Bank profits soar by 644% in 2023

The profitability of the Cyprus banking sector remarkably spiked by an annual 644 per cent in 2023, reaching €1.27 billion.

This significant increase was fueled by the high-interest environment, according to data released by the Central Bank of Cyprus (CBC).

According to the aggregate Cyprus banking sector data published by the CBC, net interest income for 2023 jumped by 97 per cent to €1.92 billion, compared with €0.98 billion for the full year 2022.

The substantial rise in the bank’s interest income can be attributed to the consecutive interest rate hikes implemented by the European Central Bank, which were a strategic response to control inflation. This inflationary pressure notably spiked in 2022, following the invasion of Russia in Ukraine and the ensuing energy crisis.

In addition to the increase in net interest income, the taxation paid by banks also witnessed a significant jump, increasing by 160 per cent to amount to €166 million for the full year 2023, in stark contrast with €64 million in 2022.

Furthermore, illustrating the strength of the sector, the Cypriot banking sector’s Common Equity Tier 1 Capital at the end of 2023 rose to €4.6 billion, compared with €3.86 billion the year before. This capital increase is indicative of the banks’ enhanced internal capital generation capacity, driven largely by the high profits they achieved.