The Central Bank of Cyprus (“CBC”) announces today the publication of a revised edition of the selected financial soundness indicators for the Cyprus banking sector, covering the entire year 2024. This revised edition consists of a user-friendly and comprehensible presentation of information concerning the soundness of the domestic banking sector and forms part of the CBC’s ongoing efforts to provide transparent and reliable information to the public. These indicators serve as a key tool for monitoring and assessing the soundness of the banking system and the country’s financial stability, as well as for supporting the formulation of macroprudential policy. The main developments are summarised below:
- Solvency: Cyprus credit institutions continued to maintain strong capital positions throughout 2024. Capital and leverage ratios improved notably compared to year-end 2023, reflecting the sector’s robust financial position.
- Asset Quality: The quality of banking sector assets continued to improve; however, the stock of non-performing exposures (“NPEs”) that remains on banks’ balance sheets is still considerable, with the NPEs ratio still above the European Union average (close to 2,5%). Nevertheless, the high NPEs coverage ratio demonstrates the sector’s ability to absorb potential future credit losses.
- Profitability: The Cyprus banking sector recorded positive profitability during 2024, mainly driven by net interest income. Income was generated from various interest sources, such as loans and advances, investments in debt securities and cash held with the European Central Bank (“ECB”). It is noted that the operating expenses of credit institutions, although lower compared to their historical average, showed a slight increase relative to 2023, primarily due to higher personnel costs.
- Liquidity: The banking sector remains highly liquid, with liquidity ratios significantly exceeding the minimum supervisory requirements (100%) and continuing on a positive path.
- Balance Sheet Structure: The domestic banking sector assets are mainly concentrated in cash and cash balances with the ECB, loans and advances, as well as debt instruments. Equivalently, the domestic banking sector liabilities consist mostly of deposits and equity.
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