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In the latest financial report, Bank of Cyprus has reported a solid profit of €401 million for the first nine months of 2024—a 15% jump from last year’s €349 million. This increase reflects strategic successes, such as a higher lending rate and increased deposit base, yet it brings a mix of benefits and challenges for Cypriot citizens and the broader economy.
On the bright side, the bank’s boost in profits and lending may create new opportunities for businesses and individuals alike. Over €1.7 billion in new loans were issued from January to September 2024, a 9% rise compared to last year. This growth in lending, particularly to small businesses and homeowners, is expected to fuel economic expansion, create jobs, and provide individuals more access to housing and business development opportunities. Meanwhile, customer deposits at the bank rose to nearly €20 billion, with a substantial 56% of these deposits insured by the Deposit Guarantee Fund. For everyday Cypriots, this means enhanced security for their savings, giving them a greater sense of financial stability.
The bank’s overall stability is another positive sign. Its Liquidity Coverage Ratio stands at a robust 312%—well above the regulatory minimum—reflecting strong financial health and a buffer against potential economic shifts. For Cyprus, this implies a resilient financial institution able to support the economy through uncertain times and keep funds available to its customers.
However, not all aspects of the report are purely positive. Operating costs have risen by 5% compared to last year, primarily due to increased personnel expenses. This uptick in costs could impact the bank’s efficiency, potentially affecting future profitability and reducing funds available for expanding services. Non-interest income, including fees and commissions, also dropped by 9% year-over-year, reflecting a decrease in revenue from financial services outside traditional lending. This dip may limit the bank’s ability to invest in new products or improve customer service.
Additionally, there are slight shifts in lending costs. While interest rates have been cut, funding costs have edged up, resulting in a minor decrease in quarterly net interest income. For individuals and small businesses seeking new loans, this may mean a slight tightening of credit availability, adding a layer of caution to what otherwise looks like strong lending growth.
The bank remains confident, however, in its ability to maintain robust returns and continue supporting Cyprus’s economic health. CEO Panikos Nikolaos emphasized this confidence by noting the bank’s strong liquidity and diverse business model, even as it navigates a changing interest rate landscape. Looking to the future, Bank of Cyprus has also strengthened its market position by listing on the Athens Stock Exchange—a move expected to enhance share trading and improve its presence in European financial markets. With high profitability and planned dividends set to return in 2025, shareholders could also benefit from the bank’s continued financial growth.
As Bank of Cyprus moves forward, its choices reflect a blend of opportunities and caution. Cypriot citizens may see increased financial security and lending opportunities, while potentially facing cost pressures as the bank adjusts to ongoing economic conditions. The bank’s success, therefore, could signal both growth and caution for those watching Cyprus’s evolving economic landscape.
