The non-performing loan (NPL) ratio in Cyprus held steady at 5.5% at the end of August 2025, according to the Central Bank of Cyprus (CBC). This stability is a positive indication of the financial system’s resilience amidst ongoing geopolitical challenges.
Decline in NPL Ratio Under EBA Guidelines
While the overall NPL ratio remained unchanged, the figure adjusted to the European Banking Authority’s (EBA) Risk Dashboard methodology saw a notable decline. This metric, which includes loans and advances to Central Banks and Credit Institutions, dropped to 2.8% at the end of August 2025, down from 2.9% in July.
Increased Coverage Ratio for Non-Performing Loans
The coverage ratio for non-performing loans, which reflects the provisions set aside to cover potential losses, rose to 62.6% at the end of August. This is an improvement from the 62.2% recorded in July, suggesting a cautious approach from banks in managing their NPLs.
Restructured Loans Amount to €1.2 Billion
As of August 2025, the total amount of restructured loans in Cyprus reached €1.2 billion. Out of this total, €0.6 billion are still classified as non-performing loans, indicating ongoing challenges for borrowers despite restructuring efforts.
Trends in New Lending
The CBC also highlighted a decline in net new loans for October, which fell by €18.5 million to €429.4 million. This decrease was largely attributed to a slowdown in corporate lending. In contrast, housing loans experienced growth, rising to €117.5 million, while consumer loans also showed positive trends.
Interest Rate Movements and Deposit Rates
In a broader economic context, interest rates increased for various lending categories. Mortgage rates climbed to 3.73%, and consumer loan rates reached 6.88%. Despite the rising borrowing costs, deposit rates in Cyprus remain the lowest in the Eurozone. The CBC noted that this discrepancy is largely due to the high liquidity levels in Cypriot banks, with a liquidity coverage ratio standing at an impressive 329%.
