Nicosia, Cyprus. The Central Bank of Cyprus published updated aggregate banking sector data for the year ending December 31, 2025, showing that profitability declined in 2025. The sector’s profits fell year-on-year, while total assets and capital adequacy improved.
Profitability decline linked to net interest income
Profitability among Cyprus banks dropped by €165 million, a decrease of 13.9 per cent year-on-year, falling to €1.02 billion from €1.18 billion in 2024. According to the CBC, the decrease was primarily driven by a reduction in net interest income across the sector.
Total assets rise on loans, advances and debt securities
Total assets in Cyprus’ banking sector increased by €4.35 billion, representing a rise of 6.6 per cent. This pushed the total figure to €69.96 billion in December 2025, compared with €65.60 billion in December 2024. The CBC said the growth was largely attributed to an increase in loans and advances and debt securities.
CET1 ratio improves
The CBC reported an improvement in the Common Equity Tier 1 ratio, which rose by 1.1 percentage points to 25.8 per cent in December 2025, up from 24.7 per cent a year earlier. The increase in capital adequacy was primarily attributed to an increase in CET1 capital and a reduction in total risk exposure.
European context of restructuring
The Cypriot banking sector’s performance comes within a broader European context in which banks have demonstrated resilience despite ongoing structural changes and external pressures. According to European Banking Federation data published in mid-December of the previous year, European banks have continued to restructure, with the total number of credit institutions declining to 4,834 in 2024, representing a 1.9 per cent decrease compared with the previous year.
How do you think the decline in net interest income could affect Cyprus banks’ performance going forward?
