Ladies and gentlemen, thank you for standing by. I'm Constantinos, your conference call operator. Welcome. Thank you for joining the Bank of Cyprus conference call to present and discuss the group's financial results for six months ended 30 June 2019. All participants will be in a listen-only mode. The conference is being recorded. The presentation will be followed by a question-and-answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. John Patrick Hourican, outgoing Group CEO, Mr. Panicos Nicolaou, Group CEO Designate, Ms. Eliza Livadiotou, Group Finance Director, Mr. Michalis Athanasiou, Group Chief Risk Officer, Ms. Anna Sofroniou, Director of Real Estate Management Unit, Mr. Nick Smith, Director of Restructuring and Recoveries, and Ms. Annita Pavlou, Manager in Investor Relations.
Mr. Hourican, you may now proceed.
Thank you very much, Constantinos. Good morning, everyone. Thank you and welcome to the 2019 Bank of Cyprus interim results call. We recognize that you haven't had a lot of time with these numbers and of course, Annita and her team are available to answer any questions you will no doubt have when you go through the detail. As an overarching statement, I'd like to say that the results for this quarter reflect our continuing progress against our core objective of balance sheet repair. Before I turn to my colleagues on the interim results, I'd like to mention that today, in fact, is my last official day at the Bank of Cyprus. I spent nearly six years now in Cyprus, and I'm proud of the progress that the bank has made since late 2013 when I joined the executive team on this journey.
The bank is returning to strength through a disciplined approach to balance sheet repair and the deliberate disposal of non-core businesses. It is now, I believe, well-placed to support the strengthening Cypriot economy and indeed to build value for shareholders. I would like to thank you all for your continued support, your trust, and most importantly, your continued patience throughout this journey. I am certain that Panicos will confidently lead the bank in its next chapter and that the management will remain focused on continuing to make the bank stronger, safer, and future-focused. I'll now hand over to Panicos to take you through the key highlights of the second quarter. Panicos?
Thank you, John. Good morning, everyone. I will start by saying that we are very grateful to John for his commitment and significant contribution to the transformation of the Bank. It has been a true privilege to work with such an incredible leader over the past six years. We will continue the hard work aiming to finish the de-risking of the Bank. At the same time, in the complex and challenging environment in which the Bank operates, we need to improve our business model, improve our efficiency, and identify ways to strengthen our long-term profitability. A lot of work is underway. The Group Organization we announced this morning put in place the structure to achieve these objectives, reduce legacy assets, deliver on costs, strengthen the customer engagement, and enhance the regulatory dialogue. We have identified ways to reduce costs for running the Bank.
Let's take a look at the highlights of the second quarter before Eliza and Michalis take you through the figures in detail. The bank's current position remains good. Our core capital and CET1 stood at 18.5% and 16.2% respectively, pro forma for CNP, well above the minimum requirements. In June, we completed the sale of EUR 2.7 billion NPLs in Project Helix, which added another 140 points to capital. The de-risking of our balance sheet continues. In Q2, our organic NPL reduction amounted to EUR 300 million, bringing total organic reduction in the first half to EUR 457 million. That is in line with our target of EUR 800 million for the whole year. Since the peak in 2014, our gross NPL declined by 71% to EUR 4.3 billion.
Our NPL ratio was reduced to 33%, and exposures are 50% covered by loan losses. Overall, since 2014, we have managed a reduction in gross NPLs of EUR 10.7 billion, of which EUR 6 billion has been through organic actions. The organic revenue sales for the quarter amounted to EUR 73 million, bringing the organic revenue sales for the first half to EUR 110 million. In Q2, we have also completed the sale of Cyprolia, delivering of a further EUR 160 million of sales in the first half. We have a clear strategy for continuing the improvement in the asset quality position of the bank. We continue to actively explore options to further accelerate the de-risking, including further portfolio sales. During the quarter, our deposits remained broadly flat at EUR 16.4 billion.
The bank continues to operate with significant surplus liquidity that as at end of the quarter amounted to EUR 3.8 billion, boosted by the EUR 1.2 billion increase following the completion of Helix. The management continues to actively cut down deposits in response to continued pressures from low interest rates. The cost of our deposits reduced by 8 basic points in Q2 and by 52 basic points since January 2018. Our loan-to-deposit ratios stood at 67%. During the second quarter, our total income was EUR 177 million, positively impacted by some one-off insurance income premiums, revaluation gains on financial instruments, and increased gains from the disposal of revenue products. Our operating profit was EUR 72 million, and the underlying profit after tax, excluding Helix and CMP, amounted to EUR 21 million. The cost of risk stood at 1.33%, reflecting continued de-risking and IFRS model volatility.
The disposal of our investment in CNP Cyprus in June 2019 resulted in net loss of EUR 23 million in the quarter, but is expected to add 30 basic points to capital completion. The net result is a profit after tax of EUR 2 million for the quarter and EUR 97 million for the first half. With that, I will hand over to Eliza to take you through the capital slides.
Thank you. Good morning from me, too. Turning to capital on slide three, the bank's capital position was strengthened following the completion of Project Helix, which added 140 basis points to capital. During the second quarter, we generated 50 basis points of organic capital in operating profits. These were partly offset by loan credit losses, impairments, and other adjustments totaling around 30 basis points. As Panicos mentioned earlier, the sale of our investment in CNP Cyprus is expected to add another 30 basis points to capital on completion, which is anticipated in the second half of the year. We finished the quarter with a CET1 ratio of 15.2% and total capital ratio of 18.1%, both pro forma for CNP. Our average risk-weighted asset intensity has remained relatively stable during the quarter at 64%.
Michalis will take you through the asset quality slides, and will then continue with the P&L. Michalis?
Thank you, Eliza. Good morning from myself as well. I will start first by focusing on slide four. In the second quarter of the year, as you can see, the bank continued to deliver organic NP reduction, with NPs reducing by EUR 300 million, or circa 6%. Since 2014, NPs reduced by EUR 10.7 billion, as Panicos mentioned earlier, of which EUR 8 billion has been through organic actions. The NP ratio reduced by two percentage points and now stands at 33%. Write-offs continued to EUR 260 million in the first half of 2019, representing 39% of organic growth NP reduction. As we have previously explained, we continue to expect that the proportion of write-offs in an even quarter will be volatile. We now turn to slide five, which shows NP outflows of EUR 334 million, an improvement on previous quarter. This quarter also had lower NP inflows of EUR 63 million.
Overall, for Q2 2019, the net organic NP reduction was EUR 300 million, bringing total organic reduction in the first half of 2019 to EUR 457 million, in line with our organic target of circa EUR 800 million of 2019. A steady quarter on quarter is to be expected. We remain committed to our annual targets. We now turn to slide six, where we present the bank's view on what we describe as core and non-core NPs, using a consistent approach in line with previous results presentations. Non-core NPs total EUR 660 million as of the 30th of June, representing 55% of gross loans and 55% of total NP stock. Coverage on these loans remains relatively modest, at 18%, reflecting the lower risk associated with this stock of NPs. Around 40% of this are available for NP exit by end of 2019, subject to continuing to meet, of course, all relevant exit criteria.
Core NPs total EUR 3.65 billion as of the 30th of June, representing 28% of gross loans with 55% coverage. The contractual balance of core NPs amounted to EUR 5.48 billion. They are 70% covered by credit losses. On slide seven, we show that a clear strategy for further NP reduction are continuing to tackle the bank's loan portfolio, which is of utmost importance for the group and our stakeholders. We have been successful in developing restructuring solutions across the book. We expect this to continue in the coming quarters at a rate of circa EUR 200 million per quarter. Today, the bank's EUR 3.65 billion of core NPs fall into three principal buckets. Firstly, the Estia, which as announced by the government, the scheme will be launched in September.
Following ongoing detailed assessments, the Estia is expected to positively impact up to EUR 4.84 billion of Estia retail core NPLs, subject of course to eligibility criteria and participation rates. Estia also remains indirectly important to other NPLs as it provides a clear definition of socially protected borrowers, discouraging strategic defaults. Secondly, retail. Non-Estia eligible loans of circa EUR 1.6 billion. This will continue to receive clear focus from management moving forward. Certainly, SMEs and corporate loans of circa EUR 1.25 billion. Our plan, prioritize realizing collateral using write-offs to incentivize quicker cash or give us solutions or via foreclosures or other enforcement routes where borrowers are not willing to cooperate. This will continue to be facilitated by onboarding assets into REMU at conservative 25%-30% discounts to open market value.
Overall, excluding Estia, core NPEs amounted to EUR 2.81 billion and will be the focus of the options we continue to explore to accelerate NPE resolution through structured solutions. We now go to slide eight. Some more information on Estia. As I mentioned on the previous slide, the scheme will commence in September. A specific timeline has been announced by the government, and this is shown on the slide. In summary, the memorandum of understanding between the government and the banks participating in the scheme was signed at the end of July, and submission of applications will start in September, and is expected to last until mid-November. The government process and the payment of the first installment to the banks is expected to be completed by April 2020. We have undertaken certain actions in order to assess eligibility in the book prior to the launch of the scheme.
As at 30th of July 2019, we have 763 applications of around EUR 211 million at the well-progressed stage for submission to the scheme in the third quarter of this year. The meetings with interested borrowers are ongoing. We expect to have good participation in the scheme, given that there is a positive response to the scheme from the market at large. Indeed, 96% of potentially eligible borrowers contacted have expressed interest to participate. As was stated before, to remind everyone, while the scheme will help resolve a sticky and politically sensitive component of NPEs, it will not produce immediate results as a restructure activity, is subject to usual NPE curing rules and timetables. The NPE benefit for the restructuring that we will perform in 2019 for eligible borrowers will not materially be visible until late 2020 or early 2021. Going to slide nine on foreclosures.
Foreclosures are becoming an important tool in NPE resolution. Therefore, having a robust legal framework around foreclosures is very important. The foreclosure law amendments that were approved in July 2018 restricted the process and limited options to accelerate execution. Recently, the parliament has voted to do certain changes to that law, being the most part seek to provide additional checks and balances where banks are seeking to foreclose small loans. In small loans, we mean less than EUR 350,000, secured by principal private residence, and extend the foreclosure timetable by extending certain notice periods. Those amendments have not yet passed into law, as the President of the Republic has deferred this to a Supreme Court based on legal advice from the attorney general that elements thereof are unconstitutional.
Discussions are ongoing, including inter alia with the Ministry of Finance, the CBC, and the financial ombudsman, aiming to introduce amendments to the foreclosure and law restructuring framework that are acceptable to all stakeholders. Given these amendments are tightly targeted and various exclusions are included, it is not expected that it will have a material adverse impact on the positive experience reported in July 2018, should it pass into law. During the second quarter, foreclosure was initiated on 527 assets. Overall, around half of the borrowers for which we have initiated the foreclosure process are engaged in active negotiations with the bank. 245 auctions were held in the first half 2019, where around 750 are already set for auction during the remainder of 2019. Around 300 properties are today awaiting repossession, having failed to sell at auction.
We expect further improvement in the pace of foreclosures during the second half of 2019. We now go to slide 10 on REMU, where we show last slide represents the performance of the division. Overall, over EUR 1 billion sales covering 1,284 properties were achieved since the REMU set up in January 2016, demonstrating that the REMU strategy targets both value and volume of assets. EUR 110 million of property sales covering 215 properties were achieved in the first half of 2019 at a profit of EUR 16 million, testament to our conservative policy for onboarding assets at a 25%-30% discount to open market value. The disposal of Cyreit, which included 21 assets, was also completed in the second quarter of 2019, delivering a further EUR 160 million of sales. The near-term sales pipeline remains strong.
As of 30th of June 2019, SPAs relating to EUR 89 million of property sales were signed and awaiting execution. At the same date, EUR 31 million of SPAs were under preparation, having agreed commercial terms with buyers. As seen in previous quarters, land deeds continue to be the largest component by volume, representing 53% of the first half 2019 sales. Market statistics remain encouraging. Residential property prices rose by 1.5% year-on-year. Sales contracts deposited at the Land Registry, excluding those that related to bank foreclosure activity, increased by 24% year-on-year by volume. Slide 11, coverage. Advanced coverage ratio increased to 50% at quarter end, in line with our previously disclosed expectations. The bank stands today above the European average coverage ratio of 44%. Total coverage, including tangible collateral, stood at 119%. Excluding Helix, the cost of risk for the second quarter was 1.23%.
That was affected by the revised IRM model volatility, driven by the constant evolution of the economic outlook and the impact of UTP criteria on NPE defaults. Around half of the quarterly cost of risk related to IRM volatility. With that, I will hand back to Eliza.
Thank you. Before I start, let me remind you that the income statement analysis as presented in the following slides excludes the impact of Helix so that it's more forward-looking and relevant to investors. The impact of Helix has been collapsed to a single line, "lower operating performance." On slide 12, starting with total income on the P&L. Total income stood at EUR 177 million for the second quarter, 14% higher than the previous quarter. Net interest income remained at similar levels, with the previous quarter at EUR 85 million, as the lower interest income on loans was offset by lower funding costs. As previously mentioned, Helix contributed around EUR 17 million in the NII line.
Our non-interest income increased to EUR 92 million compared to EUR 71 million in the first quarter, mainly due to one-off insurance income items, one-off revaluation gains on financial instruments, and increased gains from the disposal of our new productive. Moving to the drivers of revenue in more detail, starting with volume trends on slide 13. New lending amounted to EUR 548 million in the second quarter. Overall, in the first half of 2019, we lent EUR 1.1 billion to customers in Cyprus, exceeding the same level of the first half of 2018. Corporate continues to be a strong component of new lending, representing 65% of overall loan originations in the quarter. The yields on our performing books fell in the quarter as a result of the lower reference rates, the continued interest rate environment, and competitive factors.
New lending continues to be carefully considered against robust assessment criteria, 97% of new exposures in Cyprus since the beginning of 2016 continued to be performing. The bank is the single largest credit provider in Cyprus, with a market share of 41% at 30th June 2019, compared to 47% in March, with the reduction resulting exclusively from the sale of the Helix portfolio. Moving to slide 14 on balance sheet de-risking. As explained previously, the continuing balance sheet de-risking is resulting in a smaller but lower-risk loan book. Overall, net loans have reduced by 36% since 2015, driven by the legacy book leveraging and the sale of the U.K. bank last year. Today, the performing book represents 81% of net loans, compared to 58% in 2015. Q on Q, the performing book was totally flat and amounted to EUR 8.9 billion.
Excluding Helix, interest income on loans fell from EUR 104 million to EUR 101 million in the quarter. Within the performing book, interest income fell by EUR 3 million as a result of the lower yields I noted earlier due to the continued low interest rate environment, lower base rates, and the sustained competitive pressure. Interest income in the legacy portfolio was unchanged in the quarter. Going forward, the continued de-risking of the legacy book will result in further pressure on interest income, but this should have little impact to the bottom line, as all of this interest income is provided for. Moving to slide 15 now. This should be a familiar slide from previous quarters. Starting with legacy, the legacy column, you can see that the interest recognized on this book is negative to the bottom line this quarter due to higher loan credit losses.
The risk-adjusted yield of the book was actually negative compared to 3.4% of the performing book. Now turning to funding and liquidity on slide 16. Deposit service remained broadly flat Q on Q. Of the deposits in Cyprus, around two-thirds represent deposits whose ultimate beneficial owners are Cypriots, whilst only 4% are Russian. As you can see, the cost of deposits fell by a further eight basis points in this quarter. Overall, our cost of deposits has fallen by 52 basis points since January 2018, as the bank is actively pricing down deposits to respond to the intensifying pressure from low interest rates and forward curves. The bank continues to operate with significant surplus liquidity, that as at the quarter end amounted to EUR 3.8 billion, enhanced by the EUR 1.2 billion cash received following the completion of Helix.
These levels of liquidity continue to put pressure on NIM as excess liquidity is placed with ECB at negative rates, which are expected to continue and possibly deepen in the near future. Moving to the drivers of NIM on slide 17. To bring assets and liability trends together, I'd like to discuss margins now. As explained on previous results calls, NIM has come under pressure as a result of a number of actions we have taken, which had a positive impact on capital and liquidity. The recognition of Helix has impacted NIM by around 40 basis points, as the Helix portfolio included higher yielding, higher risk loans. Excluding Helix, our NIM in the second quarter was partly flat and at 189 basis points, as the lower interest income on loans was offset by lower funding costs.
Our margin dynamics are more complicated, and there are several important underlying components that I'd like to discuss. First, the liquidity build-up in a very challenging interest rate environment. Liquid assets increased to EUR 7.4 billion, up 25% in the quarter, reflecting the EUR 1.2 billion cash inflow from Helix I mentioned before. Liquid assets now account for around 40% of interest-bearing assets, and going forward, we expect that the pressure on the effective yield of liquid assets will continue as the interest rate environment remains and probably deepens into negative territory. Secondly, the yield on the performing book, this dropped from 3.55% in the first quarter to 3.35% in the second quarter due to continued lower interest rates, reference rates, and competitive pressure. Thirdly, the higher yielding, higher risk legacy loans are reducing as we successfully exit NPEs. As I mentioned earlier, this is neutral or even positive to the P&L.
Finally, the cost of funding continued to decrease and the impact is increasingly visible. We continue to aggressively reprice our deposit book down. The cost of our deposits in Cyprus declined a further 18 this quarter and 52 basis points since January 2018. Our overall blended average funding cost came down by seven basis points in the quarter. Moving to slide 18, excluding Helix, non-interest income for the second quarter increased to EUR 92 million compared to EUR 71 million in the previous quarter. Recurring income was at EUR 56 million in the quarter, up 14% QoQ, mainly due to higher insurance income attributable to increased income, positive investment returns, the reduction of the discount rate, and an improvement in the yield of assets. We also have tax revaluation gains and lower insurance claims during the quarter.
Net fee and commission income of around EUR 40 million for the first quarter was reduced to EUR 37 million in the second quarter as commission income of EUR 3 million relating to Helix transitional servicing fees is now included in the Helix line. Net fee and commission income accounts for 22% of total income, compared to 23% in the previous quarter. Net gains on financial instruments amounted to EUR 24 million in the quarter, compared to EUR 18 million in the previous quarter, positively affected by one-off revaluation gains on financial instruments. Net gains increased to EUR 12 million for the second quarter, compared to EUR 4 million in the first quarter, mainly due to increased revenue profit from the disposal of high-value properties. Revenue profit does, however, remain volatile. Now moving to costs on slide 19.
Our cost-to-income ratio, excluding Helix and the levies, stood at 59% for the first half, compared to 62% in the first quarter on the same basis. Our operating expenses are a clear focus area for the bank. During the second quarter of this year, excluding Helix, other operating expenses amounted to EUR 43 million, compared to EUR 41 million in the first quarter, and staff costs for the quarter were at EUR 56 million flat on a QoQ basis. Going forward, the digital transformation program is beginning to clearly deliver an improved customer experience. We are the first bank in Cyprus to launch PSD2 APIs to allow customers to view account balances from all banks in one interface through our 1bank product or tool. We have also launched various new features on our mobile application to allow customers to apply for e-products, make transfers and payments, and log in using biometrics.
Finally, we've introduced very recently Apple Pay and BoC Wallet to facilitate secure and fast payments via mobile devices for BoC cardholders. The digital transformation program, the above were some examples of that, is a priority for the bank and is a key lever for enabling us to achieve operating efficiency, cost reduction, and revenue generation. Now turning to the complete income statement on slide 20. Net interest income remains broadly flat at EUR 85 million this quarter. Total income increased to EUR 177 million, while total expenses were EUR 105 million, compared to EUR 103 in Q1. Loan credit losses amounted to EUR 14 million, and cost of risk was at 1.23%. Impairments of other financial instruments amounted to EUR 9 million, and they mainly relate to legacy revenue properties. Profit after tax from organic operations for the quarter was at EUR 21 million.
Following that, there was a net loss of EUR 23 million relating or resulting from the agreement to sell CMP, which was achieved in June, and this leaves an overall profit after tax of EUR 2 million for the second quarter. In summary, as Panikos mentioned at the beginning, what we'd like to emphasize is that we continue to focus on revenue generation, on cost reduction, and of course, on the continuing de-risking of the balance sheet. With these three pillars will allow us to now redesign and refine the strategy for the next three years. We are aware of your requests and calls requesting forward guidance, and we do intend to give that out on the back of full year numbers, so you will have to bear with us until then. With that, we conclude the presentation and we'll now open to questions.
Ladies and gentlemen, at this time, we'll begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from the line of Floriani Jonas with Axia Ventures. Please go ahead.
Good morning, guys. Thanks for the presentation. I'll start with a few questions, and then I can rejoin the queue if necessary. On your slide five, looks like your numbers reported for inflows and outflows of NPs were quite good compared to previous quarters. I know that you have that guidance of around EUR 300 million of organic reduction per quarter on the NPs, but do you see any of these trends seen in Q2 as sustainable or maybe a possible change from the EUR 300 million to something bigger in terms of reduction going forward? My second question then, it's on real estate assets. I'm just wondering if there's anything you can share in terms of the average age of the assets that you are able to sell on a quarterly basis compared to the inflows.
I was just wondering, once you have foreclosed assets coming in, how long it normally takes for the same asset to leave your portfolio. Finally, I am aware of what you just said in terms of guidance going forward, but just wondering if there's anything for the full year 2019, not 2021, but in terms of recurring lines, the EUR 85 million in terms of NII or maybe cost of risk. I think you already mentioned something around 100 basis points. If you can at least confirm those two, I think it would be helpful. Thank you.
To Jonas, maybe Panicos.
Okay, Jonas, thank you. I'll take the first two, and then I will let Eliza take the last one. It's true that in the first half of 2019, you guys have seen that the inflows versus outflows to the trade balance has shifted towards a better picture for the bank. Is this trend sustainable? Well, the fundamentals seem to support this trend to continue. Obviously, we need to remain focused and deliver specific actions so that we maintain this trend going forward. Not forget that there is a lot of focus by management behind all this, and actually this is what was reflected in the two quarters of 2019, and we intend to continue that. On the real estate and on the age of assets, our legacy book, the one that we had before the set up of the REMU, is actually very small.
We have managed to create some good inroads into selling a lot of those legacy assets. Obviously, once the REMU was set up, there is a lot of focus and assets from 2016 and 2017, they are continuously being sold and being tackled for sale. Of course, Amira, if you want more details on the age and the distribution of those assets, she's at your disposal.
Yeah, just to add, it's Eliza, the legacy book is now just below, legacy is before January 2016, by the way. It's just below EUR 100 million in terms of book value. It's in a EUR 1.5 billion book. In mixed effect, it's very small. Also on your question of 2019, we are not specifically guiding at this stage. On cost of risk however, as Michalis mentioned, we expect this quarter to be tougher from the IFRS 9 model volatility like a number of other banks have or still obtaining the IFRS 9 model. We do expect Q3 and Q4 charge to be below 100 basis points. Interest income does have some pressure going forward because of A, the liquid assets that we got, the cash we got from Helix, which will be sadly placed at negative rates until we decide what to do with it.
Also the general rate environment, which is negative. Don't forget that we are also focused on one or more follow-up trades of different sizes. This will impact the P&L or at least the lines of the P&L. As I mentioned, this quarter, the legacy book was actually net bottom line loss-making or neutral. It shouldn't impact bottom line on a BAU basis, but it will impact individual lines, the shape of the P&L, NII specifically. We are also planning to start implementing the cost reduction program. We will give you full details with full year numbers, but we do intend to share with you elements of that program with the Q3 results, especially the tough cost side of it.
Okay. On to me, that's clear. Yeah, thanks a lot. Let me also thank the presentation. It is very strong, good luck in his new challenge. Okay. Thanks, guys.
As a reminder, if you would like to ask a question, please press star and one on your telephone. The next question comes from the line of Sheward Robert with Toscafund. Please go ahead.
Hi. Morning, all. Thanks. Just two quick ones. Firstly, on the CMP insurance sale, just wondering, quickly kind of on an ongoing basis what the pre-provision profit kind of impact could be of that, any loss in revenue from that. The second one, just again, appreciate you kind of talked about it in the presentation, but on the derecognition of the NPEs related to Estia. Am I right in thinking that's kind of the typical 12-month period post-performance? Assuming the subsidy is being paid, et cetera, you could kind of think about that. You spoke about early 2021, when some of those could start to roll off. Just wanted to clarify if that was what you were implying. Thanks.
Thanks, Rob. CNP was contributing around EUR 8 million to bottom line profit per annum. It's reported in the share of profits of associates. It was a decision we took on the back of the fact that we were essentially a minority shareholder. We sold the company to the majority shareholder, CNP France. It was probably the last material legacy asset we had from the 2013 merger with Laiki, so it didn't make strategic sense. It is why the decision was made. It is also carried out as relief, as I've mentioned before. On Estia, Michalis, you want to-
Listen, as I've mentioned earlier, guys, on Estia, we do expect the benefit on the MP side to start materializing towards the end of 2020 and early 2021, subject to, of course, the borrowers meeting their requirement, the contractual requirement under the PSTN, of course, and satisfying our MP exit criteria, which as you can understand, there are certain criteria that they need to meet before they exit. This is the time that we start seeing the benefit.
We will also, as soon as it actually becomes real, we'll start reporting separately all the analysis. You should expect that Estia loan will migrate from core NPEs to non-core NPEs, and then eventually exit, and we'll be transparent in reporting this portfolio separately.
Perfect. Thank you.
The next question comes from the line of Santiago Mateo with Actua Capital. Please go ahead.
Hello. Good morning. Thanks very much. I would like to ask you, if possible, just to understand, which is the yields on the new lending compared to the 50 yield of 365 on the old book that you have? Thank you very much.
We don't separately disclose it. It is lower, though, than the back book. The back book was given at different macro conditions and different interest rates environment. There is a mix effect, however, and there's also a mix effect between products, with retail lending generally being lower priced than corporate and SME lending.
Okay. Thank you.
Maybe what I should add is that, as I mentioned in the presentation, around two-thirds of the new lending is corporate lending. That is at the 3% mark, or above 3%, on a blended average.
Okay. Perfect. Thank you very much.
Once again, to register for question, please press star and one on your telephone. We have a follow-up question from the line of Jonas Floriani with Axia Ventures. Please go ahead.
Hi, guys. Just two follow-ups. One, back to your, let's say NII side of things. I mean, looking at what is happening to your cost of deposits and still have the room to maneuver and to offset the top-line pressure as well, given the low rates. I mean, we're approaching the zero level. What's going to be the next phase for you guys in terms of not only the repricing, but what will be the strategy on the asset side of things as well in order to offset the low interest rate environment? The second question, if you have any comments in regards to timing of a potential NP transaction in the next months or any comments you have around that, it would be helpful as well. Thanks.
Thanks. On cost of deposits or funding costs generally, first of all, yes, there is room to go further. I know the absolute basis points level is low now, but some competitors in the market have started going negative. This is definitely something we're actively considering at the moment, whether it's through NII or fees is something we will reach a decision in the next few days on. There is room to go further. I think our track record of reducing the cost of deposits in the last five, six years, in fact, is proof of that. Of course, we need to be careful not to lose the market franchise, not to lose customer fees, et cetera. I think there is room there. There's also two other levers we can use to improve NIM.
One is volume of deposits, therefore at the margin when it's loss-making, and therefore reduce liquidity. The other is the investment opportunities of the now increased levels of liquid assets we extend. We can't, without losing sight of the fact that investment in banking institutions put capital at risk. We do need to balance the risk return and be careful not to create undue risks if market conditions change. There is also the annual review. Those of you following the stock in the last two years, every summer we review the fee levels. We are in the process of doing that, and with few fee numbers, hopefully, we'll be able to give you numbers of where those discussions will end up being set for that fund rate levels.
The next question comes from the line of Kevork Ozarslan with HSBC. Please go ahead. Mr. Kevork Ozarslan has withdrawn his question. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Hourican for any closing comments. Thank you.
I'll hand the honors to Panicos to conclude the call.
Thank you all for participating in this call. I'm sure we're going to have the chance to speak either face-to-face or, let's say, remotely in the near future, and I'm looking forward to work with you and going forward. Thank you very much.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling and have a pleasant evening.