The Cyprus banking system continues to post the second highest Non-Performing Loan (NPL) ratio in the European Union, following Greece, according data published by the European Banking Authority (EBA) on Thursday.
The EBA issued its risk dashboard for the first quarter of 2019 showing that the NPLs (90 days past due definition) in Cyprus’ three systemic banks amounted to 34.1 per cent compared with the EU average of just 3.1 per cent of total loans. In absolute terms, bad loans amounted to €6.9 billion. Greece holds the top spot with an NPL ratio of 41.4 per cent or €84.3 billion. Portugal posted the third highest NPL rate with just 9.57 per cent and Italy the fourth highest with 8.25 per cent.
However, the EBA noted that NPLs continued their declining trend albeit at a slower pace in the first quarter of the year. Cyprus NPL coverage ratio was however slightly above the EU average with 45.9 per cent compared with 45.1 per cent.
The Cyprus banking system capital ratios were below the EU average in the first quarter of 2019. The CET1 capital ratio for the Cypriot banks amounted to 13.7 per cent, compared with the EU average of 14.7 per cent, while Cyprus’ total capital ratio reached 17.4 per cent compared with the EU average of 18.9 per cent.
Cyprus’ ratio of net interest income (NII) amounted to 2.16 per cent compared with the EU average of 1.41 per cent, while the Cypriot banks return on equity climbed to 13.6 per cent compared with the EU average of 6.8 per cent.
Furthermore, Cyprus posted the fifth highest NII to total operating income indicator which in the first quarter amounted to 72.4 per cent compared to the EU average of 59 per cent.
According to EBA’s data, Cyprus posted the fifth highest cost-to-income ratio in Q1 this year which amounted to 70.8 per cent compared with the EU average of just 6.63 per cent.
Cyprus’ loan to deposit ratio amounted to 60.1 per cent compared with the EU average of 116 per cent.
Moreover, Cyprus continues to post high liquidity ratios, recording the third highest Liquidity Coverage Ratio (LCR) with 326 per cent compared with the EU average of 153 per cent.