Bank of Cyprus Holdings

Ladies and gentlemen, thank you for standing by. I am Yota Yokoro's call operator. Welcome and thank you for joining the Bank of Cyprus conference call to present and discuss the first quarter 2026 financial results. All participants will be in a listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on the telephone. At this time, I would like to turn the conference over to Mr. Panikos Nikolaou, Chief Executive Officer. Mr. Nikolaou, you may now proceed.

Good morning, everyone. Thank you for joining our Financial Design Conference call for the quarter ended 31st of March, 2026. As always, I am joined by Lidia Libaviodou, Executive Director of Finance, and Anita Bablou, Managing Strategy, IR and ESG. After my introductory remarks, Elisa will go into more detail on our financial performance for the quarter and then we will be happy to take your questions both during this conference call and afterwards. I would like to start with slide number 5 and our investment case. Today, the bank is in very good shape with a strong domestic franchise. demonstrated by our diversified and efficient business model, holding leading positions in banking, insurance, and payment solutions. And we operate in an economy that is expected to grow faster than the Eurozone average in 2026, notwithstanding geopolitical tensions. An economy that is flexible and resilient to external shocks. We are one of the most well-capitalized banks in the Euro area, have strong capital generation, which enables us to build up an attractive distribution track record, supporting a payout ratio of up to 90% for 2026 profitability and up to 100% annually for 2027 and 2028. Slides 6 and 7 give a brief overview of the microeconomic environment. Since we last spoke to you in March 2026, the microeconomic landscape has evolved as a result of the conflict in the Middle East. resulting in heightened uncertainty and volatility. We entered 2026 with strong economic tailwinds that characterized the Cypriot environment in 2035, when the economy grew by 3.8 percent. Reflectional pressures were contained and the government's fiscal position stood out in the European context. While the global backdrop has led to modest economic downgrades, recent official forecasts suggest GDP growth for 2026 in the range of 2.7 to 2.9%, level which is expected to continue to significantly outpace the forecast growth for the Eurozone average. Despite the current ceasefire agreement, geopolitical tensions continue to pose risk for the European and global economies. Clearly, we are not immune to this. The Cypriot economy will be battered through weaker tourist activity and elevated energy prices. At this stage, the full impact of the conflict on the Cypriot economy remains uncertain and depends largely on its duration. We have faced many periods of macro- and geopolitical volatility in the past. Cyprus is a small, open, flexible economy that has shown it is resilient and quickly recovers from crises. Additionally, the Cypriot governor's robust fiscal position enables it to support affected sectors. The government has already introduced a package of over 200 million financial support to both households and businesses. Let's now turn to slide number 8, which shows a snapshot for the first quarter performance. For another quarter, we delivered a strong profitability at 121 million. This performance was the outcome of stabilizing NII at 181 million. low cost-income ratio of 77% and a positive cost of risk, reflecting a cut-off specific release and strong underlying asset quality, partly offset by some I-509 driven overlays. Slide 9 shows our performance along the shareholder value creation. Our ROI from Q1 2018% corresponded to 26.5% ROI based on 50% CQR ratio and will deliver yet another quarter of strong organic current generation of over 100 basis points, while our tangible value per share is up around 5% year-to-date. Let's now turn to slide 10. At our investor update in March 2026, we outlined our strategic priorities to continue to generate sustainable and resilient profitability as well as attractive sustainable shareholder returns.

Our financial targets for 2026 to 2028 are for eroding the mid-teens, translating into