EU banking assets grow while profitability remains steady
The European Central Bank (ECB) released its consolidated banking data on Friday, revealing that total assets held by EU-headquartered credit institutions rose by 1. 6 per cent to reach €33. 50 trillion by the end of December 2025. During this same period, the aggregate non-performing loans ratio for the EU banking system…
Cyprus banking sector profits dip in first quarter of 2026TheEuropean Central Bank(ECB) released itsconsolidated banking dataon Friday, revealing that total assets held by EU-headquarteredcredit institutionsrose by 1. 6 per cent to reach €33. 50 trillion by the end of December 2025. During this same period, theaggregate non-performing loans ratiofor the EU banking system remained stable at 1. 97 per cent. The data, which covers 332 banking groups and 2,292stand-alone credit institutions, also highlighted anaggregate return on equityof 9. 3 per cent and aCommon Equity Tier 1 ratioof 16. 42 per cent. While the European sector displayed signs of stability, recent data from theCentral Bank of Cyprus(CBC) paints a more complex picture for the domestic market. Banking sector profitability in Cyprusdeclined by 23. 6 per cent during the first quarter of 2026, falling to €202 million compared with the €264 million recorded in March 2025. This downturn was primarily attributed to a reduction innet interest incomeand losses stemming fromforeign exchange differences. Despite the dip in earnings, total assets within the Cypriot banking sector grew by 0. 4 per cent, or €274 million, reaching €70. 23 billion by March 31, 2026. This growth was largely driven by an increase inloans and advancesas well as a rise indebt securities holdings. The sector saw its Common Equity Tier 1 ratio decline by 0. 7 percentage points to 25. 1 per cent, a movement the CBC attributed to a rise in thetotal risk exposure amountthat offset gains in capital. Asset quality in the Cypriot market remained resilient, with thenon-performing loan ratioholding steady at 1. 6 per cent in March 2026. Total non-performing loans stood at €835 million against a totalloan portfolioof €51. 3 billion. Thecoverage ratiofor these bad debts improved to 62. 7 per cent in March 2026, up from 62. 3 per cent at the end of 2025. Reflecting on broader trends from the previous year, the CBC reported thatexcess liquidityin the Cypriot system fell to €17. 4 billion by the end of 2025. The central bank also reported thatlending activitysaw significant growth throughout 2025, with loans held by the sector rising to €31. 7 billion. Although deposits and cash equivalents experienced a slight decline, total liabilities for the sector increased to €63. 1 billion, driven mainly by higher deposits fromhouseholdsandnon-financial corporations.