According to updated data from the Central Bank of Cyprus as of the end of October 2025, the Non-Performing Loans Index fell to 4.2% compared to 4.5% at the end of September. This dynamic confirms a steady trend toward a reduction in bad loans that has been observed throughout 2025.
If the methodology of the European Banking Authority is taken into account, including loans and advances to Central Banks and credit institutions, the indicator looks even more optimistic. Under this calculation, the Non-Performing Loans Index decreased to 2.1% from 2.3% a month earlier.
Loans increase, arrears decline
The total volume of loans issued by financial institutions operating in Cyprus, excluding Central Banks and credit institutions, reached €26.216 billion at the end of October 2025. In September, this figure stood at €26.006 billion, indicating moderate growth in lending activity.
Against this background, the volume of loans overdue by more than 90 days decreased to €891 million compared to €942 million a month earlier. Their share of the total portfolio declined to 3.4% from 3.6% in September. The total amount of non-performing loans also decreased, amounting to €1.094 billion versus €1.173 billion a month earlier.
Strengthening protection: reserves and coverage
An additional positive signal was the improvement in the coverage ratio of non-performing loans by reserves. At the end of October, the coverage ratio reached 70.7%, whereas in September it stood at 68.5%. Total accumulated reserves reached €882 million, of which €774 million relate directly to non-performing loans. This means that Cyprus banks are increasingly better prepared for potential risks and fluctuations.
Restructuring as a stabilization tool
Restructuring processes remain an important part of the debt management strategy. The total volume of restructured loans as of the end of October reached €1.066 billion, which corresponds to 4.1% of all issued loans. In September, this figure was 4%. At the same time, €541 million of this amount is still classified as non-performing loans, whereas a month earlier the figure stood at €493 million.
Breakdown by economic sectors
The public sector demonstrates the strongest resilience: with a loan volume of €175 million, no non-performing loans were recorded. Among other financial companies, the total loan volume amounted to €2.285 billion, and non-performing loans totaled €32 million, corresponding to 1.4%, with a high coverage level of 94.7%.
Non-financial companies have a loan portfolio of €13.207 billion, of which €541 million are classified as problematic, equivalent to 4.1%. The coverage level in this segment reached 84.5%. Small and medium-sized enterprises remain more vulnerable: with loans totaling €8.221 billion, the volume of non-performing loans amounted to €507 million, or 6.2%, with coverage of 85.6%.
Households received loans totaling €10.550 billion. Of these, €520 million are classified as non-performing, corresponding to 4.9%. The coverage ratio in this segment remains below average at 54.9%, highlighting the importance of further measures to support borrowers.
Overall trend and outlook
The decline in the share of non-performing loans from 6.2% in December 2024 to 4.2% in October 2025 confirms that Cypriot banks are consistently improving risk management. Experts note that the combination of growing reserves, active restructuring, and gradual economic recovery creates favorable conditions for further stabilization of the banking sector.
Against the backdrop of moderate credit growth and continued control over portfolio quality, Cyprus’s banking system is entering 2026 with a stronger resilience buffer, which is important for both businesses and households.