The percentage of non-performing loans (NPLs) in Cyprus decreased to 6.2 per cent by the end of December 2024, down from 6.5 per cent at the end of September.

This is according to updated aggregate data for the Cypriot banking sector published by the Central Bank of Cyprus (CBC) on Wednesday.

Specifically, the CBC reported that the total value of NPLs fell from €1.59 billion in September to €1.54 billion in December.

At the same time, overall lending increased from €24.41 billion to €24.73 billion during the same period.

Moreover, the coverage ratio of NPLs with impairment provisions rose to 58.3 per cent, or €898 million, at the end of December 2024, compared to 55.7 per cent, or €890 million, at the end of September 2024.

According to the CBC, the decline in NPLs during the fourth quarter of 2024 was primarily driven by loan repayments, including debt-to-asset swaps involving real estate, as well as loan write-offs.

Additionally, reclassification of NPLs as debt instruments held for sale and the successful restructuring of loans that subsequently returned to performing status also contributed to the decline.

By the end of December 2024, the total restructured loans in licensed credit institutions amounted to €1.30 billion. Of these, €685 million continued to be classified as non-performing.

Banking sector profitability and asset growth in 2024

Meanwhile, the CBC also reported that the profitability of the Cypriot banking sector reached €1.21 billion in 2024.

According to the central bank’s updated aggregate data, this figure represents a decline of €47 million compared to the €1.26 billion recorded in 2023.

The central bank attributed this decrease primarily to lower net gains from foreign exchange transactions, higher administrative expenses, and a reduction in dividend income.

Despite the decline in profitability, the total assets of the banking sector increased by €469 million, corresponding to a rise of 0.7 per cent.

In more detail, Cypriot banks’ total assets rose from €65.16 billion in December 2023 to €65.63 billion in December 2024.

The CBC stated that this growth was primarily driven by an increase in debt securities, as well as growth in loans and advances.

What is more, the Common Equity Tier 1 (CET1) capital ratio of the banking sector improved by 3 per cent at the end of 2024, reaching 24.5 per cent compared to 21.5 per cent at the end of 2023.

The CBC attributed this improvement primarily to an increase in CET1 capital, which offset the corresponding rise in total risk exposure.