Cyprus banking sector reports decline in profitability for first half of 2026

The Central Bank of Cyprus released aggregate data on September 17, 2026, revealing that the local banking sector’s profitability dropped by €122 million, or 21.1%, during the first half of the year. Profits fell to €456 million compared to €578 million in the same period of 2025, a decline primarily attributed to losses from exchange rate differences. Despite this downturn, the sector saw its total assets grow by €1.15 billion during the second quarter, reaching €71.38 billion by June 30, 2026, driven by increases in loans, advances, and debt securities.

The sector’s capital adequacy improved, with the Common Equity Tier 1 (CET1) ratio rising to 25.5% from 25.1% in March. Meanwhile, the non-performing loans (NPL) ratio remained stable at 1.6%, in line with the European Banking Authority's risk assessment methodology. Notably, the coverage ratio for these problematic loans increased to 64.9% from 62.7% in March. Total restructured loans stood at €0.7 billion, with €0.3 billion of that amount still classified as non-performing.