In accordance with the relevant rules and regulations of the Cyprus Stock Exchange and the Cyprus Securities and Exchange Committee, the Bank of Cyprus Group announces that, based on the preliminary indications of the annual review of its loan portfolio, the level of the total provision for bad and doubtful debts for 2003, including the general provision, will be clearly higher than the provision for 2002. The need for increased provisions stems from the continuous slowdown in the European and Cyprus economy, especially in the tourism sector, the extended stagnation of the Cyprus stockmarket and the concurrent introduction of new, stricter interest income suspension rules. All these factors led to increased non-performing loans.

As a result of the increased provisions for bad and doubtful debts, the Group is expected to record a loss after tax for 2003 at about the same level of the loss recorded for 2002.

It is expected that the Group's provision for bad and doubtful debts for 2004 will revert to normal levels, following the above mentioned increased provision for bad and doubtful debts for 2003 and the actions taken to collect doubtful debts and/or strengthen the collateral held in respect of the Group?s loan portfolio. This, in conjunction with the expected increase in core profitability will have a positive impact in the Group?s profit for 2004. Additional indications for the expected Group profitability and prospects for 2004 will be announced on 25 February 2004, the date of announcement of the Group's financial results for 2003.

The Group's capital base remains strong. The capital adequacy ratio at 31 December 2003 is estimated at 13%, compared to the minimum required of 10% and 8% by the Central Bank of Cyprus and the European Union directives, respectively.