Cyprus banks are among the most profitable within the Eurozone

The European Banking Authority (EBA) has declared that, in terms of bank profitability within the Eurozone, Hungary and Cyprus stood out as the most profitable banks.

In the EBA's evaluation released on Friday, Cypriot banks came in second place as of September 2023, with a notable Return on Equity (RoE) of 25.2%. This was a 2.8% rise over the prior year, demonstrating Cyprus's sound financial standing. Hungary ranked first with a remarkable return on equity (RoE) of 28.4% in the same time frame.

In contrast, the average return on equity (RoE) for banks in Europe was 10.9%, highlighting the exceptional achievements of Hungary and Cyprus.

Together with strong net interest income, the growth of net interest margins, which reached 1.62% in the third quarter of 2023, was credited with the Cypriot banks' strong financial status.

Lending growth in the European Union has been slow despite the good outlook, mostly because of strict lending standards. The autumn Risk Assessment Questionnaires (RAQs) from the EBA brought to light banks' general caution in lending. The survey did not, however, note a decline in the amount of outstanding loans to non-financial households and companies.

In terms of non-performing loans, Cyprus demonstrated a commendable performance, reporting a ratio of 2.6 per cent at the end of September 2023. This showed a decline from the 3.2 per cent recorded in the same period the previous year. In comparison, the European banking system maintained an average of 1.8 per cent of bad loans, indicating stability in this aspect compared to the corresponding period last year.