Filenews 15 January 2025
There are four important highlights of the banking system, as reflected in two different sections of financial data announced by the Central Bank, which essentially show that banks are having their best season in terms of results.
The first important highlight is that the profits of the banking system at the end of the nine months of 2024 amounted to €952.50 million. And quite easily the profit of €1,261,601 recorded in 2023 can be exceeded for the full year.
In the first half of 2024, banks' profits amounted to € 602.92 million. The updated data released by the Central Bank show in the most graphic way how much the banking sector benefited from the ECB's policy to raise interest rates in 2022, resulting in high revenues in the net interest income category due to the gap between lending rate and deposits.
More specifically, the profits of the banking system in 2022 were €171.40 million, at the end of 2021 it recorded losses of €70.60 million. and in 2020 losses amounted to €149.56m. In 2019 profits amounted to €171.62 million, in 2018 to €143.67 million. and in 2017 the banking system recorded losses of €721.39m.
The second important point of the data announced by the Central Bank is that net interest income of Cypriot banks amounted to €1.53 billion at the end of the nine months. from €1.03 billion in the first half of 2024 and €519.19 million. end of March 2024. At the end of 2023, net interest income amounted to €1.91 billion, in 2022 it was €976.04 million, in 2021 it reached €920.60 million. In 2020 net interest income was €250.75 million, in 2019 it was €307.92 million, in 2018 it was €1 billion. and in 2017 at €1.45 billion.
The third important element that cannot go unnoticed is the reduction of risk from non-performing loans on bank balance sheets. End-September 2024, the ratio of NPEs (non-performing loans) to total loans decreased further to 6.5% or €1.6 billion from 6.9% or €1.7 billion at end-June 2024.
The NPE coverage ratio with bad provisions increased to 55.7% or €0.9 billion at the end of September 2024 compared to 55.0% or €0.9 billion at the end of June 2024. The decrease in NPEs in the third quarter of 2024 is mainly attributable, in order of importance, to the following factors: 1) loan repayments (including debt-to-asset swaps (real estate), 2) positive transfers of loans that have been successfully restructured and reclassified as performing loans after the end of the surveillance/monitoring period and 3) write-offs (carried out either in the context of restructurings and usually concern amounts for which pre-existing bad debt provisions exist in the accounts of credit institutions, or concern unconventional "accounting" write-offs against amounts already included in provisions).
