Bank of Cyprus Holdings saw its nine-month profits drop 12% to €353 mln, from €401 mln in the same period a year earlier, pressured by lower interest income, down by €76 mln year-on-year.
However, the island’s biggest lender, whose hegemony is being challenged by Eurobank’s takeover of rival Hellenic Bank earlier this year, raised its full-year targets and boosted revenue thanks to non-interest income from fees and its star insurance subsidiaries.
Loan growth and fee income helped offset the impact from lower interest rates, and the bank now expects its full-year return on tangible equity (ROTE) to increase from a “solid” 18.4% for the January-September period to an optimistic 20%. Despite after-tax profits for the third quarter remaining flat at €118 mln, basic earnings per share (EPS) were 81c.
As a result, the bank’s management is confident of maintaining a generous dividend ratio of 70%, having already paid out an interim 20c a share for the first half of 2025 on October 20.
This has boosted the stock value from €4.34 year ago, and is currently trading at around €7.80, having touched a year-high of €8.16 on September 30. The bank’s current market cap is seen at €3.31 bln.
CEO Panicos Nicolaou said in a statement on Tuesday that during the first nine months, “we saw healthy balance sheet growth in customer lending and deposits. We granted €2.24 bln of new loans, 31% higher than the prior year, driven mainly by international and corporate demand.
On the other hand, non-performing exposures (NPEs) fell to 1.2% of gross loans, down from 2.0% at the end of 2024, with a €35 mln portfolio sale expected to be completed in the fourth quarter.
“Our gross performing loans increased by 6% year to date [to €10.71 bln], underpinned by 4% broad-based loan growth in Cyprus and the buildup of our international book, a pleasing performance ahead of our 4% loan growth target for 2025. Our deposit base rose by 7% year-on-year to €21.5 bln as at September 30.”
“We look forward to updating our strategy and financial targets in the first quarter of 2026,” Nicolaou concluded.
Total income amounted to €767 mln for 9M2025 (down 7% from €828 mln for 9M2024) mainly due to lower net interest income. Total income in the third quarter alone amounted to €258 mln, up 1% q-o-q.
Staff costs were up 3% y-o-y at €156 mln and include €8.2 mln performance-related pay accrual and €4.7 mln termination cost (compared to €7.6 mln in bonuses, commissions, etc. and €7.2 mln termination cost).
A third of non-interest income for the nine-month period amounted to €219 mln (up 7% from €204 mln y-o-y) comprised mainly net fee and commission income of €133 mln, net foreign exchange gains and net gains on financial instruments of €26 mln, as well as the steady annual contribution of €36 mln from the wholly-owned insurance companies EuroLife and General Insurance.
The 4% year-on-year increase in the net insurance profits from €35 mln in 9M2024, reflects increased premiums, as well as the contribution from the acquisition of 100% of Ethniki Insurance Cyprus which was completed in July 2025, despite higher claims in the non-life insurance business, arising from the wildfire in Limassol district in July this year.
“The Group’s insurance companies and have been providing recurring income, remaining valuable and sustainable contributors to the Group’s profitability,” the bank said in its financial report.
Return to Greece
As of late 2024, Bank of Cyprus maintained its lead as the largest lender on the island, but the combined entity of Eurobank and the acquired Hellenic Bank (which in turn absorbed the ‘good bank’ of the Cooperative in 2018) is expected to become the new largest bank in the country.
Eurobank completed its takeover of Hellenic Bank on September 1, with the acquisition of 100% of the shares, ending a cycle that started in mid-2024, through share purchases at prices ranging from €2.56 to €4.84.
Eurobank’s total investment for the Hellenic Bank takeover, including the acquisition of all shares and a voluntary exit plan, is estimated at €1.3 bln, while the purchase of CNP Insurance and CNP Cyprialife, rebranded ERB Insurance and ERB Cyprialife, is seen as a serious challenger to the Bank of Cyprus Group’s domination in the sector.
This has prompted the bank’s management to reconsider a return to Greece, initially through a representative office.
Bank of Cyprus left Greece in 2013 when, following the Cypriot banking crisis, its Greek operations were sold to Piraeus Bank. This was part of a larger bailout for Cyprus, which required the bank to sell off its Greek network and sought a rescue from its shareholders, twice.
Based on comments and actions during the past two years, Bank of Cyprus is actively focusing on increasing its presence in the Greek market, primarily to attract more investors. This is part of a broader growth strategy to solidify its position within the EU and increase its visibility for long-term, sustainable growth and value creation.
In September 2024, Bank of Cyprus switched its stock market listing from London to the Athens Stock Exchange to access a broader investor base in a more complementary market. The ATHEX move was met with high investor interest, with trading volume on the Athens bourse surpassing that on the Cyprus Stock Exchange on the first day.
Finally, according to reports, the bank issued loans worth €400 mln to Greek companies last year and aims to increase its total loan portfolio outside Cyprus to €1.5 bln in the medium term.
Despite the bank’s post-bailout recovery and return to growth, profitability and a healthy balance sheet, in tandem with the Cypriot economy’s resilience and strong GDP growth in recent years, rating agencies remain cautious about the island’s, and subsequently the bank’s short- and medium-term risks.
That being said, rating agencies acknowledged the bank’s continued asset quality improvements, expectations for a solid profitability and strong capital metrics.
In February this year, S&P upgraded the long-term issuer credit rating of the Bank of Cyprus to the investment grade BBB- from BB+ and revised the outlook to stable from positive.
In March, Fitch Ratings upgraded long-term issuer default rating to the investment grade BBB- from BB+, whilst maintaining the positive outlook. And in May, Moody’s upgraded the bank’s long-term deposit rating at A3 (from Baa1) and revised the outlook to stable from positive, the highest long-term deposit rating since 2011.
Bank of Cyprus has received similar ratings upgrades to investment grade from Morningstar DBRS and Capital Intelligence.
