Bank of Cyprus Delivers Strong Profits and Raises Shareholder Returns Amid Solid Economic Growth

The Bank of Cyprus announced on Tuesday that it achieved a profit after tax of €353 million for the nine months ended September 30, 2025, maintaining stable profitability and reinforcing shareholder confidence amid continued economic resilience.

“We are pleased to announce another set of strong financial results, generating in the first nine months of 2025 a profit after tax of €353m,” said Bank of Cyprus CEO Panicos Nicolaou. “This performance reflects the resilience of our net interest income, amid the prevailing interest rate environment, strong liquidity, and good cost efficiency,” he added.

For the third quarter alone, profit after tax reached €118 million, consistent with previous quarters, reflecting steady momentum. The bank’s cost-to-income ratio stood at 35 per cent, underscoring improved efficiency, while return on tangible equity (ROTE) climbed to 18.4 per cent during the period. Basic earnings per share came in at €0.81, confirming the institution’s ongoing profitability.

New lending reached €2.2 billion in the first nine months of 2025, marking a 31 per cent year-on-year increase, largely driven by international and corporate loan demand. Gross performing loans rose to €10.71 billion, a 6 per cent increase since December 2024.

“During the first nine months of 2025, we saw healthy balance sheet growth in customer lending and deposits,” Nicolaou said. “We granted €2.2 bn of new loans in the first nine months of 2025, 31 per cent higher than the prior year driven mainly by international and corporate demand,” he added. “Our gross performing loans increased by 6 per cent year to date,” he continued, “underpinned by 4 per cent broad based loan growth in Cyprus and the buildup of our international book, a pleasing performance ahead of our approximately 4 per cent loan growth target for 2025.”

The bank also recorded a continued improvement in asset quality, as the non-performing exposure (NPE) ratio declined further to 1.2 per cent, while the cost of risk remained contained at 35 basis points. Deposits, primarily retail-funded, stood at €21.5 billion, representing a 7 per cent annual increase and reflecting sustained customer trust in the institution.

The group maintained a strong capital position, with a Common Equity Tier 1 (CET1) ratio of 20.5 per cent and a total capital ratio of 25.4 per cent, including third-quarter profits net of distribution accrual. Organic capital generation reached 326 basis points in the first nine months, demonstrating the bank’s robust internal capital creation ability.

In addition, the bank successfully refinanced €300 million in Tier 2 notes at a lower coupon rate of 4.25 per cent, strengthening its funding structure. In line with its shareholder value strategy, the Bank of Cyprus distributed an interim dividend of €0.20 per ordinary share in October 2025. The institution reaffirmed its full-year target of a 70 per cent payout ratio, underscoring its confidence in sustainable earnings.

“We have maintained strong capital position, with a CET1 ratio and Total Capital ratio of 20.5 per cent and 25.4 per cent respectively as at September 30 2025, generating 326 bps of capital organically and after accruing a distribution at 70 per cent payout ratio,” Nicolaou said. “Our tangible book value per share of €5.86 grew by 6 per cent year on year, after paying €0.20 interim cash dividend per share, bringing the total cash dividends distributed in 2025 to €0.68 per share,” he added.

Management expressed a positive outlook for the broader economy, emphasizing that growth in Cyprus continues to outperform the Euro area average. The bank attributed this to a strong domestic economy and favorable business conditions.

“We continue to operate in a supportive macroeconomic environment that is resilient and growing,” Nicolaou stated. He pointed out that, according to the Finance Ministry’s latest projections, Cyprus’ GDP is expected to expand by 3.2 per cent in real terms in 2025, surpassing the Eurozone average.

“Capitalising on this strong performance, we are raising our 2025 ROTE target today to high-teens from mid-teens and we are reaffirming our distribution target of 70 per cent payout ratio in respect of 2025 earnings which is at the top-end of our distribution policy,” Nicolaou said. “Likewise, we now expect our ROTE, based on 15 per cent CET1 ratio, to exceed 20 per cent in 2025,” he added.

“Our disciplined execution of our strategy, our track record of delivery on our targets, and our strong levers reinforce our confidence in the outlook, and we look forward to updating our strategy and financial targets in the first quarter of 2026,” Nicolaou said. “We remain committed to supporting our customers and the broader Cypriot economy, with an unparalleled focus on continuing to deliver attractive returns to our shareholders,” he emphasized.

When asked about the factors driving loan growth, Nicolaou explained that the expansion was fueled primarily by corporate and international demand, while clarifying that the loan base remains concentrated within Cyprus. In response to questions on interest income, he noted that despite the European Central Bank’s rate cuts, overall income remained stable, supported by growth in both loans and deposits.

Addressing the evolving banking landscape in Cyprus, Nicolaou expressed optimism about the Bank of Cyprus’ model and its technological progress. “Competition is something that concerns us but I do not believe that this is the competition of the banks; in the coming years competition will mainly come from technology,” he said.

Regarding the next phase of the bank’s digital transformation, he explained that efforts so far have focused on individual customers, who now enjoy a full range of services through the Bank of Cyprus mobile application. The upcoming stage, he said, will target corporate clients and businesses, enabling them to take out loans or open new accounts through the same digital process as retail customers.

Finally, Nicolaou revealed that a chatbot service is expected to launch in the first quarter of 2026, allowing customers to submit any queries directly through the application, further enhancing accessibility and user experience.

By fLEXI tEAM