The banking system of Cyprus demonstrates further improvement in the quality of its loan portfolio. According to data from the Central Bank, the Non-Performing Loans Index (NPL) decreased by the end of November 2025 to 4% compared to 4.2% at the end of October 2025. This confirms a stable trend toward recovery in the sector, which in recent years has been under pressure from the consequences of the financial crisis and the pandemic.
If the methodology used in the risk table of the European Banking Authority is taken into account, where loans and advances to Central Banks and credit institutions are included in the calculation, the NPL indicator remained unchanged and amounted to 2.1% at the end of November 2025. This level is considered one of the lowest in the entire modern history of the banking system of Cyprus.
Structure of problematic loans and restructuring volumes
In absolute figures, as of November 2025 the volume of non-performing loans reached 1.06 billion euros with a total lending volume of 51.59 billion euros. Additionally, another 1.06 billion euros of loans were in the process of restructuring, while 541 million euros of this amount continued to be classified as NPL. This indicates that banks are actively working with borrowers, offering revised terms; however, some restructured loans still remain vulnerable.
Risk coverage and situation by economic sectors
The coverage ratio of non-performing loans by provisions for potential losses slightly decreased and amounted to 70.4% by the end of November 2025 compared to 70.7% a month earlier. Despite this decrease, the level of provisioning remains high and complies with supervisory requirements.
The largest share of problematic loans is still recorded in the household segment, where the indicator reaches 4.7%. In the non-financial corporate sector, the NPL level stands at 4%; however, among small and medium-sized enterprises the situation remains more tense, as the indicator rises to 6.1%. This reflects the impact of high borrowing costs and ongoing pressure on businesses, especially in sectors sensitive to inflation and changes in interest rates.
Context of 2026 and market expectations
Against the background of slowing inflation in the eurozone and expectations of gradual easing of the European Central Bank’s monetary policy in 2026, analysts forecast a further decline in the level of non-performing loans in Cyprus. Banks continue to strengthen requirements for new borrowers while simultaneously investing in digital risk management tools, which increases system resilience.
Experts also note that the stable situation in the banking sector supports the real estate market and investment activity, remaining one of the key factors of the country’s financial stability. Overall, the dynamics of NPLs indicate that the Cypriot banking system is gradually reaching a qualitatively new level corresponding to pan-European standards of reliability and transparency.
The banking system of Cyprus demonstrates further improvement in the quality of its loan portfolio. According to data from the Central Bank, the Non-Performing Loans Index (NPL) decreased by the end of November 2025 to 4% compared to 4.2% at the end of October 2025. This confirms a stable trend toward recovery in the sector, which in recent years has been under pressure from the consequences of the financial crisis and the pandemic.
If the methodology used in the risk table of the European Banking Authority is taken into account, where loans and advances to Central Banks and credit institutions are included in the calculation, the NPL indicator remained unchanged and amounted to 2.1% at the end of November 2025. This level is considered one of the lowest in the entire modern history of the banking system of Cyprus.
Structure of problematic loans and restructuring volumes
In absolute figures, as of November 2025 the volume of non-performing loans reached 1.06 billion euros with a total lending volume of 51.59 billion euros. Additionally, another 1.06 billion euros of loans were in the process of restructuring, while 541 million euros of this amount continued to be classified as NPL. This indicates that banks are actively working with borrowers, offering revised terms; however, some restructured loans still remain vulnerable.
Risk coverage and situation by economic sectors
The coverage ratio of non-performing loans by provisions for potential losses slightly decreased and amounted to 70.4% by the end of November 2025 compared to 70.7% a month earlier. Despite this decrease, the level of provisioning remains high and complies with supervisory requirements.
The largest share of problematic loans is still recorded in the household segment, where the indicator reaches 4.7%. In the non-financial corporate sector, the NPL level stands at 4%; however, among small and medium-sized enterprises the situation remains more tense, as the indicator rises to 6.1%. This reflects the impact of high borrowing costs and ongoing pressure on businesses, especially in sectors sensitive to inflation and changes in interest rates.
Context of 2026 and market expectations
Against the background of slowing inflation in the eurozone and expectations of gradual easing of the European Central Bank’s monetary policy in 2026, analysts forecast a further decline in the level of non-performing loans in Cyprus. Banks continue to strengthen requirements for new borrowers while simultaneously investing in digital risk management tools, which increases system resilience.
Experts also note that the stable situation in the banking sector supports the real estate market and investment activity, remaining one of the key factors of the country’s financial stability. Overall, the dynamics of NPLs indicate that the Cypriot banking system is gradually reaching a qualitatively new level corresponding to pan-European standards of reliability and transparency.