The Mediterranean island’s banking system has recorded profits for the fifth consecutive quarter, according to latest data released by the Central Bank of Cyprus.
The majority of lenders – systemic or not – were able to record profits amounting to a total of €693 million over the last five quarters.
Hellenic Bank and Bank of Cyprus both posted profits for the first quarter of 2019. RCB Bank recorded profits at the end of 2018, and so did Eurobank and Astrobank for the year in review.
Specifically, Bank of Cyprus’ profits in the first quarter of 2019 amounted to €95 million, Hellenic’s stood at €14.8 million, and RCB Bank recorded profits of €76.4 million by the end of 2018.
As for Eurobank, profits at the end of 2018 stood at €42.4 million while Astrobank posted profits of €9.9 million for the year in review.
However, the major challenge for banking institutions remains the high deleveraging of non-performing loans (NPLs).
NPLs in Cyprus’ banking system today make up some 30% of the total loan portfolio and this percentage has to be reduced to 10% by the end of the year, according to the Single Supervisory Mechanism’s requirements.
This is what Central Bank of Cyprus Governor Constantinos Herodotou has also made clear to banks. Of the systemic banks, Bank of Cyprus has 35% of NPLs on its balance sheets, while Hellenic Bank has 26.5%.
NPLs in Cyprus banks amounted to as high as €27 billion at the end of 2014, and have decreased to €10.1 billion within five years. This marks a 63% decrease, also contributed by the transfer of approximately €7 billion of the collapsed Cyprus Co-op bank’s assets to KEDIPES, the state-owned Cyprus Asset Management Company.
The most successful restructurings were carried out on huge corporate NPLs and that’s how such a significant decrease has been achieved, according to Central Bank data.
But hard times are still ahead considering that the vast majority of the current €10.1 billion of NPLs belong to households and small businesses.