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UK Remains Top Market Amid Surge In Tourist Arrivals From Israel And Germany

Robust Growth In Cyprus Tourism

The latest report by the Cyprus Statistical Service (Cystat) reveals robust growth in Cyprus’ tourism sector, with a 12 percent increase in tourist arrivals in September 2025 compared to the same period last year, bringing the visitor count to 570,635. For the January to September period, tourism numbers surged by 10.3 percent, reaching 3,604,790, underscoring the island’s sustained appeal to international travelers.

Key Source Markets Driving Growth

The United Kingdom continues to dominate as the primary source market, constituting 31.4 percent of total arrivals with 179,293 visitors. Notably, Israel has emerged as a strong contributor, accounting for 14 percent (80,115 arrivals), while Poland (7.9 percent or 45,019 tourists) and Germany (6 percent or 34,348 visitors) follow closely behind. Germany and Israel, in particular, have recorded impressive year-on-year growth of 39.7 percent and 46.8 percent respectively, illustrating a dynamic shift in tourist origins.

Diversification And Market Adjustments

Additional markets such as Sweden, Romania, and Greece contribute modestly to the influx, with percentages ranging from 3 to 3.6 percent. Meanwhile, arrivals from Romania and Austria witnessed gains of 22.2 percent and 26.4 percent respectively, although the United Kingdom experienced a marginal decline of 0.9 percent. Slight downturns observed in France, Switzerland, Norway, and Sweden indicate that market variations remain a factor in the evolving tourism landscape.

Visitor Motives And Patterns

Analysis of travel purposes shows that an overwhelming 84.8 percent of visitors are drawn to Cyprus for holidays, complemented by 10.1 percent visiting friends and relatives, and 5 percent traveling for business. These consistent patterns reaffirm the island’s established reputation as a premier holiday destination.

Resilient Return Travel Trends

On the domestic front, the number of Cypriot residents returning from trips abroad climbed 6.4 percent to 166,129 in September 2025. Greece leads as the preferred destination for returning residents, accounting for 35.8 percent of the total return traffic, followed by notable numbers from Russia, the United Kingdom, and Italy. Despite global travel fluctuations, holiday travel remains the dominant purpose among Cypriot residents, demonstrating a steady trend towards leisure-based journeys.

Data Collection And Methodology

Cystat’s comprehensive survey, conducted at major entry points including Larnaca and Paphos airports along with administrative sources such as port arrivals, captures all individuals passing through passport control. It is important to note that these statistics reflect the number of trips rather than unique individuals, as travelers may undertake multiple trips within the period.

Bank of Cyprus Upgrade Signals Fresh Optimism For Greek And Cypriot Banks

Regional Banks Enter A More Favorable Cycle

Bank of Cyprus and Eurobank are well positioned to benefit from a renewed re-rating of Greek and Cypriot bank stocks, according to Cyprus-based investment firm Roemer Capital, which upgraded Bank of Cyprus to a buy rating and reaffirmed its positive view on Eurobank.

The firm cited easing geopolitical tensions, resilient economic growth in Greece and Cyprus, lower funding costs and Greece’s expected transition to developed-market status as the main factors supporting the sector.

Roemer Capital also lowered its cost of equity assumptions, updated its forecasts following first-quarter 2026 results and extended its valuation horizon to the end of 2027, raising target prices across its banking coverage.

Bank Of Cyprus Gets The Largest Upgrade

Bank of Cyprus received the biggest revision, with Roemer Capital upgrading the stock from hold to buy and setting a target price of €11.10, implying potential total upside of 27%.

The firm highlighted the bank’s strong capital generation, profitability and projected 100% dividend payout, describing it as the strongest capital-return story among the banks under coverage. Roemer Capital maintained its buy rating on Eurobank, assigning a target price of €4.90 and forecasting potential upside of 28%. The report said the bank is well placed to benefit from loan growth, improving operating performance and merger-and-acquisition synergies.

National Bank of Greece and Piraeus Bank also retained buy ratings, with expected returns ranging from 25% to 36%. Optima Bank was upgraded to buy, while Alpha Bank remained at hold on valuation grounds.

Why Growth Still Sets The Region Apart

According to Roemer Capital, Greek and Cypriot banks continue to benefit from stronger economic fundamentals than many western European peers. The report pointed to faster economic growth, healthier balance sheets, low levels of non-performing exposures, capital ratios approaching 20% and strong customer deposit bases.

Analysts expect performing loans across the sector to grow at a compound annual rate of 6% to 8% through 2028, supported by private investment, digitalisation, green manufacturing, supply-chain expansion and a gradual recovery in household lending.

The report also said the conclusion of lending under the EU Recovery and Resilience Facility is unlikely to materially affect credit growth, as banks have already shifted back towards traditional commercial lending. Roemer Capital expects Euribor to remain between 2.2% and 2.5%, a level it believes should support both lending activity and net interest margins.

Geopolitics, Valuation And Market Structure Support The Case

The report said improving geopolitical conditions have strengthened the investment outlook, noting that Brent crude prices have largely returned to pre-war levels while Greek government bond yields have stabilised at around 3.5%. Although geopolitical risks remain, Roemer Capital believes the likelihood of a major inflationary shock or significant pressure on bank profitability has eased.

Another important catalyst identified by the firm is Greece’s expected promotion to developed-market status by FTSE Russell, STOXX and MSCI over the coming months.

According to the report, the reclassification should improve liquidity and attract a broader base of international investors. Roemer Capital also said Euronext’s acquisition of the Athens Exchange is expected to strengthen market infrastructure and increase international visibility, particularly for Bank of Cyprus and Optima Bank.

The firm noted that Bank of Cyprus has already benefited from its Athens listing, with average daily trading value increasing from less than €400,000 before its September 2024 move to nearly €6 million afterwards.

Economic Momentum Remains A Core Tailwind

Roemer Capital said both Greece and Cyprus have moved beyond post-crisis recovery and are now supported by private-sector-led growth. For Cyprus, the report highlighted recent tax reform and efforts to simplify the legal and regulatory framework, while also noting that limited foreign banking competition continues to support domestic lenders.

Overall, Roemer Capital expects Greek and Cypriot banks to remain well-positioned for profitable loan growth over the coming years.

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