Half-year Report -Part 2

Bank of Cyprus Holdings PLC

09 August 2023

Consolidated Condensed Interim Financial Statements for the six months ended 30 June 2023

Interim Consolidated Income Statement

		Six months ended 30 June
		2023	2022 (restated)
	Notes	€000	€000
Turnover	7	646,203	414,996
Interest income	8	403,852	181,470
Income similar to interest income	8	22,172	9,518
Interest expense	9	(56,083)	(37,514)
Expense similar to interest expense	9	(11,599)	(7,752)
Net interest income		358,342	145,722
Fee and commission income		93,879	98,086
Fee and commission expense		(4,275)	(4,447)
Net foreign exchange gains		15,839	11,898
Net gains/(losses) on financial instruments	10	5,680	(10,183)
Net gains on derecognition of financial assets measured at amortised cost		5,861	1,648
Net insurance finance income/(expense) and net reinsurance finance income/(expense)		263	2,653
Net insurance service result		34,086	31,268
Net reinsurance service result		(9,788)	(10,197)
Net gains/(losses) from revaluation and disposal of investment properties		788	(1,372)
Net gains on disposal of stock of property		3,906	8,242
Other income		12,200	8,927
Total operating income		516,781	282,245
Staff costs	11	(93,043)	(98,303)
Special levy on deposits and other levies/contributions	11	(18,236)	(16,507)
Provisions for pending litigations, claims, regulatory and other matters (net of reversals)	27	(14,148)	(594)
Other operating expenses	11	(70,456)	(75,824)
Operating profit before credit losses and impairment		320,898	91,017
Credit losses on financial assets	12	(36,772)	(24,826)
Impairment net of reversals on non‑financial assets	12	(23,206)	(12,157)
Profit before tax		260,920	54,034
Income tax	13	(39,768)	(11,158)
Profit after tax for the period		221,152	42,876
Attributable to:
Owners of the Company		220,247	42,214
Non‑controlling interests		905	662
Profit for the period		221,152	42,876

Basic profit per share attributable to the owners of the Company (€ cent)	14	49.4	9.5
Diluted profit per share attributable to the owners of the Company (€ cent)	14	49.3	9.5

Interim Consolidated Statement of Comprehensive Income

		Six months ended 30 June
		2023	2022 (restated)
	Notes	€000	€000
Profit for the period		221,152	42,876
Other comprehensive income (OCI)
OCI that may be reclassified in the consolidated income statement in subsequent periods		3,299	(20,412)
Fair value reserve (debt instruments)		3,373	(17,909)
Net gains/(losses) on investments in debt instruments measured at fair value through OCI (FVOCI)		3,705	(17,421)
Transfer to the consolidated income statement on disposal		(332)	(488)

Foreign currency translation reserve		(74)	(2,503)
(Losses)/profit on translation of net investments in foreign branches and subsidiaries		(71)	1,576
Losses on hedging of net investments in foreign branches and subsidiaries	16	(3)	(4,079)

OCI not to be reclassified in the consolidated income statement in subsequent periods		486	(211)
Fair value reserve (equity instruments)		(681)	(2,051)
Net losses on investments in equity instruments designated at FVOCI		(681)	(2,051)
Property revaluation reserve		824	-
Fair value gains before tax		798	-
Deferred tax	13	26	-

Actuarial gains on the defined benefit plans		343	1,840
Remeasurement gains on defined benefit plans		343	1,840

Other comprehensive income/(loss) for the period net of taxation		3,785	(20,623)
Total comprehensive income for the period		224,937	22,253

Attributable to:
Owners of the Company		224,026	21,591
Non‑controlling interests		911	662
Total comprehensive income for the period		224,937	22,253

Interim Consolidated Balance Sheet

				30 June 2023	31 December 2022 (restated)		1 January 2022 (restated)
Assets		Notes		€000	€000		€000
Cash and balances with central banks		28		9,127,429	9,567,258		9,230,883
Loans and advances to banks		28		431,812	204,811		291,632
Derivative financial assets		16		49,302	48,153		6,653
Investments at FVPL		15		138,661	190,209		199,194
Investments at FVOCI		15		487,806	467,375		748,695
Investments at amortised cost		15		2,703,240	2,046,119		1,191,274
Loans and advances to customers		18		10,007,819	9,953,252		9,836,405
Life insurance business assets attributable to policyholders				587,882	542,321		551,797
Prepayments, accrued income and other assets		20		609,607	609,054		583,777
Stock of property		19		945,831	1,041,032		1,111,604
Investment properties				74,339	85,099		117,745
Deferred tax assets		13		227,953	227,934		265,942
Property and equipment				267,410	253,378		252,130
Intangible assets				47,546	52,546		54,144
Non‑current assets and disposal groups held for sale				-	-		358,951
Total assets				25,706,637	25,288,541		24,800,826
Liabilities
Deposits by banks				448,713	507,658		457,039
Funding from central banks		21		2,004,480	1,976,674		2,969,600
Derivative financial liabilities		16		18,391	16,169		32,452
Customer deposits		22		19,166,155	18,998,319		17,530,883
Insurance liabilities				631,917	599,992		623,791
Accruals, deferred income, other liabilities and other provisions		24		429,585	379,182		356,697
Provisions for pending litigation, claims, regulatory and other matters		27		128,267	127,607		104,108
Debt securities in issue		23		291,976	297,636		302,555
Subordinated liabilities		23		309,348	302,104		340,220
Deferred tax liabilities		13		34,618	34,634		39,817
Total liabilities				23,463,450	23,239,975		22,757,162
Equity
Share capital		25		44,620	44,620		44,620
Share premium		25		594,358	594,358		594,358
Revaluation and other reserves				80,686	76,939		99,541
Retained earnings				1,264,795	1,090,349		1,062,711
Equity attributable to the owners of the Company				1,984,459	1,806,266		1,801,230
Other equity instruments		25		235,517	220,000		220,000
Non‑controlling interests				23,211	22,300		22,434
Total equity				2,243,187	2,048,566		2,043,664
Total liabilities and equity				25,706,637	25,288,541		24,800,826



Mr. E.G. Arapoglou	Chairman		Mr. P. Nicolaou			Chief Executive Officer






Mr. N. Sofianos	Director		Mrs. E. Livadiotou			Executive Director Finance

Interim Consolidated Statement of Changes in Equity

	Attributable to the owners of the Company
	Share capital (Note 25)	Share premium (Note 25)	Treasury shares (Note 25)	Other capital reserves (Note 11)	Retained earnings	Property revaluation reserve	Financial instruments fair value reserve	Life insurance in‑force business reserve	Foreign currency translation reserve	Total	Other equity instruments (Note 25)	Non‑ controlling interests	Total equity
	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
31 December 2022	44,620	594,358	(21,463)	322	1,041,152	74,170	7,142	101,301	16,768	1,858,370	220,000	22,300	2,100,670
Impact of retrospective application of IFRS 17 adoption	-	-	-	-	49,197	-	-	(101,301)	-	(52,104)	-	-	(52,104)
31 December 2022 (restated)/1 January 2023	44,620	594,358	(21,463)	322	1,090,349	74,170	7,142	-	16,768	1,806,266	220,000	22,300	2,048,566
Profit for the period	-	-	-	-	220,247	-	-	-	-	220,247	-	905	221,152
Other comprehensive income/(loss) after tax for the period	-	-	-	-	343	818	2,692	-	(74)	3,779	-	6	3,785
Total comprehensive income/(loss) after tax for the period	-	-	-	-	220,590	818	2,692	-	(74)	224,026	-	911	224,937
Dividends (Note 26)	-	-	-	-	(22,310)	-	-	-	-	(22,310)	-	-	(22,310)
Share‑based benefits ‑ cost (Note 11)	-	-	-	311	-	-	-	-	-	311	-	-	311
Payment of coupon to AT1 holders (Note 25)	-	-	-	-	(13,750)	-	-	-	-	(13,750)	-	-	(13,750)
Issue of other equity instruments (Note 25)	-	-	-	-	(3,530)	-	-	-	-	(3,530)	220,000	-	216,470
Repurchase of other equity instruments (Note 25)	-	-	-	-	(6,554)	-	-	-	-	(6,554)	(204,483)	-	(211,037)
30 June 2023	44,620	594,358	(21,463)	633	1,264,795	74,988	9,834	-	16,694	1,984,459	235,517	23,211	2,243,187

	Attributable to the owners of the Company
	Share capital (Note 25)	Share premium (Note 25)	Treasury shares (Note 25)	Retained earnings	Property revaluation reserve	Financial instruments fair value reserve	Life insurance in‑force business reserve	Foreign currency translation reserve	Total	Other equity instruments (Note 25)	Non‑ controlling interests	Total equity
	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
1 January 2022	44,620	594,358	(21,463)	986,623	80,060	23,285	113,651	17,659	1,838,793	220,000	22,434	2,081,227
Impact of retrospective application of IFRS 17 adoption	-	-	-	76,088	-	-	(113,651)	-	(37,563)	-	-	(37,563)
Restated balance at 1 January 2022	44,620	594,358	(21,463)	1,062,711	80,060	23,285	-	17,659	1,801,230	220,000	22,434	2,043,664
Profit for the period	-	-	-	42,214	-	-	-	-	42,214	-	662	42,876
Other comprehensive income/(loss) after tax for the period	-	-	-	1,840	-	(19,960)	-	(2,503)	(20,623)	-	-	(20,623)
Total comprehensive income/(loss) after tax for the period	-	-	-	44,054	-	(19,960)	-	(2,503)	21,591	-	662	22,253
Defence contribution	-	-	-	(4,983)	-	-	-	-	(4,983)	-	-	(4,983)
Payment of coupon to AT1 holders (Note 25)	-	-	-	(13,750)	-	-	-	-	(13,750)	-	-	(13,750)
30 June 2022	44,620	594,358	(21,463)	1,088,032	80,060	3,325	-	15,156	1,804,088	220,000	23,096	2,047,184

Interim Consolidated Statement of Cash Flows

		Six months ended 30 June
		2023	2022 (restated)
	Note	€000	€000
Profit before tax		260,920	54,034
Adjustments for:
Depreciation of property and equipment and amortisation of intangible assets		16,901	16,908
Impairment net of reversals on non‑financial assets		23,206	12,157
Credit losses on financial assets		36,772	24,826
Net gains on derecognition of financial assets measured at amortised cost		(5,861)	(1,648)
Amortisation of discounts/premiums and interest on debt securities		(24,735)	(8,767)
Dividend income		(439)	(368)
Net loss on disposal of investment in debt securities measured at FVOCI		433	2,826
(Gain)/loss from revaluation of financial instruments designated as fair value hedges		(9,473)	38,007
Interest on subordinated liabilities and debt securities in issue		13,956	14,258
Negative interest on loans and advances to banks and balances with central banks		-	20,104
Interest/(negative) interest on funding from central banks		27,806	(14,792)
Loss on disposal/dissolution of subsidiaries and associates		-	(179)
Share‑based benefits cost	11	311	-
Net gains on disposal of stock of property and investment properties		(4,868)	(8,358)
Profit on sale and write offs of property and equipment and intangible assets		(12)	(51)
Interest expense on lease liability		1,433	-
Premium tax included in net insurance service result as directly attributable expense		1,070	955
Net losses from revaluation of investment properties		174	1,488
Net exchange differences		2,290	(23,236)
		339,884	128,164
Change in:
Loans and advances to banks		3,696	36,345
Deposits by banks		(58,945)	34,983
Obligatory balances with central banks		(23,925)	(7,883)
Customer deposits		167,836	919,333
Life insurance business assets attributable to policyholders and Insurance liabilities		(13,636)	(19,715)
Loans and advances to customers		(82,889)	(356,885)
Prepayments, accrued income and other assets		(4,941)	(3,760)
Provisions for pending litigation, claims, regulatory and other matters		(110)	685
Accruals, deferred income, other liabilities and other provisions		12,287	29,534
Derivative financial instruments		1,073	(54,464)
Investments measured at FVPL		51,548	17,876
Stock of property		61,778	86,519
		453,656	810,732
Tax paid		(764)	(441)
Net cash from operating activities		452,892	810,291
Cash flows from investing activities
Purchases of debt, treasury bills and equity securities		(828,338)	(329,751)
Proceeds on disposal/redemption of investments in debt and equity securities		166,577	295,856
Interest received from debt securities		18,299	17,230
Dividend income from equity securities		439	368
Payment for purchase of Velocity 2		(3,604)	-
Deposits on held for sale portfolios		-	900
Purchases of property and equipment		(2,246)	(817)
Purchases of intangible assets		(4,484)	(6,046)
Proceeds on disposals of property and equipment and intangible assets		167	109
Proceeds on disposals of investment properties		2,921	23,384
Net cash (used in)/from investing activities		(650,269)	1,233


		Six months ended 30 June
		2023	2022 (restated)
	Note	€000	€000
Cash flow from financing activities
Payment of AT1 coupon	25	(13,750)	(13,750)
Issue of other equity instruments (net of transaction costs)	25	216,470	-
Repurchase of other equity instruments	25	(211,037)	-
Payment of defence contribution		-	(4,983)
Repayments of subordinated liabilities		-	(35,605)
Dividend paid		(16,614)	-
Interest on subordinated liabilities		-	(3,293)
Interest on debt securities in issue		(7,500)	(7,500)
Negative interest on loans and advances to banks and balances with central banks		-	(20,104)
Principal elements of lease payments		(3,430)	(3,507)
Net cash used in financing activities		(35,861)	(88,742)
Net (decrease)/increase in cash and cash equivalents		(233,238)	722,782
Cash and cash equivalents 1 January		9,586,153	9,255,210
30 June	28	9,352,915	9,977,992
Non‑cash transactions
Repossession of collaterals
During the six months ended 30 June 2023, the Group acquired properties by taking possession of collaterals held as securities for loans and advances to customers of €5,815 thousand (30 June 2022: €23,058 thousand).
Recognition of RoU asset and lease liabilities
During the six months ended 30 June 2023, the Group recognised RoU assets and corresponding lease liabilities of €2,234 thousand (30 June 2022: €136 thousand).

Notes to the Consolidated Condensed Interim Financial Statements

1. Corporate information

Bank of Cyprus Holdings Public Limited Company (the 'Company') was incorporated in Ireland on 11 July 2016, as a public limited company under company number 585903 in accordance with the provisions of the Companies Act 2014 of Ireland (Companies Act 2014). Its registered office is 10 Earlsfort Terrace, Dublin 2, D02 T380, Ireland. The Company is domiciled in Ireland and is tax resident in Cyprus.

Bank of Cyprus Holdings Public Limited Company is the holding company of Bank of Cyprus Public Company Limited ('BOC PCL' or the 'Bank') with principal place of business in Cyprus. The Bank of Cyprus Holdings Group (the 'Group') comprises the Company, its subsidiary, BOC PCL, and the subsidiaries of BOC PCL. Bank of Cyprus Holdings Public Limited Company is the ultimate parent company of the Group.

The principal activities of BOC PCL and its subsidiary companies (the 'BOC Group') involve the provision of banking services, financial services, insurance services and the management and disposal of property predominately acquired in exchange of debt.

BOC PCL is a significant credit institution for the purposes of the SSM Regulation and has been designated by the CBC as an 'Other Systemically Important Institution' (O‑SII). The Group is subject to joint supervision by the ECB and the CBC for the purposes of its prudential requirements.

The shares of the Company are listed and trading on the London Stock Exchange (LSE) and the Cyprus Stock Exchange (CSE).

Consolidated Condensed Interim Financial Statements

The Consolidated Condensed Interim Financial Statements of the Company for the six months ended 30 June 2023 (the Consolidated Financial Statements) were authorised for issue by a resolution of the Board of Directors on 08 August 2023.

The Consolidated Financial Statements are available on the Group's website www.bankofcyprus.com (Group/Investor Relations/Financial Results).

2. Unaudited financial statements

The Consolidated Financial Statements have not been audited by the Group's external auditors.

The Group's external auditors have conducted a review in accordance with the International Standard on Review Engagements 2410 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'.

3. Summary of significant accounting policies

3.1 Basis of preparation

The Consolidated Financial Statements have been prepared on a historical cost basis, except for properties held for own use and investment properties, investments at fair value through other comprehensive income (FVOCI), financial assets (including loans and advances to customers and investments) at fair value through profit or loss (FVPL) and derivative financial assets and derivative financial liabilities that have been measured at fair value, non‑current assets held for sale measured at fair value less costs to sell and stock of property measured at net realisable value where this is lower than cost. The carrying values of recognised assets and liabilities that are hedged items in fair value hedges, and otherwise carried at cost, are adjusted to record changes in fair value attributable to the risks that are being hedged.

Presentation of the Consolidated Financial Statements

The Consolidated Financial Statements are presented in Euro (€) and all amounts are rounded to the nearest thousand, except where otherwise indicated. A comma is used to separate thousands and a dot is used to separate decimals.

The Group presents its balance sheet broadly in order of liquidity. An analysis regarding expected recovery or settlement of assets and liabilities within twelve months after the balance sheet date and more than twelve months after the balance sheet date is presented in Note 29.

Comparative information

Comparative information was restated following the adoption of IFRS 17 'Insurance Contracts' on 1 January 2023 as described further below in Note 3.3.1.

Furthermore, comparative information was restated following certain changes in the presentation of the primary statements first applied in the 2022 annual consolidated financial statements. More specifically, 'Provisions for pending litigations, claims regulatory and other matters (net of reversals)' previously presented within 'Other operating expenses' is now presented separately on the Consolidated Income Statement.

In addition, comparative information was restated in relation to the presentation of segmental analysis as detailed in Note 7 following an internal re‑organisation in the fourth quarter of 2022. This change led to a respective restatement of 'Analysis by Business line' and 'Analysis of total revenue' in Note 7.

3.2 Statement of compliance

The Consolidated Financial Statements have been prepared in accordance with the International Accounting Standard (IAS) applicable to interim financial reporting as adopted by the European Union (EU) (IAS 34), the Transparency (Directive 2004/109/EC) Regulations 2007, as amended, Part 2 (Transparency Requirements) of the Central Bank (Investment Market Conduct) Rules 2019 and the applicable requirements of the Disclosure Guidance and Transparency Rules of the UK's Financial Conduct Authority.

The Consolidated Financial Statements do not comprise statutory financial statements for the purposes of the Companies Act 2014 of Ireland. The Company's statutory financial statements for the purposes of Chapter 4 of Part 6 of the Companies Act 2014 of Ireland for the year ended 31 December 2022, upon which the auditors have expressed an unqualified opinion, were published on 31 March 2023 and are expected to be delivered to the Registrar of Companies of Ireland within 56 days from 30 September 2023.

The Consolidated Financial Statements do not include all the information and disclosures required for the annual financial statements and should be read in conjunction with the Annual Consolidated Financial Statements of Bank of Cyprus Holdings Group for the year ended 31 December 2022, prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and ESEF requirements, which are available at the Group's website (www.bankofcyprus.com).

3.3 Changes in accounting policies, presentation and disclosures

The accounting policies adopted are consistent with those followed for the preparation of the annual consolidated financial statements for the year ended 31 December 2022, except for the adoption of new and amended standards and interpretations as explained in Note 3.3.1.

3.3.1 New and amended standards and interpretations

The Group applied for the first time certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2023 and which are explained below. The Group has not early adopted any other standard, interpretation or amendments that has been issued but is not yet effective.

IFRS 17: Insurance Contracts

IFRS 17 'Insurance Contracts' (IFRS 17) became effective on 1 January 2023 and as required by the standard, the Group applied the requirements retrospectively with comparative information restated from the transition date, 1 January 2022 as further explained in the 'Transition application' section below. IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts, reinsurance contracts and investment contracts with discretionary participation features.

IFRS 17 is a comprehensive new accounting standard for insurance contracts which replaces IFRS 4 'Insurance Contracts'. In contrast to the requirements in IFRS 4, IFRS 17 provides a comprehensive model (the general measurement model or 'GMM') for insurance contracts, supplemented by the variable fee approach ('VFA') for contracts with direct participation features that are substantially investment‑related service contracts, and the premium allocation approach ('PAA') mainly for short duration insurance contracts. The main features of the new accounting standard for insurance contracts are the following:

i. The measurement of the present value of future cash flows, incorporating an explicit risk adjustment, remeasured every reporting period (the fulfilment cash flows).

ii. A Contractual Service Margin (CSM) that is equal and opposite to any day one gain in the fulfilment cash flows of a group of contracts. The CSM represents the unearned profitability of the insurance contracts and is recognised in profit or loss over the service period (i.e., the coverage period).

i. Certain changes in the expected present value of future cash flows are adjusted against the CSM and thereby recognised in profit or loss over the remaining contractual service period.

ii. The recognition of insurance revenue and insurance service expenses in the consolidated income statement is based on the concept of services provided during the period.

iii. Insurance service result (earned revenue less incurred claims) is presented separately from the insurance finance income or expense.

iv. Extensive disclosures to provide information on the recognised amounts from insurance contracts and the nature and extent of the risks arising from these contracts.

Transition application

The standard is applied retrospectively using a fully retrospective approach ('FRA') as if it had always been applied, unless it is impracticable to so, in which case either a modified retrospective approach ('MRA') or a fair value approach ('FVA') can be selected. Impracticability assessments were performed based on the requirements of IFRS 17 and considered the availability of data and systems and the requirement not to apply hindsight within the measurement. Following the completion of impracticability assessments, the Group applied the following approaches:

· The FRA for all non‑life groups of insurance contracts and non‑individual life groups of insurance contracts, irrespective of issue date.

· The MRA for groups of life insurance contracts issued between 2016 and 2021.

· The FVA for groups of life insurance contracts issued prior to 2016.

Modified retrospective approach ('MRA')

The Group is permitted to use the MRA only to the extent that is does not have reasonable and supportable information to apply the FRA. MRA is an approach to achieve the outcome closest to the FRA, with the prescribed modifications to address some of the challenges of retrospective application. Under MRA the below simplifications are permitted:

· assessments at the date of initial recognition of groups of insurance contracts;

· contractual service margin for insurance contracts without direct participation features;

· contractual service margin for insurance contracts with direct participation features; and

· insurance finance income or expenses.

In applying the MRA, the Group used reasonable and supportable information from its existing reporting systems, with the objective to arrive at the outcome closest to the FRA. The Group applied each of the following modifications:

· Groups of contracts issued between 2016 and 2021 contain contracts issued more than one year apart. For these groups, the discount rates on initial recognition were determined at 1 January 2022 instead of at the date of initial recognition.

· For groups of contracts issued between 2016 and 2021, the future cash flows on initial recognition were estimated by considering:

- the transactions that occurred in the period 2016‑2021, plus

- the expected future cashflows estimated at 31 December 2021.

· For groups of contracts issued between 2016 and 2021, the illiquidity premiums applied to the risk‑free yield curves on initial recognition were estimated by determining an average spread between the risk‑free yield curves and the discount rates determined retrospectively for the period between 1 January 2016 and 1 January 2022.

· For groups of contracts issued between 2016 and 2021, the risk adjustment for non‑financial risk at initial recognition was determined by adjusting the relevant amount at 1 January 2022.

· The amount of the CSM has been released in the profit or loss before 1 January 2022 was determined by comparing the coverage units provided before 1 January 2022 and the expected coverage units at 1 January 2022.

Determination on transition of the fair value of insurance contract liabilities for which FVA was applied

Under the FVA approach required by IFRS 17, the valuation of insurance liabilities on transition is based on the requirements of IFRS 13 'Fair Value Measurement'. This requires consideration of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Under the FVA, the CSM of the liability for remaining coverage at the transition date is determined as the difference between the fair value of the groups of insurance contracts and the fulfilment cash flows measured as at that date. There is judgement involved in determining an appropriate fair value, as there is a lack of observable data for actual transactions for closed book insurance businesses and a range of possible modelling approaches. In determining the fair value the Group considered the estimated profit margin that a market participant would demand in return for assuming the insurance liabilities, and the discount rate that would be applied within the IFRS 13 calculation. The approach for setting these included the following:

· The discount rate was derived with an allowance for an illiquidity premium that takes into account the level of 'matching' between the life Insurance assets and related liabilities.

· Solvency II information (i.e. Best Estimate Liabilities and Risk Margin) has been utilised.

The sections below provide a summary of the significant accounting policies applied under IFRS 17, information on the quantitative impact of transition to IFRS 17, the restated consolidated balance sheet at 1 January 2022 and at 31 December 2022 and the restatement impact on the consolidated income statement for the year ended 31 December 2022 and the six months ended 30 June 2022.

Summary of significant accounting policies

Identifying contracts in the scope of IFRS 17

IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance contracts, reinsurance contracts and investment contracts with discretionary participation features.

An insurance contract is a contract under which the Group accepts significant insurance risk from another party by agreeing to compensate that party if it is adversely affected by a specified uncertain future event.

When identifying contracts in the scope of IFRS 17, there is a need to assess whether contracts need to be treated as a single contract and whether embedded derivatives, investment components and goods and services components need to be separated and accounted for under another standard. For the Group's insurance and reinsurance contracts held, there were no significant changes arising from the application of these requirements.

Level of aggregation

Individual insurance contracts that are managed together and are subject to similar risks are identified as a group.

Contracts that are managed together usually belong to the same product line and have similar characteristics such as being subject to a similar pricing framework or similar product management and are issued by the same legal entity. If a contract is exposed to more than one risk, the dominant risk of the contract is used to assess whether the contract features similar risks.

Each group of contracts is then divided into annual cohorts (i.e. by year of issue) and each cohort into three groups, based on expected profitability: (i) contracts that are onerous at initial recognition; (ii) contracts that at initial recognition have no significant possibility of becoming onerous subsequently; and (iii) the remaining contracts.

The groups of insurance contracts are established at initial recognition without subsequent reassessment and form the unit of account at which the contracts are measured.

Contract boundaries

The measurement of a group of insurance contracts includes all the future cash flows within the boundary of each contract in the group. Cash flows are within the boundary of an insurance contract if they arise from substantive rights and obligations that exist during the reporting period in which the Group can compel the policyholder to pay the premiums, or in which the Group has a substantive obligation to provide the policyholder with services. For multiyear (more than one year) non‑life contracts, the Group has assessed that they are expected to equal their duration as the Group cannot reprice or terminate the insurance contract during the coverage period.

Measurement

IFRS 17 introduces a standard measurement model, the General Measurement Model (GMM) and allows also for a simplified approach, the Premium Allocation Approach (PAA). IFRS 17 also provides for the Variable Fee Approach (VFA), which is mandatory to apply for insurance contracts with direct participation features upon meeting the eligibility criteria. While the GMM is the default measurement model under IFRS 17, the Group applies the VFA primarily to insurance contracts in the unit‑linked life portfolio. The PAA is an optional simplification applicable for measuring the Liability for Remaining Coverage (LRC) for contracts with coverage periods of one year or less, or when doing so approximates the GMM; it is primarily applied by the Group to non‑life insurance contracts and to non‑individual life insurance contracts as well as to reinsurance contracts of the Group except for the individual life reinsurance agreement, for which the GMM was applied. For the rest of the insurance contracts (individual protection life contracts, the acquired portfolio and health long‑term portfolio) and the Liability for Incurred Claims (LIC) of non‑life Insurance contracts, the Group applies the GMM approach.

Initial measurement

Groups of insurance contracts under the GMM or the VFA are initially measured as the total of:

- Fulfilment cash flows, which comprise:

· an estimate of the present value of future cash flows that are expected to arise as the Group fulfils its service under the insurance contracts; and

· an explicit risk adjustment for non‑financial risk (i.e., the risk adjustment held on balance sheet)

- Contractual Service Margin (CSM) which represents the unearned profit that the Group will recognise as it provides insurance contract services.

The fulfilment cash flows comprise unbiased and probability‑weighted estimates of future cash flows, discounted to present value to reflect both the time value of money and financial risks, plus a risk adjustment for non‑financial risk. The discount rate applied reflects the time value of money, the characteristics of the cash flows, the liquidity characteristics of the insurance contracts and, where appropriate, is consistent with observable current market prices.

The risk adjustment for non‑financial risk for a group of insurance contracts is the compensation required for bearing the uncertainty in relation to the amount and timing of the cash flows that arises from non‑financial risk. The risk adjustment is explicit and determined separately from other fulfilment cash flows.

A CSM arises when, for a group of contracts, the sum of the discounted cash flows and the risk adjustment is a net inflow. If the sum of these is a net outflow, then the group of contracts is onerous and a loss equal to the net outflow is recognised in the consolidated income statement.

Under the PAA, the liability for remaining coverage is initially recognised as the premiums received at initial recognition, minus any insurance acquisition cash flows.

Subsequent measurement

GMM

At the end of each reporting period, IFRS 17 requires that insurance contracts are measured as the sum of:

· Liability for remaining coverage (LRC), comprising fulfilment cash flows related to future service and the CSM at the reporting date; and

· Liability for incurred claims (LIC), comprising fulfilment cash flows related to past service at the reporting date (claims and expenses not yet paid, including claims incurred but not yet reported).

The fulfilment cash flows of groups of insurance contracts are measured at the reporting date using current estimates of future cash flows, current discount rates and current estimates of the risk adjustment for non‑financial risk. Changes in fulfilment cash flows are recognised as follows:

- Changes related to future service are adjusted against the CSM unless the group of contracts is onerous in which case such changes are recognised in the net insurance service result in the consolidated income statement

- Changes related to past or current service are recognised in the net insurance service result in the consolidated income statement

- The effects of the time value of money and financial risk are recognised as net insurance finance income or expense in the consolidated income statement

The amount of CSM recognised in income statement for services in a period is determined by the allocation of the CSM remaining at the end of the reporting period over the current and remaining expected coverage period of the group of insurance contracts based on coverage units. Services provided are estimated using coverage units, which reflect the quantity of benefits and the coverage duration.

VFA

The VFA is applied for contracts with direct participation features (contracts where returns are based on the performance of underlying assets). For insurance contracts under the VFA, changes in the Group's share of the underlying items, and economic experience and economic assumption changes adjust the CSM, whereas these changes do not adjust the CSM under the GMM but are recognised in profit or loss as they arise.

PAA

Subsequently to initial measurement, the carrying amount of the LRC is increased with premiums received in the period, minus insurance acquisition cash flows, plus amortisation of acquisition cash flows, minus the amount recognised as insurance revenue for coverage provided in that period. The LRC is not discounted, since at initial recognition, it is expected that the time between providing each part of the coverage and the due date of the related premium is not more than a year.

Reinsurance contracts

The Group applies the same accounting policies to measure a group of reinsurance contracts under PAA, with the following modifications to reflect features that differ from those of insurance contracts. The Group establishes a loss‑recovery component on the carrying amount of the asset for remaining coverage for a group of reinsurance contracts, depicting the recovery of losses, where the Group recognises a loss on initial recognition of an onerous group of underlying insurance contracts or when further onerous underlying insurance contracts are added to a group.

The Group calculates the loss‑recovery component by multiplying the loss recognised on the underlying insurance contracts and the percentage of claims on the underlying insurance contracts the Group expects to recover from the group of reinsurance contracts. The loss‑recovery component adjusts the carrying amount of the asset for remaining coverage.

The subsequent measurement of reinsurance contracts follows the same principles as those for insurance contracts issued and has been adapted to reflect the specific features of reinsurance. Where the Group has established a loss‑recovery component, the Group subsequently reduces the loss‑recovery component to zero in line with reductions in the onerous group of underlying insurance contracts in order to reflect that the loss‑recovery component shall not exceed the portion of the carrying amount of the loss component of the onerous group of underlying insurance contracts that the entity expects to recover from the group of reinsurance contracts.

The measurement of reinsurance contracts under the individual life reinsurance agreement follows the same principles as those for insurance contracts measured under the GMM. The carrying amount of the reinsurance contracts at each reporting date is the sum of the asset for remaining coverage and the asset for incurred claims. The asset for remaining coverage comprises (a) the fulfilment cash flows that relate to services that will be received under the contracts in future periods and (b) any remaining CSM at that date.

The risk adjustment for non‑financial risk will represent the amount of risk being transferred by the Group to the reinsurer.

The CSM of a group of reinsurance contracts represents a net cost or net gain on purchasing reinsurance.

Contract derecognition

The Group derecognises an insurance contract issued when the obligation specified in the contract expires, is discharged, or is cancelled, or if its terms are modified significantly. When a contract is modified significantly, a new contract based on the modified terms is recognised.

On derecognition of an insurance contract, the Group:

· -Adjusts the fulfilment cash flows to eliminate the present value of future cash flows and risk adjustment for non‑financial risk relating to the rights and obligations that have been derecognised from the group of contracts,

· Adjusts the CSM of the group of contracts for the change in the fulfilment cash flows, except where such changes are allocated to a loss component; and

· Adjusts the number of coverage units for the expected remaining services, to reflect the number of coverage units derecognised from the group of contracts.

Directly attributable expenses

In accordance with IFRS 17, expenses directly attributable to a group of insurance contracts, which include both acquisition and maintenance costs are incorporated in actual and estimated future cash flows and recognised in the net insurance result. Insurance acquisition cash flows are amortised. Expenses that are not directly attributable are excluded from the measurement of insurance contract liabilities and are recognised in profit and loss as incurred.

Significant judgments and estimates

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of insurance and reinsurance assets and liabilities within the next financial year are discussed below. The Group based its assumptions and estimates on parameters available by the reporting date. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

Estimates of future cash flows

In estimating future cash flows, the Group incorporates, in an unbiased way, all reasonable and supportable information that is available without undue cost or effort at the reporting date. This information includes both internal and external historical data about claims and other experience, updated to reflect current expectations of future events.

Cash flows within the boundary of a contract are those that relate directly to the fulfilment of the contract, including those for which the Group has discretion over the amount or timing. These include payments to (or on behalf of) policyholders and other costs that are incurred in fulfilling contracts. These comprise both an allocation of fixed and variable overheads.

The estimates of future cash flows reflect the Group's view of current conditions at the reporting date, as long as the estimates of any relevant market variables are consistent with observable market prices.

The following assumptions were used when estimating future cash flows in relation to life insurance contracts:

· Mortality and morbidity rates

· Expenses and inflation

· Lapse and surrender rates

The table below sets out the percentage assumed to apply to industry mortality and morbidity tables in estimating fulfilment cash flows:

Mortality Rates			Mortality rates*
			30 June 2023	31 December 2022
Males	Smokers	68% A67/70			68% A67/70
	Non‑Smokers	48.25% A67/70			48.25% A67/70
	Smokers	68% A67/70 rated down by 4 years			68% A67/70 rated down by 4 years
Females	Non‑Smokers	48.25% A67/70 rated down by 4 years			48.25% A67/70 rated down by 4 years
* The Group uses A67/70 UK standard mortality table in setting the mortality assumption, since the Group's own claim experience is not sufficient to allow the development of its own mortality table. To reflect the Group's specific claims experience more accurately, a percentage is applied on the A67/70 UK standard mortality table.
Discount rates
Discount rates are applied to adjust the estimates of future cash flows to reflect the time value of money and the financial risks related to those cash flows, to the extent that the financial risks are not included in the estimates of cash flows.
IFRS 17 requires that discount rates should:
· Reflect the time value of money, characteristics of the cash flows and liquidity characteristics of the insurance contract
· Be consistent with observable current market prices (if any) for financial instruments with cash flows whose characteristics are consistent with those of the insurance contracts (e.g., timing, currency and liquidity)
· Exclude the effect of factors that influence such observable market prices, but do not affect the future cash flows of the insurance contracts
IFRS 17 does not require a particular estimation technique for determining discount rates but provides two alternative approaches that may be used to derive discount rates. The determination of discount rates may be derived from a yield curve that reflects the current market rates of return of an actual or reference portfolio of assets, adjusted to eliminate any factors that are not relevant to the insurance contracts (top‑down approach), or discount rates may be derived based on a liquid risk‑free yield curve adjusted for an illiquidity premium (bottom‑up approach). The Group has elected to apply a bottom‑up approach whereby discount rates are derived based on a liquid risk free yield curve adjusted for an illiquidity premium.
The discount rates applied for discounting future cash flows are listed below:


	Year 1		Year 3		Year 5		Year 10		Year 20
	30 June 2023	31 December 2022	30 June 2023	31 December 2022	30 June 2023	31 December 2022	30 June 2023	31 December 2022	30 June 2023	31 December 2022
Life insurance contracts (unit‑linked)	3.8%	2.4%	3.2%	2.8%	3.0%	2.9%	2.9%	3.0%	2.8%	2.7%
Life insurance contracts (non‑linked)	3.9%	2.4%	3.3%	2.8%	3.1%	2.9%	3.0%	3.0%	2.9%	2.7%
Non‑life insurance contracts	3.9%	4.0%	3.3%	4.0%	3.1%	4.0%	3.0%	3.9%	2.9%	3.6%
Risk adjustments for non‑financial risk
IFRS 17 provides limited prescriptive requirements as to the methodology to be used to calculate the risk adjustment and allows an entity to apply judgement in determining an appropriate estimation technique.

Life Insurance business

The Group has applied judgement in estimating the risk adjustment, in the following areas:

· Risks included within the risk adjustment calculation ‑ the Group has considered the same risks as under the Solvency II risk margin, specifically for life underwriting and health underwriting risks, as they both use a definition of non‑market risks, apart from specific differences referred to in IFRS 17. The excluded categories are counterparty and operational risks.

· Method of calculation ‑ the Group calculates a margin, above best estimate assumptions, for each non‑financial risk to which the Group is exposed through issuing insurance contracts. The margins are set so that (in combination) they would cover potential losses from movements in non‑financial risks within a specified confidence level. The total of these margins is the risk adjustment. The Group has applied judgement in setting the confidence level applied in the risk adjustment calculation, based on the Group's appetite for accepting the risk inherent in writing insurance contracts and the compensation required for doing so.

The Group has estimated the risk adjustment using a hybrid of Cost of Capital (CoC) and Value at Risk (VaR) techniques. The Group scales up/down the Risk Adjustment calculated under the CoC technique using the VaR technique to reflect the Group's risk appetite and overall strategy.

To calculate the Risk Adjustment, the Group first uses the CoC technique to derive a calibrated normal distribution with a mean that is equal to Best Estimate Liabilities (BEL) at Best Estimate Assumptions and percentile at 99,5% equal to BEL + Solvency Capital Requirements (SCR) (t=0). A 6% CoC rate is applied to the additional capital requirement in future reporting periods to calculate the return required by the Group to compensate for the exposure to non¬financial risk. The CoC method results to a confidence level of 60%.

Using the VaR methodology, to allow for the Group's risk appetite and overall strategy the confidence level is then scaled up to 90% which is the desired confidence level of the Group. The Risk Adjustment is then calculated using the normal distribution and a confidence level of 90%.

Non‑life Insurance business

For non‑life insurance business the risk adjustment forms a key component of the LIC.

The risk adjustment for LRC forms part of the loss component calculation which is used to determine the groupings of contracts that are expected to be onerous.

Risk adjustment for non‑financial risk is determined to reflect the compensation that the Group would require for bearing non‑financial risk and its degree of risk aversion. It is determined separately for each non‑life line of business and allocated to groups of contracts based on the total premiums for each group. It reflects the effects of the diversification benefits between the different lines of business, which are determined using a correlation matrix technique available from EIOPA.

The risk adjustment for non‑financial risk is determined using a confidence level technique which stems from a hybrid Cost of Capital and Value at Risk approach. To determine the risk adjustment for non‑financial risk for non‑life reinsurance contracts, the Group applies this technique to the gross amounts and then by using gross to net ratios it derives the amount of risk being transferred to the reinsurer as the difference between the two results.

The Group estimates the probability distribution of the expected present value of the future cash flows from the contracts at each reporting date and calculates the risk adjustment for non‑financial risk at value at risk of the target confidence level. The Group uses a target 75% percentile for the confidence level.

CSM

The CSM of a group of contracts is recognised in the income statement to reflect services provided in each year, by identifying the coverage units in the group, allocating the CSM remaining at the end of the year equally to each coverage unit provided in the year and expected to be provided in future years, and recognising in income statement the amount of the CSM allocated to coverage units provided in the year. The number of coverage units is the quantity of services provided by the contracts in the group, determined by considering for each contract the quantity of the benefits and its expected coverage period. The coverage units are reviewed and updated at each reporting date.

Significant accounting policy choices

The significant accounting policy choices applicable to the Group are in relation to:

· Disaggregation of insurance finance income or expenses: The Group has elected to recognise total insurance finance income or expenses in the consolidated income statement in the period in which they arise i.e no disaggregation is applied.

· Deferral of acquisition expenses: The Group has elected to defer insurance acquisition cash flows, in applying the premium allocation approach for which IFRS 17 provides an election to be made.

· Disaggregation of change in risk adjustment for non‑financial risk: The Group has elected to disaggregate the change in risk adjustment for non‑financial risk between the net insurance service result and net insurance finance income/(expense).

Presentation

The amounts presented in the consolidated income statement under IFRS 17 include:

i. Net insurance finance income/(expense) and net reinsurance finance income/(expense), that comprises of:

· Net insurance finance income/(expense) which represents the finance related change in the carrying value of a group of insurance contracts comprising interest effects of changes in interest rates and other financial assumptions and the effect of changes in the fair value of underlying items for direct participating contracts

· Net finance income/(expense) from reinsurance contracts held is the finance related change in the carrying value of a group of reinsurance contracts comprising interest accreted and effects of changes in interest rates and other financial assumptions.

ii. Net insurance service result, that comprises of:

· Insurance revenue that reflects the consideration to which the Group expects to be entitled in exchange for the provision of coverage and other insurance contract services (excluding any investment components) and includes among others CSM released during the period, revenue for insurance contracts under the PAA and changes in risk adjustment related to current service period and experience variance.

· Insurance service expenses that comprise the incurred claims and other incurred insurance service expenses (excluding any investment components), and losses on onerous groups of contracts and reversals of such losses.

iii. Net reinsurance service result, that comprises of amounts recovered from reinsurers and reinsurance expenses.

Transition impact

On transition on 1 January 2022, consistent with the disclosures in the 2022 Annual Financial Report, the Group's Total Equity and Equity attributable to the owners of the Company were reduced by €37,563 thousand, reflecting the aggregate impact of the present value of in‑force life insurance business (PVIF) elimination and remeasurement of insurance assets and liabilities, both net of associated tax impact. Similarly, adjusting for the impact of IFRS 17 on the profit for the year ended 31 December 2022, the Group's Total Equity and Equity attributable to the owners of the Company at 31 December 2022 as reported under IFRS 4 were reduced by €52,104 thousand, as analysed below.

	At 1 January 2022	At 31 December 2022
	€000	€000
IFRS 4 Total Equity	2,081,227	2,100,670
IFRS 4 Equity attributable to the owners of the Company	1,838,793	1,858,370
Removal of PVIF asset	(129,890)	(115,776)
Contractual service margin	(43,731)	(41,863)
Removal of IFRS 4 assets and liabilities and recording of IFRS 17 fulfilment cash flows and risk adjustment	129,255	97,028
Tax effect (incl. PVIF tax effect)	7,079	9,601
Other	(276)	(1,094)
Total impact of IFRS 17 restatements	(37,563)	(52,104)
IFRS 17 Equity attributable to the owners of the Company	1,801,230	1,806,266
IFRS 17 Total Equity	2,043,664	2,048,566
The reduction of the Group's equity by €52 million as at 31 December 2022 comprises the elimination of the in‑force life insurance business asset (PVIF) and the associated deferred tax liability, resulting in a net decrease of €101 million and the remeasurement of insurance assets and liabilities (including the impact of the contractual service margin) resulting in a net increase in equity by €49 million.
On transition on 1 January 2022, the Group's Tangible Equity attributable to the owners of the Company was increased by €92,327 thousand. Adjusting for the impact of IFRS 17 on the profit for the year ended 31 December 2022, the Group's Tangible Equity attributable to the owners of the Company as at 31 December 2022 as restated under IFRS 17 was increased by €63,672 thousand as analysed below.

	At 1 January 2022	At 31 December 2022
	€000	€000
IFRS 4 Group's Tangible Equity attributable to the owners of the Company	1,654,759	1,690,048
Contractual service margin	(43,731)	(41,863)
Removal of IFRS 4 assets and liabilities and recording of IFRS 17 fulfilment cash flows and risk adjustment	129,255	97,028
Tax effect (incl. PVIF tax effect)	7,079	9,601
Other	(276)	(1,094)
Total impact of IFRS 17 restatements	92,327	63,672
IFRS 17 Group's Tangible Equity attributable to the owners of the Company	1,747,086	1,753,720

Consolidated Income Statement for the year ended 31 December 2022, as restated for IFRS 17 and as previously reported under IFRS 4 is presented below.

	Year ended 31 December 2022
	IFRS 17 (restated)	IFRS 4 (as previously presented)
	€000	€000
Interest income	428,849	428,849
Income similar to interest income	22,119	22,119
Interest expense	(65,721)	(65,821)
Expense similar to interest expense	(14,840)	(14,840)
Net interest income	370,407	370,307
Fee and commission income	202,583	202,583
Fee and commission expense	(10,299)	(10,299)
Net foreign exchange gains	31,291	31,291
Net gains/(losses) on financial instruments	(614)	10,052
Net gains/(losses) on derecognition of financial assets measured at amortised cost	5,235	5,235
Net insurance finance income/(expense) and net reinsurance finance income/(expense)	4,075	-
Net insurance service result	60,530	-
Net reinsurance service result	(20,039)	-
Income from assets under insurance and reinsurance contracts	-	114,681
Expenses from liabilities under insurance and reinsurance contracts	-	(43,542)
Net losses from revaluation and disposal of investment properties	(999)	(999)
Net gains on disposal of stock of property	13,970	13,970
Other income	16,681	16,681
Total operating income	672,821	709,960
Staff costs	(285,154)	(294,361)
Special levy on deposits and other levies/contributions	(38,492)	(38,492)
Provisions for pending litigations, regulatory and other provisions (net of reversals)	(11,880)	(11,880)
Other operating expenses	(157,916)	(166,365)
Operating profit before credit losses and impairment	179,379	198,862
Credit losses on financial assets	(59,087)	(59,529)
Impairment net of reversals on non‑financial assets	(29,549)	(29,549)
Profit before tax	90,743	109,784
Income tax	(31,312)	(35,812)
Profit after tax for the year	59,431	73,972
Attributable to:
Owners of the Company	56,565	71,106
Non‑controlling interests	2,866	2,866
Profit for the year	59,431	73,972

Basic and diluted profit per share attributable to the owners of the Company (€ cent)	12.7	15.9

Consolidated Balance Sheet at transition date and at 31 December 2022 as restated under IFRS 17 and as previously reported under IFRS 4 is presented below.

	IFRS 17 (restated)		IFRS 4 (as previously presented)
	31 December 2022	1 January 2022	31 December 2022	1 January 2022
Assets	€000	€000	€000	€000
Cash and balances with central banks	9,567,258	9,230,883	9,567,258	9,230,883
Loans and advances to banks	204,811	291,632	204,811	291,632
Derivative financial assets	48,153	6,653	48,153	6,653
Investments at FVPL	190,209	199,194	190,209	199,194
Investments at FVOCI	467,375	748,695	467,375	748,695
Investments at amortised cost	2,046,119	1,191,274	2,046,119	1,191,274
Loans and advances to customers	9,953,252	9,836,405	9,953,252	9,836,405
Life insurance business assets attributable to policyholders	542,321	551,797	542,321	551,797
Prepayments, accrued income and other assets	609,054	583,777	639,765	616,219
Stock of property	1,041,032	1,111,604	1,041,032	1,111,604
Investment properties	85,099	117,745	85,099	117,745
Deferred tax assets	227,934	265,942	227,521	265,481
Property and equipment	253,378	252,130	253,378	252,130
Intangible assets	52,546	54,144	168,322	184,034
Non‑current assets and disposal groups held for sale	-	358,951	-	358,951
Total assets	25,288,541	24,800,826	25,434,615	24,962,697
Liabilities
Deposits by banks	507,658	457,039	507,658	457,039
Funding from central banks	1,976,674	2,969,600	1,976,674	2,969,600
Derivative financial liabilities	16,169	32,452	16,169	32,452
Customer deposits	18,998,319	17,530,883	18,998,319	17,530,883
Insurance liabilities	599,992	623,791	679,952	736,201
Accruals, deferred income, other liabilities and other provisions	379,182	356,697	384,004	361,977
Provisions for pending litigation, claims, regulatory and other matters	127,607	104,108	127,607	104,108
Debt securities in issue	297,636	302,555	297,636	302,555
Subordinated liabilities	302,104	340,220	302,104	340,220
Deferred tax liabilities	34,634	39,817	43,822	46,435
Total liabilities	23,239,975	22,757,162	23,333,945	22,881,470
Equity
Share capital	44,620	44,620	44,620	44,620
Share premium	594,358	594,358	594,358	594,358
Revaluation and other reserves	76,939	99,541	178,240	213,192
Retained earnings	1,090,349	1,062,711	1,041,152	986,623
Equity attributable to the owners of the Company	1,806,266	1,801,230	1,858,370	1,838,793
Other equity instruments	220,000	220,000	220,000	220,000
Non‑controlling interests	22,300	22,434	22,300	22,434
Total equity	2,048,566	2,043,664	2,100,670	2,081,227
Total liabilities and equity	25,288,541	24,800,826	25,434,615	24,962,697

Transition impact on the Consolidated Balance Sheet at 1 January 2022

The adjustments to the Group's balance sheet at 1 January 2022 arising on the adoption of IFRS 17 are presented below.

	Balance IFRS 4	Removal of PVIF and IFRS 4 assets and liabilities	IFRS 17 fulfilment cash flows incl. Risk adjustment*	IFRS 17 CSM	Tax effect	Other	Balance IFRS 17	Total movements
Assets	€000	€000	€000	€000	€000	€000	€000	€000
Prepayments, accrued income and other assets	616,219	(70,121)	37,676	-	-	3	583,777	(32,442)
Deferred tax assets	265,481	-	-	-	461	-	265,942	461
Intangible assets	184,034	(129,890)	-	-	-	-	54,144	(129,890)
All other assets	23,896,963	-	-	-	-	-	23,896,963	-
Total assets	24,962,697	(200,011)	37,676	-	461	3	24,800,826	(161,871)
Liabilities
Insurance liabilities	736,201	(735,143)	579,002	43,731	-	-	623,791	(112,410)
Accruals, deferred income, other liabilities and other provisions	361,977	(5,559)	-	-	-	279	356,697	(5,280)
Deferred tax liabilities	46,435	-	-	-	(6,618)	-	39,817	(6,618)
All other liabilities	21,736,857	-	-	-	-	-	21,736,857	-
Total liabilities	22,881,470	(740,702)	579,002	43,731	(6,618)	279	22,757,162	(124,308)
* includes reinsurance assets and liabilities adjustments
Transition drivers
Removal of PVIF and IFRS 4 assets and liabilities
The present value of in‑force business ('PVIF') which was previously reported under IFRS 4 within 'Intangible assets' and that arose from the upfront recognition of future profits associated with in‑force insurance contracts, is no longer recognized under IFRS 17. The estimated future profits are included in the measurement of the insurance contract liability as the contractual service margin ('CSM'), representing the unearned profit, which will be gradually recognized over the duration of a contract. Other IFRS 4 insurance assets and insurance contract liabilities are removed on transition, to be replaced with IFRS 17 insurance assets and liabilities.
Recognition of the IFRS 17 fulfilment cash flows and risk adjustment
The measurement of insurance contract liabilities under IFRS 17 is based on groups of insurance contracts and includes a liability for fulfilling the contractual obligations associated with the insurance contract, such as premiums, expenses, insurance benefits and claims. These are recorded within the fulfilment cash flow component of the insurance contract liability, together with the risk adjustment.
Recognition of the IFRS 17 CSM
In contrast to IFRS 4 accounting, where profits were recognised upfront, under IFRS 17 they are deferred within the CSM which is systematically recognized in revenue, as services are provided over the coverage period of groups of insurance contracts.
Tax effect
The removal of deferred tax liability primarily results from the removal of the associated PVIF intangible, and new deferred tax assets and liabilities are reported, where appropriate, on temporary differences between the new IFRS 17 accounting balances and their associated tax bases.

Transition impact on the Consolidated Income Statement

A summary of the impact of implementing IFRS 17 on the Group's consolidated income statement for the year ended 31 December 2022 is presented below.

	For the year ended 31 December 2022
	IFRS 4	Removal of IFRS 4 and reclassifi‑cations	Net insurance finance income/ expense	IFRS 17 CSM	IFRS 17 insurance revenue‑ other than CSM	IFRS 17 insurance expense	Net expense from reinsurance	Attributable expenses (reclassifi‑cation to net insurance service result)	Tax effect	IFRS 17 (restated)
	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Interest income	428,849	-	-	-	-	-	-	-	-	428,849
Income similar to interest income	22,119	-	-	-	-	-	-	-	-	22,119
Interest expense	(65,821)	-	-	-	100	-	-	-	-	(65,721)
Expense similar to interest expense	(14,840)	-	-	-	-	-	-	-	-	(14,840)
Net interest income	370,307	-	-	-	100	-	-	-	-	370,407
Fee and commission income	202,583	-	-	-	-	-	-	-	-	202,583
Fee and commission expenses	(10,299)	-	-	-	-	-	-	-	-	(10,299)
Net foreign exchange gains	31,291	-	-	-	-	-	-	-	-	31,291
Net gains/(losses) on financial instruments	10,052	(10,666)	-	-	-	-	-	-	-	(614)
Net gains/(losses) on derecognition of financial assets measured at amortised cost	5,235	-	-	-	-	-	-	-	-	5,235
Net insurance finance income/(expense) and net reinsurance finance income/(expense)	-	-	4,075	-	-	-	-	-	-	4,075
Net insurance service result	-	-	-	5,031	130,061	(74,562)	-	-	-	60,530
Net reinsurance service result	-	-	-	-	-	-	(20,039)	-	-	(20,039)
Income from assets under insurance and reinsurance contracts	114,681	(114,681)	-	-	-	-	-	-	-	n/a
Expenses from liabilities under insurance and reinsurance contracts	(43,542)	43,542	-	-	-	-	-	-	-	n/a
Net losses from revaluation and disposal of investment properties	(999)	-	-	-	-	-	-	-	-	(999)
Net gains on disposal of stock of property	13,970	-	-	-	-	-	-	-	-	13,970
Other income	16,681	-	-	-	-	-	-	-	-	16,681
Total operating income	709,960	(81,805)	4,075	5,031	130,161	(74,562)	(20,039)	-	-	672,821
Staff costs	(294,361)	-	-	-	-	-	-	9,207	-	(285,154)
Special levy on deposits and other levies/contributions	(38,492)	-	-	-	-	-	-	-	-	(38,492)
Provisions for pending litigations, regulatory and other provisions (net of reversals)	(11,880)	-	-	-	-	-	-	-	-	(11,880)
Other operating expenses	(166,365)	-	-	-	-	-	-	8,449	-	(157,916)
Operating profit before credit losses and impairment	198,862	(81,805)	4,075	5,031	130,161	(74,562)	(20,039)	17,656	-	179,379
Credit losses on financial assets	(59,529)	-	-	-	442	-	-	-	-	(59,087)
Impairment net of reversals on non‑financial assets	(29,549)	-	-	-	-	-	-	-	-	(29,549)
Profit before tax	109,784	(81,805)	4,075	5,031	130,603	(74,562)	(20,039)	17,656	-	90,743
Income tax	(35,812)	-	-	-	-	-	-	77	4,423	(31,312)
Profit after tax for the year	73,972	(81,805)	4,075	5,031	130,603	(74,562)	(20,039)	17,733	4,423	59,431

The Consolidated Income Statement for the six months ended 30 June 2022, as restated for IFRS 17 and as previously reported under IFRS 4 is presented below:

	Six months ended 30 June 2022
	IFRS 4 (as previously presented)	IFRS 17 (adjustments)	IFRS 17 (restated)
	€000	€000	€000
Turnover	414,996	-	414,996
Interest income	181,470	-	181,470
Income similar to interest income	9,518	-	9,518
Interest expense	(37,541)	27	(37,514)
Expense similar to interest expense	(7,752)	-	(7,752)
Net interest income	145,695	27	145,722
Fee and commission income	98,086	-	98,086
Fee and commission expense	(4,447)	-	(4,447)
Net foreign exchange gains	11,898	-	11,898
Net gains/(losses) on financial instruments	(2,060)	(8,123)	(10,183)
Net gains/(losses) on derecognition of financial assets measured at amortised cost	1,648	-	1,648
Net insurance finance income/(expense) and net reinsurance finance income/(expense)	-	2,653	2,653
Net insurance service result	-	31,268	31,268
Net reinsurance service result	-	(10,197)	(10,197)
Income from assets under insurance and reinsurance contracts	29,859	(29,859)	-
Expenses from liabilities under insurance and reinsurance contracts	3,010	(3,010)	-
Net losses from revaluation and disposal of investment properties	(1,372)	-	(1,372)
Net gains on disposal of stock of property	8,242	-	8,242
Other income	8,927	-	8,927
Total operating income	299,486	(17,241)	282,245
Staff costs	(103,135)	4,832	(98,303)
Special levy on deposits and other levies/contributions	(16,507)	-	(16,507)
Provisions for pending litigations, regulatory and other provisions (net of reversals)	(594)	-	(594)
Other operating expenses	(79,799)	3,975	(75,824)
Operating profit before credit losses and impairment	99,451	(8,434)	91,017
Credit losses on financial assets	(24,965)	139	(24,826)
Impairment net of reversals on non‑financial assets	(12,157)	-	(12,157)
Profit before tax	62,329	(8,295)	54,034
Income tax	(11,579)	421	(11,158)
Profit after tax for the period	50,750	(7,874)	42,876
Attributable to:
Owners of the Company	50,088	(7,874)	42,214
Non‑controlling interests	662	-	662
Profit for the period	50,750	(7,874)	42,876

Basic profit per share attributable to the owners of the Company (€ cent)	11.2	(1.7)	9.5
Diluted profit per share attributable to the owners of the Company (€ cent)	11.2	(1.7)	9.5

Analysis of new insurance line items included in the consolidated income statement for the year ended 31 December 2022

	Year ended 31 December 2022
	€000
Insurance finance income and expense and reinsurance finance income and expense	41,429
Return on assets backing insurance liabilities	(37,354)
Net insurance finance income/(expense) and net reinsurance finance income/(expense)	4,075
Insurance revenue	135,495
Insurance service expenses	(74,562)
Other insurance related income/(expense)	(403)
Net insurance service result	60,530
Allocation of reinsurance premiums	(36,170)
Amounts recoverable from reinsurers for incurred claims	16,131
Net reinsurance service result	(20,039)
Net insurance result	44,566
IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (amendments)
The amendments to IAS 1 require companies to disclose their material accounting policy information rather than their significant accounting policies. The amendments to IFRS Practice Statement 2 provide guidance on how to apply the concept of materiality to accounting policy disclosures. These amendments did not have an impact on the Group's results and financial position.
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (amendments)
The amendments introduce the definition of accounting estimates and include other amendments to IAS 8 to help entities distinguish changes in accounting estimates from changes in accounting policies. These amendments did not have an impact on the Group's financial results and financial position.
IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (amendments)
The amendments require companies to recognise deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. The amendments typically apply to transactions such as leases for the lessee and decommissioning obligations. These amendments did not have an impact on the Group's results and financial position.
IAS 12 Income Taxes: International Tax Reform - Pillar Two Model Rules (amendments)
The amendments require an entity to disclose that it has applied the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes. An entity is required to separately disclose its current tax expense (income) related to Pillar Two income taxes, in the periods when the legislation is effective. The amendments require, for periods in which Pillar Two legislation is (substantively) enacted but not yet effective, disclosure of known or reasonably estimable information that helps users of financial statements understand the entity's exposure arising from Pillar Two income taxes. To comply with these requirements, an entity is required to disclose qualitative and quantitative information about its exposure to Pillar Two income taxes at the end of the reporting period. The legislation has not been substantively enacted at the balance sheet date and the Group will continue to monitor the evolving national legislation including any disclosures required, or exemptions available, under IAS 12 in the year ending 31 December 2023.

3.3.2 Standards and Interpretations that are issued but not yet adopted

The IASB has issued a number of minor amendments to IFRSs effective 1 January 2024 (including IAS 1 Presentation of Financial Statements, IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures, and IFRS 16 Leases). These amendments are not expected to have a significant impact on the Group.

4. Going concern

The Directors have made an assessment of the ability of the Group, the Company and BOC PCL to continue as a going concern for a period of 12 months from the date of approval of these Consolidated Financial Statements.

The Directors have concluded that there are no material uncertainties which would cast a significant doubt over the ability of the Group, the Company and BOC PCL to continue to operate as a going concern for a period of 12 months from the date of approval of these Consolidated Financial Statements.

In making this assessment, the Directors have considered a wide range of information relating to present and future conditions, including projections of profitability, cash flows, capital requirements and capital resources, taking also into consideration, the Group's Financial Plan approved by the Board in February 2023 (the 'Plan') and the operating environment as well as any reforecast exercises performed. The Group has sensitised its projection to cater for a downside scenario and has used reasonable economic inputs to develop its medium‑term strategy. The Group is working towards materialising its Strategy.

Capital

The Directors and Management have considered the Group's forecasted capital position, including the potential impact of a deterioration in economic conditions. The Group has developed capital projections under a base and an adverse scenario and the Directors believe that the Group has sufficient capital to meet its regulatory capital requirements throughout the period of assessment.

Funding and liquidity

The Directors and Management have considered the Group's funding and liquidity position and are satisfied that the Group has sufficient funding and liquidity throughout the period of assessment. The Group continues to hold a significant liquidity buffer at 30 June 2023 that can be easily and readily monetised in a period of stress.

5. Economic and geopolitical environment

The economic environment in 2023 and over the medium term is now subject to a high degree of uncertainty, with the continuation of the war in Ukraine, rising tensions in US‑China relations, more persistent inflation and tighter monetary conditions threatening a significant slowdown in the global economy, particularly in Europe. A combination of supply shocks, including rising protectionism, the green transition, persistently low productivity growth, slowing population growth as well as more widespread labour shortages following the pandemic, could potentially result in average inflation over the next few years being higher than over the past years.

Headline inflation has decelerated significantly in the first half of 2023, but core inflation, once the volatile energy and food items are excluded, remains stubbornly sticky. As a result, central banks in advanced countries remain focused on fighting inflation and are likely to continue to raise their policy rates into the third quarter of the year. Interest rates are thus likely to stay higher for longer, subduing growth and extending debt pressures in emerging markets.

Government debt levels in relation to GDP in the advanced economies, fell in 2021‑2022 following steep increases in 2020, due to a stronger recovery and higher inflation. However, governments' fiscal space will narrow again in the medium term due to higher interest rates and slower economic growth, limiting their ability to deal with future economic emergencies and potentially increasing the risk of financial instability, especially in more vulnerable countries.

The International Monetary Fund in its Spring World Economic Outlook released in April 2023, predicts slower growth for the global economy and increased financial and other vulnerabilities under tighter monetary conditions.

Cyprus demonstrates relative strength and resilience in this environment with a growth outlook that outweighs average growth in EU and with inflation dropping at a faster pace in comparison. Economic momentum is expected to continue in 2023 at a slower pace, driven mainly by the expected deterioration of external demand, as well as slowing domestic demand caused by still high consumer price inflation.

Cyprus' risk profile has improved significantly, but substantial risks remain in the domestic environment and in the external environment on which it depends. The most important factor weighing on Cyprus' sovereign risk is the high level of public debt. Banks have weathered the pandemic crisis well, with their liquidity and capital buffers intact. Non‑performing loans continued their downward trend, mainly due to the sale packages of the two largest banks. However, in an uncertain environment, asset quality remains a focus for bank management and supervisors.

The Group believes it is reasonably well positioned to withstand volatility that may arise from a deterioration in the geopolitical and global economic environment.

Group's Direct exposure to Russia

Russia's invasion of Ukraine has triggered disruptions and uncertainties in the markets and in the global economy. The coordinated implementation of sanctions by the EU, the UK and the U.S., joined by several other countries, imposed against Russia, Belarus and certain regions of Ukraine and certain Russian entities and nationals. The Group's policy is to comply with all applicable laws, including sanctions and export controls.

Overall, the Group's direct exposure to Russia and Belarus remains limited. In summary, the Group has direct lending exposure to Russia and Belarus of a gross book value of approximately €82 million (31 December 2022: approximately €86 million) across its business divisions as at 30 June 2023, of which €74 million (31 December 2022: €76 million) were classified as performing and secured mainly with residential collateral located in Cyprus. The basis of the exposure is expanded compared to the country risk exposure as included in Note 30.2 of the Consolidated Financial Statements which is disclosed by reference to the country of residency/country of registration, to also include exposures for loans and advances to customers with passport of origin in these countries and/or business activities within these countries and/or where the UBO has passport of origin or residency in these countries.

Customer deposit balances with customers with UBO primary passport of origin in these countries amounts to approximately 3.74% of total deposits as at 30 June 2023 as disclosed in Note 22 of the Consolidated Financial Statements.

With respect to the Group's Russian subsidiary, the net exposure is being run down and as a result the net assets included on the Group's balance sheet as at 30 June 2023 are less than €1 million (31 December 2022: less than €1 million).

6. Significant and other judgements, estimates and assumptions

The preparation of the Consolidated Financial Statements requires the Company's Board of Directors and management to make judgements, estimates and assumptions that can have a material impact on the amounts recognised in the Consolidated Financial Statements and the accompanying disclosures, as well as the disclosures of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affecting future periods.

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are described below. The Group based its assumptions and estimates on parameters available when the Consolidated Financial Statements were prepared. Existing circumstances and assumptions about future developments may, however, change due to market changes or circumstances beyond the control of the Group. Such changes are reflected in the assumptions when they occur.

The most significant judgements, estimates and assumptions relate to the calculation of expected credit losses (ECL), the estimation of the net realisable value of stock of property and the provisions for pending litigation, claims, regulatory and other matters, which are presented in Notes 6.1 to 6.4 below. Other judgements, estimates and assumptions are disclosed in Notes 5.5 to 5.13 of the annual consolidated financial statements for the year ended 31 December 2022.

6.1 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. In general, the assessment for the classification of financial assets into the business models is performed at the level of each business line. Further, the Group exercises judgement in determining the effect of sales of financial instruments on its business model assessment.

The Group also applies judgement upon considering whether contractual features including interest rate could significantly affect future cash flows. Furthermore, judgement is required when assessing whether compensation paid or received on early termination of lending arrangements results in cash flows that are not SPPI.

6.2 Calculation of expected credit losses

The calculation of ECL requires management to apply significant judgement and make estimates and assumptions, involving significant uncertainty at the time these are made. Changes to these estimates and assumptions can result in significant changes to the timing and amount of ECL to be recognised. The Group's calculations are outputs of models, of underlying assumptions on the choice of variable inputs and their interdependencies.

It has been the Group's policy to regularly review its models in the context of actual loss experience and adjust when necessary.

Elements of ECL models that are considered accounting judgements and estimates include:

Assessment of significant increase in credit risk (SICR)

IFRS 9 does not include a definition of significant increase in credit risk. The Group assesses whether significant increase in credit risk has occurred since initial recognition using predominantly quantitative and in certain cases qualitative information. The determination of the relevant thresholds to determine whether a significant increase in credit risk has occurred, is based on statistical metrics and could be subject to management judgement. The relevant thresholds are set, monitored and updated on a yearly basis by the Risk Management Division and endorsed by the Group Provisions Committee.

Determining the probability of default (PD) at initial recognition requires management estimates in particular cases. Specifically, in the case of exposures existing prior to the adoption of IFRS 9, a retrospective calculation of the PD is made in order to quantify the risk of each exposure at the time of the initial recognition. In certain cases, estimates about the date of initial recognition might be required.

For the retail portfolio, the Group uses a PD at origination incorporating behavioural information (score cards) whereas, for the corporate portfolio, the Group uses the internal credit rating information. For revolving facilities, management estimates are required with respect to the lifetime and hence a behavioural maturity model is utilised, assigning an expected maturity based on product and customer behaviour.

Scenarios and macroeconomic factors

The Group determines the ECL, which is a probability weighted amount, by evaluating a range of possible outcomes. Management uses forward looking scenarios and assesses the suitability of weights used. These are based on management's assumptions taking into account macroeconomic, market and other factors. Changes in these assumptions and in other external factors could significantly impact ECL. Macroeconomic inputs and weights per scenario are monitored by the Economic Research Department and are based on internal model analysis after considering external market data supplemented by expert judgement.

In a challenging international environment, the Cypriot economy has shown considerable resilience. Growth remained strong in 2022 averaging 5.6% which is well above the euro area average, driven almost entirely by services on the supply side. Tourist activity recovered strongly during the year 2022 with arrivals reaching 80% and receipts 90% of their levels in 2019. On the demand side, growth was driven by private consumption and investment, especially inventory accumulation, while the external sector made a negative contribution due to faster growth in imports.

First quarter growth for 2023 was 3.4% according to the Cyprus Statistical Service, which was largely as expected. For the year the growth forecast is around 2.8% according to the Ministry of Finance. This follows strong growth of 6.9% and 5.6% respectively in 2021‑22 driven by a strong recovery in tourism toward pre‑pandemic levels, and also strong growth in other services sectors. GDP growth will be materially supported in 2023 by EU funding in the form of grants and loans from the Recovery and Resilience Facility (RRF). Cyprus has already received €157 million as pre‑financing in September 2021 and the first payment of €85 million in December 2022 after achieving the 14 milestones being linked to the first instalment. Cyprus is broadly on track in the implementation of its National Recovery and Resilience Plan.

Harmonised inflation in Cyprus was on average 8.1% in 2022, compared to 8.4% in the Euro area. Inflation peaked in July 2022 at 10.6% and has been decelerating since, reaching 2.8% in June 2023. In the first half of 2023, total harmonised inflation was 4.9% and is expected to moderate further but only gradually. For Cyprus, the European Commission forecasts harmonised inflation of 3.8% in 2023 and 2.5% in 2024.

Developments in 2022 were favourable for public finances. The IMF forecasts fiscal surpluses of 1.9% and 1.7% of GDP and gross debt to GDP of 79.5% and 71.9% for 2023 and 2024 respectively in each case.

The sovereign risk ratings of the Cypriot government have improved significantly in recent years, reflecting reduced banking sector risks, improved economic resilience and consistent fiscal outperformance. Cyprus has demonstrated policy commitment to correcting fiscal imbalances through reform and restructuring of its banking system.

Banks managed to weather the pandemic crisis well, with their liquidity and capital buffers intact. Non‑performing exposures continued their declining trend, mostly to sales packages by the two largest banks. Total NPEs at the end of April 2023 were €2.2 billion or 9% of gross loans. About 44.8% of total non‑performing exposures are restructured facilities and the coverage ratio was 54.2%. Private debt, as measured by loans to residents on bank balance sheets, excluding the government, dropped to €20.8 billion at the end of May 2023, or about 77% of GDP.

However, substantial risks remain in terms of the domestic operating environment, as well as the external environment on which it depends. The large stock of public debt weighs heavily on Cyprus' sovereign credit risk. In the banking sector non‑performing exposures need to drop further. While the current account deficit will be narrowing as exports services recover in the medium term, it will remain sizable. The monetary policy of the European Central Bank can remain tight for longer if inflation pressures persist. The extent of the crisis in Ukraine can lead to elevated tensions for a considerable period of time.

For the ECL, the Group updated its forward looking scenarios, factoring in updated macroeconomic assumptions and other monetary and fiscal developments at the national and the EU level based on developments and events as at the reporting date 30 June 2023.

The tables below indicate the most significant macroeconomic variables as well as the scenarios used by the Group as at 30 June 2023 and 31 December 2022 respectively. The Group uses three different economic scenarios in the calculation of default probabilities and provisions. The Group has used the 30‑50‑20 probability structure for the adverse, base and favourable scenarios respectively compared to the 25‑50‑25 structure derived using the method described in Note 2.19.5 of the annual consolidated financial statements for the year ended 31 December 2022. This reflects management's view of specific characteristics of the Cyprus economy that render it more vulnerable to external and internal shocks. Given the added uncertainties of the outlook for 2023 and downside risks, a global slowdown and the continuing war in Ukraine with the risk of escalation rising, as well as the tighter monetary environment in the fight against inflation, management decided to maintain an elevated weight on the adverse scenario.

30 June 2023

Year	Scenario	Weight %	Real GDP (% change)	Unemployment rate (% of labour force)	Consumer Price Index (average % change)	RICS House Price Index (average % change)
2023	Adverse	30.0	‑0.7	7.7	2.8	‑1.8
	Baseline	50.0	2.9	7.0	3.5	3.0
	Favourable	20.0	3.7	6.9	3.9	3.4
2024	Adverse	30.0	‑1.2	8.4	2.4	0.2
	Baseline	50.0	2.6	6.9	2.7	3.1
	Favourable	20.0	3.3	6.7	2.9	3.5
2025	Adverse	30.0	1.3	8.2	2.6	1.1
	Baseline	50.0	2.8	6.4	2.5	2.9
	Favourable	20.0	2.8	6.2	2.6	3.1
2026	Adverse	30.0	3.0	8.2	2.4	2.5
	Baseline	50.0	3.0	6.2	2.5	2.9
	Favourable	20.0	2.9	5.9	2.4	3.0
2027	Adverse	30.0	3.8	7.7	2.5	3.5
	Baseline	50.0	2.9	5.8	2.5	2.9
	Favourable	20.0	2.9	5.3	2.4	3.0
31 December 2022

Year	Scenario	Weight %	Real GDP (% change)	Unemployment rate (% of labour force)	Consumer Price Index (average % change)	RICS House Price Index (average % change)
2023	Adverse	30.0	‑2.0	7.0	3.7	‑2.2
	Baseline	50.0	2.8	6.3	4.7	2.8
	Favourable	20.0	3.6	5.9	5.1	3.3
2024	Adverse	30.0	‑0.7	6.8	3.0	‑0.8
	Baseline	50.0	2.4	6.0	3.2	2.5
	Favourable	20.0	2.8	5.8	3.3	2.8
2025	Adverse	30.0	1.4	6.7	2.4	1.1
	Baseline	50.0	2.5	5.7	2.3	2.5
	Favourable	20.0	2.6	5.6	2.4	2.6
2026	Adverse	30.0	2.8	6.7	2.4	2.7
	Baseline	50.0	2.8	5.5	2.4	2.5
	Favourable	20.0	3.1	5.3	2.4	2.6
2027	Adverse	30.0	3.5	6.5	2.5	3.5
	Baseline	50.0	2.6	5.2	2.5	2.5
	Favourable	20.0	2.6	4.9	2.4	2.6
The adverse scenarios may outpace the base and favourable scenarios after the initial shock has been adjusted to and the economy starts to expand from a lower base. Thus, in the adverse scenario GDP will follow a growth trajectory that will ultimately equal and surpass the baseline before converging. Property prices are determined by multiple factors with GDP growth featuring prominently. However, the relationship between GDP growth and property prices entails a lag.
The baseline scenario was updated for the 30 June 2023 reporting, considering available information and relevant developments until then, and is described next. Economic activity continued to recover strongly in 2022 driven by a steep recovery in the tourism sector after the steep contraction of 2020, and a strong growth in private consumption, despite an aggressive monetary contraction and steep increases in interest rates. Economic momentum is expected to continue in 2023 at a slower pace. Real GDP increased by 5.6% in 2022 and is projected to rise by 2.8% in 2023 according to the Ministry of Finance. Consumer price inflation averaged 8.1% in 2022 and is expected to decelerate to 3.8% in 2023 according to the European Commission's Spring forecasts. The unemployment rate will continue to drop steadily in the medium term. Property prices will continue to rise modestly in 2023 as domestic residential demand remains relatively strong.

The adverse scenario is consistent with assumptions for a global economic slowdown driven by the war in Ukraine, elevated inflation and continued tight monetary policies. The Cypriot economy relies on services, particularly on tourism, international business, and information services with an outward orientation. This makes the Cypriot economy more exposed than other economies to the international environment and terms of trade shocks. Weaker external demand and more restricted domestic demand as a result of higher interest rates will lead to a slow‑down of economic activity. The adverse scenario assumes a deeper impact of these conditions on the real economy than under the baseline scenario. Real GDP is expected to contract modestly by 0.7% in 2023 with the recovery remaining weak in the medium term. In the labour market the unemployment rate will rise only modestly and inflation while elevated, will be lower than under the baseline scenario. House prices will also contract in line with the contraction in real GDP.

Since 1 January 2018, the Group has reassessed the key economic variables used in the ECL models consistent with the implementation of IFRS 9. The Group uses actual values for the input variables. These values are sourced from the Cyprus Statistical Service, the Eurostat, the Central Bank of Cyprus for the residential property price index, and the European Central Bank for interest rates. Interest rates are also sourced from Bloomberg. In the case of property prices, the Group additionally uses data from the Royal Institute of Chartered Surveyors. For the forward reference period, the Group uses the forecast values for the same variables, as prepared by the BOC PCL's Economic Research Department. The results of the internal forecast exercises are consistent with publicly available forecasts from official sources including the European Commission, the International Monetary Fund, the European Central Bank and the Ministry of Finance of the Republic of Cyprus.

Qualitative adjustments or overlays are occasionally made when inputs calculated do not capture all the characteristics of the market. These are reviewed and adjusted, if considered necessary, by the Risk Management Division, endorsed by the Group Provisions Committee and approved by the joint Risk and Audit Committee. Qualitative adjustments or overlays are described in the below sections as applicable.

For Stage 3 customers, the calculation of individually assessed provisions is the weighted average of three scenarios: base, adverse and favourable. The base scenario focuses on the following variables, which are based on the specific facts and circumstances of each customer: the operational cash flows, the timing of recovery of collaterals and the haircuts from the realisation of collateral. The base scenario is used to derive additional either more favourable or more adverse scenarios. Under the adverse scenario, operational cash flows are decreased by 50%, applied haircuts on real estate collateral are increased by 50% and the timing of recovery of collaterals is increased by 1 year with reference to the baseline scenario, whereas under the favourable scenario applied haircuts are decreased by 5%, with no change in the recovery period with reference to the baseline scenario. Assumptions used in estimating expected future cash flows (including cash flows that may result from the realisation of collateral) reflect current and expected future economic conditions and are generally consistent with those used in the Stage 3 collectively assessed exposures.

For collectively assessed customers the calculation is also the weighted average of three scenarios: base, adverse and favourable.

Assessment of loss given default (LGD)

A factor for the estimation of loss given default (LGD) is the timing and net recoverable amount from repossession or realisation of collaterals which mainly comprise real estate assets.

Assumptions have been made about the future changes in property values, as well as the timing for the realisation of collateral, taxes and expenses on the repossession and subsequent sale of the collateral as well as any other applicable haircuts. Indexation has been used as the basis to estimate updated market values of properties, supplemented by management judgement where necessary, given the difficulty in differentiating between short‑term impacts and long‑term structural changes and the shortage of market evidence for comparison purposes. Assumptions were made on the basis of a macroeconomic scenario for future changes in property prices and qualitative adjustments or overlays were applied to the projected future property value increases to restrict the level of future property price growth to 0% for all scenarios for loans and advances to customers which are secured by property collaterals.

At 30 June 2023, the weighted average haircut (including liquidity haircut and selling expenses) used in the collectively assessed provisions calculation for loans and advances to customers is approximately 32% under the baseline scenario (31 December 2022: approximately 32%).

The timing of recovery from real estate collaterals used in the collectively assessed provisions calculation for loans and advances to customers has been estimated to be on average seven years under the baseline scenario (31 December 2022: average of seven years).

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. For specific cases judgement may also be exercised over staging during the individual assessment.

The above assumptions are also influenced by the ongoing regulatory dialogue the Group maintains with its lead regulator, the ECB, and other regulatory guidance and interpretations issued by various regulatory and industry bodies such as the ECB and the EBA, which provide guidance and expectations as to relevant definitions and the treatment/classification of certain parameters/assumptions used in the estimation of provisions.

Any changes in these assumptions or differences between assumptions made and actual results could result in significant changes in the estimated amount of expected credit losses of loans and advances to customers.

Expected lifetime of revolving facilities

The expected lifetime of revolving facilities is based on a behavioural maturity model for revolving facilities based on BOC PCL's available historical data, where an expected maturity for each revolving facility based on the customer's profile is assigned. The behavioural model was updated in the second quarter of 2022 to reflect updates in customers profile whilst maintaining the same model components.

Modelling adjustments

Forward looking models have been developed for ECL parameters PD, EAD, LGD for all portfolios and segments sharing similar characteristics. Model validation (initial and periodic) is performed by the independent validation unit within the Risk Management Division and involves assessment of a model under both quantitative (i.e. stability and performance) and qualitative terms. The frequency and level of rigour of model validation is commensurate to the overall use, complexity and materiality of the models, (i.e. risk tiering). In certain cases, judgement is exercised in the form of management overlay by applying adjustments on the modelled parameters. Governance of these models lies with the Risk Management Division, where a strong governance process is in place around the determination of the impairment measurement methodology including inputs, assumptions and overlays. Any management overlays are prepared by the Risk Management Division, endorsed by the Group Provisions Committee and approved by the joint Risk and Audit Committee.

ECL allowances also include allowances on off‑balance sheet credit exposures represented by guarantees given and by irrevocable commitments to disburse funds. Off‑balance sheet credit exposures of the individually assessed assets require assumptions on the probability, timing and amount of cash outflows. For the collectively assessed off‑balance sheet credit exposures, the allowance for provisions is calculated using the Credit Conversion Factor (CCF) model.

Overlays in the context of current economic conditions

The two overlays introduced in 2022 in response to uncertainties from the consequences of the Ukrainian crisis, in the collectively assessed population for exposures that were considered to be the most vulnerable to the implications of the crisis, continued to be in effect during the six months ended 30 June 2023. These were introduced to address the increased uncertainties from the geopolitical instability, trade restrictions, disruptions in the global supply chains, increases in the energy prices and their potential negative impact on the domestic cost of living. The impact on the ECL from the application of these overlays was approximately €3.7 million ECL release for the six months ended 30 June 2023 (following an update of the assessment of the sectors classified as High Risk and/or Early Warning) and a net transfer of €22 million loans from Stage 1 to Stage 2 as at 30 June 2023.

Specifically, the first overlay relates to private individuals that are expected to be affected by the increased cost of living in order to reflect the future vulnerabilities to inflation, where a scenario with higher percentage increase is applied for the cost of living. A one‑notch downgrade is applied to the identified portfolio, reflecting the expected impact of inflation to their credit quality. The second overlay relates to sectors that have been classified as High Risk or Early Warning to reflect the expected Gross Value Added (GVA) outlook of these sectors, where this has deteriorated. Specifically, the sector risk classification is carried out by comparing the projected GVA outlook of each sector with its past performance (intrinsic) and its performance vis‑a‑vis other sectors (systemic). In cases where both systemic and intrinsic indicators are found to have deteriorated, the relevant sector is classified as High Risk, whereas if only one of the two has deteriorated, then the sector is classified as Early Warning. A one‑notch downgrade is applied to Early Warning sectors whereas for High Risk sectors a more severe downgrade is applied accordingly.

In addition, the overlay on the probability of default (PD), introduced in the fourth quarter of 2022 to address specifically the high inflation environment affecting the economy, continued to be in effect during the six months ended 30 June 2023. With this overlay the PDs were floored to the maximum of 2018/2019 level, on the basis that these years are considered as closer to a business‑as‑usual environment in terms of default rates. The impact on the ECL from the application of this overlay was €3.9 million charge for the six months ended 30 June 2023, as a result of multiple components including updated ratings, PD and thresholds calibrations and stage migrations.

In addition, in the six months ended 30 June 2023, for the LGD parameter, the overlay has been integrated through reduced curability period for Stage 2 and Stage 3 exposures (i.e., the maximum period that a customer is considered to cure has been reduced). The impact on the ECL was €8.4 million charge for the six months ended 30 June 2023.

The Group has exercised critical judgement on a best effort basis, to consider all reasonable and supportable information available at the time of the assessment of the ECL allowance as at 30 June 2023. The Group will continue to evaluate the ECL allowance and the related economic outlook each quarter, so that any changes arising from the uncertainty on the macroeconomic outlook and geopolitical developments, impacted by the implications of the Russian invasion of Ukraine, are timely captured.

Portfolio segmentation

The individual assessment is performed not only for individually significant assets but also for other exposures meeting specific criteria determined by management. The selection criteria for the individually assessed exposures are based on management judgement and are reviewed on a quarterly basis by the Risk Management Division and are adjusted or enhanced, if deemed necessary. The selection criteria were further enhanced in 2022 to include significant exposures to customers with passport of origin or residency in Russia, Ukraine or Belarus and/or business activity within these countries.

Further details on impairment allowances and related credit information are set out in Note 30.

6.3 Stock of property ‑ estimation of net realisable value

Stock of property is measured at the lower of cost and net realisable value. The net realisable value is determined through valuation techniques, requiring significant judgement, taking into account all available reference points, such as expert valuation reports, current market conditions, the holding period of the asset, applying an appropriate illiquidity discount where considered necessary, and any 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 the stock of property are presented in Note 19.

6.4 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 2.37 of the annual consolidated financial statements for the year ended 31 December 2022. Judgement is required in determining whether a present obligation exists and in estimating the probability, timing and amount of any outflows. Provisions for pending litigation, claims, regulatory and other matters usually require a higher degree of judgement than other types of provisions. It is expected that the Group will continue to have a material exposure to litigation and regulatory proceedings and investigations relating to legacy issues in the medium term. The matters for which the Group determines that the probability of a future loss is more than remote will change from time to time, as will the matters as to which a reliable estimate can be made and the possible loss for such matters can be estimated. Actual results may prove to be significantly higher or lower than the estimated possible loss in those matters, where an estimate was made. In addition, loss may be incurred in matters with respect to which the Group believed the probability of loss was remote.

For a detailed description of the nature of uncertainties and assumptions and the effect on the amount and timing of pending litigation, claims, regulatory and other matters refer to Note 27.

7. Segmental analysis

The Group's activities are mainly concentrated in Cyprus. Cyprus operations are organised into operating segments based on the line of business. The results of the overseas activities of the Group, namely Greece, Romania and Russia, are presented within segment 'Other', given the size of these operations which are in a run‑down mode and relate to legacy operations of the Group. Further, the results of certain small subsidiaries of the Group are allocated to the segments based on their key activities.

As from the fourth quarter of 2022, following an internal re‑organisation, the Large Corporate and the International Corporate business lines, which were previously reported together as one business line namely Global Corporate, have been separated, and Large Corporate is presented and monitored together with Corporate, while International Corporate Banking, Project Finance & Loan Syndication and Shipping Center are presented and monitored under International Corporate. Comparative information in 'Analysis by business line' and 'Analysis of total revenue' were restated to account for this change, which was reflected in the annual consolidated financial statements for the year ended 31 December 2022. Comparative information in 'Analysis by business line' and 'Analysis of total revenue' was also restated to account for the retrospective application of IFRS 17 as described in Note 3.3.1.

The operating segments are analysed below:

i. The Corporate and Large Corporate, Small and Medium‑sized Enterprises (SME) and Retail business lines are managing loans and advances to customers. Categorisation of loans per customer group is detailed below.

ii. International Corporate comprises of International Corporate Banking, Project Finance & Loan Syndication and Shipping Center. International Corporate Banking provides financing from Cyprus in respect of projects based overseas with main focus being Greece and the United Kingdom. Project Finance & Loan Syndication act as arranger or participant in large international loan syndication transactions. Shipping Center provides shipping financing primarily for ocean‑going cargo vessels.

iii. Restructuring and Recoveries is the specialised unit which was set up to tackle the Group's loan portfolio quality and manages exposures to borrowers in distress situation through innovative solutions.

iv. International Business Unit (IBU) specialises in the offering of banking services to the international corporate customers based in Cyprus, particularly international business companies whose ownership and business activities lie outside Cyprus, and non‑resident individual customers of BOC PCL.

v. Wealth Management oversees the provision of private banking and wealth management, market execution and custody along with asset management and investment banking. This business line also includes subsidiary companies of the Group, whose activities relate to investment banking and brokerage, investment holding and management, administration and safekeeping of UCITS units.

vi. The Real Estate Management Unit (REMU) manages properties acquired through debt‑for‑property swaps and properties acquired through the acquisition of certain operations of Laiki Bank in 2013, and executes exit strategies in order to monetise these assets. REMU also includes other subsidiary property companies of the Group.

vii. Treasury is responsible for liquidity management and for overseeing operations to ensure compliance with internal and regulatory liquidity policies and provide direction as to the actions to be taken regarding liquidity availability.

viii. The Insurance business line is involved in both life and non‑life insurance business.

i. The business line 'Other' includes central functions of BOC PCL such as finance, risk management, compliance, legal, Information Technology services, corporate affairs and human resources. These functions provide services to the operating segments. 'Other' includes also other subsidiary companies in Cyprus (excluding the insurance subsidiaries, property companies under REMU and subsidiary companies under Wealth), as well as the overseas activities of the Group.

BOC PCL broadly categorises its loans per customer group, using the following customer sectors:

i. Retail - all physical person customers, regardless of the facility amount, and legal entities with facilities from BOC PCL of up to €500 thousand, excluding business property loans and/or annual credit turnover up to €1 million.

ii. SME - any company or group of companies (including personal and housing loans to the directors or shareholders of a company) with facilities from BOC PCL in the range of €500 thousand to €4 million and/or annual credit turnover of €1 million up to €10 million.

iii. Corporate - any company or group of companies (including personal and housing loans to the directors or shareholders of a company) with available credit lines with BOC PCL of over €4 million and/or having a minimum annual credit turnover of over €10 million. These companies are either local larger corporations or international companies or companies in the shipping sector. Lending includes direct lending or through syndications.

Management monitors the operating results of each business segment separately for the purposes of performance assessment and resource allocation. Segment performance is evaluated based on profit after tax and non‑controlling interests. Inter‑segment transactions and balances are eliminated on consolidation and are made on an arm's length basis.

Operating segment disclosures are provided as presented to the Group Executive Committee.

Income and expenses associated with each business line are included for determining its performance. Transfer pricing methodologies are applied between the business lines to present their results on an arm's length basis. Income and expenses incurred directly by the business lines are allocated to the business lines as incurred. Indirect income and expenses are re‑allocated from the central functions to the business lines. For the purposes of the Cyprus analysis by business line, notional tax at the 12.5% Cyprus tax rate is charged/credited to profit or loss before tax of each business line.

The loans and advances to customers, the customer deposits and the related income and expense are generally included in the segment where the business is managed, instead of the segment where the transaction is recorded.

Analysis by business line

	Corporate and Large corporate	International corporate	Small and medium‑sized enterprises	Retail	Restructuring and recoveries	International business unit	Wealth management	REMU	Insurance	Treasury	Other	Total
Six months ended 30 June 2023	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Net interest income/(expense)	77,412	14,093	25,803	167,683	9,360	57,091	8,180	(19,315)	-	19,334	(1,299)	358,342
Net fee and commission income/(expense)	10,342	586	5,325	30,617	1,369	26,537	2,566	(75)	(4,332)	844	15,825	89,604
Net foreign exchange gains/(losses)	475	(5)	291	1,206	20	2,692	79	-	-	11,211	(130)	15,839
Net (losses)/gains on financial instruments	(9)	-	-	-	-	-	34	-	1,746	2,651	1,258	5,680
Net gains/(losses) on derecognition of financial assets measured at amortised cost	3,839	108	(924)	(314)	3,195	(65)	81	-	-	(41)	(18)	5,861
Net insurance result	-	-	-	-	-	-	-	-	24,509	-	52	24,561
Net gains/(losses) from revaluation and disposal of investment properties	-	-	-	-	-	-	-	889	-	-	(101)	788
Net gains on disposal of stock of property	-	-	-	-	-	-	-	3,704	-	-	202	3,906
Other income	10	-	8	84	64	2	83	3,937	5,121	12	2,879	12,200
Total operating income	92,069	14,782	30,503	199,276	14,008	86,257	11,023	(10,860)	27,044	34,011	18,668	516,781
Staff costs	(3,707)	(814)	(2,578)	(25,104)	(4,596)	(5,767)	(2,650)	(2,120)	(1,370)	(1,061)	(43,276)	(93,043)
Special levy on deposits and other levies/contributions	(1,756)	(132)	(908)	(11,064)	(32)	(3,762)	(582)	-	-	-	-	(18,236)
Provisions for pending litigations, regulatory and other provisions (net of reversals)	-	-	-	-	-	-	-	-	-	-	(14,148)	(14,148)
Other operating (expenses)/income (excluding advisory and other transformation costs)	(18,422)	(3,275)	(6,852)	(40,233)	(5,364)	(5,795)	(861)	(7,241)	(1,528)	(3,868)	25,240	(68,199)
Other operating expenses ‑ advisory and other transformation costs	(467)	(96)	(214)	(778)	(203)	(212)	(32)	(182)	-	(73)	-	(2,257)
Operating profit before credit losses and impairment	67,717	10,465	19,951	122,097	3,813	70,721	6,898	(20,403)	24,146	29,009	(13,516)	320,898
Credit losses on financial assets	(3,795)	(284)	547	(8,473)	(18,185)	(35)	4	(6,131)	(112)	(375)	67	(36,772)
Impairment net of reversals on non‑financial assets	-	-	-	-	-	-	-	(22,836)	-	-	(370)	(23,206)
Profit/(loss) before tax	63,922	10,181	20,498	113,624	(14,372)	70,686	6,902	(49,370)	24,034	28,634	(13,819)	260,920
Income tax	(7,990)	(1,273)	(2,562)	(14,203)	1,797	(8,836)	(886)	5,186	(1,962)	(3,579)	(5,460)	(39,768)
Profit/(loss) after tax	55,932	8,908	17,936	99,421	(12,575)	61,850	6,016	(44,184)	22,072	25,055	(19,279)	221,152
Non‑controlling interests‑profit	-	-	-	-	-	-	-	-	-	-	(905)	(905)
Profit/(loss) after tax attributable to the owners of the Company	55,932	8,908	17,936	99,421	(12,575)	61,850	6,016	(44,184)	22,072	25,055	(20,184)	220,247

	Corporate and Large corporate	International corporate	Small and medium‑sized enterprises	Retail	Restructuring and recoveries	International business unit	Wealth management	REMU	Insurance	Treasury	Other	Total
Six months ended 30 June 2022 (restated)	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Net interest income/(expense)	49,572	9,629	14,495	43,703	16,294	10,234	578	(12,354)	-	13,573	(2)	145,722
Net fee and commission income/(expense)	11,157	771	5,587	29,562	4,252	27,928	2,569	(90)	(3,889)	1,003	14,789	93,639
Net foreign exchange gains	450	34	279	1,137	52	2,947	86	-	-	5,809	1,104	11,898
Net gains/(losses) on financial instruments	171	-	-	-	(2,230)	-	(102)	-	(9,737)	1,899	(184)	(10,183)
Net gains/(losses) on derecognition of financial assets measured at amortised cost	1,036	108	(20)	116	1,523	13	(269)	-	-	(867)	8	1,648
Net insurance result	-	-	-	-	-	-	-	-	23,724	-	-	23,724
Net losses from revaluation and disposal of investment properties	-	-	-	-	-	-	-	(415)	(307)	-	(650)	(1,372)
Net gains on disposal of stock of property	-	-	-	-	-	-	-	7,894	-	-	348	8,242
Other income	8	-	10	43	186	(3)	155	4,867	37	1	3,623	8,927
Total operating income	62,394	10,542	20,351	74,561	20,077	41,119	3,017	(98)	9,828	21,418	19,036	282,245
Staff costs	(3,413)	(661)	(2,902)	(30,007)	(5,677)	(6,240)	(1,825)	(2,055)	(1,337)	(1,108)	(43,078)	(98,303)
Special levy on deposits and other levies/contributions	(1,506)	(134)	(806)	(10,448)	(45)	(3,272)	(295)	-	-	(1)	-	(16,507)
Provisions for pending litigations, regulatory and other provisions (net of reversals)	-	-	-	-	-	-	-	-	-	-	(594)	(594)
Other operating (expenses)/income (excluding advisory and other transformation costs)	(16,951)	(3,081)	(7,652)	(39,183)	(11,197)	(5,055)	(1,170)	(8,215)	(1,588)	(5,142)	30,085	(69,149)
Other operating expenses ‑ advisory and other transformation costs	-	-	-	-	(1,053)	-	-	(351)	-	-	(5,271)	(6,675)
Operating profit before credit losses and impairment	40,524	6,666	8,991	(5,077)	2,105	26,552	(273)	(10,719)	6,903	15,167	178	91,017
Credit losses on financial assets	(6,206)	219	569	293	(16,577)	285	(226)	(323)	38	(167)	(2,731)	(24,826)
Impairment net of reversals on non‑financial assets	-	-	-	-	-	-	-	(7,203)	-	-	(4,954)	(12,157)
Profit/(loss) before tax	34,318	6,885	9,560	(4,784)	(14,472)	26,837	(499)	(18,245)	6,941	15,000	(7,507)	54,034
Income tax	(4,290)	(860)	(1,195)	598	1,809	(3,355)	3	2,429	(888)	(1,875)	(3,534)	(11,158)
Profit/(loss) after tax	30,028	6,025	8,365	(4,186)	(12,663)	23,482	(496)	(15,816)	6,053	13,125	(11,041)	42,876
Non‑controlling interests‑profit	-	-	-	-	-	-	-	-	-	-	(662)	(662)
Profit/(loss) after tax attributable to the owners of the Company	30,028	6,025	8,365	(4,186)	(12,663)	23,482	(496)	(15,816)	6,053	13,125	(11,703)	42,214

Analysis of total revenue

Total revenue includes net interest income, net fee and commission income, net foreign exchange gains, net gains/(losses) on financial instruments, net gains/(losses) on derecognition of financial assets measured at amortised cost, net insurance result, net gains/(losses) from revaluation and disposal of investment properties, net gains/(losses) on disposal of stock of property and other income. There was no revenue deriving from transactions with a single external customer that amounted to 10% or more of Group revenue.

	Corporate and Large corporate	International corporate	Small and medium‑sized enterprises	Retail	Restructuring and recoveries	International business unit	Wealth management	REMU	Insurance	Treasury	Other	Total
Six months ended 30 June 2023	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Revenue from third parties	107,136	21,286	27,362	113,280	14,341	39,745	3,787	8,271	31,099	131,374	19,100	516,781
Inter‑segment (expense)/revenue	(15,067)	(6,504)	3,141	85,996	(333)	46,512	7,236	(19,131)	(4,055)	(97,363)	(432)	-
Total revenue	92,069	14,782	30,503	199,276	14,008	86,257	11,023	(10,860)	27,044	34,011	18,668	516,781

Six months ended 30 June 2022 (restated)
Revenue from third parties	70,241	12,505	21,749	77,546	21,454	37,163	3,275	12,102	14,463	(6,315)	18,062	282,245
Inter‑segment (expense)/revenue	(7,847)	(1,963)	(1,398)	(2,985)	(1,377)	3,956	(258)	(12,200)	(4,635)	27,733	974	-
Total revenue	62,394	10,542	20,351	74,561	20,077	41,119	3,017	(98)	9,828	21,418	19,036	282,245

Analysis of assets and liabilities

	Corporate and Large corporate	International corporate	Small and medium‑sized enterprises	Retail	Restructuring and recoveries	International business unit	Wealth management	REMU	Insurance	Treasury	Other	Total
30 June 2023	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Assets
Assets	3,631,474	693,952	980,135	4,265,210	258,551	131,417	74,992	1,015,859	864,065	12,749,946	1,412,229	26,077,830
Inter‑segment assets	-	-	-	-	-	-	(9,155)	(38,017)	(21,995)	-	(36,506)	(105,673)
	3,631,474	693,952	980,135	4,265,210	258,551	131,417	65,837	977,842	842,070	12,749,946	1,375,723	25,972,157
Assets between Cyprus and overseas operations												(265,520)
Total assets												25,706,637

	Corporate and Large corporate	International corporate	Small and medium‑sized enterprises	Retail	Restructuring and recoveries	International business unit	Wealth management	REMU	Insurance	Treasury	Other	Total
31 December 2022 (restated)	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Assets
Assets	3,556,475	684,696	1,020,727	4,193,741	313,657	137,399	72,438	1,115,788	852,892	12,291,132	1,408,357	25,647,302
Inter‑segment assets	-	-	-	-	-	-	(9,313)	(35,214)	(18,807)	-	(25,938)	(89,272)
	3,556,475	684,696	1,020,727	4,193,741	313,657	137,399	63,125	1,080,574	834,085	12,291,132	1,382,419	25,558,030
Assets between Cyprus and overseas operations												(269,489)
Total assets												25,288,541

	Corporate and Large corporate	International corporate	Small and medium‑sized enterprises	Retail	Restructuring and recoveries	International business unit	Wealth management	REMU	Insurance	Treasury	Other	Total
30 June 2023	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000	€000
Liabilities
Liabilities	1,964,893	131,044	962,581	11,667,105	34,989	3,848,653	575,888	16,335	735,553	3,178,231	720,496	23,835,768
Inter‑segment liabilities	-	-	-	-	-	-	-	-	-	(105,673)	-	(105,673)
	1,964,893	131,044	962,581	11,667,105	34,989	3,848,653	575,888	16,335	735,553	3,072,558	720,496	23,730,095
Liabilities between Cyprus and overseas operations												(266,645)
Total liabilities												23,463,450

31 December 2022 (restated)
Liabilities
Liabilities	1,915,300	139,898	1,007,555	11,333,783	33,806	3,957,050	628,578	10,049	690,757	3,183,550	699,535	23,599,861
Inter‑segment liabilities	-	-	-	-	-	-	-	-	-	(89,272)	-	(89,272)
	1,915,300	139,898	1,007,555	11,333,783	33,806	3,957,050	628,578	10,049	690,757	3,094,278	699,535	23,510,589
Liabilities between Cyprus and overseas operations												(270,614)
Liabilities												23,239,975
Segmental analysis of customer deposits and loans and advances to customers is presented in Note 22 and Notes 30.2 and 30.4 respectively.

Analysis of turnover

	Six months ended 30 June
	2023	2022
	€000	€000
Interest income and income similar to interest income	426,024	190,988
Fees and commission income	93,879	98,086
Net foreign exchange gains	15,839	11,898
Gross insurance premiums	116,773	105,591
Losses of investment properties and stock of properties	(18,512)	(494)
Other income	12,200	8,927
	646,203	414,996

The analysis of 'Losses of investment properties and stock of properties' is provided in the table below:

	Six months ended 30 June
	2023	2022
	€000	€000
Net gains/(losses) from revaluation and disposal of investment properties	788	(1,372)
Net gains on disposal of stock of property	3,906	8,242
Impairment of stock of property (Note 12)	(23,206)	(7,364)
	(18,512)	(494)

8. Interest income and income similar to interest income

Interest income

	Six months ended 30 June
	2023	2022
	€000	€000
Financial assets at amortised cost:
‑ Loans and advances to customers	237,519	152,151
‑ Loans and advances to banks and central banks	132,500	1,446
‑ Debt securities	20,742	3,781
‑ Other financial assets (Note 20)	9,098	4,314
Debt securities at FVOCI	3,993	4,986
Negative interest on funding from central banks	-	14,792
	403,852	181,470
Income similar to interest income

	Six months ended 30 June
	2023	2022
	€000	€000
Loans and advances to customers measured at FVPL	6,263	5,999
Derivative financial instruments	15,909	3,519
	22,172	9,518

9. Interest expense and expense similar to interest expense

Interest expense

	Six months ended 30 June
	2023	2022 (restated)
Financial liabilities at amortised cost:	€000	€000
‑ Customer deposits	10,671	2,363
‑ Funding from central banks and deposits by banks	31,301	783
‑ Debt securities in issue	3,878	3,843
‑ Subordinated liabilities	10,078	10,415
Negative interest on loans and advances to banks and balances with central banks	-	20,104
Interest expense on lease liabilities	155	6
	56,083	37,514
Expense similar to interest expense

	Six months ended 30 June
	2023	2022
	€000	€000
Derivative financial instruments	11,599	7,752

10. Net gains/(losses) on financial instruments

	Six months ended 30 June
	2023	2022 (restated)
	€000	€000
Trading portfolio:
‑ derivative financial instruments	16	37
Other investments at FVPL:
‑ debt securities	980	(367)
‑ mutual funds	1,780	(9,839)
‑ equity securities	1,962	(166)
Net losses on disposal of FVOCI debt securities	(433)	(1,959)
Net losses on loans and advances to customers at FVPL	(9)	(2,059)
Revaluation of financial instruments designated as fair value hedges:
‑ hedging instruments	(8,843)	49,687
‑ hedged items	10,227	(45,517)
	5,680	(10,183)

11. Staff costs and other operating expenses

Staff costs

	Six months ended 30 June
	2023	2022 (restated)
	€000	€000
Salaries	69,571	77,324
Employer's contributions to state social insurance	11,355	12,411
Variable compensation	3,761
of which: accrual for non‑deferred cash award	3,450	-
of which: share‑based benefits expense	311	-
Retirement benefit plan costs	5,556	5,438
Exit cost and other termination benefits (2022:Voluntary Exit Plan)	2,800	3,130
	93,043	98,303
During the six months ended 30 June 2023, an amount of €851 thousand (30 June 2022: €831 thousand) relating to staff costs has been capitalised as internally developed computer software.
The number of persons employed by the Group as at 30 June 2023 was 2,902 (31 December 2022: 2,889 and 30 June 2022: 3,422). In July 2022, the Group completed a VEP through which 559 of the Group's full‑time employees were approved to leave at a total cost of €101,195 thousand.
In January 2022, the Group's subsidiary company, JCC Payment Systems Ltd, proceeded with a VEP for its employees, through which 15 employees were approved to leave at a total cost of €3,130 thousand.
Share‑based benefits expense represents the cost for the period in relation to the Long‑Term Incentive Plan established in 2022, under which annual LTIP awards may be granted, and which provides for an award in the form of ordinary shares of the Company based on certain non‑market performance (driven by both delivery of the Group's Strategy as well as individual performance) and service vesting conditions. The eligible participants are the members of the Extended Executive Committee of the Group.
Non‑deferred cash award refers to a Short‑Term Incentive Plan established by the Group in 2023. This involves variable remuneration in the form of cash to selected employees, and will be driven by both delivery of the Group's Strategy, as well as individual performance.

Other operating expenses

	Six months ended 30 June
	2023	2022 (restated)
	€000	€000
Repairs and maintenance expenses	16,263	17,420
Other property‑related costs	5,058	5,518
Consultancy, legal and other professional services fees	8,224	8,220
Insurance	4,203	4,197
Advertising and marketing	2,646	3,458
Depreciation of property and equipment	6,660	6,930
Amortisation of intangible assets	7,974	7,806
Communication expenses	3,010	3,374
Printing and stationery	794	869
Cash transfer expenses	1,417	1,630
Other operating expenses	11,950	9,727
	68,199	69,149
Advisory and other transformation costs	2,257	6,675
	70,456	75,824
Advisory and other transformation costs comprise mainly fees to external advisors in relation to the transformation program and other strategic projects of the Group.
During the six months ended 30 June 2023, the Group recognised €39 thousand relating to rent expense for short term leases, included within 'Other property‑related costs' (30 June 2022: €84 thousand) and €2,752 thousand (30 June 2022: €2,823 thousand) relating to the depreciation of right‑of‑use assets (RoU assets), included within 'Depreciation of property and equipment'. In addition, depreciation of RoU assets of €492 thousand (30 June 2022: €600 thousand) and depreciation of property and equipment and amortisation of intangible assets of €1,775 thousand (30 June 2022: €1,572 thousand) are included within 'Net insurance service result', as these relate to directly attributable expenses of insurance services.
'Special levy on deposits and other levies/contributions' as presented in the interim consolidated income statement are analysed as per below:

	Six months ended 30 June
	2023	2022
	€000	€000
Special levy on deposits of credit institutions in Cyprus	8,816	7,467
Single Resolution Fund contribution	5,477	5,779
Contribution to Deposit Guarantee Fund	3,943	3,261
	18,236	16,507
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 payment of the Special Levy up to the level of the total annual Special Levy charge.
As from 1 January 2020 and until 3 July 2024, BOC PCL is subject to a contribution to the Deposit Guarantee Fund (DGF) on a semi‑annual basis. The contributions are calculated based on the Risk Based Methodology (RBM) as approved by the management committee of the Deposit Guarantee and Resolution of Credit and Other Institutions Schemes (DGS) and is publicly available on the CBC's website. In line with the RBM, the contributions are broadly calculated on the covered deposits of all authorised institutions and the target level is to reach at 0.8% of covered deposits by 3 July 2024.

12. Credit losses on financial assets and impairment net of reversals of non‑financial assets

	Six months ended 30 June
	2023	2022 (restated)
Credit losses on financial instruments	€000	€000
Credit losses to cover credit risk on loans and advances to customers
Impairment net of reversals on loans and advances to customers (Note 30.4)	38,514	28,055
Recoveries of loans and advances to customers previously written off	(8,376)	(6,509)
Changes in expected cash flows	(426)	2,840
Financial guarantees and commitments	578	(427)
	30,290	23,959
Credit losses of other financial instruments
Amortised cost debt securities	120	21
FVOCI debt securities	18	163
Loans and advances to banks	(181)	(22)
Balances with central banks	415	-
Other financial assets (Note 20)	6,110	705
	6,482	867
	36,772	24,826

	Six months ended 30 June
	2023	2022
Impairment net of reversals of non‑financial assets	€000	€000
Stock of property (Note 19)	23,206	7,364
Other non‑financial assets	-	4,793
	23,206	12,157

13. Income tax

	Six months ended 30 June
	2023	2022 (restated)
	€000	€000
Current tax:
‑ Cyprus	39,473	11,084
‑ Overseas	-	34
Cyprus special defence contribution	30	37
Deferred tax (credit)/charge	(9)	41
Prior years' tax adjustments	(11)	(16)
Other tax charges	285	(22)
	39,768	11,158
In addition to the amount of income tax presented in the respective caption in the consolidated income statement, an amount of €1,070 thousand (30 June 2022: €955 thousand) relates to tax expense presented within the net insurance service result as it is treated as directly attributable expense of the insurance operations of the Group.
Income tax in Cyprus is calculated at the rate of 12.5% on taxable income (2022: 12.5%). The Group's profits from overseas operations are taxed at the rates prevailing in the respective countries, which for 2023 were: Greece 22% (2022: 22%), Romania 16% (2022: 16%) and Russia 20% (2022: 20%).

On 22 December 2022, the European Commission approved Directive 2022/2523 which provides for a minimum effective tax rate of 15% for the global activities of large multinational groups. The Directive that follows closely the OECD Inclusive Framework on Base Erosion and Profit Shifting should be transposed by the Member States throughout 2023, entering into force on 1 January 2024. The legislation has not been substantively enacted at the balance sheet date and the Group will continue to monitor the evolving national legislation including any disclosures required, or exemptions available, under IAS 12 in the year ending 31 December 2023.

Deferred tax

The net deferred tax assets comprise:

	30 June 2023	31 December 2022 (restated)
	€000	€000
Deferred tax assets	227,953	227,934
Deferred tax liabilities	(34,618)	(34,634)
Net deferred tax assets	193,335	193,300
The deferred tax assets (DTA) relate to Cyprus operations.
The movement of the net deferred tax assets is set out below:

	30 June 2023	31 December 2022 (restated)
	€000	€000
1 January (restated)	193,300	226,125
Deferred tax recognised in the consolidated income statement ‑ tax credit	9	4,840
Deferred tax recognised in the consolidated statement of comprehensive income	26	244
Transfer to current tax receivables following conversion into tax credit	-	(37,909)
30 June/31 December	193,335	193,300

The Group offsets income tax assets and liabilities only if it has a legally enforceable right to set‑off current income tax assets and current income tax liabilities.

Income Tax Law Amendment 28 (I) of 2019

On 1 March 2019 the Cyprus Parliament adopted legislative amendments to the Income Tax Law (the 'Law') which were published in the Official Gazette of the Republic on 15 March 2019 ('the amendments').

BOC PCL has DTA that meets the requirements of the Income Tax Law Amendment 28(I) of 2019 relating to income tax losses transferred to BOC PCL as a result of the acquisition of certain operations of Laiki Bank, on 29 March 2013, under 'The Resolution of Credit and Other Institutions Law'. The DTA recognised upon the acquisition of certain operations of Laiki in 2013 amounted to €417 million (corresponding to €3.3 billion tax losses) for which BOC PCL paid a consideration as part of the respective acquisition. The period of utilisation of the tax losses which may be converted into tax credits is eleven years following the amendment of the Law in 2019, starting from 2018 i.e. by end of 2028.

As a result of the above Law, the Group has DTA amounting to €227,455 thousand as at 30 June 2023 (31 December 2022: €227,455 thousand) that meet the requirements under this Law, the recovery of which is guaranteed. On an annual basis an amount is converted to annual tax credit and is reclassified from the DTA to current tax receivables.

The DTA subject to the Law is accounted for on the same basis as described in Note 2.13 of the annual consolidated financial statements for the year ended 31 December 2022.

Accumulated income tax losses

The accumulated income tax losses are presented in the table below:

	Total income tax losses	Income tax losses for which a deferred tax asset was recognised	Income tax losses for which no deferred tax asset was recognised
30 June 2023	€000	€000	€000
Expiring within 5 years	44,960	-	44,960
Utilisation in annual instalments up to 2028	1,819,636	1,819,636	-
	1,864,596	1,819,636	44,960

31 December 2022
Expiring within 5 years	44,960	-	44,960
Utilisation in annual instalments up to 2028	1,819,636	1,819,636	-
	1,864,596	1,819,636	44,960

14. Earnings per share

Basic earnings per share

	Six months ended 30 June
Basic profit per share attributable to the owners of the Company	2023	2022 (restated)
	€000	€000
Profit for the period attributable to the owners of the Company (€ thousand) (basic)	220,247	42,214
Weighted average number of shares in issue during the period, excluding treasury shares ( € thousand)	446,058	446,058
Basic profit per share (€ cent)	49.4	9.5

Diluted earnings per share

	Six months ended 30 June
Diluted profit per share attributable to the owners of the Company	2023	2022 (restated)
	€000	€000
Profit for the period attributable to the owners of the Company (€ thousand)	220,247	42,214
Weighted average number of shares in issue during the period, excluding treasury shares adjusted for the dilutive effect of all rights on shares (€ thousand)	446,755	446,058
Diluted profit per share (€ cent)	49.3	9.5
For diluted earnings per share the weighted average number of ordinary shares in issue is adjusted for the dilutive effect of ordinary shares that may arise in respect of share awards granted to executive directors and senior management of the Group under the Long‑Term Incentive Plan (2022 LTIP).

15. Investments

The analysis of the Group's investments is presented in the table below:
	30 June 2023	31 December 2022
	€000	€000
Investments at FVPL	138,661	190,209
Investments at FVOCI	487,806	467,375
Investments at amortised cost	2,703,240	2,046,119
	3,329,707	2,703,703

Out of these, the amounts pledged as collateral are shown below:

	30 June 2023	31 December 2022
Investments pledged as collateral	€000	€000
Investments at FVOCI	24,585	60,974
Investments at amortised cost	232,562	223,369
	257,147	284,343
Investments pledged as collateral as at 30 June 2023 and 31 December 2022 related to debt securities collaterised mainly for the additional amounts borrowed from the ECB Targeted Longer‑Term Refinancing Operations (TLTRO III) (Note 21). Encumbered assets are disclosed in Note 32.
The maximum exposure to credit risk for debt securities is disclosed in Note 30.1.
The increase in the investment portfolio as at 30 June 2023 is consistent with the strategy of the Group to prudently grow the fixed income portfolio to reach approximately 15% of the Group's total assets. Further, part of the increase as at 30 June 2023 reflects incremental new investments during the second quarter of 2023, ahead of expected maturities in the second half of 2023.

Investments at fair value through profit or loss

	Investments mandatorily measured at FVPL
	30 June 2023	31 December 2022
	€000	€000
Other non‑equity securities	3,364	8,968
Equity securities	4,870	6,961
Mutual funds	130,427	174,280
	138,661	190,209

Investments at FVOCI

	30 June 2023	31 December 2022
	€000	€000
Debt securities	474,887	453,775
Equity securities (including preference shares)	12,919	13,600
	487,806	467,375

Investments at amortised cost

	30 June 2023	31 December 2022
	€000	€000
Debt securities	2,703,240	2,046,119
Further analysis of the Group's investments is provided in the tables below.
Equity securities

Equity securities	FVPL	FVOCI	Total
30 June 2023	€000	€000	€000
Listed on the Cyprus Stock Exchange	-	1,280	1,280
Listed on other stock exchanges	4,870	61	4,931
Unlisted	-	11,578	11,578
	4,870	12,919	17,789

	FVPL	FVOCI	Total
31 December 2022	€000	€000	€000
Listed on the Cyprus Stock Exchange	-	1,335	1,335
Listed on other stock exchanges	6,961	68	7,029
Unlisted	-	12,197	12,197
	6,961	13,600	20,561
The Group irrevocably made the election to classify its equity investments as equity investments at FVOCI on the basis that these are not held for trading. Their carrying value amounts to €12,919 thousand at 30 June 2023 and is equal to their fair value (31 December 2022: €13,600 thousand).
Equity investments at FVOCI comprise mainly investments in private Cyprus registered companies, acquired through loan restructuring activity and specifically through debt for equity swaps.
Dividend income amounting to €439 thousand has been received and recognised during the six months ended 30 June 2023 in other income (30 June 2022: €368 thousand).

During the six months ended 30 June 2023 and the year ended 31 December 2022 no material equity investments measured at FVOCI have been disposed off.

Mutual funds

Mutual funds	FVPL
30 June 2023	€000
Listed on other stock exchanges	37,958
Unlisted	92,469
	130,427

	FVPL
31 December 2022	€000
Listed on other stock exchanges	77,782
Unlisted	96,498
	174,280
The majority of the unlisted mutual funds relate to investments whose underlying assets are listed on stock exchanges and are therefore presented in Level 2 hierarchy in Note 17.
Debt securities and other non‑equity securities

Analysis by issuer type	FVPL	FVOCI	Amortised cost	Total
30 June 2023	€000	€000	€000	€000
Cyprus government	-	343,459	615,978	959,437
Other governments	-	10,008	546,796	556,804
Financial institutions	-	97,754	1,013,598	1,111,352
Other financial corporations	3,364	-	41,645	45,009
Supranational organisations	-	18,819	387,633	406,452
Other non‑financial corporations	-	4,847	97,590	102,437
	3,364	474,887	2,703,240	3,181,491

	FVPL	FVOCI	Amortised cost	Total
31 December 2022	€000	€000	€000	€000
Cyprus government	-	310,791	521,322	832,113
Other governments	-	22,616	402,844	425,460
Financial institutions	-	115,497	722,522	838,019
Other financial corporations	8,968	-	36,547	45,515
Supranational organisations	-	-	293,834	293,834
Other non‑financial corporations	-	4,871	69,050	73,921
	8,968	453,775	2,046,119	2,508,862

Geographic dispersion by country of issuer	FVPL	FVOCI	Amortised cost	Total
30 June 2023	€000	€000	€000	€000
Cyprus	-	343,459	626,805	970,264
Greece	-	18,422	41,649	60,071
Germany	-	-	176,649	176,649
France	-	44,632	247,792	292,424
Other European Union countries	-	19,655	549,240	568,895
United Kingdom	-	-	23,234	23,234
USA and Canada	3,364	9,029	267,283	279,676
Other countries	-	20,871	382,955	403,826
Supranational organisations	-	18,819	387,633	406,452
	3,364	474,887	2,703,240	3,181,491

	FVPL	FVOCI	Amortised cost	Total
31 December 2022	€000	€000	€000	€000
Cyprus	-	310,791	531,611	842,402
Greece	-	14,987	43,276	58,263
Germany	-	-	121,132	121,132
France	-	58,134	162,405	220,539
Other European Union countries	-	33,298	370,728	404,026
United Kingdom	-	-	23,128	23,128
USA and Canada	8,968	8,974	238,802	256,744
Other countries	-	27,591	261,203	288,794
Supranational organisations	-	-	293,834	293,834
	8,968	453,775	2,046,119	2,508,862

Listing analysis	FVPL	FVOCI	Amortised cost	Total
30 June 2023	€000	€000	€000	€000
Listed on the Cyprus Stock Exchange	-	-	25,984	25,984
Listed on other stock exchanges	-	474,887	2,677,256	3,152,143
Unlisted	3,364	-	-	3,364
	3,364	474,887	2,703,240	3,181,491

	FVPL	FVOCI	Amortised cost	Total
31 December 2022	€000	€000	€000	€000
Listed on the Cyprus Stock Exchange	-	-	29,849	29,849
Listed on other stock exchanges	-	453,775	2,016,270	2,470,045
Unlisted	8,968	-	-	8,968
	8,968	453,775	2,046,119	2,508,862
There were no reclassifications of investments during the six months ended 30 June 2023 and the year ended 31 December 2022.
The fair value of the financial assets that have been reclassified out of FVPL to FVOCI on transition to IFRS 9, amounts to €7,631 thousand at 30 June 2023 (31 December 2022: €8,694 thousand). The fair value gain that would have been recognised in the consolidated income statement during the six months ended 30 June 2023 if these financial assets had not been reclassified as part of the transition to IFRS 9, amounts to €100 thousand (30 June 2022: loss of €1,018 thousand). The effective interest rate of these instruments is 1.6%‑5.0% (2022: 1.6%‑5.0%) per annum and the respective interest income during the six months ended 30 June 2023 amounts to €105 thousand (30 June 2022: €128 thousand).

16. Derivative financial instruments

The contract amount and fair value of the derivative financial instruments is set out below:

	30 June 2023			31 December 2022
		Fair value			Fair value
	Contract amount	Assets	Liabilities	Contract amount	Assets	Liabilities
	€000	€000	€000	€000	€000	€000
Trading derivatives
Forward exchange rate contracts	22,489	204	124	13,239	103	123
Currency swaps	1,067,461	4,890	3,615	1,248,522	283	10,316
Interest rate swaps	14,244	360	347	14,806	437	420
Currency options	125	123	2	352	287	65
Interest rate caps/floors	169,248	3,699	3,699	171,864	3,094	3,094
	1,273,567	9,276	7,787	1,448,783	4,204	14,018
Derivatives qualifying for hedge accounting
Fair value hedges ‑ interest rate swaps	1,093,731	40,024	10,604	803,513	43,939	2,151
Net investments ‑ forward exchange rate contracts and currency swaps	3,288	2	-	3,059	10	-
	1,097,019	40,026	10,604	806,572	43,949	2,151
Total	2,370,586	49,302	18,391	2,255,355	48,153	16,169

Hedge accounting

The Group elected, as a policy choice permitted by IFRS 9, to continue to apply hedge accounting in accordance with IAS 39.

The Group applies fair value hedge accounting using derivatives when the required criteria for hedge accounting are met. The Group also uses derivatives for economic hedging (hedging the changes in interest rates, foreign currency exchange rates or other risks) which do not meet the criteria for hedge accounting. As a result, these derivatives are accounted for as trading derivatives and the gains or losses arising from revaluation are recognised in the consolidated income statement.

Fair value hedges

The Group uses interest rate swaps to hedge the interest rate risk arising as a result of the possible adverse movement in the fair value of fixed rate debt securities measured at FVOCI.

Changes in the fair value of derivatives designated as fair value hedges and the fair value of the item in relation to the risk being hedged are recognised in the consolidated income statement.

Hedges of net investments

The Group's consolidated balance sheet is impacted by foreign exchange differences between the Euro and all non‑Euro functional currencies of overseas subsidiaries and other foreign operations. The Group hedges its structural currency risk when it considers that the cost of such hedging is within an acceptable range (in relation to the underlying risk). This hedging is effected by financing with borrowings in the same currency as the functional currency of the overseas subsidiaries and other foreign operations and by forward exchange rate contracts.

As at 30 June 2023, forward exchange rate contracts amounting to €3,288 thousand (30 June 2022: forward exchange rate contracts amounting to €2,874 thousand) have been designated as hedging instruments and have given rise to a loss of €3 thousand (30 June 2022: loss of €4,079 thousand) which was recognised in the 'Foreign currency translation reserve' in the consolidated statement of comprehensive income, against the profit or loss from the retranslation of the net assets of the overseas subsidiaries and other foreign operations.

Interest rate benchmark reform

As at 30 June 2023 the interest rate benchmarks to which BOC PCL's hedge relationships are exposed to, are Euro Interbank Offered Rate (Euribor) (31 December 2022: Euribor and USD London Interbank Offered Rate (Libor)) in relation to the cash flows of the hedging instruments. The Group has applied judgement in relation to market expectations regarding hedging instruments.

The table below indicates the nominal amount of derivatives in hedging relationships analysed by interest rate basis. The derivative hedging instruments provide a close approximation to the extent of the risk exposure BOC PCL manages through hedging relationships.

	30 June 2023	31 December 2022
Interest Rate Swaps	€000	€000
Euribor (3‑month)	1,093,731	770,731
Libor USD (3‑month)	-	32,782
Total	1,093,731	803,513
Euribor is in compliance with EU Benchmarks Regulation (BMR) and the Group does not consider that Euribor‑based derivatives are affected by the BMR Reform.
As at 30 June 2023, the Group's assessment regarding the on going transition to the new risk free rates (RFRs) indicates that the impact on the hedging relationships and in value terms is not significant. Further details in relation to interest rate benchmark reform are disclosed in Note 31.

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