Banking sector NPL ratio increases, deposit interest rates fall slightly

The non-performing loan ratio (NPL) of the Cypriot banking sector increased in January, according to a report by the Central Bank of Cyprus released on Thursday.

The NPL ratio rose from 11.1 per cent in December of the previous year to 11.7 per cent in January of 2022.

This corresponds to an increase of €6 million, with the overall amount rising from €3 billion to €3.006 billion.

Moreover, total loans decreased from €27 billion at the end of December 2021 to € 25.56 billion, a drop of approximately €1.35 billion.

The Central Bank explained that the noticeable reduction in total loans is primarily attributed to loan repayments.

It should be noted that during the period between December 31, 2025, and December 31, 2021, there was a total decline in non-performing loans of €24.3 billion, reflecting an 89 per cent reduction.

The NPL ratio during this time exhibited a drop 36.7 per cent, falling from 47.8 per cent of total loans to 11.1 per cent.

In addition, the coverage ratio reached 43.6 per cent at the end of January 2022.

The same figure stood at 43.1 per cent at the end of December 2021 and 46.2 per cent at the end of December 2020.

Furthermore, the total loans that went through a restructuring process by the end of January 2022 amounted to €3.34 billion, of which €1.46 billion are still being included in the non-performing loans category.

An increase was also observed in loans with arrears of more than 90 days, with this category rising from 8 per cent of total loans in December 2021 to 8.5 per cent in January 2022.

The Central Bank explained that this is due to the reduction of total loans, itself primarily linked to loan repayments.

Meanwhile, the Central Bank also announced that there has been a slight decrease in interest rates on deposits and consumer loans in March of this year.

At the same time, figures for the same month show a marginal increase in the interest rate on mortgages.

The interest rate on deposits of up to one year from households fell to 0.05 per cent, compared to 0.07 per cent in the previous month.

The corresponding interest rate on deposits from non-financial companies decreased to -0.01 per cent, compared to the rate of 0.00 per cent during the previous month.

In terms of loans, the interest rate on consumer loans fell to 3.06 per cent, compared to 3.19 per cent in February 2022.

In addition, the interest rate on home loans rose to 2.16 per cent in March, compared to the rate of 2.14 per cent during the previous month.

The interest rate on loans to non-financial corporations for amounts up to €1 million fell to 3.14 per cent, compared to 3.24 per cent in the previous month.

The interest rate on loans to non-financial corporations for amounts exceeding €1 million rose to 3.28 per cent, compared to 3.16 per cent in the previous month.

In addition, total new loans increased to € 506.7 million in March 2022, compared to €437.4 million in February.

New consumer loans increased to €14.1 million in March, compared to €12.2 million during the previous month.

Furthermore, new housing loans increased to €205.1 million, compared to €150.4 million in February.

New loans to non-financial corporations for amounts up to €1 million rose to €79.3 million, compared to € 43.7 million during the previous month.

Finally, new loans to non-financial corporations for amounts exceeding €1 million fell to €199.9 million, compared to €224.9 million in February.