The Central Bank of Cyprus has published detailed statistics for the first time on companies that purchase non-performing loans from banks. The figures reveal that the total value of red loans transferred to these entities amounts to billions of euros, while these credit-acquiring companies are gradually becoming some of the largest owners of commercial and residential real estate on the island.
Striking figures
At the end of the first quarter of 2026, the total number of borrowers whose obligations had been transferred to credit-acquiring companies reached 64,381. Of these, 55,044 were households with mortgage or consumer loans, while another 9,261 were non-financial businesses. Compared to the same period last year, the number of debtors increased by nearly 3,000. Meanwhile, the total outstanding debt across all borrower categories rose to €9.667 billion, slightly higher than the €9.536 billion recorded a year earlier.
Non-performing loans: statistics and trends
The most concerning aspect of these figures is the persistently high share of non-performing loans. Of the nearly €9.7 billion in total debt, only €662 million is being serviced more or less regularly. The remaining €9 billion is classified as non-performing. Businesses account for the overwhelming majority of bad debt, with €8.833 billion out of a possible €9.236 billion. For comparison, this figure stood at €8.689 billion in 2025, indicating that the situation has seen little improvement. The picture is somewhat unusual in the segment of other financial institutions: out of a total balance of €704 million, only €15 million is considered performing. Nevertheless, this represents an improvement over last year, when the figure was just €6 million.
Credit companies' property portfolio
Another notable trend is the rapid accumulation of real estate by debt-purchasing companies. According to the Central Bank, as of the end of March they owned 8,014 properties with a combined market value of €968 million. Most of these assets were acquired through the repossession of collateral linked to non-performing loans. As a result, these organizations are becoming increasingly influential players in the property market, inevitably affecting housing prices and affordability for ordinary citizens.
The International Monetary Fund also highlighted this issue in its recent report. According to the IMF, by the middle of 2025 the total volume of non-performing loans held outside the banking sector had reached approximately €18.5 billion, equivalent to 51% of the country's gross domestic product. In practice, one out of every three euros of household and business debt is now held not by banks but by specialized credit management companies. The IMF notes that while this has helped banks strengthen their balance sheets, it also creates risks for the wider economy. The judicial system is struggling to keep up with the volume of cases, debt recovery procedures remain slow, and this hampers both loan restructuring and new lending.
Outlook
As of 31 March 2026, the total net carrying amount of all loan portfolios managed by these credit organizations stood at €2.843 billion, up slightly from €2.802 billion a year earlier. However, the overall picture remains unchanged: with total non-performing loans amounting to €18.5 billion, performing loans account for only 5.5% of the portfolios managed by these institutions. This means that the vast majority of debt remains distressed. Unless the judicial system and debt enforcement mechanisms are significantly reformed, the situation is unlikely to improve dramatically. Cyprus needs new approaches to managing problematic debt in order to protect households, businesses, and the country's economy as a whole.