Central Bank of Cyprus (CBC) Governor Chrystalla Georghadji has outlined the key challenges faced by the banking sector during her speech at the AGM of the Cyprus Banking Association.
Despite improvement in the banking sector since 2013, there are still substantial issues that need to be addressed, she noted.
Georghadji said that the primary objective is to solve the problem of Non-Performing Loans(NPLs) which despite their significant decrease over the past two years they continue to bedevil the banking sector.
The current level of NPLs, she added, is an obstacle to the growth of banks as it reduces their profitability while consuming a significant amount of their capital and many resources (personnel and systems) that could be used in purely banking.
As a result, the contribution of the banking sector to the recovery of the economy through the granting of new loans is limited, she said.
She also assured that the CBC will continue to be next to the Association in providing guidance and any assistance required in relation to the matter.
At the same time, she said that another major challenge for banks is to restore profitability through a viable business model.