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MP stresses importance of public investments for Cyprus

Cypriot MP Christiana Erotokritou stressed the importance of public investments for Cyprus due to the disproportionate immigration and demographic pressures the country is facing and the adverse effects of climate change. 

Erotokritou who is the President of the Cyprus House  Finance and Budget Committee, intervened in Budapest during a meeting of the Inter-Parliamentary Conference on Stability, Economic Coordination and Governance in the European Union.

In her intervention regarding Cyprus, she noted that the country is on a steady path of public debt reduction, maintaining healthy fiscal surpluses, however, it presents a large current account deficit.

She pointed out that the country-specific recommendations of the European Commission for Cyprus highlight the imperative need for full and timely implementation of the Recovery and Resilience Plan to reduce the country’s excessive dependence on oil and accelerate the completion of the necessary reforms and investments.

In this context, Erotokritou said it is important to have public investment for Cyprus due to the disproportionate immigration and demographic pressures the country is facing and the adverse effects of climate change.

Erotokritou stressed that the key challenge is to balance fiscal discipline and sustainable development, ensuring that fiscal responsibility, sustainable development and social cohesion go hand in hand and that the economic governance framework contributes to addressing current and emerging challenges of the EU and shaping a more hopeful future for all European citizens.

Cyprus Banks Maintain Strong Asset Quality As NPL Ratio Stays Below EU Average

Cyprus banks continued to report relatively strong asset quality in May, with the non-performing loan (NPL) ratio holding steady at 1.6%, according to the Central Bank of Cyprus (CBC).

The figure remained unchanged from April and was below the EU-wide NPL ratio of 1.98% recorded in March, based on consolidated banking data from the European Central Bank (ECB). While the reporting dates differ, Cyprus’ ratio was 0.38 percentage points lower than the EU average.

NPL Coverage Edges Higher

Banks also slightly strengthened their protection against potential losses. The NPL coverage ratio increased to 63.0% at the end of May, from 62.9% a month earlier, meaning that provisions covered nearly two-thirds of non-performing loans.

Meanwhile, the stock of restructured loans remained relatively contained. Total restructured loans stood at €800 million, of which €300 million were still classified as non-performing.

Cyprus Banks Show Strong Profitability

Cyprus also compared favourably with the wider EU banking sector on profitability during the first quarter of 2026.

Domestic banks recorded a return on equity of 3.6973%, compared with 2.44% across EU credit institutions in March. The measure indicates how effectively banks generate profits from shareholders’ capital.

Across the EU, banks continued to maintain substantial capital buffers. The Common Equity Tier 1 ratio stood at 16.27% in March, providing an important cushion against potential losses.

EU Banking Sector Remains Resilient

The ECB’s March data covered 335 banking groups and 2,284 stand-alone credit institutions, alongside non-EU-controlled subsidiaries and branches operating within the bloc. Together, these institutions represented almost the entire EU banking sector by balance sheet.

Aggregate assets of EU-headquartered credit institutions rose 3.63% year on year, reaching €34.33 trillion in March 2026, up from €33.13 trillion a year earlier.

Overall, Cyprus’ latest figures point to a banking sector with relatively contained asset-quality pressures, supported by a stable 1.6% NPL ratio, 63% coverage and profitability above the EU average. The comparison should be viewed with some caution, however, as the CBC and ECB figures cover different reporting periods and datasets.

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