The quality of Cypriot banks’ loan portfolios continued to improve, with the Non-Performing Loans (NPL) ratio declining to 5.6% at the end of June 2025, from 6.1% recorded at the end of March.
According to updated figures published by the Central Bank of Cyprus (CBC), total non-performing loans decreased to €1.46 billion from €1.53 billion three months earlier, while the banking system’s total loans amounted to €25.84 billion.
The CBC noted that the reduction in NPLs during the second quarter of the year was mainly due to four factors: exchange rate fluctuations, loan repayments including debt-for-property swaps, the reclassification of successfully restructured loans into performing loans, and loan write-offs already covered by provisions.
At the same time, the NPL coverage ratio strengthened, reaching 62% in June compared with 60.5% at the end of March, pointing out their greater capacity to absorb future risks.
Restructured loans amounted to €1.23 billion, of which €643 million are still classified as non-performing. Under the definition of the European Banking Authority, a minimum monitoring period of 12 months is required before such loans are considered fully performing, even if the borrower adheres to the new repayment plan.
By sector, NPLs stood at 7.4% for households, 4.8% for non-financial corporations, and just 1.5% for other financial corporations. However, small and medium-sized enterprises continued to record a higher NPL ratio, at 7.1%.
(Source: CNA)
