Drop in Cyprus bank profitability attributed primarily to exchange rate losses

Cyprus banks recorded €456 million in profit in the first six months of 2026, down by €122 million, representing a decrease of 21.1 per cent compared with the same period last year, according to aggregate data published by the Central Bank of Cyprus (CBC) on Thursday.

The banking sector’s profitability fell from €578m recorded during the first half of 2025, with the CBC attributing the decline primarily to losses from exchange differences.

The latest figures cover the profitability, balance sheet and capital adequacy of the Cyprus banking sector, with June 30, 2026 as the reference date.

Despite the decline in profitability, the sector’s balance sheet expanded during the second quarter of the year, with total assets increasing by €1.15 billion, reflecting a rise of 1.6 per cent when compared with March.

Total banking sector assets reached €71.38bn at the end of June, up from €70.23bn three months earlier.

The increase was largely driven by growth in loans and advances and debt securities, according to the CBC.

Capital adequacy also strengthened during the quarter, with the sector’s Common Equity Tier 1 (CET1) ratio rising to 25.5 per cent in June, compared with 25.1 per cent in March.

The 0.4 percentage point increase was mainly attributable to growth in CET1 capital, which exceeded the increase in the sector’s total risk exposure amount.

The figures provide an aggregate picture of the Cyprus banking sector rather than the performance of individual banks.