The Bank of Cyprus on Tuesday announced the publication of its Pillar 3 disclosures for the year ended December 31, 2025, offering a snapshot of its risk profile, financial performance and strategic direction.

The document provides a high-level overview of the group’s risk appetite and business model, outlining how it balances growth with regulatory compliance and financial stability.

The group confirmed that financial performance remained strong in 2025, reporting a return on tangible equity of 18.6 per cent and earnings per share of €1.10.

It also recorded robust growth in deposits and loans, which supported the resilience of its net interest income despite a lower interest rate environment.

At the same time, the group maintained strict cost discipline and strong asset quality, contributing to a 6 per cent year-on-year increase in tangible book value per share to €6.10.

The report highlights a continued focus on capital-efficient revenue growth, particularly through high-quality new lending and expansion in insurance and digital products.

This approach is intended to diversify income streams beyond traditional banking, strengthening the group’s market position and long-term sustainability.

The group reiterated that its strategy centres on sustainable profitability and attractive shareholder returns, while also supporting the wider economy and its stakeholders.

It added that investment in technology, including artificial intelligence, remains a priority alongside efforts to maintain a low-risk business model.

On the asset quality front, the group reported a significant reduction in non-performing exposures, which fell to €127 million in 2025 from €202 million in 2024.

As a result, the non-performing exposure ratio declined to 1.2 per cent of gross loans, compared with 2.0 per cent a year earlier.

The coverage ratio of non-performing exposures increased sharply to 139 per cent, up from 82 per cent in the previous year, reflecting stronger provisioning.

Loan credit losses for 2025 amounted to €35 million, corresponding to a cost of risk of 33 basis points, slightly higher than the 30 basis points recorded in 2024.

The increase was attributed to more conservative macroeconomic assumptions and the introduction of an ESG overlay, reflecting heightened global uncertainty.

Despite this, the report notes that the overall credit portfolio continues to perform robustly, supported by prudent underwriting standards.

Liquidity indicators remained well above regulatory thresholds, with the liquidity coverage ratio reaching 321 per cent, compared with 309 per cent in 2024.

Similarly, the net stable funding ratio stood at 171 per cent, up from 162 per cent, comfortably exceeding the minimum requirement of 100 per cent.

Capital strength also improved, with the common equity tier 1 ratio on a transitional basis rising to 20.96 per cent, compared with 19.16 per cent in the previous year.

On a fully loaded basis, the CET1 ratio reached 20.61 per cent, while the total capital ratio increased to 25.90 per cent, up from 24.02 per cent.

The group explained that the implementation of CRR III had a positive impact of around 1 per cent on the CET1 ratio, contributing to the overall improvement in capital metrics.

At the same time, total risk-weighted assets declined to €10.42 billion from €10.83 billion, mainly due to reductions in operational and credit risk exposures.

The report confirms that credit risk remains the dominant component of capital requirements, calculated using the standardised approach.

Beyond financial metrics, the disclosures provide insight into the group’s comprehensive risk management framework, overseen by the board and its risk committee.

This framework is designed to identify, monitor and control a wide range of risks, including credit, market, liquidity, operational and geopolitical risks, as well as emerging threats such as cyber risk and climate-related challenges.

The group emphasised that risk appetite plays a central role in shaping business strategy, ensuring that all activities remain aligned with its capacity to absorb risk.

Regular reporting and oversight mechanisms, including a risk appetite dashboard reviewed by the board, are used to ensure compliance and trigger corrective action where necessary.

The report also includes extensive forward-looking statements, highlighting expectations regarding capital, profitability, growth and ESG commitments, while warning of uncertainties linked to economic conditions, geopolitical developments and technological change.

“Forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future,” the group said.

“Actual results could differ materially due to economic, regulatory, technological and geopolitical factors, as well as evolving environmental and social requirements,” it added.

The group stressed that such statements reflect current expectations at the time of publication and may be affected by changes in reporting frameworks, accounting standards and ESG requirements.

Broadly, the disclosures offer insight into the group’s risk profile and strategic priorities, underscoring its focus on resilience, capital strength and sustainable growth in an evolving financial environment.