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S&P Upgrades Cyprus Economy’s Outlook To Positive Amid Accelerated Debt Reduction

by THEFUTURE.TEAM

November 17, 2025

Credit rating agency S&P has elevated Cyprus’s economic outlook from stable to positive, underscoring a faster-than-anticipated improvement in external debt ratios. The upgrade reflects expectations for the island’s external position to outperform current projections over the next two years as a result of accelerated debt de-escalation.

Steady Ratings And Fiscal Discipline

Cyprus maintains its long-term and short-term credit ratings at A-/A-2. The firm noted that continued reductions in net external leverage could potentially warrant a further upgrade. Despite a persistent current account deficit, robust foreign direct investment inflows have facilitated a gradual decline in external debt. This fiscal discipline has fostered impressive performance, as strong economic activity and high employment levels have boosted tax revenues and social security contributions, thereby supporting sustainable public finance surpluses and reducing overall public debt.

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Projected Growth And Resilient Economic Policies

Looking ahead, forecasts indicate an average surplus of 3.3% of GDP between 2025 and 2028, with net debt anticipated to decline to 35% of GDP by 2028, in contrast to 56% last year and 90% in 2019. The economic momentum, bolstered by a surge in tourism and the relocation of technology companies, is expected to be driven by domestic demand, rising real incomes, and increased public and private investments. The resilience of Cyprus’s economy is further highlighted by its limited exposure to international trade tensions and its ability to withstand geopolitical instabilities in regions such as Ukraine and the Middle East.

Leadership Endorsement And Forward-Looking Strategies

Cyprus President Nikos Christodoulides hailed the outlook upgrade as a milestone that signifies the nation’s entry into a phase of enhanced economic momentum, reflecting consistent and responsible fiscal decisions. He underscored Cyprus’s emerging reputation as a reliable center for quality investment, characterized by lower borrowing costs, vibrant entrepreneurship, and well-paid job opportunities. Finance Minister Makis Keravnos echoed this sentiment, emphasizing that the upgrade reinforces international confidence in the government’s economic policies. He affirmed that continued fiscal discipline and targeted initiatives will sustain stable and sustainable growth even amidst increased geopolitical risks.

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Bank of Cyprus Upgrade Signals Fresh Optimism For Greek And Cypriot Banks

by THEFUTURE.TEAM

June 26, 2026

Regional Banks Enter A More Favorable Cycle

Bank of Cyprus and Eurobank are well positioned to benefit from a renewed re-rating of Greek and Cypriot bank stocks, according to Cyprus-based investment firm Roemer Capital, which upgraded Bank of Cyprus to a buy rating and reaffirmed its positive view on Eurobank.

The firm cited easing geopolitical tensions, resilient economic growth in Greece and Cyprus, lower funding costs and Greece’s expected transition to developed-market status as the main factors supporting the sector.

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Roemer Capital also lowered its cost of equity assumptions, updated its forecasts following first-quarter 2026 results and extended its valuation horizon to the end of 2027, raising target prices across its banking coverage.

Bank Of Cyprus Gets The Largest Upgrade

Bank of Cyprus received the biggest revision, with Roemer Capital upgrading the stock from hold to buy and setting a target price of €11.10, implying potential total upside of 27%.

The firm highlighted the bank’s strong capital generation, profitability and projected 100% dividend payout, describing it as the strongest capital-return story among the banks under coverage. Roemer Capital maintained its buy rating on Eurobank, assigning a target price of €4.90 and forecasting potential upside of 28%. The report said the bank is well placed to benefit from loan growth, improving operating performance and merger-and-acquisition synergies.

National Bank of Greece and Piraeus Bank also retained buy ratings, with expected returns ranging from 25% to 36%. Optima Bank was upgraded to buy, while Alpha Bank remained at hold on valuation grounds.

Why Growth Still Sets The Region Apart

According to Roemer Capital, Greek and Cypriot banks continue to benefit from stronger economic fundamentals than many western European peers. The report pointed to faster economic growth, healthier balance sheets, low levels of non-performing exposures, capital ratios approaching 20% and strong customer deposit bases.

Analysts expect performing loans across the sector to grow at a compound annual rate of 6% to 8% through 2028, supported by private investment, digitalisation, green manufacturing, supply-chain expansion and a gradual recovery in household lending.

The report also said the conclusion of lending under the EU Recovery and Resilience Facility is unlikely to materially affect credit growth, as banks have already shifted back towards traditional commercial lending. Roemer Capital expects Euribor to remain between 2.2% and 2.5%, a level it believes should support both lending activity and net interest margins.

Geopolitics, Valuation And Market Structure Support The Case

The report said improving geopolitical conditions have strengthened the investment outlook, noting that Brent crude prices have largely returned to pre-war levels while Greek government bond yields have stabilised at around 3.5%. Although geopolitical risks remain, Roemer Capital believes the likelihood of a major inflationary shock or significant pressure on bank profitability has eased.

Another important catalyst identified by the firm is Greece’s expected promotion to developed-market status by FTSE Russell, STOXX and MSCI over the coming months.

According to the report, the reclassification should improve liquidity and attract a broader base of international investors. Roemer Capital also said Euronext’s acquisition of the Athens Exchange is expected to strengthen market infrastructure and increase international visibility, particularly for Bank of Cyprus and Optima Bank.

The firm noted that Bank of Cyprus has already benefited from its Athens listing, with average daily trading value increasing from less than €400,000 before its September 2024 move to nearly €6 million afterwards.

Economic Momentum Remains A Core Tailwind

Roemer Capital said both Greece and Cyprus have moved beyond post-crisis recovery and are now supported by private-sector-led growth. For Cyprus, the report highlighted recent tax reform and efforts to simplify the legal and regulatory framework, while also noting that limited foreign banking competition continues to support domestic lenders.

Overall, Roemer Capital expects Greek and Cypriot banks to remain well-positioned for profitable loan growth over the coming years.