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Bank of Cyprus has broken its five-year lossmaking streak by reporting a net profit of €64m, helped by a sharp fall in provisions for bad debts, even though they still accounted for about half its balance sheet.

The bank, which recently listed its shares on the London Stock Exchange, said provisions for bad loans fell 61 per cent to €370m. That helped it turn a post-tax attributable loss for shareholders of €438m into a profit of €64m at the bank, which has the new US commerce secretary Wilbur Ross as one of its biggest shareholders and vice-chairman – a post he is set to give up imminently.

The bank, which was rescued by European authorities after the Cyprus debt crisis four years ago, said it continues to work towards achieving a premium listing in the UK which would allow it to be included in the FTSE indices.

Non-performing exposures at the Mediterranean bank fell 7 per cent in the fourth quarter to €11bn, accounting for 54.8 per cent of its total loans, down from 62 per cent a year ago. It aims to reduce this to below 30 per cent in the “medium term”.

The coverage ratio of provisions to bad loans increased from 39 per cent to 41 per cent, still below its target of 50 per cent.

Chaired by former Deutsche Bank chief executive Josef Ackermann, the bank last month completed a switch of its second listing from Athens to London and repaid the last of its emergency central bank funding left over from its near-collapse in 2013.

John Hourican, the former Royal Bank of Scotland executive who became Bank of Cyprus’ chief executive in 2013, said: “Underpinning the group’s momentum is a recovering Cypriot economy. It was pleasing to note a 2.8 per cent growth rate in the underlying economy for 2016.”

The bank’s net interest income, the difference between what it pays out to savers and what it earns from borrowers, fell 19 per cent last year. Total expenses fell 3 per cent and operating costs as a proportion of revenues fell from 41 to 39 per cent.

Its common equity tier one ratio – a key benchmark of financial strength – increased from 14 to 14.7 per cent. It ratio of net loans to deposits improved from 121 per cent to 95 per cent.

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