Interim Condensed Consolidated Financial OF CYPRUS GROUP Interim Condensed Consolidated Financial Statements for the three months ended 31 March 2016 Contents Page Interim Consolidated Income Statement 1 Interim Consolidated Statement of

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<ul><li><p> Interim Condensed Consolidated Financial Statements for the three months ended 31 March 2016 </p></li><li><p>BANK OF CYPRUS GROUP Interim Condensed Consolidated Financial Statements for the three months ended 31 March 2016 </p><p>Contents Page Interim Consolidated Income Statement 1 Interim Consolidated Statement of Comprehensive Income 2 Interim Consolidated Balance Sheet 3 Interim Consolidated Statement of Changes in Equity 4 Interim Consolidated Statement of Cash Flows 6 Notes to the Interim Condensed Consolidated Financial Statements </p><p>1. Corporate information 7 2. Operating environment in Cyprus 7 3. Unaudited financial statements 7 4. Basis of preparation 8 5. Accounting policies 8 6. Significant judgements, estimates and assumptions 8 7. Segmental analysis 13 8. Net losses on financial instrument transactions 22 9. Staff costs and other operating expenses 22 </p><p>10. Impairment of financial and non-financial instruments and loss/(gain) on derecognition of loans and advances to customers and changes in expected cash flows 24 </p><p>11. Income tax 25 12. Earnings per share 25 13. Investments 26 14. Derivative financial instruments 29 15. Fair value measurement 30 16. Loans and advances to customers 35 17. Stock of property 35 18. Non-current assets and disposal group classified as held for sale 36 19. Prepayments, accrued income and other assets 38 20. Funding from central banks 38 21. Customer deposits 39 22. Accruals, deferred income and other liabilities 40 23. Share capital 46 24. Cash and cash equivalents 47 25. Analysis of assets and liabilities by expected maturity 49 26. Risk management Credit risk 50 27. Risk management Market risk 74 28. Risk management Liquidity risk and funding 74 29. Capital management 79 30. Related party transactions 79 31. Group companies 81 32. Acquisitions and disposals 83 33. Investments in associates and joint ventures 84 34. Capital commitments 85 35. Events after the reporting date 85 </p><p>Report to the Board of Directors of Bank of Cyprus Public Company Ltd on the Review of the Interim Condensed Consolidated Financial Statements 86 </p></li><li><p>BANK OF CYPRUS GROUP Interim Consolidated Income Statement </p><p>1 </p><p> Three months ended 31 March </p><p>2016 2015 (represented) Notes 000 000 </p><p>Continuing operations Turnover 319.340 377.435 </p><p>Interest income 240.013 305.085 Interest expense (55.220) (78.290) Net interest income 184.793 226.795 Fee and commission income 37.798 44.959 Fee and commission expense (1.832) (1.660) Net foreign exchange gains/(losses) 7.429 (2.248) Net losses on financial instrument transactions 8 (655) (1.248) Insurance income net of claims and commissions 13.593 11.887 Gains/(losses) from revaluation and disposal of investment properties 3.692 (7.589) (Losses)/gains on disposal of stock of property (2.422) 208 Other income 1.846 2.684 244.242 273.788 Staff costs 9 (64.083) (59.115) Other operating expenses 9 (51.950) (51.148) 128.209 163.525 (Loss)/gain on derecognition of loans and advances to customers and changes in expected cash flows 10 (15.441) 43.006 </p><p>Provisions for impairment of loans and advances to customers and other customer credit losses 10 (46.892) (153.445) </p><p>Impairment of other financial instruments 10 (976) (813) Impairment of non-financial instruments 10 (7.003) - Profit before share of profit from associates and joint ventures 57.897 52.273 Share of profit from associates and joint ventures 801 1.840 Profit before tax from continuing operations 58.698 54.113 Income tax 11 (8.136) (7.974) Profit after tax from continuing operations 50.562 46.139 Discontinued operations Loss after tax from discontinued operations 7 - (22.493) Profit for the period 50.562 23.646 </p><p> Attributable to: Owners of the Company continuing operations 7 50.225 46.443 Owners of the Company discontinued operations 7 - (17.919) Total profit attributable to the owners of the Company 50.225 28.524 Non-controlling interests continuing operations 7 337 (304) Non-controlling interests discontinued operations 7 - (4.574) Total profit/(loss) attributable to non-controlling interests 337 (4.878) Profit for the period 50.562 23.646 Basic and diluted earnings per share (cent) attributable to the owners of the Company - continuing operations 12 0,6 0,5 </p><p>Basic and diluted earnings per share (cent) attributable to the owners of the Company 12 0,6 0,3 </p></li><li><p>BANK OF CYPRUS GROUP Interim Consolidated Statement of Comprehensive Income </p><p>2 </p><p> Three months ended </p><p>31 March 2016 2015 </p><p> 000 000 Profit for the period 50.562 23.646 Other comprehensive income (OCI) OCI to be reclassified in the consolidated income statement in subsequent periods </p><p>Foreign currency translation reserve Loss on translation of net investment in foreign branches and subsidiaries (18.996) (13.463) Profit on hedging of net investments in foreign branches and subsidiaries 19.326 13.030 Transfer to the consolidated income statement on dissolution of foreign operations 678 - </p><p> 1.008 (433) Available-for-sale investments Net (losses)/gains from fair value changes before tax (1.198) 3.046 Share of net losses from fair value changes of associates (174) - Transfer to the consolidated income statement on impairment 502 322 Transfer to the consolidated income statement on sale - (435) (870) 2.933 138 2.500 OCI not to be reclassified in the consolidated income statement in subsequent periods </p><p>Actuarial loss for the defined benefit plans Remeasurement losses on defined benefit plans (3.701) - Other comprehensive (loss)/income after tax (3.563) 2.500 Total comprehensive income for the period 46.999 26.146 </p><p>Attributable to: Owners of the Company 46.667 35.718 Non-controlling interests 332 (9.572) Total comprehensive income for the period 46.999 26.146 </p></li><li><p>BANK OF CYPRUS GROUP Interim Consolidated Balance Sheet </p><p>3 </p><p> 31 March 2016 31 December </p><p>2015 </p><p>Assets Notes 000 000 Cash and balances with central banks 24 1.141.275 1.422.602 Loans and advances to banks 24 1.272.704 1.314.380 Derivative financial assets 14 3.498 14.023 Investments 13 520.218 588.255 Investments pledged as collateral 13 393.442 421.032 Loans and advances to customers 16 16.820.668 17.191.632 Life insurance business assets attributable to policyholders 475.885 475.403 Prepayments, accrued income and other assets 19 258.218 281.780 Stock of property 17 745.610 515.858 Investment properties 35.391 34.628 Property and equipment 263.556 264.333 Intangible assets 140.645 133.788 Investments in associates and joint ventures 33 108.367 107.753 Deferred tax assets 450.602 456.531 Non-current assets and disposal group held for sale 18 39.461 48.503 Total assets 22.669.540 23.270.501 Liabilities Deposits by banks 313.117 242.137 Funding from central banks 20 3.802.700 4.452.850 Repurchase agreements 339.091 368.151 Derivative financial liabilities 14 76.804 54.399 Customer deposits 21 14.127.589 14.180.681 Insurance liabilities 558.296 566.925 Accruals, deferred income and other liabilities 22 281.639 282.831 Debt securities in issue 661 712 Deferred tax liabilities 41.636 40.807 Non-current liabilities and disposal group held for sale 18 3.677 3.677 Total liabilities 19.545.210 20.193.170 Equity Share capital 23 892.294 892.294 Share premium 23 552.618 552.618 Capital reduction reserve 23 1.952.486 1.952.486 Revaluation and other reserves 263.052 258.709 Accumulated losses (558.828) (601.152) Equity attributable to the owners of the Company 3.101.622 3.054.955 Non-controlling interests 22.708 22.376 Total equity 3.124.330 3.077.331 Total liabilities and equity 22.669.540 23.270.501 </p><p> Prof. Dr. J. Ackermann Chairman Mr. J. P. Hourican Chief Executive Officer Mr. I. Zographakis Director Mrs. E. Livadiotou Finance Director </p></li><li><p>BANK OF CYPRUS GROUP Interim Consolidated Statement of Changes in Equity </p><p>4 </p><p>Attributable to the owners of the Company </p><p>Non- controlling interests </p><p>Total equity </p><p>Share capital </p><p>(Note 23) </p><p>Share premium (Note 23) </p><p>Capital reduction reserve </p><p>(Note 23) </p><p>Accumulated losses </p><p>Property revaluation </p><p>reserve </p><p>Revaluation reserve of available-for-sale </p><p>investments </p><p>Other reserves </p><p>Life insurance in-</p><p>force business reserve </p><p>Foreign currency </p><p>translation reserve </p><p>Treasury shares </p><p>(Note 23) </p><p>Reserve of disposal group </p><p> and assets held for sale </p><p>(Note 18) </p><p>Total </p><p>000 000 000 000 000 000 000 000 000 000 000 000 000 000 </p><p>1 January 2016 892.294 552.618 1.952.486 (601.152) 99.218 47.125 6.059 99.050 30.939 (41.301) 17.619 3.054.955 22.376 3.077.331 </p><p>Profit for the period - - - 50.225 - - - - - - - 50.225 337 50.562 </p><p>Other comprehensive (loss)/income after tax for the period </p><p>- - - (3.701) - (865) - - 1.008 - - (3.558) (5) (3.563) </p><p>Total comprehensive income/(loss) for the period </p><p>- - - 46.524 - (865) - - 1.008 - - 46.667 332 46.999 </p><p>Increase in value of in-force life insurance business </p><p>- - - (4.802) - - - 4.802 - - - - - - </p><p>Tax on increase in value of in-force life insurance business </p><p>- - - 602 - - - (602) - - - - - - </p><p>31 March 2016 892.294 552.618 1.952.486 (558.828) 99.218 46.260 6.059 103.250 31.947 (41.301) 17.619 3.101.622 22.708 3.124.330 </p></li><li><p>BANK OF CYPRUS GROUP Interim Consolidated Statement of Changes in Equity </p><p>5 </p><p> Attributable to the owners of the Company </p><p>Non- controlling interests </p><p>Total equity </p><p>Share capital </p><p>(Note 23) </p><p>Share premium (Note 23) </p><p>Capital reduction reserve </p><p>(Note 23) </p><p> Shares </p><p>subject to interim orders </p><p>(Note 23) </p><p>Accumulated losses </p><p>Property revaluation </p><p>reserve </p><p>Revaluation reserve of available-for-sale </p><p>investments </p><p>Other reserves </p><p>Life insurance in-force business reserve </p><p>Foreign currency </p><p>translation reserve </p><p>Treasury shares </p><p>(Note 23) </p><p>Reserve of disposal group and assets held </p><p>for sale (Note 18) </p><p>Total </p><p>000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 </p><p>1 January 2015 892.238 552.539 1.952.486 441 (79.021) 98.211 2.226 6.059 97.698 22.929 (88.051) 7.737 3.465.492 15.555 3.481.047 </p><p>Profit/(loss) for the period - - - - 28.524 - - - - - - - 28.524 (4.878) 23.646 </p><p>Other comprehensive income/(loss) after tax for the period </p><p>- - - - - - 2.846 - - (2.690) - 7.038 7.194 (4.694) 2.500 </p><p>Total comprehensive income/(loss) for the period </p><p>- - - - 28.524 - 2.846 - - (2.690) - 7.038 35.718 (9.572) 26.146 </p><p>Issue of shares 56 79 - - - - - - - - - - 135 - 135 Transfer of realised profits on sale of property </p><p>- - - - 73 - - - - - - (73) - - - </p><p>Acquisition of non-controlling interest - - - - (68) - - - - - - - (68) 68 - </p><p>Increase in value of in-force life insurance business </p><p>- - - - (2.724) - - - 2.724 - - - - - - </p><p>Tax on increase in value of in-force life insurance business </p><p>- - - - 324 - - - (324) - - - - - - </p><p>Disposals of treasury shares - - - - (1.910) - - - - - 2.375 - 465 - 465 </p><p>31 March 2015 892.294 552.618 1.952.486 441 (54.802) 98.211 5.072 6.059 100.098 20.239 (85.676) 14.702 3.501.742 6.051 3.507.793 </p></li><li><p>BANK OF CYPRUS GROUP Interim Consolidated Statement of Cash Flows </p><p>6 </p><p> Three months ended 31 March </p><p>2016 2015 (represented) Note 000 000 Net cash flows from operating activities Profit before tax from continuing operations 7 58.698 54.113 Loss before tax from discontinued operations 7 - (22.515) Profit for the period before tax 58.698 31.598 Share of profit from associates and joint ventures (801) (1.840) Loss on derecognition, changes in expected cash flows and provisions for impairment of loans and advances to customer and other credit losses </p><p> 62.333 128.263 </p><p>Depreciation of property and equipment and amortisation of intangible assets 4.382 4.765 Increase in value of in-force life insurance policies (4.802) (2.724) Impairment of assets held for sale 7 - 1.320 Impairment of other financial instruments 976 813 Amortisation of discounts/premiums of debt securities and interest on debt securities </p><p> (7.141) (36.009) </p><p>Interest on funding from central banks 11.779 23.797 Impairment of non-financial instruments 10 7.003 - Loss on dissolution of subsidiaries 678 - (Income)/losses from investments and disposals of investment properties, equipment and intangible assets </p><p> (5.934) 8.918 </p><p> 127.171 158.901 Net decrease/(increase) in loans and advances to customers and other accounts </p><p> 111.475 (264.259) </p><p>Net increase in customer deposits and other accounts 4.420 447.953 243.066 342.595 Tax (paid)/received (795) 724 Net cash flow from operating activities 242.271 343.319 Cash flows from investing activities Purchases of debt securities, treasury bills and equity securities (10.435) - Proceeds on disposal/redemption of investments 95.004 63.004 Interest received from debt securities and treasury bills 3.600 6.290 Dividend income from equity securities 27 128 Purchases of property and equipment (2.903) (2.402) Proceeds on disposal of property and equipment 116 249 Purchases of intangible assets (3.932) (1.935) Proceeds on disposal of intangible assets 78 - Proceeds on disposal of investment property 12.228 7.388 Net cash flow from investing activities 93.783 72.722 Cash flows from financing activities Proceeds from the issue of shares - 135 Net repayment of funding from central banks (650.150) (580.312) Interest on subordinated loan stock - (11) Proceeds from disposal of treasury shares - 465 Interest on funding from central banks (11.779) (23.797) Net cash flow used in financing activities (661.929) (603.520) Net decrease in cash and cash equivalents for the period (325.875) (187.479) Cash and cash equivalents 1 January 2.406.344 2.238.601 Foreign exchange adjustments 3.816 4.555 Net decrease in cash and cash equivalents for the period (325.875) (187.479) 31 March 24 2.084.285 2.055.677 </p></li><li><p>BANK OF CYPRUS GROUP Notes to the Interim Condensed Consolidated Financial Statements </p><p>7 </p><p>1. Corporate information Bank of Cyprus Public Company Ltd (the Company) is the holding company of the Bank of Cyprus Group (the Group). The principal activities of the Company and its subsidiary companies during the period continued to be the provision of banking, financial, insurance services and management and disposal of property. The Company is a limited liability company incorporated in 1930 under the Cyprus Companies Law. The Company has a primary listing on the Cyprus Stock Exchange and a secondary listing on the Athens Exchange. It is also a public company for the purposes of the Cyprus Income Tax Laws. Interim Condensed Consolidated Financial Statements The Interim Condensed Consolidated Financial Statements include the financial statements of the Company and its subsidiaries. They were approved and authorised for issue by a resolution of the Board of Directors on 31 May 2016. 2. Operating environment in Cyprus </p><p>Cyprus exited its economic adjustment programme at the end of March 2016 after a successful return to markets and having utilised only about 70% of the 10 billion funding resources made available by the European Union (EU) and the International Monetary Fund (IMF). In the area of publi...</p></li></ul>

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