According to updated data from the Central Bank of Cyprus, prepared using the methodology of the European Banking Authority, the share of non-performing loans (NPLs) in the country fell to 2.8% by the end of August 2025. In July, the figure stood at 2.9%.
If loans granted to central banks and credit institutions are excluded, the overall level of problematic assets remains stable at 5.5%. This trend confirms the gradual strengthening of the country’s banking system and an improvement in loan portfolio quality.
Decline in the total volume of overdue debt
The total volume of NPLs in August 2025 decreased to €1.42 million, compared with €1.43 million a month earlier. Most problem loans fall within the private sector: about €608 million are owed by companies, and €785 million by households. Economists note that the decline comes amid labour market stabilization, rising consumer activity, and the expansion of loan restructuring programmes.
Improved risk coverage levels
The coverage ratio of NPLs with provisions is also improving. For the corporate sector, it reached 78.6%, and 48.9% for households. Across the banking system as a whole, coverage increased to 62.6%, up from 62.2% in the previous month. The increase in provisions indicates greater resilience among banks to potential risks and reflects continued adherence to conservative risk management practices.
Loan restructuring and future trends
The total volume of restructured loans reached €1.2 billion at the end of August 2025. Of this amount, €600 million are still classified as non-performing. Despite this, experts expect the NPL ratio to continue declining in 2026, driven by stricter supervisory standards, the adoption of digital risk assessment tools, and further improvements in borrower financial discipline.
Additional forecasts suggest that high bank liquidity and moderate economic recovery in Cyprus are creating favourable conditions for further risk reduction. The banking sector is gradually returning to pre-crisis performance levels, strengthening the confidence of private investors and international partners.