Filenews 11 February 2026 - by Theano Thiopoulou
The number of good performers in banks is increasing and the number of loans that are in arrears in instalment payment for more than 90 days (3 months) is decreasing, while the non-performing loans ratio remained stable at 2.1% in November, as in October, while in December 2024 the ratio was at 3.1%.
Loans for which the instalment is not paid for three months decreased to €887 million end of November 2025 from €891 million in October and €1.19 billion at the end of December 2024.
The picture is clearly improved in the last five years if we take into account that in 2020 loans in this category were €3.93 billion. A delay in instalment payment of more than 90 days damages both the borrower and the bank.
The customer is charged an additional default rate, which can reach very high levels, depending on the contract and the type of loan, and the interest rate changes dramatically. In addition to the interest rate, after 3 months additional costs may be imposed on the customer for managing the delay. For banks, these loans should be transferred to the category of non-performing loans, which implies greater provisions for bad debts, thus a greater commitment of funds for any future risks.
According to data published yesterday by the Central Bank, total non-performing loans at the end of November 2025 were €1.06 billion out of total loans of €51.59 billion, the lowest amount in the banking system since joining the Eurozone based on the methodology used by the European Banking Authority.
Despite progress, Cyprus needs to continue to reduce the NPL ratio to converge with the EU average and this requires targeted policies that address the root causes of the problem. The amount of non-performing loans is divided into €435 million to businesses and €393 million to households.
To clarify something that the Central Bank often refers to, progress in further reducing problem loans is uneven, with smaller banking institutions facing greater difficulties in resolving the relevant portfolios. Specifically, in 2024 the NPE ratio of less significant credit institutions stood at 21.0%, remaining significantly higher than the 3% recorded by the index of systemic banks.
But how did we get here, the red loans leaving the banks but the red borrowers remaining in the economy? The reasons are known. The banks solved the part of the equation that concerns them, that is, they reduced the toxic part of their loan portfolio, selling the red loans to credit acquiring companies. However, the problem of red borrowers has not been solved and based on the latest information from the Central Bank (June 30, 2025), about 70,000 borrowers have been transferred to credit acquiring companies, with the value of loans being close to €19 billion.
Another important element of the banking system is loan restructurings amounting to €1.06 billion at the end of November, of which those remaining in the category of non-performing loans are €541 million.
According to the European Banking Authority, when a non-performing loan is restructured, it is not automatically transferred to performing loans, but remains under monitoring under the category of non-performing loans for an additional period of at least 12 months, even if the borrower follows the new agreed repayment plan without delay.
Therefore, according to this definition, a part of the restructured loans appears as non-performing even if the borrower adheres to the new repayment plan.
