Profitability of Cyprus’ systemic banks in the second quarter of 2023 was the second strongest in the Eurozone, according to latest data released by the European Central Bank (ECB).
And this highlights again their benefit from raising lending rates and keeping deposit rates at very low levels, Philenews reported on Thursday.
According to ECB’s published supervisory banking statistics on significant institutions for the second quarter of 2023, return on equity (RoE) of Cyprus’ systemic banks rose to 26.3% compared to 26.7% in the first quarter of the year.
In the second quarter of 2022 it had only risen to 6.9% – a very low rate because the ECB had yet to start raising interest rates.
Return on equity of significant euro area banks rose further in the second quarter of 2023 to 10.8%, from 10.2% in the first quarter – almost exclusively due to an increase in net interest income.
The report also shows that Croatia’s banking system led the way in return on equity, with the ROE ratio at 28.7% at the end of June, year-on-year. The lowest RoE ratio (7.8%) is that of the French banking system.
RoE is a financial indicator that shows how efficiently a company uses its capital to generate additional revenue.
It is used as an indication of a company’s efficiency, i.e. how much profit it can generate using the resources available invested by its shareholders and its reserves. In terms of non-performing loans (NPLs), the ratio at Cyprus’ systemic banks stood at 2.8% in the second quarter of 2023, compared to 2.9% in the first quarter of 2022 and 3.6% in the second quarter of 2022.