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Bank Of Cyprus Reports €121 Million Q1 Profit As Lending Growth Accelerates

by THEFUTURE.TEAM

In a display of resilient financial performance, Bank of Cyprus reported profit after tax of €121 million for the quarter ended March 31, 2026. The results were supported by accelerating lending growth, stable asset quality and continued capital generation, reinforcing the bank’s broader growth strategy amid ongoing geopolitical and economic uncertainty.

Financial Performance And Growth Metrics

Return on tangible equity reached 18%, while basic earnings per share stood at €0.28. New lending increased to €829 million during the quarter, representing a 9% rise compared with the previous period. Growth in lending activity contributed to an expansion of the bank’s gross performing loan portfolio, which reached €11.1 billion. Customer deposits remained stable at €22.3 billion, reflecting continued liquidity strength and deposit stability.

Operational Efficiency And Asset Quality

Operational efficiency remained a central focus during the quarter, with the cost-to-income ratio standing at 37%. Asset quality indicators also continued improving, as the non-performing exposure ratio declined to 1.1%, while the cost of risk benefited from a net release of 17 basis points. Panicos Nicolaou said the results were supported by stabilising net interest income alongside disciplined cost management across the group.

Strategic Acquisitions And Expanding Digital Horizons

Bank of Cyprus also continued pursuing expansion through targeted acquisitions and digital investment initiatives. The bank reached an agreement to acquire the performing loan and deposit portfolio of Cyprus Development Bank Public Company Limited in a transaction involving approximately €150 million in loans and €500 million in deposits. In parallel, Bank of Cyprus acquired a 26% stake in Wealthyhood as part of efforts to strengthen its digital investment and wealth management services focused on stocks and exchange-traded funds.

Market Outlook And Future Targets

Despite continued geopolitical uncertainty, the bank said the Cypriot economy remains resilient, with GDP growth forecasts for 2026 ranging between 2.7% and 2.9%, above the broader eurozone average. Bank of Cyprus maintained its medium-term targets for 2026–2028, including a mid-teens annual return on tangible equity. Management also reiterated plans to maintain a significant shareholder distribution policy, targeting payouts of up to 90% of 2026 earnings and potentially 100% for 2027 and 2028.

Conclusion

Bank of Cyprus said its strong capital position, stable balance sheet and continued lending growth support its ability to navigate ongoing economic and geopolitical uncertainty. According to Nicolaou, the bank remains focused on supporting customers and the broader Cyprus economy while continuing to deliver sustainable returns for shareholders.

Middle East Tensions Cast A Long Shadow Over Cyprus Economic Outlook

by THEFUTURE.TEAM

Improved Current Account Performance Amid Uncertainty

Cyprus recorded an improvement in its current account balance during 2025, with the deficit narrowing to 6.4% of GDP from 9.7% in 2023, according to analysis by Michail Vassileiadis. The improvement was primarily supported by continued expansion in the country’s services surplus, which reached a historic high of 25.2% of GDP compared with 23.5% a year earlier.

Sectoral Strength And Fiscal Dynamics

A moderate reduction in the goods deficit also contributed to the stronger current account position, although the deficit remained elevated at 19.5% of GDP. At the same time, the primary income deficit widened from 10.8% to 11.2% of GDP, reflecting higher outward flows linked to direct investment profits. The secondary income balance improved slightly, moving to a deficit of 0.9% of GDP.

Robust Contributions From Key Economic Sectors

Strong contributions continued coming from intellectual property, tourism and financial services, which generated surpluses equal to 5.3%, 5.7% and 6.5% of GDP, respectively. Although transport and other business services weakened compared with the previous year, ICT services remained stable at 7.5% of GDP, continuing to support economic growth between 2021 and 2025.

Export-Import Dynamics And Structural Shifts

In value terms, the goods deficit widened by 2.5%, driven by a 1.4% increase in imports alongside a 0.2% decline in exports. Petroleum products accounted for 53.9% of the increase in imports, while pharmaceuticals represented another 16.5%. At the same time, exports of refined petroleum products surged by 298.8%, helping offset the impact of a sharp decline in ship exports.

Risks From Geopolitical Instability And Future Outlook

The analysis noted that geopolitical tensions in the Middle East continue posing risks for sectors including tourism and transport. A slowdown in European economic activity or prolonged regional instability could affect tourism revenues and disrupt shipping activity. The report also noted that Cyprus benefited from safe-haven inflows during earlier periods of regional instability, including the Gaza conflict between 2023 and 2025, although prolonged uncertainty could weigh on investment activity and increase market caution.

Conclusion

Cyprus’ recent fiscal improvements, supported by structural reforms and successive sovereign credit rating upgrades, have bolstered investor confidence, enabling a return to A-tier status. Nonetheless, the country faces a delicate balancing act as it navigates rising energy prices and the potential market turbulence induced by external geopolitical pressures. Strategic policy measures and adaptive economic planning will be critical in maintaining this positive momentum against a backdrop of persistent uncertainty.

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