The non-performing loans ratio in Cyprus has experienced a significant decline, reflecting the ongoing recovery of the country’s banking sector. According to the Central Bank of Cyprus (CBC), the ratio of non-performing exposures (NPEs) to total loans fell to 5.5 per cent as of July 31, 2025, down from 5.6 per cent at the end of June and a notable reduction from 6.2 per cent at the close of 2024.
The total stock of NPLs now stands at €1.44 billion, a decrease from €1.46 billion the previous month. This decline is part of a broader trend that indicates improving financial health within Cypriot banks.
Non-performing loans: Stable Loan Growth Amid Declining NPLs
In July, total loans saw a modest increase to €26.0 billion, up from €25.8 billion in June. This rise in loans has contributed positively to the improvement in the NPL ratio, highlighting a stabilising loan portfolio across the sector.
Loans that are overdue by more than 90 days remained consistent at €1.15 billion, which accounts for 4.4 per cent of the total, suggesting that while there are still challenges, the quality of loans is stabilising.
Provisions and Coverage Ratios Indicate Strong Buffers
Cypriot banks have also maintained robust provisions against potential losses, with cumulative provisions amounting to €982 million, of which €895 million pertained specifically to non-performing exposures. The coverage of NPEs by these provisions rose slightly to 62.2 per cent, up from 62.0 per cent in June and 59.9 per cent at the end of 2024.
Households and SMEs Bear the Brunt of NPLs
The CBC report reveals that households continue to hold the largest share of non-performing loans, with an NPE ratio of 7.4 per cent, translating to an outstanding balance of €794 million out of total loans amounting to €10.76 billion. Similarly, non-financial corporations reported NPEs of €613 million, which corresponds to 4.7 per cent of their total loans, while the figure for small and medium-sized enterprises (SMEs) was slightly higher at 7.1 per cent.
Restructured Loans Show Signs of Stabilisation
In terms of restructured loans, a decrease has been noted, with the total amount falling to €1.21 billion from €1.23 billion in June. Over half of this, approximately €640 million, remain classified as non-performing, indicating that while restructuring efforts are ongoing, challenges remain.
The data from the CBC underscores the resilience of the Cypriot banking sector, which is making consistent strides in enhancing loan quality and maintaining strong protective measures against potential losses. The downward trend in non-performing loans is a positive sign for the overall financial stability of the country.
