Cyprus’s non-performing loan (NPL) ratio held steady at 2.1% in November 2025, unchanged from October and down sharply from 3.1% at the end of December 2024, according to data published by the Central Bank yesterday.
Total NPLs at the end of November stood at €1.06bn out of a total loan book of €51.59bn – the lowest level recorded in the Cypriot banking system since the country joined the eurozone, based on European Banking Authority (EBA) methodology.
Loans overdue decline sharply
Loans overdue by more than 90 days fell to €887m at the end of November, down from €891m in October and €1.19bn at the end of December 2024. The improvement is even more pronounced over five years, as loans in this category stood at €3.93bn in 2020.
Of the €1.06bn in total NPLs, €435m relates to businesses and €393m to households.
The cost of falling behind
Missing loan payments for more than 90 days affects both borrowers and banks.
For borrowers, penalty interest applies and can rise sharply depending on the contract and type of loan. Additional management fees may also be imposed after the three-month threshold.
For banks, overdue loans must be reclassified as non-performing, triggering larger provisions against bad debts and tying up more capital against future risk.
Banks solve part of the problem
The headline figures mask a more complex picture. Banks have cleared some of the issue by selling distressed loans to credit acquisition companies, reducing the toxic portion of their portfolios.
However, the underlying problem for borrowers remains unresolved. As of 30 June 2025, around 70,000 borrowers had been transferred to credit acquisition companies, with the value of these loans close to €19bn.
Progress is uneven across the sector. In 2024, the NPL ratio at less significant credit institutions reached 21.0%, far above the 3% recorded by systemic banks, highlighting the greater difficulty smaller institutions face in resolving problem loan portfolios.
Cyprus still needs to reduce its NPL ratio further to align with the EU average, which will require targeted policies addressing the root causes of the issue.
The restructuring grey zone
Loan restructurings at the end of November totalled €1.06bn, of which €541m remains classified as non-performing. Under EBA rules, a restructured NPL does not automatically return to performing status.
It stays in the non-performing category under monitoring for at least 12 months, even if the borrower meets all payments under the new schedule. As a result, some restructured loans continue to appear as non-performing even when borrowers are no longer in default.
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