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:

https://in-cyprus.com/moodies-foreclosures-law-changes-hamper-banks-efforts-to-reduce-npls/

Top Stories

Larry King dies at 87

Larry King dies at 87. Photo taken at his concert at Hard Rock Live in Hollywood, Florida on January 25, 2012. (Reuters)

Russia: Vladivostok police detains Navalny supporters

At least 35 Russians were detained on Saturday (January 23) in the Far Eastern city of Vladivostok at a rally for the release of...

Police begin investigation of athlete’s accusations for sexual abuse

Police has began the investigation of accusations made by female shooting athlete Andri Eleftheriou for sexual abuse. Eleftheriou spoke about these allegations a few...

Rapid tests major factor for possible COVID-19 relaxations Ministry says

The results of rapid tests carried out on the population of Cyprus constitute a major factor for any possible relaxations in COVID-19 measures and...

Mainly fine on Saturday with high cloud

Mainly fine on Saturday with high cloud developing initially. Winds will be north-easterly to south-easterly, moderate, force 3 to 4 Beaufort, turning strong, 4 to...

Taste

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...

Mezedes

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...