The ratio of Non-Performing Loans (NPLs) in Cyprus’s banking sector fell to 6.5%, equivalent to €1.6 billion, at the end of September 2024, down from 6.9% (€1.7 billion) in June 2024, according to the Central Bank of Cyprus (CBC).
The coverage ratio for NPLs, reflecting provisions held against these loans, increased slightly to 55.7% (€0.9 billion) by the end of September, compared to 55% in June 2024.
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The CBC attributed the reduction in NPLs to several factors:
- Loan repayments, including debt-to-asset swaps.
- Successful restructurings, with loans reclassified as performing after probation periods.
- Loan write-offs are often tied to previously provisioned amounts or accounting set-offs.
Key Highlights
- Household NPLs: Declined to €900 million in September 2024 (from €916 million in August), representing 8.5% of total household loans. Total provisions for household NPLs accounted for 41% (€388 million) of the total.
- Total Household Loans: Reached €10.57 billion.
- Corporate NPLs: Dropped to €658 million in September (from €682 million in August), representing 5.5% of total corporate loans. Of these, €610 million related to small and medium-sized enterprises (SMEs), with provisions covering 75.5% of total corporate NPLs.
- Restructured Loans: Totalled €1.3 billion at the end of Q3 2024, with €0.7 billion still classified as NPLs.
The steady decline in NPLs reflects ongoing efforts by Cypriot banks to manage credit risk and improve loan portfolio quality, supporting the overall stability of the financial system.
