Increased interest income from successive interest rate hikes by the European Central Bank significantly boosted Cypriot banks’ profits in the first quarter of 2024, with the Bank of Cyprus reporting a 31% increase in net interest income and Hellenic Bank seeing a 40% rise.
Astrobank is opening a new branch in the Dali area in Nicosia, which is considered an underserved location with no existing banking facilities. The bank will seek regulatory approval from the Central Bank of Cyprus to distribute dividends and aims to reduce non-performing loans to single digits by July. Astrobank has a capital adequacy ratio of 23.7% and has already met the Minimum Requirements for Own Funds and Eligible Liabilities. The bank is optimistic about the future and is open to acquisitions and evaluating new opportunities in the banking sector.
Fact: Legislators in Cyprus discussed government bills to harmonize current legislation on loan transfers with an EU directive on credit servicers and credit purchasers.
Kedipes has announced a new repayment plan for non-performing loans that would be secured by a primary residence with a market value of up to €350,000. Eligible borrowers can fully repay their loan obligations by paying an amount calculated with a significant percentage discount on the market value of the mortgaged residence.
Capital Intelligence has revised upwards the sovereign ratings for Cyprus due to a faster than projected decline in general government debt, consistent primary fiscal surpluses, proactive debt management, progress in clearing up non-performing loans in the banking system, and declining government contingent liabilities from the banking sector.
Capital Intelligence Ratings has revised its long-term foreign currency rating outlook for the Republic of Cyprus from stable to positive. The government’s debt has been reduced due to consistent primary fiscal surpluses and proactive debt management.
– Finance Minister Makis Keravnos and Cyprus Central Bank Governor Constantinos Herodotou discussed a potential decrease in interest rates by the European Central Bank during 2024.
– They agreed that interest rates are likely to fall before the end of the year, barring unforeseen events.
– Herodotou mentioned the positive trajectory of the Cypriot economy, which was echoed by Keravnos.
– Inflation in Cyprus was at 8.1% in 2022, peaking at 10.6% in July, then falling to 1.9% in December 2023, with a minimal increase expected in January due to the base effect.
– The positive progress in inflation was attributed to monetary policy and targeted support measures.
– Increased uncertainty exists due to geopolitical developments, including attacks on the Suez Canal and the situation in the Middle East.
– Herodotou indicated that interest rate cuts are expected within 2024, but cautioned against reducing them too soon to avoid a resurgence of inflation.
– The majority of Cypriot consumer products are imported from European countries, but the economy is affected by issues such as cruise ship tourism due to regional instability.
– There has been a decrease in the prices of basic products, including fuel, in Cyprus.
– Despite interest rate hikes, a surge in non-performing loans (NPLs) has not occurred, partly due to measures ensuring banks consider borrowers’ repayment capacity and increased savings.
– A new framework for NPLs has seen a positive response from borrowers and includes a stable foreclosure framework with a safety net.
– Banks and credit acquisition companies have restructured £2.4 billion worth of loans in 2023.
– The CBC, in collaboration with the Ministry of Finance, is working on a plan to help smaller banks reduce their NPL ratios, which is currently in its second phase.