Cyprus has seen a significant improvement in its financial health, with the ratio of nonperforming loans (NPLs) dropping to 6.5% by the end of September 2024. This translates to a total of 1.6 billion euros, marking a decrease from the 6.9% recorded at the end of June 2024, which stood at €1.7 billion. The Central Bank of Cyprus (CBC) shared this positive development in a recent announcement.
Another encouraging trend is the rise in the coverage ratio of NPLs with provisions, which climbed to 55.7% (€0.9 billion) in September 2024, up from 55% in the previous quarter. This suggests that credit institutions are becoming more resilient, better equipped to handle potential losses.
The CBC highlighted several key factors driving this reduction in NPLs during the third quarter of 2024. Loan repayments, including innovative debt-to-asset swaps, played a prominent role.Additionally, the successful restructuring of loans led to their reclassification as performing loans after the end of the surveillance period. loan write-offs, often linked to restructuring efforts, also contributed to this positive shift. These write-offs typically involve amounts that are already accounted for in credit institutions’ loan loss provisions or non-contractual “accounting” set-offs.
By the end of September 2024, the total volume of restructured loans across authorized credit institutions reached €1.3 billion. Though,it’s worth noting that €0.7 billion of these loans remain classified as NPLs, indicating that while progress has been made, there’s still work to be done in managing these financial challenges.
