Panayiotis Rougalas
Despite the European Central Bank (ECB) preparing for its sixth interest rate cut since June 2023, bank profits in Cyprus have soared, marking two consecutive years of record earnings. While 2023 was already considered a milestone year, with total bank profits slightly exceeding €1.1 billion, 2024 has been even stronger, approaching €1.2 billion. Specifically, profits have already surpassed €1.16 billion, and for smaller banks, the reported earnings for 2024 only account for the first half of the year.
Even though five interest rate cuts have already taken place since June—when the ECB began easing its monetary policy—and a sixth is expected in the coming days, 2024 is set to go down in history as the most profitable year for banks. With the upcoming ECB rate reduction, the deposit rate is expected to settle at 2.5%, making it unlikely that 2025 will match the profit levels of 2023, let alone 2024, which saw an additional €100 million in earnings compared to the previous year.
The strong profitability in 2024 was largely due to high interest rates in the first half of the year. Until June 2024, when the first rate cut was implemented, banks operated with a 4% base deposit rate and a 4.5% main refinancing rate. By 2025, these had dropped to 3% for the deposit facility rate and 3.15% for the main refinancing rate. Since January 2025, there has already been a 25-basis-point rate cut, with another expected in early March.
Breakdown of Bank Profits
Bank of Cyprus recorded the highest earnings, reporting €508 million in profits for 2024, compared to €487 million in 2023. The role of interest rates in this growth is evident, as net interest income reached €822 million in 2024, up from €792 million the previous year—an annual increase of 4%. According to the bank, this rise was mainly due to higher interest rates on liquid assets and loans, along with increased liquidity. These gains were partially offset by a moderate rise in deposit costs and financing expenses, as well as hedging-related costs.
Hellenic Bank also posted strong results, with profits reaching €382.6 million in 2024, up from €265.4 million in 2023. Net interest income for 2024 stood at €598.9 million, a 12% increase from €536.3 million in 2023. Hellenic attributed this rise primarily to higher interest income from its loan portfolio, driven by increased lending rates during the first three quarters of 2024. Higher interest income from securities also contributed, though higher deposit costs due to increased interest rates offset some of these gains.
Eurobank Cyprus, part of Eurobank S.A. in Greece, reported adjusted net profits of €210 million in 2024, up from €199.4 million the previous year—an increase of 5.1%.
Among smaller banks, financial results were available only for the first half of 2024:
- Astrobank posted profits of €19.5 million, up from €11.1 million in June 2023.
- Alpha Bank Cyprus recorded €29.9 million in profits, down from €38.2 million in June 2023.
- Ancoria Bank reported €4.2 million in profits, compared to €8.3 million at the end of 2023.
National Bank of Greece (Cyprus) has not yet released its 2024 results, but its 2023 profits stood at €5.6 million.
Overall, the banks mentioned above are expected to double their 2023 profits in 2024, while the National Bank of Greece (Cyprus) is likely to maintain a similar performance to the previous year.
Cheaper Loans on the Horizon
The ECB has repeatedly emphasized that interest rate cuts by its Governing Council will gradually make borrowing more affordable for businesses and households. However, financial conditions remain tight, as monetary policy is still restrictive and past rate hikes continue to affect outstanding loans. Some expiring loans are also being renewed at higher interest rates.
While economic challenges persist, rising real incomes and the gradual easing of monetary policy effects are expected to support demand recovery over time. The ECB’s Governing Council remains committed to ensuring inflation stabilizes at its 2% medium-term target, making policy decisions on a meeting-by-meeting basis based on available data.
*This article was translated from its Greek original
