The focus on EU banking assets reveals a 1.6 per cent growth, reaching €33.50 trillion by the end of December 2025, according to the European Central Bank (ECB).
- The focus on EU banking assets reveals a 1.6 per cent growth, reaching €33.50 trillion by the end of December 2025, according to the European Central Bank (ECB).
This data, released on Friday, covers 332 banking groups and 2,292 stand-alone credit institutions across the European Union. Despite the rise in assets, the aggregate non-performing loans ratio for the EU banking system remained stable at 1.97 per cent during the same period.
Eu banking: Solid Returns Amidst Stability
The ECB’s report also indicated an aggregate return on equity of 9.3 per cent and a Common Equity Tier 1 ratio of 16.42 per cent, suggesting a degree of stability within the European banking sector.
Challenges in the Cypriot Banking Market
In contrast, the Central Bank of Cyprus (CBC) highlighted a more complex landscape for its domestic banking sector. Profitability in Cyprus experienced a notable decline of 23.6 per cent in the first quarter of 2026, dropping to €202 million from €264 million in March 2025.
This downturn was largely attributed to a decrease in net interest income and losses due to foreign exchange differences. Despite this profit dip, total assets in the Cypriot banking sector still grew by 0.4 per cent, amounting to €70.23 billion as of March 31, 2026.
Asset Growth Driven by Loans
The asset increase in Cyprus was primarily fuelled by a rise in loans and advances, along with an uptick in debt securities holdings. However, the CBC reported a 0.7 percentage point decline in the Common Equity Tier 1 ratio, now standing at 25.1 per cent, attributed to an increase in total risk exposure that offset capital gains.
Resilience in Asset Quality
Despite the challenges, asset quality in the Cypriot market has remained resilient, with a non-performing loan ratio holding steady at 1.6 per cent in March 2026. The total non-performing loans reached €835 million against a loan portfolio of €51.3 billion, with the coverage ratio for these debts improving to 62.7 per cent, up from 62.3 per cent at the end of 2025.
Liquidity Trends and Lending Growth
Reflecting on broader trends, the CBC reported that excess liquidity in the Cypriot banking system fell to €17.4 billion by the end of 2025. Furthermore, lending activity saw significant growth throughout 2025, with loans held by the sector rising to €31.7 billion.
While deposits and cash equivalents experienced a slight decline, total liabilities for the sector increased to €63.1 billion, largely driven by higher deposits from households and non-financial corporations.
