Filenews 6 October 2025 - by Theano Thiopoulou
Driven by the resilience of the economy, the positive interest rate environment and the consolidation of their balance sheets, the financial system of Cyprus has entered a new phase that can support economic growth and compare particularly favourably with the average European indicators.
Let's look at some elements that have drastically changed the banking system:
The total assets of the banking sector in June 2025 amounted to €67 billion, an increase of €3.7 billion compared to the same period last year. The increase was mainly due to a rise in loans (€3.5 billion) and bonds (€1.7 billion), which offset decreases recorded in cash (€1.2 billion) as well as other assets (€0.3 billion). The banking system is financed almost exclusively by deposits without reliance on liquidity lines, either from the markets or from other financial institutions.
Another important element is that the largest share of deposits comes from households, which ensures a wider dispersion and enhances the stability of the deposit base. An important element that highlights the health of banks is the Liquidity Coverage Ratio, which measures the ability of a credit institution to cover net liquidity outflows over a period of 30 days, under conditions of intense financial pressure, using high-quality liquid assets.
The liquidity coverage ratio of the Cypriot banking sector stands at 335% in June 2025, well above the supervisory threshold. A liquidity coverage ratio greater than or equal to 100% (supervisory minimum) indicates that the bank has sufficient liquidity to fully cover the estimated 30-day outflows, enhancing the confidence of depositors and supervisors in the financial system.
It should be noted that it is a key supervisory indicator established in the context of the Basel III reforms, with the aim of strengthening the short-term resilience of banks to liquidity crises.
