The Cypriot banking sector has seen notable improvements in loan quality, as highlighted in a recent report from the Central Bank of Cyprus (CBC) dated November 30, 2025.
- The Cypriot banking sector has seen notable improvements in loan quality, as highlighted in a recent report from the Central Bank of Cyprus (CBC) dated November 30, 2025.
- As the sector continues to navigate these changes, the ongoing monitoring and reporting by the CBC will be crucial in understanding the long-term impacts of these trends on the economy.
The report reveals that the non-performing loans (NPL) ratio, excluding central banks and credit institutions, has dropped to 4.0 per cent, down from 4.2 per cent at the end of October 2025. This decline indicates a positive trend in managing loan performance across the banking system.
Loan quality: Understanding Non-Performing Loans
Non-performing loans are defined as loans where the borrower is unable to make scheduled payments for a specified period, typically 90 days or more. The reduction in NPLs is a crucial indicator of the financial health of banks.
Latest Figures from the CBC
According to the CBC’s methodology, which aligns with the European Banking Authority Risk Dashboard, the NPL ratio remains unchanged at 2.1 per cent when including exposures to central banks and credit institutions. This stability, despite fluctuations in other metrics, suggests that the sector is managing its risk effectively.
Coverage Ratio and Restructured Loans
Additionally, the coverage ratio for non-performing loans has seen a slight decrease, falling to 70.4 per cent from 70.7 per cent in the previous month. This ratio indicates the proportion of provisions available to cover potential losses from bad loans.
As of the end of November 2025, the total balance of restructured loans in the Cyprus banking sector stood at €1.10 billion. Interestingly, €0.50 billion of these restructured loans are still classified as non-performing, signalling ongoing challenges despite the improvements.
A Glimpse into the Future
The data released underscores a stabilisation of the Cypriot banking sector, demonstrated by the declining NPL ratios and consistent provisioning levels. The gradual enhancement in asset quality, coupled with significant restructuring activity, paints a hopeful picture for the future of banking in Cyprus.
As the sector continues to navigate these changes, the ongoing monitoring and reporting by the CBC will be crucial in understanding the long-term impacts of these trends on the economy.
