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12° Nicosia,
07 October, 2025
 
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Behind the numbers: Are Cyprus's non-performing loans just a makeup job?

A skeptical view on banking reforms reveals concerns about transparency and reality in the financial sector

Panayiotis Rougalas

Panayiotis Rougalas

Are there good makeup artists in Cyprus? Sometimes I wonder, but since I’m out of the fashion scene, I can’t say for sure. However, when I think back to the banking events of the last 15 years, then yes—at least in the banks, they exist.

By the end of June 2024, the ratio of non-performing loans (NPLs) to total loans dropped further to 6.9%, or €1.7 billion, down from 7.3%, or €1.8 billion at the end of March 2024. According to the Central Bank of Cyprus, the coverage ratio for NPLs with bad debt provisions increased to 55%, or €0.9 billion, compared to 53.3% at the end of March. The reduction in NPLs during the second quarter of 2024 is attributed to a series of factors, mainly loan write-offs, the sale of small non-performing loan portfolios, and loan repayments, including debt-for-asset swaps. Some loans successfully restructured have also been reclassified as performing after a monitoring period.

A skeptical friend of mine, who has insight and access to banking matters, occasionally mentions something fishy about the loans. When I ask what, he tells me that the ghost of non-performing loans is still "hiding in the closet," as he puts it in his Cypriot dialect. "Even if the data shows something else," he adds. According to him, banks and credit-buying companies are full of “makeup artists,” people who manipulate numbers to make everything look better. "They only show the positives," he says emphatically.

"The favorite word of the banks these days is 'restructuring,'" he highlights. He wonders how long banks and credit-buying firms will keep restructuring loans every six months just to avoid listing them as non-performing and waiting another 18 months to reclassify them. Then he shifts the conversation to these credit-buying companies, stressing that their game is already lost. "The losses they will record will be massive; their best option is to sell off everything at whatever price they can and leave the island," he claims.

To be honest, I’m tired of hearing him talk about such gloomy scenarios and painting a dark picture when the numbers say otherwise. And it's not like he’s naturally pessimistic. "I’m just being realistic," he explains.

Personally, I hope the NPL saga doesn’t repeat itself. I hope he’s wrong, and my friend is just talking nonsense. For all our sakes.

[This op-ed was translated from its Greek original]

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