Nicosia: The need to safeguard Cyprus' financial stability and economic resilience amid significant geopolitical and domestic challenges was highlighted on Tuesday, during the Annual General Meeting of the Association of Cyprus Banks, held in Nicosia, in the presence of the Finance Minister and the Central Bank Governor.
According to Cyprus News Agency, speakers at the meeting underscored the country's positive economic indicators, including GDP growth of 3.8% in 2025 and the strong capital position of the banking sector, while also sending clear messages about the need for long-term strategic thinking over short-term gains. A recurring theme throughout the event was the concern over legislative interventions relating to foreclosures, with several speakers referring to the recent opinion issued by the European Central Bank (ECB), which warned of fiscal risks and a potential erosion of the payment culture.
Addressing the meeting on behalf of the President of the Republic, Minister of Finance Makis Keravnos emphasized that the banking sector remains strong and well-capitalized, with the Common Equity Tier 1 (CET1) ratio standing at 25.1% in March 2026. He noted that although profitability declined compared to 2024 due to changes in interest rates, banking sector profits still reached approximately pound 1 billion in 2025. Keravnos expressed a preference for bank profitability to come more from healthy lending to businesses in productive sectors rather than from interest rate differentials resulting from European Central Bank monetary policy.
In a message delivered by Democratic Rally MP Savia Orphanidou on behalf of House President Annita Demetriou, it was stated that Cyprus' banking sector has shown remarkable resilience, adaptability to challenges, and compliance with demanding European and international regulations. Orphanidou highlighted that the positive results in financial stability and profitability bolster confidence in the banks and the Cypriot economy.
Governor of the Central Bank of Cyprus, Christodoulos Patsalides, noted that geopolitical risk, climate change, challenges of the green transition, cybersecurity threats, and the rapid development of Artificial Intelligence are now critical determinants of banking resilience and financial stability. Patsalides stressed the importance of prioritizing long-term resilience over short-term gains and emphasized the need for continuous investment in technological infrastructure, operational resilience, human capital, and strategic adaptability.
Cyprus Banks Association Chairman Panicos Nicolaou highlighted that the stability of the financial system is not guaranteed and recalled the major challenges faced by the banking sector. He noted that banks managed these challenges through disciplined decision-making and timely investments in technology, creating a resilient and mature banking system.
Director General of the Association, Marios Skandalis, pointed out that Cyprus has faced serious domestic crises such as the wildfire in mountainous Limassol and the outbreak of foot-and-mouth disease, which had direct economic consequences. Skandalis stated that banks supported the economy, customers, society, and affected communities during these crises.
On the issue of foreclosures, Minister of Finance Makis Keravnos, Central Bank Governor Christodoulos Patsalides, and Cyprus Banks Association Chairman Panicos Nicolaou addressed non-performing loans and legislative initiatives. Keravnos mentioned that the government has promoted legislation for stable and effective management, providing additional tools for borrowers and enhancing debt restructuring opportunities. He also noted the ECB's serious concerns about the potential extension of financial risks into fiscal risks.
Patsalides emphasized that the state should not underestimate the risks from legislative measures affecting the banking sector, aligning with the ECB's opinion on the matter. He warned that recent amendments to the foreclosure framework might erode financial discipline and undermine financial stability and public finances.
Chairman Panicos Nicolaou criticized populist proposals for suspending foreclosure procedures and highlighted the ECB's stance against interventions without impact assessments. He warned that non-performing loans outside the banking system continue to weigh heavily on the economy and urged stakeholders to address the issue from a sustainability perspective.