The overall solvency ratio of the Cypriot banking industry was 21.2 percent at the end of September 2022, the highest level since data collection began by the Central Bank of Cyprus (CBC).
According to the central bank's major aggregated financial indicators for the private banking sector, published this week, the indicator has improved by 60 basis points since the second quarter of 2022.
Furthermore, there has been a 90 basis point increase year on year.
The Common Equity Tier 1 (CET1) increased by 0.5% between June 2022 and June 2023, reaching 18%, with an annual improvement of 80 basis points.
The improvement in the banking sector's capital ratio is mostly due to a reduction in risk on the balance sheets of Cypriot banks.
According to the data, boosting bank efficiency is a critical ongoing problem, as the cost-to-income ratio continued to rise, reaching 82.6 percent at the end of September 2022, up from 71.7 percent at the end of June of the same year.
In terms of income sources, net interest income accounted for 74.3 percent of total income at the end of September, up from 70.1 percent in the previous quarter, indicating the ECB's monetary policy normalisation course, which began in July 2022.
Net fee and commission income was 29% at the end of September, up 0.3% from the previous quarter and 4% higher when compared to the same quarter in 2021.
In terms of the assets of the Cypriot banking industry, there is a convergence of cash deposited in central banks and total loans.
Total loans were for 41.2 percent of total assets at the end of September 2022, up from 41.5 percent at the end of June.
Cash deposited with central banks stood for 37.3 percent of total assets, up from 36.9 percent at the end of June last year.
This convergence indicates the banking sector's ongoing deleveraging following the financial crisis of 2012-2013.
In September 2012, deposits in central banks accounted for only 5.5 percent of total assets, while total loans accounted for 79.5 percent.
By fLEXI tEAM