Insider Economy Three main challenges for banks in Cyprus

Three main challenges for banks in Cyprus

Cyprus banks are confronted with three main challenges which put at risk the country’s overall economic sector, according to a report by the Central Bank of Cyprus on macroeconomic projections for 2018 and recent macroeconomic policy decisions.

The report, which was recently sent to the House of Representatives, underlines that the high level of non-performing loans (NPLs) and poor quality of loan portfolios of credit institutions are assessed as top risks.

In fact, the NPLs are a constant vulnerability for the country’s banking sector even though the projection is that the state of play will improve. For the moment, red loans still pose significant risks to the stability of the island’s financial system and remain the biggest obstacle to further strengthening the banking sector.

The report also notes that credit institutions are expected to continue their strenuous efforts to reduce non-performing loans by implementing holistic and sustainable strategies. In addition, the report underlines  that red loans outside the banking sector are still part of the real economy and burden it since the private sector remains heavily indebted.

The second constant vulnerability is the reduced profitability of banks. The Central Bank points out that profitability of credit institutions remains under pressure.

And that increasing revenue, reducing costs and enhancing operational efficiency are a major challenge for banks. The report indicates that credit institutions should broaden their revenue base and invest in technology.

The third constant vulnerability is the excessive indebtedness of the domestic non-financial private sector. According to the report, over-lending to households and non-financial corporations continues to pose risks to the country’s economy.

At the same time, the Central Bank indicates that a potential increase in interest rates or a sharp slowdown in economic growth would make the non-financial private sector extremely vulnerable.

Read more:

Top Stories

Triple digit covid cases for a 3rd day running but going down-101 today One in 18 positive

  One hundred and oney new Covid-19 cases were announced today, out of 2 thousand 781 tests, taking the total number of confirmed patients to...

Sudan says it will discuss trade, migration deals with Israel

  Sudan and Israel will discuss agreements to cooperate on trade and migration issues in the coming weeks, the Sudanese foreign ministry said, signaling steps...

‘Macron a nutcase who’s lost his way’, Erdogan says in new insulting tirade

  Turkish President Tayyip Erdogan said Emmanuel Macron had “lost his way”, in his second sharp criticism of the French leader in two days over...

Armenian community in Cyprus holds Karabakh protest

  The Armenian community in Cyprus held an all-day protest today, condemning the Azeri attack on Nagorno Karabakh. The march went through various areas of Nicosia,...

Spain decrees new state of emergency in COVID-19 fight

  Spanish Prime Minister Pedro Sanchez announced a new state of emergency in an effort to curb soaring coronavirus infections, imposing local nighttime curfews and...


Squash soup

Ingredients: 1 kg pumpkin, cut into small cubes, approximately 5 cups 2 medium (400g) sweet potatoes, cut into cubes, approximately 2 ½ cups 1 chopped leek, only...


No visit to Cyprus is complete without enjoying the traditional meal of many small dishes known as ‘meze’. This large feast, which has been a...

Prawns with fried cheese, barley shaped pasta

Put the barley shaped pasta into a small pan with salted water, bring to a boil and when tender, drain. Peal the prawns leaving...

Salmon and shrimp sheftalies

Mix all ingredients for tabbouli in a bowl and keep to one side so flavours can combine. Prepare the sheftalies: wash and soak the casing...