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DBRS Warns Of Middle East Risks For Greek And Cypriot Banks’ Key Sector

by THEFUTURE.TEAM

Rising Geopolitical Risks And Economic Vulnerabilities

DBRS said rising geopolitical tensions in the Middle East increase risks for Greece and Cyprus, citing their exposure to shipping and tourism. The assessment highlights sector dependence as a key vulnerability in both economies.

Impact On Economic Activity And Banking Systems

Despite recent resilience in Cyprus, ongoing volatility is affecting economic activity and the banking sector. The report, titled “Middle East Tensions Heighten Risks for Greek and Cypriot Banks’ Shipping and Tourism Exposures,” compares risks across both countries and identifies areas of exposure.

Tourism And Shipping: The Economic Double-Edged Sword

Tourism and shipping account for a larger share of economic activity in Cyprus and Greece than in most EU countries. In Cyprus, these sectors represent 6.6% of gross value added, compared with 7.3% in Greece and an EU average of 2.9%. Beyond direct activity, tourism supports transport and leisure services, influencing consumption and broader economic output. According to DBRS, banks in both countries have above-average exposure to these sectors, increasing credit risk in the event of a prolonged downturn.

Differentiated Exposure: Cyprus Versus Greece

Exposure differs between the two banking systems. Greek banks hold a larger share of internationally secured shipping loans, while Cypriot banks have greater exposure to tourism-related activity. This makes Cyprus more sensitive to changes in travel demand. Both systems maintain profitability and capital buffers that may support performance under pressure.

Economic Ripple Effects And Sectoral Vulnerabilities

A decline in tourism flows would affect small and medium-sized businesses, household income, and real estate values. These factors are linked to asset quality in Cypriot banks. Early indicators point to higher cancellation rates and weaker travel demand in Cyprus, reflecting its proximity to regional tensions. Greece may see a more limited short-term impact due to lower exposure and potential diversion of tourism demand from affected regions.

Maintaining Profitability In A Challenging Environment

Bank profitability in both countries remained above the EU average as of the fourth quarter of 2025. Capital levels in Cypriot banks remain strong, while Greek banks continue to align with broader European benchmarks. Asset quality has improved, with non-performing loan ratios in transportation and storage close to 0% in 2025, compared with an EU average of 2.3%. In lodging and food services, non-performing loans stood at 2.1% in Greece and 0.7% in Cyprus, both below the EU average of 5%.

Sectoral Exposure And Wider Banking Implications

Data from the European Banking Authority show that transportation and storage accounted for 19.8% of loans to non-financial corporations in Greece and 11.2% in Cyprus in 2025, compared with an EU average of 5.5%. Exposure to lodging and food services reached 11.1% in Greece and 21.2% in Cyprus, exceeding the EU average of 2.6%.

Greek Retail Powerhouse Expands Into Six Strategic International Markets

by THEFUTURE.TEAM

Greek retail titan Jumbo has announced an ambitious expansion strategy that positions the company to extend its international footprint beyond its established strongholds in Cyprus and Southeast Europe. In a strategic agreement with the Balfin Group, the retailer is set to penetrate six new markets, including Ukraine, Georgia, Armenia, Azerbaijan, Kazakhstan, and Uzbekistan.

Strategic Global Expansion

The agreement builds on the existing cooperation between Jumbo and Balfin Group, which previously supported the retailer’s expansion into markets including Albania, Kosovo, Bosnia and Herzegovina, Montenegro and Moldova. According to the company, the next phase of expansion will include a greater degree of local operational management across the new markets.

Enhanced Logistics And Supply Chain Capabilities

To support the expanded international network, Balfin Group is also developing a new central logistics hub in China. The facility is expected to strengthen sourcing, warehousing, transportation and distribution operations across the Caucasus region, Central Asia and Ukraine. Previously, Jumbo relied primarily on logistics infrastructure based in Greece to support franchise operations across Southeast Europe.

Sustainable Growth And Robust Financial Foundation

Alongside its franchise expansion strategy, Jumbo continues focusing on organic growth across existing markets. The retailer currently operates 89 physical stores, including 53 in Greece, six in Cyprus, 10 in Bulgaria and 20 in Romania, in addition to its e-commerce operations. A new store in Baia Mare is expected to open by the end of October.

Jumbo also operates 46 franchise stores across seven countries, including Albania, Kosovo, Serbia, North Macedonia, Bosnia and Herzegovina, Montenegro and Israel. According to the company, its expansion strategy continues to be supported by strong liquidity levels and the absence of bank borrowing.

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