Cyprus NPL ratio falls below EU average for first time since 2014

The Central Bank of Cyprus (CBC) on Wednesday announced that the country’s banking sector non-performing loans ratio fell below the European Union average for the first time since 2014, according to data with a reference date of December 31, 2025.

The figures showed that the non-performing loans ratio of the banking sector excluding loans and advances to central banks and credit institutions declined to 3.2 per cent at the end of December 2025, compared with 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.

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 corresponding EU average stood at 1.8 per cent as of September 2025, the CBC added.

The central bank’s publication underlined that this marks a significant milestone for the domestic banking sector in terms of asset quality convergence with European peers.

At the same time, the coverage ratio of non-performing loans with provisions decreased to 62.3 per cent at the end of December 2025, compared with 68.5 per cent at the end of September 2025.

The updated figures also showed that total restructured loans amounted to €0.8 billion at the end of December 2025.

Out of this amount, loans worth €0.3bn continue to be classified as being non-performing.

The data reflects the continued improvement in the quality of bank loan portfolios, alongside adjustments in provisioning levels.