Cyprus’ banking sector recorded a significant decline in profitability in the first nine months of 2025, with total profits falling by €237 million year-on-year, the Central Bank of Cyprus reported on Tuesday.
Sector profits dropped to €716 million in September 2025, down from €953 million in September 2024. The Central Bank attributed the decrease primarily to a reduction in net interest income, which had been boosted in previous years by rising interest rates but is now stabilising.
Total assets continue to grow
Despite the decline in profits, total banking sector assets increased during the third quarter. Assets rose by €835 million, or 1.2%, climbing from €66.976 billion in June 2025 to €67.811 billion in September 2025. The Central Bank said the increase was driven mainly by higher volumes of loans and advances.
CET1 ratio dips marginally
The sector’s Common Equity Tier 1 (CET1) ratio recorded a slight decline of 0.2 percentage points in the third quarter, falling from 26.3% in June 2025 to 26.1% in September 2025.
According to the Central Bank, the decrease reflects an increase in total risk exposure, which offset a parallel rise in CET1 capital. Even after this adjustment, Cyprus’ CET1 levels remain comfortably above EU supervisory requirements.
The data will feed into broader assessments of banking sector resilience as 2025 draws to a close, with profitability and balance sheet composition expected to remain key areas of scrutiny going into 2026.