According to the Central Bank of Cyprus's latest report, the level of non-performing corporate loans (NPLs) in Cyprus continues to decline. However, closer analysis of the data reveals that credit risk is distributed unevenly across different sectors of the economy.
The total amount of loans granted to non-financial companies was €12.49 billion, while the amount of NPLs fell from €745.2 million to €666.4 million year on year. This means that the proportion of NPLs fell from 6.24% to 5.34%, which indicates progress in the financial system. At the same time, these figures mask a more complex picture.
Three sectors account for almost 70% of all problem debts:
The transport and logistics, trade, and real estate sectors continue to accumulate the largest share of problem loans. Looking in more detail:
- The transport and storage sector leads with €261.8 million in non-performing loans, accounting for 16.5% of the industry's total loans. This is almost three times higher than the average level.
- Wholesale and retail trade ranks second with €131.8 million in non-performing loans (NPLs) and a default rate of 6.55%.
- The real estate sector has a relatively low default rate of 4.07%, but the absolute values are still significant at €91.5 million.
Together, these three sectors account for almost 73% of all non-performing loans in the corporate segment.
Construction and professional services are moderate risks
The construction sector remains in the middle range. With €924 million in loans outstanding, the default rate in March 2025 was 5.52%, equating to €51 million. A similar situation was recorded in professional, scientific and technical activities, with NPLs accounting for 5.78% of total loans.
Tourism and industry are improving their positions
There are positive signs coming from the hotel and catering sector, where the NPL ratio is extremely low at 1.26%, despite a significant total loan volume of €2.31 billion.
Industrial production also showed progress. The volume of problem loans in this sector decreased from €30 million to €17.1 million over the year, and the default rate fell to 1.35%.
However, credit risk is growing in agriculture and IT
At the same time, agriculture is the only sector where NPLs are growing. Overdue loans increased from €7.9 million to €11 million, and the default rate rose from 7.73% to 11.43%. The information technology and communications sector is also cause for concern, with NPLs reaching €15.7 million — equivalent to 5.37% of the total loan portfolio.
Stability in education, healthcare, and social services
The sectors with the smallest share of the loan portfolio — healthcare, education, and other services — demonstrated stability and low levels of problem loans (less than 0.6% each). This indicates high solvency and low credit risk in these segments.
Thus, despite the overall decline in loan defaults in the corporate sector, economic stability remains uneven across different industries. The high concentration of problem loans in transport, trade, and real estate requires special attention from banks and regulators.