The Central Bank of Cyprus has released the latest data on non-performing loans in the country’s banking sector. According to the report, the share of non-performing loans remained unchanged at 1.6% as of January 31, 2026. The figure has stabilized at this level, matching the same value recorded at the end of December 2025.
The calculations were carried out using the methodology of the European Banking Authority, which takes into account loans and advances granted to central banks and other credit institutions. This approach allows for an objective comparison of Cyprus with other European countries.
Provision coverage slightly decreased
The coverage ratio of non-performing loans—that is, the share of loans for which banks have set aside provisions to cover potential losses—declined slightly over the month. At the end of January 2026, it stood at 62.2%, compared to 62.3% a month earlier. The decrease is minimal but indicates that banks continue to take a cautious approach to risk assessment.
Restructured loans: figures and nuances
The total outstanding volume of restructured loans reached €0.8 billion at the end of January 2026. Of this amount, loans worth €0.3 billion were still classified as non-performing. This means that even after changes in loan terms—such as payment deferrals or reduced interest rates—about one-third of restructured loans have not returned to a normal repayment schedule.
For comparison, during the peak of the financial crisis in Cyprus, the share of non-performing loans reached nearly 50%. Today’s 1.6% reflects years of effort by the banking system and the state to clean up balance sheets.
Additional context: overall lending trends
In January 2026, the Central Bank also recorded a sharp decline in the total volume of net new loans—down by €377.7 million compared to December 2025. Mortgage lending saw a particularly notable drop, with net new housing loans falling to €95.7 million from €135.4 million the previous month.
Interest rates, however, continued to decline. Mortgage rates dropped to 3.7% from 3.78% in December, while consumer loan rates fell to 7.2%. As for deposits, January 2026 saw a net outflow of €851.2 million.
The situation with non-performing loans in Cyprus remains stable and under control. The low level of bad loans reflects the resilience of the banking system after years of balance sheet restructuring. However, the volume of restructured loans—some of which are still classified as problematic—serves as a reminder of the need for continued vigilance. Banks and regulators are expected to keep closely monitoring the situation, especially amid declining volumes of new lending.