Bank reports stable profitability and enhanced shareholder returns

The Bank of Cyprus on Tuesday reported a profit after tax of €353 million for the nine months ended September 30, 2025, maintaining strong momentum amid robust economic conditions.

“We are pleased to announce another set of strong financial results, generating in the first nine months of 2025 a profit after tax of €353m,” said Bank of Cyprus CEO Panicos Nicolaou.

“This performance reflects the resilience of our net interest income, amid the prevailing interest rate environment, strong liquidity, and good cost efficiency,” he added.

For the third quarter alone, profit after tax was €118m, remaining flat compared to previous quarters.

The bank’s cost-to-income ratio stood at 35 per cent, reflecting continued efficiency improvements, while return on tangible equity (ROTE) reached 18.4 per cent for the period.

Basic earnings per share amounted to €0.81, underlining the institution’s consistent profitability.

New lending reached €2.2 billion in the first nine months of 2025, a 31 per cent year-on-year increase, driven primarily by international and corporate demand.

Gross performing loans rose to €10.71 bn, marking a 6 per cent increase since December 2024.

“During the first nine months of 2025, we saw healthy balance sheet growth in customer lending and deposits,” said Nicolaou.

“We granted €2.2 bn of new loans in the first nine months of 2025, 31 per cent higher than the prior year driven mainly by international and corporate demand,” he added.

“Our gross performing loans increased by 6 per cent year to date,” he continued, “underpinned by 4 per cent broad based loan growth in Cyprus and the buildup of our international book, a pleasing performance ahead of our approximately 4 per cent loan growth target for 2025.”

Furthermore, the bank’s non-performing exposure (NPE) ratio improved further, falling to 1.2 per cent, while the cost of risk remained contained at 35 basis points.

The retail-funded deposit base stood at €21.5 bn, representing a 7 per cent annual rise, underscoring strong customer confidence.

The group maintained a robust capital position, with a Common Equity Tier 1 (CET1) ratio of 20.5 per cent and a total capital ratio of 25.4 per cent, both figures including third-quarter profits net of distribution accrual.

Organic capital generation reached 326 basis points during the first nine months of the year, demonstrating strong internal capital creation capacity.

The bank also completed the successful refinancing of €300m in Tier 2 notes at a significantly lower coupon rate of 4.25 per cent, further strengthening its funding profile.

In line with its commitment to shareholder value, the Bank of Cyprus paid an interim dividend of €0.20 per ordinary share in October 2025.

The institution also reaffirmed its 2025 distribution target of a 70 per cent payout ratio, highlighting its confidence in sustainable profitability.

“We have maintained strong capital position, with a CET1 ratio and Total Capital ratio of 20.5 per cent and 25.4 per cent respectively as at September 30 2025, generating 326 bps of capital organically and after accruing a distribution at 70 per cent payout ratio,” the Bank of Cyprus CEO stated.

“Our tangible book value per share of €5.86 grew by 6 per cent year on year, after paying €0.20 interim cash dividend per share, bringing the total cash dividends distributed in 2025 to €0.68 per share,” he added.

Management expressed optimism about the broader outlook, stating that economic growth in Cyprus continues to outpace the Euro area average, supported by a strong domestic economy and favourable business conditions.

Moreover, the bank said the Cypriot economy remains resilient and dynamic, continuing to perform better than many of its European counterparts.

“We continue to operate in a supportive macroeconomic environment that is resilient and growing,” Nicolaou said.

Citing the latest projections from the Finance Ministry, he mentioned that Cyprus’ GDP is expected to grow by 3.2 per cent in real terms in 2025, exceeding the average growth rate of the Eurozone.

“Capitalising on this strong performance, we are raising our 2025 ROTE target today to high-teens from mid-teens and we are reaffirming our distribution target of 70 per cent payout ratio in respect of 2025 earnings which is at the top-end of our distribution policy,” Nicolaou said.

“Likewise, we now expect our ROTE, based on 15 per cent CET1 ratio, to exceed 20 per cent in 2025,” he added.

“Our disciplined execution of our strategy, our track record of delivery on our targets, and our strong levers reinforce our confidence in the outlook, and we look forward to updating our strategy and financial targets in the first quarter of 2026,” Nicolaou stated.

“We remain committed to supporting our customers and the broader Cypriot economy, with an unparalleled focus on continuing to deliver attractive returns to our shareholders,” the Bank of Cyprus CEO underlined.

When asked about the factors driving the increase in new loans, Nicolaou reiterated that the increase was supported mainly by demand for loans from businesses and the international operations sector, noting, however, that the loan base remains within Cyprus.

In response to a query regarding the relative decrease in interest income, he said that despite the European Central Bank’s interest rate cuts, income remained almost stable due to the increase in the volume of loans and deposits.

Also invited to comment on the new banking landscape taking shape in Cyprus, he expressed his optimism about the Bank of Cyprus’ model and its progress in technology.

“Competition is something that concerns us but I do not believe that this is the competition of the banks; in the coming years competition will mainly come from technology,” he said.

Responding to a question about the bank’s next steps in digital transformation, he mentioned that the focus so far had been on individuals, to whom a full range of services is now provided through the Bank of Cyprus digital application.

He added that in the coming period, emphasis will be placed mainly on companies and businesses, offering, for example, the option of taking out loans via mobile or opening a new account following the same procedure as individuals.

Finally, he said that a chatbot application is expected to be available in the first quarter of 2026, through which customers will be able to submit any query concerning the bank.