The profitability of Cyprus’ banking sector decreased by 23.6% during the first quarter of 2026, falling to €202 million from €264 million in the same period last year, the Central Bank of Cyprus (CBC) reported. This €62 million decline was primarily driven by a reduction in net interest income and losses from foreign exchange differences. Despite the profitability drop, the total assets of the banking sector increased slightly by 0.4%, reaching €70.23 billion by March 31, 2026, up from €69.96 billion at the end of 2025, largely due to growth in loans, advances, and debt securities holdings.

Meanwhile, the banking sector’s Common Equity Tier 1 (CET1) capital ratio fell by 0.7 percentage points to 25.1%. The CBC attributed this decline to an increase in total risk exposure that outweighed the rise in CET1 capital, resulting in a lower capital adequacy ratio. The updated data reflect the challenges faced by Cypriot banks in maintaining profitability amid fluctuating income sources and rising risk exposures.