The Cypriot banking sector continues to shed its legacy of ‘bad debt’, with the latest figures showing a marked improvement in asset quality. According to fresh data released by the Central Bank of Cyprus (CBC) on Tuesday, February 10, 2026, the ratio of Non-Performing Loans (NPLs) fell to 4% as of late November 2025.
This figure, which excludes loans to central banks and other credit institutions, represents a steady decline from the 4.2% recorded just one month earlier in October.
Inside the €1.06 Billion Debt Pool
Despite the overall downward trend, the total volume of non-performing debt remains significant, standing at €1.06 billion out of a total loan portfolio of €51.59 billion.
The CBC also noted that banks have aggressively pursued debt restructurings to manage risk. Approximately €1.06 billion in loans have undergone restructuring; however, over half of these, roughly €541 million are still classified as non-performing under current regulatory standards.
Sector Disparities: SMEs Face Higher Pressure
While the national average is improving, the burden of bad debt is not distributed equally across the economy. Small and medium-sized enterprises (SMEs) are currently experiencing the highest level of financial strain.
| Loan Category | NPL Ratio (Nov 2025) | Market Sentiment |
| National Average | 4.0% | 📉 Improving |
| Non-Financial Corps | 4.0% | ↔️ Stable |
| Households | 4.7% | ↔️ Stable |
| SMEs | 6.1% | 📈 Increasing |
The 6.1% ratio for SMEs highlights the specific challenges faced by smaller local businesses in maintaining debt sustainability compared to larger corporations.
Coverage and Provisioning
To protect against potential defaults, Cypriot banks maintain a high coverage ratio, the amount of money set aside in provisions to cover bad loans. As of November 2025, this coverage stood at 70.4%.
Although this is a slight decrease from the 70.7% recorded in October, it remains one of the more robust buffers in the region, ensuring that the banking system is well-insulated against sudden shocks.
The Alternative View: EBA Methodology
Using the stricter European Banking Authority (EBA) risk dashboard methodology, which includes loans to central banks and other credit institutions, the NPL ratio remained completely stable at 2.1%. This lower figure is often used by international investors to compare Cyprus’ financial stability against other Eurozone members.
Source: Stockwatch.com.cy