Big bank profits, bigger plans for shareholder payouts

Banks operating in Cyprus and Greece reported nine-month results that lay solid foundations for a strong 2027. Profits topped €1 billion in some cases, helped substantially by net interest income as interest rates moved in the banks’ favor.

Bank of Cyprus reported a profit of €383 million for the nine months. Eurobank posted €1.16 billion, of which €356 million came from Cyprus. Alpha Bank reported net profit of €779 million, including €79 million from its Cypriot subsidiary. National Bank of Greece posted €996 million and gave no breakdown of Cyprus’ contribution.

The headline profit figures tell only part of the story. In previous years, bank profits came with two unwelcome companions: high costs and nonperforming loans. Until roughly five to seven years ago, banks could report millions in profits while costs still exceeded half their profits and they had to keep securing collateral to protect themselves against troubled loans.

That picture has changed considerably. Nonperforming loan ratios at banks in Cyprus and Greece are now in the low single digits, and banks have taken significant steps to cut costs. Bank of Cyprus, Eurobank Ltd. and Alpha Bank Cyprus have rolled out targeted voluntary exit schemes to reduce staffing in selected departments as part of a broader shift toward upgrading their technology.

Banks aim higher

Cyprus’ three systemically important banks have paired strong results with ambitious targets. Bank of Cyprus expects a return on tangible equity, or ROTE, in the mid-teens over 2026–2028. That would translate into a return of more than 20% if calculated using a Common Equity Tier 1 capital ratio of 15%.

The bank expects net interest income to reach about €765 million in 2026, reflecting faster and larger interest rate increases and strong growth in loans and deposits in the nine months ended Sept. 30. Loan growth had already exceeded the full-year target of more than 5% by the end of September, supported by domestic demand and measured expansion of lending in its international business. The loan portfolio is expected to grow at a high single-digit rate for the full year, excluding the cdbBank deal. The bank also lowered its 2026 cost-to-income forecast to below 40%, after adjusting for the special levy on deposits and other fees and contributions, citing strong income and continued control over costs.

For Alpha Bank, Cyprus is its second most important market and one of the fastest-growing sources of revenue in its strategy through 2030, which group CEO Vassilis Psaltis presented at the bank’s Investor Day in Athens. Cyprus’ share of group net profit is expected to rise from about 6% to about 10% by 2030.

Alpha Bank plans to grow lending in Cyprus by about 13% a year, against projected market growth of 4% to 5%. It also plans to move from selling individual products to serving a wider range of each customer’s needs. Gains from the AstroBank acquisition, together with higher revenue, are expected to bring the cost-to-income ratio down from about 56% on a pro forma basis in 2025 to about 44% by 2030. Growth is expected to come from mortgages, lending to small businesses, wholesale banking and selected international and shipping finance. The group is also investing again in its own insurance products to capture more of the value from that business.

Eurobank said adjusted net profit in Cyprus fell 3.9% from a year earlier to €356 million, while profit in Bulgaria rose 9.2% to €182 million. Total assets stood at €114.2 billion on Sept. 30, including €66.9 billion in Greece, €29.4 billion in Cyprus and €14.8 billion in Bulgaria.

Loans grew organically by €3.8 billion in the first nine months of 2026, with €2 billion of that growth in Greece and €1.8 billion in operations outside Greece. Total outstanding loans before provisions reached €59.1 billion on Sept. 30, including €38.6 billion in Greece, €9.3 billion in Cyprus and €10.1 billion in Bulgaria. Across the group, business loans stood at €37.1 billion, mortgages at €13.1 billion and consumer loans at €5.3 billion. Customer deposits rose by €4.7 billion over the nine months to €87.2 billion, including €48.5 billion in Greece, €24.3 billion in Cyprus and €11.7 billion in Bulgaria.

Dividends take priority

Banks are returning a growing share of their profits to shareholders. The payout ratio has become a measure of success, a way to show current and prospective investors that a bank is financially sound and can keep generating profits.

For 2026, Bank of Cyprus is targeting a regular payout of 70%, the upper limit under its distribution policy, plus a special dividend of up to 20%. That would bring the total payout to as much as 90% of adjusted profit before one-off items. For 2027 and 2028, the group is targeting a regular payout of 70% and a special dividend of up to 30%, bringing the total to as much as 100% of adjusted profit before one-off items each year.

In 2026, Eurobank approved a final dividend of €258.7 million, following an interim dividend of €170 million paid in November 2025. Alpha Bank distributed a further €0.0656 per share in July 2026, after paying an interim dividend of €0.0485 per share in December 2025. National Bank of Greece paid a final dividend of €264 million in 2026, following an interim dividend of €200 million in 2025.

For 2027, Alpha Bank is aiming to return 60% of net profit to shareholders, while Eurobank expects a payout of at least 55%, including dividends and share buybacks. National Bank of Greece’s payout ratio is expected to reach about 50%.