The pandemic had a less severe impact on the Cyprus banking system’s capital adequacy in the second quarter of 2020, as banks front-loaded provisions from the beginning of the outbreak.
According to consolidated data published by the Central Bank of Cyprus for Q2, the banking system’s CET1 capital declined marginally by €44 mln to €4.48 bln compared to €4.52 bln at the end of Q1.
Banks front-loaded provisions to factor in risk associated with the coronavirus pandemic in the first three months, as CET1 declined by €134 mln in Q1 compared with the end of 2019.
Banks are protected from the inflow of non-performing loans due to a moratorium on debt repayment in place since March by government decree.
The loan payment holiday scheme expires at the end of December.
Furthermore, risk-weighted assets, which show the banking system’s risk exposure, declined to €26.15 bln in Q2 from €26.95 bln in Q1.
Bank profitability continued in negative territory with total cumulative losses in Q2 amounting to €103 mln with net losses reaching €79 mln, according to the CBC data.