The Cyprus Cement Public Company LTD

Annual Report • May 19, 2025

The Cyprus Development Bank Group Annual Financial Report For the year ended 31 December 2024

CONTENTS

	Page
Directors and advisers	3
Management report	4 - 13
Corporate Governance report	14 - 33
Independent Auditors' report	34 - 40
Consolidated income statement	41
Income statement of The Cyprus Development Bank Public Company Limited	42
Consolidated statement of comprehensive income	43
Statement of comprehensive income of The Cyprus Development Bank Public Company Limited	44
Consolidated statement of financial position	45
Statement of financial position of The Cyprus Development Bank Public Company Limited	46
Consolidated statement of changes in equity	47
Statement of changes in equity of The Cyprus Development Bank Public Company Limited	49
Consolidated statement of cash flows	50
Statement of cash flows of The Cyprus Development Bank Public Company Limited	51
Notes to the financial statements	52 - 161

DIRECTORS AND ADVISERS

Management Body

Christodoulos Patsalides, Chairman, Non-Executive Andreas Hadjikyrou, Vice-Chairman, Non-Executive Avgoustinos Papathomas, Senior Independent, Non-Executive Stalo Koumidou, Non-Executive Konstantinos Mitropoulos, Non-Executive Christodoulos Plastiras, Non-Executive Dimitrios P. Sioufas, Non-Executive Demetris Sparsis, Non-Executive Loucas Marangos, Executive Stella Avraam, Executive

Chief Executive Officer

Loucas Marangos

Secretary

Maria Agathokleous

Legal Advisers

Chryssafinis & Polyviou

Independent Auditors

Deloitte Limited

Registered office

50, Arch. Makarios III Avenue Alpha House 1065 Nicosia

MANAGEMENT REPORT

The Management Body of The Cyprus Development Bank Public Company Limited (the ''Bank'') presents to its shareholders its annual report together with the audited financial statements of the Bank and its subsidiaries (together referred to as the ''Group'') for the year ended 31 December 2024.

PRINCIPAL ACTIVITIES

The principal activities of the Bank and its subsidiary companies, which remained unchanged from last year, are the provision of banking and financial services.

All subsidiary companies are set out in Note 21 to the Financial Statements.

FINANCIAL RESULTS

The results of the Group are set out in the consolidated income statement on page 41.

Income Statement Analysis

Total net income

Total net income for the year ended 31 December 2024 amounted to €22,8 million, compared to €25,2 million for the year ended 31 December 2023, a decrease of 9% mainly driven by the decrease of net interest income as explained below.

Net interest income

Net interest income (NII) for the year ended 31 December 2024 amounted to €19,1 million, down by 12% compared to €21,8 million for the year ended 31 December 2023. While interest income increased by 6% year-on-year, from €23,9 million in 2023 to €25,3 million in 2024, interest expense rose significantly by 192% year-on-year, from €2,1 million in 2023 to €6,2 million in 2024. This significant increase of interest expense was driven by a 220% year-on-year increase in the cost of deposits, as well as a 150% increase in interest payable on loan capital. The latter was due to the payment of interest on the Perpetual Unsecured Subordinated Note, as disclosed in Note 32 to the Financial Statements.

The Group's average interest earning assets for 2024 amounted to €555 million (2023: €536 million), an increase of 4% compared to the previous year. The net interest margin for 2024 was 3,44%, down by 62 bps from 4,06% in 2023.

Non-interest income

Net non-interest income for the year ended 31 December 2024 amounted to €3,7 million, up by 9% compared to €3,4 million for the year ended 31 December 2023, comprising of net fee and commission income of €3,1 million (2023: €3,0 million), net foreign exchange gains of €0,1 million (2023: €0,01 million loss), net gains on disposal of stock of property €0,2 million (2023: €0,2 million), and other income of €0,3 million (2023: €0,2 million).

Expenses

Total expenses for the year ended 31 December 2024 amounted to €16,9 million, up by 17% compared to €14,4 million for the year ended 31 December 2023. The annual increase was driven mainly by higher staff costs, other operating expenses and depreciation. Further details are provided below.

FINANCIAL RESULTS (continued)

Income Statement Analysis (continued)

Expenses (continued)

Staff costs

Group staff costs for 2024 amounted to €10,4 million, including a provision of €1,0 million for the voluntary exit of 4 employees. Adjusted for voluntary exist costs, group staff costs amounted to €9,5 million, up by 12% compared to €8,5 million for 2023. The main drivers of the increase were salary increments, higher COLA, higher employer's contributions, and an increase in headcount by 6 employees. The analysis of staff costs is disclosed in Note 11 to the Financial Statements.

Other operating expenses

The Group's other operating expenses for 2024 amounted to €4,7 million, up by 12% compared to €4,2 million for 2023. The increase was mainly driven by higher regulatory fees (up by 77%), IT expenses (up by 11%) and the creation of a provision of €350 thousand for pending litigation (representing 8% of the total 2023 other operating expenses). These were partly offset by a decrease in consultancy and legal fees by 36% and a decrease in remaining expenses by 4%. The analysis of other operating expenses is disclosed in Note 12 to the Financial Statements.

Special levy on deposits and other levies/contributions

Special levy on deposits and other levies/contributions for 2024 amounted to €0,85 million, down by 5% compared to €0,90 million for 2023 mainly due to lower contributions to Deposit Guarantee Fund.

Depreciation

Depreciation charge for 2024 amounted to €0,92 million, up by 12% compared to €0,81 million for 2023. The increase was mainly driven by capital expenditure on IT software and hardware.

The cost to income ratio, adjusted for the special levy on deposits and other levies/contributions and the cost of voluntary exits, was 66% for 2024 compared to 54% for 2023. The increase was driven by higher interest expense as well as higher operating expenses.

Provisions for impairment

The Group's total provisions for impairment for 2024 amounted to €1,2 million compared to €3,7 million for 2023.

Total provisions for impairment comprise mainly of impairment charge on loans and advances of €0,9 million (2023: €3,2 million), impairment reversal on financial guarantees and commitments of €0,3 million (2023: charge of €0,4 million) and impairment losses on valuation of stock of property of €0,6 million (2023: €0,2 million).

The impairment charge of €0,9 million on loans and advances was based on updated collateral values as per the Bank's Policy using updated forecasts and haircuts.

FINANCIAL RESULTS (continued)

Income Statement Analysis (continued)

Provisions for impairment (continued)

For the calculation of individually assessed provision, the timing of recovery of collaterals as well as the haircuts used are based on the specific facts and circumstances of each case. Judgement may also be exercised over staging during the individual assessment. Any changes in these assumptions or difference between assumptions made and actual results could result in significant changes in the amount of required credit losses on loans and advances.

The methodology for the calculation of expected credit losses is set out in Note 4.2 to the Financial Statements.

Statement of Financial Position Analysis

The Group's total assets as at 31 December 2024 amounted to €623 million presenting an increase of 12% compared to €558 million as at 31 December 2023. This growth was primarily driven by higher customer deposits and increased equity resulting from the year's profitability. The increase in total assets was mainly reflected in the increased balances with central banks, as well as in loans and advances.

The Group Financial Position is set out in the Consolidated Statement of Financial Position on page 45.

Liquidity

As at 31 December 2024, the Group Liquidity Coverage Ratio (LCR) stood at 348% (31 December 2023: 355%), well above the regulatory minimum requirement of 100%. The liquidity surplus in LCR at 31 December 2024 amounted to €277 million (31 December 2023: €241 million).

At 31 December 2024, the Group Net Stable Funding Ratio (NSFR) stood at 273% (31 December 2023: 252%), with the minimum regulatory requirement at 100%.

Liquid assets

The Group's carrying value of liquid assets amounted to €404 million as at 31 December 2024, an increase of 16% compared to €348 million as at 31 December 2023. Liquid assets accounted for 65% of the total assets of the Group as at 31 December 2024 up from 62% on 31 December 2023. Total liquid assets comprised of cash and balances with Central Bank of €374 million (31 December 2023: €300 million), placements with other banks of €4 million (31 December 2023: €2 million) and investments in debt securities of €26 million (31 December 2023: €45 million).

Loans and advances to customers

The Group's gross loans and advances as at 31 December 2024 amounted to €213 million, compared to €210 million as at 31 December 2023, a marginal increase of 1%, as resolution of NPEs and repayments largely offset new lending.

FINANCIAL RESULTS (continued)

Statement of Financial Position Analysis (continued)

Loans and advances to customers (continued)

Performing loans and advances

Total new lending during 2024 amounted to €34,0 million, a year-on-year increase of 183% compared to new lending of €12,0 million in 2023. Performing loans and advances amounted to €175 million as at 31 December 2024, up by 4% compared to €169 million as at 31 December 2023.

Non-performing loans and advances

The Group's non-performing exposures (NPEs), as defined by the European Banking Authority (EBA), amounted to €37,7 million as at 31 December 2024, down by 9% from €41,2 million as at 31 December 2023.

The reduction of NPEs during the year was driven by organic actions as well as write offs (mainly noncontractual) which were partially offset by new defaults and accrued interest.

The NPE ratio as at 31 December 2024 stood at 17,7% compared to 19,6% as at 31 December 2023. Net NPEs amounted to €23,7 million as at 31 December 2024, with the net NPEs to total assets ratio at 3,8% (31 December 2023: 4,3%).

The NPE provision coverage ratio as at 31 December 2024 stood at 37,1% compared to 41,7% at 31 December 2023. The decrease is attributed to write offs of €6,6 million fully provided NPEs during the year.

Stock of property

During the year ended 31 December 2024, the Group on boarded €3,6 million (31 December 2023: €3,3 million) of properties through foreclosures and debt for asset swaps and completed disposals of €1,2 million (31 December 2023: €3,1 million). Disposals in 2024 were made at a net gain of €0,2 million (31 December 2023: €0,2 million). Impairment charge on stock of property amounted to €0,6 million for 2024 (2023: €0,2 million).

Deposits

Client deposits amounted to €549 million as at 31 December 2024, up by 12% compared to €489 million at 31 December 2023. Client deposits accounted for 88% of total assets at 31 December 2024 (31 December 2023: 88%) and net loans to deposit ratio stood at 36% at 31 December 2024 indicating the high level of liquidity of the Group (31 December 2023: 39%).

Loan capital

At 31 December 2024, the Group's loan capital (including accrued interest) amounted to €11,3 million (31 December 2023: €11,3 million) and relates to an Unsecured Perpetual Subordinated Note of €5 million (31 December 2023: €5 million) which qualifies for classification as Additional Tier 1 Capital, and Subordinated Tier 2 Bonds of €6,3 million (31 December 2023: €6,3 million) which qualifies for classification as Tier 2 Capital.

Details about loan capital are disclosed in Note 32 to the Financial Statements.

FINANCIAL RESULTS (continued)

Statement of Financial Position Analysis (continued)

Capital base

The Central Bank of Cyprus (CBC) sets and monitors capital requirements for the Group and for the Bank. The CBC requires the Group and the Bank to maintain a prescribed capital adequacy ratio, which is the ratio of total eligible capital to total risk weighted assets, in accordance with Regulation (EU) no. 575/2013 on prudential requirements for credit institutions and investment firms.

The Group's Common Equity Tier 1 ratio (CET 1) as at 31 December 2024 stood at 22,25% (2023: 20,56%), 11,16 pp above the minimum regulatory CET 1 ratio of 11,09%. The Overall Capital Ratio (OCR) as at 31 December 2024 stood at 27,38% (2023: 25,68%), 10,38 pp above the minimum regulatory OCR of 17,00%. The Directors and Management are closely monitoring and managing the capital of the Group and take actions to optimise capital usage and maintain capital ratios above minimum requirements.

CET 1 capital amounted to €48,8 million as at 31 December 2024, up by 7,9% compared to €45,2 million as at 31 December 2023. CET 1 and OCR ratios benefited from organic capital generation due to the year's profitability, positive valuation adjustments through OCI, and a reduction in risk-weighted assets.

Details on capital base and capital adequacy are disclosed in Note 38.5 to the Financial Statements.

GOING CONCERN

The Group's Financial Statements have been prepared on a going concern basis following the assessment performed by the Directors and Management of the Group's ability to continue as a going concern for a period of at least 12 months from the date of approval of these Consolidated and Separate Financial Statements.

The Directors and Management have considered the conditions that existed during 2024 and developments up to the date of approval of these Financial Statements and they believe that the Group and the Bank are taking all necessary measures to ensure their viability and the development of their business in the current economic environment.

GOING CONCERN (continued)

In making their assessment, the Directors and Management have reviewed a wide range of information relating to present and future conditions, including projections of profitability, liquidity, capital requirements and capital resources. This review took into consideration the 2025 Budget and financial projections for 2026 (being part of the 2025-2027 Business Plan), approved by the Board in March 2025, as well as the operating environment (as set out in Note 44). The Business Plan has used conservative economic inputs to develop the Group's medium-term strategy and incorporates sensitivity scenarios to cater for downside risk and assesses how potential changes in underlying assumptions (such as higher risk weights, lower levels of lending, outflow of deposits, lower margins on loans and higher cost of deposits), could impact the Group's projected financial performance, capital adequacy and liquidity. The Directors and Management have paid particular attention to the challenges and uncertainties stemming from the macroeconomic developments (as set out in Note 44 - Operating environment) as well as the current level of NPEs and evolution, and how the risks and uncertainties affect the future profitability, liquidity and capital adequacy of the Bank and the Group, and the ability to continue the operations in the normal course of business.

Capital

As at 31 December 2024, the Group's CET 1 ratio stood at 22,25% (2023: 20,56%), which is 11,16 percentage points above the minimum regulatory CET 1 ratio of 11,09%. The overall Capital Ratio (OCR) as at 31 December 2024 stood at 27,38% (2023: 25,68%), 10,38 percentage points above the minimum regulatory OCR of 17,00%.

In assessing the Group's capital position, the Directors and Management have considered the Group's current and future capital requirements at the time of assessment. Based on the Bank's approved Budget for 2025 and financial projections for 2026 (being part of the 2025-2027 Business Plan), which were approved by the Board in March 2025, all capital ratios are expected to remain above regulatory requirements throughout the period of assessment, including Pillar 2 Guidance and MREL add on. The Directors and Management taking into consideration all available information, together with the Business Plan approved in March 2025 and adverse sensitivity scenarios performed, expect that the Group will meet its capital requirements for the period of assessment.

The Directors and Management of the Group remain focused on implementing the actions detailed in the Group's Business Plan, ensuring the viability of the Bank and the Group, and maintaining compliance with regulatory capital requirements throughout the period of assessment.

Funding and liquidity

The following items have been considered in relation to the Group's liquidity position:

• The Group enjoys a strong liquidity position and is compliant with all regulatory liquidity ratios. The Liquidity Coverage Ratio (LCR) stood at 348% on 31 December 2024, well above the minimum regulatory requirement of 100%.
• The Group holds significant liquidity buffers that can be monetised in a period of stress. The LCR surplus as at 31 December 2024 amounted to €277 million.
• Based on the Group's approved Business Plan, together with relevant sensitivity scenarios, it is expected that the Group will be compliant with regulatory liquidity requirements for the period of the going concern assessment.

GOING CONCERN (continued)

Non-performing exposures (NPEs)

Effective management of the non-performing loan portfolio and monetization of REOs remains a top priority for the Group. During 2024, the Group deployed all available tools for organic reduction of NPEs.

During 2024, the Group's NPEs continued to decline, dropping from €41,2 million in 2023 to €37,7 million, a decrease of 9%. Furthermore, the NPE ratio improved further, decreasing from 19,6% at the end of 2023 to 17,7%, by the end of 2024.

In its NPE Plan for 2025-2027 Management has formulated a recovery action plan for organic reduction of NPEs. The plan defines the resolution strategy for each NPE exposure with the primary objective to expedite the resolution process. The implementation of these actions is carefully monitored, and recovery strategies and action plans are frequently reviewed and revised based on developments and results in order to promptly introduce corrective actions.

DIVIDEND

The Management Body does not recommend the payment of dividend.

RISK MANAGEMENT

As a financial organisation the Group is exposed to risks, the most significant of which are credit risk, market risk, liquidity risk and operational risk. The Group monitors and manages these risks through various control mechanisms. Information relating to the principal risks the Group faces, and risk management is set out in Note 38 to the Financial Statements. In addition, in relation to legal risk arising from litigations, information is disclosed in Note 43 to the Financial Statements.

SHARE CAPITAL

There were no changes in the share capital of the Bank during the year ended 31 December 2024.

SHAREHOLDERS

The shareholding structure as at 31 December 2024 is presented in Note 41 to the Financial Statements.

CAPITAL MANAGEMENT

The Central Bank of Cyprus (CBC) sets and monitors capital requirements for the Group and for the Bank. The CBC requires the Group and the Bank to maintain a prescribed capital adequacy ratio, which is the ratio of total eligible capital to total risk weighted assets, in accordance with Regulation (EU) no. 575/2013 on prudential requirements for credit institutions and investment firms.

At 31 December 2024 the Group was required to maintain on a consolidated basis, a minimum CET 1 ratio of 11,09% (31 December 2023: 10,59%) and an Overall Capital Ratio ("OCR") of 17,00% (31 December 2023: 16,50%).

CAPITAL MANAGEMENT (continued)

As at 31 December 2024, the Group's CET 1 ratio stood at 22,25%, 11,16 pp above the minimum regulatory requirement. The overall Capital Ratio (OCR) as at 31 December 2024 stood at 27,38%, 10,38 pp above the minimum regulatory requirement. The capital ratios were in compliance with minimum regulatory requirements throughout 2024.

The Directors and Management are closely monitoring and managing the capital of the Group and take actions to optimize capital usage and maintain ratios above minimum requirements.

Details on capital management are disclosed in Note 38.5 to the Financial Statements.

MINIMUM REQUIREMENT FOR OWN FUNDS AND ELIGIBLE LIABILITIES (MREL)

The Central Bank of Cyprus in its capacity as the National Resolution Authority of Less Significant Institutions (LSIs) sets and monitors minimum MREL requirements. On 25 April 2024, CBC communicated to the Bank its final decision for the determination of MREL, by which MREL requirement for the Bank was set at 16,00% of total risk weighted assets (RWAs) and 4,25% of total leverage ratio exposure (LRE) which should be met by 31 December 2024. The own funds used by the Bank to meet the Combined Buffer Requirement (CBR) are not eligible to meet its MREL requirements expressed in terms of risk-weighted assets. The MREL ratio of the Group as at 31 December 2024 stood at 23,88% (31 December 2023: 22,68%), 788 bps above the MREL requirement of 16,00%. The Group leverage ratio (LR) as at 31 December 2024 stood at 8,39% (31 December 2023: 8,72%), well above the regulatory requirement of 4,25%. The Group's MREL requirement as at 31 December 2024 was met with regulatory capital.

STRATEGY AND PRIORITIES

The Group's medium-term strategic objectives remain focused on strengthening its balance sheet, enhancing the quality and efficiency of its assets, strengthening its capital position, and increasing operating profitability through the prudent growth of its loan portfolio which will boost both interest and fee income, as well as the diversification of income streams from fee generating activities. At the same time maintaining strong capital and liquidity ratios remains top priority for the Group.

Effective management of non-performing exposures is also a key focus. In its NPE Plan for 2025, Management has formulated a recovery action plan defining the resolution strategy for each major NPE exposure. The NPE Plan for 2025 targets a 34% reduction in NPEs, from €38 million at the end of 2024 to €25 million by the end of 2025, achieved entirely through organic actions. Implementation of these actions is closely monitored, with recovery strategies and action plans frequently reviewed and revised based on developments and results to promptly introduce corrective measures.

The Group remains focused on the prudent growth of its loan portfolio through strict underwriting standards. In 2024, total new lending reached €34,0 million, marking an increase of 152% compared to new lending of €13,5 million in 2023. As at 31 December 2024, performing loans and advances amounted to €175 million, up by 4% compared to €169 million as at 31 December 2023.

During 2024, the Bank completed an independent review of its loan origination process to identify and address areas of improvement, streamline operations, and expedite the loan origination process. Based on the findings of the review the Business Division underwent a reorganisation, which was completed in the first quarter of 2025.

STRATEGY AND PRIORITIES (continued)

Given the Group's balance sheet structure, most of its interest bearing assets are floating, which supports growth in net interest income when interest rates rise. The repricing of the loan portfolio, approximately 80% of which is Euribor based, along with balances held with the Central Bank and bank placements, has benefited from interest rate increases over the past two and a half years. In response to the current downward interest rate environment, the Group is implementing measures to mitigate the impact of decreasing interest rates. These measures include the close monitoring of the cost of deposits and the prudent investment in fixed rate bonds.

The Group continues to manage its deposit base prudently to maintain healthy liquidity ratios while effectively managing funding costs, leveraging market confidence in the sector. As at 31 December 2024 client deposits amounted to €549 million, up by 12% compared to €489 million at 31 December 2023. After consecutive increases in the cost of deposits during the first three quarters of 2024, a decrease was observed from the last quarter of 2024. A gradual decrease in the cost of deposits is expected in 2025 as deposit maturities are repriced at lower interest rates.

The Group offers asset management, investment and advisory services through its subsidiary company Global Capital Securities and Financial Services Ltd which provides also related activities to Alternative Investment Funds.

The Group continues to invest in upgrading its technological infrastructure and systems that support the implementation of its business strategy. Key actions include modular upgrades to the core banking system and introduction of peripheral systems to enhance automation of processes.

Continued emphasis is placed on ensuring the effectiveness of the Bank's risk management and compliance frameworks through prudent risk policies and measures. At the same time the Group is committed to maintaining and enhancing its organisational resilience, supported by robust corporate governance that is aligned with the Group's strategic priorities.

BRANCHES

The Bank carries out its activities through its head office and two branches, one in Nicosia and one in Limassol.

MANAGEMENT BODY

The names of the members of the Management Body (MB) as at the date of this report (alternatively referred to as "Directors", "Board of Directors" and "Board" in the Financial Statements) are set out on page 3.

All of them were members of the Board throughout the year 2024.

In accordance with the Bank's Articles of Association, at the Bank's Annual General Meeting for 2025, one third of the Directors serving (those with longest service since their last appointment) will be due for retirement, and being eligible will offer themselves for re-election.

RELATED PARTY TRANSACTIONS

Disclosed in Note 42 to the consolidated and separate Financial Statements.

CORPORATE GOVERNANCE REPORT

1. Introduction

Good Corporate Governance safeguards an organization's long-term viability and is a key factor for the achievement of shareholder value maximization. An effective Corporate Governance Framework facilitates communication between the key stakeholders of the organization and ensures strategic objectives are achieved.

Another key objective of the Corporate Governance Arrangements is to ensure compliance with the applicable legal and regulatory requirements. The Group was in 2024 subject to the CBC Directive on Internal Governance of Credit Institutions (the 'CBC Governance Directive') and the CBC Directive on the Assessment of the Suitability of Members of the Management Body and Key Function Holders (the 'CBC Directive on Suitability').

The Board aims to adopt a robust corporate governance framework with clearly defined lines of responsibility which promote segregation of duties and limit conflicts of interest as well as effective processes to identify, manage, monitor, control and report the risks to which the Group is or might be exposed to. In this respect, the Group has adopted the three lines of defence framework for risk management and risk oversight.

Corporate governance principles are constantly evolving, and the Board is committed to monitoring and reviewing the Bank's corporate governance arrangements accordingly through review and challenge.

The Board has delegated authority to committees of the Board to support its oversight of risks and controls. The Committees are the Audit Committee ('the AC'), the Risk Committee ('the RC'), the Nomination and Remunerations Committee ('the NRC') and the Strategy Committee ('the SC'). Details of these Committees are provided in the sections to follow. The Chairperson of each Committee reports on matters discussed during Committee meetings to the subsequent scheduled meeting of the Board and minutes of these meetings are tabled to the Board as soon as possible for noting and/or discussion, as necessary. The Committees' terms of reference are available on the Bank's website www.cdb.com.cy.

2. Board of Directors

The authorities of the members of the Board of Directors derive from the Articles of Association of the Bank as well as the prevailing Companies and Banking Laws and the Directives of the Central Bank of Cyprus ('CBC'). The role of the Board and its committees is described in the Policies and Procedures of the Board that are annually reviewed to include all responsibilities that emanate from the regulatory framework and best practices.

The Board is collectively responsible for ensuring that the management maintains an appropriate system of internal controls which provides assurance for effective operations, internal controls and compliance with rules and regulations. It has the overall responsibility for the Group's long-term success, it approves and oversees the implementation of the Group's strategy and sets the strategic objectives and the risk appetite to support the strategy implementation.

2. Board of Directors (continued)

2.1. The role of the Board of Directors

The Board's role is to provide effective leadership to the Group and promote the Group's vision, values, culture, and behaviour, within a framework of prudent and effective controls, which enable risks to be identified, assessed and managed. The Board has the primary responsibility for setting the strategy of the Group and ensuring that the necessary human and financial resources are in place to meet the strategic and operational objectives. It has an overall responsibility for the Group and approves and oversees the implementation of the Group's strategic objectives, risk strategy and internal governance.

The Board has the overall responsibility for:

• Setting and overseeing the values and standards of the Group;
• Setting and overseeing the strategy of the Group;
• Setting and overseeing the business model of the Group;
• Maintaining an effective system of controls to ensure the effective operation of the Group and compliance with applicable laws and regulations;
• Setting the framework and policy for effective governance and oversight of the Group;
• Monitoring business performance against strategic objectives, risk appetite and expected standards.

The Board is responsible for ensuring that the Board's and Committees' composition and organization are appropriate for the delivery of value to shareholders and key stakeholders in a sustainable manner.

The Board is a decision-making body for all matters of importance because of their strategic, financial or reputational implications or consequences. Specific decisions and matters are reserved for approval by the Board. Such matters include, inter alia, setting of the Group's strategy and targets, approval of the annual budget, approval of capital and funding plans, decisions on important matters and material transactions, transactions with members of the Board and senior executives or shareholders, the appointment, replacement, transfer and removal from office of the heads of internal control functions, matters concerning the composition and organization of the Board and Board Committees and governance matters. A formal schedule of matters reserved for approval by the Board ensures that control of these key decisions is maintained by the Board. The schedule is reviewed annually and updated as necessary.

In addition, the Board is responsible for determining the nature and extent of the principal risks the Group is willing to assume in achieving its strategic objectives and ensuring the maintenance of an effective risk management and oversight framework across the Group.

Furthermore, the Board has the responsibility to present a fair, balanced, and understandable assessment of the Group's position and prospects, including in relation to the annual financial statements, other reports and reports required by regulators and by law.

2. Board of Directors (continued)

2.1. The role of the Board of Directors (continued)

Leadership

There is a clear separation between the role of the Chairman who is responsible for the leadership and effectiveness of the Board and the Chief Executive Officer ('CEO') who is responsible for the running of the Company's business. The clear division of responsibility is documented in the policies and procedures of the Board which have been approved by the Board. The day-to-day operations of the Group have been delegated to management.

Role of the Chairperson

The Chairperson oversees the Board's operation and effectiveness, ensures the agenda covers the key strategic items, sets the style and tone of Board discussions, encourages the active participation of members of the Board in the discussions and activities of the Board and sets clear expectations regarding the Group's culture, values and behaviour. The Chairperson also ensures that there is effective communication with shareholders and promotes compliance with corporate governance standards.

Role of the CEO

The CEO is responsible for the execution of the approved strategy and has ultimate executive responsibility for the Group's operations, performance and compliance.

2.1.1. Information Support

The Board meets on a regular basis and has a formal schedule of matters for consideration which is reviewed annually. The Board receives regular reports and presentations from the CEO and other senior executives on strategy and developments in the operations of the Group. The Board is regularly provided with reports on the Group's risk exposure, risk appetite, top and emerging risks, risk management, credit exposures and the Group's loan portfolio, NPE management, asset and liability management, liquidity, financial position as well as compliance and reputational issues.

All members of the Board have access to the advice and services of the Company Secretary, who can provide relevant information related to Board procedures and relevant regulatory requirements. The Directors also have access to the advice of the Group's external legal advisors and to independent professional advice at the Group's expense if and when required. Committees of the Board have similar access. All Directors have the benefit of directors' and officers' liability insurance in respect of legal actions against them.

2.2. Composition of the Management Body

As at 31 December 2024 the Board comprised of ten (10) Directors: the Chairman who is independent, two (2) Executive Directors and seven (7) Non-Executive Directors. Six (6) of the Non-Executive Directors were independent. The names and brief biographical details including each Director's background, experience and status are set out in section 4 below.

2. Board of Directors (continued)

2.2. Composition of the Management Body (continued)

The composition of the Board should be appropriate in terms of structure, size, tenure, skills, knowledge, experience and diversity and the Board and its Committees should comprise of Directors who have a broad perception of the Group's activities and the risks associated with them, in order to effectively steer the Group. We believe that a Board with the right balance of skills, experience and diversity is critical to the sustainable delivery of value to our shareholders and other key stakeholders.

The Board through its annual performance evaluation process reviews its structure, size and composition (including collective skills, knowledge, experience, independence and diversity). The process is executed by the Nomination and Remunerations Committee which makes recommendations to the Board as required.

The members of the Board of Directors are required to confirm, on an annual basis, any changes in their circumstances in respect of their compliance with the CBC Suitability Directive.

2.2.1. Meetings of the Management Body

The Board prepares an annual Schedule of Board meetings. All members of the Board have the opportunity to provide input in the formulation of the Schedule. The process aims to ensure that sufficient time is allocated to important matters and that regulatory obligations are addressed in a timely manner. Matters may be added to agendas in response to external events, Non-Executive Directors' requests and regulatory initiatives, etc.

Board meetings have certain standing items such as a report from the Chief Financial Officer on Group's performance and updates on key initiatives from the CEO and other senior management members.

During 2024 the Board held 10 meetings. Details on the number of meetings of the Board and its committees and attendance of individual Directors are set out below.

				Committees
					Joint Risk
					&
	MB	Risk	Audit	NR	Audit	Strategy
Total Meetings - 2024	10	11	8	5	2	3
Christodoulos Patsalides	10	-	-	4	-	3
Avgoustinos Papathomas	10	-	8	-	2	2
Christodoulos Plastiras	9	11	6	-	2	3
Stalo Koumidou	10	11	-	5	2	-
Andreas Hadjikyrou	10	11	-	5	2	3
Konstantinos Mitropoulos	9	11	-	5	1	3
Dimitrios Sioufas	10	-	7	5	2	-
Demetris Sparsis	10	11	8	-	2	-
Loucas Marangos	10	-	-	-	-	3
Stella Avraam	9	-	-	-	-	-

2. Board of Directors (continued)

2.2. Composition of the Management Body (continued)

2.2.1. Meetings of the Management Body (continued)

In the evaluation of the structure and composition of Committees, cross committee membership is considered an important factor. Common Committee membership facilitates effective governance across all finance and risk issues. In addition, agendas can be aligned and overlap of responsibilities can be avoided. The below table shows the number of cross memberships of Non-Executive Directors across Board Committees as at 31 December 2024.

Agendas and papers are circulated at each meeting and all members of the Board are informed in writing of forthcoming Board meetings to allow them enough time to review the relevant information. Meetings packs are typically uploaded sufficiently in advance of the meetings and communicated to all members of the Board via a secure electronic Board portal to ensure they have sufficient time to review the matters which are to be discussed and to seek clarifications or any additional information they may require.

Committee meetings are held prior to Board meetings with the chairperson of each Committee reporting matters discussed to the Board. Topics for deep dives or additional items are discussed when required and include business, governance and regulatory update.

	Audit Committee (4 Members)	Risk Committee (5 Members)	Nomination and Remunerations Committee (5 Members)	Strategy Committee (5 Members)
Audit Committee	N/A	2	1	2
Risk Committee	2	N/A	3	3
Nomination and Remunerations Committee	1	3	N/A	3
Strategy Committee	2	3	3	N/A

Cross Committee Membership Matrix

2.2.2. Conflicts of interest

The Group's conflict of interest policy which also applies to Directors, sets out how conflicts of interest are to be identified, reported and managed to ensure that the Directors as well as all officers and employees of the Group, act at all times in the best interests of the Group. The policy also sets out their duty to avoid, manage and disclose actual, potential or perceived conflicts of interest. The policy is reviewed on a regular basis and is communicated throughout the Group.

The Board's policies and procedures set additional specific requirements relating to Directors' conflicts of interest and sets out how these are to be reported and managed to ensure that the Directors act at all times in the best interests of the Bank.

2. Board of Directors (continued)

2.2. Composition of the Management Body (continued)

2.2.2. Conflicts of interest (continued)

For Directors' interest, directly or indirectly in any contract of significance with the Group refer to Note 42 to the Financial Statements.

2.2.3. Time commitment

The Group expects Non-Executive Directors to devote sufficient time to discharge their duties. Time devoted to the Group can vary considerably depending on Directors serving on Board Committees. The Board's policies and procedures define the time commitment expectations for each role. Certain Non-Executive Directors such as the Vice Chairman, the Senior Independent Director (SID), and Committee chairpersons are required to allocate additional time in fulfilling those roles.

The NRC considers whether the potential Director is able to devote the requisite time and attention to the Group's affairs prior to the Board's approval of the individual's appointment. The NRC considers in its assessment the Directors' other professional obligations including other Executive and Non-Executive directorships.

The Directors may hold positions on the Boards of other companies. Such participation should not prevent them from devoting the necessary time and attention to their duties as members of the Board of the Bank and should be in line with the requirements of the CBC Suitability Directive. Additional external appointments require the prior approval of the Board. It is estimated that in 2024, each Non-Executive Director spent at least 60 days on board-related duties.

2.3. Board Balance and Independence

The CBC Governance Directive defines the minimum requirements for Board members independence so that no individual or small group of individuals can dominate the Board's decision-taking.

The NRC and the Board consider the independence status of each Director on appointment. In addition, the independence status of each Director is reviewed on an annual basis to ensure that the determination regarding independence remains appropriate.

In 2024 the Board considered the principles relating to independence contained in the CBC Suitability Directive and concluded that the status of each Director as determined remained appropriate. The status of each Director is presented in the biographical details in section 4 of this report.

The Board considers that each Non-Executive Director brings independent challenge and judgement to the workings of the Board, through their character, objectivity and integrity.

A relevant confirmation of independence based on the independence criteria defined in the CBC Suitability Directive is provided annually by each of the Independent Directors.

2. Board of Directors (continued)

2.3. Board Balance and Independence (continued)

2.3.1. Appointments to the Board

The Board recognizes the need to identify the best qualified and available people to serve on the Board of Directors. It is responsible for the appointment of Directors. All appointments are made on merit against objective criteria (including skills and experience) with a view for the benefits of diversity on the Board.

In assessing potential candidates, the Board considers in addition to the skills and experience required for the role, the results of the collective suitability assessment, the ability of the candidate to devote sufficient time to the role, independence as well as possible conflicts of interest. The assessment process and the due diligence process include external checks of various publicly available sources.

At the time of appointment, Non-Executive Directors are provided with a letter setting out the terms of their appointment, including the specific role requirements and obligations as well as the time commitment anticipated.

Non-Executive Directors are not employees of the Group and do not participate in the daily management of the Group. They are responsible for monitoring executive activity and contributing to the development of strategy. Their role is to constructively challenge the Group's existing strategy, contribute to the development of new strategies, oversee and challenge the performance of senior management in meeting agreed targets and objectives as well as to satisfy themselves on the integrity of financial information and that the systems of internal controls, compliance and risk management are robust.

Directors are required to devote sufficient time to the business of the Group, which includes attendance at regular meetings, training sessions and briefings and preparation time for meetings. In addition, Non-Executive Directors are normally required to sit on at least one Committee of the Board, which involves the commitment of additional time.

2.3.2. Directors' inductions and ongoing development

Induction programs are arranged for newly appointed Directors. Training includes a series of meetings with senior executives and other Directors to enable new Directors to familiarize themselves with the business, management and governance structure including the function of the Board and the role of the committees, key risks of the Group and the risk management Framework.

In addition, training based on the Director's individual needs is provided.

On appointment all members of the Board are provided with an information pack which includes, among other things, key policies as well as key legislation, directives and regulations and the Company's Articles of Association. An online database with training material on this aspect has been set up and is available to all Directors.

Directors are also offered the option of attending suitable external educational courses, events, or conferences designed to provide an overview of current issues of relevance to Directors.

2. Board of Directors (continued)

2.3. Board Balance and Independence (continued)

2.3.2. Directors inductions and ongoing development (continued)

During 2024, training sessions and reading material were provided to Directors, amongst other, on banking sector developments, corporate governance and Board Leadership, cybersecurity and digital operational resilience, Climate and Environmental related-risks, emerging technological trends in the banking sector and the use of AI, the future of digital banking, the new CRR III requirements as well as supervisory priorities and new regulations.

The Company Secretary provides the Board with guidance on Board procedures and dedicated support for Directors on any matter relevant to the business on which they require advice separately from or additional to that available in the normal Board process.

2.3.3. Board Performance Evaluation

The Board reviews annually its effectiveness and that of its committees as well as the performance of the Chairman and individual Directors in order to improve its operations. The objective of these evaluations is to review past performance, identify opportunities for improvement and maximize strengths. The aim of the assessments is to determine whether the Board and its committees as a whole are effective in discharging their responsibilities and, in the case of individual Directors, to determine whether each Director continues to contribute effectively and to demonstrate commitment to the role.

The Board is subject to external evaluation every three years. The last external review was conducted in 2024. The external review included an evaluation of the Board, each Committee and the Chairman through the completion of a series of online questionnaires. The Directors' views on a range of issues including amongst others strategy, performance monitoring, reporting, risk and control, board composition and size, balance of skills, culture and communication, board agendas, quality and timeliness of information and training of Directors were obtained and assessed. In addition, an internal collective suitability assessment was conducted following the guidelines issued by the CBC and the EBA.

The outcome of the Board evaluation was considered by the NRC and collectively discussed by the Board. The recommendations made were intended to further enhance Board processes, and were not material to the effectiveness of the Board or its Committees.

The assessment concluded that the Board and its Committees are aligned with leading industry practices and that the organization, functioning and composition of the Board is proportionate and aligned with relevant regulatory requirements. The Chairman's performance evaluation concluded that the Chairman of the Board creates an environment that encourages contribution from all Board members and leads the Board effectively whilst maintaining an appropriate meeting structure. The Directors were assessed as effective in their roles on the Board continuing to demonstrate high commitment to their role and independence of mind.

The Directors are aware that in case they have material concerns about the overall governance of the Group, they should report them to the Board and if these concerns are not satisfactorily addressed, to the CBC.

2. Board of Directors (continued)

2.3. Board Balance and Independence (continued)

2.3.4. Loans to Directors and other transactions

Details of loans to Directors and other transactions with the Group are set out in Note 42 to the Financial Statements for the year ended 31 December 2024.

The CBC Directives set specific requirements and limits for the extension of credit to members of the Board and their related parties. The Board has set specific procedures for the approval and monitoring of such exposures.

The credit facilities to Directors (and related parties) should be granted in the normal course of the Company's business, under normal commercial and employment terms, and with transparency. All relevant cases of bank facilities to Company Directors and its subsidiary Company Directors should be forwarded for approval to the Board. The interested member of the Board is neither present nor participates in the procedure.

3. Internal controls

The Board is responsible for the adequacy and effectiveness of the system of internal controls in the Group. This system aims to ensure:

• The effectiveness of the governance framework is monitored and periodically assessed, and appropriate steps are taken to timely address any deficiencies;
• The appropriate compliance framework is in place;
• The integrity of the accounting and financial reporting systems, including financial and operational controls and compliance with legal and supervisory requirements and relevant standards, is adequate;
• The appropriate information security framework for the protection of confidential information is in place;
• The system of internal controls has been designed in accordance with the nature, scale and complexity of the Group's operations in order to provide reasonable but not absolute assurance against material misstatements, errors, losses, fraud or breaches of laws and regulations.

The overall internal control systems of the Group include:

• A transparent organisational structure with clear reporting lines to Senior Management and the Board;
• Three lines of defence model for the management of risks across the Group;
• Board and Executive Committees with clear responsibilities;
• Policies and procedures;
• Conflicts of Interest Policy;

3. Internal controls (continued)

• A Code of Conduct setting out the standards expected of all officers and employees;
• A Whistleblowing Policy including processes and procedures to be followed for independent investigation of concerns raised by staff.

The Board through the AC and the RC, receives the results of reviews conducted by internal and external parties through which it assesses the effectiveness of the Group's internal control, risk management and information systems, as well as in relation to the procedures used to ensure the accuracy, completeness and validity of the information used for internal and regulatory reporting. The reviews cover financial, operational and compliance systems of internal controls, as well as risk management systems. In addition, the AC and RC receive business and operational risk assessments, regular reports, internal and external audit reports, as well as regulatory reports from the Group's Internal Auditor, the Head of Compliance and the Head of Risk Management and Information Security.

The Board, through the AC and RC, is informed on a regular basis about the actions taken by executive management to remedy the weaknesses identified through the operation of the Group's framework of internal controls.

The Group's financial reporting process is controlled using documented accounting policies and procedures supported by instructions and guidance on reporting requirements. The internal control system also ensures that the integrity of the accounting and financial reporting systems, including financial and operational controls and compliance with legal and supervisory requirements and relevant standards, is adequate.

The Board, through the AC scrutinizes and approves the financial statements and the Annual Report and ensures that appropriate disclosures have been made. This governance process ensures that both management and the Board are given sufficient opportunity to challenge the Group's financial statements and other significant disclosures before their publication.

The Board is responsible for determining the nature and extent of the principal risks the Group is willing to take in achieving its strategic objectives and ensuring the maintenance of an effective risk management and oversight process across the Group. The Board approves the Group's Risk Appetite Statement on an annual basis and receives regular updates on the Group's risk exposure and material risks through the quarterly Risk Report.

3.1. Group code of conduct and whistleblowing policy

The Group has set out the standards that are expected from all the employees and Directors of the Group in the Code of Conduct along with guidance on how these standards should be applied.

The Group also has a Whistleblowing Policy in place for all staff, including Directors, which is in accordance with international practice. The policy is reviewed annually. Its general principles are:

• Concerns in good faith, about wrongdoing or malpractice can be raised in confidence without fear of victimization, discrimination, disadvantage or dismissal;
• Procedures for the reporting of any matters of concern are clearly provided. The persons concerned must be able to bypass the main channels for whistleblowing if these prove inappropriate and use the anonymous reporting line;

3. Internal controls (continued)

3.1. Group code of conduct and whistleblowing policy (continued)

Disclosures are managed in a timely, consistent and professional manner.

The Board and Group CEO are committed to this policy, which encourages staff to raise concerns.

4. Members of the Management Body

4.1. Non-Executive Directors

Christodoulos Patsalides (Chairman)

He has extensive experience in the financial sector. He served as General Manager of the Ministry of Finance for 17 years. At the same time, he has served as Director General of the Directorate General for European Programs, Coordination and Development (2018-2019), Deputy Director General of the Ministry of Defence (2010) and Office Director of the President of the Republic (2001-2003). He has also served for a number of years in a number of European Institutions: Deputy Governor for Cyprus at the European Bank for Reconstruction and Development, the World Bank and the Board of Governors of the European Stability Mechanism. In addition, he was the representative of Cyprus to the Board of Directors of the Development Bank of the Council of Europe and the Council of the European Financial Stability Fund. He holds a Bachelor of Science in Economics from the University of Athens and a Master's in Economics from London University.

Term of Office: Appointed to the Board of Directors on 10 March 2020

Independent: Yes

Member of a Board Committee:

• Nomination and Remunerations Committee
• Chairman of the Strategy Committee

Avgoustinos Papathomas (Senior Independent Member)

He is a Senior Partner of FRP Advisory (Cyprus) and APP Audit. He holds a BSc and BEng in Engineering Manufacture and Management from U.M.I.S.T the University of Manchester. He is a fellow of the Institute of Chartered Accountants in England and Wales, a member of the Institute of Certified Public Accountants of Cyprus and a licensed Insolvency Practitioner. He has served as a Director on various organizations and is currently the Vice-President-Services of the Cyprus Chamber of Commerce and Industry.

Term of Office: Appointed to the Board of Directors on 7 May 2019

Independent: Yes

Appointed as the member of the MB responsible of the Prevention and Suppression of Money Laundering Activities Laws of 2007 to 2018 and as Senior Independent Member on 8 May 2019 and 2 August 2022 respectively.

Member of a Board Committee:

• Chairman of the Audit Committee
• Strategy Committee

4. Members of the Management Body (continued)

4.1. Non-Executive Directors (continued)

Christodoulos Plastiras

He is an enthusiastic entrepreneur with extensive knowledge in Banking, Technology, Finance and Business. He is the co-founder and Non-Executive Director of Melior Capital, a technology company which develops and runs some of the country's most successful e-commerce projects. He has led the Digital Transformation of many large corporations in a variety of industries and participates as a mentor or judge in many start-up initiatives in Cyprus and abroad. He holds a Bachelor's degree in Computer Science from the University of Cambridge and a Master's degree in Finance from Imperial College.

Term of Office: Appointed to the Board of Directors on 7 May 2019

Independent: Yes

Member of a Board Committee:

• Chairman of the Risk Committee
• Audit Committee
• Strategy Committee

Stalo Koumidou

She is an independent financial advisor. She has extensive experience covering all aspects of the financial sector, with dedicated expertise in the local and European capital and debt markets, public takeovers, investment banking transactions and corporate financial advisory. She also possesses in depth knowledge of the EU harmonised regulatory environment for investment firms, publicly listed entities and funds. Holds a BSc (Hons) Financial and Business Economics from Royal Holloway University of London and an MSc Finance and Economics from London School of Economics and Political Science. She is a member of the Board of Directors of Cosmos Insurance Public Company Ltd.

Term of Office: Appointed to the Board of Directors on 2 February 2022

Independent: Yes

Member of a Board Committee:

• Risk Committee
• Nomination and Remunerations Committee

Andreas Hadjikyrou

He is the founder of 7Q Investment Group a leading boutique asset manager and institutional investor. Currently he is the Chief Investment Officer of 7Q Asset Management Ltd, responsible for implementing the general investment policy for each managed AIF as well as the overall strategic asset allocation and tactical investment strategy. He brings in excess of twenty years of experience in the field of Asset Management, Investments and Finance. He played a leading role in expanding the 7Q Investment Group overall footprint on the institutional investors landscape in Cyprus, including creating the biggest Cyprus AIF investing in local assets. He is a holder of a BSc in International Business Administration from the University of Northumbria of Newcastle, UK and an MBA in International Banking and Finance from the University of Birmingham, UK.

Term of Office: Appointed to the Board of Directors on 3 March 2022 Independent: No Appointed as Vice-Chairman on 2 August 2022 Member of a Board Committee:

4. Members of the Management Body (continued)

4.1. Non-Executive Directors (continued)

Andreas Hadjikyrou (continued)

• Nomination and Remunerations Committee
• Risk Committee
• Strategy Committee

Konstantinos Mitropoulos

He is currently a member of the Board of Directors of a number of listed companies and the Foundation for Economic and Industrial Research (IOBE). He has served as Chairman of the Board of Directors of ATTICA BANK, as Chief Executive Officer at PQH, the Single Special Liquidator of 16 failed banks and as Executive Director and Executive Board Member of PwC Greece. He was the first Chief Executive Officer of the Hellenic Republic Asset Development Fund, the privatisation agency, Executive Chairman of Eurobank EFG Equities and the founder and Executive Chairman of KANTOR Management Consultants S.A. He has served as a member of the Board of Directors of the Hellenic Bank Association, the Athens Stock Exchange, and a number of private companies. He was also a long-standing member of the Global Advisory Council of the London Business School. He is a mechanical and electrical engineer from the National Technical University of Athens, with post graduate studies in Business Administration and Economics, holding an MSc from Imperial College and a PhD from the London Business School.

Term of Office: Appointed to the Board of Directors on 29 April 2022 Independent: Yes

Member of a Board Committee:

• Chairman of the Nomination and Remunerations Committee
• Risk Committee
• Strategy Committee

Dimitrios Sioufas

He is an experienced attorney with specialisation in the shipping sector, working for the last 15 years for Theo V. Sioufas & Co. Law office, a well-established legal network with presence in Greece, Cyprus, China and Singapore. He is also the founding partner and chief representative for the China and Singapore offices. His extensive professional expertise in the shipping sector includes ship finance, banking and finance law, corporate law, contract law, international trade law, vessel flag registration and vessel sale and purchase. He holds an MSc in Business and Administration for Law Practitioners from ALBA Graduate Business School and LLBs, a Bachelor of Laws from the National and Kapodistrian University of Athens and University of Greenwich, and he is a member of both the Greek and Cyprus Bar Associations.

Term of Office: Appointed to the Board of Directors on 29 June 2022 Independent: Yes

Member of a Board Committee:

• Audit Committee
• Nomination and Remunerations Committee

4. Members of the Management Body (continued)

4.1. Non-Executive Directors (continued)

Demetris Sparsis

He has more than 30 years of extensive financial markets experience in the areas of banking, insurance and investments. He worked in the Cypriot banking sector and served in various managerial positions as Head of the Insurance Division, Corporate Affairs Manager and Branch Network Manager. He is also a member of the Board of Directors of NAGA Markets Europe Ltd. He holds an MSc in Tourism, Marketing, Planning and Development from the University of Surrey in UK and a BA in Economics - Business Administration from the State University of New York at Albany, USA.

Term of Office: Appointed to the Board of Directors on 14 November 2022 Independent: Yes

Member of a Board Committee:

• Audit Committee
• Risk Committee

4.2. Executive Directors

Loucas Marangos (Executive Director – CEO)

He is the Chief Executive Officer and Executive Member of the Board since July 2021. He has a strong financial markets experience and in-depth knowledge of local and overseas financial markets. He is a member of the Board of Directors of the Association of Cyprus Banks (ACB), member of the Board of Directors of the Employers' Association of Cyprus Banks and Vice-chairman of the Cyprus Institute of Financial Services (CIFS). He holds a BSc in Accounting and Finance from London School of Economics and an MBA from Imperial College London.

Term of Office: Appointed to the Board of Directors on 21 July 2021 Independent: No

Member of a Board Committee: None

Stella Avraam (Executive Director – Group CFO)

She is the Chief Financial Officer of the Bank since October 2016 and Member of the Board since September 2019. She was the Chief Accountant since January 2009. She is an experienced banking professional having served in the banking sector for more than 25 years in various positions within the Finance Division setting. She also serves at the Board of Directors of a number of subsidiaries of the Group. She is a qualified Accountant and a member of the Association of Chartered Certified Accountants and the Institute of Certified Public Accountants of Cyprus. She also holds an MBA from the Cyprus International Institute of Management.

Term of Office: Appointed to the Board of Directors on 27 September 2019 Independent: No Member of a Board Committee: None

5. Board Committees

In order to exercise proper oversight of risk and control, the Board has delegated certain responsibilities to committees of the Board. The principal committees are the Audit Committee (AC), the Risk Committee (RC), the Nomination and Remunerations Committee (NRC) and the Strategy Committee (SC). The key roles of the Board committees are provided in the sections that follow. The terms of reference of the main statutory committees are based on the relevant provisions of the CBC Governance Directive and are available on the Group's website (www.cdb.com.cy) or by request to the Company Secretary.

The terms of reference of the Board and Board Committee were revised in 2024 to include climate and environmental risks related responsibilities as well as to reflect in more detail responsibilities relating to digital operational resilience.

The overall responsibility for approving and monitoring the Group's strategy, risk appetite and policies for managing risks lies with the Board, which exercises this responsibility through two of its main committees, namely the RC and the AC.

The Chairman of each committee reports on matters discussed during committee meetings to the subsequent scheduled meetings of the Board and minutes these meetings. This linkage is important between the committees as it ensures alignment of the work conducted by the various committees. Furthermore, cross membership is encouraged as it ensures alignment of the work performed by the Committees as well as to avoid duplication of responsibilities. Committees may also hold joint meetings to discuss items of common interest such as the AC and RC discussion and review of impairment or risk appetite for AML and CTF risks.

5.1. Nomination and Remunerations committee (NRC)

As at 31 December 2024, the NRC comprised five (5) Non-Executive Directors, four (4) of whom were independent. Members of the Committee are also members of the Risk, Audit and Strategy Committees.

Biographical details, including each member's background, experience and independence status are set out in section 4 of this report.

The Committee held 5 meetings in 2024. The Chairman and members of the Committee together with their attendance at meetings are shown in section 2.2.1.

The key responsibilities of the NRC are set out in its terms of reference, which are available on the Group's website (www.cdb.com.cy) and have been approved by the Board.

The role of the Committee is to ensure that the Board is comprised of members who are best able to discharge the duties and responsibilities of Directors and to support and advise the Board in relation to:

• Board recruitment (including regularly reviewing, reporting on and taking into account, when making further appointments, the composition and effectiveness of the Board);
• Directors' development;
• Chairperson development (under the overall responsibility and supervision of the SID);

5. Board Committees (continued)

5.1. Nomination and Remunerations committee (NRC) (continued)

• The ongoing evaluation of the structure, size, composition and performance of the Board, its committees and individual Directors, and;
• Succession planning for Directors and senior management;
• Ensure that the Group is equipped with the human capital necessary for the achievement of its strategic goals, whose reward will be based on personal performance and Group results;
• Propose adequate remuneration considered necessary to attract and retain high value-adding professionals. Therefore, remuneration has to be satisfactory vis-a-vis peer companies;
• Set the overarching principles and parameters of compensation and benefits policies across the Group and exercise oversight for such issues;
• Consider the remuneration arrangements of the Executive Directors of the Group, other identified staff and the employee Remuneration Policy bearing in mind the European Banking Authority ('EBA') Guidelines on remuneration policies and practices and the CBC Governance Directive.

The Chairman of the Committee reports to the Board after each meeting to ensure all Directors are fully informed of the Committee's activities.

5.2. Audit committee (AC)

As at 31 December 2024, the AC comprised of four (4) independent Directors. Members of the Committee are also Members of the Risk, Nomination and Remunerations and Strategy Committee. The Chairman of the Committee, has extensive experience in the audit profession.

Biographical details, including each member's background, experience and independence status are set out in section 4 of this report.

The Committee held 8 meetings in 2024. The Chairman and members of the Committee together with their attendance at meetings are shown in section 2.2.1.

The key responsibilities of the AC are set out in its terms of reference, which are available on the Group's website (www.cdb.com.cy) and have been approved by the Board.

The role of the Committee, inter alia, is:

• To oversee the system of internal controls including reviewing its effectiveness;
• To monitor the integrity of the Group's financial statements;
• To monitor the effectiveness of the internal audit function;
• To advise the Board on appointment of the external auditors and be responsible for oversight and remuneration of the external auditor;
• To review the Group's and Company's financial and accounting policies and practices;

5. Board Committees (continued)

5.2. Audit committee (AC) (continued)

• To monitor the effectiveness of the anti-money laundering function of the Company and all other aspects of regulatory/ethics compliance; and
• To make recommendations to the Board on such matters.

The role of the Committee is fundamental in ensuring the financial integrity and accuracy of the Company's financial reporting. Good, open relationships between the Committee, the Chief Financial Officer, the Internal Auditor and the Head of Compliance as well as the external auditors, are essential to adding value to the organisation. This is achieved by holding management to account for the implementation of all audit recommendations (internal and external). In addition to providing assurance within the governance and accountability structures of the Group, it is essential that the Committee contributes, delivers results and adds value to the Group.

The Chairman of the Committee reports to the Board after each meeting to ensure all Directors are fully informed of the Committee's activities.

5.2.1. Internal audit independence

The Group Internal Audit and Group Compliance Divisions report directly to the Board through the AC. They are organisationally independent of units with executive functions and are not subordinated to any other unit.

The Committee's activities include considering reports submitted by the Group Internal Audit and Group Compliance Departments as well as regular meetings with the Internal Auditor and the Compliance Officer through which the Committee assesses Internal Audit Unit's and Compliance Unit's effective and adequate resourcing. Management's responses to Group Internal Audit's findings and recommendations are also reviewed and monitored by the Committee. The reports issued by the Internal Auditor and the Compliance Officer enable the Committee to focus discussion on specific areas of concern and root causes and to track remediation progress over time.

5.3. Risk committee (RC)

As at 31 December 2024, the RC comprised five (5) Non-Executive Directors, four (4) of whom were independent. Members of the Committee are also Members of the Audit, the Nomination and Remunerations, and Strategy Committees.

The RC is responsible for advising the Board on high level risk related matters and risk governance and for non-executive oversight of risk management and internal controls (other than financial reporting).

Biographical details, including each member's background, experience and independence status are set out in section 4 of this report.

The Committee held 11 meetings in 2024. The Chairman and members of the Committee together with their attendance at meetings are shown in section 2.2.1.

5. Board Committees (continued)

5.3. Risk committee (RC) (continued)

The main purpose of the Committee is to review, on behalf of the Board, the aggregate risk profile of the Group, including performance against risk appetite for all risk types and to ensure that both the risk profile and risk appetite remain appropriate. Specifically, it:

• Advises the Board on risk appetite and alignment with strategy;
• Monitors the effectiveness of the Group's risk management and internal control systems except for financial reporting and compliance internal control systems;
• Monitors the Group's risk appetite and risk profile against key performance/risk indicators as set out in the Group's Risk Appetite Statement;
• Identifies the potential impact of key issues and themes that may impact the risk profile of the Group;
• Ensures that the Group's overall risk profile and risk appetite remain appropriate given the external environment, any key issues and themes impacting the Group and the internal control environment;
• Seeks to identify and assess future potential risks which, by virtue of their uncertainty, of low probability and unfamiliarity may not have been factored adequately into review by other Board Committees.

The Group, like all other financial institutions, is exposed to risks, the most significant of which are credit risk, liquidity and funding risk, market risk, operational risk, climate and environmental related risks and property price risk. The Group monitors and manages these risks through various control mechanisms and reviews the mitigating actions proposed by management.

Information relating to Group Risk Management is set out in Note 38 to the Financial Statements.

The Chairman of the Committee reports to the Board after each meeting to ensure all Directors are fully informed of the Committee's activities.

5.4. Strategy Committee (SC)

The SC is responsible for advising the Board on strategy formulation and monitoring.

As at the 31 December 2024, the SC comprised five (5) Non-Executive Directors, of whom four (4) were independent. Members of the Committee are also Members of the Audit, Risk and Nomination and Remunerations Committees. Biographical details, including each member's background, experience and independence status are set out in section 4 of this report.

The Committee held 3 meetings in 2024. The Chairman and members of the Committee together with their attendance at meetings are shown in section 2.2.1.

Information relating to strategy is set out in Note 38 to the Financial Statements.

5. Board Committees (continued)

5.4. Strategy Committee (SC) (continued)

The main purpose of the Committee is to provide direction and support to the CEO and Senior Management for the formulation of the overall business strategy of the Bank and of initiatives of strategic importance which affect the position and dynamics of the Bank in the market. More specifically, the Committee is responsible to:

• Formulate and recommend to the Board the strategy, business plan, specific strategic initiatives across all functions, mergers and acquisitions, disposals and servicing of NPEs, sales of subsidiaries and any major profit and loss and balance sheet affecting moves/transactions;
• Ensure that the annual budget is consistent with the strategy and all approved strategic initiatives/moves are part of the budgetary cycle;
• Review the overall progress annually and monitor the progress of designated high significance initiatives/moves outside the budgetary cycle, and report to the Board.

The Chairman of the Committee reports to the Board after each meeting to ensure all Directors are fully informed of the Committee's activities.

6. Remuneration policy

In developing its Remuneration Policy, the Group considers the provisions that are included in the CBC Governance Directive.

The remuneration of Non-Executive Directors is determined and approved by the Board. Neither the Chairman nor any Director participates in decisions relating to their own personal remuneration.

The remuneration of Non-Executive Directors is not linked to the profitability of the Group. It is related to the responsibilities and time devoted for Board meetings and decision-making for the governance of the Group, and for their participation in the committees of the Board and any participation in the boards of Group subsidiary companies. The remuneration of Non-Executive Directors is approved annually by the AGM.

The remuneration of Executive Directors is set out in their contracts of employment unless any of the Executive Directors is an appointed member of the senior management team, in which case the terms of employment are based on the provisions of the collective agreement in place, excluding the CEO.

7. Shareholders relations

One of the responsibilities of the Chairman of the Board is to ensure that the views, issues and concerns of shareholders are effectively communicated to the Board and to ensure that Directors develop an understanding of the views of major investors. The SID is available to shareholders if they have concerns that are not resolved through the normal communication channels.

All shareholders of the Company are treated on an equal basis. There are no shareholders with special control rights. Shareholders are informed of any material changes regarding the Group, including its financial condition, financial results, ownership and governance.

7. Shareholders relations (continued)

Any change or addition to the Articles of Association of the Company is only valid if approved by special resolution at a meeting of the shareholders.

Details of the shareholders are disclosed in note 41 to the Financial Statements.

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-

-

-

-

-

-

-

-

-

-

-

-

CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2024

		2024	2023
	Note	€'000	€'000
Turnover		29.342	27.665
Interest income calculated using the effective interest method	5	25.307	23.898
Interest expense calculated using the effective interest method	6	(6.160)	(2.109)
Net interest income		19.147	21.789
Fee and commission income	7	3.401	3.381
Fee and commission expense	8	(335)	(381)
Net foreign exchange gains	9	67	(11)
Other income	10	567	397
Total net income		22.847	25.175
Staff costs	11	(10.437)	(8.497)
Other operating expenses	12	(4.713)	(4.224)
Special levy on deposits and other levies/contributions	12	(852)	(896)
Depreciation	13	(916)	(812)
Profit before provisions for impairment		5.929	10.746
Provisions for impairment	14	(1.184)	(3.682)
Profit after provisions for impairment		4.745	7.064
Share of profit from associates	22	7	2
Profit before tax		4.752	7.066
Tax	15	(654)	(106)
Profit for the year after tax		4.098	6.960
Profit for the year attributable to:
Owners of the Bank		4.074	6.957
Non-controlling interests		24	3
Profit for the year		4.098	6.960
Basic and fully diluted earnings per share (cent)	16	9,41	16,08

INCOME STATEMENT

For the year ended 31 December 2024

		2024	2023
	Note	€'000	€'000
Turnover		28.892	27.211
Interest income calculated using the effective interest method	5	25.437	24.078
Interest expense calculated using the effective interest method	6	(6.158)	(2.106)
Net interest income		19.279	21.972
Fee and commission income	7	2.946	2.978
Fee and commission expense	8	(302)	(334)
Net foreign exchange gains	9	57	(6)
Other income	10	452	161
Total net income		22.432	24.771
Staff costs	11	(10.176)	(8.231)
Other operating expenses	12	(4.594)	(4.011)
Special levy on deposits and other levies/contributions	12	(852)	(896)
Depreciation	13	(915)	(811)
Profit before provisions for impairment		5.895	10.822
Provisions for impairment	14	(1.364)	(3.783)
Profit before tax		4.531	7.039
Tax	15	(653)	(106)
Profit for the year after tax		3.878	6.933
Basic and fully diluted earnings per share (cent)	16	8,96	16,02

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2024

€'000 Note Profit for the year 4.098 Other comprehensive income (OCI) Items that are or may be reclassified in the consolidated income statement in subsequent periods Fair value reserve (debt instruments) Net gains on investments in debt instruments measured at fair value through OCI (FVOCI) 20 23 Total OCI that may be reclassified in the consolidated income statement in subsequent periods 23 OCI items not to be reclassified in the consolidated income statement in subsequent periods Property revaluation reserve Gains from revaluation of premises 23 - Deferred tax on revaluation of premises 29 9 Total OCI not to be reclassified in the consolidated income statement	€'000 6.960 56 56
	257
	(27)
in subsequent periods 9	230
Other comprehensive income for the year net of taxation 32	286
Total comprehensive income for the year 4.130	7.246
Attributable to:
Owners of the Bank 4.106	7.243
Non-controlling interests 24	3
Total comprehensive income for the year 4.130 7.246

The notes on pages 52 to 161 form an integral part of the financial statements.

STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2024

		2024	2023
		€'000	€'000
	Note
Profit for the year		3.878	6.933
Other comprehensive income (OCI)
Items that are or may be reclassified in the income statement in
subsequent periods
Fair value reserve (debt instruments)
Net gains on investments in debt instruments measured at fair value
through OCI (FVOCI)	20	23	56
Total OCI that may be reclassified in the income statement in
subsequent periods		23	56
OCI items not to be reclassified in the income statement in
subsequent periods
Fair value reserve (equity instruments)
Net gains from revaluation of subsidiaries	21	187	226
		187	226
Property revaluation reserve
Gains from revaluation of premises	23	-	257
Deferred tax on revaluation of premises	29	9	(27)
		9	230
Total OCI not to be reclassified in the income statement in
subsequent periods		196	456
Other comprehensive income for the year net of taxation		219	512
Total comprehensive income for the year		4.097	7.445

		2024	2023
	Note	€ 000	€'000
ASSETS
Cash and balances with central banks	17	373.772	300.407
Balances with other banks	17	3.390	2.146
Investments in debt securities	20	26.211	45.356
Loans and advances	18	197.565	190.484
Investments and exposures in subsidiary companies	21	4.626	4.006
Stock of property	25	7.231	6.028
Receivables and other assets	26	918	1.453
Premises and equipment	23	7.346	6.745
Intangible assets	24	1.254	ਦਰਤ
Total assets		622.313	557.218
LIABILITIES
Bank borrowings	27	1 494	1.921
Client deposits	28	548.579	489.423
Deferred taxation	29	306	314
Accruals and other liabilities	30	10.864	8.589
Loan capital	32	11.263	11.261
Total liabilities		572.506	511.508
EQUITY
Share capital	33	8.655	8.655
Share premium		16.048	16.048
Capital reduction reserve		14.653	14.653
Reserves		10.451	6.354
Total equity		49.807	45.710
Total liabilities and equity		622.313	557.218
Contingent liabilities and commitments	34	53.801	58.011

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2024

	Attributable to the parent company's owners
2024	Capital						Non
		Share	reduction	Revaluation	Revenue		controlling
	Share capital	premium	reserve fund	reserve	reserve	Total	interests	Total
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Balance 1 January 2024	8.655	16.048	14.653	1.898	4.430	45.684	241	45.925
Correction in opening balance of subsidiaries reserves	-	-	-	-	56	56	9	65
Restated balance 1 January 2024	8.655	16.048	14.653	1.898	4.486	45.740	250	45.990
Total comprehensive income after taxation
Profit for the year	-	-	-	-	4.074	4.074	24	4.098
Other comprehensive income	-	-	-	32	-	32	-	32
Total comprehensive income	-	-	-	32	4.074	4.106	24	4.130
Transfers between reserves
Excess depreciation on revaluation surplus	-	-	-	(1)	1	-	-	-
Total transfers between reserves	-	-	-	(1)	1	-	-	-
Balance 31 December 2024	8.655	16.048	14.653	1.929	8.561	49.846	274	50.120

The notes on pages 52 to 161 form an integral part of the financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2024

	Attributable to the parent company's owners
	Capital						Non
2023		Share reduction Revaluation Revenue					controlling
	Share capital	premium	reserve fund	reserve	reserve	Total	interests	Total
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Balance 1 January 2023	8.655	16.048	14.653	1.629	(2.755)	38.230	199	38.429
Correction in opening balance of subsidiaries reserves	-	-	-	-	211	211	39	250
Restated balance 1 January 2023	8.655	16.048	14.653	1.629	(2.544)	38.441	238	38.679
Total comprehensive income after taxation
Profit for the year	-	-	-	-	6.957	6.957	3	6.960
Other comprehensive income	-	-	-	286	-	286	-	286
Total comprehensive income	-	-	-	286	6.957	7.243	3	7.246
Transfers between reserves
Excess depreciation on revaluation surplus	-	-	-	(17)	17	-	-	-
Total transfers between reserves	-	-	-	(17)	17	-	-	-
Balance 31 December 2023	8.655	16.048	14.653	1.898	4.430	45.684	241	45.925

The notes on pages 52 to 161 form an integral part of the financial statements.

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2024

	Share	Share	reduction	Revaluation	Revenue
	capital	premium	reserve	reserve	reserve	Total
2024	€'000	€'000	€'000	€'000	€'000	€'000
Balance 1 January 2024	8.655	16.048	14.653	973	5.381	45.710
Total comprehensive income after taxation
Profit for the year	-	-	-	-	3.878	3.878
Other comprehensive income	-	-	-	219	-	219
Total comprehensive income	-	-	-	219	3.878	4.097
Transfers between reserves
Excess depreciation on revaluation surplus	-	-	-	(1)	1	-
Total transfers between reserves	-	-	-	(1)	1	-
Balance 31 December 2024	8.655	16.048	14.653	1.191	9.260	49.807

	Capital reduction
2023	Share capital €'000	Share premium €'000	reserve FUND €'000	Revaluation reserve €'000	Revenue reserve €'000	Total €'000
Balance 1 January 2023	8.655	16.048	14.653	478	(1.569)	38.265
Total comprehensive income after taxation Profit for the year Other comprehensive income	- -	- -	- -	- 512	6.933 -	6.933 512
Total comprehensive income	-	-	-	512	6.933	7.445
Excess depreciation on revaluation surplus	-	-	-	(17)	17	-
Total transfers between reserves	-	-	-	(17)	17	-
Balance 31 December 2023	8.655	16.048	14.653	973	5.381	45.710

Share capital

There were no changes in the share capital of the Group and the Bank during the years ended 31 December 2024 and 31 December 2023.

Share premium

Share premium is not available for distribution.

Capital reduction reserve fund

Capital reduction reserve fund is not available for distribution.

Revaluation reserve

The revaluation reserve relates to the revaluation of investments at FVOCI and revaluation of premises. The revaluation reserve is not available for distribution.

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2024

€'000 €'000 Note CASH FLOWS FROM OPERATING ACTIVITIES Group profit for the year 4.098 6.960 Adjustments for: Net interest from debt securities (512) (913) Premium/discount amortisation on debt securities 438 589 Interest on loan capital 6 1.148 460 Gain on revaluation of investments at FVTPL 10 (34) (26) Depreciation of premises and equipment 13 569 458 Amortisation of intangible assets 13 347 354 Net foreign exchange gains 2 57 Provisions for impairment 14 1.184 3.682 Interest expense on lease liability 6 40 22 Share of profit from associate (7) (2) Tax 15 654 106 7.927 11.747 Change in: Obligatory balances with Central Bank (309) (127) Loans and advances (7.967) 22.570 Client deposits 59.156 2.582 Bank borrowings (427) (407) Working capital and other items of the statement of financial position 480 (32) Net cash from operating activities before tax 58.860 36.333 Taxes and special contributions paid (439) (400) Net cash from operating activities 58.421 35.933 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of premises and equipment 23 (983) (271) Acquisition of intangible assets 24 (1.008) (277) Acquisition of debt securities 20 (952) (17.861) Proceeds from redemption of debt securities 20 19.711 62.271 Net interest from debt securities 512 913 Net cash from investing activities 17.280 44.775 CASH FLOW FROM FINANCING ACTIVITIES Principal element of lease payments (174) (172) Interest paid on loan capital (1.146) (460) Net cash to financing activities (1.320) (632) Net increase in cash and cash equivalents 74.381 80.076 Effect of exchange rate fluctuations on cash and cash equivalents (1) (54) Cash and cash equivalents at the beginning of the year 298.077 218.055 Cash and cash equivalents at the end of the year 372.457 298.077 37		2024	2023

STATEMENT OF CASH FLOWS

For the year ended 31 December 2024

		2024	2023
	Note	€'000	€'000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit for the year		3.878	6.933
Adjustments for:
Net interest from debt securities		(512)	(913)
Premium/discount amortisation on debt securities		438	589
Interest expense on loan capital	6	1.148	460
Depreciation of premises and equipment	13	568	457
Amortisation of intangible assets	13	347	354
Net foreign exchange gains		12	51
Provisions from impairment	14	1.364	3.783
Interest expense on lease liability	6	40	22
Tax	15	653	106
		7.936	11.842
Change in:
Obligatory balances with Central Bank		(309)	(127)
Loans and advances		(7.967)	22.570
Client deposits		59.156	2.582
Bank borrowings		(427)	(407)
Working capital and other items of the statement of financial position		402	(208)
Net cash from operating activities before tax		58.791	36.252
Taxes and special contributions paid		(439)	(400)
Net cash from operating activities		58.352	35.852
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of premises and equipment	23	(983)	(272)
Acquisition of intangible assets	24	(1.008)	(277)
Acquisition of debt securities	20	(952)	(17.861)
Proceeds from redemption of debt securities	20	19.711	62.271
Net interest from debt securities		512	913
Net cash from investing activities		17.280	44.774
CASH FLOW FROM FINANCING ACTIVITIES
Principal element of lease payments		(174)	(172)
Interest paid on loan capital		(1.146)	(460)
Net cash to financing activities		(1.320)	(632)
Net increase in cash and cash equivalents		74.312	79.994
Effect of exchange rate fluctuations on cash and cash equivalents		(12)	(47)
Cash and cash equivalents at the beginning of the year		297.867	217.920
Cash and cash equivalents at the end of the year	37	372.167	297.867

The notes on pages 52 to 161 form an integral part of the financial statements.

For the year ended 31 December 2024

1. INCORPORATION AND PRINCIPAL ACTIVITIES

The Cyprus Development Bank Public Company Limited (the "Bank") was incorporated in the Republic of Cyprus in 1963. The Bank's business name is "cdbbank" and it is the parent company of the cdbbank Group.

The principal activities of the Bank, which remained unchanged from last year, are commercial banking operations.

The principal activities of the subsidiary company, Global Capital Securities and Financial Services Ltd, which remained the same as in the previous year, are portfolio management as well as the provision of financial advisory, investment banking and brokerage services.

The consolidated financial statements of the Group are available at the registered office of the Cyprus Development Bank Public Company Ltd and on the Bank's website www.cdb.com.cy.

2. BASIS OF PREPARATION

2.1 Going concern

The Group's Financial Statements have been prepared on a going concern basis following the assessment performed by the Directors and Management of the Group's ability to continue as a going concern for a period of at least 12 months from the date of approval of these Consolidated and Separate Financial Statements.

The Directors and Management have considered the conditions that existed during 2024 and developments up to the date of approval of these Financial Statements and they believe that the Group and the Bank are taking all necessary measures to ensure their viability and the development of their business in the current economic environment.

In making their assessment, the Directors and Management have reviewed a wide range of information relating to present and future conditions, including projections of profitability, liquidity, capital requirements and capital resources. This review took into consideration the 2025 Budget and financial projections for 2026 (being part of the 2025-2027 Business Plan), approved by the Board in March 2025, as well as the operating environment (as set out in Note 44). The Business Plan has used conservative economic inputs to develop the Group's medium-term strategy and incorporates sensitivity scenarios to cater for downside risk and assesses how potential changes in underlying assumptions (such as higher risk weights, lower levels of lending, outflow of deposits, lower margins on loans and higher cost of deposits), could impact the Group's projected financial performance, capital adequacy and liquidity. The Directors and Management have paid particular attention to the challenges and uncertainties stemming from the macroeconomic developments (as set out in Note 44 - Operating environment) as well as the current level of NPEs and evolution, and how the risks and uncertainties affect the future profitability, liquidity and capital adequacy of the Bank and the Group, and the ability to continue the operations in the normal course of business.

2.1.1 Capital

As at 31 December 2024, the Group's CET 1 ratio stood at 22,25% (2023: 20,56%), which is 11,16 percentage points above the minimum regulatory CET 1 ratio of 11,09%. The overall Capital Ratio (OCR) as at 31 December 2024 stood at 27,38% (2023: 25,68%), 10,38 percentage points above the minimum regulatory OCR of 17,00%.

For the year ended 31 December 2024

2. BASIS OF PREPARATION (continued)

2.1 Going concern (continued)

2.1.1 Capital (continued)

In assessing the Group's capital position, the Directors and Management have considered the Group's current and future capital requirements at the time of assessment. Based on the Bank's approved Budget for 2025 and financial projections for 2026 (being part of the 2025-2027 Business Plan), which were approved by the Board in March 2025, all capital ratios are expected to remain above regulatory requirements throughout the period of assessment, including Pillar 2 Guidance and MREL add on. The Directors and Management taking into consideration all available information, together with the Business Plan approved in March 2025 and adverse sensitivity scenarios performed, expect that the Group will meet its capital requirements for the period of assessment.

The Directors and Management of the Group remain focused on implementing the actions detailed in the Group's Business Plan, ensuring the viability of the Bank and the Group, and maintaining compliance with regulatory capital requirements throughout the period of assessment.

2.1.2 Funding and liquidity

The following items have been considered in relation to the Group's liquidity position:

• The Group enjoys a strong liquidity position and is compliant with all regulatory liquidity ratios. The Liquidity Coverage Ratio (LCR) stood at 348% on 31 December 2024, well above the minimum regulatory requirement of 100%.
• The Group holds significant liquidity buffers that can be monetised in a period of stress. The LCR surplus as at 31 December 2024 amounted to €277 million.
• Based on the Group's approved Business Plan, together with relevant sensitivity scenarios, it is expected that the Group will be compliant with regulatory liquidity requirements for the period of the going concern assessment.

2.1.3 Non-performing exposures (NPEs)

Effective management of the non-performing loan portfolio and monetization of REOs remains a top priority for the Group. During 2024, the Group deployed all available tools for organic reduction of NPEs.

During 2024, the Group's NPEs continued to decline, dropping from €41,2 million in 2023 to €37,7 million, a decrease of 9%. Furthermore, the NPE ratio improved further, decreasing from 19,6% at the end of 2023 to 17,7%, by the end of 2024.

In its NPE Plan for 2025-2027 Management has formulated a recovery action plan for organic reduction of NPEs. The plan defines the resolution strategy for each NPE exposure with the primary objective to expedite the resolution process. The implementation of these actions is carefully monitored, and recovery strategies and action plans are frequently reviewed and revised based on developments and results in order to promptly introduce corrective actions.

For the year ended 31 December 2024

2. BASIS OF PREPARATION (continued)

2.2 Statement of compliance

The Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113.

2.3 Basis of measurement

The Consolidated Financial Statements have been prepared on the historical cost basis, except for investments classified at fair value through other comprehensive income and properties for own use which are measured at fair value. Stock of property is measured at the lower of cost and net realisable value.

2.4 New and amended standards and Interpretations

As from 1 January 2024, the Group adopted all the changes to International Financial Reporting Standards (''IFRSs'') as adopted by the EU which are relevant to its operations.

IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (amendments)

The amendments supplement requirements already in IFRS and require an entity to disclose the terms and conditions of supplier finance arrangements. Additionally, entities are required to disclose at the beginning and end of reporting period the carrying amounts of supplier finance arrangement financial liabilities and the line items in which those liabilities are presented as well as the carrying amounts of financial liabilities and line items, for which the finance providers have already settled the corresponding trade payables. Entities should also disclose the type and effect of non-cash changes in the carrying amounts of supplier finance arrangement financial liabilities, which prevent the carrying amounts of the financial liabilities from being comparable. Furthermore, the amendments require an entity to disclose as at the beginning and end of the reporting period the range of payment due dates for financial liabilities owed to the finance providers and for comparable trade payables that are not part of those arrangements. These amendments do not have any effect on the Financial Statements.

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

Amendments to IFRS 16 Leases impact how a seller lessee accounts for variable lease payments that arise in a sale and leaseback transaction. The amendments introduce a new accounting model for variable payments and requires seller lessees to reassess and potentially restate sale and leaseback transactions entered into since 2019. The amendments confirm that, on initial recognition, the seller lessee includes variable lease payments when it measures a lease liability arising from a sale and leaseback transaction and that, after initial recognition, the seller lessee applies the general requirements for subsequent accounting of the lease liability such that it recognises no gain or loss relating to the right of use it retains. The amendments did not have any impact on the Financial Statements.

For the year ended 31 December 2024

2. BASIS OF PREPARATION (continued)

2.4 New and amended standards and Interpretations (continued)

IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current (amendments)

The objective of the amendments is to clarify the principles in IAS 1 for the classification of liabilities as either current or non-current. The amendments clarify the meaning of a right to defer settlement, the requirement for this right to exist at the end of the reporting period, that management intent does not affect current or non-current classification, that options by the counterparty that could result in settlement by the transfer of the entity's own equity instruments do not affect current or non-current classification. Also, the amendments specify that only covenants with which an entity must comply on or before the reporting date will affect a liability's classification. Additional disclosures are also required for non-current liabilities arising from loan arrangements that are subject to covenants to be complied with within twelve months after the reporting period. These amendments did not have any effect on the Financial Statements.

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

The following Amendments to Standards and Interpretations have been issued by the International Accounting Standards Board (''IASB''), are effective for annual periods beginning on 1 January 2024 and adopted by the European Union.

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.

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

The following Standards, Amendments to Standards and Interpretations have been issued by the International Accounting Standards Board (''IASB'') but are not yet adopted for annual periods beginning on 1 January 2024. Those which may be relevant to the Group are set out below. The Group does not plan to adopt these Standards, Amendments and Interpretations early.

For the year ended 31 December 2024

2. BASIS OF PREPARATION (continued)

2.4.2 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.

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 IFRS7;

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

(iv) IFRS 10 Consolidated Financial Statements - Determination of a 'de facto agent';

For the year ended 31 December 2024

2. BASIS OF PREPARATION (continued)

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

(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.

2.5 Fair value of financial assets and liabilities

The Group and the Bank apply the definition of fair value as set out in note 36. The Group and the Bank include disclosures in the financial statements, which are required under IFRS 13.

• Level 1: financial instruments valued using quoted (unadjusted) prices in active markets for identical assets.
• Level 2: investments valued using models for which all inputs which have a significant effect on fair value are market observable.
• Level 3: investments valued using models for which inputs which have a significant effect on fair value are not based on observable market data.

2.6 Functional and presentation currency

The financial statements of the Group and the Bank are for the year ended 31 December 2024 and are presented in Euro (€), which is the functional currency of the Bank and its subsidiaries in Cyprus.

2.7 Use of estimates and judgments

The preparation of financial statements in accordance with IFRSs requires from Management the exercise of judgment, to make estimates and assumptions that influence the application of accounting principles and the reported amounts of assets, liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are deemed to be reasonable based on knowledge available at that time. Actual results may deviate from such estimates.

For the year ended 31 December 2024

2. BASIS OF PREPARATION (continued)

2.7 Use of estimates and judgments (continued)

Estimates and underlying assumptions are reviewed on a regular basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and in future periods if the revision affects both current and future periods.

Significant accounting estimates and judgments are set out in note 4 to the Financial Statements.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies followed in respect of items which are considered material for the results for the year and the reporting of the financial condition of the Group and the Bank, are stated below.

3.1 Consolidated financial statements

The consolidated financial statements comprise the financial statements of the Bank, and of its subsidiary companies, which together are referred to as the "Group".

All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated on consolidation.

3.2 Foreign currency

Transactions in foreign currencies are converted into the Group's functional currency at the exchange rates prevailing on the transaction date. Assets and liabilities denominated in foreign currencies are translated into Euro at the exchange rates in effect at the end of the year. Exchange differences arising from the above are recorded in the income statement.

3.3 Turnover

The Group's and the Bank's turnover comprises interest income, fee and commission income, foreign exchange gains, dividends and profits on disposal of equity investments, profit from disposal of stock of property, fees from services rendered and other income.

3.4 Interest income and interest expense

The Group calculates interest income by applying the effective interest rate (EIR) to the gross carrying amount of financial assets, unless the asset is credit-impaired.

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 reverses the unwinding of the discount on the expected credit losses (ECL) through the "Provisions for impairment" line in the Income Statement.

For purchased or originated credit impaired (POCI) financial assets interest income is calculated by applying the credit-adjusted effective interest rate to the amortised cost of the asset.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.4 Interest income and interest expense (continued)

Interest expense on financial liabilities held at amortised cost is calculated using the EIR method which allocates interest over the expected life of the financial liabilities.

The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts though the expected life of the financial asset or liability to the net carrying amount of the financial asset or liability.

3.5 Fee and commission income and expense

The Group applies the IFRS 15, ''Revenue from Contracts with Customers'' five-step revenue recognition model to recognise commissions and fee income, under which income is recognised when control of goods and services is transferred, hence the contractual performance obligations to the customer have been satisfied.

As a first step, the Group identifies the contract with the customer and subsequently the performance obligation. The amount of income is measured on the basis of the contractually agreed transaction price and is allocated to the performance obligations defined in the contract. Income is recognised in the income statement when the identified performance obligation has been satisfied.

Fee and commission expense is recognised in the income statement on an accruals basis, as the related services are performed.

3.6 Dividend income

Dividend income is recognised in the income statement when the right to receive payment is established.

3.7 Profit/(loss) on disposal of stock of property

Net profit/(loss) on disposal of stock of property is recognised in the income statement when the buyer accepts delivery and the control of property is transferred to the buyer.

3.8 Retirement benefits to staff

The Group operates a defined contribution plan for its permanent employees. This plan provides for employer contributions of 9% for the Bank and 6% for Global Capital Securities and Financial Services Ltd (the Bank's subsidiary) (2023: 9% and 6%) and employee contributions of 3% - 10% of the employees' gross salaries. The Bank's and subsidiary's contributions are charged to the income statement. The plan is managed by a Committee appointed by the members.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.9 Taxation

Provision for taxation is made in accordance with the tax legislation and tax rates applicable in Cyprus. Corporation tax in Cyprus is calculated at the rate of 12,5%. Provision for deferred taxation is also made for all temporary differences between the carrying values of assets and liabilities for financial reporting purposes and their tax base. Deferred taxation is calculated using the tax rates that were applicable at the end of the year. Any deferred tax assets arising from deductible temporary differences are recognised only to the extent that it is expected that taxable profits will be available in the future. Taxation is recognised in the income statement unless it relates to items recognised directly in equity or in the statement of comprehensive income. Tax assets and liabilities are offset if they relate to taxes imposed by the same tax authority provided it allows such settlements and provided the intention of the Group is to either settle the net amount or realise the asset and settle the obligation simultaneously.

3.10 Special Levy

According to the "Special Levy on Credit Institutions Law of 2011 to 2017", special levy is imposed on credit institutions on a quarterly basis, at the rate of 0,0375% on qualifying deposits held by each credit institution on 31 December of the previous year for the quarter ending on 31 March, on 31 March of the same year for the quarter ending on 30 June, on 30 June of the same year for the quarter ending on 30 September and on 30 September of the same year for the quarter ending on 31 December. Based on an amendment to the Law effective as from 6 October 2017, an amount corresponding to the annual contribution of each credit institution to the Resolution Fund or to the Single Resolution Fund as the case may be, is deducted from the balance of special levy payable, up to the maximum amount of special levy for the same year.

3.11 Financial instruments

The Group applies IFRS 9 ''Financial Instruments'' for the recognition, classification, measurement, and derecognition of financial assets and financial liabilities and the impairment of financial assets.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.11 Financial instruments (continued)

i. Classification

Business model assessment

The Group classifies financial assets based on the business model for managing those assets and their contractual cash flow characteristics. Accordingly, financial assets are classified into one of the following measurement categories:

• amortised cost;
• fair value through other comprehensive income; or
• fair value through profit or loss.

The business model assessment determines how the Group manages a group of assets to generate cash flows. That is, whether the Group's objective is solely to collect contractual cash flows from the assets, to realize cash flows from the sale of assets, or both to collect contractual cash flows and cash flows from the sale of assets. In addition, the business model is determined after aggregating the financial assets into groups (business lines) which are managed similarly rather than at an individual instruments level.

Accordingly, in making the above assessment, the Group will consider a number of factors including the risks associated with the performance of the business model and how those risks are evaluated and managed and the frequency, volume and reasons of past sales, as well as expectations about future sales activity.

ii. Measurement categories

Financial Assets measured at Amortised Cost (AC)

The Group classifies and measures a financial asset at AC only if both of the following conditions are met and is not designated as a FVTPL:

• a) the financial asset is held within a business model whose objective is to collect contractual cash flows (hold-to-collect business model); and
• b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (SPPI).

Financial assets that meet these criteria are measured initially at fair value plus direct and incremental transaction costs, and are subsequently measured at amortised cost, using the EIR method. Interest income, realised gains and losses on de-recognition and changes in expected credit losses from assets classified at AC, are included in the income statement.

The classification relates to cash and balances with Central Bank, placements with other banks, debt instruments and loans and advances to customers that pass the SPPI test.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.11 Financial instruments (continued)

ii. Measurement categories (continued)

Financial Assets measured at Fair Value through Other Comprehensive Income (FVOCI)

The Group classifies and measures a financial asset at FVOCI only if both of the following conditions are met and is not designated as a FVTPL:

• a) the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets (hold-to-collect-and-sell business model); and
• b) the contractual terms of the financial asset give rise on specified dates to cash flows that are SPPI.

Financial assets that meet these criteria are debt instruments and are measured initially at fair value, plus direct and incremental transaction costs. Subsequent to initial recognition FVOCI debt instruments are re-measured at fair value through OCI except for interest income, related foreign exchange gains or losses and expected credit losses which are recognised in the income statement. Cumulative gains and losses previously recognised in OCI are transferred from OCI to the income statement when the debt instrument is derecognised.

Equity Instruments measured at FVOCI

The Group may make an irrevocable election to designate an equity instrument that is not held for trading at FVOCI. This designation, if elected, is made at initial recognition and on an instrument-by instrument basis. Gains and losses on these instruments, including when derecognised, are recorded in OCI and are not subsequently reclassified to the income statement. Dividends received are recorded in the income statement.

Financial Assets measured at Fair Value through Profit and Loss (FVTPL)

A financial asset that has been originated, acquired or incurred principally for the purpose of trading or that is not managed within a "hold to collect" or a "hold to collect and sell" business model shall be measured at FVTPL. Additionally, instruments for which the contractual cash flows do not meet the SPPI assessment must be measured at FVTPL even if they are managed within a business model whose objective is "hold to collect" or "hold to collect and sell". Upon subsequent measurement of FVTPL a gain or loss on financial asset shall be recognised in profit or loss.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.11 Financial instruments (continued)

ii. Measurement categories (continued)

Derivatives

Derivatives include mainly forward exchange rate contracts and currency swaps. Derivatives are recognised initially and are subsequently measured at fair value. Derivatives are classified as assets when their fair value is positive or as liabilities when their fair value is negative.

Financial liabilities

Financial liabilities include deposits by banks, customer deposits and other customer accounts. Financial liabilities are measured at amortised cost using the effective interest rate method.

iii. Derecognition of financial assets and financial liabilities

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:

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

• The Group transfers substantially all the risks and rewards of the asset; or
• The Group neither transfers nor retains substantially all the risks and rewards of the asset, but it transfers control of the asset.

Financial liabilities

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.

iv. 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.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.11 Financial instruments (continued)

iv. Modification of financial assets (continued)

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.

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 creditimpairment. A modified financial asset will transfer out of Stage 3 if the conditions that led to it being identified as credit impaired 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 and other considerations. The financial asset continues to be monitored for significant increase 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 for significant increases in credit risk, the date of initial recognition for the new financial asset is the date of the modification.

3.12 Impairment of financial assets

The estimation of expected credit loss (ECL) requires significant judgement, estimates, and assumptions in considering information for current as well as future events and conditions.

The ECL model applies to the following financial assets that are not measured at FVTPL:

• financial assets that are measured at amortised cost or FVOCI;
• financial guarantee contracts issued;
• loan commitments issued; and
• unutilised limits issued.

Under IFRS 9 no impairment losses need to be recognised on equity investments.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.12 Impairment of financial assets (continued)

IFRS 9 requires a loss allowance to be recognised at an amount equal to either 12-month ECL or lifetime ECL. At initial recognition, an impairment allowance is required for expected credit losses (ECL) resulting from default events that are possible within the next 12 months (12-month ECL). In the event of a significant increase in credit risk, an allowance is required for ECL resulting from all possible default events over the expected life of the financial instrument (lifetime ECL). IFRS 9 requires the classification of facilities/customers in three stages, according to the increases in credit risk level, considering certain criteria:

• Stage 1:Financial Instruments are classified as stage 1 when the credit risk has not increased significantly since initial recognition. The Group recognises a credit loss allowance at an amount equal to 12-month expected credit losses.
• Stage 2: Financial Instruments are classified as stage 2 when the credit risk has increased significantly since initial recognition but not to the point that the asset is credit impaired. The Group recognises a credit loss allowance at an amount equal to lifetime expected credit losses.
• Stage 3: Financial Instruments are classified as stage 3 when the credit quality of a financial asset deteriorates to the point that the asset is credit impaired. The Bank aligned Stage 3 classification with the NPE classification, consistent with the definition used for internal credit risk management purposes. The Group recognises a credit loss allowance at an amount equal to lifetime expected credit losses.

Upon initial recognition of instruments in scope of the impairment principles, the Group will record a loss allowance equal to 12-month ECL, being the ECL that results from default events that are possible within the next twelve months unless assets are considered as Purchased or Originated as Credit Impaired (POCI). When the criteria for stage 2 classification are no longer met, and the financial asset is not credit impaired, it will be reclassified to stage 1. In addition, subsequent transfers from stage 3 to stage 2 will take place when the financial asset ceases to be credit impaired as defined further below.

The loss allowance for POCI financial assets will always be measured at an amount equal to lifetime ECL. POCI financial assets include assets purchased at a deep discount and substantially modified assets arising from de-recognition of the original asset that are considered originated credit impaired. POCI financial assets remain a separate category until derecognition and are classified either as stage 3 or stage 2. For POCI financial assets, cumulative changes in lifetime ECLs since initial recognition are recognised in the loss allowance.

Interest revenue recognition

The Group will recognise interest income of financial assets at stage 1 or 2, by applying the effective interest rate (EIR) on their gross carrying amount, while for financial assets at stage 3 by applying EIR on their net carrying amount.

For purchased or originated credit impaired (POCI) financial assets interest income is calculated by applying the credit-adjusted effective interest rate to the amortised cost of the asset.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.12 Impairment of financial assets (continued)

Significant increase in credit risk

As noted above financial assets that experience a significant increase in credit risk since initial recognition will be classified under stage 2 and the loss allowance calculation will change from 12 month ECLs to lifetime ECLs. Upon granting of forbearance measures to performing exposures a significant increase in credit risk is considered to have occurred and exposures are classified as stage 2. Also, in assessing whether a financial asset has experienced a significant increase in credit risk since initial recognition, the Group uses a combination of qualitative and backstop criteria including:

• The credit facility presents arrears over 30 days within the last 90 days.
• Individual assessment of significant increase in credit risk for significant exposures to ensure that there was not a significant decline in the internal credit rating compared to the one at origination (for facilities where credit rating at origination is available).

Backstop

As required by IFRS 9, the Group considers as a backstop criterion that a significant increase in credit risk occurs when contractual payments are more than 30 days past due (past due materiality is applied). The materiality levels applied are set in accordance with the CBC Directives.

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

IFRS 9 low credit risk exception has been adopted by the Group for debt security instruments, balances with banks and balances with central banks that are assigned an investment grade rating by an external credit rating agency. For these exposures the Group considers that significant deterioration in credit risk has occurred in the event of two notches or more downgrade of the credit rating at initial recognition (unless the credit rating remains within the investment grade category).

Credit-impaired exposures

As noted above credit-impaired exposures are allocated to stage 3 and lifetime ECLs are estimated. The Group considers as credit-impaired and hence in default all non-performing exposures (NPE) as per regulatory guidance. According to the European Banking Authority (EBA) standards, NPEs are defined as those exposures that satisfy one of the following conditions:

• 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.
• 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, distress restructuring and obligor bankruptcy.
• Material exposures as set by the Central Bank of Cyprus, which are more than 90 days past due.
• Performing forborne exposures under probation for which consecutive forbearance measures are extended.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.12 Impairment of financial assets (continued)

Credit-impaired exposures (continued)

• Performing forborne exposures under probation, after declassification from NPE, that present more than 30 days past due within the probation period.
• Performing forborne exposures under probation, after declassification from NPE, for which consecutive forbearance measures are extended within the probation period.

For retail clients if more than 20% of the clients' on balance sheet exposures are past due by more than 90 days, all other exposures to the same client (on and off-balance sheet) are considered as nonperforming. Otherwise only the specific exposure which is past due by more than 90 days is classified as non-performing.

For non-retail clients, if an exposure meets the non-performing criteria set out above, then all exposures of that client are considered non-performing.

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.

Materiality thresholds for retail exposures are defined as the amount in arrears to exceed €100 and 1% of on-balance exposure, whereas for non-retail exposures the client's total amount in arrears to exceed €500 and 1% of total on-balance exposure of the client.

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:

• At least one year has passed since the latest of the following events:
  • The restructuring date.
  • The date the exposure was classified as non-performing.
  • The end of the grace period included in the restructuring arrangements i.e. the beginning of capital instalments.
• According to the post-forbearance conditions, there is no past due amount or concerns regarding the full repayment of the exposure.
• No Unlikely-to-Pay criteria exist for the debtor.
• The debtor has made post-forbearance payments of a non-insignificant amount of capital.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.12 Impairment of financial assets (continued)

Credit-impaired exposures (continued)

Non-performing non-forborne exposures cease to be considered as NPEs when for 3 consecutive months none of the NPE criteria apply and it can be verified, that the economic situation of the debtor has improved to the extent that full repayment according to the original or when applicable the modified conditions is likely to be made.

When the exit criteria from the NPE status are met and the exposure ceases to be an NPE, it is transferred out of stage 3. At such time if the conditions for stage 2 classification are met the exposure is transferred to stage 2 otherwise it is classified as stage 1.

Debt Securities, balances with central banks and balances with other banks

Debt Securities, balances with central banks and balances with other banks are considered defaulted and transferred to stage 3 if the issuers have failed to pay either interest or principal for a period of 90 consecutive days. In addition, a number of other criteria are considered to determine whether there has been a significant deterioration that could result in unlikeliness to pay.

Measurement of expected credit losses

As described above, if the credit risk of a financial instrument that is not classified as POCI has not increased significantly at the reporting date compared to its origination date, the loss allowance will be measured at an amount equal to 12-month ECLs. The 12-month ECLs represent a portion of lifetime losses that result from default events that are possible within the next 12 months after the reporting date and is equal to the expected cash shortfalls over the life of the instrument or group of instruments, due to loss events probable within the next 12 months.

In cases where a significant increase in credit risk on a financial instrument has been identified at the reporting date since initial recognition date, the measurement of ECLs will be conducted on a lifetime basis. Lifetime ECLs represent the expected credit losses that result from all possible default events over the expected life of the financial instrument.

The measurement of ECLs will be an estimate of credit losses that will reflect the time value of money. A credit loss is the difference between the cash flows that are due to the Group in accordance with the contractual terms of the instrument and the cash flows that the Group expects to receive (i.e. cash shortfalls) discounted using an approximation of the original effective interest rate (EIR) of the same instrument. In measuring ECL, information about past events, current conditions and reasonable and supportable forecasts of future conditions is considered.

For the purposes of measuring ECL, the Group estimates expected cash shortfalls, which reflect the cash flows expected from all possible sources including collateral and other credit enhancements that are part of the contractual terms and are not recognised separately. In the case of a collateralised financial instrument, the estimated expected cash flows related to the collateral reflect the amount and timing of cash flows that are expected from foreclosure on the collateral less the discounted costs of obtaining and selling the collateral, irrespective of whether foreclosure is probable.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.12 Impairment of financial assets (continued)

Measurement of expected credit losses (continued)

ECLs on financial guarantee contracts are estimated as the difference between the expected payments to reimburse the holder of the guarantee less any amounts that the Group expects to recover.

The Group calculates ECLs either on an individual basis or a collective basis depending on the nature of the underlying portfolio of exposures. ECLs on individually large credit-impaired loans, above predefined materiality thresholds set in accordance with the Group's risk management policy are measured individually. This incorporates borrower and collateral specific information, collective historical experience of losses and forward-looking macroeconomic information. All customer exposures that are not individually assessed, are assessed on a collective basis. For this purpose, the exposures are grouped into segments with similar risk characteristics/behaviour.

ECL Key inputs

The ECL calculations are based on the term structures of the probability of default (PD), the loss given default (LGD), the exposure at default (EAD) and other input parameters such as the credit conversion factor (CCF). Generally, the Group derives these parameters from internally developed statistical models and observed point-in-time and historical data. ECLs are calculated based on three-weighted scenarios.

PD represents the likelihood of a borrower defaulting on its financial obligations either on the next twelve months or over the remaining lifetime of the exposure. The group calculates the PDs using internal statistical models for different segments. The estimation of PDs is based on point-in-time unbiased PDs that are derived from TTC PDs through the application of a scaling factor that reflects the current economic conditions and incorporates forward-looking information and macroeconomic inputs. For certain segments the PDs are estimated at the debtor level while for retail portfolios are estimated at the facility level.

EAD represents the exposure that the Group expects to be owed at the time of default. In estimating the EAD of each exposure, at each point in time, for the period over which the ECL will be estimated, historical observations and forward-looking forecasts are utilised, to reflect payments of principal and interest and any potential drawdowns on lending commitments are utilised. EAD estimation is different for the following categories: term exposures, revolving exposures, credit-impaired exposures and guarantees and other trade finance products. For term exposures the contractual term of the exposure is considered to reflect repayments of principal and interest. For revolving exposures, the projected EAD is the carrying amount plus the credit conversion factor applied to the undrawn amount. CCF of 100% for unutilised limits is adopted by the Bank. For credit-impaired exposures, the EAD is equal to the on-balance sheet amount as at the reporting date. For guarantees and trade finance products the CCF for unutilised commitments has been set at 50% while for issued facilities the CCFs provided in European regulation 575/2013 are used.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.12 Impairment of financial assets (continued)

ECL Key inputs (continued)

LGD represents the Group's expectation of the extent of loss if a default occurs at a given time and is the difference between the contractual cash flows due and those that the Group expects to receive including any amounts from collateral liquidation. LGD varies by type of counterparty, type and seniority of claim, availability of collateral or other credit support, and is usually expressed as a percentage of EAD. The LGD model structure considers two outcomes in the event of default: curing and non-curing. Probability of curing is estimated based on historical observations based on time in default and risk status. In the event of non-curing, LGD estimates are based on recovery expectation under different recovery strategies such as cash recoveries from sources other than collateral realisations. In collectively assessed exposures a minimum LGD rate is imposed under the pessimistic scenario which provides for a minimum loss rate irrespective of the value of collateral and recovery outcome.

Forward-looking inputs

The Group incorporates forward-looking information when measuring ECL. This involves the use of external forecasts to formulate both a 'baseline' view of key economic variables (e.g. GDP Growth, unemployment, house prices, consumer prices) as well as two additional economic scenarios representing a pessimistic and an optimistic macroeconomic outcome to estimate ECLs by linking economic variables to default and loss rates. For PDs this is achieved through regression equations while for LGDs forward-looking information is factored in through the evolution of property indices. The ECLs that result under each scenario are weighted to achieve an unbiased estimate of ECL. The weights applied are 50% (2023: 50%) for the base scenario, 30% (2023: 30%) for the pessimistic scenario and 20% (2023: 20%) for the optimistic scenario.

Macroeconomic variables for each scenario are disclosed in Note 4.

3.13 Offsetting

Financial assets and liabilities are set off and the net amount is presented in the statement of financial position only when the Group has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions.

3.14 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. Write-offs and partial write-offs represent derecognition/partial derecognition events.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.14 Write-offs (continued)

If the amount of write-offs 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 "Provisions for impairment".

3.15 Subsidiary companies

Subsidiary companies are investees controlled by the Group. The Group "controls" an investee if it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date when control ceases.

The subsidiary companies are consolidated using the acquisition method of accounting. Any excess of the cost of acquisition over the Group's share of the fair values of the identifiable net assets acquired, is recognised as goodwill on the consolidated statement of financial position. The investments in the subsidiary companies are fully eliminated on consolidation in the consolidated financial statements of the Group.

Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as transactions with owners in their capacity as owners. Adjustments to non-controlling interests are based on a proportionate amount of the net assets of the subsidiary. No adjustments are made to goodwill and no gain or loss is recognised in the income statement.

Investment in the subsidiary company Global Capital Limited in the Bank's separate financial statements is stated at its assessed fair value. The Group designates investment in Global Capital Limited at FVOCI. Any gains or losses on the subsidiary, are recorded in OCI and are not subsequently reclassified to the income statement upon derecognition. Dividends received are recorded in the income statement.

Investments in subsidiaries that are set up with the purpose of managing the properties under debt for asset swaps (SPEs) are carried at cost less impairment.

The financial statements of the subsidiaries are prepared as of the same reporting date as that of the Bank, using consistent accounting policies.

3.16 Investments in Associates

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control over those policy decisions.

The considerations made in determining significant influence are similar to those necessary to determine control over subsidiaries.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.16 Investments in Associates (continued)

In the Consolidated Financial Statements, the Group's investments in associates are accounted for using the equity method of accounting.

Under the equity method, the investment in an associate is carried in the consolidated balance sheet at cost plus post-acquisition changes in the Group's share of the net assets of the associate. The Group's share of the results of the associate is included in the consolidated income statement. Losses of the associate in excess of the Group's cost of the investment are recognised as a liability only when the Group has incurred obligations on behalf of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not tested for impairment separately.

Any excess of the Group's share of the net fair value of the associate's identifiable assets over the cost of the investment (i.e. negative goodwill) is included as income in the determination of the Group's share of the associate's profit or loss in the period in which the investment is acquired. The aggregate of the Group's share of profit or loss of an associate is shown on the face of the consolidated income statement and represents profit or loss before tax. The associated tax charge is disclosed in income tax.

The Group recognises its share of any changes in the equity of the associate through the consolidated statement of changes in equity. Profits and losses resulting from transactions between the Group and the associate are eliminated to the extent of the Group's interest in the associate.

The Group applies equity accounting only up to the date an investment in associates meets the criteria for classification as held for sale. From then onwards, the investment in associates is measured at the lower of its carrying amount and fair value less costs to sell.

The financial statements of the associates are prepared as of the same reporting date as that of the Bank, using consistent accounting policies.

3.17 Cash and cash equivalents

Cash and cash equivalents consist of cash, non-obligatory balances with central banks, deposits with banks and other securities that are highly liquid and readily convertible into known amounts of cash or are repayable within three months from the date of their acquisition.

3.18 Premises and equipment

Freehold premises are used in the operations of the Group and are stated at valuation on the basis of open market value for existing use as assessed by independent professional valuers less accumulated depreciation. Revaluation surpluses or deficits are credited or debited to the revaluation reserve. Any deficit not covered by accumulated revaluation surpluses in the revaluation reserve for the specific asset, is written off to the income statement.

Equipment is measured at cost less accumulated depreciation. Material expenses which add future economic benefit are capitalised whereas other expenses are written off to the income statement.

Depreciation on premises is provided on the straight-line method in equal annual instalments over a period of 33 years. No depreciation is provided on land.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.18 Premises and equipment (continued)

Depreciation on equipment is provided on the straight-line method in equal annual instalments over their estimated useful life, which ranges from five to ten years.

On disposal of premises and equipment, the difference between the net proceeds and the net book value is transferred to the income statement. Any related balance in the revaluation reserve is transferred to revenue reserve.

3.19 Leases

The Group as a lessee

The Group assesses whether a contract is a lease in scope of this policy by determining whether the contract gives it the right to control the use of an identified asset for a period of time in exchange for consideration.

Where the Group is a lessee and the lease is deemed in scope, it recognises a lease liability 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. Lease liability is recognised in "Accruals and other liabilities". Interest is computed by unwinding the present value of the lease liability and charged to the consolidated income statement within "Interest expense".

Right of use (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 assets comprises the amount of the initial measurement of the lease liability, initial direct costs, adjusted for any related prepaid or accrued lease payments previously recognised. RoU assets is recognised in "Premises and equipment". Depreciation is computed on a straight-line basis up to the end of the lease term and recognised in the consolidated income statement within "Depreciation".

The Group has elected to use the recognition exemption for lease contracts that 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 assessed 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.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.19 Leases (continued)

The Group as a lessee (continued)

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.

The 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 from operating leases is recognised on a straight-line basis over the term of the lease term and is included in "Other income" in the consolidated income statement. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

3.20 Intangible assets

Intangible assets include computer software.

Computer software is stated at cost less accumulated depreciation. Depreciation on computer software is provided on the straight-line method in equal annual instalments over a period of five years which is its estimated useful life.

Maintenance expenses of computer software are written off to the income statement in the year in which they are incurred.

3.21 Stock of property

The Bank in its normal course of business acquires properties in satisfaction of debt, which are held either directly or by special purpose entities (SPEs) set up and controlled by the Bank for the sole purpose of managing these properties with an intention to be disposed of.

Properties acquired in satisfaction of debt, are recognised in the statement of financial position as ''Stock of property'', reflecting the substance of these transactions. The initial measurement of the acquired property is based on the carrying amount of the debt settled. Subsequently to initial recognition, stock of property is measured at the lower of cost and net realisable value (NRV). Any write-down to NRV is recognised as an expense in the income statement in the period in which the write down occurs. Profit or loss from disposal of stock of property, is the difference between the net consideration amount and the carrying value of the asset and is recognised in the income statement when the asset is disposed.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.22 Client deposits

Client deposits are initially measured at the fair value of the consideration received, which equals the amount deposited by the client minus incremental direct transaction costs. Subsequently, client deposits are measured at their amortised cost using the effective interest rate method.

3.23 Loan capital

Loan capital issued by the Bank is initially recorded at fair value, which equals the amount received less transaction costs directly attributable to the issue and subsequently is measured at its amortised cost using the effective interest rate method.

3.24 Share capital

The Bank's own shares are stated as equity.

3.25 Financial guarantees, letters of credit and undrawn loan commitments

The Group issues financial guarantees to its customers, consisting of letters of credit, letters of guarantee and acceptances. Financial guarantees are initially recognised at fair value being the premium received and presented on the Consolidated financial position within "Accruals and other liabilities". Subsequently, the Group's liability under each guarantee is measured at 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.

ECL resulting from financial guarantees is recorded in "Provisions for impairment" in the Consolidated income statement, and in "Accruals and other liabilities" on the Consolidated financial position.

Undrawn loan commitments 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. ECL relating to loan commitments is recorded in "Provisions for impairment" in the consolidated income statement and in "Accruals and other liabilities" on the Consolidated financial position.

3.26 Impairment of non-financial assets

The carrying amounts of the Group's non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or its cash generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the income statement.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For the year ended 31 December 2024

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

3.26 Impairment of non-financial assets (continued)

The loss from impairment of goodwill is not reversible. The loss from impairment of other non-financial assets is reversible only to the extent that the carrying value does not exceed net carrying value that the non-financial asset would have if the impairment loss was not recognised.

3.27 Assets held for sale

The Group classifies assets as held for sale if the carrying amount will be recovered principally through a sale transaction rather than through continuing use. The condition is regarded as met only when the sale is highly probable, and the asset is available for immediate sale in its present condition. 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. When the Bank is committed to a sale plan involving loss of control of a subsidiary, the total assets and liabilities of that subsidiary are classified as held for sale, regardless of whether non-controlling interest in its former subsidiary after the sale is retained. Non-current assets classified as held for sale are measured at the lower of their carrying amount and fair value less cost to sell. Impairment losses on initial classification and gains or losses from subsequent measurement are recognised in the income statement. A gain is only recognised to the extent that it is not in excess of the cumulative impairment loss that has been recognised.

The Group currently does not classify any asset as held-for-sale.

3.28 Provisions for pending litigation, claims, regulatory and other matters

Provisions for pending litigation, claims, regulatory and other matters against the Group are made when: (a) there is a present obligation (legal or constructive) arising from past events, (b) the settlement of the obligation is expected to result in an outflow of resources embodying economic benefits, and (c) a reliable estimate of the amount of the obligation can be made.

3.29 Comparatives

Comparatives presented in the financial statements are restated, where considered necessary, to conform with changes in the presentation of the current year.

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of the consolidated financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent obligations and liabilities at balance sheet date and the reported amounts of income and expenses during the year of reporting. Despite the fact that these assumptions are based on the best possible knowledge of the Group's Board of Directors and Management regarding current conditions and activities, actual results may eventually differ from those estimates.

For the year ended 31 December 2024

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

Accounting estimates and judgments are reviewed and evaluated on an ongoing basis and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The assessment of these factors determines the basis under which judgement is being applied in connection with accounting principles affecting the value of assets and liabilities which are not immediately apparent from other sources.

4.1 Classification of financial assets

The Group exercises judgement upon determining the classification of its financial assets in relation to business models and future cash flows.

Judgement is also required to determine the appropriate level at which the assessment of business models needs to be performed. Further, the Group exercises judgement in determining the effect of sales of financial assets on its business model assessment.

In the event of disposals, the Group considers information about past sales and expectations about future sales, including the frequency, value and nature of such sales, when determining the objective of the business model. Sales or expected sales of financial assets may be consistent with a held-to-collect business model if those sales are incidental to the business model.

The following are examples of sales which are incidental to the held-to-collect business model:

• The sales are due to an increase in the credit risk of a financial asset. Irrespective of their frequency and value, sales due to an increase in the assets' credit risk are not inconsistent with a held-tocollect objective. This is because the credit quality of financial assets is relevant to the entity's ability to collect contractual cash flows.
• The sales are infrequent (even if they are significant) or are insignificant individually and in aggregate (even if they are frequent).
• The sales take place close to the maturity of the financial assets and the proceeds from the sales approximate the collection of the remaining contractual cash flows.

The Bank is assessing the significance of the amount of sales by comparing the portion sold with the overall size of the portfolio subject to the business model assessment.

The Group also applies judgement upon considering whether contractual features including interest rates could significantly affect future cash flows.

More details on investment in debt securities and equity are presented in Note 20.

4.2 Calculation of expected credit losses

The calculation of ECLs requires management to apply significant judgement and make estimates and assumptions. Changes to these estimates and assumptions can result in significant changes to the timing and amount of ECLs to be recognised. The Group's calculations are outputs of models, of underlying assumption on the choice of variable inputs and their interdependencies. Elements of ECL models that are considered accounting judgement and estimates include:

For the year ended 31 December 2024

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

4.2 Calculation of expected credit losses (continued)

Assessment of significant increase in credit risk (SICR)

The Group assesses whether significant increase in credit risk has occurred since initial recognition using staging criteria and qualitative information in certain cases. The determination of the relevant thresholds to determine whether the significant increase in credit risk has occurred, involves management judgement. The relevant thresholds are set, monitored and updated by the Group's Management and endorsed by the Bank's Risk Committee.

In 2024 the Group proceeded with amendments in the backstop criteria adopted for the assessment of significant increase in credit risk. More specifically the Group decreased the period for which exposures with material arrears over 30 days were considered as with increased credit risk from 12 months to 90 days and removed the additional probation period from forborne exposures of 12 months adopted in previous periods. The abovementioned change had an impact on staging classification, with €25 million being transferred out of the Stage 2 classification and classified as Stage 1 exposures, while the impact on ECL amount was €37 thousand.

Determination of probability of default (PD)

PD represents the likelihood of a borrower defaulting on its financial obligations either on the next twelve months or over the remaining lifetime of the exposure. The group calculates the PDs using internal statistical models for different segments, which are constructed based on the customer sector type and the combination of risk factors such as days past due bucket and forbearance status. The estimation of PDs is based on point-in-time unbiased PDs that are derived from TTC PDs through the application of a scaling factor that reflects the current economic conditions and incorporates forwardlooking information and macroeconomic inputs. For corporate segments the PDs are estimated at the debtor level while for retail portfolios are estimated at the facility level.

An adjustment was applied on the forecasted default rates by the adopted models in the form of a scalar factor and utilisation of a floor. The adjustment aims to capture uncertainties in the macroeconomics forecasts and emerging risks such as high inflation and interest rates. These risks may have a prominent impact on default rates as they generally lack the necessary historical data that would allow the bank's regression models to capture.

Determining the probability of default (PD) includes estimates and the use of Management judgement in order to assess and adjust accordingly the historical information which determines the parameters and the measurement of ECL as at the reporting date.

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 specific external studies on the Cyprus Economy. 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 Bank's Executive Provisioning Committee and endorsed by the Bank's Risk Committee.

For the year ended 31 December 2024

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

4.2 Calculation of expected credit losses (continued)

Scenarios and macroeconomic factors (continued)

The Group updated its forward-looking scenarios, factoring in updated macroeconomic assumptions and other monetary and fiscal developments in the national and the EU level including the Russian-Ukraine and Israel-Hamas military conflicts, the high inflation and increased interest rates.

The Group uses three different economic scenarios. The calculation of expected credit losses for both individually and collectively assessed exposures is the weighted average of three scenarios: baseline at 50% weight (2023: 50% weight), pessimistic at 30% weight (2023: 30% weight) and optimistic 20% weight (2023: 20% weight). In order to account for the increased uncertainty in the economic outlook the Group continues to utilise an increased weight for the pessimistic scenario of 30% compared to 25% and a decreased weight for the optimistic scenario of 20% compared to 25%.

For the year ended 31 December 2024

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

4.2 Calculation of expected credit losses (continued)

Scenarios and macroeconomic factors (continued)

The table below indicates the most significant macroeconomic variables as well as the scenario weights used by the Group as at 31 December 2024 and 31 December 2023.

Scenarios			2024	2025	2026	2027	2028
	Real GDP change	%	3,43	3,85	2,00	1,33	1,16
Optimistic	Unemployment	%	4,97	4,98	4,99	4,92	4,98
	Consumer price index	%	1,83	2,55	2,94	2,88	3,05
	House price index change	%	6,56	7,34	3,82	2,57	0,00
	Other properties price index change	%	3,00	4,77	2,41	1,27	0,00
	Real GDP change	%	3,43	2,51	1,65	1,53	1,19
Baseline	Unemployment	%	4,97	4,97	5,11	5,17	5,17
	Consumer price index	%	1,83	2,29	2,89	2,94	2,96
	House price index change	%	6,56	4,70	3,00	2,50	0,00
	Other properties price index change	%	3,00	2,20	1,60	1,20	0,00
	Real GDP change	%	3,43	-1,61	-0,81	3,29	2,87
Pessimistic	Unemployment	%	4,97	7,20	8,79	8,08	7,25
	Consumer price index	%	1,83	1,34	2,08	2,92	2,64
	House price index change	%	6,56	-4,41	-4,24	3,22	0,00
	Other properties price index change	%	3,00	-6,70	-5,55	1,91	0,00

Cyprus Economy – Macroeconomic Parameters 31 December 2024

For the year ended 31 December 2024

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

4.2 Calculation of expected credit losses (continued)

Scenarios and macroeconomic factors (continued)

Cyprus Economy – Macroeconomic Parameters 31 December 2023

Scenarios			2023	2024	2025	2026	2027
	Real GDP change	%	0,85	3,49	3,74	1,48	1,45
Optimistic	Unemployment	%	6,14	5,34	5,14	5,26	5,45
	Consumer price index	%	3,76	2,69	1,84	2,14	2,50
	House price index change	%	6,91	7,82	13,07	13,83	14,35
Baseline	Real GDP change	%	0,85	1,33	2,54	1,70	1,51
	Unemployment	%	6,14	5,94	5,98	6,02	6,03
	Consumer price index	%	3,76	2,41	1,62	2,09	2,40
	House price index change	%	6,91	5,85	8,72	12,11	14,36
	Real GDP change	%	0,85	-3,15	-0,20	3,65	3,37
Pessimistic	Unemployment	%	6,14	8,36	9,18	8,33	7,60
	Consumer price index	%	3,76	1,82	0,61	1,92	2,16
	House price index change	%	6,91	0,93	1,06	11,16	16,00

Assessment of loss given default

A factor for the estimation of LGD is the timing of net recoverable amount from repossession or realisation of collaterals which mainly comprises 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 related to repossession and subsequent sale of the collateral as well as any other applicable haircuts. Indexation has been used to estimate updated market values of properties, while assumptions were made on the basis of a macroeconomic scenario for future changes in property.

The open market values of real estate collaterals are indexed from the valuation report date to the impairment test reference date, using the latest available property price indices by the CBC. In addition, a forward-looking indexation is applied to collateral prices for estimating the future open market value at the time of liquidation. The future net liquidation value is capped at the market value indexed as at the reference date.

For the year ended 31 December 2024

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

4.2 Calculation of expected credit losses (continued)

Assessment of loss given default (continued)

Under the pessimistic scenario, applied haircuts on real estate collaterals are increased by 5 pp and the timing of recovery of collaterals is increased by 0,5 year. Under the optimistic scenario applied haircuts are decreased by 5 pp and the timing of recovery of collaterals is decreased by 0,5 year. Under all scenarios, selling costs are assumed to be 5% of the recoverable amount of real estate collaterals and are additional to the liquidation haircuts applied to collaterals values.

The timing of recovery from real estate collaterals used in the collectively assessed provisions calculation for loans and advances to customers is set at 5 years for all property types under the baseline scenario as applied from the previous year. The weighted average liquidation period for all real estate collaterals is 5,0 years (2023: 5,0 years). Different liquidation haircuts are applied depending on the type and location of each collateral with the liquidation haircut including selling expenses ranging from 10% 49% under the baseline scenario and weighted average liquidation haircut of 18% (2023: 18%).

For the calculation of individually assessed provisions, the timing of recovery of collaterals as well as the haircuts used are based on the specific facts and circumstances of each case. Judgement may also be exercised over staging during the individual assessment. Any changes in these assumptions or difference between assumptions made and actual results could result in significant changes in the amount of required credit losses on loans and advances.

Sensitivity analysis

For the purposes of providing an indication of the change in accumulated impairment losses on loans and advances as a result of changes in key loan impairment assumptions, the Bank has performed a sensitivity analysis. The impact on the provisions for impairment of loans and advances is presented below:

	Increase/(Decrease) of
	ECLs for loans and
	advances
	€'000
Baseline 100%, Optimistic 0%, Pessimistic 0%	(1.540)
Baseline 0%, Optimistic 100%, Pessimistic 0%	(3.550)
Baseline 0%, Optimistic 0%, Pessimistic 100%	4.933
Increase liquidation haircuts by 5 pp	812
Decrease liquidation haircuts by 5 pp	(770)
Increase PDs by 20%	185
Decrease PDs by 20%	(186)

For the year ended 31 December 2024

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

4.3 Fair value of investment in debt securities and equity

The best evidence of fair value is a quoted price in an actively traded market. The fair value of investments in debt securities and equity that are not traded in an active market is determined by using valuation techniques. The Bank and the Group uses valuation techniques that use observable market data, to the extent possible, where 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. Changes in these estimates and assumptions could affect the fair value of the relevant financial instruments.

More details on investment in debt securities and equity are presented in Notes 19, 20 and 36.

4.4 Income taxes

Significant estimates are required in determining the provision for income tax. For specific transactions and calculations, the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes may become due. 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.

4.5 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 that require significant judgement. These techniques consider all available reference points, such as expert valuation reports, current market conditions, the holding period of the asset (applying an appropriate illiquidity discount where necessary), and other relevant parameters. Selling expenses are deducted from the realisable value. Depending on the value of the underlying asset and available market information, the determination of costs to sell may require professional judgement which involves a high degree of uncertainty due to the relatively low level of market activity.

More details on stock of property are presented in Note 25.

4.6 Exercise of significant influence or control

The Group determines whether it exercises significant influence or control on companies in which it has shareholdings. In performing this assessment, it considers its representation in the Board of Directors, the participation in policy-making processes including participation in decisions about dividends and other distributions, the execution of material transactions between the investor and the investee, the interchange of managerial personnel or the provision of essential technical information.

More details on exercise of significant influence or control are presented in Notes 21 and 22.

For the year ended 31 December 2024

4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

4.7 Provisions for pending litigation, claims, regulatory and other matters

The accounting policy for provisions for pending litigation, claims, regulatory and other matters is described in Note 3.28. Judgment is required in determining whether a present obligation exists and in estimating the probability, timing and amount of any outflows. Provisions for pending litigation, claims, regulatory and other matters usually require a high degree of judgement than other types of provisions. For a description of the nature of uncertainties and assumptions and the effect of the amount and timing of pending litigation, claims, regulatory and other matters refer to Note 43.

5. INTEREST INCOME CALCULATED USING THE EFFECTIVE INTEREST METHOD

	THE GROUP		THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Loans and advances at amortised cost	12.404	13.734	12.537	13.915
Balances with banks at amortised cost	12.391	9.251	12.388	9.250
Debt securities	512	913	512	913
	25.307	23.898	25.437	24.078

Interest from loans and advances includes interest on net carrying amount of impaired loans and advances amounting to €2.169 thousand for the Group and €2.280 thousand for the Bank (31 December 2023: €2.218 thousand for the Group and €2.379 thousand for the Bank).

When a financial asset becomes credit impaired then interest is recognised on the net carrying amount of the financial asset. The policy applicable for interest recognition is disclosed in Note 3.4 to the Financial Statements.

The Bank's interest from loans and advances includes interest from loans to subsidiaries amounting to €133 thousand (31 December 2023: €181 thousand).

6. INTEREST EXPENSE CALCULATED USING THE EFFECTIVE INTEREST METHOD

	THE GROUP			THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Bank borrowings	85	100	85	100
Client deposits	4.885	1.524	4.885	1.524
Balances with banks	2	3	-	-
Loan capital	1.148	460	1.148	460
Interest expense on lease liability	40	22	40	22
	6.160	2.109	6.158	2.106

The total interest expense is derived from financial liabilities measured at amortised cost.

For the year ended 31 December 2024

7. FEE AND COMMISSION INCOME

	THE GROUP		THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Credit related fees and commissions	674	419	674	419
Fund transfer commissions	807	912	807	912
Other banking and brokerage fees and commissions	1.920	2.050	1.465	1.647
	3.401	3.381	2.946	2.978

8. FEE AND COMMISSION EXPENSE

	THE GROUP		THE BANK
		2024 2023	2024	2023
	€'000	€'000	€'000	€'000
Fund transfer fees and commissions	199	168	199	168
Banking related fees and commissions	103	166	103	166
Brokerage fees and commissions	33	43	-	-
Management and performance fees	-	4	-	-
	335	381	302	334

9. NET FOREIGN EXCHANGE GAINS

Net foreign exchange gains comprise gains less losses related to the conversion of monetary assets and liabilities in foreign currency at the reporting date and realised exchange gains/(losses) from transactions in foreign currency settled during the year.

10. OTHER INCOME

	THE GROUP		THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Dividend income	96	41	-	-
Profit on disposal of stock of property (note 25)	207	206	207	126
Profit on revaluation of financial assets at FVTPL	34	26	-	-
Other income	230	124	245	35
	567	397	452	161

For the year ended 31 December 2024

11. STAFF COSTS

	THE GROUP			THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Salaries	7.404	6.794	7.189	6.573
Employer's contributions	1.242	1.117	1.209	1.084
Other staff emoluments	195	-	195	-
Cost of retirement benefits	646	586	633	574
Compensation for voluntary exit	950	-	950	-
	10.437	8.497	10.176	8.231

The number of people employed by the Group as at 31 December 2024 was 140 (31 December 2023: 134) and by the Bank 135 (31 December 2023: 130).

Retirement benefits

The Bank operates a defined contribution plan for its permanent employees. This plan provides for employer contributions of 9% (2023: 9%) and employee contributions of 3%-10% (2023: 3%-10%) on the employees' gross salaries. The Bank's contributions are charged to the income statement.

The employees of Global Capital Securities and Financial Services Ltd are participating in the plan with employer contributions of 6% (2023: 6%) and employee contributions of 3%-10% (2023: 3%-10%) on the employees' gross salaries. The Company's contributions are charged to the income statement.

In December 2024, after obtaining the relevant approvals from the members and the employer, the plan was transferred and forms part of the Provident Fund of the Cyprus Bank Employees.

Compensation for voluntary exit

In 2024, the Bank implemented a targeted voluntary exit plan for four employees at a total cost of €950 thousand. These employees are expected to leave the Bank in 2025, pending a ruling from the Tax Department regarding the tax treatment of their compensations.

12. OTHER OPERATING EXPENSES

	THE GROUP		THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Consultancy and legal fees	516	803	508	735
Regulatory fees	735	415	720	400
IT related expenses	1.191	1.071	1.189	1.069
Marketing, subscriptions and donations	449	381	437	368
Provisions for pending litigations	350	-	350	-
Utilities	288	324	279	313
Other operating expenses	1.184	1.230	1.111	1.126
	4.713	4.224	4.594	4.011

For the year ended 31 December 2024

12. OTHER OPERATING EXPENSES (continued)

Special levy on deposits and other levies/contributions as presented in the consolidated income statement are set out below:

	THE GROUP AND THE BANK
	2024	2023
	€'000	€'000
Contribution to Deposit Guarantee Fund	102	163
Single Resolution Fund contribution	-	46
Special levy on deposits of credit institutions in Cyprus	750	687
	852	896

As from 1 January 2020 and until 3 July 2024 the Bank was subject to contributions to the Deposit Guarantee Fund (DGF) on a semi-annual basis. The contributions were calculated based on the Risk Based Methodology (RBM) approved by the management committee of the Deposit Guarantee and Resolution of Credit and Other Institutions Schemes (DGS) which 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 set was to reach 0,8% of covered deposits by 3 July 2024.

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 contribution, which is charged annually by the Single Resolution Board, 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.

13. PROFIT BEFORE TAX

The (loss)/profit before tax for the year is stated after charging the following:

	THE GROUP		THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Directors' emoluments:
Fees (note 42)	256	254	256	254
Expenses	16	18	16	18
Independent auditors' remuneration:
Audit of annual accounts	165	168	140	140
Other non-audit services	-	119	-	119
Other assurance services	3	3	3	3
Depreciation on:
Premises and equipment (note 23)	569	458	568	457
Computer software (note 24)	347	354	347	354

For the year ended 31 December 2024

14. PROVISIONS FOR IMPAIRMENT

	THE GROUP			THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Loans and advances	861	3.216	861	3.216
Recoveries of loans and advances to customers
previously written off	(15)	(41)	(15)	(41)
Receivables and other assets	10	(9)	10	(9)
Financial guarantees and commitments (note 30)	(261)	366	(261)	366
Debt securities at FVOCI (note 20)	(1)	(8)	(1)	(8)
Debt securities at amortised cost (note 20)	(27)	(63)	(27)	(63)
Balances with Group companies	-	-	180	122
Cash and cash equivalents	-	(1)	-	(1)
Impairment losses on stock of property (note 25)	576	222	576	201
Changes in contractual cash flows due to
modifications	41	-	41	-
	1.184	3.682	1.364	3.783

15. TAXATION

	THE GROUP			THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Corporation tax	589	120	588	120
Taxes prior year	62	-	62	-
Deferred tax (note 29)	1	(14)	1	(14)
Special contribution to the defence fund	2	-	2	-
	654	106	653	106

The Bank is subject to income tax on taxable profits at the rate of 12,5%. As from 2012 a limitation of five years was introduced in the carried forward losses, under which losses are allowed to be carried forward for offsetting future taxable income, for a period of five years from the year to which the profits relate. Under certain conditions interest income may be subject to defence contribution at the rate of 30%. In such cases this interest will be exempt from corporation tax.

For the year ended 31 December 2024

15. TAXATION (continued)

Reconciliation of taxation based on taxable income and taxation based on accounting profits:

	THE GROUP			THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Accounting profit before tax	4.752	7.066	4.531	7.039
Corporation tax on the loss for the year at the rates
applicable in Cyprus	594	883	566	880
Tax effect of:
Expenses not deductible for tax purposes	398	200	398	200
Allowances and income not subject to tax	(403)	(156)	(376)	(153)
Effect of tax losses brought forward	-	(807)	-	(807)
Corporation tax	589	120	588	120
Deferred tax	1	(14)	1	(14)
Special contribution to the defence fund	2	-	2	-
Taxes previous years	62	-	62	-
Charge for the year	654	106	653	106

16. BASIC AND DILUTED EARNINGS PER SHARE

	THE GROUP		THE BANK
	2024	2023	2024	2023
Basic and diluted earnings per share
Earnings attributable to the owners of the parent company (€'000)	4.074	6.957	3.878	6.933
Weighted average number of shares in issue during the year ('000)	43.276	43.276	43.276	43.276
Basic and fully diluted earnings per share (cent)	9,41	16,08	8,96	16,02
			THE GROUP AND THE BANK

Weighted average number of ordinary shares in issue	2024	2023
Weighted average number of shares in issue during the year ('000)	43.276	43.276

For the year ended 31 December 2024

17. CASH AND BALANCES WITH CENTRAL BANKS AND OTHER BANKS

THE GROUP		THE BANK
2024	2023	2024	2023
€'000	€'000	€'000	€'000
843	803	843	803
			299.604
373.772	300.407	373.772	300.407
3.680	2.357	3.390	2.147
			(1)
3.680	2.356	3.390	2.146
	372.929 -	299.604 (1)	372.929 -

Balances with central banks include mandatory deposits for liquidity purposes which amount to €4.995 thousand (2023: €4.686 thousand) for the Group and the Bank.

For cash and cash equivalents as per statement of cash flows, refer to Note 37 to the Financial Statements.

The credit rating analysis of balances with central banks and balances with other banks by independent credit rating agencies is set out in Note 38 to the Financial Statements.

18. LOANS AND ADVANCES

THE GROUP AND THE BANK

	2024	2023
	€'000	€'000
Loans and advances	212.580	210.034
Changes to contractual cash flows due to modifications	(196)	(209)
Impairment losses individually assessed	(13.982)	(17.171)
Impairment losses collectively assessed	(837)	(2.170)
	197.565	190.484

Additional analysis and information regarding credit risk and analysis of the impairment losses is set out in Note 38 to the Financial Statements.

For the year ended 31 December 2024

18. LOANS AND ADVANCES (continued)

An analysis of the movement of gross loans and advances to customers according to stages, of the Group and the Bank is presented in the table below:

THE GROUP AND THE BANK	2024
	Stage 1 €'000	Stage 2 €'000	Stage 3 €'000	POCI €'000	Total €'000
1 January	107.936	51.705	40.797	9.596	210.034
Transfers to stage 1	21.349	(21.337)	(12)	-	-
Transfers to stage 2	(6.798)	8.059	(1.261)	-	-
Transfers to stage 3	(1.614)	(5.025)	6.639	-	-
New loans originated	31.521	1.000	1.510	-	34.031
Loans derecognised or repaid	(22.905)	(5.697)	(9.365)	(490)	(38.457)
Write offs	(1)	-	(6.351)	(252)	(6.604)
Interest accrued and other adjustments	7.862	2.251	2.830	633	13.576
31 December	137.350	30.956	34.787	9.487	212.580

THE GROUP AND THE BANK	2023
	Stage 1 €'000	Stage 2 €'000	Stage 3 €'000	POCI €'000	Total €'000
1 January	124.573	53.195	62.169	9.845	249.782
Transfers to stage 1	651	(651)	-	-	-
Transfers to stage 2	(4.156)	4.156	-	-	-
Transfers to stage 3	(50)	(21)	71	-	-
New loans originated	11.690	1	341	-	12.032
Loans derecognised or repaid	(34.568)	(8.716)	(7.147)	(796)	(51.227)
Write offs	(1)	(8)	(19.779)	(4)	(19.792)
Interest accrued and other adjustments	9.797	3.749	5.142	551	19.239
31 December	107.936	51.705	40.797	9.596	210.034

For the year ended 31 December 2024

19. INVESTMENTS IN EQUITIES

		THE GROUP		THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Cost
Balance 1 January	6.196	6.196	6.065	6.065
Balance 31 December	6.196	6.196	6.065	6.065
Permanent diminution
Balance 1 January	(6.063)	(6.063)	(6.063)	(6.063)
Balance 31 December	(6.063)	(6.063)	(6.063)	(6.063)
Revaluation at fair value
Balance 1 January	213	9	(2)	(2)
Increase in fair value	80	204	-	-
Balance 31 December	293	213	(2)	(2)
Balance 31 December at fair value	426	346	-	-

The Bank's subsidiary Global Capital Limited has an investment of 150.728 redeemable shares in Interorient Shipping Fund AIF V.C.I.C Plc. The valuation of this investment is performed on a semiannual basis and the Group uses the net assets value (NAV) of the Fund. The fair value of the investment as at 31 December 2024 amounts to €426 thousand (31 December 2023: €346 thousand).

The investment in Interorient Shipping Fund AIF V.C.I.C Plc is classified as investments at fair value through profit or loss ("FVTPL") and is categorised under level 3. The fair values are disclosed in Note 36 to the Financial Statements.

Additional analysis and information regarding market risk is set out in Note 38 to the Financial Statements.

For the year ended 31 December 2024

20. INVESTMENTS IN DEBT SECURITIES

THE GROUP AND THE BANK

	2024	2023
	€'000	€'000
Securities at amortised cost
Government bonds	20.394	37.610
Corporate bonds	5.817	4.705
	26.211	42.315
Securities at FVOCI
Government bonds	-	3.041
	-	3.041
	26.211	45.356
All debt securities are listed.
The movement of debt securities was as follows:
	2024	2023
	€'000	€'000
Securities at amortised cost
Balance at 1 January	42.355	85.246
Acquisitions	952	17.861
Maturities	(16.711)	(60.271)
Amortisation of discounts/premiums and interest	(373)	(481)
	26.223	42.355
Stage 1 - 12 month expected credit losses	(12)	(40)
Balance 31 December	26.211	42.315
	2024	2023
	€'000	€'000
Securities at FVOCI
Balance at 1 January	3.042	5.094
Maturities	(3.000)	(2.000)
Amortisation of discounts/premiums and interest	(65)	(108)
Mark to market valuation	23	56
	-	3.042
Stage 1 - 12 month expected credit losses	-	(1)
Balance 31 December	-	3.041

For the year ended 31 December 2024

20. INVESTMENTS IN DEBT SECURITIES (continued)

Movement of Expected credit losses

	THE GROUP			THE BANK
	2024	2023		2023
	€'000	€'000	€'000	€'000
Balance 1 January	40	111	40	111
Stage 1 – 12 month expected credit losses
FVOCI (note 14)	(1)	(8)	(1)	(8)
Stage 1 – 12 month expected credit losses amortised
cost (note 14)	(27)	(63)	(27)	(63)
Balance 31 December	12	40	12	40

Additional analysis and information regarding market risk are set out in Note 38 to the Financial Statements.

21. INVESTMENTS AND EXPOSURES IN SUBSIDIARY COMPANIES

THE BANK

The companies included in the consolidated and standalone financial statements and their activities are:

		Shareholding		Activities
	2024	2023
In Cyprus:	%	%
Global Capital Limited	84,64	84,64	Portfolio financial services	management, advisory	and	provision of brokerage

Global Capital Limited is the parent company of two below companies that are registered and operate in Cyprus. The companies of the group are:

	Shareholding				Activities
	2024	2023
	%	%
Global Capital Securities and	99,99	99,99	Portfolio management, provision of
Financial Services Limited			financial advisory services and
			brokerage services
Global Capital Finance Limited	100,00	100,00	Inactive

For the year ended 31 December 2024

21. INVESTMENTS AND EXPOSURES IN SUBSIDIARY COMPANIES (continued)

At 31 December 2024 the Bank had 100% shareholding in the Cyprus registered Special Purpose Entities (''SPEs'') listed below whose activity is the ownership and management of immovable properties acquired in satisfaction of client debts.

• Tsemberio Holding Limited
• Glumar Limited
• Welbon Limited
• Primesky Limited
• Starwiz Limited

Acquisitions, dissolutions and disposals of subsidiaries

There were no acquisitions or disposals of subsidiaries during the years ended 31 December 2024 and 31 December 2023.

Wailmer Holdings Limited and Metrore Properties Limited were dissolved on 01 September 2023.

For the year ended 31 December 2024

21. INVESTMENTS AND EXPOSURES IN SUBSIDIARY COMPANIES (continued)

THE BANK

Shareholding interest in Global Capital Limited

The Bank's investment in Global Capital Limited and its subsidiaries is held at fair value through other comprehensive income (FVOCI) as shown below:

	2024	2023
	€'000	€'000
Cost of investment 1 January	2.281	2.281
Adjustment to assessed fair value	(773)	(960)
Fair value of investment 31 December	1.508	1.321
Amounts due to subsidiary company	(510)	(416)
Amounts due by subsidiary company
Gross amount due by subsidiary company	531	513
Provision for impairment - collective	(1)	(1)
	530	512
Total exposure in Global Capital Limited	1.528	1.417
Income for the year	43	43
Expenses for the year	21	26
Movement in fair value of Global Capital Limited
	2024	2023
	€'000	€'000
Fair value 1 January	1.321	1.095
Movement of fair value	187	226
Fair value of investment 31 December	1.508	1.321

The assumptions and methodology underlying the calculation of fair value of Global Capital Limited are disclosed in Note 36 to the Financial Statements.

Recognition of interest income and estimation of ECLs on loans to subsidiaries are in line with the Group's policies for interest income and impairment of financial assets as disclosed in Note 3 to the Financial Statements.

For the year ended 31 December 2024

21. INVESTMENTS AND EXPOSURES IN SUBSIDIARY COMPANIES (continued)

THE BANK

Shareholding interest in Special Purpose Entities (SPEs)

	2024 €'000	2023 €'000
Cost of investments 1 January Disposals/dissolutions/strike offs	8 -	9 (1)
Cost of investments 31 December	8	8
Amounts due to SPEs	(12)	-
Amounts due by SPEs
Gross amount due by SPEs	4.170	3.444
Provision for impairment	(1.068)	(863)
	3.102	2.581
Total exposure in SPEs	3.098	2.589
Income for the year	152	161
Total exposure in subsidiary companies	4.626	4.006

Recognition of interest income and estimation of ECLs on loans to SPEs are in line with the Group's policies for interest income and impairment of financial assets as disclosed in Note 3 to the Financial Statements.

For the year ended 31 December 2024

22. INVESTMENTS IN ASSOCIATES

THE GROUP

In 2021, the Group through its subsidiary company Global Capital Limited, acquired 83.999 thousand shares in CLR Investment Fund Public Ltd, an investment company listed in the Cyprus Stock Exchange resulting in a participation of 29,15%. The details of the investment are as follows:

	Country of
Name	incorporation	Effective shareholding		Activities
		2024	2023
		%	%
CLR Investment Fund Public Limited	Cyprus	24,674	24,674	Investments in securities listed in the Cyprus Stock Exchange, in strategic investments and in business participations in private companies

The Group's interest in CLR Investment Fund Public Ltd is accounted for using the equity method in the consolidated financial statements. The following table illustrates the summarised financial information of the Group's investment in CLR Investment Fund Public Ltd:

Summarised statement of financial position of CLR Investment Fund Public Ltd

	2024 €'000	2023 €'000
Total assets Total liabilities	3.307	3.229
Equity	(719) 2.588	(678) 2.551
Group's share in equity - carrying amount of investment	754	744
Group's share of profit for the year	7	2

For the year ended 31 December 2024

23. PREMISES AND EQUIPMENT

THE GROUP	Land and buildings €'000	Plant and equipment €'000	Right-of-use assets €'000	Total €'000
2024
Cost or valuation
Balance 1 January	6.034	2.995	786	9.815
Additions	430	553	-	983
Remeasurement of RoU assets	-	-	29	29
Balance 31 December	6.464	3.548	815	10.827
Depreciation
Balance 1 January	502	2.567	-	3.069
Charge for the year	148	264	157	569
Remeasurement of RoU assets	-	-	(157)	(157)
Balance 31 December	650	2.831	-	3.481
Net book value 31 December	5.814	717	815	7.346
Historic net book value of own premises stated
at valuation 31 December	3.489	-	-	3.489
THE GROUP	Land and	Plant and	Right-of-use
	buildings	equipment	assets	Total
	€'000	€'000	€'000	€'000
2023
Cost or valuation
Balance 1 January	6.121	3.504	799	10.424
Additions	27	245	-	272
Disposals/write offs	-	(754)	-	(754)
Revaluation	257	-	-	257
Reversal of depreciation on revaluation	(371)	-	-	(371)
Remeasurement of RoU assets	-	-	(13)	(13)
Balance 31 December	6.034	2.995	786	9.815
Depreciation
Balance 1 January	736	3.160	142	4.038
Charge for the year	137	161	160	458
On disposals/write offs	-	(754)	-	(754)
Reversal of depreciation on revaluation	(371)	-	-	(371)
Remeasurement of RoU assets	-	-	(302)	(302)
Balance 31 December	502	2.567	-	3.069
Net book value 31 December	5.532	428	786	6.746
Historic net book value of own premises stated
at valuation 31 December	3.205	-	-	3.205

For the year ended 31 December 2024

23. PREMISES AND EQUIPMENT (continued)

THE BANK	Land and	Plant and	Right-of-use
	buildings	equipment	assets	Total
	€'000	€'000	€'000	€'000
2024
Cost or valuation
Balance 1 January	5.937	2.855	786	9.578
Additions	428	555	-	983
Remeasurement of RoU assets	-	-	29	29
Balance 31 December	6.365	3.410	815	10.590
Depreciation
Balance 1 January	405	2.428	-	2.833
Charge for the year	146	265	157	568
Remeasurement of RoU assets	-	-	(157)	(157)
Balance 31 December	551	2.693	-	3.244
Net book value 31 December	5.814	717	815	7.346
Historic net book value of own premises stated
at valuation 31 December	3.489	-	-	3.489
THE BANK	Land and	Plant and	Right-of-use
	buildings	equipment	assets	Total
	€'000	€'000	€'000	€'000
2023
Cost or valuation
Balance 1 January	6.024	3.262	798	10.084
Additions	27	245	-	272
Disposals/write offs	-	(652)	-	(652)
Revaluation	257	-	-	257
Reversal of depreciation on revaluation	(371)	-	-	(371)
Remeasurement of RoU assets	-	-	(12)	(12)
Balance 31 December	5.937	2.855	786	9.578
Depreciation
Balance 1 January	639	2.920	141	3.700
Charge for the year	137	160	160	457
On write-offs	-	(652)	-	(652)
Reversal of depreciation on revaluation	(371)	-	-	(371)
Remeasurement of RoU assets	-	-	(301)	(301)
Balance 31 December	405	2.428	-	2.833
Net book value 31 December	5.532	427	786	6.745
Historic net book value of own premises stated
at valuation 31 December	3.205	-	-	3.205

For the year ended 31 December 2024

23. PREMISES AND EQUIPMENT (continued)

Where the Group is a lessee of a right-of-use asset, the leased assets are capitalised and included in Premises and equipment, with a corresponding liability to the lessor recognised in Other liabilities, in accordance with the Group's leased assets accounting policy in note 3.19.

The Group policy is to revalue its own premises every 3 years, but more frequent valuations may be performed when there are significant movements in values. The Group's freehold premises are revalued by external professional valuers using two different valuation methodologies. The average value of the two methodologies is used to determine the value of premises. The following table shows the valuation techniques used in measuring fair value of property, as well as the significant unobservable inputs used:

Valuation technique	Significant unobservable data	Inter-relationship between key unobservable inputs and fair value measurement The estimated fair value would increase/(decrease) if:
Investment Method: The valuation model considers the income to be generated from	 Rent price per square meter (€8,00-€17,00 per m2 );	 The rent prices per square meter were higher/(lower);
the property, taking into consideration the income per square meter, a capitalization rate and the expected remaining useful life of the building.	 Remaining useful life of the property (30 years);	 Estimated useful life of the property was longer/(shorter);
	 Capitalization rate (6,0% - 6,5%);	 The capitalization rate was lower/(higher);
Comparison Method: The valuation method considers		The estimated fair value would increase/(decrease) if:
selling prices of other properties with similar characteristics that have been sold recently.	 Selling price per square meter (€1.500K – €3.500K	 The selling prices per square meter were higher/(lower).

The Bank's freehold premises were valued by external professional valuers on 31 December 2023 at open market value on the basis of existing use. The surplus arising from the revaluation of freehold premises amounting to €257 thousand, less related deferred tax of €27 thousand, was transferred to the revaluation reserve.

per m² ).

The net book value of freehold premises, on a cost less accumulated depreciation basis, as at 31 December 2024 would have amounted to €3.466 thousand (2023: €3.182 thousand). The net book value of leasehold premises as at 31 December 2024 amounts to €23 thousand (2023: €24 thousand).

For the year ended 31 December 2024

24. INTANGIBLE ASSETS

	THE GROUP	THE BANK
	Computer	Computer
	software	software
2024	€'000	€'000
Cost
Balance 1 January	6.316	6.171
Additions	1.008	1.008
Balance 31 December	7.324	7.179
Depreciation and impairment losses
Balance 1 January	5.723	5.578
Charge for the year	347	347
Balance 31 December	6.070	5.925
Net book value 31 December	1.254	1.254
	THE GROUP	THE BANK
	Computer	Computer
	software	software
2023	€'000	€'000
Cost
Balance 1 January	6.068	5.894
Additions	277	277
Write-offs	(29)	-
Balance 31 December	6.316	6.171
Depreciation and impairment losses
Balance 1 January	5.397	5.224
Charge for the year	354	354
On write-offs	(28)	-
Balance 31 December	5.723	5.578
Net book value 31 December	593	593

For the year ended 31 December 2024

25. STOCK OF PROPERTY

		THE GROUP		THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Stock of property	10.368	8.579	7.231	6.028
	10.368	8.579	7.231	6.028

The Bank in its normal course of business acquires properties in exchange of debt, which are held either directly or by Special Purpose Entities (SPEs) set up and controlled by the Bank for the sole purpose of managing these properties with the intention to be disposed of.

The initial measurement of the acquired property is based on the carrying amount of the debt settled. Subsequently to initial recognition, stock of property is measured at the lower of cost and net realizable value. Impairment is recognised if the net realisable value is below the cost of stock of property. During 2024 an impairment loss of €576 thousand (2023: €222 thousand) was recognised in the consolidated income statement and €576 thousand (2023: €201 thousand) in the income statement of the Bank (note 14).

The stock of property held as at 31 December 2024 consisted mainly of commercial and industrial buildings of €5,4 million (2023: €3,8 million), commercial land plots of €1 million (2023: €2,1 million), agricultural land plots of €0,8 million (2023: €0,9 million) and residential land and buildings of €3,2 million (2023: €1,8 million).

The carrying amount of the stock of property is analysed in the table below:

	THE GROUP			THE BANK
	2024 2023		2024	2023
	€'000	€'000	€'000	€'000
Net book value 1 January	8.579	8.633	6.028	3.971
Additions	3.592	3.263	3.006	3.263
Disposals of stock of property	(1.227)	(3.095)	(1.227)	(1.005)
Movement in impairment loss provision (note 14)	(576)	(222)	(576)	(201)
Balance 31 December	10.368	8.579	7.231	6.028

The table below shows the result on the disposal of stock of property in the year:

	THE GROUP		THE BANK
	2024 2023		2024	2023
	€'000	€'000	€'000	€'000
Net proceeds	1.434	3.301	1.434	1.131
Carrying value of stock of property disposed of	(1.227)	(3.095)	(1.227)	(1.005)
Profit on disposal of stock of property (note 10)	207	206	207	126

For the year ended 31 December 2024

26. RECEIVABLES AND OTHER ASSETS

		THE GROUP		THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Tax receivable	279	279	279	279
Sundry debtors and other assets	1.335	1.922	639	1.174
	1.614	2.201	918	1.453

27. BANK BORROWINGS

THE GROUP AND THE BANK

	2024	2023
	€'000	€'000
Borrowings	1.494	1.921
	1.494	1.921

In 2016 a Finance Contract was signed between the Bank and the European Investment Bank (EIB) for an amount of up to €15 million. The purpose of the loan was to provide support to the Cypriot economy through the financing of eligible investment projects located in Cyprus undertaken by small and medium sized companies. The interest and repayment period are defined for each tranche of the loan. Until the end of 2024 two tranches were disbursed for a total amount of €4.210 thousand carrying a floating interest based on the six-month Euribor and a margin of 0,708% for tranche 1 and 0,793% for tranche 2. Both tranches are repayable within ten years, from the date of disbursement, in twenty equal semiannual instalments as follows:

			Balance
	Disbursed €'000	2024 €'000	2023 €'000	Maturity
Tranche 1	2.000	604	806	8 November 2027
Tranche 2	2.210	890	1.115	24 October 2028
	4.210	1.494	1.921

28. CLIENT DEPOSITS

THE GROUP AND THE BANK

	2024	2023
	€'000	€'000
Demand deposits	308.289	275.361
Fixed-term or notice deposits	240.290	214.062
	548.579	489.423

For the year ended 31 December 2024

29. DEFERRED TAXATION

THE GROUP AND THE BANK
Movement in deferred tax liability:	2024 €'000	2023 €'000
Balance 1 January	314	301
Deferred tax on revaluation of premises	(9)	27
Deferred tax on temporary differences debited/(credited) to the income
statement (note 15)	1	(14)
Balance 31 December	306	314
Deferred tax liability comprises of:	2024	2023
	€'000	€'000
Surplus on revaluation of premises (net of accumulated depreciation) Accumulated temporary timing differences between depreciation and capital	344	353
allowances	(38)	(39)
	306	314

For the year ended 31 December 2024

30. ACCRUALS AND OTHER LIABILITIES

	THE GROUP			THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Accrued expenses and other liabilities	4.908	2.681	4.544	2.302
Items in the course of settlement	4.488	4.793	4.488	4.793
Deferred income	232	247	232	247
Lease liability (note 31)	848	797	848	797
Provision for financial guarantees and commitments	189	450	189	450
Provision for pending litigation	350	-	350	-
Tax payable	213	-	213	-
	11.228	8.968	10.864	8.589

Deferred income relates to the advance consideration received from customers for guarantees and letters of credit (LCs) extended, which are valid for a specific period of time as per the terms of each individual guarantee/LC extended. Deferred income is recognised as revenue over the period of time to which it relates.

Provisions for financial guarantees and commitments

The movement for the year in provisions for financial guarantees and commitments is as follows:

THE GROUP AND THE BANK	2024 €'000	2023 €'000
Balance 1 January	450	84
Net (decrease)/increase in provision (Note 14)	(261)	366
Balance 31 December	189	450

For the year ended 31 December 2024

31. LEASE LIABILITIES

THE GROUP AND THE BANK

The Group leases commercial properties used as offices and branches. The basic terms for the current lease contracts have a non-cancellable period of 2 years with an option to renew for one or two years. The Group has the right at any time after the expiry of the initial term to terminate the rental agreement by providing notice (usually 3 - 6 months notice) to the lessor. Depending on the terms agreed, the rent is adjusted at the end of each renewal period by a percentage which is either fixed or linked to a price index.

Leases are assessed 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.

Movement in lease liability

	2024 €'000	2023 €'000
Balance 1 January	797	657
Remeasurement of lease liability	185	290
Cash-outflow payments	(174)	(172)
Interest expense (note 6)	40	22
	848	797

The right-of-use asset balances and depreciation charges are disclosed in Note 23.

The maturity profile for lease liabilities associated with leased premises is as follows:

2024	One year or less €'000	Between one and two years €'000	Between two and five years €'000	More than five years €'000	Total €'000
Other liabilities - lease liabilities	176	176	496	-	848
2023	One year or less €'000	Between one and two years €'000	Between two and five years €'000	More than five years €'000	Total €'000
Other liabilities - lease liabilities	173	164	460	-	797

The fair values of lease obligations approximate to their carrying amounts as presented above.

For the year ended 31 December 2024

32. LOAN CAPITAL

THE GROUP AND THE BANK

		2024		2023
		€'000	€'000	€'000	€'000
	Contractual	Nominal	Carrying	Nominal	Carrying
	interest rate	value	value	value	value
Perpetual Unsecured Subordinated
Note	13,75%	5.000	5.002	5.000	5.000
Subordinated Tier 2 Bonds	7,125%	6.250	6.261	6.250	6.261
		11.250	11.263	11.250	11.261

Perpetual Unsecured Subordinated Note

On 3 August 2017, the Bank issued at par a €5.000.000 Perpetual Unsecured Subordinated Note. The interest rate on the Note is fixed at 13,75% per annum, payable semi-annually on 30th June and 31st December of each year. The payment of interest can be cancelled by the Bank (the Issuer) at its discretion, provided that at the time of such interest payment:

• (a) The Capital Ratio of the Bank for the six months' period prior to the interest payment date concerned shall be below the Regulatory Minimum Capital Ratio as determined by the Central Bank of Cyprus (the Competent Authority) increased by 200 basis points;
• (b) The interest payment shall cause the Capital Ratio of the Bank to fall below its Regulatory Minimum Capital Ratio, as determined by the Competent Authority for the six months' period prior to the Interest Payment Date concerned increased by 200 basis points.

Any interest payment cancelled, as indicated above, shall not accumulate or be payable at any time thereafter. For the year ended 31 December 2024, the conditions for payment of interest were met and interest was paid on the Note. The Interest is included under the interest expense line in the Income Statement. For the year ended 31 December 2023 the conditions for payment of interest were not met and consequently no interest was paid or accrued on the Note.

The Issuer has the option to redeem the Note in full but not in part on the fifth anniversary from the issue date, which is 3 August 2022, or on any interest payment due date thereafter. The right to exercise such redemption option is subject to prior permission by the Competent Authority upon demonstrating that the Note has been replaced by own funds instruments of equal or higher quality or that following such redemption own funds would exceed minimum capital requirements as determined by the Competent Authority.

Upon the occurrence of a trigger event, being defined as a Core Equity Tier 1 ratio ("CET1") below 5,125%, the principal amount of the Note shall be written down proportionately with other such loss absorbing instruments to the extent necessary to restore CET1 to 5,125%.

The Perpetual Unsecured Subordinated Note qualifies for classification as Additional Tier 1 Capital.

For the year ended 31 December 2024

32. LOAN CAPITAL (continued)

Subordinated Tier 2 Bonds

In December 2021, the Bank issued €6,25 million unsecured Subordinated Bonds of 10-year duration. The Bonds carry a fixed interest rate of 7,125% payable every six months, on 23 June and 23 December each year. The Bonds mature on 23 December 2031. The Bank has the option to redeem the bonds in whole or in part before their contractual maturity, provided that 5 years have lapsed from the date of issuance, and subject to regulatory consents. The Bank also has the right but not the obligation to exercise an option for the early call, redemption, repayment, or purchase of the Bonds during the first five years following the date of their issuance, under specific circumstances as these are stated in Article 78(4) of the CRR and subject to regulatory consents. The Subordinated Tier 2 Bond qualifies for classification as Tier 2 Capital.

The Bonds were listed in the Emerging Companies Bond Market ("ECBM") of the Cyprus Stock Exchange ("CSE") on 29 September 2022.

33. SHARE CAPITAL

THE BANK
	2024		2023
	No. of shares	Share Capital €'000	No. of shares	Share Capital €'000
Authorised: Ordinary shares of €0,20 each	704.849.584	140.970	704.849.584	140.970
Issued and fully paid: Ordinary shares of NV €0,20 each	43.275.979	8.655	43.275.979	8.655

Annual report 2024|109

For the year ended 31 December 2024

34. CONTINGENT LIABILITIES AND COMMITMENTS

The nominal amounts of contingent liabilities and commitments as at 31 December are as follows:

THE GROUP AND THE BANK

Contingent liabilities	2024	2023
	€'000	€'000
Guarantees issued	19.820	22.553
Commitments	2024	2023
	€'000	€'000
Documentary credits	1.008	542
Undrawn commitments for loans and advances	18.089	23.292
Undrawn commitments for non-funded facilities	14.884	11.624
	33.981	35.458
Contingent liabilities and commitments	53.801	58.011

Documentary credits represent bank commitments for payment to third parties, on condition that the terms of the documentary credit are satisfied, including the presentation of the required documents. The repayment by the client is usually immediate.

Undrawn commitments represent agreements to provide loans, overdrafts or other facilities to clients which remain unutilised.

Capital Commitments

Commitments for contracted capital expenditure as at 31 December 2024 amounted to €351 thousand (2023: €73 thousand).

Contingent liabilities for material litigation

Details of material litigation of the Group are disclosed in Note 43 to the Financial Statements.

35. FIDUCIARY TRANSACTIONS

The Group and the Bank offer fund management and custody services that result in holding or investing financial assets on behalf of its customers. The Group and the Bank are not liable to their customers for any default by other banks or organisations. The assets under management and custody are not included in the consolidated balance sheet of the Group and the balance sheet of the Bank unless they are placed with the Group/Bank. Total assets under management and custody at 31 December 2024 amounted to €65.478 thousand (2023: €46.327 thousand) for the Group and €6.111 thousand (2023: €14.344) for the Bank.

For the year ended 31 December 2024

36. FAIR VALUE

Fair value represents the amount for which an asset could be exchanged, or the amount paid to transfer or settle a liability, between knowledgeable, willing parties in an arm's length transaction. The fair value of the Group's and of the Bank's financial instruments, which are not shown on the calculated fair value, are measured at amortized cost using the effective interest method less provision for impairment. The fair value of loans and advances to customers equals the amount shown in the statement of financial position after deducting provisions for impairment.

Where possible, the Group calculates the fair value of financial assets using prices in active markets. A market is considered active if prices are available in a stable and continuous basis where real transactions between market participants are frequently carried out under normal commercial practice.

When the market for some financial instruments is not active, the Group calculates fair value using various methods of valuation. Such valuation methods may include the use of prices from recent transactions made at an arm's length, the use of the current fair value of other similar instruments, discounted cash flow methods and option pricing models. The chosen valuation method is compatible with generally accepted accounting methodologies used to determine the value of financial instruments. The data used in the valuation techniques represent market expectations and measurements of the relationship between risk-return relating to the financial instruments.

The Group and the Bank use the following hierarchy for determining and disclosing fair value:

• Level 1: financial instruments valued using quoted (unadjusted) prices in active markets for identical assets.
• Level 2: investments valued using models for which all inputs which have a significant effect on fair value are market observable.
• Level 3: investments valued using models for which inputs which have a significant effect on fair value are not based on observable market data.

For assets and liabilities that are recognised in the 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. During the year ended 31 December 2024 and 2023, the Group did not make any transfers between fair value hierarchy levels.

For the year ended 31 December 2024

36. FAIR VALUE (continued)

Financial instruments measured at fair value

The following table presents an analysis of financial instruments recorded at fair value by level of the fair value hierarchy.

THE GROUP 2024	Note	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Financial assets
Investments at FVTPL Equities	19	-	-	426	426
		-	-	426	426
Financial liabilities		-	-	-	-
THE GROUP 2023	Note	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Financial assets
Investments at FVTPL Equities	19	-	-	346	346
Investments at FVOCI Debt securities	20	-	3.041	-	3.041
		-	3.041	346	3.387
Financial liabilities		-	-	-	-

There were no transfers between levels during 2024 and 2023.

For the year ended 31 December 2024

36. FAIR VALUE (continued)

Financial instruments measured at fair value (continued)

THE BANK 2024	Note	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Financial assets
Investments in subsidiary companies	21	-	-	1.508	1.508
		-	-	1.508	1.508
Financial liabilities		-	-	-	-
THE BANK 2023	Note	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Financial assets
Investments at FVOCI Debt securities	20	-	3.041	-	3.041
Investments in subsidiary companies	21	-	-	1.321	1.321
		-	3.041	1.321	4.362
Financial liabilities		-	-	-	-

For the year ended 31 December 2024

36. FAIR VALUE (continued)

Non-financial assets measured at fair value

The following table presents an analysis of non-financial assets recorded at fair value by level of the fair value hierarchy.

THE GROUP

2024		Level 1	Level 2	Level 3	Total
	Note	€'000	€'000	€'000	€'000
Non-financial assets
Land and buildings	23	-	-	5.814	5.814
2023
	Note	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Non-financial assets
Land and buildings	23	-	-	5.532	5.532
There were no transfers between levels during 2024 and 2023.
THE BANK
2024		Level 1	Level 2	Level 3	Total
	Note	€'000	€'000	€'000	€'000
Non-financial assets
Land and buildings	23	-	-	5.814	5.814
2023
	Note	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Non-financial assets
Land and buildings	23	-	-	5.532	5.532

There were no transfers between levels during 2024 and 2023.

For the year ended 31 December 2024

36. FAIR VALUE (continued)

Financial instruments not measured at fair value

The following table sets out the fair values of financial instruments not measured at fair value and analyses them by the level of the fair value hierarchy into which each fair value measurement is categorised.

THE GROUP

2024	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Financial assets
Cash and balances with central banks	-	373.772	-	373.772
Balances with other banks	-	3.680	-	3.680
Loans and advances	-	-	197.565	197.565
Debt securities at amortised cost	988	25.188	-	26.176
Investments in associates	-	-	252	252
	988	402.640	197.817	601.445
Financial liabilities
Bank borrowings	-	-	1.494	1.494
Client deposits	-	-	548.579	548.579
Loan capital	-	-	11.263	11.263
Provision for financial guarantees and commitments	-	-	189	189
	-	-	561.525	561.525

There were no transfers between levels during 2024 and 2023.

2023	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Financial assets
Cash and balances with central banks	-	300.407	-	300.407
Balances with other banks	-	2.356	-	2.356
Loans and advances	-	-	190.484	190.484
Debt securities at amortised cost	-	41.500	-	41.500
Investments in associates	-	-	336	336
	-	344.263	190.820	535.083
Financial liabilities
Bank borrowings	-	-	1.921	1.921
Client deposits	-	-	489.423	489.423
Loan capital	-	-	11.261	11.261
Provision for financial guarantees and commitments	-	-	450	450
	-	-	503.055	503.055

There were no transfers between levels during 2024 and 2023.

For the year ended 31 December 2024

36. FAIR VALUE (continued)

Financial instruments not measured at fair value (continued)

THE BANK

2024	Level 1	Level 2	Level 3	Total
	€'000	€'000	€'000	€'000
Financial assets
Cash and balances with central banks	-	373.772	-	373.772
Balances with other banks	-	3.390	-	3.390
Loans and advances	-	-	197.565	197.565
Debt securities at amortised cost	988	25.188	-	26.176
	988	402.350	197.565	600.903
Financial liabilities
Bank borrowings	-	-	1.494	1.494
Client deposits	-	-	548.579	548.579
Loan capital	-	-	11.263	11.263
Provision for financial guarantees and commitments	-	-	189	189
	-	-	561.525	561.525
2023	Level 1 €'000	Level 2 €'000	Level 3 €'000	Total €'000
Financial assets
Cash and balances with central banks	-	300.407	-	300.407
Balances with other banks	-	2.146	-	2.146
Loans and advances	-	-	190.484	190.484
Debt securities at amortised cost	-	41.500	-	41.500
	-	344.053	190.484	534.537
Financial liabilities
Bank borrowings	-	-	1.921	1.921
Client deposits	-	-	489.423	489.423
Loan capital	-	-	11.261	11.261
Provision for financial guarantees and commitments	-	-	450	450
	-	-	503.055	503.055

There were no transfers between levels during 2024 and 2023.

The assumptions and methodologies underlying the calculation of fair values of financial instruments carried at fair value under level 2 and level 3 hierarchy and for financial assets not carried at fair value are as follows:

For the year ended 31 December 2024

36. FAIR VALUE (continued)

Financial instruments not measured at fair value (continued)

Investments in subsidiaries

Investment in Global Capital Limited is categorised under level 3. For this investment the Group uses models which are not based on observable market data and takes into account mainly the net position of the entity in which the investment has been made, as well as estimates of the Group's management to reflect uncertainties in fair values resulting from the lack of data.

A variance of 10% on the net asset value of the investment in subsidiary would have a positive or negative impact of €151 thousand (2023: €132) on the Group's equity.

Investments in associates

Investment in CLR Investment Fund Public Limited is accounted for using the equity method in the consolidated financial statements. For the purpose of calculating the fair value this investment is categorised under level 3. The shares of CLR Investment Fund Public Limited are listed on the Cyprus Stock Exchange and for the calculation of the fair value, the Group uses the price of the share as at 31 December 2024.

Balances with other banks

Since balances with banks are short-term, the fair value is an approximation of the carrying value.

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. In estimating future cash flows, the Group makes assumptions on expected repayments, timing and value of collateral realisation.

Premises

Premises consist of the Bank's freehold land and building in Nicosia used for own account. The fair value of premises is determined using valuations performed by external, accredited independent valuers (note 23).

37. CASH AND CASH EQUIVALENTS

		THE GROUP		THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Cash	843	803	843	803
Balances with central banks	367.934	294.918	367.934	294.918
Balances with other banks	3.680	2.356	3.390	2.146
	372.457	298.077	372.167	297.867

Cash and cash equivalents include cash and unrestricted balances with Central Banks and cash with other banks with maturity of less than three months.

For the year ended 31 December 2024

38. RISK MANAGEMENT

The Group, as a financial organisation, is exposed to risks, the most important of which are credit risk, market risk, liquidity risk and operational risk.

The Group implements internal mechanisms to continuously and systematically monitor the risks mentioned above, aiming to prevent an undue concentration of these risks. The nature of these risks and the approach to managing them are provided below. The risks outlined below should not be considered an exhaustive or all-encompassing list of potential risks, uncertainties, or mitigating factors. Other factors that have not yet been identified or are not currently significant may also impact the Group negatively.

38.1 Credit risk

In the ordinary course of its business the Group is exposed to credit risk. Credit risk emanates from the potential inability of clients to repay their loans and other credit facilities and the non–compliance with their contractual obligations. Credit risk is monitored through various control mechanisms in order to prevent undue risk concentration and to price facilities and products on a risk adjusted basis.

The Group establishes the financing policies and sets limits on credit exposures to clients and ensures that these policies and limits, as well as the related credit sanctioning procedures and controls, are adhered to in the conduct of the Bank's operations. Credit risk from connected clients' accounts is monitored on an aggregated basis. The Bank classifies its corporate and SME clients into risk grades based on quantitative ratings from external models, combined with qualitative internal assessments, in accordance with the Bank's grading methodology. Grading parameters include the client's track record with the Bank and other financial institutions, management quality and succession, market position, repayment capability, and financial score based on the latest financial information. These parameters are weighted and mapped to the corresponding Loss Given Default (LGD) to determine the final client grade.

The Group's policy relating to recognition of income on loans and advances and provisions for impairment of doubtful accounts is stated in Notes 3.4, 3.12 and 4.2 to the Financial Statements.

The Group sets limits for the composition of the portfolio of loans and advances and monitors compliance with them. The credit risk exposure of the Group is diversified across the various sectors of the economy. The terms of loans and advances may be renegotiated due to deterioration in the client's financial position. The Group implements a restructuring policy in order to maximise collection and minimise the risk of default. The revised terms usually include extending maturity, changing timing of interest and principal payments and amendments of terms of loan covenants.

Internal Audit undertakes audits of the Group's portfolio of loans and advances and of the Group's credit processes.

The Group assesses the credit risk associated with investments in liquid funds, mainly debt securities and placements with banks. To manage these exposures, the Group has established counterparty and country limits.

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Credit quality analysis

THE GROUP				2024
	Note	Stage 1	Stage 2	Stage 3	POCI	Total
		€'000	€'000	€'000	€'000	€'000
Balances with central banks and other banks
Aaa - Aa3		1.594	-	-	-	1.594
A1 - A3		372.932	-	-	-	372.932
Baa1 - Baa3		1.343	-	-	-	1.343
Ba1 - Ba3		145	-	-	-	145
Unrated		595	-	-	-	595
	17	376.609	-	-	-	376.609
Loss allowance		-	-	-	-	-
Carrying amount	17	376.609	-	-	-	376.609
Loans and advances to customers at amortised cost - gross carrying amount
Grade 1-3: Low-medium risk		136.591	28.935	-	6.596	172.122
Grade 4-5: Special mention		759	2.021	-	-	2.780
Non-performing		-	-	34.787	2.891	37.678
	18	137.350	30.956	34.787	9.487	212.580
Loss allowance and changes to contractual
cash flows due to modifications	18	(523)	(495)	(13.689)	(308)	(15.015)
Carrying amount	18	136.827	30.461	21.098	9.179	197.565
Debt securities
A1 - A3		8.797	-	-	-	8.797
Baa1 - Baa3		3.565	-	-	-	3.565
Ba1 - Ba3		13.861	-	-	-	13.861
	20	26.223	-	-	-	26.223
Loss allowance	20	(12)	-	-	-	(12)
Carrying amount	20	26.211	-	-	-	26.211
Contingent liabilities and commitments
Gross amount	34	53.490	201	47	63	53.801
Loss allowance	30	(159)	(1)	(29)	-	(189)
Carrying amount		53.331	200	18	63	53.612

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Credit quality analysis (continued)

THE GROUP				2023
	Note	Stage 1	Stage 2	Stage 3	POCI	Total
		€'000	€'000	€'000	€'000	€'000
Balances with central banks and other banks
Aaa - Aa3		2	-	-	-	2
A1 - A3		1	-	-	-	1
Baa1 - Baa3		300.855	-	-	-	300.855
Ba1 - Ba3		517	-	-	-	517
Unrated		586	-	-	-	586
	17	301.961	-	-	-	301.961
Loss allowance		(1)	-	-	-	(1)
Carrying amount	17	301.960	-	-	-	301.960
Loans and advances to customers at amortised cost - gross carrying amount
Grade 1-3: Low-medium risk		107.116	48.853	-	9.172	165.141
Grade 4-5: Special mention		820	2.852	-	-	3.672
Non-performing		-	-	40.797	424	41.221
	18	107.936	51.705	40.797	9.596	210.034
Loss allowance and changes to contractual
cash flows due to modifications	18	(838)	(1.538)	(16.923)	(251)	(19.550)
Carrying amount	18	107.098	50.167	23.874	9.345	190.484
Debt securities
Baa1 - Baa3		30.930	-	-	-	30.930
Ba1 - Ba3		14.467	-	-	-	14.467
	20	45.397	-	-	-	45.397
Loss allowance	20	(41)	-	-	-	(41)
Carrying amount	20	45.356	-	-	-	45.356
Contingent liabilities and commitments
Gross amount	34	57.576	415	20	-	58.011
Loss allowance	30	(448)	(1)	(1)	-	(450)
Carrying amount		57.128	414	19	-	57.561

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Credit quality analysis (continued)

THE BANK		2024
	Note	Stage 1	Stage 2	Stage 3	POCI	Total
		€'000	€'000	€'000	€'000	€'000
Balances with central banks and other banks
Aaa - Aa3		1.594	-	-	-	1.594
A1 - A3		372.932	-	-	-	372.932
Baa1 - Baa3		1.053	-	-	-	1.053
Ba1 - Ba3		145	-	-	-	145
Unrated		595	-	-	-	595
	17	376.319	-	-	-	376.319
Loss allowance		-	-	-	-	-
Carrying amount	17	376.319	-	-	-	376.319
Loans and advances to customers at amortised cost - gross carrying amount
Grade 1-3: Low-medium risk		136.591	28.935	-	6.596	172.122
Grade 4-5: Special mention		759	2.021	-	-	2.780
Non-performing		-	-	34.787	2.891	37.678
	18	137.350	30.956	34.787	9.487	212.580
Loss allowance and changes to contractual
cash flows due to modifications	18	(523)	(495)	(13.689)	(308)	(15.015)
Carrying amount	18	136.827	30.461	21.098	9.179	197.565
Debt securities
A1 - A3		8.797	-	-	-	8.797
Baa1 - Baa3		3.565	-	-	-	3.565
Ba1 - Ba3		13.861	-	-	-	13.861
	20	26.223	-	-	-	26.223
Loss allowance	20	(12)	-	-	-	(12)
Carrying amount	20	26.211	-	-	-	26.211
Contingent liabilities and commitments
Gross amount	34	53.490	201	47	63	53.801
Loss allowance	30	(159)	(1)	(29)	-	(189)
Carrying amount		53.331	200	18	63	53.612

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Credit quality analysis (continued)

THE BANK		2023
	Note	Stage 1	Stage 2	Stage 3	POCI	Total
		€'000	€'000	€'000	€'000	€'000
Balances with central banks and other banks
Aaa - Aa3		2	-	-	-	2
A1 - A3		1	-	-	-	1
Baa1 - Baa3		300.658	-	-	-	300.658
Ba1 - Ba3		504	-	-	-	504
Unrated		586	-	-	-	586
	17	301.751	-	-	-	301.751
Loss allowance		(1)	-	-	-	(1)
Carrying amount	17	301.750	-	-	-	301.750
Loans and advances to customers at amortised cost - gross carrying amount
Grade 1-3: Low-medium risk		107.116	48.853	-	9.172	165.141
Grade 4-5: Special mention		820	2.852	-	-	3.672
Non-performing		-	-	40.797	424	41.221
	18	107.936	51.705	40.797	9.596	210.034
Loss allowance and changes to contractual
cash flows due to modifications	18	(838)	(1.538)	(16.923)	(251)	(19.550)
Carrying amount	18	107.098	50.167	23.874	9.345	190.484
Debt securities
Baa1 - Baa3		30.930	-	-	-	30.930
Ba1 - Ba3		14.467	-	-	-	14.467
	20	45.397	-	-	-	45.397
Loss allowance	20	(41)	-	-	-	(41)
Carrying amount	20	45.356	-	-	-	45.356
Contingent liabilities and commitments
Gross amount	34	57.576	415	20	-	58.011
Loss allowance	30	(448)	(1)	(1)	-	(450)
Carrying amount		57.128	414	19	-	57.561

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Concentration of loans and advances by economic sector

THE GROUP AND THE BANK 2024 Stage 1 Stage 2 Stage 3 POCI Total €'000 €'000 €'000 €'000 €'000 Services 34.128 10.206 11.006 101 55.441 Construction & real estate 51.426 12.176 1.815 9.238 74.655 Industry 5.374 - 2.994 - 8.368 Hotels & catering 19.574 8.565 2.355 - 30.494 Agriculture 926 - 4.180 - 5.106 Transport and storage 1.809 - 1 - 1.810 Other sectors 24.113 9 12.436 148 36.706 137.350 30.956 34.787 9.487 212.580 Loss allowance and changes to contractual cash flows due to modifications (523) (495) (13.689) (308) (15.015) Carrying amount 136.827 30.461 21.098 9.179 197.565

			2023
	Stage 1	Stage 2	Stage 3	POCI	Total
	€'000	€'000	€'000	€'000	€'000
Services	35.971	7.064	10.232	269	53.536
Construction & real estate	30.445	23.041	1.429	9.173	64.088
Industry	4.542	694	7.867	-	13.103
Hotels & catering	16.663	18.593	3.925	-	39.181
Agriculture	925	-	4.598	-	5.523
Transport and storage	1.936	-	1	-	1.937
Other sectors	17.454	2.313	12.745	154	32.666
	107.936	51.705	40.797	9.596	210.034
Loss allowance and changes to contractual
cash flows due to modifications	(838)	(1.538)	(16.923)	(251)	(19.550)
Carrying amount	107.098	50.167	23.874	9.345	190.484

Concentration by location

THE GROUP AND THE BANK

Concentration by location for loans and advances is based on the client's country of domicile. The carrying amount of loans and advances of the Group and the Bank relating to non-resident clients amounts to €1.560 thousand (2023: €1.386 thousand).

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Analysis of performing loans and advances by risk grade

THE GROUP AND THE BANK	2024	2023
	€'000	€'000
Carrying amount
Grade 1-3: Low-medium risk	171.180	162.933
Grade 4-5: Special mention	2.688	3.501
	173.868	166.434
Of which loans and advances with renegotiated terms	20.630	48.835
Value of collateral security*
Grade 1-3: Low-medium risk	145.330	138.671
Grade 4-5: Special mention	2.416	3.328
	147.746	141.999
Of which loans and advances with renegotiated terms	17.960	42.172

*Collateral securities are stated at market value capped to the carrying amount of loans and advances.

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Analysis of loans and advances by borrower category

THE GROUP AND THE BANK

2024			Non
		Performing loans and advances			performing
	Total loans and advances	Non restructured	Restructured	Total	loans and advances
	€'000	€'000	€'000	€'000	€'000
Loans and advances to corporate legal
entities
Services	37.164	29.009	-	29.009	8.155
Construction & real estate	63.488	44.718	16.111	60.829	2.659
Industry	3.259	2.457	-	2.457	802
Hotels & catering	25.654	24.027	1.627	25.654	-
Agriculture	3.366	-	-	-	3.366
Transport and storage	1.002	1.002	-	1.002	-
	133.933	101.213	17.738	118.951	14.982
Loans and advances to retail legal entities
Services	13.041	9.939	1.211	11.150	1.891
Construction & real estate	9.817	8.583	12	8.595	1.222
Industry	5.110	2.917	-	2.917	2.193
Hotels & catering	3.871	1.019	497	1.516	2.355
Agriculture	1.459	926	-	926	533
Transport and storage	808	807	-	807	1
Other sectors	15	-	-	-	15
	34.121	24.191	1.720	25.911	8.210
Loans and advances to private individuals
Loans and advances for the
purchase/construction of immovable
property
Owner occupied	23.202	15.812	-	15.812	7.390
Consumer Loans	13.552	10.067	-	10.067	3.485
Current accounts	3.122	1.548	-	1.548	1.574
Credit facilities to sole traders	4.650	1.130	1.483	2.613	2.037
	44.526	28.557	1.483	30.040	14.486
Total loans and advances	212.580	153.961	20.941	174.902	37.678
Provisions and changes to contractual cash
flows due to modifications	(15.015)	(723)	(311)	(1.034)	(13.981)
Carrying amount	197.565	153.238	20.630	173.868	23.697

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Analysis of loans and advances by borrower category (continued)

THE GROUP AND THE BANK

2023					Non
		Performing loans and advances			performing
	Total loans and	Non			loans and
	advances	restructured	Restructured	Total	advances
	€'000	€'000	€'000	€'000	€'000
Loans and advances to corporate legal entities
Services	33.129	21.255	5.326	26.581	6.548
Construction & real estate	53.893	26.801	27.085	53.886	7
Industry	7.455	1.041	-	1.041	6.414
Hotels & catering	34.806	21.798	11.282	33.080	1.726
Agriculture	3.289	-	-	-	3.289
	132.572	70.895	43.693	114.588	17.984
Loans and advances to retail legal entities
Services	14.561	10.536	860	11.396	3.165
Construction & real estate	8.888	6.566	1.422	7.988	900
Industry	5.648	3.501	694	4.195	1.453
Hotels & catering	3.337	1.139	-	1.139	2.198
Agriculture	1.959	925	-	925	1.034
Transport and storage	1.937	1.936	-	1.936	1
	36.330	24.603	2.976	27.579	8.751
Loans and advances to private individuals Loans and advances for the purchase/construction of immovable property
Owner occupied	19.779	12.753	-	12.753	7.026
Consumer Loans	13.480	7.041	2.147	9.188	4.292
Current accounts	2.903	1.446	-	1.446	1.457
Credit facilities to sole traders	4.970	1.721	1.538	3.259	1.711
	41.132	22.961	3.685	26.646	14.486
Total loans and advances	210.034	118.459	50.354	168.813	41.221
Provisions and changes to contractual cash
flows due to modifications	(19.550)	(860)	(1.519)	(2.379)	(17.171)
Carrying amount	190.484	117.599	48.835	166.434	24.050

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Analysis of loans and advances on the basis of origination date

THE GROUP AND THE BANK	Total loans and advances			Loans and advances to legal entities			Loans and advances to private individuals - Immovable property			Loans and advances to private individuals - Other
2024	Total	Non performing	Provision and modification amount	Total	Non performing	Provision and modification amount	Total	Non performing	Provision and modification amount	Total	Non performing	Provision and modification amount
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Within one year	32.253	-	65	26.061	-	61	4.219	-	2	1.973	-	2
Between one and two years	10.852	-	11	7.301	-	8	3.012	-	2	539	-	1
Between two and three years	18.137	-	3	13.955	-	2	2.705	-	-	1.477	-	1
Between three and five years	25.302	30	156	19.883	2	153	2.713	-	1	2.706	28	2
Between five and seven years	18.699	69	216	13.557	59	209	2.592	-	1	2.550	10	6
Between seven and ten years	21.357	2.756	1.422	19.093	1.989	801	319	-	-	1.945	767	621
Over ten years	85.980	34.823	13.142	68.204	21.142	8.050	7.642	7.390	1.776	10.134	6.291	3.316
	212.580	37.678	15.015	168.054	23.192	9.284	23.202	7.390	1.782	21.324	7.096	3.949

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Analysis of loans and advances on the basis of origination date (continued)

THE GROUP AND THE BANK		Total loans and advances			Loans and advances to legal entities		Loans and advances to private individuals - Immovable property			Loans and advances to private individuals - Other
2023	Total	Non performing	Provision and modification amount	Total	Non performing	Provision and modification amount	Total	Non performing	Provision and modification amount	Total	Non performing	Provision and modification amount
	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000	€'000
Within one year	11.070	189	197	8.060	189	187	2.516	-	1	494	-	9
Between one and two years	23.107	6	27	17.914	3	17	3.501	-	-	1.692	3	10
Between two and three years	16.343	521	826	13.052	481	784	2.407	-	1	884	40	41
Between three and five years	33.563	2.654	1.158	25.538	2.615	1.146	3.216	-	-	4.809	39	12
Between five and seven years	24.260	1.870	1.667	21.109	388	840	602	-	-	2.549	1.482	827
Between seven and ten years	11.824	1.975	791	10.642	1.783	675	237	-	-	945	192	116
Over ten years	89.867	34.006	14.884	72.587	21.276	9.791	7.300	7.026	1.601	9.980	5.704	3.492
	210.034	41.221	19.550	168.902	26.735	13.440	19.779	7.026	1.603	21.353	7.460	4.507

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Analysis of non-performing loans and advances on the basis of arrears

THE GROUP AND THE BANK

2024	Non
	performing			Value of
	loans and		Carrying	collateral
	advances	Provisions	amount	security*
	€'000	€'000	€'000	€'000
Arrears
Less than three months	18.987	4.693	14.294	10.636
Between three and six months	83	12	71	70
Between six months and one year	2.853	827	2.026	2.026
Over one year	15.755	8.449	7.306	4.817
Total	37.678	13.981	23.697	17.549
Of which loans and advances with
renegotiated terms	20.953	5.821	15.132	12.500
2023	Non
	performing			Value of
	loans and		Carrying	collateral
	advances €'000	Provisions €'000	amount €'000	security* €'000
Arrears
Less than three months	3.862	1.507	2.355	2.303
Between three and six months	8.804	2.054	6.750	6.738
Between six months and one year	1.641	943	698	697
Over one year	26.914	12.667	14.247	10.572
Total	41.221	17.171	24.050	20.310
Of which loans and advances with

*Collateral securities are stated at market value capped to the carrying amount of loans and advances.

Credit committees determine the amount and type of collateral and other risk mitigation required for the granting of new loans to customers, having knowledge of Credit Sanctioning Department's assessment and for material exposures the Risk Department's assessment.

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

The main types of collateral obtained by the Group are mortgages on real estate, cash collateral, bank guarantees, government guarantees, pledges of equity securities and debt instruments, fixed and floating charges over corporate assets, assignment of life insurance policies and personal and corporate guarantees. Onboarding and subsequent management of acquired properties due to DFAS or repossession is carried out through a rigorous and transparent process. A dedicated Acquisitions and Disposals Committee (ADC) with senior executive participation has been formed which meets regularly for this purpose whilst all major decisions are brought before the Board of Directors.

The table below presents the maximum exposure to credit risk, the tangible and measurable collaterals held and the net exposure to credit risk from loans and advances. Personal and corporate guarantees are an additional form of collateral but are not included below since it is impracticable to estimate their fair value.

THE GROUP AND THE BANK
2024	Maximum			Net
	exposure to				Total	exposure to
	credit risk	Cash	Property	Other	collateral	credit risk
	€'000	€'000	€'000	€'000	€'000	€'000
Loans and advances to customers
Performing
Stage 1	136.827	7.128	109.332	1.631	118.091	18.736
Stage 2	30.461	892	20.066	2.183	23.141	7.320
POCI	6.580	-	6.514	-	6.514	66
	173.868	8.020	135.912	3.814	147.746	26.122
Non-performing
Stage 3	21.098	-	13.521	1.429	14.950	6.148
POCI	2.599	-	2.599	-	2.599	-
	23.697	-	16.120	1.429	17.549	6.148
	197.565	8.020	152.032	5.243	165.295	32.270
2023
Loans and advances to customers Performing
Stage 1	107.098	1.396	85.004	3.813	90.213	16.885
Stage 2	50.167	182	42.509	-	42.691	7.476
POCI	9.169	-	9.095	-	9.095	74
	166.434	1.578	136.608	3.813	141.999	24.435
Non-performing
Stage 3	23.874	10	18.626	1.498	20.134	3.740
POCI	176	-	176	-	176	-
	24.050	10	18.802	1.498	20.310	3.740
	190.484	1.588	155.410	5.311	162.309	28.175

*Collateral securities are stated at market value capped to the carrying amount of loans and advances.

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

Provisions for impairment of doubtful accounts on loans and advances

The table below discloses the accumulated impairment losses on the value of loans and advances as per IFRS 9.

THE GROUP AND THE BANK

			2024
	Stage 1	Stage 2	Stage 3	POCI	Total
	€'000	€'000	€'000	€'000	€'000
1 January	838	1.538	16.923	251	19.550
Transfers to stage 1	177	(165)	(12)	-	-
Transfers to stage 2	(79)	351	(272)	-	-
Transfers to stage 3	(188)	(729)	917	-	-
Exchange differences	-	-	-	(6)	(6)
New loans originated	79	76	244	-	399
Loans derecognised or repaid	(310)	(658)	(2.647)	-	(3.615)
Changes to contractual cash flows due to
modifications not resulting in derecognition	(18)	4	-	-	(14)
Write offs	(1)	-	(6.351)	(252)	(6.604)
Interest provided not recognised in the income
statement	-	-	1.146	82	1.228
Changes due to models and inputs	25	78	3.741	233	4.077
31 December	523	495	13.689	308	15.015

During 2024 exposures of €6.604 thousand (2023: €19.792 thousand) were written off, out of which €4.989 thousand (2023: €18.452) relate to accounting write offs.

			2023
	Stage 1	Stage 2	Stage 3	POCI	Total
	€'000	€'000	€'000	€'000	€'000
1 January	930	1.990	30.513	120	33.553
Transfers to stage 1	11	(11)	-	-	-
Transfers to stage 2	(2)	2	-	-	-
Transfers to stage 3	-	(2)	2	-	-
Exchange differences	-	-	-	(9)	(9)
New loans originated or purchased	11	-	217	-	228
Loans derecognised or repaid	(87)	(1)	(537)	-	(625)
Changes to contractual cash flows due to
modifications not resulting in derecognition	(51)	-	-	-	(51)
Write offs	(1)	(8)	(19.779)	(4)	(19.792)
Interest provided not recognised in the income
statement	-	-	2.587	46	2.633
Changes due to models and inputs	27	(432)	3.920	98	3.613
31 December	838	1.538	16.923	251	19.550

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.1 Credit risk (continued)

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 other banks

Balances with central banks and other banks are analysed by Moody's rating as follows (net carrying amount):

	THE GROUP		THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Aaa – Aa3	1.594	2	1.594	2
A1 – A3	372.932	1	372.932	1
Baa1 – Baa3	1.343	300.854	1.053	300.657
Ba1 – Ba3	145	517	145	504
Unrated	595	586	595	586
	376.609	301.960	376.319	301.750

38.2 Market Risk

Market risk is the risk of loss from adverse changes in market prices - namely from changes in interest rates, exchange rates and security prices.

38.2.1 Price risk

Equity investments 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. The prices of equity investments are being monitored by the Group on a regular basis.

The portfolio of equity investments at 31 December 2024 and 31 December 2023 comprises of a holding in one Alternative Investment Fund. More details are disclosed in Note 19.

Equity investments are stated in the financial statements at their assessed fair value which takes into account possible losses that may arise in relation to specific investments. A change in the value of equity investments classified as FVOCI or FVTPL affects the equity of the Group. The Group's policy relating to revaluation of equity investments at their assessed fair value is stated in Note 3 to the Financial Statements.

The table below indicates how the equity of the Group will be affected from a change in the price of the equity investments held, as a result of reasonably possible changes in their price.

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.2 Market Risk (continued)

38.2.1 Price risk (continued)

Equity investments price risk (continued)

THE GROUP

		2024		2023
		Change in
	Carrying	Index or	Effect on	Carrying	Index or	Effect on
	amount	Book Value	equity	amount	Book Value	equity
	€'000	%	€'000	€'000	%	€'000
Equity investments at FVTPL
Non-listed investments	426	+20	85	346	+20	69
Non-listed investments	426	-20	(85)	346	-20	(69)
THE BANK
		2024			2023
		Change in			Change in
	Carrying	Index or	Effect on	Carrying	Index or	Effect on
	amount	Book Value	equity	amount	Book Value	equity
	€'000	%	€'000	€'000	%	€'000
Equity investments at FVOCI
Non-listed investments	1.508	+20	302	1.321	+20	264
Non-listed investments	1.508	-20	(302)	1.321	-20	(264)
Concentration of equity securities
				THE GROUP THE BANK
			2024	2023	2024	2023
			€'000	€'000	€'000	€'000
By sector
Financial services			-	-	1.508	1.321

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 Bank. Debt security prices change as the credit risk of the issuer changes and/or as the interest rate changes for fixed rate securities. The Bank invests a significant part of its liquid assets in debt securities issued mostly by governments. The current portfolio of debt securities comprises of debt securities at FVOCI and debt securities at amortised cost. Changes in the value of securities at FVOCI affect the equity of the Group, whereas changes in the value of securities at amortised cost have no effect on equity. The Group's policy relating to valuation of debt securities, is stated in Note 3 to the Financial Statements.

Shipping 426 346 - -

426 346 1.508 1.321

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.2 Market Risk (continued)

38.2.1 Price risk (continued)

The table below shows the impact on the equity of the Bank and the Group from reasonably possible changes in the price of the debt securities held at FVOCI.

THE GROUP AND THE BANK

		2024	2023
		Change in			Change in
	Carrying	market Effect on		Carrying	market	Effect on
	amount	prices	equity	amount	prices	equity
	€'000	%	€'000	€'000	%	€'000
Debt Securities
For below A3 rated bonds	-	+10%	-	3.041	+10%	304
For below A3 rated bonds	-	-10%	-	3.041	-10%	(304)
Concentration of debt securities
					2024	2023
					€'000	€'000
By sector
Sovereigns					20.394	40.651
Corporate bonds					5.817	4.705
					26.211	45.356
By country
Cyprus					12.196	19.781
Greece					8.153	11.139
Italy					4.887	14.436
Germany					975	-
					26.211	45.356

38.2.2 Interest rate risk

Interest rate risk arises as a result of changes in the rates of interest and re-pricing timing mismatches on assets and liabilities. The Group closely monitors fluctuations in interest rates on a continuous basis and the relationship of assets and liabilities, which are subject to interest rate fluctuations, and takes measures to contain to acceptable levels the effects of these changes on the Group's profitability.

Interest rate risk is measured using interest rate sensitivity gap analysis, where the annual impact of any change in interest rates on profit is calculated by multiplying the net asset or liability position repricing in each time band with the assumed change in interest rates.

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.2 Market Risk (continued)

38.2.2 Interest rate risk (continued)

The interest rate sensitivity gap analysis indicating the effect on the Group's and on the Bank's profit of changes in interest rates is shown in the tables below:

THE GROUP			Between
2024	Up to one month €'000	Between one and three months €'000	three months and one year €'000	Between one and five years €'000	Over five years €'000	Non interest bearing €'000	Total €'000
ASSETS
Cash and balances with central banks	372.899	-	-	-	-	873	373.772
Balances with other banks	2.607	1.000	-	-	-	73	3.680
Loans and advances	74.183	15.401	103.020	-	-	4.961	197.565
Investments in equities	-	-	-	-	-	426	426
Investments in debt securities	-	6.518	7.431	11.904	-	358	26.211
Investments in associates	-	-	-	-	-	754	754
Premises and equipment	-	-	-	-	-	7.346	7.346
Intangible assets	-	-	-	-	-	1.254	1.254
Stock of property	-	-	-	-	-	10.368	10.368
Receivables and other assets	-	-	-	-	-	1.614	1.614
Total assets	449.689	22.919	110.451	11.904	-	28.027	622.990
LIABILITIES & EQUITY
Bank borrowings	-	-	1.484	-	-	10	1.494
Client deposits	49.481	48.604	136.051	706	5.456	308.281	548.579
Deferred taxation	-	-	-	-	-	306	306
Accruals and other liabilities	-	-	-	-	-	11.228	11.228
Loan capital	-	-	-	-	11.250	13	11.263
Share capital	-	-	-	-	-	8.655	8.655
Reserves	-	-	-	-	-	41.465	41.465
Total liabilities and equity	49.481	48.604	137.535	706	16.706	369.958	622.990
Net position	400.208	(25.685)	(27.084)	11.198	(16.706)	(341.931)	-
Change in interest rates -1% - effect on profit	(4.002)	257	271	(112)	167	-	(3.419)
Change in interest rates +1% - effect on profit	4.002	(257)	(271)	112	(167)	-	3.419

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.2 Market Risk (continued)

38.2.2 Interest rate risk (continued)

THE GROUP			Between
2023	Up to one month €'000	Between one and three months €'000	three months and one year €'000	Between one and five years €'000	Over five years €'000	Non interest bearing €'000	Total €'000
ASSETS
Cash and balances with central banks	299.605	-	-	-	-	802	300.407
Balances with other banks	1.354	1.002	-	-	-	-	2.356
Loans and advances	74.327	25.737	84.911	-	-	5.509	190.484
Investments in equities	-	-	-	-	-	346	346
Investments in debt securities	-	2.879	17.028	25.449	-	-	45.356
Investments in associates	-	-	-	-	-	744	744
Premises and equipment	-	-	-	-	-	6.746	6.746
Intangible assets	-	-	-	-	-	593	593
Stock of property	-	-	-	-	-	8.579	8.579
Receivables and other assets	-	-	-	-	-	2.201	2.201
Total assets	375.286	29.618	101.939	25.449	-	25.520	557.812
LIABILITIES & EQUITY
Bank borrowings	-	-	1.921	-	-	-	1.921
Client deposits	24.121	29.503	150.343	10.005	89	275.362	489.423
Deferred taxation	-	-	-	-	-	314	314
Accruals and other liabilities	-	-	-	-	-	8.968	8.968
Loan capital	-	-	-	-	6.250	5.011	11.261
Share capital	-	-	-	-	-	8.655	8.655
Reserves	-	-	-	-	-	37.270	37.270
Total liabilities and equity	24.121	29.503	152.264	10.005	6.339	335.580	557.812
Net position	351.165	115	(50.325)	15.444	(6.339)	(310.060)	-
Change in interest rates -1% - effect on profit	(3.512)	(1)	503	(154)	63	-	(3.101)
Change in interest rates +1% - effect on profit	3.512	1	(503)	154	(63)	-	3.101

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.2 Market Risk (continued)

38.2.2 Interest rate risk (continued)

THE BANK			Between
2024	Up to one month €'000	Between one and three months €'000	three months and one year €'000	Between one and five years €'000	Over five years €'000	Non interest bearing €'000	Total €'000
ASSETS
Cash and balances with central banks	372.899	-	-	-	-	873	373.772
Balances with other banks	2.317	1.000	-	-	-	73	3.390
Loans and advances	74.183	15.401	103.020	-	-	4.961	197.565
Investments in debt securities	-	6.518	7.431	11.904	-	358	26.211
Investments and exposures in subsidiary companies	-	-	-	-	-	4.626	4.626
Premises and equipment	-	-	-	-	-	7.346	7.346
Intangible assets	-	-	-	-	-	1.254	1.254
Stock of property	-	-	-	-	-	7.231	7.231
Receivables and other assets	-	-	-	-	-	918	918
Total assets	449.399	22.919	110.451	11.904	-	27.640	622.313
LIABILITIES & EQUITY
Bank borrowings	-	-	1.484	-	-	10	1.494
Client deposits	49.481	48.604	136.051	706	5.456	308.281	548.579
Deferred taxation	-	-	-	-	-	306	306
Accruals and other liabilities	-	-	-	-	-	10.864	10.864
Loan capital	-	-	-	-	11.250	13	11.263
Share capital	-	-	-	-	-	8.655	8.655
Reserves	-	-	-	-	-	41.152	41.152
Total liabilities and equity	49.481	48.604	137.535	706	16.706	369.281	622.313
Net position	399.918	(25.685)	(27.084)	11.198	(16.706)	(341.641)	-
Change in interest rates -1% - effect on profit	(3.999)	257	271	(112)	167	-	(3.416)
Change in interest rates +1% - effect on profit	3.999	(257)	(271)	112	(167)	-	3.416

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.2 Market Risk (continued)

38.2.2 Interest rate risk (continued)

THE BANK			Between
2023	Up to one month €'000	Between one and three months €'000	three months and one year €'000	Between one and five years €'000	Over five years €'000	Non interest bearing €'000	Total €'000
ASSETS
Cash and balances with central banks	299.605	-	-	-	-	802	300.407
Balances with other banks	1.144	1.002	-	-	-	-	2.146
Loans and advances	74.327	25.737	84.911	-	-	5.509	190.484
Investments in debt securities	-	2.879	17.028	25.449	-	-	45.356
Investments and exposures in subsidiary companies	-	-	-	-	-	4.006	4.006
Premises and equipment	-	-	-	-	-	6.745	6.745
Intangible assets	-	-	-	-	-	593	593
Stock of property	-	-	-	-	-	6.028	6.028
Receivables and other assets	-	-	-	-	-	1.453	1.453
Total assets	375.076	29.618	101.939	25.449	-	25.136	557.218
LIABILITIES & EQUITY
Bank borrowings	-	-	1.921	-	-	-	1.921
Client deposits	24.121	29.503	150.343	10.005	89	275.362	489.423
Deferred taxation	-	-	-	-	-	314	314
Accruals and other liabilities	-	-	-	-	-	8.589	8.589
Loan capital	-	-	-	-	6.250	5.011	11.261
Share capital	-	-	-	-	-	8.655	8.655
Reserves	-	-	-	-	-	37.055	37.055
Total liabilities and equity	24.121	29.503	152.264	10.005	6.339	334.986	557.218
Net position	350.955	115	(50.325)	15.444	(6.339)	(309.850)	-
Change in interest rates -1% - effect on profit	(3.510)	(1)	503	(154)	63	-	(3.099)
Change in interest rates +1% - effect on profit	3.510	1	(503)	154	(63)	-	3.099

The Group does not operate a trading book and thus all interest rate exposure arises from the banking book.

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.2 Market Risk (continued)

38.2.2 Interest rate risk (continued)

During 2024 the Group implemented a new methodology for monitoring interest rate risk in the banking book ("IRRBB"), performing six shock scenarios in line with regulatory requirements. The table below sets out the impact on the Group's equity, from possible changes in the interest rates under various interest rate scenarios for the Euro being the main currency of the Group, in line with the EBA guidelines.

Interest Rate Scenario	Impact on Equity
	€000
Parallel up	(704)
Parallel down	(2.764)
Steepening	26
Flattening	(439)
Short up	(187)
Short down	(2.015)

The table below sets out the impact on the Group's net interest income, from possible changes in the interest rates under various interest rate scenarios for the Euro being the main currency of the Group, in line with the EBA guidelines.

Interest Rate Scenario	Impact on Net Interest Income
	€000
Parallel up	1.085
Parallel down	(3.618)

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.2 Market Risk (continued)

38.2.3 Currency risk

Currency risk arises from adverse movements in exchange rates when there is a net currency position (asset or liability) in one or more currencies. Net currency positions are monitored on a daily basis and the Group takes such measures so that this risk is contained within acceptable limits. The foreign exchange position limits prescribed by the Central Bank of Cyprus are adhered to.

THE GROUP		2024 Change in			2023 Change in
	Net open	exchange	Effect on	Net open	exchange	Effect on
	position	rates	profits	position	rates	profits
Currency	€'000	%	€'000	€'000	%	€'000
US Dollar	612	+10	61	602	+10	60
British Pound	30	+10	3	38	+10	4
Russian Rouble	210	+30	63	191	+30	57
Other currencies	44	+10	4	21	+10	2
US Dollar	612	-10	(61)	602	-10	(60)
British Pound	30	-10	(3)	38	-10	(4)
Russian Rouble	210	-30	(63)	191	-30	(57)
Other currencies	44	-10	(4)	21	-10	(2)

THE BANK		2024		2023 Change in
		Change in
	Net open position	exchange rates	Effect on profits	Net open position	exchange rates	Effect on profits
Currency	€'000	%	€'000	€'000	%	€'000
US Dollar	20	+10	2	107	+10	11
British Pound	29	+10	3	37	+10	4
Russian Rouble	210	+30	63	191	+30	57
Other currencies	28	+10	3	2	+10	-
US Dollar	20	-10	(2)	107	-10	(11)
British Pound	29	-10	(3)	37	-10	(4)
Russian Rouble	210	-30	(63)	191	-30	(57)
Other currencies	28	-10	(3)	2	-10	-

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.3 Liquidity Risk

Liquidity risk refers to possible losses that may be incurred due to a potential inability of the Group to meet fully or promptly its cash flow obligations. This risk includes the possibility that the Group may have to raise funding at higher cost.

The Group's banking business requires a steady flow of funds, both to replace existing deposits as they mature and to satisfy customer requests for additional borrowings. Undrawn borrowing facilities are also taken into consideration in managing the liquidity position. The Management Body, reviews at its regular meetings the liquidity position of the Group.

Treasury manages liquidity risk on a continuous basis by closely monitoring the relationship between cash flow obligations and liquid assets and timely action is being taken to secure financial resources to meet the Group's funding requirements. Treasury assesses on a continuous basis, and informs ALCO at regular time intervals, the adequacy of the liquid assets and takes the necessary actions to ensure a comfortable liquidity position.

Key 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. The regulatory minimum requirement has been set at 100%. The Group also calculates its NSFR as per Capital Requirements Regulation II (CRR II), enforced in June 2021, 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.

The LCR of the Group and the Bank as at 31 December 2024 was 348% (31 December 2023: Group 355%, Bank 354%), well above the regulatory minimum requirement of 100%. The NSFR of the Group as at 31 December 2024 was 273% (31 December 2023: 252%) and the Bank 270%, (31 December 2023: 249%), well above the regulatory minimum requirement of 100%.

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.3 Liquidity Risk (continued)

Analysis of financial liabilities according to their residual contractual maturities

The table below presents the discounted cash flows by residual maturity (values equal their carrying values).

THE GROUP

		Between	Between
2024	On demand	one and	three	Between
	and up to one	three	months and	one and five	Over five	Carrying
	month	months	one year	years	years	amount
	€'000	€'000	€'000	€'000	€'000	€'000
ON BALANCE SHEET
Bank borrowings	-	-	431	-	1.063	1.494
Client deposits	357.762	48.604	136.051	706	5.456	548.579
Deferred taxation	-	-	-	-	306	306
Accruals and other liabilities	9.243	71	427	452	1.035	11.228
Loan capital	-	-	13	-	11.250	11.263
	367.005	48.675	136.922	1.158	19.110	572.870
OFF BALANCE SHEET
Guarantees issued	667	2.501	10.319	5.747	586	19.820
Undrawn facilities	2.074	3.676	14.412	12.811	-	32.973
Documentary credits	543	49	220	196	-	1.008
	3.284	6.226	24.951	18.754	586	53.801
2023	On demand	Between one and	Between three	Between
	and up to one	three	months and	one and five	Over five	Carrying
	month	months	one year	years	years	amount
	€'000	€'000	€'000	€'000	€'000	€'000
ON BALANCE SHEET
Bank borrowings	-	-	437	1.484	-	1.921
Client deposits	299.483	29.503	150.343	10.005	89	489.423
Deferred taxation	-	-	-	-	314	314
Accruals and other liabilities	7.422	53	256	340	897	8.968
Loan capital	-	-	11	-	11.250	11.261
	306.905	29.556	151.047	11.829	12.550	511.887
OFF BALANCE SHEET
Guarantees issued	414	1.462	9.414	10.757	506	22.553
Undrawn facilities	2.346	4.027	15.111	13.432	-	34.916

Documentary credits 177 173 102 90 - 542

2.937 5.662 24.627 24.279 506 58.011

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.3 Liquidity Risk (continued)

THE BANK

		Between	Between
2024	On demand	one and	three	Between
	and up to one	three	months and	one and five	Over five	Carrying
	month	months	one year	years	years	amount
	€'000	€'000	€'000	€'000	€'000	€'000
ON BALANCE SHEET
Bank borrowings	-	-	431	-	1.063	1.494
Client deposits	357.762	48.604	136.051	706	5.456	548.579
Deferred taxation	-	-	-	-	306	306
Accruals and other liabilities	8.879	71	427	452	1.035	10.864
Loan capital	-	-	13	-	11.250	11.263
	366.641	48.675	136.922	1.158	19.110	572.506
OFF BALANCE SHEET
Guarantees issued	667	2.501	10.319	5.747	586	19.820
Undrawn facilities	2.074	3.676	14.412	12.811	-	32.973
Documentary credits	543	49	220	196	-	1.008
	3.284	6.226	24.951	18.754	586	53.801
		Between	Between
2023	On demand	one and	three	Between
	and up to one	three	months and	one and five	Over five	Carrying
	month	months	one year	years	years	amount
	€'000	€'000	€'000	€'000	€'000	€'000
ON BALANCE SHEET
Bank borrowings	-	-	437	1.484	-	1.921
Client deposits	299.483	29.503	150.343	10.005	89	489.423
Deferred taxation	-	-	-	-	314	314
Accruals and other liabilities	7.043	53	256	340	897	8.589
Loan capital	-	-	11	-	11.250	11.261
	306.526	29.556	151.047	11.829	12.550	511.508
OFF BALANCE SHEET
Guarantees issued	414	1.462	9.414	10.757	506	22.553
Undrawn facilities
	2.346	4.027	15.111	13.432	-	34.916
Documentary credits	177	173	102	90	-	542
	2.937	5.662	24.627	24.279	506	58.011

Encumbered assets

Balances with other banks as at 31 December 2024 include encumbered amounts of €1 million (31 December 2023: €1 million).

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.4 Operational risk

Operational risk is the risk of loss arising from a variety of causes associated with the Group's processes, personnel, technology and infrastructure, and from other external events. It is inherent in every business organisation and covers a wide range of risks not directly attributable to any of the other risk types. The Bank is exposed to a variety of operational risks, such as: internal and external fraud, transaction execution errors, system failures, natural disasters, risk of losses due to damage of physical assets and risks arising from improper use of products or business practices.

The Group establishes policies and procedures for managing operational risk and monitors the adherence to these in the conduct of the Group's operations. Operational risk is managed by establishing internal processes and controls involving:

• Segregation of duties, including independent authorisation of transactions, the reconciliation and monitoring of transactions, documentation of controls and procedures;
• Compliance with regulatory and other legal requirements;
• Development of business continuity plans and disaster recovery plans;
• Personnel training;
• Risk mitigation by taking out insurance cover.

Internal Audit has the responsibility of reviewing periodically the above procedures and controls.

Business Continuity Plans and Disaster Recovery Plans have been developed by the Group and are regularly updated to ensure continuity and timely recovery of operations after a potentially catastrophic event.

38.5 Capital management

The primary objective of the Group's capital management is to ensure compliance with the applicable regulatory capital requirements and to maintain healthy capital adequacy ratios which can support the Group's business and safeguard the interest of its shareholders and all other stakeholders.

The Central Bank of Cyprus (CBC) sets and monitors capital requirements for the Group and for the Bank. The capital requirements of the subsidiary company Global Capital Securities and Financial Services Ltd are set and monitored by the Cyprus Securities and Exchange Commission.

The capital adequacy framework, as in force, was incorporated through the Capital Requirements Regulation (CRR) and Capital Requirements Directive (CRD) which came into effect on 1 January 2014 with certain specified provisions implemented gradually. The CRR and CRD transposed the new capital, liquidity and leverage standards of Basel III into the European Union's legal framework. CRR establishes the prudential requirements for capital, liquidity and leverage for credit institutions. It is directly applicable in all EU member states. CRD governs access to deposit taking activities and internal governance arrangements including remuneration, board composition and transparency. Unlike the CRR, member states were required to transpose the CRD into national law and national regulators were allowed to impose additional capital buffer requirements.

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.5 Capital management (continued)

On 27 June 2019, the revised rules on capital and liquidity (Regulation (EU) 2019/876 (CRR II) and Directive (EU) 2019/878 (CRD V)) came into force. As an amending regulation, the existing provisions of CRR apply, unless they are amended by CRR II. Certain provisions took immediate effect (primarily relating to Minimum Requirement for Own Funds and Eligible Liabilities (MREL)), but most changes became effective as at June 2021. The key changes introduced consist of, among others, changes to qualifying criteria for Common Equity Tier 1 (CET1), Additional Tier 1 (AT1) and Tier 2 (T2) instruments, introduction of requirements for MREL and a binding Leverage Ratio requirement (as defined in the CRR) and a Net Stable Funding Ratio (NSFR).

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 have an impact on the Group's capital ratio relate to the acceleration of the implementation of the new SME discount factor (lower RWAs).

In October 2021, the European Commission adopted legislative proposals for further amendments to CRR, CRD and the Bank Recovery and Resolution Directive (BRRD), collectively known as the '2021 Banking Package'. Among other things, the 2021 Banking Package aims to implement certain elements of Basel III that have not yet been transposed into EU law. The 2021 Banking Package includes:

• A proposal for a Regulation (sometimes referred to as 'CRR III') to amend the CRR with regard to requirements on credit risk, credit valuation adjustment risk, operational risk, market risk and the output floor.
• A proposal for a Directive (sometimes referred to as 'CRD VI') to amend the CRD with regard to requirements on supervisory powers, sanctions, third country branches and ESG risks.
• A proposal for a Regulation to amend both the CRR and the BRRD with regard to requirements on the prudential treatment of Global Systemically Important Institutions (G SIIs) with a multiple point of entry resolution strategy and a methodology for the indirect subscription of instruments eligible for meeting the Minimum, Requirement for Own Funds and Eligible Liabilities (MREL) requirements.

The 2021 Banking Package is subject to amendment in the course of the EU's legislative process, and its scope and terms may change prior to implementation. Additionally, the terms and effects of the proposed amendments to the CRD and the BRRD will depend, in part, on how they are transposed by each member state.

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.5 Capital management (continued)

The European Council's proposal on CRR and CRD was published on 8 November 2022. In February 2023, the European Parliament's Economic and Monetary Affairs (ECON) Committee voted to adopt Parliament's proposed amendments to the Commission's proposal. In June 2023, negotiators from the Council presidency and the European Parliament reached a provisional agreement on amendments to the CRR and the CRD, which were endorsed in December 2023 by the preparatory bodies of the Council and European Parliament. Following these decisions, 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 publication. Most provisions of CRR III became effective on 1 January 2025, with certain measures subject to transitional arrangements or 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.

Basel III Framework comprises of three Pillars:

Pillar 1 – Minimum capital requirements: Sets forth guidelines for calculating the minimum capital requirements to cover credit risk, market risk, and operational risk.

The Group uses the Standardised Approach for calculating minimum capital requirements against credit risk and the financial collateral simple method for credit risk mitigation purposes. The Group adopts the Basic Indicator Approach for the calculating capital requirements for operational risk, based on which the operational risk capital requirement is estimated using a 15% (as defined in CRR) of the average sum of total net income on a three-year basis net of non-recurring income.

• Pillar 2 Supervisory Review and Evaluation Process (SREP): Aims to enhance the link between an institution's risk profile, its risk management and risk mitigations systems, and its capital planning.
  • An internal assessment by the institution on internal governance, risk management, stress testing frameworks, business model and strategy, known as the Internal Capital and Liquidity Adequacy Assessment Process ('ICAAP/ILAAP').
  • A Supervisory Review and Evaluation Process ('SREP'), which ensures that institutions have adequate arrangements, strategies, processes, mechanisms, capital and liquidity to manage and cover the risks to which they are or might be exposed to. This includes risks arising from stress testing exercises and risks an institution may pose to the financial system.

The Bank is in the process of preparation of its ICAAP and ILAAP reports for the year 2024.

Pillar 3 – Market discipline: sets out required disclosures to allow market participants to assess key information relevant to the capital structure, risk exposures, risk assessment processes and hence the capital adequacy of the Bank.

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.5 Capital management (continued)

Based on CRR, disclosures by banks include information relating to their risk management objectives and policies, the composition of own funds and original and supplementary funds, their compliance with minimum capital requirements and the internal capital adequacy assessment process.

The Group closely monitors its capital adequacy to ensure compliance with supervisory authority requirements as well as to maintain a base to support and develop its activities and safeguard the interest of its shareholders.

Pillar 3 disclosures are published on the Bank's website.

The CBC requires the Group to maintain a prescribed capital adequacy ratio, which is the ratio of total eligible capital to total risk weighted assets, in accordance with Regulation (EU) no. 575/2013 on prudential requirements for credit institutions and investment firms.

The minimum Pillar 1 total capital requirement is 8% which should be met by at least 6% Tier 1 (T1) capital of which 4,5% minimum Common Equity Tier 1 (CET 1) capital, and with up to 2,00% by Tier 2 capital.

The Group is also subject to additional capital requirements for risks which are not covered by the Pillar 1 capital requirements (Pillar 2 addons). Applicable Regulation allows a part of the Pillar 2 Requirements (P2R) to be met also with AT1 and T2 capital and does not require solely the use of CET1. In the context of the annual SREP conducted by CBC in 2021 and based on the final 2021 SREP decision received on 8 February 2023, Pillar 2 requirement was set at 5,50%. In addition to Pillar 2 requirement, the final SREP 2021 decision introduced Pillar 2 Guidance which should be comprised entirely of CET 1 capital and held over and above the OCR.

In addition to the total SREP capital requirement, the Group is also required to maintain a Capital Conservation Buffer of 2,50% to be met entirely by CET 1 Capital.

On 30 November 2022, the CBC, following the revised methodology described in its macroprudential policy, decided to increase the countercyclical buffer (CCyB) rate from 0,00% to 0,50% for the risk weighted exposures in the Republic of Cyprus of each licensed credit institution incorporated in the Republic. The new rate of 0,50% was applicable from 30 November 2023. In June 2023, the CBC, announced its decision to raise the CCyB rate from 0,50% to 1,00%, with effect as from 2 June 2024. In January 2025, the CBC announced its decision to increase the CCyB rate from 1,00% to 1,50% with effect as from 14 January 2026. As at 31 December 2024, the Group's CCyB has been calculated at approximately 1,0% (31 December 2023: approximately 0,5%).

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.5 Capital management (continued)

Based on the above, on 31 December 2024 the Group was required to maintain on a consolidated basis a minimum CET 1 ratio of 11,09% (31 December 2023: 10,59%) and an overall capital adequacy ratio of 17,00% (31 December 2023: 16,50%) as shown below:

Minimum CET1 Regulatory Capital Requirements	2024	2023
Pillar 1 – CET 1 Requirement	4,50%	4,50%
Pillar 2 – CET 1 Requirement	3,09%	3,09%
Capital Conservation Buffer	2,50%	2,50%
Countercyclical Buffer	1,00%	0,50%
Minimum CET 1 Regulatory Requirements	11,09%	10,59%
Minimum Total Capital Regulatory Requirements	2024	2023
Pillar 1 – Total Capital Requirement	8,00%	8,00%
Pillar 2 – Total Capital Requirement	5,50%	5,50%
Capital Conservation Buffer	2,50%	2,50%
Countercyclical Buffer	1,00%	0,50%
Minimum Total Capital Regulatory Requirements	17,00%	16,50%

The Group elected to apply the transitional provisions of EU Regulation 2017/2395 for gradual phase in over a five-year period of the impact on regulatory capital caused by additional impairments arising from the implementation of IFRS 9 on 1 January 2018. The impact was fully phased in by 1 January 2023.

CET 1 ratio as at 31 December 2024 stood at 22,25%, 1.116 bps above the minimum regulatory CET 1 of 11,09%. The Group's Overall Capital Ratio (OCR) as at 31 December 2024 stood at 27,38%, 1.038 bps above the minimum regulatory OCR of 17,00%. The Directors and Management are closely monitoring and managing the capital of the Group and take actions to ensure compliance with the relevant regulatory capital requirements and to maintain healthy capital adequacy ratios to cover the risk of its business and support its strategy.

Additional information on regulatory capital is disclosed in the Pillar 3 Disclosures Report, which is available on the Group's website www.cdb.com.cy

The Group's regulatory capital is analysed as follows:

Common Equity Tier 1 Capital: It includes share capital, share premium, retained earnings, current year's profits, revaluation and other reserves. Intangible assets and deferred tax assets that rely on future profitability and do not arise from temporary differences are deducted from Common Equity Tier I Capital subject to transitional provisions.

Additional Tier 1 Capital: It includes the Perpetual Unsecured Subordinated Note (note 32).

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.5 Capital management (continued)

Tier 2 Capital: It includes Unsecured Subordinated Tier 2 Bonds (note 32).

The Group's and the Bank's regulatory capital position as at 31 December was as follows:

	THE GROUP		THE BANK
	2024	2023	2024	2023
	€'000	€'000	€'000	€'000
Regulatory capital
Common Equity Tier 1	48.763	45.204	48.553	45.095
Additional Tier 1	5.000	5.000	5.000	5.000
Tier 2	6.250	6.250	6.250	6.250
Total regulatory capital	60.013	56.454	59.803	56.345
Risk weighted assets
Credit risk	181.211	188.567	181.881	188.981
Operational risk	37.942	31.310	37.341	30.910
Total risk weighted assets	219.153	219.877	219.222	219.891
Common Equity Tier 1 ratio	22,25%	20,56%	22,15%	20,51%
T1 Capital ratio	24,53%	22,83%	24,43%	22,78%
Overall capital adequacy ratio	27,38%	25,68%	27,28%	25,62%

For the year ended 31 December 2024

38. RISK MANAGEMENT (continued)

38.6 Leverage Ratio Requirements

The Basel III framework introduced the leverage ratio as a non risk-based measure which is intended to restrict the build-up of excessive leverage from on and off-balance sheet items in the banking sector. The leverage ratio is defined as Tier 1 capital divided by the total exposure measure and is a binding requirement as from 1 January 2018. The leverage ratio is submitted to the regulatory authorities on a quarterly basis.

The Leverage Ratio of the Group as at 31 December 2024 was 8,39% (31 December 2023: 8,72%), and the Bank 8,35% (31 December 2023: 8,70%), well above the 3% minimum threshold applied by the competent authorities.

38.7 Minimum Requirement for Own Funds and Eligible Liabilities (MREL)

The Bank, within the framework of the Bank Recovery and Resolution Directive (BRRD), is subject to the minimum requirement for own funds and eligible liabilities (MREL). This framework, which entered into effect on 1 January 2016, provides authorities with a set of tools to intervene sufficiently early and quickly in an unsound or failing institution so as to ensure the continuity of the institution's critical financial and economic functions, while minimising the impact of an institution's failure on the economy and financial system. This is achieved by requiring banks to have a funding structure with a certain proportion of liabilities that can be written off or converted into equity in the event of a bank failure.

On 27 June 2019, as part of the reform package for strengthening the resilience and resolvability of European banks, the BRRD II came into effect and must be transposed into National Law. BRRD II was transposed and implemented in Cyprus law in early May 2021. In addition, certain provisions on MREL have been introduced in CRR II which also came into force on 27 June 2019 as part of the reform package and took immediate effect.

The Central Bank of Cyprus in its capacity as the National Resolution Authority of Less Significant Institutions (LSIs) sets and monitors minimum MREL requirements. On 25 April 2024, CBC communicated to the Bank its final decision for the determination of MREL, by which MREL requirement for the Bank was set at 16,00% of total risk weighted assets (RWAs) and 4,25% of total leverage ratio exposure (LRE) which should be met by 31 December 2024. The own funds used by the Bank to meet the Combined Buffer Requirement (CBR) is not eligible to meet its MREL requirements expressed in terms of risk-weighted assets. The MREL ratio of the Group as at 31 December 2024 stood at 23,88% (31 December 2023: 22,68%), 788 bps above the MREL requirement of 16,00%. The Group leverage ratio (LR) as at 31 December 2024 stood at 8,39% (31 December 2023: 8,72%), well above the regulatory requirement of 4,25%. The Group's MREL requirement as at 31 December 2024 was met with regulatory capital.

For the year ended 31 December 2024

39. CATEGORISATION OF FINANCIAL INSTRUMENTS

		Securities	Securities at	Securities	Other at
THE GROUP	Carrying	classified	amortised	classified	amortised
	amount	at FVTPL	cost	at FVOCI	cost
	€'000	€'000	€'000	€'000	€'000
31 December 2024
Assets
Cash and balances with central banks	373.772	-	-	-	373.772
Balances with other banks	3.680	-	-	-	3.680
Loans and advances	197.565	-	-	-	197.565
Equity investments	426	426	-	-	-
Debt securities	26.211	-	26.211	-	-
	601.654	426	26.211	-	575.017
Liabilities
Bank borrowings	1.494	-	-	-	1.494
Client deposits	548.579	-	-	-	548.579
Loan capital	11.263	-	-	-	11.263
	561.336	-	-	-	561.336
31 December 2023
Assets
Cash and balances with central banks	300.407	-	-	-	300.407
Balances with other banks	2.356	-	-	-	2.356
Loans and advances	190.484	-	-	-	190.484
Equity investments	346	346	-	-	-
Debt securities	45.356	-	42.315	3.041	-
	538.949	346	42.315	3.041	493.247
Liabilities
Bank borrowings	1.921	-	-	-	1.921
Client deposits	489.423	-	-	-	489.423
Loan capital	11.261	-	-	-	11.261
	502.605	-	-	-	502.605

For the year ended 31 December 2024

39. CATEGORISATION OF FINANCIAL INSTRUMENTS (continued)

		Securities at	Securities	Other at
THE BANK	Carrying	amortised	classified	amortised
	amount	cost	at FVOCI	cost
	€'000	€'000	€'000	€'000
31 December 2024
Assets
Cash and balances with central banks	373.772	-	-	373.772
Balances with other banks	3.390	-	-	3.390
Loans and advances	197.565	-	-	197.565
Debt securities	26.211	26.211	-	-
	600.938	26.211	-	574.727
Liabilities
Bank borrowings	1.494	-	-	1.494
Client deposits	548.579	-	-	548.579
Loan capital	11.263	-	-	11.263
	561.336	-	-	561.336
31 December 2023
Assets
Cash and balances with central banks	300.407	-	-	300.407
Balances with other banks	2.146	-	-	2.146
Loans and advances	190.484	-	-	190.484
Debt securities	45.356	42.315	3.041	-
	538.393	42.315	3.041	493.037
Liabilities
Bank borrowings	1.921	-	-	1.921
Client deposits	489.423	-	-	489.423
Loan capital	11.261	-	-	11.261
	502.605	-	-	502.605

For the year ended 31 December 2024

40. ANALYSIS OF ASSETS AND LIABILITIES BY EXPECTED MATURITY

	2024				2023
THE GROUP	Less than	Over one		Less than	Over one
	one year	year	Total	one year	year	Total
ASSETS	€'000	€'000	€'000	€'000	€'000	€'000
Cash and balances with central banks	368.777	4.995	373.772	295.721	4.686	300.407
Balances with other banks	3.680	-	3.680	2.356	-	2.356
Loans and advances	57.658	139.907	197.565	52.166	138.318	190.484
Investments in equities	-	426	426	-	346	346
Investments in associates	-	754	754	-	744	744
Investments in debt securities	14.308	11.903	26.211	19.907	25.449	45.356
Premises and equipment	-	7.346	7.346	-	6.746	6.746
Intangible assets	-	1.254	1.254	-	593	593
Stock of property	10.368	-	10.368	8.579	-	8.579
Receivables and other assets	699	915	1.614	1.284	917	2.201
Total assets	455.490	167.500	622.990	380.013	177.799	557.812
LIABILITIES
Bank borrowings	431	1.063	1.494	437	1.484	1.921
Client deposits	542.417	6.162	548.579	479.329	10.094	489.423
Deferred taxation	-	306	306	-	314	314
Accruals and other liabilities	9.741	1.487	11.228	7.732	1.236	8.968
Loan capital	13	11.250	11.263	11	11.250	11.261
Total liabilities	552.602	20.268	572.870	487.509	24.378	511.887

The main assumptions used in determining the expected maturity of assets and liabilities are set out below.

The investments are classified in the relevant time band based on expectations as to their realisation. In most cases this is the maturity date, unless there is an indication that there is an intention to sell.

Performing loans and advances are classified based on the contractual repayment schedule. Performing overdraft accounts are classified in the "less than one year" time band. The Stage 3 loans and overdrafts are classified in the "over one year" time band.

Stock of property is classified in the relevant time band based on expectations as to its realisation.

Customer deposits are classified according to contractual maturity. Current account balances are classified under the "less than one year" time band.

For the year ended 31 December 2024

40. ANALYSIS OF ASSETS AND LIABILITIES BY EXPECTED MATURITY (continued)

The expected maturity of all prepayments, accrued income and other assets and accruals, deferred income and other liabilities is the same as their contractual maturity. If they do not have a contractual maturity, the expected maturity is based on the timing the asset is expected to be realised and the liability is expected to be settled.

	2024			2023
THE BANK	Less than	Over one		Less than	Over one
	one year	year	Total	one year	year	Total
ASSETS	€'000	€'000	€'000	€'000	€'000	€'000
Cash and balances with central banks	368.777	4.995	373.772	295.721	4.686	300.407
Balances with other banks	3.390	-	3.390	2.146	-	2.146
Loans and advances	57.658	139.907	197.565	52.166	138.318	190.484
Investments in debt securities	14.308	11.903	26.211	19.907	25.449	45.356
Investments and exposures in subsidiary companies	-	4.626	4.626	2.657	1.349	4.006
Premises and equipment	-	7.346	7.346	-	6.745	6.745
Intangible assets	-	1.254	1.254	-	593	593
Stock of property	7.231	-	7.231	6.028	-	6.028
Receivables and other assets	496	422	918	1.028	425	1.453
Total assets	451.860	170.453	622.313	379.653	177.565	557.218
LIABILITIES
Bank borrowings	431	1.063	1.494	437	1.484	1.921
Client deposits	542.417	6.162	548.579	479.329	10.094	489.423
Deferred taxation	-	306	306	-	314	314
Accruals and other liabilities	9.377	1.487	10.864	7.353	1.236	8.589
Loan capital	13	11.250	11.263	11	11.250	11.261
Total liabilities	552.238	20.268	572.506	487.130	24.378	511.508

For the year ended 31 December 2024

41. SHAREHOLDERS

The shareholding structure at 31 December 2024 is shown below:

		Shareholding structure as at 31.12.2024
	Number of
	shares	% of total
7Q Invest AIF V.C.I.C. PLC I Multi Opportunities	6.681.171	15,44%
7Q Holdings Ltd	1.188.447	2,75%
7Q Financial Services Ltd	781.250	1,80%
Path Holdings Ltd	8.197.836	18,94%
Menelaos Shiacolas	7.058.982	16,31%
Delphis Ependysis Ltd	6.064.370	14,01%
8Safe International Ltd	4.284.322	9,90%
Intergaz Ltd	4.106.922	9,49%
Leon Investment SARL	2.102.881	4,86%
Leonidas Ioannou	1.510.571	3,49%
Adamos Christodoulou	695.000	1,61%
Shareholders with holdings below 1%	604.227	1,40%

On 12 December 2024, 7.058.982 ordinary shares of nominal value €0,20 each were transferred to Mr Menelaos Shiacolas from Mr Constantinos Shiacolas.

On 4 May 2023, 695.000 ordinary shares of nominal value €0,20 each, were transferred to Mr Adamos Christodoulou from Delphis Ependysis Ltd.

For the year ended 31 December 2024

42. RELATED PARTY TRANSACTIONS

THE GROUP AND THE BANK

Fees and emoluments of members of the Management Body and key management personnel

	2024 €'000	2023 €'000
Director emoluments
Executives
Salaries and other benefits	463	284
Employer's contributions for social insurance, etc	35	30
Retirement benefits	27	25
	525	339
Non-Executives
Fees	256	254
	781	593
Key management personnel emoluments
Salaries	481	450
Employer's contributions for social insurance, etc	65	60
Retirement benefits	43	40
	589	550
Total	1.370	1.143

Members of the Management Body and connected persons

Connected persons include spouses, minor children and companies in which members of the Management Body hold directly or indirectly, at least 20% of the voting rights in a general meeting, or act as directors of the entities concerned or have guaranteed credit exposures of such entities.

Key management personnel

Key management personnel emoluments for 2024 and 2023 include the remuneration of the members of the EXCO committee with voting rights.

For the year ended 31 December 2024

42. RELATED PARTY TRANSACTIONS (continued)

Transactions with members of the Management Body and connected persons:

	2024 €'000	2023 €'000
Loans and advances	143	153
Deposits	739	253
Loan capital - Subordinated Tier 2 Bonds	556	556
Unutilised limits	4	11
Assets under custody	2.548	2.256
Interest and other income for the year	4	5
Interest expense for the year	(46)	(40)

All transactions with members of the Management Body and their connected persons are made on normal business terms.

Key Management personnel who are not Directors and their connected persons

Connected persons include spouses, minor children and companies in which the key management personnel who are not Directors hold, directly or indirectly, at least 20% of the voting rights in a general meeting, or act as directors of the entities concerned or have guaranteed credit exposures of such entities.

	2024	2023
	€'000	€'000
Loans and advances	35	51
Deposits	256	194
Guarantees and unutilised limits	46	38
Interest and other income for the year	2	2
Interest expense for the year	(2)	(1)

Transactions with key management personnel are made according to the terms applicable to the rest of the personnel of the Bank.

Transactions with shareholders

Pursuant to the provisions of IAS 24, related parties are considered, among others, the shareholders who have significant influence over the Bank and/or hold directly or indirectly more than twenty percent (20%) of the issued share capital of the Bank.

For the year ended 31 December 2024

42. RELATED PARTY TRANSACTIONS (continued)

Transactions with shareholders (continued)

Connected persons include the entities controlled by shareholders with significant influence as they are defined above.

As at 31 December 2024 and 31 December 2023, there were no shareholders who had significant influence over the Bank and/or held directly or indirectly more than 20% of the issued share capital of the Bank.

During the year ended 31 December 2024, there were no purchases of goods and services from Shareholders with significant influence and their connected persons as defined above (31 December 2023: nil).

All transactions with Shareholders with significant influence and their connected persons are conducted on an arm's length basis.

Transactions with associates

	2024	2023
	€'000	€'000
Loans and advances	593	587
Other trading receivables	-	18
Trading account payable	673	587
Guarantees and unutilised limits	-	3
Interest income for the year	32	32
Other trading income for the year	73	73

Transactions with subsidiaries

Balances and transactions with subsidiary companies are disclosed under Note 21 to the Financial Statements.

43. MATERIAL LITIGATION

As at 31 December 2024, there were pending litigations against the bank arising in the ordinary course of the Bank's business. Based on the information available, the Group has recorded a provision against these cases as disclosed in Note 12 to the Financial Statements.

Claims relating to execution of transactions

The Bank was served with a legal action against it by a client claiming certain wrongdoings by the Bank in accepting transfer instructions which allegedly relate to fraud by a third person. The Bank is closely monitoring this claim.

For the year ended 31 December 2024

44. OPERATING ENVIRONMENT

In 2024, the economy of Cyprus recorded a positive performance, continuing along the post COVID trajectory established in 2022 and 2023. According to averaged data from key bodies, the 2024 GDP growth is 2,9%, compared to 2,5% for 2023. The 2024 performance compares favourably with the euro zone's respective performance, which has been revised by ECB to 0,9%. The outlook for the Cyprus economy for the next years remains positive, with the 2025 and 2026 GDP growth forecasts increasing slightly to circa 3%. These growth rates are significantly higher than those of the eurozone which, following recent downgrades, the ECB expects to be 1,2% for 2025 and 1,3% for 2026.

Inflation is forecasted to decline towards the 2% target for 2025 and 2026, following the euro zone's inflation outlook. The performance of the Cyprus economy, which includes an improvement in primary surpluses (2024: 2,9% of GDP), is reflected in the gradual decline of the Government Debt to GDP ratio from 113,6% in 2020 to approximately 65% in 2024. The Ministry of Cyprus expects this ratio to fall below 50% of GDP by 2028.

Cyprus holds an investment grade rating with all major credit rating agencies, a status further strengthened by a series of upgrades in 2024 and 2025. The latest upgrades have also elevated Cyprus from the lower to the upper medium grade of the investment grade scale. Despite ongoing geopolitical uncertainty and other multifaceted challenges, the Cyprus economy once again demonstrated resilience and flexibility to external shocks. Nevertheless, the significant trade turmoil, economic uncertainty and market volatility caused by the imposition of tariffs by the US, suggest that the Cyprus economy may need to face additional challenges in order to maintain the achieved momentum.

Following supply shocks pertaining to pandemic and geopolitical developments, global economies have been gradually returning to a relatively normalised framework of economic activity and inflation. The ECB's response in 2022-2023 to high inflation was a cycle of interest rate increases aiming to bring inflation toward its 2% medium-term target. In Cyprus, the inflation rate is gradually heading towards the target of 2%. According to the December 2024 Economic Bulletin of the Central Bank of Cyprus, following the inflation rate decline to 3,9% in 2023 and to 2,2% in 2024, inflation is expected to range around the medium-term target of 2% during the next three years. These figures align with European Commission forecasts for Cyprus. Geopolitical, economic and trade developments continue to pose a risk to inflation stability, mainly due to their direct impact on energy and food prices.

As regards employment conditions in Cyprus, according to the Labour Force Survey of the Cyprus Statistical Service, unemployment rate in Q4 2024 was 4,6% (2023: 5,4%). According to the macroeconomic forecast of the European Commission for Cyprus, the seasonally adjusted unemployment rate is projected to decline from 4,9% in 2024 to 4,7% in 2025 and 4,5% in 2026.

Despite the ECB lowering the Deposit Facility rate from 4,00% to 3,15% in 2024, banks managed to improve upon their record profits from 2023 and strengthen their overall financial position. Indicatively, the 2024 combined before and after-tax profits of the three largest banks increased by 8,2% and 4,9%, respectively. Interest rate conditions continued to be favourable for banks in 2024, albeit to a slightly lesser extent compared to 2023. In response to narrowing deposit spreads, banks increased their holdings of high-quality bonds to enhance income.

For the year ended 31 December 2024

44. OPERATING ENVIRONMENT (continued)

The performance of the Cyprus banks was supported by the positive performance of the Cyprus economy, along with the stabilisation of the non-performing exposures at lower levels. The ratio of Non-Performing Loans to Total Loans decreased in December 2024 to 6,2% from 7,9% in December 2023, still well above the EU average of approximately 2% but significantly lower than the 17,7% of 2020 and the 42,5% of 2017.

Capital adequacy continued to improve, with the Common Equity Tier 1 capital ratio reaching 23,5% in Q3 2024 from 19,4% in Q3 2023, significantly exceeding the European average of 16%. Banks in Cyprus also maintained strong liquidity, with a Liquidity Coverage Ratio of 336%, well above both the supervisory requirement of 100% and the European average of 163%.

Total deposits reached €55,9 billion in 2024, marking an increase of 7,2% over 2023. This growth rate is significantly higher than the average growth rate of 2,7% for the three preceding years. Total loans reached €25,4 billion, recording a growth of 2,5% compared to 2023; the loans to domestic residents were down by €234 million, a negative performance outweighed by an increase in loans to other euro area and rest of the world residents of €863 million.

Banks are expected to remain alert regarding potential adverse economic and geopolitical developments which could negatively impact the quality of their loan portfolios and investments, through cautious lending practices and prudent investment policies. Stronger competition, low growth rates for net loans and lower net revenues from placements with the ECB are expected to be major challenges.

The tourism sector performed strongly in 2024, establishing once more its position as a core revenue contributor of the Cyprus economy. 2024 was a record year for tourism in Cyprus, surpassing prepandemic levels in both arrivals and revenues. Total tourist arrivals in 2024, reached 4,04 million, marking a 5,1% increase compared to 2023. Tourism revenues in 2024, also saw significant growth, reaching €3,21 billion, up 7,3% from the previous year. The sector's rebound was achieved amidst multiple challenges, the main ones being the loss of arrivals from the Russian market and geopolitical uncertainty.

Despite various challenges, the real estate sector remained a key pillar of the Cyprus economy in 2024, with all major activity indicators remaining at high levels. The challenges included uncertainty related to geopolitical developments, increased construction costs (mainly from prior years), and higher borrowing costs. Regarding borrowing costs, the total cost of new loans for house purchase in December 2024 was 5,19%, compared to 4,44% in 2023, 4,18% in 2022 and 2,96% in 2021.

Continuing demand from foreign buyers and local investor interest, combined with the relatively inelastic supply, resulted in a significant number and value of transactions, albeit with lower price gains. According to the Department of Lands and Surveys, sales transfers increased in 2024 by 1,8% with the underlying accepted value recording an annual decrease of 2,3%. The number of sales contracts recorded a small increase of 1,5% over 2023.

In the first nine months of 2024, the Residential Property Price Index of the CBC rose by 4,1%, with flats up 5,4% and houses up 4,1%. Larnaca, Paphos, and Famagusta saw the highest gains. Based on the RICS Cyprus Property Price, for the entire 2024, apartment prices increased by 3,4%, office space by 1,7%, and warehouses and houses by 1%, while retail prices slightly decreased. Overall, the real estate sector maintained its momentum in 2024, though with lower gains and varying performance across districts.

For the year ended 31 December 2024

44. OPERATING ENVIRONMENT (continued)

As a eurozone member since 2008, Cyprus is influenced by the European Central Bank's (ECB) monetary decisions. After nearly a decade of zero or negative interest rates, the ECB began increasing rates in 2022 to bring inflation back to its medium-term target of 2%. Inflation in the eurozone peaked at 8,4% in 2022 before subsiding to 5,4% in 2023. The ECB's Deposit Facility Rate rose from -0,5% in May 2022 to 4% in September 2023, remained at that level until June 2024, and then gradually decreased to 3% in December 2024 and 2,5% in March 2025.

The ECB forecasts that eurozone inflation will meet the 2% medium target on a sustainable basis, forecasting rates of 2,3% in 2025, 1,9% in 2026, and 2,0% in 2027. Regarding growth projections, following a downward prediction due to lower exports and investment uncertainty, ECB expects 0,9% for 2025, 1,2% for 2026, and 1,3% for 2027. The ECB's interest rate decisions will be based on inflation outlook and economic data.

ECB reiterated its position that interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. The tariffs policy of the USA has introduced additional uncertainty and complexity as regards ECB's monetary policy, due to the potential negative effects on growth and inflation.

45. EVENTS AFTER THE REPORTING PERIOD

No significant non-adjusting events have taken place since 31 December 2024.