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

Twice as many tests in Cyprus than UK per 100k population, 10x that of Holland – report

According to data from the latest report by the Health Ministry's Epidemiological Surveillance Unit, as of June 2, Cyprus has performed 13,734 tests per...

No new Covid-19 cases in Cyprus on Thursday

No new coronavirus cases were reported in Cyprus on Thursday after 1996 tests, in what Health Ministry experts described as "a brilliant result" at...

EU considers broadening scrutiny of foreign investments

The European Union's executive has proposed broadening scrutiny of foreign investments in the bloc, according to a public draft document, part of efforts to...

Wedding industry pleads for rethink on gathering restrictions

The government's decision yesterday to entirely lift the ban on gatherings on September 1 has taken the wedding industry by surprise, with a group...

Fiscal Council urges caution with public funds

    The government should be cautious in channeling public funds until there is clarity concerning the development of the crisis caused by the coronavirus outbreak, ...


Poulles (Υoung kolokassi)

Either you thrash the coriander seeds in a mortar, without making them into dust, or you gradually crush them in a blender. Remove the edges...

Pork cooked in wine

Crush the coriander seeds in a pestle and mortar or pulse-blend in a blender, taking care not to over-grind. Put the meat in bowl (not...

Lefkaritikos tavas – O ‘protinos’

Wash and dry the meat and rice separately. In a ‘tava’ (oven proof deep clay pot) first put a layer of five-six pieces of meat...

Local cuisine: An introduction

Rich in fresh ingredients and tasty herbs, offers the very best of Mediterranean culinary delights. Head out to a tavern and feast on a...