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Cyprus’ Banking Sector Drives Major Gains In Nonperforming Loan Recovery

by THEFUTURE.TEAM

November 15, 2024

A recent analysis from Morningstar DBRS Ratings highlights a positive trajectory for Cyprus’ nonperforming loan (NPL) market, outperforming initial expectations and showcasing resilience against broader economic pressures. According to the report, Cyprus’ NPL sector maintained a steady upward trend throughout 2024, aided by strong performance from key projects such as Hestia Financing, Titan Financing, and Capella Financing.

Key Findings on Cypriot NPL Transactions

The report underscores significant improvements in Cyprus’ NPL transactions, where projects Hestia, Titan, and Capella surpassed prior projections in terms of collections. Capella achieved a notable 5.8% increase in its annual collection rate (CCR), with Titan and Hestia also registering growth at 1.7% and 3.8%, respectively. These results reflect an improved outlook for Cyprus’ NPL market, despite some initial underperformance relative to business plans.

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The upgrades follow Cyprus’ ongoing progress in reducing its nonperforming loan ratios, particularly in the mortgage sector, which saw a reduction of 254 basis points (bps)—one of the most significant declines in Europe. DBRS attributes this improvement to proactive deleveraging strategies and the strengthened quality of collateral backing NPL portfolios.

Market Resilience Amid Economic Pressures

Even as the European Central Bank’s (ECB) stringent monetary policy added pressure, the Cypriot NPL market benefited from high demand for foreign labour and a more favourable interest rate environment, helping mitigate the adverse effects. This buoyancy in the real estate sector has encouraged rating agencies to upgrade their outlooks, switching Hestia and Capella’s trends from negative to positive.

The Morningstar DBRS commentary suggests that if these stabilization trends continue, Cyprus’ NPL sector could see further positive adjustments in credit ratings. However, the report does caution that certain projects, such as Titan Financing, face potential risks related to the relatively lower collateralization of senior securities, which could become problematic if collection rates fall short of expectations.

Outlook for Cyprus’ NPL Market

The Cypriot NPL market’s upward trajectory is an encouraging sign of recovery within a traditionally volatile sector. Analysts believe that continued strength in the country’s banking and real estate sectors will be crucial for sustaining these improvements while emphasizing the importance of monitoring collateral levels in individual projects.

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Cyprus Economy Outperforms EU Benchmarks With 4.5% Quarterly Growth

by THEFUTURE.TEAM

February 16, 2026

The Cypriot economy recorded an impressive 4.5% year-on-year growth in the fourth quarter of 2025, according to preliminary estimates from the Statistical Service. This performance represents a notable acceleration, with a seasonally adjusted quarterly increase of 1.4% compared to the previous period.

Quarterly Performance Surpasses Expectations

Based on Eurostat data, Cyprus has significantly outpaced its European counterparts. While the Eurozone achieved an average growth rate of 1.3% and the European Union registered 1.5%, Cyprus clearly outperformed both. Such robust quarterly performance underlines the nation’s strategic economic positioning amid global market uncertainties.

Full-Year Projections And Fiscal Discipline

For the entire year 2025, growth is forecasted at 3.75%, exceeding earlier predictions from the Ministry of Finance and several domestic and international agencies, which had estimated an increase between 2.9% and 3.5%. This optimistic projection is supported by a low inflation environment and conditions of near-full employment.

Sustainable Growth Amid Global Uncertainty

Despite increased international volatility, Cyprus continues to demonstrate a resilient economic dynamic. Experts assert that a commitment to prudent and disciplined fiscal policies will bolster the nation’s ability to maintain medium-term growth rates above 3%. This strategic approach offers a strong competitive edge, much like other success stories in high-growth markets where sound economic management has proven vital.