Cyprus’s banking sector continues to demonstrate resilience and further improvement in the quality of its loan portfolio. According to updated data released by the Central Bank as of March 31, 2026, the volume of non-performing loans (NPLs) remained at the same level as at the end of 2025, while the ratio of problematic debt stands among the lowest recorded in recent years. The statistics cover all credit institutions operating in Cyprus and reflect only their domestic activities within the country.
The NPL Ratio Remains at 1.6%
According to the Central Bank, the non-performing loan ratio, calculated under the methodology of the European Banking Authority (EBA), stood at 1.6% of total lending at the end of March 2026. This figure remained unchanged compared to December 2025.
The total volume of non-performing loans amounted to €835 million, also unchanged from the end of last year.
At the same time, the long-term trend shows a significant improvement in the banking system. At the end of 2024, the volume of non-performing loans stood at €1.541 billion, compared with €1.892 billion at the end of 2023. At the end of 2022, problematic debt totaled €2.29 billion, while in 2020 it exceeded €5.17 billion. In other words, over the past six years, the volume of non-performing loans in Cyprus’s banking system has declined by more than sixfold.
Total Lending Declined Slightly
The total volume of loans in the banking system stood at €51.346 billion at the end of March 2026, compared with €52.144 billion in December 2025. This figure includes customer loans, balances held with central banks, and other demand deposits.
At the same time, the volume of loans overdue by more than 90 days continued to decline. At the end of March, these loans totaled €634 million, compared with €647 million three months earlier.
The corresponding ratio remained at 1.2% of the total loan portfolio. For comparison, it stood at 2.4% at the end of 2024, 3.5% at the end of 2022, and reached 8.4% in 2020. These figures confirm that Cypriot banks continue to successfully reduce the share of their riskiest assets.
A further positive development was the strengthening of provisions for problematic loans. The NPL coverage ratio increased to 62.7%, compared with 62.3% in December 2025. Total accumulated provisions rose to €658 million from €647 million three months earlier.
Of this amount, €524 million related directly to non-performing loans, compared with €520 million at the end of 2025. The improvement is particularly notable over the long term. At the end of 2024, the coverage ratio stood at 59.9%, compared with 50% at the end of 2023, 48% at the end of 2022, and only 45.8% in 2020. In practice, banks now have a substantially stronger buffer against any future deterioration in borrowers’ repayment capacity.
The Volume of Restructured Loans Continues to Decline
At the end of March 2026, the total volume of restructured loans stood at €777 million. For comparison, the figure was €824 million in December 2025.
Of the total amount of restructured loans, €320 million are still classified as non-performing.
The Central Bank notes that, under European Banking Authority regulations, a restructured loan is not automatically reclassified as performing. Even if a borrower complies fully with the revised repayment schedule, the loan remains under observation for at least 12 months. As a result, some restructured loans continue to be recorded as non-performing in official statistics despite the absence of new arrears.
The share of restructured loans in total lending declined to 1.5%, compared with 1.6% in December 2025. For comparison, the ratio stood at 2.7% at the end of 2024 and reached 7.2% in 2020.
Business Lending Remains Resilient
In the non-financial corporate sector, total lending reached €13.639 billion. Of this amount, €327 million was classified as non-performing, resulting in an NPL ratio of 2.4%.
Provisions for these loans reached €234 million, corresponding to a coverage ratio of 71.4%.
Particularly noteworthy is the performance of the small and medium-sized enterprise (SME) segment, which plays a crucial role in the Cypriot economy. Lending to SMEs totaled €8.438 billion, of which €305 million remained non-performing.
The NPL ratio in this segment reached 3.6%, while the provision coverage ratio increased to 71.8%.
Households Remain the Most Vulnerable Category
The highest level of problematic debt continues to be recorded among private households. Total lending to households stood at €10.753 billion at the end of March 2026.
Of this amount, €477 million was classified as non-performing, while loans overdue by more than 90 days totaled €380 million.
The household NPL ratio stood at 4.4%, the highest among the major borrower categories. Provisions for non-performing household loans reached €260 million, with a coverage ratio of 54.5%.
Experts note that mortgage and consumer loans remain the primary source of risk for the banking sector, despite the substantial improvement observed over recent years.
Financial Companies Show Minimal Risk
Among other financial institutions, total lending amounted to €2.982 billion. Only €31 million of these loans were classified as non-performing, corresponding to an NPL ratio of 1%.
Meanwhile, the provision coverage ratio reached a record 96.2%. Provisions allocated to non-performing loans totaled €30 million, representing the highest coverage ratio among all borrower categories.
As of the end of March 2026, there were no non-performing loans recorded in the categories of central banks, credit institutions, or the public sector.
The latest Central Bank data confirm that Cyprus’s banking system is successfully completing its recovery from the debt crisis of the previous decade. The reduction in non-performing loans from €5.17 billion in 2020 to €835 million in March 2026 represents one of the most significant achievements of the country’s financial sector.