3.8%	-3.8%

448

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

14. Staff costs (continued)

14.1 Retirement benefits (continued)

The above sensitivity analysis (with the exception of the inflation sensitivity) is based on a change in one

assumption while holding all other assumptions constant. In practice this is unlikely to occur and some

changes of the assumptions may be correlated. The inflation sensitivity includes changes to any inflation-

linked benefit increases. When calculating the sensitivity of the defined benefit obligation to significant

assumptions, the same method has been applied as when calculating the pension liability recognised on the

consolidated balance sheet. The methods and types of assumptions used in preparing the sensitivity

analysis did not change compared to previous years.

14.2 Share-based compensation plan

Long-Term Incentive Plan

At the Annual General Meeting of the shareholders of the Company which took place on 20 May 2022, a

special resolution was approved for the establishment and implementation of the share based Long-Term

Incentive Plan (the ‘LTIP’) of Bank of Cyprus Holdings Public Limited Company.

The LTIP is an equity-settled share-based compensation plan for executive directors and senior

management of the Group. The LTIP provides for an award in the form of ordinary shares of the Company

based on certain non-market performance and service vesting conditions. Performance is measured over a

three-year period. The performance conditions are set by the Human Resources & Remuneration Committee

(HRRC) each year and may be differentiated at the HRRC's discretion to reflect the Group's strategic targets

and employees' personal performance. Performance will be assessed against an evaluation scorecard

consistent with the Group’s Medium-Term Strategic Targets containing both financial and non-financial

objectives, and including targets in the areas of: (i) Profitability; (ii) Asset quality; (iii) Capital adequacy;

(iv) Risk control & compliance; (v) Environmental, Social and Governance ('ESG'); and (vi) Customer

Experience (targets in the area of Customer Experience have been introduced for non-control functions from

2024). The awards ordinarily vest in six tranches, with 40% vesting in the year following the year the

performance period ends and the remaining 60% vesting in tranches (12%), on each of the first, second,

third, fourth and fifth anniversary of the first vesting date. For any award to vest the employee must be in

the employment of the Group up until the date of the vesting of such an award. Awards are subject to

potential forfeiture under certain leaver scenarios. Under certain circumstances the HRRC has the discretion

to determine whether the award will lapse and/or the extent to which the award will be vested.

The maximum number of shares that may be issued pursuant to the LTIP until the tenth anniversary of the

relevant resolution shall not exceed 5% of the issued ordinary share capital of the Company as at the date

of the resolution (being 22,309,996 ordinary shares of €0.10 each), as adjusted for any issuance or

cancellation of shares subsequently to the date of the resolution (excluding any issuances of shares

pursuant to the LTIP).

Under the LTIP the following share awards were outstanding as of 31 December 2024:

i. On 3 April 2024 (grant date) a maximum of 403,990 share awards were granted by the Company to 21

eligible employees, comprising the Extended Executive Committee of the Group. The awards granted in

April 2024 are subject to a three-year performance period 2024-2026 (with all performance conditions

being non-market performance conditions).

ii. On 3 October 2023 (grant date) a maximum of 479,160 share awards were granted by the Company to

21 eligible employees, comprising the Extended Executive Committee of the Group. The awards granted

in October 2023 are subject to a three-year performance period 2023-2025 (with all performance

conditions being non-market performance conditions).

iii. On 22 December 2022 (grant date) a maximum of 819,860 share awards were granted by the Company

to 22 eligible employees, comprising the Extended Executive Committee of the Group. The awards

granted in December 2022 were subject to a three-year performance period 2022-2024 (with all

performance conditions being non-market performance conditions). The amounts awarded under this

2022 LTIP cycle in early 2025 are disclosed in Note 49 of the Consolidated Financial Statements.

The following table presents movements in outstanding share-based awards during 2024 and 2023.

449

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

14. Staff costs (continued)

14.2 Share-based compensation plan (continued)

	2024		2023
	Number of
	shares
		Weighted
		average grant
		date fair value
			Number of
			shares
				Weighted
				average grant
				date fair value
		€		€
As at 1 January	1,209,036	2.15	819,860	1.69
Granted during the year	403,990	3.70	479,160	2.95
Change in estimate of number of awards to
vest
	39,004	-	-	-
Vested during the year	-	-	-	-
Forfeited during the year
	-
		n/a
			(89,984)
				n/a
31 December
	1,652,030		1,209,036

Assumptions

The fair value calculations as of the granting date for each of the share awards are calculated using the

Black-Scholes model. As the award is a share award (and does not contain any market-based performance

conditions) the fair value is based on the share price at the date of the grant.

14.3 Short-term incentive plan

Short-term incentive award refers to a Short-Term Incentive Plan first introduced by the Group in 2023.

This is an annual incentive which involves variable remuneration in the form of cash, or a combination of

cash and shares, to selected employees, and is driven by both delivery of the Group's Strategy, as well as

individual performance, in the relevant year. Executive Management are also eligible to be considered for

the short-term incentive award. The short-term incentive award is generally paid in cash and is non-

deferred, however, in cases where the total variable remuneration in a year (i.e including both amounts

under STIP and LTIP) of an employee exceeds a specified threshold as per regulatory guidelines, then at

least 50% of the total variable remuneration is awarded in shares. In cases where the total variable

remuneration threshold is exceeded, the STIP award (both the cash and share component, if any) vests

similarly to the vesting of LTIP award, i.e., 40% vests in the year following the performance year to which

the incentive award relates to, and the remaining 60% vests in tranches (12%) over five years.

Shares vesting as part of the short-term incentive award are subject to one-year retention period and 100%

of the award is subject to clawback provisions.

For the short-term incentive award for the performance year 2024 no amount is to be granted in the form

of shares (2023: €250 thousand of the total STIP for 2023 was granted in the form of shares). Further

information on the amounts awarded under the short-term incentive award for the performance year 2024

to Executive Directors and other key management personnel is disclosed in Note 49.

450

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

15. Other operating expenses

	2024	2023
	€000	€000
Technology and systems	34,684	31,159
Property-related costs	14,348	14,392
Consultancy, legal and other professional services fees	23,904	19,467
Insurance	6,121	7,096
Advertising and marketing	13,281	9,000
Incentives to performing customers	2,300	2,500
Depreciation of property and equipment (Note 15.1)	16,075	13,760
Amortisation of intangible assets (Note 15.1)	14,901	15,740
Communication expenses	5,936	6,119
Printing and stationery	1,685	1,641
Cash transfer expenses	3,352	3,193
Other operating expenses
	27,062	24,773
	163,649	148,840
Advisory and other transformation costs (non-recurring)
	-	2,253
	163,649	151,093

The Group has changed the description of the first line item in the table above to more appropriately reflect

the nature of this expense and has changed this to 'Technology and systems' from 'Repairs and

Maintenance'. As a result of this change, expenses of €2,678 thousand have been included in 'Property-

related costs' and €31,159 thousand in 'Technology and systems' in respect of the comparative information.

Advisory and other transformation costs comprise mainly fees to external advisors in relation to the

transformation program and other strategic projects of the Group and are considered to be non-recurring.

During the year ended 31 December 2024, the Group recognised €56 thousand relating to rent expense for

short-term leases, included within 'Property-related costs' (2023: €57 thousand).

Incentives to performing customers of €2,300 thousand during the year ended 31 December 2024 (2023:

€2,500 thousand relate to the Reward Programme launched in June 2023) relate to the Reward Programme

launched in August 2024 to reward performing borrowers through the Antamivi reward scheme.

Within total other operating expenses, an amount of €542 thousand (2023: €777 thousand) relates to

investment property that generated rental income.

Special levy on deposits and other levies/contributions as presented in the consolidated income statement

are set out below:

	2024	2023
	€000	€000
Special levy on deposits of credit institutions in Cyprus	29,448	23,300
Single Resolution Fund contribution	-	5,477
Guarantee fee on annual deferred tax credit (Note 17)	5,364	5,364
Contribution to Deposit Guarantee Fund
	4,303	8,239
	39,115	42,380

The special levy on credit institutions in Cyprus (the Special Levy) is imposed on the level of deposits as at

the end of the previous quarter, at the rate of 0.0375% per quarter. Following an amendment of the

Imposition of Special Credit Institution Tax Law in 2017, the Single Resolution Fund ('SRF') contribution,

which is charged annually by the Single Resolution Board ('SRB'), reduces the charge of the Special Levy up

to the level of the total annual Special Levy charge. In February 2024, the SRB announced that no regular

annual contributions would be collected in 2024 from the institutions falling in scope of the SRF and

contributions would only be collected in the event of specific circumstances.

451

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

15. Other operating expenses (continued)

As from 1 January 2020 and until 3 July 2024 BOC PCL was subject to a contribution to the Deposit

Guarantee Fund (DGF) on a semi-annual basis. The contributions were calculated based on the Risk Based

Methodology (RBM) as approved by the management committee of the Deposit Guarantee and Resolution of

Credit and Other Institutions Schemes (DGS) and is publicly available on the CBC’s website. In line with the

RBM, the contributions are broadly calculated on the covered deposits of all authorised institutions and the

target level was to reach at least 0.8% of covered deposits by 3 July 2024. The management committee of

the DGS can decide to collect additional ex-ante contributions to achieve a higher return.

Fees to the independent auditors of the Group for audit and other professional services provided both in

Cyprus and overseas are presented in the table below:

	PwC Ireland		PwC Network firms
	2024	2023	2024	2023
	€000	€000	€000	€000
Audit of the individual and the Group financial
statements
	318	433	1,793	1,684
Other assurance services	247	117	779	545
Tax compliance and advisory services	-	-	193	169
Other non-assurance services
	35	-	448	326
	282	117	1,420	1,040
	600	550	3,213	2,724

Fees are exclusive of VAT.

Other assurance services fees relate primarily to the fees for limited assurance review of the Sustainability

Statement (2024 only), letters of comfort and interim review.

15.1 Expenses by nature

Analysis of staff costs and other operating expenses incurred by the Group by nature, is presented in the

table below:

		2024
	Directly
	attributable
	expenses
	(Note 12)
		Capitalised
		as
		internally
		developed
		computer
		software
		(Note 26)
			Staff
			costs
			(Note 14)
				Other
				operating
				expenses
				(Note 15)
					Total
	€000	€000	€000	€000	€000
Salaries and employer's contributions	11,193	2,337	169,719	-	183,249
Variable compensation:
Accrual for short-term incentive award	-	-	10,090	-	10,090
Share-based benefits expense	-	-	932	-	932
Retirement benefit plan costs (Note 14.1)	1,103	-	12,782	-	13,885
Exit cost and other termination benefits	-	-	9,539	-	9,539
Depreciation (Note 25)	453	-	-	7,698	8,151
Depreciation of RoU assets (Note 25)	1,451	-	-	8,377	9,828
Amortisation of intangible assets (Note 26)	3,291	-	-	14,901	18,192
Other operating expenses
	4,148	-	-	132,673	136,821
Total
	21,639	2,337	203,062	163,649	390,687

452

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

17. Income tax

	2024	2023
	€000	€000
Current tax:
- Cyprus	45,214	46,319
Cyprus special defence contribution	121	47
Deferred tax charge	34,081	26,001
Prior years’ tax adjustments	515	(52)
Other tax charges
	1,197	665
	81,128	72,980

The reconciliation between the income tax expense and the profit before tax as estimated using the current

income tax rates is set out below:

	2024	2023
	€000	€000
Profit before tax
	590,271	561,924
Income tax at the normal tax rates in Cyprus	73,784	70,241
Income tax effect of:
- expenses not deductible for income tax purposes	21,423	12,862
- income not subject to income tax	(9,644)	(7,366)
- other allowable deductions
	(6,268)	(3,417)
	79,295	72,320
Cyprus special defence contribution	121	47
Prior years' tax adjustments	515	(52)
Other tax charges
	1,197	665
	81,128	72,980

The corporate income tax rate in Cyprus is 12.5% on taxable income (2023: 12.5%). The tax rates

prevailing in the countries the Group has entities incorporated, in the year ended 31 December 2024 were:

Greece 22% (2023: 22%), Romania 16% (2023: 16%) and Russia 20% (2023: 20%).

For life insurance business there is a minimum income tax charge of 1.5% on gross premiums (this is

included within 'Net insurance service result'), which amounted to €2,494 thousand for the year ended 31

December 2024 (2023: €2,148 thousand). Special defence contribution is payable on the 75% of rental

income at a rate of 3% (2023: 3%) and on interest income from activities outside the ordinary course of

business at a rate of 17% (2023: 30%).

The Group is subject to income tax in the various jurisdictions in which it operates and the calculation of the

Group’s income tax charge, top-up tax liability under Cyprus Pillar Two Law and provisions for income tax

necessarily involves a degree of estimation and judgement. There are transactions and calculations for

which the ultimate income tax treatment is uncertain and cannot be determined until resolution has been

reached with the relevant tax authority. The Group has a number of open income tax returns with various

income tax authorities and liabilities relating to these judgemental matters which are based on estimates of

whether additional income taxes will be due. In case the final income tax outcome of these matters is

different from the amounts that were initially recorded, such differences will impact the current and

deferred income tax assets and liabilities in the period in which such determination is made.

On 22 December 2022, the European Commission approved Directive 2022/2523 which provides for a

minimum effective tax rate of 15% for the global activities of large multinational groups (Pillar Two tax).

The Directive (EU) 2022/2523 that follows closely the OECD Inclusive Framework on Base Erosion and Profit

Shifting was voted into Law 151(Ι)/2024 (the 'Cyprus Pillar Two Law') in December 2024, effective for

financial years starting from 31 December 2023. The Group is in scope of the Cyprus Pillar Two Law for the

year ended 31 December 2024. The Group is eligible for the transitional provision under Article 55 of the

Cyprus Pillar Two Law which results in zeroing any top-up tax liability in Cyprus computed in accordance

with the rules laid out in the Cyprus Pillar Two Law for the year ended 31 December 2024. The Group does

not anticipate any top-up tax liability arising from the foreign jurisdictions in which it has subsidiary entities.

454

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

17. Income tax (continued)

Deferred tax

The movement of the net deferred tax assets is set out below:

	Differences
	between
	capital
	allowances
	and
	depreciation
		Own property
		revaluation
			Stock of
			property and
			investment
			properties
				Unutilised
				income tax
				losses
				carried
				forward
				(guaranteed
				deferred tax
				asset)
					Other
					temporary
					differences
					(net)
						Total
2024	€000	€000	€000	€000	€000	€000
Net Deferred tax asset/(liability) as
at 1 January 2024
	(10,329)	(16,546)	7,542	189,546	(1,251)	168,962
Income Statement - tax
(charge)/credit
	(762)	-	3,004	(37,909)	1,586	(34,081)
Other comprehensive income - tax
credit
	-	20	-	-	-	20
31 December 2024
	(11,091)	(16,526)	10,546	151,637	335	134,901
Deferred tax assets	87	29	13,393	151,637	1,698	166,844
Deferred tax liabilities
	(11,178)	(16,555)	(2,847)	-	(1,363)	(31,943)
31 December 2024
	(11,091)	(16,526)	10,546	151,637	335	134,901
2023
Net Deferred tax asset/(liability) as
at 1 January 2023
	(10,528)	(13,338)	(2,847)	227,455	(7,442)	193,300
Income Statement - tax
credit/(charge)
	199	-	10,389	(37,909)	1,320	(26,001)
Other comprehensive income - tax
charge
	-	(3,234)	-	-	-	(3,234)
Other transfers	-	26	-	-	-	26
Transfer to current tax payables
following the adoption of IFRS 17
	-	-	-	-	4,871	4,871
31 December 2023
	(10,329)	(16,546)	7,542	189,546	(1,251)	168,962
Deferred tax assets	56	29	10,389	189,546	1,248	201,268
Deferred tax liabilities
	(10,385)	(16,575)	(2,847)	-	(2,499)	(32,306)
31 December 2023
	(10,329)	(16,546)	7,542	189,546	(1,251)	168,962

The deferred tax assets (DTA) relate to Cyprus operations.

455

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

17. Income tax (continued)

The Group offsets income tax assets and liabilities only if it has a legally enforceable right to set-off current

income tax assets and current income tax liabilities.

Income Tax Law Amendment 28(I) of 2019

On 1 March 2019, the Cyprus Parliament adopted legislative amendments to the Income Tax Law (the

'Law') which were published in the Official Gazette of the Republic on 15 March 2019 ('the amendments').

BOC PCL has DTA that meets the requirements of the Income Tax Law Amendment 28(I) of 2019 relating to

income tax losses transferred to BOC PCL as a result of the acquisition of certain operations of Laiki Bank,

on 29 March 2013, under ‘The Resolution of Credit and Other Institutions Law’. The DTA recognised upon

the acquisition of certain operations of Laiki in 2013 amounted to €417 million (corresponding to €3.3 billion

tax losses) for which BOC PCL paid a consideration as part of the respective acquisition. The period of

utilisation of the tax losses which may be converted into tax credits is eleven years following the

amendment of the Law in 2019, starting from 2018 i.e., by end of 2028.

As a result of the above Law, the Group has DTA amounting to €151,637 thousand as at 31 December 2024

(2023: €189,546 thousand) that meet the requirements under this Law, the recovery of which is

guaranteed. On an annual basis, an amount is either converted to annual tax credit and is reclassified from

the DTA to current tax receivables or it is used in the determination of the taxable income of the relevant

year, as the annual instalment can be claimed as a deductible expense. The annual instalment is reflected

as a charge in the Consolidated Income Statement.

The DTA subject to the Law is accounted for on the same basis as described in Note 2.11.

The Law, provides that an annual fee is charged on an annual basis until expiration of such losses in 2028.

The Group estimates that such fees could range to approximately €5,300 thousand per year (for each tax

year in scope i.e., since 2018) although the Group understands that such fee may fluctuate annually as to

be determined by the Ministry of Finance. An amount of €5,364 thousand that relates to the tax credit of

year 2024 (2023: €5,364 thousand) was recorded during the year ended 31 December 2024.

Accumulated income tax losses

The accumulated income tax losses are presented in the table below:

	Total income
	tax losses
		Income tax
		losses for
		which a
		deferred tax
		asset was
		recognised
			Income tax
			losses for
			which no
			deferred tax
			asset was
			recognised
2024	€000	€000	€000
Expiring within 5 years	464	-	464
Utilisation in annual instalments up to 2028
	1,213,091	1,213,091	-
	1,213,555	1,213,091	464
2023
Expiring within 5 years	45,851	-	45,851
Utilisation in annual instalments up to 2028
	1,516,364	1,516,364	-
	1,562,215	1,516,364	45,851

456

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

20. Investments (continued)

Investments at FVOCI

	2024	2023
	€000	€000
Debt securities	406,540	431,068
Equity securities
	9,537	12,352
	416,077	443,420

Investments at amortised cost

	2024	2023
	€000	€000
Debt securities
	3,805,637	3,116,714

Further analysis of the Group's investments is provided in the tables below.

Equity securities

	FVPL	FVOCI	Total
2024
	€000	€000	€000
Listed on the Cyprus Stock Exchange	-	6	6
Listed on other stock exchanges	837	60	897
Unlisted
	-	9,471	9,471
	837	9,537	10,374

	FVPL	FVOCI	Total
2023
	€000	€000	€000
Listed on the Cyprus Stock Exchange	-	728	728
Listed on other stock exchanges	903	58	961
Unlisted
	-	11,566	11,566
	903	12,352	13,255

The Group irrevocably made the election to classify its equity investments as equity investments at FVOCI

on the basis that these are not held for trading. Their carrying value amounts to €9,537 thousand at 31

December 2024 and is equal to their fair value (2023: €12,352 thousand).

Equity investments at FVOCI comprise mainly investments in private Cyprus registered companies, acquired

through loan restructuring activity and specifically through debt for equity swaps.

Dividend income amounting to €183 thousand has been received and recognised during the year ended 31

December 2024 in other income (2023: €856 thousand) (Note 13).

During the year ended 31 December 2024, holdings of equity investments measured at FVOCI with a

carrying value of €812 thousand have been disposed of (2023: €702 thousand).

459

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

20. Investments (continued)

Mutual funds

	FVPL
2024	€000
Listed on other stock exchanges	30,740
Unlisted
	94,350
	125,090

	FVPL
2023	€000
Listed on other stock exchanges	35,192
Unlisted
	95,569
	130,761

The majority of the unlisted mutual funds relate to investments whose underlying assets are listed on stock

exchanges and are therefore presented in Level 2 hierarchy in Note 22.

Debt securities and other non-equity securities

Analysis by issuer type	FVPL	FVOCI
			Amortised
			cost
				Total
2024	€000	€000	€000	€000
Cyprus government	-	287,590	735,617	1,023,207
Other governments	-	24,735	1,056,915	1,081,650
Financial institutions	-	65,822	1,084,888	1,150,710
Other financial corporations	10,702	-	57,258	67,960
Supranational organisations	-	23,462	696,260	719,722
Other non-financial corporations	-	4,972	175,431	180,403
Allowance for expected credit losses
	-	(41)	(732)	(773)
	10,702	406,540	3,805,637	4,222,879

	FVPL	FVOCI
			Amortised
			cost
				Total
2023	€000	€000	€000	€000
Cyprus government	-	315,844	611,199	927,043
Other governments	-	10,317	751,399	761,716
Financial institutions	-	81,803	1,046,525	1,128,328
Other financial corporations	3,611	-	47,483	51,094
Supranational organisations	-	18,439	550,441	568,880
Other non-financial corporations	-	4,948	110,655	115,603
Allowance for expected credit losses
	-	(283)	(988)	(1,271)
	3,611	431,068	3,116,714	3,551,393

460

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

20. Investments (continued)

Geographic dispersion by country of issuer	FVPL	FVOCI
			Amortised
			cost
				Total
2024	€000	€000	€000	€000
Cyprus	-	287,590	737,640	1,025,230
Greece	-	11,097	78,492	89,589
Germany	-	2,934	217,589	220,523
France	-	23,140	344,597	367,737
Other European Union countries	-	31,201	1,129,546	1,160,747
United Kingdom	-	-	18,094	18,094
USA and Canada	10,702	4,091	291,982	306,775
Other countries	-	23,066	292,169	315,235
Supranational organisations	-	23,462	696,260	719,722
Allowance for expected credit losses
	-	(41)	(732)	(773)
	10,702	406,540	3,805,637	4,222,879

	FVPL	FVOCI	Amortised cost	Total
2023	€000	€000	€000	€000
Cyprus	-	315,844	621,617	937,461
Greece	-	18,793	60,516	79,309
Germany	-	-	210,519	210,519
France	-	31,662	283,256	314,918
Other European Union countries	-	20,345	741,331	761,676
United Kingdom	-	-	18,098	18,098
USA and Canada	3,611	4,078	273,471	281,160
Other countries	-	22,190	358,453	380,643
Supranational organisations	-	18,439	550,441	568,880
Allowance for expected credit losses
	-	(283)	(988)	(1,271)
	3,611	431,068	3,116,714	3,551,393

'Other countries' include exposures in Israel amounting to €31,065 thousand as at 31 December 2024

(2023: €46,715 thousand).

Analysis by currency
	FVPL	FVOCI
			Amortised
			cost
				Total
2024	€000	€000	€000	€000
Euro	-	387,000	3,510,264	3,897,264
US dollar	10,702	19,581	283,963	314,246
Pound sterling	-	-	12,142	12,142
Allowance for expected credit losses
	-	(41)	(732)	(773)
	10,702	406,540	3,805,637	4,222,879

	FVPL	FVOCI	Amortised cost	Total
2023	€000	€000	€000	€000
Euro	-	412,913	2,877,334	3,290,247
US dollar	3,611	18,438	228,779	250,828
Pound sterling	-	-	11,589	11,589
Allowance for expected credit losses
	-	(283)	(988)	(1,271)
	3,611	431,068	3,116,714	3,551,393

461

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

20. Investments (continued)

Listing analysis	FVPL	FVOCI
			Amortised
			cost
				Total
2024	€000	€000	€000	€000
Listed on the Cyprus Stock Exchange	-	-	33,884	33,884
Listed on other stock exchanges	-	406,581	3,772,485	4,179,066
Unlisted	10,702	-	-	10,702
Allowance for expected credit losses
	-	(41)	(732)	(773)
	10,702	406,540	3,805,637	4,222,879

	FVPL	FVOCI	Amortised cost	Total
2023	€000	€000	€000	€000
Listed on the Cyprus Stock Exchange	-	-	4,567	4,567
Listed on other stock exchanges	-	431,351	3,113,135	3,544,486
Unlisted	3,611	-	-	3,611
Allowance for expected credit losses
	-	(283)	(988)	(1,271)
	3,611	431,068	3,116,714	3,551,393

The Group uses fair value hedging to manage the interest rate risk in relation to its FVOCI bonds (Note 21).

An analysis of the movement of the gross debt securities at FVOCI and ECL of debt securities at FVOCI is

presented in the table below:

	2024		2023
	Gross debt
	securities
		ECL
			Gross debt
			securities
				ECL
	€000	€000	€000	€000
1 January	431,351	(283)	454,438	(663)
New assets acquired in the year	45,316	-	84,700	-
Assets derecognised and/or redeemed in the
year (Note 16)
	(75,871)	68	(128,929)	39
Interest accrued and amortisation	(2,959)	-	(1,728)	-
Foreign exchange adjustments	1,188	-	(640)	-
Changes to models and inputs used for ECL
calculations (Note 16)
	-	174	-	341
Changes in fair value
	7,556	-	23,510	-
31 December
	406,581	(41)	431,351	(283)

All debt securities measured at FVOCI are classified as Stage 1 as at 31 December 2024 and 31 December

2023.

462

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

21. Derivative financial instruments (continued)

The use of derivatives is an integral part of the Group’s activities. Derivatives are used to manage the

Group’s own exposure to fluctuations in interest rates and foreign currency exchange rates. Derivatives are

also sold to customers as risk management products.

Credit risk for derivatives arises from the possibility of the counterparty’s failure to meet the terms of any

contract. In the case of derivatives, credit losses are a significantly smaller amount compared to the

derivatives’ notional amount. In order to manage credit risk, the Group sets derivative limits based on the

creditworthiness of the involved counterparties and uses credit mitigation techniques such as netting,

collateralisation, margin calls and clearing through Central Clearing House (CCP) where applicable.

Interest rate risk is explained in Note 45. The interest rate risk is managed through the use of own balance

sheet solutions such as plain vanilla interest rate swaps and interest rate options. In fair value hedging of

interest rate risk, fixed rate assets/liabilities are converted to floating. In cash flow hedging of interest rate

risk, the Group converts floating rate assets/liabilities to fixed.

Currency risk is explained in Note 45. In order to manage currency risk, the Group hedges its open position

by entering into foreign exchange deals such as: foreign exchange spot, foreign exchange forwards, foreign

exchange swaps or foreign exchange options. The foreign currency risk mainly arises from customer-driven

transactions on deposits and loans and advances.

Forward exchange rate contracts are irrevocable agreements to buy or sell a specified quantity of foreign

currency on a specified future date at an agreed rate.

Currency swaps involve the exchange of two currencies at the current market rate and the commitment to

re-exchange them at a specified rate upon maturity of the swap. Cross-currency swaps are interest rate

swaps in which the cash flows are in different currencies.

Interest rate swaps are contractual agreements between two parties to exchange fixed rate and floating

rate interest, by means of periodic payments, based upon a notional principal amount and the interest rates

defined in the contract.

Currency options are contracts that grant the holder the right, but not the obligation, to buy or sell currency

at a specified exchange rate during a specified period of time.

Interest rate caps/floors protect the buyer from fluctuations of interest rates above or below a specified

interest rate for a specified period of time.

The credit exposure of derivative financial instruments represents the cost to replace these contracts at the

reporting date. The exposure arising from these transactions is managed as part of the Group’s credit risk

management process for credit facilities granted to customers and financial institutions.

The contract amount of certain types of derivative financial instruments provides a basis for comparison

with other instruments recognised on the consolidated balance sheet, but does not necessarily indicate the

amount of future cash flows involved or the current fair value of the instruments and, consequently, does

not indicate the Group’s exposure to credit or market risk.

The fair value of the derivatives can be either positive (asset) or negative (liability) as a result of

fluctuations in market interest rates and foreign currency exchange rates in accordance with the terms of

the relevant contract. The aggregate net fair value of derivatives may fluctuate significantly over time.

Hedge accounting

The Group elected, as a policy choice permitted by IFRS 9, to continue to apply hedge accounting in

accordance with IAS 39.

The Group applies hedge accounting using derivatives when the required criteria for hedge accounting are

met. The Group also uses derivatives for economic hedging (hedging the changes in interest rates, foreign

currency exchange rates or other risks) which do not meet the criteria for hedge accounting. As a result,

these derivatives are accounted for as trading derivatives and the gains or losses arising from revaluation

are recognised in the consolidated income statement.

464

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

21. Derivative financial instruments (continued)

Derivatives held for trading comprise derivatives entered into with economic hedging intent to which the

Group does not apply hedge accounting or derivative positions arise as a result of activity generated by

corporate customers. Derivatives classified as held for hedging comprise only those derivatives to which the

Group applies hedge accounting.

Fair value hedges

The Group uses interest rate swaps to hedge the interest rate risk arising as a result of the possible adverse

movement in the fair value of fixed rate debt securities measured at FVOCI, debt securities in issue and

subordinated liabilities, as well as customer deposits.

As part of its structural interest rate risk management, during the year ended 31 December 2024, the

Group has contracted fixed-rate receiver swaps to hedge interest rate risk by setting up fair value hedges

for a portfolio of liabilities being the core NMDs. This strategy is designated as a fair value hedge, under the

IAS 39 as adopted by the EU (IAS 39 carve-out) and its effectiveness is assessed by comparing changes in

the fair value of the designated hedged item, attributable to changes in the benchmark interest rate, with

the respective changes in the fair value of the interest rate swaps used as hedging instruments.

Changes in the fair value of derivatives designated as fair value hedges (both for micro hedges and macro

hedges) and the fair value of the hedged items in relation to the risk being hedged are recognised in the

consolidated income statement.

In the case of fair value macro hedges, fair value changes of the hedged portfolios are recognised in the

liability side of the consolidated balance sheet under caption ‘Changes in the fair value of hedged items in

portfolio hedges of interest rate risk’, which as at 31 December 2024 amounted to a cumulative fair value

change of €44,074 thousand (2023: n/a).

Hedges of net investments

The Group’s consolidated balance sheet is impacted by foreign currency exchange differences between Euro

and all non-Euro functional currencies of overseas subsidiaries and other foreign operations. The Group

hedges its structural currency risk when it considers that the cost of such hedging is within an acceptable

range (in relation to the underlying risk). This hedging is done through the use of forward exchange rate

contracts.

As at 31 December 2024, forward exchange rate contracts amounting to €985 thousand (2023: €1,200

thousand) have been designated as hedging instruments and have given rise to approximately nil loss

(2023: loss of €13 thousand) which was recognised in the ‘Foreign currency translation reserve’ in the

consolidated statement of comprehensive income, against the profit or loss from the retranslation of the net

assets of the overseas subsidiaries and other foreign operations.

	Gains/(losses) attributable to
	hedged risk
			Hedge in-
			effectiveness
2024
	Hedged items
		Hedging
		instruments
Derivatives qualifying for hedge accounting	€000	€000	€000
Fair value hedges - interest rate swaps
-debt securities - investment	8,763	(8,763)	-
-debt securities in issue	(8,914)	8,914	-
-subordinated liabilities	93	(93)	-
-customer deposits (macro hedge)
	(44,074)	44,074	-
Total
	(44,132)	44,132	-

465

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

21. Derivative financial instruments (continued)

	Gains/(losses) attributable
	to hedged risk
			Hedge in-
			effectiveness
2023
	Hedged items
		Hedging
		instruments
Derivatives qualifying for hedge accounting	€000	€000	€000
Fair value hedges - interest rate swaps
-debt securities - investments	22,840	(20,722)	2,118
-debt securities in issue	(14,274)	14,274	-
-subordinated liabilities	(4,237)	4,237	-
Net investments
-forward exchange rate contracts
	13	(13)	-
Total
	4,342	(2,224)	2,118

The accumulated fair value adjustment arising from the hedging relationships is presented in the table

below:

	Carrying amount of hedged
	items
			Accumulated amount of fair
			value hedging adjustments
			gains/(losses) on the
			hedged item
2024	Assets	Liabilities	Assets	Liabilities
Derivatives qualifying for hedge
accounting	€000	€000	€000	€000
Fair value hedges - interest rate swaps
-debt securities - investments	379,937	-	(28,498)	-
-debt securities in issue	-	989,435	-	(18,335)
-subordinated liabilities	-	307,138	-	(4,144)
-customer deposits (macro hedge)	-	2,914,362	-	(44,074)
Net investments - forward exchange rate
contracts
Net assets/liabilities
	-	985	-	1
Total
	379,937	4,211,920	(28,498)	(66,552)

	Carrying amount of hedged
	items
			Accumulated amount of fair
			value hedging adjustments
			gains/(losses) on the hedged
			item
2023	Assets	Liabilities	Assets	Liabilities
Derivatives qualifying for hedge
accounting	€000	€000	€000	€000
Fair value hedges - interest rate swaps
-debt securities - investments	439,043	-	(43,441)	-
-debt securities in issue	-	671,632	-	(9,421)
-subordinated liabilities	-	306,787	-	(4,237)
Net investments - forward exchange rate
contracts
Net assets/liabilities
	1,200	-	1	-
Total
	440,243	978,419	(43,440)	(13,658)

For assets hedged using fair value hedges the applicable average rates of hedging instruments is 2.35%

fixed rate as at 31 December 2024 (2023: 2.05%). For liabilities hedged using fair value hedges, the

average fixed rate is 3.55% as at 31 December 2024 (2023: 5.44%).

466

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

21. Derivative financial instruments (continued)

The maturity of the Group's contract amount of the derivatives is presented in the table below:

	On demand
	and up to one
	month
		Between one
		and three
		months
			Between
			three months
			and one year
				Between one
				and five
				years
					Over five
					years
						Total
						contract
						amount
2024	€000	€000	€000	€000	€000	€000
Trading
derivatives
Forward exchange
rate contracts
	8,040	9,870	5,322	-	-	23,232
Currency swaps	719,764	206,213	218	-	-	926,195
Currency options	472	-	-	-	-	472
Interest rate
caps/floors
	-	-	-	18,130	-	18,130
	728,276	216,083	5,540	18,130	-	968,029
Derivatives
qualifying for
hedge
accounting
Fair value hedges
- interest rate
swaps
	-	-	69,000	1,404,000	164,500	1,637,500
Portfolio fair value
hedges - interest
rate swaps
	-	-	-	2,914,362	-	2,914,362
Net investments -
forward exchange
rate contracts
	985	-	-	-	-	985
	985	-	69,000	4,318,362	164,500	4,552,847
Total
	729,261	216,083	74,540	4,336,492	164,500	5,520,876

	On demand
	and up to one
	month
		Between one
		and three
		months
			Between three
			months and
			one year
				Between one
				and five years
					Over five
					years
						Total contract
						amount
2023	€000	€000	€000	€000	€000	€000
Trading
derivatives
Forward exchange
rate contracts
	9,734	9,657	4,569	-	-	23,960
Currency swaps	852,963	132,603	693	-	-	986,259
Interest rate
swaps
	-	4,372	9,088	-	-	13,460
Currency options	44	-	-	-	-	44
Interest rate
caps/floors
	-	-	-	166,075	-	166,075
	862,741	146,632	14,350	166,075	-	1,189,798
Derivatives
qualifying for
hedge
accounting
Fair value hedges
- interest rate
swaps
	-	15,000	56,031	1,166,000	164,500	1,401,531
Net investments -
forward exchange
rate contracts
	1,200	-	-	-	-	1,200
	1,200	15,000	56,031	1,166,000	164,500	1,402,731
Total
	863,941	161,632	70,381	1,332,075	164,500	2,592,529

467

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

22. Fair value measurement

The following table presents the carrying value and fair value of the Group's financial assets and liabilities.

	2024		2023
	Carrying
	value
		Fair value
			Carrying
			value
				Fair value
Financial assets	€000	€000	€000	€000
Cash and balances with central banks	7,600,726	7,600,726	9,614,502	9,614,502
Loans and advances to banks	820,574	813,239	384,802	370,853
Investments at FVPL	136,629	136,629	135,275	135,275
Investments at FVOCI	416,077	416,077	443,420	443,420
Investments at amortised cost	3,805,637	3,837,774	3,116,714	3,119,618
Reverse repurchase agreements	1,010,170	1,026,046	403,199	411,654
Derivative financial assets	95,273	95,273	51,055	51,055
Loans and advances to customers	10,114,394	10,114,750	9,821,788	9,972,249
Life insurance business assets attributable to
policyholders
	761,127	761,127	637,562	637,562
Financial assets classified as held for sale	23,143	23,143	-	-
Other financial assets
	295,632	300,606	388,244	406,602
	25,079,382	25,125,390	24,996,561	25,162,790
Financial liabilities
Funding from central banks and deposits by
banks
	364,231	334,156	2,515,424	2,472,718
Derivative financial liabilities	4,664	4,664	17,980	17,980
Customer deposits	20,519,276	20,494,544	19,336,915	19,300,867
Debt securities in issue	989,435	1,024,400	671,632	655,428
Subordinated liabilities	307,138	314,195	306,787	300,098
Other financial liabilities and lease liabilities
	441,445	441,445	362,152	362,152
	22,626,189	22,613,404	23,210,890	23,109,243

The fair value of financial assets and liabilities in the above table is as at the reporting date and does not

represent any expectations about their future value.

The Group uses the following hierarchy for determining and disclosing fair value:

Level 1: investments valued using quoted prices in active markets.

Level 2: investments valued using models for which all inputs that have a significant impact on fair value

are market observable.

Level 3: investments valued using models for which inputs that have a significant impact on fair value are

not based on market observable data.

Observable inputs to the models for the valuation of unquoted equity and debt securities include, where

applicable, current and expected market interest rates, market expected default rates, market implied

country and counterparty credit risk and market liquidity discounts.

For assets and liabilities that are recognised in the Consolidated Financial Statements at fair value, the

Group determines whether transfers have occurred between levels in the hierarchy by re-assessing

categorisation at the end of each reporting period.

468

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

22. Fair value measurement (continued)

The following table presents the fair value measurement hierarchy of the Group's assets and liabilities

recorded at fair value and financial assets and financial liabilities for which fair value is disclosed, by level of

the fair value hierarchy.

	Level 1	Level 2	Level 3	Total
2024	€000	€000	€000	€000
Assets measured at fair value
Investment properties
Residential	-	-	4,584	4,584
Offices and other commercial properties	-	-	20,715	20,715
Manufacturing and industrial properties	-	-	8,662	8,662
Land (fields and plots)
	-	-	2,290	2,290
	-	-	36,251	36,251
Freehold property
Offices and other commercial properties
	-	-	240,185	240,185
Loans and advances to customers measured
at FVPL
	-	-	131,008	131,008
Trading derivatives
Forward exchange rate contracts	-	171	-	171
Currency swaps	-	7,662	-	7,662
Interest rate swaps	-	-	-	-
Currency options	-	455	-	455
Interest rate caps/floors
	-	945	-	945
	-	9,233	-	9,233
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps	-	58,299	-	58,299
Portfolio fair value hedges - interest rate
swaps
	-	27,741	-	27,741
	-	86,040	-	86,040
Investments at FVPL
	31,577	94,350	10,702	136,629
Investments at FVOCI
	406,600	6	9,471	416,077
Prepayments, accrued income and other
assets
	-	-	25,500	25,500
	438,177	189,629	453,117	1,080,923
Financial assets not measured at fair
value
Loans and advances to banks	-	813,239	-	813,239
Investments at amortised cost	3,604,367	233,407	-	3,837,774
Reverse repurchase agreements	-	1,026,046	-	1,026,046
Loans and advances to customers
	-	-	9,983,742	9,983,742
	3,604,367	2,072,692	9,983,742	15,660,801

The discount rate used in the determination of the fair value of the loans and advances to customers

measured at FVPL as at 31 December 2024 is 6.79% (2023: 7.56%).

For loans and advances to customers measured at FVPL categorised as Level 3 as at 31 December 2024, an

increase in the discount factor by 10% would result in a decrease of €2,460 thousand in their fair value and

a decrease in the discount factor by 10% would result in an increase of €591 thousand in their fair value.

For one investment included in other non-equity securities mandatorily measured at FVPL as a result of the

SPPI assessment and categorised as Level 3 with a carrying amount of €10,702 thousand as at 31

December 2024, a change in the conversion factor by 10% would result in a change in the value of the

other non-equity securities by €1,070 thousand.

For additional disclosures on sensitivity analysis of equity securities refer to Note 45.

469

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

22. Fair value measurement (continued)

The fair value measurement hierarchy for life insurance business assets attributable to policy holders is

disclosed in Note 24.

	Level 1	Level 2	Level 3	Total
2024	€000	€000	€000	€000
Liabilities measured at fair value
Trading derivatives
Forward exchange rate contracts	-	126	-	126
Currency swaps	-	517	-	517
Currency options	-	17	-	17
Interest rate caps/floors
	-	945	-	945
	-	1,605	-	1,605
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps	-	2,918	-	2,918
Portfolio fair value hedges - interest rate
swaps
	-	140	-	140
Net investments - forward exchange rate
contracts
	-	1	-	1
	-	3,059	-	3,059
	-	4,664	-	4,664
Financial liabilities not measured at fair
value
Deposits by banks	-	334,156	-	334,156
Customer deposits	-	-	20,494,544	20,494,544
Debt securities in issue	1,024,400	-	-	1,024,400
Subordinated liabilities
	314,195	-	-	314,195
	1,338,595	334,156	20,494,544	22,167,295

470

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

22. Fair value measurement (continued)

	Level 1	Level 2	Level 3	Total
2023	€000	€000	€000	€000
Assets measured at fair value
Investment properties
Residential	-	-	5,933	5,933
Offices and other commercial properties	-	-	34,369	34,369
Manufacturing and industrial properties	-	-	19,513	19,513
Land (fields and plots)
	-	-	2,290	2,290
	-	-	62,105	62,105
Freehold property
Offices and other commercial properties
	-	-	232,235	232,235
Loans and advances to customers measured
at FVPL
	-	-	138,727	138,727
Trading derivatives
Forward exchange rate contracts	-	205	-	205
Currency swaps	-	136	-	136
Interest rate swaps	-	189	-	189
Currency options	-	2	-	2
Interest rate caps/floors
	-	1,843	-	1,843
	-	2,375	-	2,375
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps	-	48,679	-	48,679
Net investments-forward exchange rate
contracts
	-	1	-	1
	-	48,680	-	48,680
Investments at FVPL
	36,095	95,569	3,611	135,275
Investments at FVOCI
	431,854	-	11,566	443,420
	467,949	146,624	448,244	1,062,817
Financial assets not measured at fair
value
Loans and advances to banks	-	370,853	-	370,853
Investments at amortised cost	2,958,793	160,825	-	3,119,618
Reverse repurchase agreements	-	411,654	-	411,654
Loans and advances to customers
	-	-	9,833,522	9,833,522
	2,958,793	943,332	9,833,522	13,735,647

For loans and advances to customers measured at FVPL categorised as Level 3 as at 31 December 2023, an

increase in the discount factor by 10% would result in a decrease of €2,714 thousand in their fair value and

a decrease in the discount factor by 10% would result in an increase of €622 thousand in their fair value.

For one investment included in other non-equity securities mandatorily measured at FVPL as a result of the

SPPI assessment and categorised as Level 3 with a carrying amount of €3,611 thousand as at 31 December

2023, a change in the conversion factor by 10% would result in a change in the value of the other non-

equity securities by €361 thousand.

471

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

22. Fair value measurement (continued)

	Level 1	Level 2	Level 3	Total
2023	€000	€000	€000	€000
Liabilities measured at fair value
Trading derivatives
Forward exchange rate contracts	-	184	-	184
Currency swaps	-	13,278	-	13,278
Interest rate swaps	-	181	-	181
Currency options	-	42	-	42
Interest rate caps/floors
	-	1,844	-	1,844
	-	15,529	-	15,529
Derivatives qualifying for hedge accounting
Fair value hedges-interest rate swaps
	-	2,451	-	2,451
	-	17,980	-	17,980
Financial liabilities not measured at fair
value
Funding from central banks	-	2,043,868	-	2,043,868
Deposits by banks	-	428,850	-	428,850
Customer deposits	-	-	19,300,867	19,300,867
Debt securities in issue	655,428	-	-	655,428
Subordinated liabilities
	300,098	-	-	300,098
	955,526	2,472,718	19,300,867	22,729,111

The cash and balances with central banks are financial instruments whose carrying value is a reasonable

approximation of fair value because they are mostly short-term in nature or are repriced to current market

rates frequently. The carrying value of other financial assets, other than the deferred purchase payment

consideration (Note 28), and other financial liabilities is a close approximation of their fair value and they

are categorised as Level 3.

During the years ended 31 December 2024 and 2023 there were no significant transfers between Level 1

and Level 2.

472

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

22. Fair value measurement (continued)

Movements in Level 3 assets measured at fair value

Transfers from Level 3 to Level 2 occur when the market for some securities becomes more liquid, which eliminates the need for the previously required

significant unobservable valuation inputs. Following a transfer to Level 2 the instruments are valued using valuation models incorporating observable market

inputs. Transfers into Level 3 reflect changes in market conditions as a result of which instruments become less liquid and consequently, the Group requires

significant unobservable inputs to calculate their fair value.

The movement in Level 3 assets which are measured at fair value is presented below:

	2024					2023
	Investment
	properties
		Own use
		properties
			Other
			financial
			assets
				Loans and
				advances to
				customers
					Financial
					instruments
						Investment
						properties
							Own use
							properties
								Loans and
								advances to
								customers
									Financial
									instruments
	€000	€000	€000	€000	€000	€000	€000	€000	€000
1 January
	62,105	232,235	-	138,727	15,177	85,099	203,658	214,359	21,233
Additions	198	9,549	25,500	-	-	1,390	836	-	-
Disposals	(23,613)	-	-	-	-	(23,797)	-	-	-
Transfers from own use properties to investment properties (Note 25)	-	-	-	-	-	798	(798)	-	-
Net transfers from stock of property (Note 25)	-	-	-	-	-	-	17,827	-	-
Conversion of instruments into common shares	-	-	-	-	-	-	-	-	(6,521)
Depreciation charge for the year	-	(2,121)	-	-	-	-	(2,047)	-	-
Impairment (Note 25)	-	-	-	-	-	-	(765)	-	-
Fair value (losses)/gains	(2,439)	522	-	-	4,847	(1,385)	13,524	-	569
Net gains on loans and advances to customers measured at FVPL (Note 11)	-	-	-	1,232	-	-	-	2,401	-
Repayments/derecognition of loans	-	-	-	(17,792)	-	-	-	(89,522)	-
Interest on loans (Note 7)	-	-	-	8,841	-	-	-	11,489	-
Foreign exchange adjustments
	-	-	-	-	149	-	-	-	(104)
31 December
	36,251	240,185	25,500	131,008	20,173	62,105	232,235	138,727	15,177

Valuation policy and sensitivity analysis

Investment properties and own use properties

The valuation technique mainly applied by the Group is the market comparable approach, adjusted for market and property specific conditions. In certain

cases, the Group also utilises the income capitalisation approach. The key inputs used for the valuations of the investment properties and own use properties

are presented in the tables below:

473

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

22. Fair value measurement (continued)

Valuation policy and sensitivity analysis (continued)

Analysis of investment properties

Type and country
	2024
		Estimated
		rental value
		per m
		2
		per
		annum
			Estimated
			building cost
			per m
			2
				Yield
					Estimated fair
					value per m
					2
						Estimated
						land value per
						m
						2
							Land	Building area
									Age of
									building
Residential
	€000
							m
							2
								m
								2
									Years
Cyprus	1,638	€41-€108	€1,250-€1,542	3.0%-5.0%	€473-€1,886	€130-€380	607-725	142-420	12-59
Greece
	2,946
		€15-€118	€229-€3,018	2.7%-9.4%	€45-€2,038	€26-€479	24-5,147	51-825	19-52
	4,584
Offices and other commercial properties
Cyprus	17,942	€47-€349	n/a	4.0%-7.0%	€579-€5,833	€500-€3,900	348-1,872	16-3,292	18-70
Greece
	2,773
		€9-€219	€193-€1,161	4.9%-8.8%	€73-€3,648	€558-€3,451	100-8,582	6-4,692	20-66
	20,715
Manufacturing and industrial
Cyprus	2,679	€45-€67	€709	6.0%-7.0%	€920-€956	€150-€400	2,935-3,410	1,608-1,713	31
Greece
	5,983
		€1-€71	€214-€1,199	4.5%-10.3%	€12-€464	€52-€521	57-34,495	349-5,858	15-86
	8,662
Land (fields and plots)
Cyprus
	2,290
		n/a	n/a	n/a	n/a	€989	2,316	n/a	n/a
	2,290
Total
	36,251

Analysis of own use properties

Type and country
	2024
		Estimated
		rental value
		per m
		2
		per
		annum
			Estimated
			building cost
			per m
			2
				Yield
					Estimated fair
					value per m
					2
						Estimated
						land value per
						m
						2
							Land	Building area
									Age of
									building
Offices and other commercial properties
	€000
							m
							2
								m
								2
									Years
Cyprus
	240,185
		€36-€264	€1,063-€3,162	5.5%-6.0%	€383-€5,254	€150-€2,757	390-51,947	210-24,035	17-100
Total
	240,185

474

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

22. Fair value measurement (continued)

Valuation policy and sensitivity analysis (continued)

Analysis of investment properties

Type and country
	2023
		Estimated
		rental value
		per m
		2
		per
		annum
			Estimated
			building cost
			per m
			2
				Yield
					Estimated fair
					value per m
					2
						Estimated
						land value per
						m
						2
							Land	Building area
									Age of
									building
Residential
	€000
							m
							2
								m
								2
									Years
Cyprus	2,024	€41-€98	€1,090-€1,673	4.5%-5.5%	€380-€2,338	€130-€380	607-725	89-594	10-58
Greece
	3,909
		€6-€113	€164-€2,961	2%-9.4%	€46-€1,878	€16-€1,910	24-5,147	51-825	16-51
	5,933
Offices and other commercial properties
Cyprus	31,297	€36-€289	€470	3.9%-6.7%	€578-€5,781	€150-€3,900	348-11,301	0-4,605	11-68
Greece
	3,072
		€9-€219	€193-€1,404	4.9%-8.8%	€72-€3,648	€261-€289	100-8,582	6-4,692	19-65
	34,369
Manufacturing and industrial
Cyprus	12,583	€23-€67	€205-€709	4.5%-7.0%	€266-€1,225	€165-€500	2,202-14,590	743-8,007	20-37
Greece
	6,930
		€1-€99	€172-€684	4.4%-10.4%	€12-€439	€10-€191	57-34,495	349-5,858	14-85
	19,513
Land (fields and plots)
Cyprus
	2,290
		n/a	n/a	n/a	n/a	€989	2,316	n/a	n/a
	2,290
Total
	62,105

Analysis of own use properties

Type and country
	2023
		Estimated
		rental value
		per m
		2
		per
		annum
			Estimated
			building cost
			per m
			2
				Yield
					Estimated fair
					value per m
					2
						Estimated
						land value per
						m
						2
							Land	Building area
									Age of
									building
Offices and other commercial properties
	€000
							m
							2
								m
								2
									Years
Cyprus
	232,235
		€30-€315	€1,063-€3,162	6%-6.5%	€65-€5,254	€65-€2,756	390-51,947	210-24,035	16-100
Total
	232,235

475

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

23. Loans and advances to customers (continued)

The following tables present the Group’s gross loans and advances to customers at amortised cost by

staging and by business line concentration.

2024	Stage 1	Stage 2	Stage 3	POCI	Total
By business line	€000	€000	€000	€000	€000
Corporate	2,897,542	409,697	30,103	9,879	3,347,221
IBU & International corporate
- IBU	104,327	16,124	126	117	120,694
- International corporate	935,383	25,634	-	4	961,021
SMEs	886,864	68,843	8,094	4,270	968,071
Retail
- housing	3,327,631	179,619	18,206	9,893	3,535,349
- consumer, credit cards and
other
	959,787	61,415	8,463	10,729	1,040,394
Restructuring
- corporate	1,424	3,184	2,469	10,357	17,434
- SMEs	6,447	3,928	8,205	1,966	20,546
- retail housing	5,062	5,898	24,281	1,143	36,384
- retail other	2,014	738	11,698	754	15,204
Recoveries
- corporate	-	-	3,873	307	4,180
- SMEs	-	-	8,671	993	9,664
- retail housing	-	-	30,358	4,494	34,852
- retail other
	14	-	16,221	3,156	19,391
	9,126,495	775,080	170,768	58,062	10,130,405

2023 (restated)	Stage 1	Stage 2	Stage 3	POCI	Total
By business line	€000	€000	€000	€000	€000
Corporate	2,709,523	519,134	96,289	32,799	3,357,745
IBU & International corporate
- IBU	99,009	21,409	320	140	120,878
- International corporate	744,955	17,220	38	15	762,228
SMEs	824,503	109,865	5,583	9,042	948,993
Retail
- housing	3,038,339	345,135	23,508	9,897	3,416,879
- consumer, credit cards and
other
	836,679	103,710	9,814	13,839	964,042
Restructuring
- corporate	3,770	21,747	13,461	10,073	49,051
- SMEs	9,831	8,089	13,715	2,431	34,066
- retail housing	6,450	12,429	39,696	1,912	60,487
- retail other	2,471	2,533	13,474	733	19,211
Recoveries
- corporate	-	-	6,378	967	7,345
- SMEs	-	-	15,812	1,587	17,399
- retail housing	-	-	65,070	10,255	75,325
- retail other
	59	-	23,725	5,081	28,865
	8,275,589	1,161,271	326,883	98,771	9,862,514

During 2023, BOC PCL entered into an agreement with Cyprus Asset Management Company ('KEDIPES') to

acquire a portfolio of performing and restructured loans with gross book value of approximately €58 million

with reference date 31 December 2022 (the 'Transaction'). The Transaction was completed in March 2024.

Loans and advances to customers pledged as collateral are disclosed in Note 46.

477

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

25. Property and equipment

Property	Equipment	Total
2024	€000	€000	€000
Net book value at 1 January	255,905	29,663	285,568
Additions	10,591	10,464	21,055
Revaluation	522	-	522
Disposals and write-offs	-	(11)	(11)
Depreciation charge for the year (Note 15.1)	(9,347)	(8,632)	(17,979)
New leases (Note 42)	1,575	895	2,470
Re-assessment of RoU assets (Note 42)	16,158	-	16,158
Derecognition of RoU assets (Note 42)
	(369)	-	(369)
Net book value at 31 December
	275,035	32,379	307,414
1 January 2024
Cost or valuation	327,251	123,677	450,928
Accumulated depreciation
	(71,346)	(94,014)	(165,360)
Net book value
	255,905	29,663	285,568
31 December 2024
Cost or valuation	354,363	134,622	488,985
Accumulated depreciation
	(79,328)	(102,243)	(181,571)
Net book value
	275,035	32,379	307,414

Property	Equipment	Total
2023	€000	€000	€000
Net book value at 1 January	235,538	17,840	253,378
Additions	396	7,058	7,454
Revaluation	13,524	-	13,524
Impairment	(765)	-	(765)
Transfers to investment properties (Note 22)	(798)	-	(798)
Net transfers from stock of property (Note 27)	17,827	-	17,827
Disposals and write-offs	-	(24)	(24)
Depreciation charge for the year (Note 15.1)	(8,997)	(6,396)	(15,393)
New leases (Note 42)	168	11,185	11,353
Re-assessment of RoU assets (Note 42)
	(988)	-	(988)
Net book value at 31 December
	255,905	29,663	285,568
1 January 2023
Cost or valuation	303,891	142,787	446,678
Accumulated depreciation
	(68,353)	(124,947)	(193,300)
Net book value
	235,538	17,840	253,378
31 December 2023
Cost or valuation	327,251	123,677	450,928
Accumulated depreciation
	(71,346)	(94,014)	(165,360)
Net book value
	255,905	29,663	285,568

480

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

27. Stock of property

The carrying amount of stock of property is determined as the lower of cost and net realisable value.

Impairment is recognised if the net realisable value is below the cost of the stock of property. During the

year ended 31 December 2024 an impairment loss of €55,612 thousand (2023: €46,026 thousand) was

recognised in 'Impairment net of reversals on non-financial assets' in the consolidated income statement. At

31 December 2024, stock of property of €405,520 thousand (2023: €445,009 thousand) is carried at net

realisable value.

There is no stock of property pledged as collateral.

The carrying amount of the stock of property is analysed in the tables below:

	2024	2023
	€000	€000
Net book value at 1 January	826,115	1,041,032
Additions	30,488	19,531
Disposals	(152,234)	(170,595)
Net transfer to property and equipment (Note 25)	-	(17,827)
Impairment for the year (Note 16)
	(55,612)	(46,026)
Net book value at 31 December
	648,757	826,115

The result on the disposal of stock of property in the year is presented in the table below:

	2024	2023
	€000	€000
Net consideration	152,450	179,567
Carrying value of stock of property disposed of
	(152,234)	(170,595)
Net gains on disposal of stock of property
	216	8,972

Analysis by type and country	Cyprus	Greece	Total
2024	€000	€000	€000
Residential properties	44,327	3,216	47,543
Offices and other commercial properties	59,650	5,060	64,710
Manufacturing and industrial properties	12,532	3,993	16,525
Hotels	7,005	339	7,344
Land (fields and plots)
	509,547	3,088	512,635
Total
	633,061	15,696	648,757

2023	€000	€000	€000
Residential properties	47,841	8,091	55,932
Offices and other commercial properties	91,114	9,978	101,092
Manufacturing and industrial properties	23,373	9,263	32,636
Hotels	17,345	437	17,782
Land (fields and plots)
	614,990	3,683	618,673
Total
	794,663	31,452	826,115

482

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

28. Prepayments, accrued income and other assets

	2024	2023
	€000	€000
Financial assets
Debtors	33,340	34,662
Insurance contract assets (Note 31)	-	1,255
Receivable relating to tax	2,772	3,263
Deferred purchase payment consideration	143,604	243,013
Other assets
	115,916	106,051
	295,632	388,244
Non-financial assets
Insurance and reinsurance contract assets (Note 31)	50,612	56,239
Current tax receivable	61,890	73,943
Prepaid expenses	1,222	867
Retirement benefit plan assets (Note 14.1)	1,767	669
Other assets
	68,076	64,957
	183,567	196,675
	479,199	584,919

An analysis of the movement of the gross carrying amount of the financial assets included in prepayments,

accrued income and other assets measured at amortised cost is presented in the table below:

	Stage 1	Stage 3
			Simplified
			method
				Total
2024	€000	€000	€000	€000
1 January	381,151	35,934	5,872	422,957
Net (decrease)/increase
	(116,822)	(504)	(427)	(117,753)
31 December
	264,329	35,430	5,445	305,204

2023
1 January	394,814	37,512	4,919	437,245
Net (decrease)/increase
	(13,663)	(1,578)	953	(14,288)
31 December
	381,151	35,934	5,872	422,957

An analysis of the movement of the ECL of the above financial assets is presented in the table below:

	Stage 1	Stage 3
			Simplified
			method
				Total
2024	€000	€000	€000	€000
1 January	2,101	31,876	736	34,713
Changes to models and inputs used for ECL
calculations
	229	8	122	359
31 December
	2,330	31,884	858	35,072

2023
1 January	2,107	32,181	495	34,783
Write-offs	-	(82)	-	(82)
Changes to models and inputs used for ECL
calculations
	(6)	(223)	241	12
31 December
	2,101	31,876	736	34,713

There were no financial assets classified as Stage 2 as at 31 December 2024 and 2023. In addition, financial

assets amounting to €25,500 thousand were measured at FVPL as at 31 December 2024 (2023: nil).

483

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

30. Customer deposits

	2024	2023
	€000	€000
By type of deposit
Demand	10,737,484	10,167,622
Savings	3,091,475	2,979,275
Time or notice
	6,690,317	6,190,018
	20,519,276	19,336,915
By geographical area
Cyprus	16,422,089	15,355,445
Greece	1,558,482	1,473,491
United Kingdom	396,972	386,057
United States	129,823	166,673
Germany	80,796	77,288
Romania	38,408	29,729
Russia	88,710	128,489
Ukraine	212,662	183,316
Belarus	1,583	3,762
Israel	214,547	195,580
Other countries
	1,375,204	1,337,085
	20,519,276	19,336,915

Deposits by geographical area are based on the country of residence of the Ultimate Beneficial Owner.

	2024	2023
	€000	€000
By currency
Euro	18,559,339	17,514,400
US Dollar	1,589,240	1,448,753
British Pound	309,083	300,867
Russian Rouble	1,080	1,322
Swiss Franc	8,315	8,947
Other currencies
	52,219	62,626
	20,519,276	19,336,915

	2024
		2023
		(restated)
By business line	€000	€000
Corporate	2,310,165	2,086,753
IBU & International corporate
- IBU	4,139,368	3,779,571
- International corporate	174,370	121,454
SMEs	1,161,464	1,019,245
Retail	12,600,526	12,216,209
Restructuring
– corporate	10,000	12,565
– SMEs	2,854	5,954
– retail other	6,306	9,428
Recoveries
– corporate	979	1,098
Institutional Wealth Management and Custody
	113,244	84,638
	20,519,276	19,336,915

485

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

31. Insurance and reinsurance contracts

The breakdown of groups of insurance and reinsurance contracts, that are in an asset position and those in a liability position is set out in the table below:

	2024			2023
	Assets	Liabilities	Net	Assets	Liabilities	Net
Insurance contracts	€000	€000	€000	€000	€000	€000
Life insurance	-	(682,830)	(682,830)	6,472	(604,233)	(597,761)
Non-life insurance
	-	(60,854)	(60,854)	-	(54,191)	(54,191)
Total insurance contracts
	-	(743,684)	(743,684)	6,472	(658,424)	(651,952)
Reinsurance contracts
Life insurance	24,039	-	24,039	26,350	-	26,350
Non-life insurance
	26,573	-	26,573	24,672	-	24,672
Total reinsurance contracts
	50,612	-	50,612	51,022	-	51,022
Total insurance and reinsurance contracts
	50,612	(743,684)	(693,072)	57,494	(658,424)	(600,930)

The table below presents a reconciliation of the measurement components of insurance and reinsurance contract balances showing estimates of the present

value of future cash flows, risk adjustment and CSM for portfolios in the life insurance business measured under GMM and VFA.

	2024					2023
	Estimates of
	the present
	value of
	future cash
	flows
		Risk
		adjustment
		for
		non-
		financial
		risk
			Contractual
			Service
			Margin
				Total
					Estimates of
					the present
					value of
					future cash
					flows
						Risk
						adjustment
						for
						non-financial
						risk
							Contractual
							Service
							Margin
								Total
Insurance contracts
	€000	€000	€000	€000	€000	€000	€000	€000
Insurance contracts liabilities	(586,145)	(17,302)	(75,615)	(679,062)	(528,955)	(13,940)	(58,331)	(601,226)
Insurance contracts assets	-	-	-	-	10,411	(2,004)	(1,935)	6,472
Reinsurance contracts
Reinsurance contracts assets	(915)	15	23,654	22,754	7,896	220	16,979	25,095

486

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

31. Insurance and reinsurance contracts (continued)

The roll-forward of the net asset or liability for insurance contracts issued, showing the liabilities for remaining coverage and the liabilities for incurred claims

for portfolio included in life and non-life insurance, is disclosed in the table below:

	2024				2023
	Liabilities for remaining coverage
	LRC
			Liabilities for
			incurred claims
			LIC
				Total
					Liabilities for remaining coverage
					LRC
							Liabilities for
							incurred claims
							LIC
								Total
	Excluding loss
	component
		Loss component
					Excluding loss
					component
						Loss component
	€000	€000	€000	€000	€000	€000	€000	€000
Insurance contract liabilities as at 1 January	(580,410)	(5,713)	(72,301)	(658,424)	(522,191)	(6,278)	(69,512)	(597,981)
Insurance contract assets as at 1 January
	7,175	(305)	(398)	6,472	4,110	(1,540)	(300)	2,270
Net insurance contract assets/(liabilities) as at 01 January
	(573,235)	(6,018)	(72,699)	(651,952)	(518,081)	(7,818)	(69,812)	(595,711)
Insurance revenue	150,070	-	-	150,070	145,775	-	-	145,775
Insurance service expenses
Incurred claims and directly attributable expenses	3,976	545	(63,823)	(59,302)	-	815	(58,225)	(57,410)
Amortisation of insurance acquisition cash flows	(7,294)	-	-	(7,294)	(5,768)	-	-	(5,768)
Insurance acquisition cash flows expensed as incurred	(9,067)	-	-	(9,067)	(8,488)	-	-	(8,488)
Reversals of losses/(losses) on onerous contracts	-	76	-	76	-	1,037	-	1,037
Changes to liabilities for incurred claims (LIC)	-	-	2,414	2,414	-	-	(903)	(903)
Investment component	65,973	-	(65,973)	-	55,325	-	(55,325)	-
Insurance finance income/(expense)
	(60,630)	(10)	(1,725)	(62,365)	(43,778)	(42)	(1,269)	(45,089)
Total changes in the statement of profit or loss
	143,028	611	(129,107)	14,532	143,066	1,810	(115,722)	29,154
Premiums received	(266,547)	-	-	(266,547)	(234,913)	-	-	(234,913)
Claims and other directly attributable expenses paid	-	-	119,760	119,760	-	-	112,670	112,670
Insurance acquisition cash flows
	40,302	-	221	40,523	36,693	(10)	165	36,848
Total cash flows
	(226,245)	-	119,981	(106,264)	(198,220)	(10)	112,835	(85,395)
Net insurance contract assets/(liabilities) as at 31 December
	(656,452)	(5,407)	(81,825)	(743,684)	(573,235)	(6,018)	(72,699)	(651,952)
Insurance contract liabilities as at 31 December	(656,452)	(5,407)	(81,825)	(743,684)	(580,410)	(5,713)	(72,301)	(658,424)
Insurance contract assets as at 31 December
	-	-	-	-	7,175	(305)	(398)	6,472
Net insurance contract assets/(liabilities) as at 31 December
	(656,452)	(5,407)	(81,825)	(743,684)	(573,235)	(6,018)	(72,699)	(651,952)

487

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

32. Debt securities in issue and Subordinated liabilities (continued)

Debt securities in issue

Senior Preferred Notes - June 2021

In June 2021, BOC PCL issued a €300 million senior preferred note under the EMTN Programme. The note

was priced at par with a fixed coupon of 2.50% per annum, payable annually in arrear and resettable on 24

June 2026. The note matures on 24 June 2027. BOC PCL has the option to redeem the note early on 24

June 2026, subject to applicable regulatory consents. The note is listed on the Luxembourg Stock

Exchange’s Euro MTF market. The note complies with the criteria for the minimum requirement for own

funds and eligible liabilities (MREL) and contributes towards BOC PCL’s MREL requirements.

Senior Preferred Notes - July 2023

In July 2023, BOC PCL issued a €350 million senior preferred note under the EMTN Programme. The note

was priced at par with a fixed coupon of 7.375% per annum, payable annually in arrear and resettable on

25 July 2027. The note matures on 25 July 2028. BOC PCL has the option to redeem the note early on 25

July 2027, subject to applicable regulatory consents. The note is listed on the Luxembourg Stock Exchange’s

Euro MTF market. The note complies with the criteria for the minimum requirement for own funds and

eligible liabilities (MREL) and contributes towards BOC PCL’s MREL requirements.

Green Senior Preferred Notes - May 2024

In May 2024, BOC PCL issued a €300 million green senior preferred note under the EMTN Programme. The

note was priced at par with a fixed coupon of 5.00% per annum, payable annually in arrear and resettable

on 2 May 2028. The note matures on 2 May 2029. BOC PCL has the option to redeem the note early on 2

May 2028, subject to applicable regulatory consents. The note is listed on the Luxembourg Stock

Exchange’s Euro MTF market. The note complies with the criteria for the minimum requirement for own

funds and eligible liabilities (MREL) and contributes towards BOC PCL’s MREL requirements.

The fair value of the debt securities in issue as at 31 December 2024 and 2023 is disclosed in Note 22.

489

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

34. Share capital (continued)

Share premium reserve

There were no changes to the share premium reserve during the years ended 31 December 2024 and 2023.

Share repurchase programme (Buyback)

In April 2024, the Group launched its inaugural programme to buy back ordinary shares of the Company for

an aggregate consideration of up to €25 million (the ‘Programme’). The purpose of the Programme was to

reduce the Company’s issued share capital and therefore the shares purchased under the Programme were

cancelled. On 29 November 2024, the Programme has been completed. 5,698 thousand shares were

repurchased and cancelled under the Programme at a total consideration (including transaction costs) of

€25,090 thousand.

Capital redemption reserve

The capital redemption reserve is a legal reserve arising as a result of the acquisition and cancellation of the

Company’s ordinary shares under a buyback programme, and represents transfers from share capital. The

capital redemption reserve is not distributable. As at 31 December 2024, the capital redemption reserve

amounted to €570 thousand representing 5,698 thousand shares in the Company which have been

cancelled as a result of the buyback programme.

Treasury shares of the Company

The consideration paid, including any directly attributable incremental costs (net of income taxes), for

shares of the Company held by the Company and by entities controlled by the Group is deducted from

equity attributable to the owners of the Company as treasury shares, until these shares are cancelled or

reissued. No gain or loss is recognised in the consolidated income statement on the purchase, sale, issue or

cancellation of such shares.

The life insurance subsidiary of the Group, as at 31 December 2024, held a total of 142 thousand ordinary

shares of the Company of a nominal value of €0.10 each (2023: 142 thousand ordinary shares of a nominal

value of €0.10 each), as part of its financial assets which are invested for the benefit of insurance

policyholders. The cost of acquisition of these shares was €21,463 thousand (2023: €21,463 thousand).

Other equity instruments

	2024	2023
	€000	€000
2023 Reset Perpetual Additional Tier 1 Capital Securities
	220,000	220,000
	220,000	220,000

In June 2023, the Company issued €220,000 thousand Fixed Rate Reset Perpetual Additional Tier 1 Capital

Securities (the 'Capital Securities'). The Capital Securities constitute unsecured and subordinated

obligations of the Company, are perpetual and issued at par. They carry an initial coupon of 11.875% per

annum, payable semi-annually, and resettable on 21 December 2028 and every five years thereafter. The

Company may elect to cancel any interest payment for an unlimited period, on a non-cumulative basis,

whereas it mandatorily cancels interest payment under certain conditions. The Capital Securities are

perpetual and have no fixed date of redemption, but can be redeemed (in whole but not in part) at the

Company's option from, and including, 21 June 2028 to, and including, 21 December 2028 and on each

interest payment date thereafter, subject to applicable regulatory consents and the relevant conditions to

redemption. The Capital Securities are listed on the Luxembourg Stock Exchange's Euro Multilateral Trading

Facility (MTF) market.

Transaction costs of €3,530 thousand in relation to the issuance of the Capital Securities were recorded

directly in equity during the year ended 31 December 2023.

491

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

38. Provisions for pending litigation, claims, regulatory and other matters (continued)

38.1 Pending litigation and claims (continued)

The resolution of the claims brought in the courts of Greece and Cyprus is expected to take a number of

years.

Provision has been made based on management's best estimate of probable outflows for capital securities

related litigation.

Bail-in related litigation

Depositors

A number of BOC PCL's depositors, who allege that they were adversely affected by the bail-in, filed claims

against BOC PCL and other parties (such as the CBC and the Ministry of Finance of Cyprus) including against

BOC PCL as the alleged successor of Laiki Bank on the grounds that, inter alia, the ‘Resolution Law of 2013’

and the Bail-in Decrees were in conflict with the Constitution of the Republic of Cyprus and the European

Convention on Human Rights. They are seeking damages for their alleged losses resulting from the bail-in of

their deposits. Cases could relate to bail-in related litigation (on failure to follow instructions), bail-in decree

related cases and bail-in wrongful application. BOC PCL is defending these actions. In relation to the bail-in

decree related cases, the court ruled in favour of BOC PCL on the grounds that the measures that the

government implemented were necessary to prevent the collapse of the financial sector, which would have

detrimental consequences for the country’s economy. Under the circumstances the government could rely

on the doctrine of necessity when it imposed the bail-in. To date, a number of cases have been tried

however the resolution of the claims brought is expected to take a number of years.

Provision has been made based on management's best estimate of probable outflows for depositors related

litigation.

Shareholders

A number of actions for damages have been filed with the District Courts of Cyprus alleging either the

unconstitutionality of the Resolution Law and the Bail-in Decrees, or a misapplication of same by BOC PCL

(as regards the way and methodology whereby such Decrees have been implemented), or that BOC PCL

failed to follow instructions promptly prior to the bail-in coming into force. As at the present date, both the

Resolution Law and the Bail-in Decrees have not been annulled by a court of law and thus remain legally

valid and in effect. BOC PCL contests all of these claims.

Legal position of the Group

All of the above claims are being vigorously disputed by the Group, in close consultation with the

appropriate state and governmental authorities. The position of the Group is that the Resolution Law and

the Decrees take precedence over all other laws. As matters now stand, both the Resolution Law and the

Decrees issued thereunder are constitutional and lawful, in that they were properly enacted and have not so

far been annulled by any court.

Provident fund case

In December 2015, the Bank of Cyprus Employees Provident Fund (the Provident Fund) filed an action

against BOC PCL claiming €70 million allegedly owed as part of BOC PCL's contribution by virtue of an

agreement with the Union dated 31 December 2011. Towards the end of 2024, the Group has reached a

final settlement arrangement, which has received final court approval so that the case was permanently

withdrawn with no right to be reinstated, and as a result of which, the Group has recognised a provision as

at 31 December 2024. The financial settlement took place early in 2025. This matter is now concluded,

without anything pending at court.

Employment litigation

Former employees of the Group have instituted a number of employment claims including unfair dismissals.

The Group does not consider that the pending cases in relation to employment will have a material impact

on its financial position. A judgment has been issued in one of the unfair dismissal cases and BOC PCL lost.

BOC PCL has filed an appeal with respect to this case and similarly, the plaintiff has also filed an appeal. The

facts of this case are unique and it is not expected to affect the rest of the cases where unfair dismissal is

claimed.

Additionally, a number of former employees have filed claims against BOC PCL contesting entitlements

received relating to the various voluntary exit plans. As at the reporting date, most of these cases have

been withdrawn with only two such cases remaining. The Group does not expect that these actions will have

a material impact on its financial position.

494

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

38. Provisions for pending litigation, claims, regulatory and other matters (continued)

38.1 Pending litigation and claims (continued)

Banking business cases

There is a number of banking business cases where the amounts claimed are significant. These cases

primarily concern allegations as to BOC PCL's standard policies and procedures allegedly resulting to

damages and other losses for the claimants (including cases where it is alleged that BOC PCL misled

borrowers and/or misrepresented matters, in violation of applicable laws for matters such as foreign

currency lending and advancing/misselling loans for the purchase of property in Cyprus by UK nationals).

Further, there are several other banking claims, where the amounts involved are not as significant.

Management has assessed either the probability of loss as remote and/or does not expect any future

outflows with respect to these cases to have a material impact on the financial position of the Group. Such

matters arise as a result of the Group’s activities and management appropriately assesses the facts and the

risks of each case accordingly.

General criminal investigations and proceedings

The Attorney General and the Cypriot Police (the Police) are conducting various investigations and inquiries

following and relating to the financial crisis which culminated in March 2013. BOC PCL is cooperating fully

with the Attorney General and the Police and is providing all information requested of it. Based on the

currently available information, the Group is of the view that any further investigations or claims resulting

from these investigations will not have a material impact on its financial position.

Others

An investigation is in process related to potentially overstated and/or fictitious claims paid by the non-life

insurance subsidiary of the Group. The information usually required by IAS 37 'Provisions, Contingent

Liabilities and Contingent Assets' is not disclosed on the grounds that it is expected to seriously prejudice

the outcome of the investigation and/or the possible taking of legal action. Based on the information

available at present, management considers that it is unlikely for this matter to have a material adverse

impact on the financial position and capital adequacy of the non-life insurance subsidiary and thereby the

Group, also taking into account that it is virtually certain that compensations will be received from a

relevant insurance coverage, upon the settlement of any obligation that may arise.

38.2 Regulatory matters

The Hellenic Capital Market Commission (HCMC) Investigation

The HCMC has been in the process of investigating matters concerning the Group's investment in Greek

Government Bonds from 2009 to 2011, including, inter alia, related non-disclosure of material information

in BOC PCL's CCS, CECS and rights issue prospectuses (tracking the investigation carried out by CySEC in

2013), Greek government bonds' reclassification, ELA disclosures and allegations by some investors

regarding BOC PCL's non-compliance with Markets in Financial Instruments Directive (MiFID) in respect of

investors' direct investments in Greek Government Bonds.

A specific estimate of the outcome of the investigations or of the amount of possible fines cannot be given

at this stage, though it is not expected that any resulting liability or damages will have a material impact on

the financial position of the Group.

Central Bank of Cyprus (CBC)

The CBC had conducted an investigation in the past into BOC PCL's issuance of capital securities and

concluded that BOC PCL breached certain regulatory requirements concerning the issuance of Convertible

Capital Securities (Perpetual) in 2009, but not in relation to the CECS in 2011. The CBC had, in 2013,

imposed a fine of €4 thousand upon BOC PCL, who filed a recourse. The Administrative Court cancelled both

the CBC’s decision and the fine that was imposed upon BOC PCL in a respective judgment dated in 2020. In

2021, CBC decided to re-examine this matter and to re-open the investigation. This matter is still pending

as at the year end.

495

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

38. Provisions for pending litigation, claims, regulatory and other matters (continued)

38.2 Regulatory matters (continued)

Commission for the Protection of Competition Investigation (CPC)

In April 2014, following an investigation which began in 2010, CPC issued a statement of objections,

alleging violations of Cypriot and EU competition law relating to the activities and/or omissions in respect of

card payment transactions by, among others, BOC PCL and JCC Payment Systems Ltd (JCC), a card

processing business currently 75% owned by BOC PCL. There was also an allegation concerning BOC PCL's

arrangements with American Express, namely that such exclusive arrangements violated Cypriot and EU

competition law. On both matters, the CPC has concluded that BOC PCL (in common with other banks and

JCC) has breached the relevant provisions of the applicable law for the protection of competition and

imposed a fine of €18 million upon BOC PCL. BOC PCL filed a recourse against the decision and the fine. In

June 2018, the Administrative Court accepted BOC PCL’s position and cancelled the decision as well as the

fine imposed upon BOC PCL. During 2018, the Attorney General has filed an appeal before the Supreme

court with respect to such decision. Following the decision of the appeal court in a CySEC case, the Attorney

General acting on behalf of CPC withdrew his appeal. In July 2024, the Group was informed that the CPC

had resolved to refrain from re-opening the investigation and the matter is now considered closed.

Consumer Protection Service (CPS)

In July 2017, CPS imposed a fine of €170 thousand upon BOC PCL after concluding an ex officio

investigation regarding some terms in both BOC PCL's and Marfin Popular Bank's loan documentation, that

were found to constitute unfair commercial practices. Decisions of the CPS (according to rulings of the

Administrative Court) are not binding but merely an expression of opinion. BOC PCL has filed a recourse

before the Administrative Court against this decision. The Administrative Court has issued its judgment in

2022 in favour of BOC PCL, and the CPS decision along with the fine have been cancelled. An appeal has

been submitted by CPS with regards to this judgment, which is still pending as at 31 December 2024.

In March 2020, BOC PCL has been served with an application by the director of CPS seeking for an order of

the court, with immediate effect, the result of which will be for BOC PCL to cease the use of a number of

terms in the contracts of BOC PCL relating to 2006-2007 deemed to be unfair under the said order. This

application was withdrawn in November 2024 and the matter is considered closed.

In April 2021, the director of CPS filed an application for the issuance of a court order against BOC PCL,

prohibiting the use of a number of contractual terms included in BOC PCL’s consumer contracts and

requiring the amendment of any such contracts (present and future) so as to remove such unfair terms.

This matter is still pending before the court as at 31 December 2024.

Cyprus Consumers’ Association (CCA)

In March 2021, BOC PCL was served with an application filed by the CCA for the issuance of a court order

prohibiting the use of a number of contractual terms included in BOC PCL’s consumer contracts and

requiring the amendment of any such contracts (present and future) so as to remove such terms deemed as

unfair. The said contractual terms were determined as unfair pursuant to the decisions issued by the

Consumer Protection Service of the Ministry of Energy, Commerce, Industry and Tourism against BOC PCL

in 2016 and 2017. BOC PCL will take all necessary steps for the protection of its interests. This matter is

still pending before the court as at 31 December 2024.

The Consumer Protection Law 2021 brings under one umbrella the existing legislation on unfair contract

terms and practices with some enhanced powers vested in the Consumer Protection Service, i.e. power to

impose increased fines which are immediately payable. The Consumer Protection Law 2021 has a

retrospective effect in that it also applies to all contracts/practices entered into and/or terminated prior to

this law coming into effect as opposed to contracts/practices which are only entered into/adopted as from

the date of publication of the new Law on Consumer Protection.

There are many factors that may affect the range of outcomes and the resulting financial impact of these

matters is unknown.

UK regulatory matters

During the year ended 31 December 2024, the obligation undertaken in regards to UK regulatory matters as

part of the sale of Bank of Cyprus UK Ltd expired and was terminated, thus the respective provision balance

was released.

496

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

42. Leases (continued)

The carrying amounts of the Group’s RoU assets and lease liabilities and the movement during the year

ended 31 December 2024 and the year ended 31 December 2023 is presented in the table below:

2024
	RoU assets
	(Note 25)
		Lease
		Liabilities
		(Note 33)
	€000	€000
1 January	33,862	(30,217)
Depreciation charge for the year (Note 15.1)	(9,828)	-
New leases (Note 25)	2,470	(1,489)
Re-assesment of lease terms (Note 25)	16,158	(16,158)
Assets derecognised (Note 25)	(369)	1,713
Interest expense	-	(493)
Cash outflows-payments
	-	9,741
31 December
	42,293	(36,903)

2023
	RoU assets
	(Note 25)
		Lease
		Liabilities
		(Note 33)
	€000	€000
1 January	30,233	(30,190)
Depreciation charge for the year (Note 15.1)	(6,736)	-
New leases (Note 25)	11,353	(7,113)
Re-assesment of lease terms (Note 25)	(988)	693
Interest expense	-	(1,453)
Cash outflows-payments
	-	7,846
31 December
	33,862	(30,217)

As at 31 December 2024 RoU assets comprised of leases of buildings of a carrying amount of €33,124

thousand (2023: €22,400 thousand) and computer hardware of a carrying amount of €9,169 thousand

(2023: €11,462 thousand), and are presented within Property and equipment in Note 25.

Interest expense on lease liabilities of €231 thousand is included within net insurance service result as it is

directly attributable expense for the fulfilment of insurance contracts within IFRS 17 scope (2023: €1,159

thousand).

Cash outflows relate to lease payments made during the year.

The analysis of lease liabilities based on remaining contractual maturity is disclosed in Note 46.

500

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

Models and limits are presented to and approved by the Board of Directors, through the relevant authority

based on the authorisation level limits.

The Group’s significant judgements, estimates and assumptions regarding the determination of the level of

provisions for impairment are described in Note 5.

Monitoring process and credit risk mitigation

Loans and advances to customers

The Credit Risk Management department determines the effective credit standards required for the granting

of new loans to customers. The assessment of financial position/repayment ability is the determining factor

when assessing the granting of a new loan. Furthermore, post-approval monitoring is in place to ensure

adherence to both terms and conditions set in the approval process and credit risk policies and procedures.

A key aspect of credit risk is credit risk concentration which is defined as the risk that arises from the

uneven distribution of exposures to individual borrowers, specific industry or economic sectors, geographical

regions, product types or currencies. The monitoring and control of concentration risk is achieved by limit

setting (e.g. sector and name limits) and reporting them to senior management. In addition, the Group

obtains collaterals which are used for risk mitigation, as they act as a secondary source of repayment.

The main types of collateral obtained by the Group are mortgages on real estate, cash collateral/blocked

deposits, bank guarantees, government guarantees, pledges of equity securities and debt instruments of

public companies, fixed and floating charges over corporate assets, assignment of life insurance policies,

assignment of rights on contracts of sale and personal and corporate guarantees.

The Group regularly monitors the changes in the market value of the collateral and, where necessary,

requests the pledging of additional collateral in accordance with the relevant agreement.

The Group's requirements on obtaining collateral, valuation and management of collateral are set out in

relevant policies of the Group.

Off-balance sheet exposures

The Group enters into various irrecoverable commitments and contingent liabilities, by offering guarantee

facilities, documentary credits and other commitments to extend credit lines of its customers to secure their

liquidity needs. Even though these obligations may not be recognised on the statement of financial position,

such commitments expose the Group to risks similar to those of loans and advances and are therefore

monitored by the same policies and control processes.

The Group makes available to its customers guarantees that may require that the Bank makes payments on

their behalf. The Group also enters into commitments, such as documentary credits which commit the

Group to make payments on behalf of customers in the event of a specific act, generally related to the

import or export of goods.

Policies and procedures for managing, monitoring and mitigating credit risk on off-balance sheet exposures

apply as for loans and advances to customers.

Other financial instruments

Collateral held as security for financial assets other than loans and advances to customers and off-balance

sheet exposures is determined by the nature of the financial instrument. Debt securities and other eligible

bills are generally unsecured with the exception of asset-backed securities and similar instruments, which

are secured by pools of financial assets. In addition, some debt securities are government-guaranteed.

Reverse repurchase agreements are generally secured by bonds.

The Market & Liquidity Risk Unit monitors the debt security investment and reverse repo arrangement limits

in place for governing the level of riskiness of the overall portfolio, as well as the credit limits per issuer.

Analysis of the positions the Group maintains per issuer type is presented in Note 20 and information for

the credit quality is presented in Note 44.11.

503

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

The Group has chosen the ISDA Master Agreement for documenting its derivatives activity. It provides the

contractual framework within which dealing activity across a full range of over-the-counter (OTC) products

is conducted and contractually binds both parties to apply close-out netting across all outstanding

transactions covered by an agreement, if either party defaults. In most cases the parties execute a Credit

Support Annex (CSA) in conjunction with the ISDA Master Agreement. Under a CSA, the collateral is passed

between the parties in order to mitigate the market contingent counterparty risk inherent in their open

positions. As at 31 December 2024, the majority of derivative exposures are covered by ISDA netting

arrangements. The effect of potential effect of netting arrangements on the Group's financial position is

presented in Note 52. An analysis of derivative asset and liability exposures is available in Note 21.

Information about the Group’s level of collateral under derivative transactions as at 31 December is

provided in Note 41.

44.1 Maximum exposure to credit risk and collateral and other credit enhancements

The table below presents the maximum exposure to credit risk, the tangible and measurable collateral and

credit enhancements held and the net exposure to credit risk, that is the exposure after taking into account

the impairment loss and tangible and measurable collateral and credit enhancements held. Personal

guarantees are an additional form of collateral, but are not included in the information below since it is

impracticable to estimate their fair value.

The fair value of the collateral presented in the tables below is capped to the carrying value of the loans and

advances to customers.

504

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.1 Maximum exposure to credit risk and collateral and other credit enhancements (continued)

					Fair value of collateral and credit enhancements held by the Group
	Maximum
	exposure to
	credit risk
		Cash	Securities
				Letters of credit/
				guarantee
					Property	Other	Surplus collateral	Net collateral
									Net exposure to
									credit risk
2024
	€000	€000	€000	€000	€000	€000	€000	€000	€000
Balances with central banks (Note 19)	7,505,735	-	-	-	-	-	-	-	7,505,735
Loans and advances to banks (Note 19)	820,574	-	-	-	-	-	-	-	820,574
Reverse repurchase agreements (Note 44.11)	1,010,170	13,068	1,006,856	-	-	-	(9,754)	1,010,170	-
FVPL non-equity securities (Note 20)	10,702	-	-	-	-	-	-	-	10,702
Debt securities classified at amortised cost and
FVOCI (Note 20)
	4,212,177	-	-	-	-	-	-	-	4,212,177
Derivative financial instruments (Note 21)	95,273	-	-	-	-	-	-	-	95,273
Loans and advances to customers (Note 23)	10,114,394	577,972	659,723	233,160	17,141,516	292,621	(10,037,307)	8,867,685	1,246,709
Loans and advances to customers classified as
held for sale (Note 23)
	23,143	-	-	-	-	-	-	-	23,143
Debtors (Note 28)	33,340	-	-	-	-	-	-	-	33,340
Insurance and reinsurance contract assets
(Note 28)
	50,612	-	-	-	-	-	-	-	50,612
Deferred purchase payment consideration
(Note 28)
	143,604	-	-	-	-	-	-	-	143,604
Other financial assets (Note 28)
	118,688	57,481	-	-	-	-	-	57,481	61,207
On-balance sheet total
	24,138,412	648,521	1,666,579	233,160	17,141,516	292,621	(10,047,061)	9,935,336	14,203,076
Contingent liabilities
Acceptances and endorsements	5,271	-	-	-	5,269	2	-	5,271	-
Guarantees	705,774	72,744	209	4,099	148,199	224	-	225,475	480,299
Commitments
Documentary credits	14,768	844	-	-	166	-	-	1,010	13,758
Undrawn formal stand-by facilities, credit lines
and other commitments to lend
	2,009,698	26,529	20,349	2,459	439,691	22,722	-	511,750	1,497,948
Off-balance sheet total
	2,735,511	100,117	20,558	6,558	593,325	22,948	-	743,506	1,992,005
	26,873,923	748,638	1,687,137	239,718	17,734,841	315,569	(10,047,061)	10,678,842	16,195,081

505

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.1 Maximum exposure to credit risk and collateral and other credit enhancements (continued)

					Fair value of collateral and credit enhancements held by the Group
	Maximum
	exposure to
	credit risk
		Cash	Securities
				Letters of credit/
				guarantee
					Property	Other	Surplus collateral	Net collateral
									Net exposure to
									credit risk
2023
	€000	€000	€000	€000	€000	€000	€000	€000	€000
Balances with central banks (Note 19)	9,521,961	-	-	-	-	-	-	-	9,521,961
Loans and advances to banks (Note 19)	384,802	39,344	-	-	-	-	-	39,344	345,458
FVPL non-equity securities (Note 20)	3,611	-	-	-	-	-	-	-	3,611
Debt securities classified at amortised cost and FVOCI
(Note 20)
	3,547,782	-	-	-	-	-	-	-	3,547,782
Reverse repurchase agreements (Note 44.11)	403,199	-	426,419	-	-	-	(29,524)	396,895	6,304
Derivative financial instruments (Note 21)	51,055	-	-	-	-	-	-	-	51,055
Loans and advances to customers (Note 23)	9,821,788	475,241	743,890	149,415	16,755,799	275,344	(9,615,735)	8,783,954	1,037,834
Debtors (Note 28)	34,662	-	-	-	-	-	-	-	34,662
Insurance and reinsurance contract assets (Note 28)	57,494	-	-	-	-	-	-	-	57,494
Deferred purchase payment consideration (Note 28)	243,013	-	-	-	-	-	-	-	243,013
Other financial assets (Note 28)
	109,314	-	-	-	-	-	-	-	109,314
On-balance sheet total
	24,178,681	514,585	1,170,309	149,415	16,755,799	275,344	(9,645,259)	9,220,193	14,958,488
Contingent liabilities
Acceptances and endorsements	2,580	8	-	-	2,570	2	-	2,580	-
Guarantees	703,044	71,752	1,874	6,797	145,545	255	-	226,223	476,821
Commitments
Documentary credits	10,251	140	-	-	21	-	-	161	10,090
Undrawn formal stand-by facilities, credit lines and
other commitments to lend
	1,948,482	22,980	10,648	9,764	455,964	17,231	-	516,587	1,431,895
Off-balance sheet total
	2,664,357	94,880	12,522	16,561	604,100	17,488	-	745,551	1,918,806
	26,843,038	609,465	1,182,831	165,976	17,359,899	292,832	(9,645,259)	9,965,744	16,877,294

506

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.2 Credit risk concentration of loans and advances to customers

There are restrictions on loan concentrations which are imposed by the Banking Law in Cyprus, the relevant

CBC Directives and CRR. The Group’s Risk Appetite Statement may impose stricter concentration limits

which are monitored by the Group.

The credit risk concentration, which is based on industry (economic activity) and business line, as well as

the geographical concentration, is presented below.

The geographical analysis, for credit risk concentration purposes, is based on the Group’s Country Risk

Policy which is followed for monitoring the Group's exposures. Market and Liquidity Risk department is

responsible for analysing the country risk of exposures. ALCO reviews the country risk of exposures on a

quarterly basis and the Board, through its Risk Committee, reviews the country risk of exposures and any

breaches of country risk limits on a regular basis and at least annually.

The table below presents the geographical concentration of loans and advances to customers by country of

risk based on the country of residency for individuals and the country of registration for companies.

2024
	Cyprus	Greece
			United
			Kingdom
				Russia
					Other
					countries
						Gross loans at
						amortised cost
By economic activity
	€000	€000	€000	€000	€000	€000
Trade	880,142	8,405	1	-	15,283	903,831
Manufacturing	275,779	9,691	193	-	31,412	317,075
Hotels and catering	914,460	33,500	38,355	-	36,329	1,022,644
Construction	453,362	36,629	-	-	297	490,288
Real estate	757,099	114,289	2	-	34,565	905,955
Private individuals	4,670,608	7,842	34,513	7,534	40,083	4,760,580
Professional and other services	568,294	567	5,171	6	61,550	635,588
Shipping	36,874	12	-	-	302,279	339,165
Other sectors
	606,598	106,116	-	5	42,560	755,279
	9,163,216	317,051	78,235	7,545	564,358	10,130,405

2024
	Cyprus	Greece
			United
			Kingdom
				Russia
					Other
					countries
						Gross loans at
						amortised cost
By business line
	€000	€000	€000	€000	€000	€000
Corporate	3,286,902	59,961	195	-	163	3,347,221
IBU & International corporate
- IBU	92,206	1,638	4,769	5,214	16,867	120,694
- International corporate	147,180	251,140	43,245	-	519,456	961,021
SMEs	964,412	402	1,054	-	2,203	968,071
Retail
- housing	3,496,469	2,544	22,185	80	14,071	3,535,349
- consumer, credit cards and other	1,033,208	1,339	337	-	5,510	1,040,394
Restructuring
- corporate	16,015	-	1,241	112	66	17,434
- SMEs	20,289	-	157	-	100	20,546
- retail housing	35,644	-	534	126	80	36,384
- retail other	15,169	2	3	-	30	15,204
Recoveries
- corporate	3,627	-	32	144	377	4,180
- SMEs	7,760	4	390	876	634	9,664
- retail housing	25,795	5	3,571	907	4,574	34,852
- retail other
	18,540	16	522	86	227	19,391
	9,163,216	317,051	78,235	7,545	564,358	10,130,405

507

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.2 Credit risk concentration of loans and advances to customers (continued)

2023
	Cyprus	Greece
			United
			Kingdom
				Russia
					Other
					countries
						Gross loans at
						amortised cost
By economic activity
	€000	€000	€000	€000	€000	€000
Trade	868,039	277	40	-	15,340	883,696
Manufacturing	287,524	43,971	192	-	31,194	362,881
Hotels and catering	928,910	29,454	36,704	-	39,368	1,034,436
Construction	486,622	8,332	14	-	331	495,299
Real estate	871,544	108,635	1,863	-	51,349	1,033,391
Private individuals	4,543,985	9,680	56,074	12,075	48,080	4,669,894
Professional and other services	535,994	572	5,242	352	54,846	597,006
Shipping	20,622	15	-	-	222,422	243,059
Other sectors
	512,666	-	-	2	30,184	542,852
	9,055,906	200,936	100,129	12,429	493,114	9,862,514

2023 (restated)
	Cyprus	Greece
			United
			Kingdom
				Russia
					Other
					countries
						Gross loans at
						amortised cost
By business line
	€000	€000	€000	€000	€000	€000
Corporate	3,326,556	30,487	193	324	185	3,357,745
IBU & International corporate
- IBU	87,127	1,688	6,544	6,901	18,618	120,878
- International corporate	115,212	164,103	43,401	-	439,512	762,228
SMEs	945,018	482	1,177	-	2,316	948,993
Retail
- housing	3,369,111	2,320	27,728	86	17,634	3,416,879
- consumer, credit cards and other	956,834	1,775	480	-	4,953	964,042
Restructuring
- corporate	48,440	-	611	-	-	49,051
- SMEs	33,212	-	261	532	61	34,066
- retail housing	57,685	-	2,468	122	212	60,487
- retail other	19,164	22	2	-	23	19,211
Recoveries
- corporate	6,079	-	182	173	911	7,345
- SMEs	13,419	1	1,173	1,623	1,183	17,399
- retail housing	50,927	50	14,718	2,399	7,231	75,325
- retail other
	27,122	8	1,191	269	275	28,865
	9,055,906	200,936	100,129	12,429	493,114	9,862,514

The loans and advances to customers include lending exposures in Cyprus with collaterals in Greece with a

carrying value as at 31 December 2024 of €176,890 thousand (2023: €128,705 thousand).

The loans and advances to customers reported within 'Other countries' as at 31 December 2024 include

exposures of €0,6 million in Ukraine (2023: €1,7 million) and €4,9 million in Israel (2023: €4,9 million).

508

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.3 Analysis of loans and advances to customers

The movement of the gross loans and advances to customers at amortised cost by staging, including the

loans and advances to customers classified as held for sale is presented in the tables below:

	Stage 1	Stage 2	Stage 3	POCI	Total
2024	€000	€000	€000	€000	€000
1 January	8,275,589	1,161,271	326,883	98,771	9,862,514
Transfers to stage 1	565,289	(564,134)	(1,155)	-	-
Transfers to stage 2	(228,889)	265,111	(36,222)	-	-
Transfers to stage 3	(14,037)	(19,442)	33,479	-	-
Foreign exchange and other
adjustments
	-	-	(5)	-	(5)
Write offs	(801)	(619)	(47,106)	(4,951)	(53,477)
Interest accrued and other
adjustments
	417,918	74,717	43,137	7,703	543,475
New loans originated or
purchased and drawdowns of
existing facilities
	2,252,251	69,200	1,877	11,336	2,334,664
Loans derecognised or repaid
(excluding write offs)
	(2,140,595)	(212,439)	(100,651)	(49,241)	(2,502,926)
Changes to contractual cash flows
due to modifications
	(230)	1,415	120	(224)	1,081
31 December
	9,126,495	775,080	220,357	63,394	10,185,326

	Stage 1	Stage 2	Stage 3	POCI	Total
2023	€000	€000	€000	€000	€000
1 January	7,867,256	1,565,603	371,018	113,458	9,917,335
Transfers to stage 1	786,990	(785,026)	(1,964)	-	-
Transfers to stage 2	(514,415)	546,249	(31,834)	-	-
Transfers to stage 3	(38,959)	(83,436)	122,395	-	-
Foreign exchange and other
adjustments
	-	-	10	-	10
Write offs	(594)	(588)	(79,286)	(5,282)	(85,750)
Interest accrued and other
adjustments
	388,970	39,662	47,804	8,001	484,437
New loans originated or
purchased and drawdowns of
existing facilities
	1,827,530	89,118	8,125	1,847	1,926,620
Loans derecognised or repaid
(excluding write offs)
	(2,038,389)	(210,331)	(107,490)	(22,753)	(2,378,963)
Changes to contractual cash flows
due to modifications
	(2,800)	20	(1,895)	(149)	(4,824)
Acquisition of Velocity 2 portfolio
	-	-	-	3,649	3,649
31 December
	8,275,589	1,161,271	326,883	98,771	9,862,514

As at 31 December 2023 no loans and advances to customers were classified as held for sale.

For revolving facilities, overdrafts and credit cards, the net positive change in balance by stage excluding

write-offs is reported in ‘New loans originated’ and the net negative change is reported in ‘Loans

derecognised or repaid'.

The analysis of gross loans and advances to customers at amortised cost by staging and by business line

concentration is included in Note 23.

509

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.3 Analysis of loans and advances to customers (continued)

The movement of gross loans and advances to customers at amortised cost, in the Corporate, IBU &

International corporate, SME and Retail business lines in Cyprus (the country where the loans are

managed), are presented in the tables below:

	Corporate
		IBU &
		International
		corporate
			SME	Retail
2024	€000	€000	€000	€000
1 January	3,357,421	883,106	948,624	4,380,921
Transfers (out of)/in business line	(19,487)	(3,596)	21,822	(5,792)
Write offs	(4,597)	(189)	(144)	(1,458)
Interest accrued	179,997	77,373	44,709	201,869
New loans originated or purchased	933,201	426,906	204,860	761,804
Loans derecognised or repaid (excluding write
offs)
	(1,098,155)	(302,429)	(252,530)	(762,789)
Changes to contractual cash flows due to
modifications not resulting in derecognition
	(1,159)	544	396	1,188
31 December
	3,347,221	1,081,715	967,737	4,575,743

	Corporate
		IBU &
		International
		corporate
			SME	Retail
2023 (restated)	€000	€000	€000	€000
1 January	3,398,475	823,182	1,026,608	4,264,777
Transfers in/(out of) business line	111,905	(35,005)	(38,809)	36,081
Write offs	(25,277)	(173)	(142)	(1,165)
Interest accrued	166,290	56,142	59,465	159,108
New loans originated or purchased	748,197	218,979	192,439	696,146
Loans derecognised or repaid (excluding write
offs)
	(1,037,422)	(179,763)	(291,534)	(775,774)
Changes to contractual cash flows due to
modifications not resulting in derecognition
	(4,747)	(256)	597	1,748
31 December
	3,357,421	883,106	948,624	4,380,921

44.4 Credit quality of loans and advances to customers based on the internal credit rating

Credit scoring is the primary risk rating system for assessing obligor and transaction risk for the key

portfolios of BOC PCL. For the purposes of credit scoring, these portfolios are Corporate, Retail and SMEs.

Corporate and SME portfolios include legal entities. Retail portfolio includes individuals.

Scoring models use internal and external data to assess and 'score' borrowers and their credit quality, in

order to provide further input on managing limits for existing loans and collection activities. The data is

specific to the borrower but additional data which could affect the borrower’s behaviour is also used.

Credit score is one of the factors employed on new clients and management of existing clients. The credit

score of the borrower is used to assess the credit quality for each independent acquisition or account

management action, leading to an automated decision or guidance for an adjudicator. Credit scoring

enhances the credit decision quality and facilitates risk-based pricing where feasible.

Borrower score defines the rating of the borrower from a range of 1-8 where 8 is defined as defaulted. The

12-months probability of default (PD) is calculated per rating. The following table presents weighted PD per

risk level's rating for corporate, retail and SME exposures.

Unrated corporate exposures are assessed using the Group's in-house behavioural scorecard model for

corporate legal entities. Unrated retail exposures include qualifying revolving facilities without scoring (i.e.

prepaid cards) and other revolving facilities (i.e. financial guarantees) which are assigned a more generic

curve. Similarly unrated SME exposures are assigned a more generic segment curve.

510

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.4 Credit quality of loans and advances to customers based on the internal credit rating

(continued)

New customers' lending to corporate and SME legal entities and new lending to retail individuals are

separately disclosed since a time span of seven months is necessary in order to provide an accurate rating.

The portfolios weighted PD per rating is presented below.

2024		12-month PD
Rating
	Corporate legal entities
	%
		Retail individuals
		%
			SME legal entities
			%
1	0.52	0.04	0.08
2	0.55	0.06	0.17
3	0.71	0.11	0.35
4	0.98	0.16	1.26
5	1.43	0.50	3.73
6	1.74	3.34	8.44
7	2.07	8.80	15.62

2023		12-month PD
Rating
	Corporate legal entities
	%
		Retail individuals
		%
			SME legal entities
			%
1	1.32	0.10	0.18
2	1.42	0.17	0.46
3	1.75	0.28	0.96
4	2.38	0.42	3.37
5	3.68	0.89	8.92
6	3.82	7.20	18.16
7	4.88	15.21	36.65

Lower rating exposures demonstrate a better capacity to meet financial commitments, with lower

probability of default, whereas higher rating exposures require varying degrees of special attention and

default risk is of greater concern.

As disclosed in Note 5.1 under section ‘Calibration of IFRS 9 models and removal of overlays in relation to

economic conditions', the Group during 2024 proceeded with model calibrations affecting the probability of

default parameter (the ‘PD-macro’) which led to a reduction in portfolios weighted PDs, when compared to

last year.

The tables below show the gross loans and advances to customers at amortised cost which are managed in

Cyprus, using the corporate legal entities, SMEs legal entities and retail individuals definition as per the

internal rating of BOC PCL.

		2024			2023
	Stage 1	Stage 2	Total	Stage 1	Stage 2	Total
Corporate legal entities	€000	€000	€000	€000	€000	€000
Rating 1	795,970	7,675	803,645	654,192	8,681	662,873
Rating 2	414,627	12,266	426,893	404,127	2,604	406,731
Rating 3	840,468	17,460	857,928	857,583	17,943	875,526
Rating 4	617,084	181,452	798,536	420,299	75,912	496,211
Rating 5	446,603	85,994	532,597	593,987	210,143	804,130
Rating 6	58,029	61,365	119,394	97,182	176,247	273,429
Rating 7	6,217	21,329	27,546	30,182	10,713	40,895
Unrated	231,861	22,225	254,086	230,024	34,157	264,181
New customers
	654,183	48,048	702,231	397,922	14,956	412,878
	4,065,042	457,814
			4,522,856
				3,685,498	551,356
						4,236,854
Total Stage 3 and POCI
			58,171			157,455
			4,581,027			4,394,309

511

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.4 Credit quality of loans and advances to customers based on the internal credit rating

(continued)

		2024			2023
	Stage 1	Stage 2	Total	Stage 1	Stage 2	Total
Retail individuals	€000	€000	€000	€000	€000	€000
Rating 1	404,639	1,263	405,902	410,510	886	411,396
Rating 2	309,996	898	310,894	296,784	1,182	297,966
Rating 3	539,982	1,155	541,137	531,271	8,583	539,854
Rating 4	1,523,523	12,369	1,535,892	1,387,960	59,067	1,447,027
Rating 5	1,107,575	48,957	1,156,532	915,585	195,178	1,110,763
Rating 6	59,245	81,998	141,243	63,506	91,634	155,140
Rating 7	82,361	120,555	202,916	104,288	121,092	225,380
Unrated	-	2,215	2,215	-	2,099	2,099
New customers
	380,491	6,629	387,120	308,043	13,166	321,209
	4,407,812	276,039
			4,683,851
				4,017,947	492,887
						4,510,834
Total Stage 3 and POCI
			146,115			230,837
			4,829,966			4,741,671

		2024			2023
	Stage 1	Stage 2	Total	Stage 1	Stage 2	Total
SMEs legal entities	€000	€000	€000	€000	€000	€000
Rating 1	125,714	1,235	126,949	120,165	3,360	123,525
Rating 2	260,609	2,266	262,875	210,856	47,818	258,674
Rating 3	125,330	8,654	133,984	108,742	29,117	137,859
Rating 4	47,228	15,261	62,489	45,841	14,490	60,331
Rating 5	10,668	4,285	14,953	13,021	5,771	18,792
Rating 6	3,414	4,361	7,775	5,300	3,328	8,628
Rating 7	3,172	1,415	4,587	3,324	2,534	5,858
Unrated	-	670	670	-	6,312	6,312
New customers
	77,368	3,080	80,448	64,722	4,298	69,020
	653,503	41,227
			694,730
				571,971	117,028
						688,999
Total Stage 3 and POCI
			24,348			36,842
			719,078			725,841

512

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.5 Credit losses of loans and advances to customers

The movement in ECL of loans and advances to customers, including those classified as held for sale, is as

follows:

	Stage 1	Stage 2	Stage 3	POCI	Total
2024	€000	€000	€000	€000	€000
1 January	24,205	30,257	103,996	20,995	179,453
Transfers to stage 1	11,706	(11,386)	(320)	-	-
Transfers to stage 2	(660)	4,411	(3,751)	-	-
Transfers to stage 3	(131)	(984)	1,115	-	-
Impact on transfer between
stages during the year*
	(8,970)	1,221	7,638	(173)	(284)
Foreign exchange and other
adjustments
	-	-	41	-	41
Write offs	(801)	(619)	(47,106)	(4,951)	(53,477)
Interest (provided) not
recognised in the income
statement
	-	-	4,156	1,105	5,261
New loans originated or
purchased*
	5,043	-	-	385	5,428
Loans derecognised or repaid
(excluding write offs)*
	(4,390)	(1,177)	(14,213)	(801)	(20,581)
Write offs*	748	325	12,193	295	13,561
Changes to models and inputs
(changes in PDs, LGDs and EADs)
used for ECL calculations*
	(14,380)	15,373	43,693	3,684	48,370
Changes to contractual cash flows
due to modifications not resulting
in derecognition*
	(365)	1,318	77	(5)	1,025
31 December
	12,005	38,739	107,519	20,534	178,797
Individually assessed	3,378	17,069	21,286	10,485	52,218
Collectively assessed
	8,627	21,670	86,233	10,049	126,579
	12,005	38,739	107,519	20,534	178,797

* Individual components of the ‘Impairment net of reversals on loans and advances to customers’ (Note

16).

The main driver of the ECL charge are the ‘Changes to models and inputs (changes in PDs, LGDs and EADs)

used for ECL calculations’ which includes the calibration of the provisioning models as set out in Note 5.1

together with the impact of the agreement for disposal of NPE portfolio (Project River).

As at 31 December 2023 no loans and advances to customers were classified as held for sale.

513

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.5 Credit losses of loans and advances to customers (continued)

	Stage 1	Stage 2	Stage 3	POCI	Total
2023	€000	€000	€000	€000	€000
1 January	22,288	27,041	113,573	15,540	178,442
Transfers to stage 1	10,985	(10,504)	(481)	-	-
Transfers to stage 2	(1,532)	6,677	(5,145)	-	-
Transfers to stage 3	(481)	(2,576)	3,057	-	-
Impact on transfer between
stages during the year*
	(8,860)	3,450	24,888	-	19,478
Foreign exchange and other
adjustments
	-	-	91	-	91
Write offs	(594)	(588)	(79,286)	(5,282)	(85,750)
Interest (provided) not
recognised in the income
statement
	-	-	3,827	1,079	4,906
New loans originated or
purchased*
	5,953	-	-	992	6,945
Loans derecognised or repaid
(excluding write offs)*
	(2,798)	(782)	(5,433)	(162)	(9,175)
Write offs*	455	340	7,981	1,118	9,894
Changes to models and inputs
(changes in PDs, LGDs and EADs)
used for ECL calculations*
	258	7,021	39,891	7,935	55,105
Changes to contractual cash flows
due to modifications not resulting
in derecognition*
	(1,469)	178	1,033	(225)	(483)
31 December
	24,205	30,257	103,996	20,995	179,453
Individually assessed	8,287	11,983	45,178	13,480	78,928
Collectively assessed
	15,918	18,274	58,818	7,515	100,525
	24,205	30,257	103,996	20,995	179,453

* Individual components of the ‘Impairment net of reversals on loans and advances to customers’ (Note

16).

The analysis of credit losses of loans and advances to customers by business line, excluding those classified

as held for sale is presented in the table below:

	Stage 1	Stage 2	Stage 3	POCI	Total
2024	€000	€000	€000	€000	€000
Corporate	4,468	17,645	14,830	323	37,266
IBU & International corporate
- IBU	84	378	51	5	518
- International corporate	1,925	1,070	-	-	2,995
SMEs	958	3,209	3,303	142	7,612
Retail
- housing	2,604	10,895	4,911	526	18,936
- consumer, credit cards and
other
	1,836	4,856	4,790	750	12,232
Restructuring
- corporate	2	127	1,627	10,178	11,934
- SMEs	47	123	2,997	515	3,682
- retail housing	53	371	10,686	341	11,451
- retail other	28	65	7,524	475	8,092
Recoveries
- corporate	-	-	2,053	158	2,211
- SMEs	-	-	4,714	470	5,184
- retail housing	-	-	11,686	2,600	14,286
- retail other
	-	-	9,344	1,276	10,620
	12,005	38,739	78,516	17,759	147,019

514

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.5 Credit losses of loans and advances to customers (continued)

	Stage 1	Stage 2	Stage 3	POCI	Total
2023 (restated)	€000	€000	€000	€000	€000
Corporate	12,993	11,727	32,761	5,169	62,650
IBU & International corporate
- IBU	161	323	40	5	529
- International corporate	1,498	816	38	6	2,358
SMEs	2,424	2,403	1,200	303	6,330
Retail
- housing	3,098	6,435	3,804	486	13,823
- consumer, credit cards and
other
	3,693	5,665	4,969	1,164	15,491
Restructuring
- corporate	21	1,635	6,962	9,964	18,582
- SMEs	134	589	4,334	553	5,610
- retail housing	75	440	12,393	204	13,112
- retail other	108	224	7,060	489	7,881
Recoveries
- corporate	-	-	3,342	267	3,609
- SMEs	-	-	4,794	150	4,944
- retail housing	-	-	13,772	1,094	14,866
- retail other
	-	-	8,527	1,141	9,668
	24,205	30,257	103,996	20,995	179,453

The movement of the ECL allowance for the loans and advances to customers in the Corporate, IBU &

International corporate, SME and Retail business lines in Cyprus (the country where the loans are

managed), is presented in the table below:

	Corporate
		IBU &
		International
		corporate
			SME	Retail
2024	€000	€000	€000	€000
1 January	62,425	2,887	6,134	29,314
Transfer (out of)/in the business line	(10,684)	91	921	(1,409)
Write offs	(4,597)	(189)	(144)	(1,458)
Interest (provided) not recognised in the income
statement
	987	2	116	458
New loans originated or purchased	1,998	1,029	287	1,688
Loans derecognised or repaid (excluding write offs)
	(10,004)	(487)	(216)	(2,183)
Write offs	10	21	79	979
Changes to models and inputs (changes in PDs,
LGDs and EADs) used for ECL calculations
	(1,078)	(52)	105	4,317
Changes to contractual cash flows due to
modifications not resulting in derecognition
	800	(2)	174	64
Impact on transfer between stages during the year
	(2,591)	213	(40)	(602)
31 December
	37,266	3,513	7,416	31,168

515

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.5 Credit losses of loans and advances to customers (continued)

	Corporate
		IBU &
		International
		corporate
			SME	Retail
2023 (restated)	€000	€000	€000	€000
1 January	56,359	1,087	5,879	24,827
Transfer in/(out of) the business line	(660)	112	76	(1,813)
Write offs	(25,276)	(173)	(142)	(1,165)
Interest (provided) not recognised in the income
statement
	287	-	-	464
New loans originated or purchased	4,058	470	616	1,804
Loans derecognised or repaid (excluding write offs)
	(2,627)	(315)	-	(1,615)
Write offs	18	28	135	740
Changes to models and inputs (changes in PDs,
LGDs and EADs) used for ECL calculations
	12,120	885	242	6,236
Changes to contractual cash flows due to
modifications not resulting in derecognition
	481	4	(469)	(283)
Impact on transfer between stages during the year
	17,665	789	(203)	119
31 December
	62,425	2,887	6,134	29,314

During the year ended 31 December 2024 the total non-contractual write-offs recorded by the Group

amounted to €25,391 thousand (2023: €66,547 thousand). The contractual amount outstanding on financial

assets that were written off during the year ended 31 December 2024 and that are still subject to

enforcement activity is €187,288 thousand (2023: €566,451 thousand).

Sensitivity analysis

The Group has performed sensitivity analysis relating to the loan portfolio in Cyprus, which represents more

than 99% of the total loan portfolio of the Group with reference date 31 December 2024 and 2023.

The Group has applied sensitivity analysis to the below parameters and the impact on the ECL, for both

individually and collectively assessed ECL calculations, is presented in the table below:

	Increase/(decrease) on ECL for
	loans and advances to customers
	at amortised cost
	2024	2023
	€000	€000
Increase the adverse weight by 5% and decrease the favourable weight by 5%	1,560	1,297
Decrease the adverse weight by 5% and increase the favourable weight by 5%	(1,677)	(1,629)
Increase the expected recovery period by 1 year	1,965	6,090
Decrease the expected recovery period by 1 year	(2,047)	(7,863)
Increase the collateral realisation haircut by 5%	4,429	8,816
Decrease the collateral realisation haircut by 5%	(3,771)	(9,495)
Increase in the PDs of stages 1 and 2 by 20%*	18,232	5,424
Decrease in the PDs of stages 1 and 2 by 20%*	(8,273)	(5,880)

516

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.5 Credit losses of loans and advances to customers (continued)

The increase/(decrease) on ECL, for loans and advances to customers at amortised cost is presented per

stage in the table below:

	Stage 1	Stage 2	Stage 3	Total
2024	€000	€000	€000	€000
Increase the adverse weight by 5% and decrease the
favourable weight by 5%
	186	931	443	1,560
Decrease the adverse weight by 5% and increase the
favourable weight by 5%
	(213)	(522)	(942)	(1,677)
Increase the expected recovery period by 1 year	139	870	956	1,965
Decrease the expected recovery period by 1 year	(111)	(687)	(1,249)	(2,047)
Increase the collateral realisation haircut by 5%	265	1,579	2,585	4,429
Decrease the collateral realisation haircut by 5%	(182)	(1,067)	(2,522)	(3,771)
Increase in the PDs of stages 1 and 2 by 20%*	1,810	16,422	-	18,232
Decrease in the PDs of stages 1 and 2 by 20%*	(2,059)	(6,214)	-	(8,273)

	Stage 1	Stage 2	Stage 3	Total
2023	€000	€000	€000	€000
Increase the adverse weight by 5% and decrease the
favourable weight by 5%
	295	204	798	1,297
Decrease the adverse weight by 5% and increase the
favourable weight by 5%
	(235)	(267)	(1,127)	(1,629)
Increase the expected recovery period by 1 year	727	1,201	4,162	6,090
Decrease the expected recovery period by 1 year	(695)	(1,121)	(6,047)	(7,863)
Increase the collateral realisation haircut by 5%	1,037	1,692	6,087	8,816
Decrease the collateral realisation haircut by 5%	(900)	(1,406)	(7,189)	(9,495)
Increase in the PDs of stages 1 and 2 by 20%*	2,624	2,800	-	5,424
Decrease in the PDs of stages 1 and 2 by 20%*	(1,325)	(4,555)	-	(5,880)

*The impact on the ECL also includes the transfer between stages of the loans and advances to customers

following the increase/decrease in the PD.

517

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.5 Credit losses of loans and advances to customers (continued)

The sensitivity analysis performed on the collateral realisation haircut and its impact on the ECL by business

line is presented in the table below:

	Increase the
	collateral
	realisation
	haircut by
	5%
		Decrease the
		collateral
		realisation
		haircut by
		5%
			Increase the
			collateral
			realisation
			haircut by 5%
				Decrease the
				collateral
				realisation
				haircut by 5%
	2024	2024
			2023
			(restated)
				2023
				(restated)
	€000	€000	€000	€000
Corporate	553	(1,061)	2,708	(2,521)
IBU & International corporate
- IBU	3	(2)	9	(6)
- International corporate	17	(14)	65	(55)
SMEs	464	(382)	365	(324)
Retail
- housing	940	(638)	1,128	(811)
- consumer, credit cards and other	200	(137)	336	(286)
Restructuring
- corporate	34	(29)	1,029	(3,337)
- SMEs	109	(88)	233	(300)
- retail housing	660	(576)	694	(616)
- retail other	148	(140)	196	(175)
Recoveries
- corporate	22	(87)	123	(111)
- SMEs	209	(146)	932	(319)
- retail housing	671	(346)	693	(455)
- retail other
	399	(125)	305	(179)
	4,429	(3,771)	8,816	(9,495)

44.6 Contingent liabilities and commitments

The Group enters into various irrevocable commitments and contingent liabilities. These consist of

acceptances and endorsements, guarantees, documentary credits and undrawn formal stand-by facilities,

credit lines and other commitments to lend.

44.6.1 Contingent liabilities

An analysis of changes in the outstanding nominal amount of exposures and the corresponding ECL are

disclosed in the tables below:

	Stage 1	Stage 2	Stage 3	Total
2024	€000	€000	€000	€000
Exposures
1 January	483,831	184,827	36,966	705,624
Transfers to stage 1	51,626	(51,626)	-	-
Transfers to stage 2	(16,549)	17,453	(904)	-
Transfers to stage 3	(147)	(3,121)	3,268	-
Net increase/(decrease)
	45,157	(32,736)	(7,000)	5,421
31 December
	563,918	114,797	32,330	711,045

518

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.6 Contingent liabilities and commitments (continued)

44.6.1 Contingent liabilities (continued)

	Stage 1	Stage 2	Stage 3	Total
2023	€000	€000	€000	€000
Exposures
1 January	509,186	110,626	36,582	656,394
Transfers to stage 1	8,820	(8,755)	(65)	-
Transfers to stage 2	(88,817)	91,722	(2,905)	-
Transfers to stage 3	(585)	(3,763)	4,348	-
Net increase/(decrease)
	55,227	(5,003)	(994)	49,230
31 December
	483,831	184,827	36,966	705,624

	Stage 1	Stage 2	Stage 3	Total
2024	€000	€000	€000	€000
ECL
1 January	-	18	19,174	19,192
Net decrease	-	-	(293)	(293)
Credit for the year
	-	(4)	(1,002)	(1,006)
31 December
	-	14	17,879	17,893
Individually assessed	-	-	17,879	17,879
Collectively assessed
	-	14	-	14
	-	14	17,879	17,893

	Stage 1	Stage 2	Stage 3	Total
2023	€000	€000	€000	€000
ECL
1 January	119	110	17,013	17,242
Transfers to stage 3	(35)	(4)	39	-
Charge/(credit) for the year
	(84)	(88)	2,122	1,950
31 December
	-	18	19,174	19,192
Individually assessed	-	-	19,174	19,174
Collectively assessed
	-	18	-	18
	-	18	19,174	19,192

The credit quality of contingent liabilities as per the internal rating system of BOC PCL is disclosed in the

table below.

		2024			2023
	Stage 1	Stage 2	Total	Stage 1	Stage 2	Total
Corporate legal entities	€000	€000	€000	€000	€000	€000
Rating 1	98,192	2,161	100,353	130,436	266	130,702
Rating 2	17,055	151	17,206	16,168	2	16,170
Rating 3	92,078	63	92,141	33,253	29,663	62,916
Rating 4	27,905	421	28,326	26,279	2,686	28,965
Rating 5	73,886	17,939	91,825	25,253	30,270	55,523
Rating 6	1,768	5,700	7,468	19,494	281	19,775
Rating 7	1,817	66	1,883	6,485	33	6,518
Unrated	64,565	23,683	88,248	26,003	33,737	59,740
New customers
	56,061	500	56,561	102,235	6,174	108,409
	433,327	50,684
			484,011
				385,606	103,112
						488,718
Total Stage 3
			6,038			8,314
			490,049			497,032

519

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.6 Contingent liabilities and commitments (continued)

44.6.1 Contingent liabilities (continued)

		2024			2023
	Stage 1	Stage 2	Total	Stage 1	Stage 2	Total
SME legal entities	€000	€000	€000	€000	€000	€000
Rating 1	57,714	1,147	58,861	42,683	2,796	45,479
Rating 2	20,390	74	20,464	6,435	8,181	14,616
Rating 3	3,149	536	3,685	1,599	1,950	3,549
Rating 4	672	916	1,588	329	907	1,236
Rating 5	6	2	8	31	7	38
Rating 6	17	2	19	3	14	17
Rating 7	27	136	163	4	137	141
Unrated	-	43,046	43,046	-	50,393	50,393
New customers
	48,616	1,213	49,829	47,141	122	47,263
	130,591	47,072
			177,663
				98,225	64,507
						162,732
Total Stage 3
			26,190			28,232
			203,853			190,964

		2024			2023
	Stage 1	Stage 2	Total	Stage 1	Stage 2	Total
Retail individuals	€000	€000	€000	€000	€000	€000
Unrated
	-	17,041	17,041	-	17,208	17,208
	-	17,041
			17,041
				-	17,208
						17,208
Total Stage 3
			102			420
			17,143			17,628

44.6.2 Commitments

An analysis of changes in the outstanding exposures and the corresponding ECL are disclosed in the tables

below:

	Stage 1	Stage 2	Stage 3	Total
2024	€000	€000	€000	€000
Exposure
1 January
	1,665,479	271,766	21,488
				1,958,733
Transfers to stage 1
	156,132	(155,983)	(149)
				-
Transfers to stage 2
	(23,419)	23,754	(335)
				-
Transfers to stage 3
	(441)	(2,736)	3,177
				-
Net increase/(decrease)
	62,616	7,353	(4,236)
				65,733
31 December
	1,860,367	144,154	19,945	2,024,466

	Stage 1	Stage 2	Stage 3	Total
2023	€000	€000	€000	€000
Exposure
1 January	1,564,964	319,114	43,033	1,927,111
Transfers to stage 1	121,814	(121,602)	(212)	-
Transfers to stage 2	(100,140)	102,838	(2,698)	-
Transfers to stage 3	(4,872)	(3,783)	8,655	-
Net increase/(decrease)
	83,713	(24,801)	(27,290)	31,622
31 December
	1,665,479	271,766	21,488	1,958,733

520

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.6 Contingent liabilities and commitments (continued)

44.6.2 Commitments (continued)

	Stage 1	Stage 2	Stage 3	Total
2023	€000	€000	€000	€000
ECL
1 January	90	97	-	187
Charge/(credit) for the year
	(90)	(97)	-	(187)
31 December
	-	-	-	-

There is no ECL on commitments as at 31 December 2024 and 2023.

The credit quality of commitments, as per the internal rating system of BOC PCL is disclosed in the table

below.

		2024			2023
	Stage 1	Stage 2	Total	Stage 1	Stage 2	Total
Corporate legal entities	€000	€000	€000	€000	€000	€000
Rating 1	287,501	4,488	291,989	280,836	10,252	291,088
Rating 2	48,996	2,543	51,539	63,694	1,672	65,366
Rating 3	90,481	1,897	92,378	78,107	8,560	86,667
Rating 4	106,090	6,608	112,698	77,465	3,669	81,134
Rating 5	63,889	12,487	76,376	45,954	22,251	68,205
Rating 6	1,691	4,919	6,610	14,720	4,892	19,612
Rating 7	1,883	555	2,438	2,074	336	2,410
Unrated	131,778	45,041	176,819	90,986	51,113	142,099
New customers
	91,060	2,359	93,419	86,953	707	87,660
	823,369	80,897
			904,266
				740,789	103,452
						844,241
Total Stage 3
			11,035			11,981
			915,301			856,222

		2024			2023
	Stage 1	Stage 2	Total	Stage 1	Stage 2	Total
SME legal entities	€000	€000	€000	€000	€000	€000
Rating 1	306,438	17,151	323,589	275,684	34,643	310,327
Rating 2	104,628	1,473	106,101	54,993	56,903	111,896
Rating 3	18,280	1,916	20,196	11,146	13,215	24,361
Rating 4	3,529	1,196	4,725	2,698	1,811	4,509
Rating 5	558	100	658	530	322	852
Rating 6	128	152	280	173	152	325
Rating 7	13	9	22	7	192	199
Unrated	-	5,242	5,242	-	8,577	8,577
New customers
	11,375	692	12,067	16,658	915	17,573
	444,949	27,931
			472,880
				361,889	116,730
						478,619
Total Stage 3
			5,125			5,742
			478,005			484,361

521

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.6 Contingent liabilities and commitments (continued)

44.6.2 Commitments (continued)

		2024			2023
	Stage 1	Stage 2	Total	Stage 1	Stage 2	Total
Retail individuals	€000	€000	€000	€000	€000	€000
Rating 1	143,334	8,115	151,449	145,977	11,477	157,454
Rating 2	83,886	4,617	88,503	85,690	5,503	91,193
Rating 3	136,728	6,649	143,377	135,923	10,084	146,007
Rating 4	88,827	3,502	92,329	90,081	6,541	96,622
Rating 5	27,224	1,519	28,743	22,724	5,899	28,623
Rating 6	4,704	1,778	6,482	5,317	2,645	7,962
Rating 7	931	1,213	2,144	1,142	1,459	2,601
Unrated	30	7,038	7,068	-	6,832	6,832
New customers
	106,385	895	107,280	75,947	1,144	77,091
	592,049	35,326
			627,375
				562,801	51,584
						614,385
Total Stage 3
			3,785			3,765
			631,160			618,150

44.7 Collateral and other credit enhancements obtained

The carrying value of assets obtained during 2024 and 2023 by taking possession of collateral held as

security, was as follows:

	2024	2023
	€000	€000
Residential property	7,968	5,980
Commercial and other property	11,388	14,560
Land (fields and plots)
	6,477	-
	25,833	20,540

The total carrying value of stock of property and investment properties obtained over the years by taking

possession of collateral held as security for customer loans and advances and held by the Group as at 31

December 2024, including any expenses capitalised during the year, amounted to €659,976 thousand

(2023: €861,675 thousand).

The disposals of repossessed assets during 2024 amounted to €174,840 thousand (2023: €173,587

thousand).

44.8 Currency concentration of loans and advances to customers

The following table presents the currency concentration of the Group's loans and advances to customers at

amortised cost.

	2024	2023
Gross loans at amortised cost	€000	€000
Euro	9,475,479	9,336,828
US Dollar	573,140	409,555
British Pound	72,361	87,610
Russian Rouble	-	324
Swiss Franc	8,935	27,358
Other currencies
	490	839
	10,130,405	9,862,514

522

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.9 Modified loans and advances to customers

Modified loans and advances to customers are those loans where the original contractual terms of the loans

i. have been modified due to financial difficulties of the borrower and are considered as

forborne/restructured (as explained in Note 44.10), and

ii. have been modified due to commercial renegotiations and such loans are considered as non-

forborne.

Customers classified as Stage 2 and Stage 3 as at 31 December 2023, that had facilities modified (in a prior

or the current period), and are classified as Stage 1 as at 31 December 2024 amount to €157,066 thousand

(2023: €137,357 thousand) and their corresponding ECL amount to €251 thousand (2023: €547 thousand).

Previously classified Stage 2 and Stage 3 customers (with a carrying amount as at 31 December 2023 of

€95,331 thousand (2022: €30,012 thousand)) that had facilities modified during the year and are classified

as Stage 1 at 31 December 2024 amount to €88,935 thousand (2023: €19,113 thousand) and their

corresponding ECL amount to €118 thousand (2023: €36 thousand). Their related modification loss

amounted to €277 thousand (2023: €55 thousand).

Stage 2 and Stage 3 loans that were forborne during the year amounted to €148,112 thousand (2023:

€44,827 thousand). Their related modification loss amounted to €5,941 thousand (2023: €3,036 thousand).

Facilities that reverted to Stage 2 and Stage 3 having once cured during the year amount to €44,655

thousand (2023: €51,720 thousand) and their corresponding ECL amount to €3,243 thousand (2023:

€1,984 thousand) as at 31 December 2024.

44.10 Forbearance/Restructuring

Forborne/restructured loans and advances are those loans and advances that have been modified because

the borrower is considered unable to meet the terms and conditions of the contract due to financial

difficulties. Taking into consideration these difficulties, the Group decides to modify the terms and

conditions of the contract to provide the borrower with the ability to service the debt or refinance the

contract, either partially or fully. They include the facilities for which the Group has modified the repayment

programme (e.g. provision of a grace period, suspension of the obligation to repay one or more

instalments, reduction in the instalment amount and/or elimination of overdue instalments relating to

capital or interest).

The practice of extending forbearance/restructuring measures constitutes a grant of a concession whether

temporarily or permanently to that borrower. A concession may involve restructuring the contractual terms

of a debt or payment in some form other than cash, such as an arrangement whereby the borrower

transfers collateral pledged to the Group.

For an account to qualify for forbearance/restructuring it must meet certain criteria including the viability of

the customer. The extent to which the Group reschedules accounts that are eligible under its existing

policies may vary depending on its view of the prevailing economic conditions and other factors which may

change from year to year. In addition, exceptions to policies and practices may be allowed in specific

situations in response to legal or regulatory requirements.

Forbearance/restructuring activities may include measures that restructure the borrower's business

(operational restructuring) and/or measures that restructure the borrower's financing (financial

restructuring).

Forbearance/restructuring options may be of a short or long-term nature or a combination thereof. The

Group has developed and deployed sustainable restructuring solutions, which are suitable for the borrower

and acceptable for the Group.

Short-term restructuring solutions are defined as restructured repayment solutions of duration of less than

two years. In the case of loans for the construction of commercial property and project finance, a short-

term solution may not exceed one year.

Short-term restructuring solutions can include the following:

i. Suspension of capital or capital and interest: granting to the borrower a grace period in the payment of

capital (i.e. during this period only interest is paid) or capital and interest, for a specific period of time.

523

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.10 Forbearance/Restructuring (continued)

ii. Reduced payments: decrease of the amount of repayment instalments over a defined short-term period

in order to accommodate the borrower’s new cash flow position.

iii. Arrears and/or interest capitalisation: capitalisation of the arrears and of any unpaid interest to the

outstanding principal balance for repayment under a rescheduled program.

Long-term restructuring solutions can include the following:

i. Interest rate reduction: permanent or temporary reduction of interest rate (fixed or variable) into a fair

and sustainable rate.

ii. Extension of maturity: extension of the maturity of the loan which allows a reduction in instalment

amounts by spreading the repayments over a longer period.

iii. Sale of Assets: Part of the restructuring can be the agreement with the borrower for immediate or over

time sale of assets (mainly real estate) to reduce borrowing.

iv. Modification of existing terms of previous decisions: In the context of the new sustainable restructuring

solution, any terms of previous decisions that are assessed not feasible to be met are revisited.

v. Consolidation/refinancing of existing facilities that: In cases where the borrower maintains several

separate loans with different collaterals, these can be consolidated and a new repayment schedule can

be set and the new loan can be secured with all existing collaterals.

vi. Hard Core Current Account Limit: In such cases a loan with a longer repayment may be offered to

replace/reduce the current account limit.

vii. Split and freeze: the customer’s debt is split into sustainable and unsustainable parts. The sustainable

part is restructured to a sustainable repayment program. The unsustainable part is ‘frozen’ for the

restructured duration of the sustainable part. At the maturity of the restructuring, the frozen part is

either forgiven pro rata (based on the actual repayment of the sustainable part) or restructured.

viii. Rescheduling of payments: the existing contractual repayment schedule is adjusted to a new

sustainable repayment program based on a realistic, current and forecasted assessment of the cash flow

generation of the borrower.

ix. Liquidation Collateral: An agreement between BOC PCL and a borrower for the voluntary sale of

mortgaged assets, for partial or full repayment of the debt.

x. Currency Conversion: This solution is provided to match the credit facility currency and the borrower's

income currency.

xi. Additional Financing: This solution can be granted, simultaneously with the restructuring of the existing

credit facilities of the borrower, to cover any financing gap.

xii. Partial or total write off: This solution corresponds to the Group forfeiting the right to legally recover

part or the whole of the amount of debt outstanding by the borrower.

xiii. Debt/equity swaps: debt restructuring that allows partial or full repayment of the debt in exchange of

obtaining an equivalent amount of equity in the company by the Group, with the remaining debt right

sized to the cash flows of the borrower to allow repayment. This solution is used only in exceptional

cases and only where all other efforts for restructuring are exhausted and after ensuring compliance

with the banking law.

xiv. Debt/asset swaps: agreement between the Group and the borrower to voluntarily transfer the

mortgaged asset or other immovable property to the Group, to partially or fully repay the debt. Any

residual debt may be restructured with an appropriate repayment schedule in line with the borrower’s

reassessed repayment ability.

The loans forborne continue to be classified as Stage 3 in the case they are performing forborne exposures

under probation for which additional forbearance measures are extended, or performing forborne

exposures, previously classified as NPEs that present more than 30 days past due within the probation

period.

Forbearance modifications of loans and advances that do not affect payment arrangements, such as

restructuring of collateral or security arrangements, are not regarded as sufficient to categorise the facility

as credit impaired, as by themselves do not necessarily indicate credit distress affecting payment ability

such that would require the facility to be classified as NPE.

The forbearance characteristic contributes in two specific ways for the calculation of lifetime ECL for each

individual facility. Specifically, it is taken into consideration in the scorecard development, where, if this

characteristic is identified as statistically significant, it affects negatively the rating of each facility. It also

contributes in the construction through the cycle probability of default and cure curves, where, when

feasible, a specific curve for the forborne products is calculated and assigned accordingly.

524

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.10 Forbearance/Restructuring (continued)

The below table presents the movement of the Group’s forborne loans and advances to customers

measured at amortised cost.

	2024	2023
	€000	€000
1 January	455,740	1,106,298
New loans and advances forborne in the year	148,348	47,366
Loans no longer classified as forborne and repayments	(249,742)	(705,103)
Write off of forborne loans and advances	(11,983)	(41,996)
Interest accrued on forborne loans and advances	24,427	49,102
Foreign exchange adjustments
	49	73
31 December
	366,839	455,740

The forborne loans classification is discontinued when all EBA criteria for the discontinuation of the

classification as forborne exposure are met. The criteria are set out in the EBA Final draft Implementing

Technical Standards (ITS) on supervisory reporting and non-performing exposures.

The below tables present the Group’s forborne loans and advances to customers by staging, economic

activity and business line classification, as well as the ECL allowance and tangible collateral held for such

forborne loans.

	2024	2023
	€000	€000
Stage 1	-	-
Stage 2	253,862	261,091
Stage 3	86,639	173,728
POCI
	26,338	20,921
	366,839	455,740

Fair value of collateral

	2024	2023
	€000	€000
Stage 1	-	-
Stage 2	234,794	241,983
Stage 3	75,515	154,051
POCI
	24,965	19,734
	335,274	415,768

The fair value of collateral presented above has been computed to the extent that the collateral mitigates

credit risk.

525

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.10 Forbearance/Restructuring (continued)

Credit risk concentration

	2024	2023
By economic activity	€000	€000
Trade	10,155	15,578
Manufacturing	3,325	10,195
Hotels and catering	6,058	60,129
Construction	132,011	82,849
Real estate	26,614	61,550
Private individuals	116,063	187,537
Professional and other services	36,621	35,197
Other sectors
	35,992	2,705
	366,839	455,740

	2024	2023
By business line	€000	€000
Corporate	224,271	207,534
IBU & International corporate
- IBU	944	2,386
- International corporate	653	768
SMEs	19,046	20,823
Retail
- housing	47,506	67,087
- consumer, credit cards and other	8,411	17,265
Restructuring
- corporate	12,555	33,098
- SMEs	7,726	11,749
- retail housing	18,818	34,538
- retail other	4,764	7,399
Recoveries
- corporate	966	2,480
- SMEs	2,511	6,157
- retail housing	13,960	34,496
- retail other
	4,708	9,960
	366,839	455,740

526

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.10 Forbearance/Restructuring (continued)

2024	Stage 1	Stage 2	Stage 3	POCI	Total
By business line	€000	€000	€000	€000	€000
Corporate	-	189,064	25,745	9,462	224,271
IBU & International corporate
- IBU	-	943	1	-	944
- International corporate	-	653	-	-	653
SMEs	-	13,519	5,527	-	19,046
Retail
- housing	-	34,818	10,508	2,180	47,506
- consumer, credit cards and
other
	-	5,942	2,413	56	8,411
Restructuring
- corporate	-	1,431	1,006	10,118	12,555
- SMEs	-	2,507	4,350	869	7,726
- retail housing	-	4,444	13,458	916	18,818
- retail other	-	541	3,825	398	4,764
Recoveries
- corporate	-	-	934	32	966
- SMEs	-	-	2,280	231	2,511
- retail housing	-	-	12,356	1,604	13,960
- retail other
	-	-	4,236	472	4,708
	-	253,862	86,639	26,338	366,839

2023	Stage 1	Stage 2	Stage 3	POCI	Total
By business line	€000	€000	€000	€000	€000
Corporate	-	136,097	71,330	107	207,534
IBU & International corporate
- IBU	-	2,091	295	-	2,386
- International corporate	-	768	-	-	768
SMEs	-	19,414	1,409	-	20,823
Retail
- housing	-	51,588	13,479	2,020	67,087
- consumer, credit cards and
other
	-	13,047	4,089	129	17,265
Restructuring
- corporate	-	21,254	1,807	10,037	33,098
- SMEs	-	3,686	6,760	1,303	11,749
- retail housing	-	11,341	21,633	1,564	34,538
- retail other	-	1,805	5,249	345	7,399
Recoveries
- corporate	-	-	2,250	230	2,480
- SMEs	-	-	5,668	489	6,157
- retail housing	-	-	30,643	3,853	34,496
- retail other
	-	-	9,116	844	9,960
	-	261,091	173,728	20,921	455,740

527

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.10 Forbearance/Restructuring (continued)

ECL allowance

	2024	2023
	€000	€000
Stage 1	-	-
Stage 2	9,525	8,643
Stage 3	36,503	47,840
POCI
	12,462	11,510
	58,490	67,993

44.11 Credit quality of Group assets exposed to credit risk other than loans and advances to

customers - analysis by rating agency designation

Balances with central banks and loans and advances to banks

Balances with central banks and loans and advances to banks are analysed by Moody’s Investors Service

rating as follows:

	2024	2023
	€000	€000
Aaa - Aa3	468,981	227,075
A1 - A3	7,743,265	23,647
Baa1 - Baa3	17,983	9,550,286
Ba1 - Ba3	3,642	4,545
B1 - B3	-	254
Caa - C	-	2,148
Unrated	23,910	64,276
Other receivables from banks
	68,528	34,532
	8,326,309	9,906,763

All balances with central banks and loans and advances to banks are classified as Stage 1 (Note 19).

Reverse repurchase agreements

Reverse repurchase agreements counterparties are analysed by Moody's Investors Service rating as follows:

	2024	2023
	€000	€000
A1 - A3	306,053	-
Unrated
	704,117	403,199
	1,010,170	403,199

The average rating of the collateral received was Aa2 as at 31 December 2024 (2023: Aa1).

In accordance with the terms of the reverse repurchase agreements of a carrying value of €1,010 million

(2023: €403 million) that are held by the Group as at 31 December 2024, the Group accepts collateral that

it is permitted to sell. At 31 December 2024, the total fair value of the collateral received was €1,007

million (2023: €426 million), none of which had been resold or repledged. As at 31 December 2024, cash

collateral of €7 million has been placed with counterparties and €13 million has been received from the

counterparties (2023: cash collateral of €30 million was placed with the counterparties). The effective yield

of the reverse repurchase agreements is approximately 3% p.a. (2023: 3% p.a.) and the average duration

is estimated at approximately 2.1 years (2023: 2.8 years).

528

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

44. Risk management - Credit risk (continued)

44.11 Credit quality of Group assets exposed to credit risk other than loans and advances to

customers - analysis by rating agency designation (continued)

Debt securities and other non-equity securities

Investments in debt securities and other non-equity securities are analysed by Moody's Investors Service

rating as follows:

	2024	2023
Moody's rating	€000	€000
Aaa - Aa3	2,459,365	1,969,693
A1 - A3	1,506,802	442,968
Baa1 - Baa3	254,698	1,049,328
Ba1 - Ba3
	2,014	89,404
	4,222,879	3,551,393

The tables below present the Moody's Investors Service rating of the Group's investments in debt securities:

	FVOCI	Amortised cost
	Stage 1	Stage 1
2024	€000	€000
Aaa - Aa3	75,598	2,373,065
A1 - A3	319,855	1,186,947
Baa1 - Baa3	11,087	243,611
Ba1 - Ba3
	-	2,014
	406,540	3,805,637

	FVOCI	Amortised cost
	Stage 1	Stage 1
2023	€000	€000
Aaa - Aa3	62,469	1,903,613
A1 - A3	34,234	408,734
Baa1 - Baa3	315,640	733,688
Ba1 - Ba3
	18,725	70,679
	431,068	3,116,714

The ratings are provided for the ISIN or if not available for the specific issuance, the rating of the

counterparty is used.

45. Risk management - Market risk

Market risk is the risk of loss from adverse changes in market prices namely from changes in interest rates,

credit spreads, foreign currency exchange rates, property and security prices. The Market and Liquidity Risk

department is responsible for monitoring the risk on financial instruments resulting from such changes with

the objective to minimise the impact on earnings and capital. The department also monitors property price

risk, liquidity risk and credit risk from counterparties and countries. It is also responsible for monitoring

compliance with the various market risk policies and procedures.

529

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

45. Risk management - Market risk (continued)

Interest rate risk

Interest rate risk refers to the current or prospective risk to Group's capital and earnings arising from

adverse movements in interest rates that affect the Group's banking book positions.

Interest rate fluctuations affect the economic value of the Group’s assets, liabilities and off-balance sheet

items, through corresponding changes in the cash flow amounts and discount rates and therefore their

present value. Changes in interest rates also affect the earnings by increasing or decreasing the net interest

income of other interest rate-sensitive items. As such, interest rate risk is measured primarily by reference

to the impact on net interest income and impact on economic value.

The Group’s balance sheet composition is characterized by floating rate assets and fixed or non-rate

sensitive liabilities, resulting in an increased volatility on net interest income, with a negative impact when

interest rates decrease and a positive impact when interest rates increase. In addition, this balance sheet

composition results in relatively low volatility of the Economic Value. This is due to the floating rate nature

of assets which are longer term in terms of maturity such as loans and advances and the short term nature

of the sizable central bank balances. On the liability side, term deposits, although fixed rate in nature, have

short contractual maturities (mainly up to one year). In addition, the economic value impact from fixed rate

assets is mitigated by the impact of core NMDs which behave as fixed rate liabilities.

Interest rate risk is managed through internal and regulatory limits on the change in net interest income

and economic value of equity under various adverse interest rate shock scenarios. Internal limits on net

interest income are set as a percentage of the annualised net interest income while regulatory limits on net

interest income and economic value of equity are set as a percentage of the Group Tier 1 regulatory capital.

Treasury is responsible for the management of the interest rate risk arising from the banking book and

asset and liability positions, effected through the hedging strategy. This involves the set of techniques and

the financial instruments used to manage the risk of adverse changes in interest rates, affecting the net

interest income and the economic value of the Group and aims to ensure financial stability and robust risk

management. The Group uses derivatives and currently applies fair value hedge accounting. The Group

applies macro fair value hedging to NMDs and micro fair value hedging to fixed rate debt securities

measured at FVOCI, debt securities in issue and subordinated liabilities. For fair value hedges the Group

uses interest rate swaps to manage the fair value movements of fixed rate financial instruments due to

changes in the benchmark rate.

The Group assesses and measures hedge effectiveness of a hedging relationship based on the change in the

fair value of the derivative instrument relative to the change in the fair value of the hedged item

attributable to the hedged risk.

The Market and Liquidity Risk department is responsible to measure, monitor and control the interest rate

risk on the banking book (IRRBB) based on the established Risk Appetit Framework (RAF) of the Group. One

of the risk metrics that Market and Liquidity Risk department uses for monitoring and controlling the IRRBB

is the Net Interest Income Sensitivity, which measures changes to net interest income under varying

interest rate scenarios over a one-year horizon and assuming a constant balance sheet over this period. Its

main purpose is to measure the vulnerability of the profitability to changing interest rate conditions. In

addition, another risk metric employed by the Group for this purpose is the Economic Value of Equity

Sensitivity. This represents the change in the net present value of all cash flows in the balance sheet under

a set of interest rate stress scenarios and is calculated on the entire balance sheet under a run-off

assumption, i.e., no replenishment of matured transactions.

The Group does not maintain a trading book.

Sensitivity analysis

The table below sets out the impact on the Group’s net interest income, over a one-year period, from

reasonably possible changes in the interest rates of the Euro and the US Dollar, being the main currencies,

using the assumptions of the prevailing market risk policy as at 31 December 2024 and 2023 respectively.

530

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

45. Risk management - Market risk (continued)

		Impact on Net Interest Income
		€000
Currency	Interest Rate Scenario
		2024
		(+135 bps/-100
		bps for Euro and
		+160 bps/-100 bps
		for US Dollar)
			2023
			(+140 bps/-120 bps
			for Euro and +170
			bps/-110 bps for US
			Dollar)
All	Parallel up	102,061	147,348
All	Parallel down	(84,200)	(135,973)
All	Steepening	(51,175)	(81,265)
All	Flattening	79,770	112,104
All	Short up	106,190	150,679
All	Short down	(88,788)	(140,778)
Euro	Parallel up	98,728	142,318
Euro	Parallel down	(82,267)	(132,297)
Euro	Steepening	(51,731)	(79,595)
Euro	Flattening	79,588	108,998
Euro	Short up	104,647	145,795
Euro	Short down	(88,085)	(137,046)
US Dollar	Parallel up	3,333	5,030
US Dollar	Parallel down	(1,932)	(3,676)
US Dollar	Steepening	556	(1,670)
US Dollar	Flattening	182	3,106
US Dollar	Short up	1,543	4,884
US Dollar	Short down	(703)	(3,732)

The above sensitivities incorporate assumptions on the pass-through rate of time deposits of 40% for the

upside scenario and 50% for the downside scenario for Euro denominated deposits for the year ended 31

December 2024 (2023: 40% for the upside scenario and 50% for the downside scenario for Euro

denominated deposits). The above sensitivities are computed under the assumption of a constant balance

sheet and that all market rates move upwards or downwards in parallel.

531

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

45. Risk management - Market risk (continued)

The table below sets out the impact on the Group’s equity, from reasonably possible changes in the interest

rates under various interest rate scenarios for the Euro and the US Dollar in line with the EBA guidelines.

		Impact on Equity
		€000
Currency	Interest Rate Scenario
		2024
		(+135 bps/-100
		bps for Euro and
		+160 bps/-100 bps
		for US Dollar)
			2023
			(+140 bps/-120 bps
			for Euro and +170
			bps/-110 bps for US
			Dollar)
All	Parallel up	(16,380)	62,584
All	Parallel down	613	(89,615)
All	Steepening	41,074	(511)
All	Flattening	(113,840)	(11,035)
All	Short up	(112,972)	14,117
All	Short down	40,990	(40,727)
Euro	Parallel up	(15,355)	114,640
Euro	Parallel down	953	(60,469)
Euro	Steepening	78,258	6,669
Euro	Flattening	(107,390)	20,775
Euro	Short up	(106,983)	48,756
Euro	Short down	78,078	(27,450)
US Dollar	Parallel up	(1,025)	10,529
US Dollar	Parallel down	273	(29,146)
US Dollar	Steepening	3,890	(3,846)
US Dollar	Flattening	(6,450)	(21,422)
US Dollar	Short up	(5,990)	(10,261)
US Dollar	Short down	3,903	(13,277)

The aggregation of the impact on equity was performed as per the EBA guidelines by adding the negative

and 50% of the positive impact of each scenario. The increased IRRBB hedging that took place during the

year ended 31 December 2024 and the different magnitude of the shocks impact the sensitivity scenarios

year-on-year.

In addition to the above fluctuations in net interest income, interest rate changes can result in fluctuations

in the fair value of investments at FVPL (including investments held for trading) and in the fair value of

derivative financial instruments impacting the profit and loss of the Group.

The equity of the Group is also affected by changes in market interest rates. The impact on the Group’s

equity arises from changes in the fair value of mainly fixed rate debt securities classified at FVOCI.

The sensitivity analysis is based on the assumption of a parallel shift of the yield curve. The table below sets

out the impact on the Group’s profit/loss before tax and equity as a result of reasonably possible changes in

the interest rates of the major currencies.

Parallel change in interest rates
	Impact on profit/loss
	before tax
		Impact on equity
2024	€000	€000
+1.6% for US Dollar
+1.35% for Euro
+3% for British Pound
	(934)	(1,982)
-1% for US Dollar
-1% for Euro
-3% for British Pound
	692	1,468

532

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

45. Risk management - Market risk (continued)

	Impact on profit/loss
	before tax
		Impact on equity
Parallel change in interest rates	€000	€000
2023
+1.7% for US Dollar
+1.4% for Euro
+3% for British Pound
	(2,468)	(773)
-1.1% for US Dollar
-1.2% for Euro
-3% for British Pound
	2,115	663

The hedging relationships have been taken into account in the Net Interest Income (NII) and Economic

Value of Equity (EVE) Sensitivity tables.

Currency risk

Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate

because of changes in foreign currency exchange rates.

In order to manage currency risk, the ALCO has approved open position limits for the total foreign currency

positions. The foreign currency position limits are lower than those prescribed by the regulator. These limits

are managed by Treasury Division and monitored daily by Market and Liquidity Risk department.

The Group does not maintain a currency trading book.

The table below sets out the Group's currency risk resulting from the Group's open FX position. The analysis

assumes reasonably possible changes in the exchange rates of major currencies against the Euro, based

mainly on historical price fluctuations. The impact on profit/loss after tax includes the change in net interest

income that arises from the change of currency rate.

The impact on equity arises from the hedging instruments that are used to hedge part of the net assets of

the subsidiaries whose functional currency is not the Euro. The net assets of foreign operations are also

revalued and affect equity (by an approximately equal and opposite impact), but their impact is not taken

into account in the below sensitivity analysis as the below relates only to financial instruments which have a

direct impact either on profit/loss after tax or on equity.

	Change in foreign
	exchange rate
		Impact on profit/loss
		after tax
			Impact on equity
2024	%	€000	€000
US Dollar	+5	1,566	-
Russian Rouble	+60	1,231	-
Romanian Lei	+5	4	(49)
Swiss Franc	+5	91	-
British Pound	+5	235	-
Japanese Yen	+5	1	-
Other currencies	+5	54	-
US Dollar	-5	(1,417)	-
Russian Rouble	-30	(189)	-
Romanian Lei	-5	(4)	44
Swiss Franc	-5	(82)	-
British Pound	-5	(212)	-
Japanese Yen	-5	(1)	-
Other currencies	-5	(49)	-

533

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

45. Risk management - Market risk (continued)

	Change in foreign
	exchange rate
		Impact on profit/loss
		after tax
			Impact on equity
2023	%	€000	€000
US Dollar	+5	1,622	-
Russian Rouble	+60	1,364	-
Romanian Lei	+5	3	(63)
Swiss Franc	+5	92	-
British Pound	+5	307	-
Japanese Yen	+5	2	-
Other currencies	+5	48	-

	Change in foreign
	exchange rate
		Impact on profit/loss
		after tax
			Impact on equity
US Dollar	-5	(1,467)	-
Russian Rouble	-30	(210)	-
Romanian Lei	-5	(3)	57
Swiss Franc	-5	(84)	-
British Pound	-5	(278)	-
Japanese Yen	-5	(2)	-
Other currencies	-5	(53)	-

Price risk

Equity securities price risk

The risk of loss from changes in the price of equity securities arises when there is an unfavourable change in

the prices of equity securities held by the Group as investments.

Investments in equities are outside the Group’s risk appetite, but may be acquired in the context of

delinquent loan workouts. The Group monitors the current portfolio mostly acquired by the Group as part of

the acquisition of certain operations of Laiki Bank, or through delinquent loan workouts, with the objective

to gradually liquidate all positions for which there is a market. Equity securities are disposed of by the

Group as soon as practicable.

Changes in the prices of equity securities that are classified as investments at FVPL affect the results of the

Group, whereas changes in the value of equity securities classified as FVOCI affect directly the equity of the

Group.

The table below shows the impact on the profit/loss before tax and on equity of the Group from a change in

the price of the equity securities held, as a result of reasonably possible changes in the relevant stock

exchange indices.

	Change in index
		Impact on profit/loss
		before tax
			Impact on equity
2024	%	€000	€000
Cyprus Stock Exchange	+40	-	575
Athens Exchange	+50	419	-
New York Exchange	+40	-	-
Other stock exchanges and
unlisted
	+40	-	1,343
Non-listed (Real Estate)	+10	-	693
Cyprus Stock Exchange	-40	-	(575)
Athens Exchange	-50	(419)	-
New York Exchange	-10	-	-
Other stock exchanges and
unlisted
	-40	-	(1,343)
Non-listed (Real Estate)	-10	-	(693)

534

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

45. Risk management - Market risk (continued)

	Change in index
		Impact on profit/loss
		before tax
			Impact on equity
2023	%	€000	€000
Cyprus Stock Exchange	+40	1	900
Athens Exchange	+50	419	-
New York Exchange	+45	-	-
Other stock exchanges and
unlisted
	+40	26	1,270
Non-listed (Real Estate)	+25	-	1,732
Cyprus Stock Exchange	-40	(1)	(900)
Athens Exchange	-50	(419)	-
New York Exchange	-10	-	-
Other stock exchanges and
unlisted
	-40	(26)	(1,270)
Non-listed (Real Estate)	-10	-	(693)

Debt securities price risk

Debt securities price risk is the risk of loss as a result of adverse changes in the prices of debt securities

held by the Group. Debt security prices change as the credit risk of the issuer changes and/or as the market

interest rates change mainly for fixed rate securities. The Group invests a significant part of its liquid assets

in highly rated debt securities. The average Moody’s Investors Service rating of the debt securities portfolio

of the Group as at 31 December 2024 was Aa2 (2023: A1). Further information on ratings of debt securities

is disclosed in Note 44.11.

Changes in the prices of debt securities classified as investments at FVPL, affect the profit or loss of the

Group, whereas changes in the value of debt securities classified as FVOCI affect directly the equity of the

Group.

The table below indicates how the profit/loss before tax and equity of the Group will be affected from

reasonably possible changes in the price of the debt securities held, based on Value at Risk.

	Impact on profit/loss
	before tax
		Impact on equity
2024	€000	€000
Up scenario:
Aa3 and above rated bonds	1,250	2,168
A3 and above rated bonds	281	655
Baa1 and below rated bonds	6	437
Cyprus Government bonds	-	12,273
Down scenario:
Aa3 and above rated bonds	(1,250)	(2,168)
A3 and above rated bonds	(281)	(655)
Baa1 and below rated bonds	(6)	(437)
Cyprus Government bonds	-	(12,273)

535

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

45. Risk management - Market risk (continued)

	Impact on profit/loss
	before tax
		Impact on equity
2023	€000	€000
Up scenario:
Aa3 and above rated bonds	2,614	4,068
A3 and above rated bonds	151	1,938
Baa1 and below rated bonds	53	430
Cyprus Government bonds	-	27,618
Down scenario:
Aa3 and above rated bonds	(2,614)	(4,068)
A3 and above rated bonds	(151)	(1,938)
Baa1 and below rated bonds	(53)	(430)
Cyprus Government bonds	-	(27,618)

Other non-equity instruments price risk

The table below shows the impact on the profit/loss before tax and equity of the Group from a change in the

price of other non-equity instruments held, as a result of reasonably possible changes in the price index of

the relevant instruments.

	Change in index
		Impact on profit/loss
		before tax
			Impact on equity
2024	%	€000	€000
Other non-equity instruments	+40	4,281	-
Other non-equity instruments	-10	(1,070)	-
2023
Other non-equity instruments	+45	1,625	-
Other non-equity instruments	-10	(361)	-

Property price risk

A significant part of the Group’s loan portfolio is secured by real estate, the majority of which is located in

Cyprus. Furthermore, the Group holds a substantial number of properties mainly arising from loan

restructuring activities; the enforcement of loan collateral and debt for asset swaps. These properties are

held by the Group primarily as stock of property and some are held as investment properties.

Property risk is the risk that the Group’s business and financial position will be affected by adverse changes

in the demand for, and prices of, real estate, or by regulatory capital requirements relating to increased

charges with respect to the stock of property held.

46. Risk management - Liquidity and funding risk

Liquidity Risk

Liquidity risk is the risk that the Group is unable to fully or promptly meet current and future payment

obligations as and when they fall due. This risk includes the possibility that the Group may have to raise

funding at high cost or sell assets at a discount to fully and promptly satisfy its obligations.

It reflects the potential mismatch between incoming and outgoing payments, taking into account

unexpected delays in repayment and unexpectedly high payment outflows. Liquidity risk involves both the

risk of unexpected increases in the cost of funding of the portfolio of assets and the risk of being unable to

liquidate a position in a timely manner on reasonable terms.

In order to limit this risk, management has in place an established Liquidity Risk Policy of managing assets,

taking liquidity into consideration and monitoring cash flows and liquidity on a regular basis. The Group has

developed internal control processes and contingency plans for managing liquidity risk.

536

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

46. Risk management - Liquidity and funding risk (continued)

Management and structure

The Board of Directors sets the Group's Liquidity Risk Appetite which defines the level of risk at which the

Group should operate.

The Board of Directors, through its Risk Committee, approves the Liquidity Risk Policy and reviews at

frequent intervals the liquidity position of the Group.

The ALCO is responsible for setting the policies for the effective management and monitoring of liquidity risk

across the Group.

The Treasury Division is responsible for liquidity management at Group level, ensuring compliance with

internal policies and regulatory liquidity requirements and providing direction as to the actions to be taken

regarding liquidity needs. The Treasury Division assesses on a regular basis the adequacy of the liquid

assets and takes the necessary actions to ensure adequate liquidity position.

Liquidity is also monitored by Market and Liquidity Risk department, to ensure compliance with both internal

policies and limits, and with the limits set by the regulatory authorities. Market and Liquidity Risk

department reports the liquidity position to ALCO at least monthly. It also provides the results of various

stress tests to ALCO and the Board Risk Committee at least quarterly.

Liquidity is monitored and managed on an ongoing basis through:

(i) Risk appetite: establishes the Group's Risk Appetite Statement together with the appropriate limits

for the management of all risks including liquidity risk.

(ii) Liquidity Risk Policy: sets the principles, the roles and responsibilities for managing liquidity risk as

well as the liquidity and funding risk management framework, stress testing and the reporting on

liquidity and funding.

(iii) Liquidity limits: a number of internal and regulatory limits are monitored on a regular basis. Where

applicable, a traffic light system (RAG) is used for ratios, in order to raise flags and take action

when the ratios deteriorate.

(iv) Early Warning Indicators: monitoring of a range of indicators for early signs of liquidity risk in the

market or specific to the Group. These are designed to immediately identify the emergence of

increased liquidity risk so as to maximise the time available to execute appropriate mitigating

actions.

(v) Liquidity Contingency Plan: maintenance of a Liquidity Contingency Plan (LCP) which is designed to

provide a framework where a liquidity stress could be effectively identified and managed. The LCP

provides a communication plan and includes management actions to respond to liquidity stresses.

(vi) Recovery Plan: the Group has developed a Recovery Plan (RP), the key objectives of which are,

among others, to set key Recovery and Early Warning Indicators and to set in advance a range of

recovery options to enable the Group to be adequately prepared to respond to stressed conditions

and restore the Group’s liquidity position.

Monitoring process

Daily

The daily monitoring of the stock of highly liquid assets is important to safeguard and ensure the

uninterrupted operations of the Group’s activities. Market and Liquidity Risk department prepares a daily

report analysing the internal liquidity buffer and comparing it to the previous day’s buffer. Results are made

available to members of the Risk and Treasury Divisions. In addition, Treasury monitors daily and intraday

the customer inflows and outflows in the main currencies used by the Group.

The liquidity buffer is made up of: Banknotes, CBC balances (excluding the Minimum Reserve Requirements

(MRR)), unpledged cash and nostro current accounts, as well as money market placements up to the stress

horizon, available ECB credit line and market value net of haircut of unencumbered/available liquid bonds.

537

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

46. Risk management - Liquidity and funding risk (continued)

The designing of the stress tests follows guidance and is based on the liquidity risk drivers which are

recognised internationally by both the Prudential Regulation Authority (PRA) and EBA. In addition, it takes

into account SREP recommendations, as well as the Annual Risk Identification Process of the Group. The

stress test assumptions are reviewed on an annual basis and approved by the Board of Directors through its

Risk Committee. Whenever it is considered appropriate to amend the assumptions during the year, approval

is requested from ALCO and the Board Risk Committee. The main items shocked in the different scenarios

are: deposit outflows, wholesale funding, loan repayments, off balance sheet commitments, marketable

securities, own issue covered bond, additional credit claims, interbank takings and cash collateral for

derivatives and repos.

Weekly

Market and Liquidity Risk department prepares a report indicating the level of liquid assets including Credit

Institutions Money-Market Placements as per LCR definitions.

Market and Liquidity Risk department also prepares the liquidity stress testing for bank specific, market

wide and combined scenarios on a weekly basis. The requirement is to have sufficient liquidity buffer to

enable BOC PCL to survive a twelve-month stress period, including capacity to raise funding under all

scenarios.

Furthermore, a report is submitted to the regulator on a weekly basis. The report includes information on

deposits breakdown, cash flow information, survival period, LCR ratio, rollover of funding, funding gap

(through the Maturity Ladder analysis), concentration of funding and collateral details. It concludes on the

overall liquidity position of BOC PCL and describes the measures already implemented and those which will

be implemented in the short-term to improve liquidity position if needed.

Monthly

Market and Liquidity Risk department prepares reports monitoring compliance with internal and regulatory

liquidity requirements and submits them to the ALCO, the Executive Committee and the Board Risk

Committee. It also calculates the surplus liquidity buffer following stress outflows. The fixed deposit renewal

rates, the percentage of International business unit deposits over total deposits and the percentage of

instant access deposits are also presented. The liquidity mismatch in the form of the Maturity Ladder report

(for both contractual and behavioural flows) is presented to ALCO and the resulting mismatch between

assets and liabilities is compared to previous month’s mismatch.

Market and Liquidity Risk department also reports the Liquidity Coverage Ratio (LCR) and Additional

Liquidity Monitoring Metrics (ALMM) to the CBC/ECB on a monthly basis.

Quarterly

The results of the stress testing scenarios are reported to ALCO and the Board Risk Committee quarterly as

part of the quarterly Internal Liquidity Adequacy Assessment Process (ILAAP) review. Market and Liquidity

Risk department also reports the Net Stable Funding Ratio (NSFR) to the CBC/ECB quarterly.

Annually

The Group prepares on an annual basis its ILAAP package. The ILAAP package provides a holistic view of the

Group’s liquidity adequacy under normal and stress conditions. Within ILAAP, the Group evaluates its

liquidity risk in the context of established policies and processes for the identification, measurement,

management and monitoring of liquidity risk as implemented by the Group.

The Market and Liquidity Risk department also prepares annually an ECB/SRB liquidity report, the 'Joint

liquidity template' that runs for five consecutive days. The report includes information on deposits

breakdown, cash flow information, survival period, LCR ratio, rollover of funding, funding gap (through the

Maturity Ladder analysis), concentration of funding and collateral details. It concludes on the overall

liquidity position of BOC PCL and describes the measures implemented and to be implemented in the short-

term to improve liquidity position if needed.

As part of the Group’s procedures for monitoring and managing liquidity risk, there is a Group Liquidity

Contingency Plan (LCP) for handling liquidity difficulties. The LCP details the steps to be taken in the event

that liquidity problems arise, which escalate to a special meeting of the Crisis Management Committee for

LCP (CMC-LCP). The LCP sets out the members of this committee and a series of the possible actions that

can be taken. The LCP is reviewed and tested at least annually.

538

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

46. Risk management - Liquidity and funding risk (continued)

Liquidity ratios

The Group LCR is calculated based on the Delegated Regulation (EU) 2015/61. It is designed to establish a

minimum level of high quality liquid assets sufficient to meet an acute stress lasting for 30 calendar days.

Τhe minimum regulatory requirement is 100%. The Group also calculates its NSFR as per Capital

Requirements Regulation II (CRR II), with the limit set at 100%. The NSFR is the ratio of available stable

funding to required stable funding. NSFR has been developed to promote a sustainable maturity structure of

assets and liabilities.

Funding risk

Funding risk is the risk that the Group does not have sufficiently stable sources of funding or access to

sources of funding may not always be available at a reasonable cost, and thus the Group may fail to meet

its obligations, including regulatory ones (e.g. MREL).

Main sources of funding

As at 31 December 2024, the Group’s main sources of funding were its deposit base and wholesale funding.

Wholesale funding is becoming an important source of funding, with the issuance of Tier 2 of a nominal

amount of €300 million, the issuances of senior preferred debt of an aggregate nominal amount of €950

million and the AT1 issuance for €220 million. As at 31 December 2024, the wholesale funding nominal

amount was €1,470 million (2023: €1,170 million) as further described in Notes 32 and 34.

With respect to funding from TLTRO III operations, this was fully repaid in the year ended 31 December

2024.

Funding to subsidiaries

The funding provided by BOC PCL to its subsidiaries for liquidity purposes is repayable as per the terms of

the respective agreements.

The subsidiaries may proceed with dividend distributions in the form of cash to BOC PCL, provided that they

are not in breach of their regulatory capital and liquidity requirements, where applicable.

Collateral requirements and other disclosures

Collateral requirements

The carrying values of the Group's encumbered assets as at 31 December 2024 and 2023 are summarised

below:

	2024	2023
	€000	€000
Cash and other liquid assets	55,434	72,800
Investments	39,958	260,011
Loans and advances
	3,470,859	3,349,118
	3,566,251	3,681,929

Cash is mainly used to cover collateral required for derivatives, trade finance transactions and guarantees

issued. It may also be used as part of the supplementary assets for the covered bond.

As at 31 December 2024 investments are used as supplementary assets for the covered bond. As at 31

December 2023 investments were mainly used as collateral for ECB funding or as supplementary assets for

the covered bond.

As at 31 December 2024, loans and advances indicated as encumbered are mainly pledged for any potential

use of the funding facilities of the ECB and for the covered bond. As at 31 December 2023, loans and

advances indicated as encumbered were mainly used as collateral for funding from the ECB and the covered

bond.

539

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

46. Risk management - Liquidity and funding risk (continued)

Loans and advances to customers include mortgage loans of a nominal amount of €1,010 million as at 31

December 2024 (2023: €1,008 million) in Cyprus, pledged as collateral for the covered bond issued by BOC

PCL in 2011 under its Covered Bond Programme. As at 31 December 2024, although there is no outstanding

funding from the ECB, housing loans of a nominal amount of €2,431 million (2023: €2,329 million) in

Cyprus, remain in the collateral pool of the CBC part of the available credit line.

BOC PCL maintains a Covered Bond Programme set up under the Cyprus Covered Bonds legislation and the

Covered Bonds Directive of the CBC. Under the Covered Bond Programme, BOC PCL has in issue covered

bonds of €650 million secured by residential mortgages originated in Cyprus. The Covered Bonds have a

maturity date of 12 December 2026 and pay an interest rate of 3-month Euribor plus 1.25% on a quarterly

basis. On 9 August 2022, BOC PCL proceeded with an amendment to the terms and conditions of the

covered bonds following the implementation of Directive (EU) 2019/2162 in Cyprus. The covered bonds are

listed on the Luxemburg Bourse. The covered bonds have a conditional Pass-Through structure. All the

bonds are held by BOC PCL. The covered bonds are eligible collateral for the Eurosystem credit operations

and are placed as collateral for accessing funding from the ECB.

In addition to the encumbered assets presented above, as at 31 December 2024 cash collateral of €7

million has been placed with counterparties in relation to the reverse repurchase agreements (2023: €30

million) (Note 44.11).

Other disclosures

Deposits by banks include balances of €13,870 thousand as at 31 December 2024 (2023: €20,462

thousand) relating to borrowings from international financial and similar institutions for funding, aiming to

facilitate access to finance and improve funding conditions for small or medium sized enterprises, active in

Cyprus. The carrying value of the respective loans and advances granted to such enterprises serving this

agreement amounts to €27,341 thousand as at 31 December 2024 (2023: €40,049 thousand).

Analysis of financial assets and liabilities based on remaining contractual maturity

The analysis of the Group’s financial assets and liabilities based on the remaining contractual maturity at 31

December is based on undiscounted cash flows, analysed in time bands according to the number of days

remaining from 31 December to the contractual maturity date.

Financial assets

The analysis of financial assets does not include any interest receivable cash flows. Financial assets have a

much longer duration than financial liabilities and non-discounted interest receivable cash flows are higher

than non-discounted interest payable cash flows (based on remaining contractual maturity). As a result,

non-discounted cash inflows from interest receivable would have greatly exceeded non-discounted cash

outflows on interest payable, thus artificially improving liquidity.

Cash and balances with central banks are classified in the relevant time band based on the contractual

maturity, with the exception of obligatory balances with central banks and balances with central banks for

ancillary systems. Obligatory balances with central banks are assigned to different time bands

proportionally according to the allocation of customer deposits and deposits by banks. Balances with central

banks for ancillary systems are classified in the 'over five years' time band.

Current accounts, overdrafts and amounts in arrears are included within the first maturity time band which

reflects their contractual maturity. All other loans and advances to customers are analysed according to

their contractual repayment schedule.

Loans and advances to banks are analysed in the time bands according to the number of days remaining

from 31 December until their contractual maturity date. Amounts placed as collateral (primarily for

derivatives) are assigned to different time bands based on either their maturity, or proportionally according

to the maturities of derivatives (where the collateral had no fixed maturity).

Financial assets with no contractual maturity (such as equity securities) are included in the 'Over five years'

time band, unless classified as at FVPL, in which case they are included in the 'On demand and up to one

month' time band.

The investments are classified in the relevant time band according to their contractual maturity.

540

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

46. Risk management - Liquidity and funding risk (continued)

Financial liabilities

All financial liabilities for the repayment of which notice is required, are included in the relevant time bands

as if notice had been given on 31 December, despite the fact that the Group expects that the majority of its

customers will not demand repayment of such liabilities on the earliest possible date. Fixed deposits are

classified in time bands based on their remaining contractual maturity. Although customers may demand

repayment of time deposits (subject to penalties depending on the type of the deposit account), the Group

has the discretion not to accept such early termination of deposits.

Debt securities in issue and subordinated liabilities are classified in the relevant time band according to the

remaining contractual maturity.

The amounts presented in the table below are not equal to the amounts presented on the balance sheet,

since the table below presents all cash flows (including interest to maturity) on an undiscounted basis.

Derivative financial instruments

The fair value of the derivatives is included in financial assets or in financial liabilities in the time band

corresponding to the remaining maturity of the derivative.

Gross settled derivatives are presented in a separate table and the corresponding cash flows are classified

accordingly in the time bands which relate to the number of days until their receipt or payment.

Contingent liabilities and Commitments

Amounts of contingent liabilities and commitments are included in the time band on the basis of their

remaining contractual maturities except for amounts of undrawn facilities and guarantees which are

included in the earliest date on which the Group can be required to pay. For guarantees to give rise to a

payment obligation to the Group, certain conditions must be met specific to the guarantee contract in order

for an outflow to arise. Given that guarantees could be called at any time by the counterparty, subject to

the occurrence of the relevant event, they are included in the 'On demand and up to one month' time band.

The analysis in the time bands of the amounts for the guarantees for the comparative period has been

changed from being included in the time bands on the basis of their remaining contractual maturities to the

‘On demand and up to one month’ time band to align to the above. The total amount presented for

guarantees for the comparative period is not impacted.

As a significant portion of the contingent liabilities and commitments expire without being utilised the total

of the nominal principal amounts is not indicative of future liquidity requirements.

541

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

46. Risk management - Liquidity and funding risk (continued)

	On demand
	and up to one
	month
		Between one
		and three
		months
			Between three
			months and
			one year
				Between one
				and five years
					Over five years	Total
2024
	€000	€000	€000	€000	€000	€000
Financial assets
Cash and balances with
central banks
	7,512,616	14,685	23,759	2,061	47,605	7,600,726
Loans and advances to
banks
	289,133	1,566	472,188	57,687	-	820,574
Reverse repurchase
agreements
	-	-	-	1,010,170	-	1,010,170
Fair value of derivative
assets
	7,907	332	503	75,197	11,334	95,273
Investments at FVPL	128,996	-	5,335	2,298	-	136,629
Investments not at FVPL	119,238	97,899	400,429	1,965,335	1,638,813	4,221,714
Loans and advances to
customers
	1,057,005	214,529	744,076	3,078,961	5,019,823	10,114,394
Other assets
	73,560	4,214	158,119	49,289	10,450	295,632
	9,188,455	333,225	1,804,409	6,240,998	6,728,025	24,295,112
Financial liabilities
Deposits by banks	100,558	11,533	32,434	207,342	23,284	375,151
Customer deposits	16,439,268	1,550,780	2,535,228	15,440	-	20,540,716
Debt securities in issue	-	-	48,313	1,104,057	-	1,152,370
Subordinated liabilities	-	-	19,875	102,615	356,162	478,652
Fair value of derivative
liabilities
	585	34	178	2,077	1,790	4,664
Lease liabilities	870	1,269	4,383	22,127	9,911	38,560
Other liabilities
	283,609	543	188	33,972	86,230	404,542
	16,824,890	1,564,159	2,640,599	1,487,630	477,377	22,994,655
Net financial
(liabilities)/assets
	(7,636,435)	(1,230,934)	(836,190)	4,753,368	6,250,648	1,300,457

542

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

46. Risk management - Liquidity and funding risk (continued)

	On demand
	and up to one
	month
		Between one
		and three
		months
			Between three
			months and
			one year
				Between one
				and five
				years
					Over five years	Total
2023
	€000	€000	€000	€000	€000	€000
Financial assets
Cash and balances with
central banks
	9,571,884	14,810	23,159	3,995	654	9,614,502
Loans and advances to
banks
	292,546	1,609	467	79,899	10,281	384,802
Reverse repurchase
agreements
	-	-	-	403,199	-	403,199
Fair value of derivative
assets
	220	99	540	35,263	14,933	51,055
Investments at FVPL	131,664	-	-	3,611	-	135,275
Investments not at FVPL	86,322	76,184	483,759	1,816,464	1,097,405	3,560,134
Loans and advances to
customers
	1,100,174	188,261	723,535	2,798,404	5,011,414	9,821,788
Other assets
	95,211	2,649	123,783	151,298	15,303	388,244
	11,278,021	283,612	1,355,243	5,292,133	6,149,990	24,358,999
Financial liabilities
Deposits by banks	153,942	18,737	35,481	210,135	69,494	487,789
Funding from central banks	-	1,752,836	313,174	-	-	2,066,010
Customer deposits	15,175,687	1,538,792	2,424,392	214,190	-	19,353,061
Debt securities in issue	-	-	33,323	779,464	-	812,787
Subordinated liabilities	-	-	19,885	94,663	384,739	499,287
Fair value of derivative
liabilities
	13,362	516	201	2,515	1,386	17,980
Lease liabilities	1,710	2,193	4,583	20,304	1,427	30,217
Other liabilities
	184,487	17,640	35,090	32,836	61,882	331,935
	15,529,188	3,330,714	2,866,129	1,354,107	518,928	23,599,066
Net financial
(liabilities)/assets
	(4,251,167)	(3,047,102)	(1,510,886)	3,938,026	5,631,062	759,933

	On demand
	and up to one
	month
		Between one
		and three
		months
			Between three
			months and
			one year
				Between one
				and five years
					Over five years	Total
2024
	€000	€000	€000	€000	€000	€000
Gross settled derivatives
Financial assets
Contractual amounts
receivable
	667,289	181,962	2,991	-	-	852,242
Contractual amounts payable
	(659,663)	(181,323)	(2,927)	-	-	(843,913)
	7,626	639	64	-	-	8,329
Financial liabilities
Contractual amounts
receivable
	144,527	34,120	2,549	-	-	181,196
Contractual amounts payable
	(144,633)	(34,119)	(2,605)	-	-	(181,357)
	(106)	1	(56)	-	-	(161)

543

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

48. Capital management (continued)

The amendments that came into effect on 28 June 2021 are in addition to those introduced in June 2020

through Regulation (EU) 2020/873, which among other, brought forward certain CRR II changes in light of

the COVID-19 pandemic. The main adjustments of Regulation (EU) 2020/873 that had an impact on the

Group’s capital ratio relate to the acceleration of the implementation of the new SME discount factor (lower

RWAs), extending the IFRS 9 transitional arrangements and introducing further relief measures to CET1

allowing to fully add back to CET1 any increase in ECL recognised in 2020 and 2021 for non-credit impaired

financial assets and phasing-in this starting from 2022 (phasing-in at 25% in 2022, 50% in 2023 and 75%

in 2024) and advancing the application of prudential treatment of software assets as amended by CRR II

(which came into force in December 2020).

In October 2021, the European Commission adopted legislative proposals for further amendments to the

CRR, CRD and the BRRD (the ‘2021 Banking Package’). Amongst other things, the 2021 Banking Package

would implement certain elements of Basel III that had not yet been transposed into EU law. In addition, in

the case of the proposed amendments to CRD and the BRRD, their terms and effect will depend, in part, on

how they are transposed in each member state. In December 2023, the preparatory bodies of the Council

and European Parliament endorsed the amendments to the CRR and the CRD and the legal texts were

published on the Council and the Parliament websites. In April 2024, the European Parliament voted to

adopt the amendments to the CRR and the CRD; Regulation (EU 2024/1623 (known as CRR III) and

Directive (EU) 2024/1619 (known as CRD VI) were published in the EU's official journal in June 2024, with

entry into force 20 days from the date of the publication. Most provisions of CRR III have become effective

on 1 January 2025 with certain measures subject to transitional arrangements or to be phased in over time.

Member states shall adopt and publish, by 10 January 2026, the laws, regulations and administrative

provisions necessary to comply with CRD VI and shall apply most of those measures by 11 January 2026.

The Group and BOC PCL have complied with the minimum capital requirements (Pillar I and Pillar II).

The insurance subsidiaries of the Group, the General Insurance of Cyprus Ltd and EuroLife Ltd, comply with

the requirements of the Superintendent of Insurance including the minimum solvency ratio. The regulated

Cyprus Investment Firm (CIF) of the Group, The Cyprus Investment and Securities Corporation Ltd (CISCO)

complies with the minimum capital adequacy ratio requirements. The payment services subsidiary of the

Group, JCC Payment Services Ltd, complies with regulatory capital requirements under the Provision and

Use of Payment Services and Access to Payment Systems Laws of 2018 to 2023.

547

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

49. Related party transactions

Related parties of the Group include associates and joint ventures, key management personnel, members of

the Board of Directors and their connected persons. Connected persons for the purpose of this disclosure

include spouses, minor/dependent children and companies in which the directors/key management

personnel, hold directly or indirectly, at least 50% of the voting shares in a general meeting, or act as

executive director or exercise control of the entities in any way.

(a) Transactions with subsidiaries

The Company is the holding company of the Group. The Company enters into transactions with its

subsidiaries in the normal course of business. Balances and transactions between the Company and its

subsidiaries are disclosed in Note 17 of the Company’s financial statements. Transactions with the

subsidiaries have been eliminated on consolidation.

(b) Transactions with associates

From time to time, the Group provides to and receives from its associates certain banking and financial

services. These are not material to the Group and all the transactions are made on normal business terms

as for comparable transactions with other customers of a similar type.

(c) Compensation of the Board of Directors and key management personnel

The following disclosures are made in accordance with the provisions of IAS 24 Related Party Disclosures

and sections 305 and 306 of the Companies Act 2014, in respect of the compensation of the Board of

Directors and key management personnel.

Fees and emoluments of members of the Board of Directors and key management personnel

	2024	2023
Directors' emoluments	€000	€000
Executives
Salaries and other short-term benefits	1,151	1,061
Variable remuneration - STIP	72	400
Variable remuneration - LTIP	1,180	-
Retirement benefit plan costs
	102	94
	2,505	1,555
Non-executives
Fees
	942	1,077
Total directors' emoluments
	3,447	2,632
Key management personnel emoluments
Salaries and other short-term benefits	3,241	3,058
Termination benefits	-	200
Variable remuneration - STIP	600	610
Variable remuneration - LTIP	2,161	-
Retirement benefit plan costs
	275	262
Total key management personnel emoluments
	6,277	4,130
Total
	9,724	6,762

Fees and emoluments of members of the Board of Directors and key management personnel are included

for the period that they serve as members of the Board of Directors and as key management personnel

respectively.

The retirement benefit plan costs relate to contributions paid for defined contribution plans.

548

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

49. Related party transactions (continued)

Variable remuneration amounts (amounts for STIP and LTIP) presented in the tables above and further

below in the tables in this Note represent the award amount awarded in respect of the performance year

2024 for STIP and of the performance period 2022-2024 for the 2022 LTIP (2022 LTIP cycle awarded), and

include both amounts expected to vest in 2025 and amounts to be deferred in following years. In respect of

the 2022 LTIP, the amount of the award disclosed is different from the annual cost amount recorded in the

consolidated income statement as the annual cost is calculated under the IFRS 2 provisions as per the

accounting policy disclosed in Note 2.32. The LTIP amount included in the tables in this Note represents the

amount awarded, calculated as the final amount of shares to be delivered (subject to continuing

employment) (determined by reference to the performance scorecard assessment outcome) based on the

average closing share price on the Cyprus Stock Exchange for the period from 1 December 2024 to 17

January 2025 of €4.62. The final number of shares to be delivered to the CEO have been set to 192,883, to

the EDF to 62,614 and for the key management personnel to 467,662. No LTIP cycle had a performance

period ending in the year ended 31 December 2023 and therefore no amounts are included in the tables in

respect of variable remuneration under LTIP for the comparative period. The annual expense amounts

recorded in the consolidated income statement for the year ended 31 December 2024 and 2023 in

accordance with IFRS 2 in respect of the Executive Directors and key management personnel are disclosed

below.

As disclosed in Note 14.3, the short-term incentive award is primarily awarded in the form of cash. Where

the total amount of variable remuneration for a financial year awarded under STIP and LTIP for an individual

exceeds a threshold as per regulatory guidelines, then at least 50% of the variable remuneration must be

awarded in the form of shares. In the case of the Executive Directors and key management personnel for

the year ended 31 December 2024, the amounts awarded under STIP will be in the form of cash as the LTIP

award is awarded in the form of shares and it is in excess of 50% of the variable remuneration for 2024

(2023: in the case of the Executive Directors, the 2023 STIP award was 50% in the form of cash and 50%

in the form of shares and in the case of the other key management personnel an amount of €560 thousand

was in the form of cash and an amount of €50 thousand in the form of shares). In the context of

establishing the final amount of variable remuneration for the performance year 2024, following the

outcome of the assessment of the predetermined performance targets, the amounts awarded under the

2022 LTIP cycle were determined first, followed by the STIP amount to be awarded so that the total variable

remuneration is within the 100% fixed to variable remuneration ratio threshold. Therefore, for year 2024,

where for a participant the entire of the 100% threshold was utilised for the LTIP, no STIP amount has been

awarded.

In case the total variable remuneration award to an individual exceeds a certain regulatory threshold, then

vesting conditions as described in Note 14.3, apply for both the cash and the share component and remain

subject to malus and clawback conditions as per the applicable regulatory framework and the LTIP Plan

rules.

Executive Directors' emoluments

A cost of €317 thousand has been recorded by the Group in its Consolidated Income Statement in relation

to awards granted in 2022, 2023 and 2024 to the Executive Directors under the Long-Term Incentive Plan

(LTIP) as described in Note 14.2 (2023: cost of €235 thousand for awards granted in 2022 and 2023). The

recognition of such cost is in accordance with the Group accounting policy described in Note 2.32.

Key management personnel

The emoluments of key management personnel include the remuneration of the members of the Executive

Committee and the emoluments of other members of the Senior Management team (Extended EXCO) since

the date of their appointment to the Committees.

Further, employer's contributions in relation to the emoluments of key management personnel of €391

thousand have been recorded in the Consolidated Income Statement during the year ended 31 December

2024 (2023: €351 thousand). Such amounts are not considered part of the remuneration, but rather an

incremental cost to the Group, and as such not included in the table above.

Further, a cost of €615 thousand has been recorded by the Group in its Consolidated Income Statement in

relation to awards granted in 2022, 2023 and 2024 to the key management personnel under the Long-Term

Incentive Plan (LTIP) as described in Note 14.2 (2023: cost of €360 thousand for awards granted in 2022

and 2023). The recognition of such cost is in accordance with the Group accounting policy described in Note

2.32.

549

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

49. Related party transactions (continued)

Executive Directors

The fees and emoluments of the Executive Directors are analysed as follows:

	2024	2023
	€000	€000
Panicos Nicolaou (Chief Executive Officer)
Salaries and other short-term benefits	819	761
Variable remuneration - STIP	-	300
Variable remuneration - LTIP	891	-
Retirement benefit plan costs
	73	68
	1,783	1,129
Eliza Livadiotou (Executive Director Finance)
Salaries and other short-term benefits	332	300
Variable remuneration - STIP	72	100
Variable remuneration - LTIP	289	-
Retirement benefit plan costs
	29	26
	722	426
Total
	2,505	1,555

The share-based benefits expense recorded in the Consolidated Income Statement during the year ended

31 December 2024 for the share awards granted under the LTIP for LTIP Cycles 2022, 2023 and 2024

amounts to €240 thousand (2023: €186 thousand) for the Chief Executive Officer and to €77 thousand

(2023: €49 thousand) for the Executive Director Finance.

Further, employer's contributions of €63 thousand have been recorded in the Consolidated Income

Statement during the year ended 31 December 2024, of which €34 thousand relate to the Chief Executive

Officer and €29 thousand relate to the Executive Director Finance (2023: total employer's contributions of

€64 thousand, of which €38 thousand relate to the Chief Executive Officer and €26 thousand to the

Executive Director Finance). Such amounts are not considered part of the remuneration of Directors, but

rather an incremental cost to the Group, and as such have not been included in the table above.

Non-executive Directors

The fees of Non-executive Directors are analysed as follows:

	2024	2023
	€000	€000
Efstratios-Georgios Arapoglou	261	250
Lyn Grobler	165	155
Constantine Iordanou
(1)
	81	148
Monique Eugenie Hemerijck
(2)
	152	38
Adrian John Lewis
(3)
	159	8
Christian Philipp Hansmeyer
(4)
	62	-
William Stuart Birrell
(4)
	62	-
Arne Berggren
(5)
	-	30
Ioannis Zographakis
(6)
	-	113
Nicolaos Sofianos
(7)
	-	117
Paula Hadjisotiriou
(6)
	-	141
Maria Philippou
(8)
	-	77
	942	1,077

Further, employer's contributions in relation to non-executive Directors of €24 thousand have been recorded

in the Consolidated Income Statement during the year ended 31 December 2024 (2023: €31 thousand).

Such amounts are not considered part of the remuneration of Directors, but rather an incremental cost to

the Group, and as such have not been included in the table above.

550

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

49. Related party transactions (continued)

(1)

Passed away on 16 June 2024.

(2)

ECB approved the appointment of Mrs Monique Eugenie Hemerijck on 10 August 2023.

(3)

ECB approved the appointment of Mr Adrian John Lewis on 17 November 2023.

(4)

On 29 April 2024, ECB approved the appointment of Mr Christian Philipp Hansmeyer and Mr William Stuart

Birrell as members of the Board of Directors and during the AGM on 17 May 2024, they were appointed to

the Board of Directors.

(5)

On 31 March 2023, Mr Arne Berggren resigned as a member of the Board of Directors.

(6)

On 31 December 2023, both Mrs Paula Hadjisotiriou and Mr Ioannis Zographakis resigned from their

respective positions as members of the Board of Directors.

(7)

On 11 December 2023, Mr Nicolaos Sofianos resigned as a member of the Board of Directors.

(8)

On 13 October 2023, Mrs Maria Philippou resigned as a member of the Board of Directors.

The fees of the non-executive Directors include fees as members of the Board of Directors of the Company

and its subsidiaries, as well as fees as members of committees of the Board of Directors. Fees are included

for the period that they serve as members of the Board of Directors, upon approval of appointment by the

ECB, and for the period that they serve as members of the committees of the Board of Directors, upon their

appointment in the respective committee.

(d) Transactions with Directors and key management personnel

The tables below show the deposits, loans and advances and other credit balances held by the members of

the Board of Directors and key management personnel and their connected persons, as at the balance sheet

date and other relevant information as required by the Companies Act 2014 and the provisions of IAS 24

Related Party Disclosures.

Loans to Directors

The following information is presented in accordance with the Companies Act 2014. For the purposes of the

Companies Act 2014 disclosures, ‘Directors’ means the current Board of Directors of the Company and any

past Directors who were members of the Board of Directors of the Company during the year.

All transactions with members of the Board of Directors and their connected persons are made on normal

business terms as for comparable transactions, including interest rates, with customers of a similar credit

standing.

There were nine Directors in office during the year (2023: twelve Directors), two of whom availed of credit

facilities (2023: three Directors). Two of the Directors who availed of credit facilities had balances

outstanding at 31 December 2024 (2023: two of the Directors who availed of credit facilities had balances

outstanding). The balances outstanding are disclosed below.

The value of arrangements at the beginning and end of the current and preceding financial years as stated

below, expressed as a percentage of the net assets of the Group at the beginning and end of the current

and preceding financial years is less than 1% in accordance with section 307 of the Companies Act 2014. No

amounts have been waived during the year ended 31 December 2024.

551

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

49. Related party transactions (continued)

Board of Directors

Details of transactions with the Directors and their connected persons, where indicated, for the years ended

31 December 2024 and 2023 are as follows:

	Balance as
	at 1 January
		Amounts
		advanced
		during the
		year
			Amounts
			repaid
			during the
			year
				Balance as at
				31 December
					Aggregate
					maximum
					amount
					outstanding
					during the
					year
						Unused
						credit
						facilities
Panicos Nicolaou
	€000	€000	€000	€000	€000	€000
2024
Overdrafts/ credit cards
	2
		n/a	n/a
				3	5	54
Panicos Nicolaou
2023
Overdrafts/ credit cards
	2
		n/a	n/a
				2	4	54

	Balance as
	at 1 January
		Amounts
		advanced
		during the
		year
			Amounts
			repaid
			during the
			year
				Balance as at
				31 December
					Aggregate
					maximum
					amount
					outstanding
					during the
					year
						Unused
						credit
						facilities
Eliza
Livadiotou
	€000	€000	€000	€000	€000	€000
2024
Loans	71	-	14	60	71	-
Overdrafts/ credit cards
	4
		n/a	n/a
				8	8	55
	75			68	79	55
Eliza
Livadiotou
2023
Loans	87	-	19	71	87	-
Overdrafts/ credit cards
	14
		n/a	n/a
				4	14	59
	101			75	101	59

	Balance as
	at 1 January
		Amounts
		advanced
		during the
		year
			Amounts
			repaid
			during the
			year
				Balance
				as at
				31 December
					Aggregate
					maximum
					amount
					outstanding
					during the
					year
						Unused
						credit
						facilities
Ioannis Zographakis
	€000	€000	€000	€000	€000	€000
2023
Overdrafts/ credit cards
	2
		n/a	n/a	n/a
					2	-

The balances included in the table above include principal and interest. Also, amounts approved and repaid

are not shown for overdraft and credit card facilities as these are revolving in nature. The aggregate

maximum amount outstanding includes credit card exposures at the maximum statement balance.

No other Directors had any loan facilities or overdraft/credit card balances with the Group during the year

ended 31 December 2024 (2023: nil).

The aggregate expected credit loss allowance on the above loans and credit facilities is below €5 thousand

as at 31 December 2024 (2023: below €5 thousand). All principal and interest that has fallen due on these

loans or credit facilities has been paid.

552

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

49. Related party transactions (continued)

Connected persons of the Board of Directors

The aggregate of loans to connected persons of Directors in office at 31 December 2024, as defined in

section 220 of the Companies Act 2014, are as follows (2024: aggregate of two persons; 2023: aggregate

of two persons):

	Balance as at
	1 January
		Amounts
		advanced
		during the year
			Amounts
			repaid during
			the year
				Balance as at
				31 December
					Aggregate
					maximum
					amount
					outstanding
					during the year
Panicos Nicolaou
	€000	€000	€000	€000	€000
2024
Overdrafts/credit cards
	1
		n/a	n/a
				1	3
2023
Overdrafts/credit cards
	2
		n/a	n/a
				1	2

	Balance as at
	1 January
		Amounts
		advanced
		during the year
			Amounts
			repaid during
			the year
				Balance as at
				31 December
					Aggregate
					maximum
					amount
					outstanding
					during the year
Eliza Livadiotou
	€000	€000	€000	€000	€000
2024
Loans	66	-	13	57	66
Overdrafts/credit cards
	18
		n/a	n/a
				15	18
	84			72	84
2023
Loans	74	-	13	66	74
Overdrafts/credit cards
	10
		n/a	n/a
				18	18
	84			84	92

The balances included in the table above include principal and interest. Also, amounts approved and repaid

are not shown for overdraft and credit card facilities as these are revolving in nature. The aggregate

maximum amount outstanding includes credit card exposures at the maximum statement balance.

The aggregate expected credit loss allowance on the above loans and credit facilities is below €5 thousand

as at 31 December 2024 (2023: below €5 thousand). All principal and interest that has fallen due on these

loans or credit facilities has been paid.

Key management personnel in office during the year and their connected persons

There were 19 key management personnel in office during the year (2023: 20 key management personnel),

19 of whom availed of credit facilities (2023: 20 key management personnel). All of the key management

personnel who availed of credit facilities had balances outstanding at 31 December 2024 and 2023.

A number of loans and advances have been extended to key management personnel on the same terms as

those applicable to the rest of the Group’s employees and to their connected persons on the same terms as

those of customers of a similar credit standing.

Where no amount is shown in the tables below, this indicates a credit balance, a nil balance, or a balance of

less than €500.

553

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

49. Related party transactions (continued)

Details of transactions with key management personnel and their connected persons for the years ended 31

December 2024 and 2023 are as follows:

	Balance as
	at 1 January
		Balances of
		key
		management
		personnel
		appointed in
		the year
			Other
			movements
			on balances
			of key
			management
			personnel and
			their
			connected
			persons
			during the
			year
				Amounts
				advanced
				during the year
					Amounts repaid
					during the year
						Balance as at
						31 December
							Aggregate
							maximum
							amount
							outstanding
							during the
							year (since
							appointment
							date)
2024
	€000	€000	€000	€000	€000	€000	€000
Loans	2,092	n/a	-	142	477	1,967	2,303
Overdrafts/credit cards
	249
		n/a	n/a	n/a	n/a
						269	437
	2,341					2,236	2,740
2023
Loans	2,400	-	-	605	490	2,092	2,439
Overdrafts/credit cards
	386
		n/a	n/a	n/a	n/a
						249	568
	2,786					2,341	3,007

The balances included in the table above include principal and interest. Also, amounts approved and repaid

are not shown for overdraft and credit card facilities as these are revolving in nature. The aggregate

maximum amount outstanding includes credit card exposures at the maximum statement balance.

The aggregate expected credit loss allowance on the above loans and credit facilities is below €26 thousand

as at 31 December 2024 (2023: below €11 thousand). All principal and interest that has fallen due on these

loans or credit facilities has been paid.

Aggregate amounts outstanding at year end and additional transactions

	2024	2023
	€000	€000
Loans and advances as at 31 December
Board of Directors	71	77
Key management personnel	1,706	1,849
Connected persons - Board of Directors	73	85
Connected persons - Key management personnel
	530	492
	2,380	2,503
Deposits as at 31 December
Board of Directors	644	1,919
Key management personnel	2,945	2,004
Connected persons - Board of Directors	308	969
Connected persons - Key management personnel
	4,541	2,402
	8,438	7,294
Interest income for the year
	113	119
Interest expense for the year
	37	9
Insurance premium income for the year
	487	497
Insurance expenses for the year
	6	5

The above table does not include year-end balances for members of the Board of Directors, key

management personnel and their connected persons who resigned during the year, nor balances of

customers that do not meet the definition of connected persons as at 31 December 2024.

554

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

49. Related party transactions (continued)

As at 31 December 2024 there were nine Directors in office (2023: seven) and 19 key management

personnel in office (2023: 18).

Interest income and expense are disclosed for the period during which they were members of the Board of

Directors or served as key management personnel.

During the year ended 31 December 2024 an amount of €871 thousand has been paid to connected persons

of key management personnel for the cost of services capitalised within property and equipment. These

services were rendered on normal business terms as for comparable services received from third parties.

In addition to loans and advances, there were contingent liabilities and commitments in respect of members

of the Board of Directors and their connected persons, mainly in the form of documentary credits,

guarantees and commitments to lend, amounting to €114 thousand as at 31 December 2024 (2023: €116

thousand).

There were also contingent liabilities and commitments to key management personnel and their connected

persons amounting to €1,379 thousand as at 31 December 2024 (2023: €1,197 thousand).

The total unsecured amount of the loans and advances and contingent liabilities and commitments to

members of the Board of Directors, key management personnel and their connected persons (using forced-

sale values for tangible collaterals and assigning no value to other types of collaterals) at 31 December

2024 amounted to €1,485 thousand (2023: €1,489 thousand).

During the year ended 31 December 2024 premiums of €177 thousand (2023: €220 thousand) and nil

claims (2023: nil) were paid by/to the members of the Board of Directors of the Company and their

connected persons to/from the insurance subsidiaries of the Group.

There were no other transactions during the year ended 31 December 2024 and 2023 with connected

persons of the current members of the Board of Directors or with any members who resigned during the

years.

555

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

50. Group companies

The main subsidiary companies and branches included in the Consolidated Financial Statements of the

Company, their registered office, their activities and the percentage held by the Company (directly or

indirectly) as at 31 December 2024 are:

Company	Registered office	Activities
			Percentage
			holding (%)
Bank of Cyprus Holdings Public
Limited Company
	10 Earlsfort Terrace, Dublin 2,
	D02 T380, Ireland
		Holding company	n/a
Bank of Cyprus Public Company Ltd
	51 Stasinos Street, Ayia
	Paraskevi, Strovolos, CY-2002,
	Nicosia, Cyprus
		Commercial bank	100
EuroLife Ltd
	4 Evrou Street, CY-2003,
	Strovolos, Nicosia, Cyprus
		Life insurance	100
General Insurance of Cyprus Ltd
	2-4 Themistokli Dervis Street,
	CY-1066, Nicosia, Cyprus
		Non-life insurance	100
JCC Payment Systems Ltd
	1 Stadiou Street, CY-2571,
	Nisou, Cyprus
		Development of inter-banking
		systems, acquiring and
		processing of card transactions,
		other payment services and
		other activities
			75
The Cyprus Investment and
Securities Corporation Ltd (CISCO)
	1 Agiou Prokopiou and
	Poseidonos Street, CY-2406,
	Engkomi, Nicosia, Cyprus
		Investment banking,
		brokerage, discretionary asset
		management and investment
		advice services
			100
Jinius Ltd
	51 Stasinos Street, Ayia
	Paraskevi, Strovolos, CY-2002,
	Nicosia, Cyprus
		Digital Economy Platform	100
LCP Holdings and Investments Public
Ltd
	1 Agiou Prokopiou and
	Poseidonos Street, CY-2406,
	Engkomi, Nicosia, Cyprus
		Investments in securities and
		participations in companies and
		schemes that are active in
		various business sectors and
		projects
			67
Kermia Ltd
	51 Stasinos Street, Ayia
	Paraskevi, Strovolos, CY-2002,
	Nicosia, Cyprus
		Property trading and
		development
			100
Kermia Properties & Investments Ltd
	51 Stasinos Street, Ayia
	Paraskevi, Strovolos, CY-2002,
	Nicosia, Cyprus
		Property trading and
		development
			100
S.Z. Eliades Leisure Ltd
	51 Stasinos Street, Ayia
	Paraskevi, Strovolos, CY-2002,
	Nicosia, Cyprus
		Land development and
		operation of a golf resort
			70
Auction Yard Ltd
	51 Stasinos Street, Ayia
	Paraskevi, Strovolos, CY-2002,
	Nicosia, Cyprus
		Auction company	100
BOC Secretarial Company Ltd
	51 Stasinos Street, Ayia
	Paraskevi, Strovolos, CY-2002,
	Nicosia, Cyprus
		Secretarial services	100
Bank of Cyprus Public Company Ltd
(branch of BOC PCL)
	192 Alexandras Avenue,
	11521 Athens, Greece
		Administration of guarantees
		and holding of real estate
		properties
			n/a
BOC Asset Management Romania
S.A.
	Calea Dorobonti 187B, Sector 1,
	Bucharest, Romania
		In run-down	100
MC Investment Assets Management
LLC
	19-1 Zvezdnyi building, Moscow,
	Russia
		Problem asset management
		company - In run-down
			100
Fortuna Astrum Ltd
	Internacionalnih Brigada 69,
	11104, Grad Beograd, Serbia
		Problem asset management
		company - In run-down
			100

556

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

50. Group companies (continued)

In addition to the above companies, as at 31 December 2024, BOC PCL had 100% shareholding, either

directly or indirectly, in the companies listed below, whose activity is the ownership and management of

immovable property:

Cyprus: Tolmeco Properties Ltd, Pelika Properties Ltd, Cobhan Properties Ltd, Nalmosa Properties Ltd,

Emovera Properties Ltd, Blodar Properties Ltd, Cranmer Properties Ltd, Les Coraux Estates Ltd, Natakon

Company Ltd, Oceania Ltd, Dominion Industries Ltd, Ledra Estate Ltd, Laiki Lefkothea Center Ltd, Labancor

Ltd, Joberco Ltd, Domita Estates Ltd, Memdes Estates Ltd, Kernland Properties Ltd, Jobelis Properties Ltd,

Melsolia Properties Ltd, Spacous Properties Ltd, Solomaco Properties Ltd, Linaland Properties Ltd, Unital

Properties Ltd, Neraland Properties Ltd, Wingstreet Properties Ltd, Nolory Properties Ltd, Lisbo Properties

Ltd, Mantinec Properties Ltd, Provezaco Properties Ltd, Hillbay Properties Ltd, Forenaco Properties Ltd,

Hovita Properties Ltd, Astromeria Properties Ltd, Barosca Properties Ltd, Fogland Properties Ltd, Tebasco

Properties Ltd, Valecross Properties Ltd, Altco Properties Ltd, Olivero Properties Ltd, Jaselo Properties Ltd,

Elosa Properties Ltd, Flona Properties Ltd, Toreva Properties Ltd, Resoma Properties Ltd, Mostero Properties

Ltd, Helal Properties Ltd, Pendalo Properties Ltd, Frontyard Properties Ltd, Bonsova Properties Ltd,

Thermano Properties Ltd, Venicous Properties Ltd, Lorman Properties Ltd, Eracor Properties Ltd, Rulemon

Properties Ltd, Maledico Properties Ltd, Balasec Properties Ltd, Diafor Properties Ltd, Kartama Properties

Ltd, Paramina Properties Ltd, Nouralia Properties Ltd, Resocot Properties Ltd, Soblano Properties Ltd,

Talamon Properties Ltd, Weinar Properties Ltd, Zemialand Properties Ltd, Coeval Properties Ltd, Finevo

Properties Ltd, Mazima Properties Ltd, Riveland Properties Ltd, Rosalica Properties Ltd, Secretsky Properties

Ltd, Senadaco Properties Ltd, Tasabo Properties Ltd, Venetolio Properties Ltd, Zandexo Properties Ltd,

Odolo Properties Ltd, Molemo Properties Ltd, Samilo Properties Ltd, Alezia Properties Ltd, Enelo Properties

Ltd, Monata Properties Ltd, Amary Properties Ltd, Aparno Properties Ltd, Lomenia Properties Ltd, Midelox

Properties Ltd, Montira Properties Ltd, Orilema Properties Ltd, Carilo Properties Ltd, Olisto Properties Ltd,

Holstone Properties Ltd, Gelimo Properties Ltd, Larizemo Properties Ltd and Philiki Ltd.

Romania: Otherland Properties Dorobanti SRL.

Further, at 31 December 2024, BOC PCL had 100% shareholding in Stamoland Properties Ltd, Unoplan

Properties Ltd, Petrassimo Properties Ltd and Gosman Properties Ltd.

The main activities of the above companies are the holding of shares and other investments and the

provision of services.

At 31 December 2024, BOC PCL had 100% shareholding in BOC Terra AIF V.C.I.C. Plc which is a real estate

alternative investment fund, currently inactive.

At 31 December 2024, BOC PCL had 100% shareholding, either directly or indirectly, in the companies

listed below which are reserved to accept property:

Cyprus: Rifelo Properties Ltd, Dadela Properties Ltd, Leziga Properties Ltd, Bavara Properties Ltd, Fernia

Properties Ltd, Wolfenia Properties Ltd, Ortizelo Properties Ltd and Ellagio Properties Ltd.

In addition, BOC PCL holds 100% of the following intermediate holding companies:

Cyprus: Otherland Properties Ltd, Battersee Properties Ltd, Bonayia Properties Ltd, Janoland Properties Ltd,

Imoreth Properties Ltd, Inroda Properties Ltd, Zunimar Properties Ltd, Nikaba Properties Ltd, Allioma

Properties Ltd and Hydrobius Ltd.

BOC PCL also holds 100% of the following companies which are inactive:

Cyprus: Laiki Bank (Nominees) Ltd, Paneuropean Ltd, Nelcon Transport Co. Ltd, Canosa Properties Ltd,

Hοmirova Properties Ltd and Finerose Properties Ltd.

Greece: Kyprou Zois (branch of EuroLife Ltd), Kyprou Asfalistiki (branch of General Insurance of Cyprus

Ltd), Kyprou Commercial SA and Kyprou Properties SA.

BOC PCL also holds indirectly 75% of Settle Cyprus Ltd, which is inactive.

All Group companies are accounted for as subsidiaries using the full consolidation method. All companies

listed above have share capital consisting of ordinary shares.

557

BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

52. Offsetting financial assets and liabilities (continued)

				Related amounts
				not set off in the
				balance sheet
	Gross
	amounts of
	recognised
	financial
	assets
		Gross
		amounts of
		recognised
		financial
		liabilities
		set off in
		the balance
		sheet
			Net
			amounts of
			financial
			assets
			presented
			in the
			balance
			sheet
				Amounts
				subject to
				master
				netting
				agreements
					Financial
					collateral
					(including
					cash
					collateral)
						Net
						amount
Assets
	€000	€000	€000	€000	€000	€000
2024
Derivative financial assets	95,273	-	95,273	(3,421)	(91,202)	650
Reverse repurchase agreements
	1,010,170	-	1,010,170	-	(13,068)	997,102
Total
	1,105,443	-	1,105,443	(3,421)	(104,270)	997,752
2023
Derivative financial assets	51,055	-	51,055	(3,705)	(47,179)	171
Reverse repurchase agreements
	403,199	-	403,199	-	-	403,199
Total
	454,254	-	454,254	(3,705)	(47,179)	403,370

The gross amounts of recognised derivative financial assets, include amounts of €3,421 thousand that do

not meet the offsetting criteria, but are subject to enforceable master netting arrangements (2023: €3,705

thousand). Financial collateral (including cash collateral) disclosed is limited to the net position exposure

and hence may differ from the maximum collateral available for offset and is reported in 'Deposits by

banks'.

				Related amounts
				not set off in the
				balance sheet
	Gross
	amounts of
	recognised
	financial
	liabilities
		Gross
		amounts of
		recognised
		financial
		assets set
		off in the
		balance
		sheet
			Net
			amounts of
			financial
			liabilities
			presented
			in the
			balance
			sheet
				Amounts
				subject to
				master
				netting
				agreements
					Financial
					collateral
					(including
					cash
					collateral)
						Net
						amount
Liabilities
	€000	€000	€000	€000	€000	€000
2024
Derivative financial liabilities
	4,664	-	4,664	(3,421)	-	1,243
Total
	4,664	-	4,664	(3,421)	-	1,243
2023
Derivative financial liabilities
	17,980	-	17,980	(3,705)	(11,896)	2,379
Total
	17,980	-	17,980	(3,705)	(11,896)	2,379

The gross amounts of recognised derivative financial liabilities, include amounts of €3,421 thousand that do

not meet the offsetting criteria, but are subject to enforceable master netting arrangements (2023: €3,705

thousand). Financial collateral (including cash collateral) disclosed is limited to the net position exposure

and hence may differ from the maximum collateral available for offset and is reported in 'Loans and

advances to banks'.

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BANK OF CYPRUS HOLDINGS PUBLIC LIMITED COMPANY

Annual Financial Report 2024

Notes to the Consolidated Financial Statements

54. Events after the reporting period

Distribution in respect of 2024 earnings

In February 2025, the Company announced its proposal to make a total distribution of €241 million in

respect of 2024 earnings, comprising an aggregate cash dividend of €211 million (calculated by reference to

the number of shares in issue as at 31 December 2024) and a share buyback in an aggregate consideration

amount of up to €30 million (together, the ‘2024 Distribution’) as described below.

Cash dividend

The Board of Directors of the Company has resolved to propose to the AGM that will be held on 16 May

2025 for approval, a final cash dividend of €0.48 per ordinary share in respect of earnings for the year

ended 31 December 2024. The financial statements for the year ended 31 December 2024 do not reflect

this dividend, which will be accounted for in shareholders’ equity as an appropriation of retained earnings in

the year ending 31 December 2025.

Share Buyback Programme

Following approval by the Board of Directors, on 24 February 2025 the Company launched a programme to

buy back ordinary shares of the Company for an aggregate consideration of up to €30 million, for which

approval by the ECB has been received. The shares will be repurchased on the Main Market of the Regulated

Securities Market of the ATHEX and the CSE and will be cancelled. The financial statements for the year

ended 31 December 2024 do not reflect the impact of the share buyback programme, which will be

accounted for as and when the shares are repurchased by the Company.

During the period from 24 February 2025 to 20 March 2025, 1,035 thousand ordinary shares have been

bought back at a total cost of €5,744 thousand. As at 20 March 2025, the Company holds 1,035 thousand

ordinary shares, all arising from the share repurchase programme.

Dividends and share buybacks are funded out of distributable reserves.

No other significant non-adjusting events have taken place since 31 December 2024.

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