Nicosia, Cyprus. The Central Bank of Cyprus said the country’s banking sector non-performing loans ratio fell below the European Union average for the first time since 2014, based on data as of December 31, 2025.
NPL ratios decline under two methodologies
The CBC said the non-performing loans (NPL) ratio for the banking sector excluding loans and advances to central banks and credit institutions fell to 3.2 per cent at the end of December 2025, from 4.5 per cent at the end of September 2025.
Under the methodology applied in the European Banking Authority Risk Dashboard, which includes loans and advances to central banks and credit institutions, the NPL ratio declined to 1.6 per cent at the end of December 2025, compared with 2.3 per cent at the end of September 2025.
Cyprus falls below EU average for first time since 2014
The central bank said that for the first time since 2014, when the definition of non-performing loans was harmonised across the EU, the NPL ratio in Cyprus fell below the EU average.
The CBC added that the corresponding EU average stood at 1.8 per cent as of September 2025, and said the development marks a milestone for the domestic banking sector in terms of asset quality convergence with European peers.
Coverage ratio and restructured loans
The CBC said the coverage ratio of non-performing loans with provisions decreased to 62.3 per cent at the end of December 2025, from 68.5 per cent at the end of September 2025.
It also reported that total restructured loans amounted to €0.8 billion at the end of December 2025, of which €0.3 billion remained classified as non-performing.
Loan portfolio quality and provisioning adjustments
The data reflects continued improvement in the quality of bank loan portfolios, alongside adjustments in provisioning levels.
What do you think the latest NPL figures indicate about the resilience of Cyprus’ banking sector?
