Cyprus’s non-performing loan (NPL) ratio held steady at 2.1% in November 2025, unchanged from October and down sharply from 3.1% at the end of December 2024, according to data published by the Central Bank yesterday.
Total NPLs at the end of November stood at €1.06bn out of a total loan book of €51.59bn — the lowest level recorded in the Cypriot banking system since the country joined the eurozone, based on European Banking Authority methodology.
Loans overdue by more than 90 days fell to €887m at the end of November, down from €891m in October and €1.19bn at the end of December 2024. The improvement is even starker over five years: in 2020, loans in this category stood at €3.93bn.
Of the €1.06bn in total NPLs, €435m relates to businesses and €393m to households.
The cost of falling behind
Missing loan payments for more than 90 days hurts both borrower and bank.
For the borrower, penalty interest kicks in — the rate can rise sharply depending on the contract and type of loan — and additional management fees can be imposed after the three-month threshold.
For the bank, the loan must be reclassified as non-performing, triggering larger provisions against bad debts and tying up more capital against future risk.
The problem banks solved — and the one they didn’t
The headline figures mask a more complicated picture. Banks cleared their part of the problem by selling distressed loans to credit acquisition companies, reducing the toxic portion of their portfolios.
But the underlying problem for borrowers was never resolved. According to the Central Bank’s most recent data as of 30 June 2025, around 70,000 borrowers have been transferred to credit acquisition companies, with the value of those loans close to €19bn.
Progress is also uneven across the sector, as the Central Bank has noted. In 2024, the NPL ratio at less significant credit institutions stood at 21.0% — far above the 3% recorded by systemic banks — reflecting the greater difficulty smaller institutions face in resolving problem loan portfolios.
Cyprus still needs to keep cutting its NPL ratio to bring it in line with the EU average, which will require targeted policies to address the root causes of the problem, according to the source.
The restructuring grey zone
Loan restructurings at the end of November totalled €1.06bn, of which €541m remains classified as non-performing. Under EBA rules, a restructured NPL is not automatically reclassified as performing.
It stays in the non-performing category under monitoring for at least a further 12 months, even if the borrower is meeting every payment under the new agreed schedule.
As a result, a portion of restructured loans continues to appear as non-performing even where the borrower is no longer in default.