Panicos Nicolaou: Protecting dividend yields as a top priority

The CEO of the Bank of Cyprus, Panicos Nicolaou, presented the bank's strategy for the future and its course in the rapidly evolving financial services sector, at the 12th Banking Forum & FinTech Expo in Nicosia.

Addressing the challenges faced by banks in Cyprus and internationally, as well as how the Bank of Cyprus (BoC) is preparing to meet market demands and remain competitive, Nicolaou highlighted the importance of trust between banks and their customers. “Customer service is fundamental,” he stated.

In an era where this relationship faces ongoing challenges, Bank of Cyprus recognises the need to build trust based on mutual understanding and benefits, he said, adding that banks must continually improve customer service, as no growth strategy can succeed without customer support.

Addressing the bank's shareholders, the CEO explained that the bank strives to maintain strong dividend yields. “Shareholder returns are very important, and we aim to achieve 50% this year and protect it,” he said, emphasising the importance of retaining investors. He remarked, “No foreign investor will easily choose to invest in Cyprus. When you secure investors for your banks, it is crucial to retain them for the future. If you lose them, it is difficult to win them back.”

Nicolaou also touched on interest rates, stating that BoC continues to provide returns despite potential rate increases. “The bank, with an interest rate close to 2%, will continue to deliver returns,” he explained, adding that the bank has diversified its revenue streams to reduce reliance on traditional interest income.

Looking at the trends in the Cypriot economy, Nicolaou expressed optimism about the country's future. “The Cypriot economy is in excellent condition, with growth and greater resilience,” he noted. However, he voiced concerns about geopolitical risks and their impact on the local market, stressing that ongoing uncertainty in international markets and related risks must not be overlooked.

He also highlighted the high energy costs in Cyprus, which, according to him, erode citizens’ quality of life and undermine business competitiveness.

Additionally, Nicolaou discussed credit acquisition companies that carry substantial debt, which he identified as a significant burden on the country’s economy. “This is one of the biggest issues that must be resolved,” he said. He emphasised the need for banks to exercise caution with credit, ensuring borrowers can repay their debts.

On the topic of lending policies, he was clear: “We do not exclude any sector when it comes to lending. The key issue is whether the borrower can repay.” He underlined the importance of assessing borrowers’ creditworthiness.

Focusing on investments and growth strategies, the CEO mentioned the creation of a business hub targeting the Middle East and Africa. This initiative aims to attract investments and position the Bank of Cyprus as a regional leader.