The assessment that in the medium term we will see further concentration of the banking sector, through acquisitions and mergers, has been expressed by the Executive Director – CEO of cdbbank, Loucas Marangos, who, however, also indicated that "this fact as a development is not necessarily good for competitiveness."
In an interview with InBusinessNews in the context of the IN Business Forecasting 2026 series, Marangos notes that "on the other hand, it also comes as an inevitable result of the necessary economies of scale and the increasing regulatory obligations that currently govern the banking environment, pushing banking institutions in this direction."
Regarding the general course of the sector in 2026, he anticipates that it will continue to be profitable and that banks will continue to have strong capital adequacy, without facing any particular problems.
On cdbbank's development strategy, the bank's Chief Executive Officer states that "high among our strategic priorities for 2026 is the technological upgrade of the organisation, with the clear goal of modernising our technological infrastructure for even greater efficiency and further improving our customer experience."
How do you think the Cypriot economy will perform in the new year and what are its prospects?
In recent years, the Cypriot economy has recorded a particularly positive performance, while simultaneously demonstrating resilience to the various challenges it faces.
Its strong momentum is reflected, among other things, in the continuous upgrades by international rating agencies as well as in the attraction of significant foreign quality investments.
Specifically, our country in 2025 recorded a growth rate higher than the European average, around 3.4%-3.5%, while inflation is below the EU average and is limited to 1%.
Regarding 2026, I estimate that the Cypriot economy will maintain a steady growth path, presenting a performance that will exceed the European Union average.
Specifically, GDP growth is estimated to approach 3%, with tourism, domestic consumption and services as the main drivers of growth. At the same time, inflationary pressures are expected to increase slightly, with inflation close to 1.5%.
Foreign investment is a key factor in the growth and stability of the Cypriot economy, contributing to the establishment of Cyprus as a regional business hub. It is also noteworthy that these investments are directed to various sectors of the economy, such as health, education, real estate and technology.
The dispersion of investments, in conjunction with maintaining the growth path of traditional sectors such as tourism, reinforces the effort to diversify and strengthen the country's economic model.
What do you consider to be the biggest risks to the Cypriot economy and how can they be addressed?
The risks that the Cypriot economy faces, due to its small size and the fact that it is significantly exposed to the international environment, are mainly exogenous.
Therefore, within this context, a possible reduction in foreign investment interest, and by extension, foreign investments in Cyprus, as well as a possible contraction in global economic activity, may have an impact, negatively affecting the country's economy.
In any case, for the continuation of the positive course of the Cypriot economy, it is important that some significant challenges are effectively addressed, such as high energy costs, the increase in housing costs and the lack of specialised human resources.
Therefore, a national strategy is required to address these issues and strengthen the image of Cyprus as a technological and business hub.
How do you anticipate that your company's sector of activity will develop in 2026, what are the biggest trends/changes that you expect to occur and what are the most important challenges? A strong trend that seems to be taking hold in Cypriot business is that of acquisitions and mergers. Will we see it strongly in your sector as well?
Indeed, the main trend in the banking sector is that of mergers and I believe that in the medium term we will see further concentration of the sector. This development is not necessarily good for competitiveness.
But on the other hand, it also comes as an inevitable result of the necessary economies of scale and the increasing regulatory obligations that govern the banking environment today, pushing banking institutions in this direction.
Speaking more generally about the course of the industry in 2026, I estimate that it will continue to be profitable and banks will continue to have strong capital adequacy, without facing any particular problems.
What can we expect in terms of your organisation's development and expansion plans and strategy in 2026? What moves do you intend to make in this direction?
Strengthening our competitiveness is our long-term goal as cdbbank, in order to support the real economy and contribute to the formation of a sustainable business environment.
With a presence of over 62 years and a steadfast commitment to supporting businesses, we operate on the philosophy that economic stability and growth depend on a strong banking system that offers access to capital and creates conditions for investment and sustainable business activity.
In light of the above, the technological upgrade of the organisation is high among our strategic priorities for 2026, with the clear goal of modernising our technological infrastructure for even greater efficiency and further improving our customer experience. At the same time, the prudent development of our loan portfolio with balanced risk management, as well as the increase in our non-interest income to enhance the profitability and stability of the bank, constitute, I would say, the triptych of our key strategic priorities.
At this point, I would like to emphasise that maintaining a healthy loan portfolio is a continuous effort for cdbbank. All loans granted in the last five years are performing, while the strategy of organic resolution of older non-performing loans that the bank chose to follow has proven to be correct.
This is demonstrated by the significant reduction in non-performing loans, the percentage of which we currently consider not to be a problem for the bank.
The new year sees the implementation of the tax reform, which is taking place 22 years after the previous tax reform. How do you anticipate that it will affect the Cypriot economy, businesses, and the attraction of foreign investments?
One of the key components of the tax reform is the increase in corporate tax from 12.5% to 15%, which I do not expect to negatively affect the investment environment and especially the attraction of foreign investment.
Moreover, as a business hub, our country offers a full range of services to foreign companies that choose it, either as a base or for business purposes, without of course choosing it solely for its tax model.
Beyond that, I believe that the complete abolition of deemed dividend distribution will allow companies to have more retained profits and therefore be more resilient.
Regarding the changes in taxation for individuals, I believe that these will have a positive impact on consumption, since the reduction in taxation according to income will increase disposable income.
What emerges as an overall conclusion in relation to the tax reform is that in the short term, the state's tax revenues may decrease, however, Cyprus will maintain a strong tax surplus in the medium term and the positives that will prove to be for the country in the long term will outweigh any possible negatives.
(Source: InBusinessNews)
