Bank of Cyprus reported strong profitability, accelerating credit expansion and further balance sheet strengthening in the first quarter of 2026, as the lender signalled confidence in the resilience of the Cypriot economy and outlined plans for enhanced shareholder distributions despite ongoing geopolitical uncertainty.
According to results announced on Monday, profit after tax reached pound 121 million for the quarter ended March 31, 2026, while Return on Tangible Equity (ROTE) stood at 18%. Basic earnings per share amounted to pound 0.28, with the cost-to-income ratio remaining low at 37%, reflecting continued operational efficiency.
Net profit rose 3% year-on-year despite pressure on interest income from a lower interest-rate environment.
Loan growth remained robust, with new lending reaching pound 829 million during the quarter, up 9% compared with the previous quarter. Performing loans increased by 2% quarter-on-quarter to pound 11.1 billion.
Deposits remained stable at pound 22.3 billion, with the funding base continuing to be primarily retail-driven. On an annual basis, deposits increased by 8%, or approximately pound 1.6 billion, compared with the first quarter of 2025.
Asset quality continued to improve, with the non-performing exposure ratio declining to 1.1% of total loans. Loan credit losses recorded a net credit of 17 basis points following a reversal linked to a specific client.
The group’s capital position remained particularly strong, with the CET1 ratio reaching 20.7% and the total capital adequacy ratio standing at 25.5%. Organic capital generation reached 114 basis points during the quarter.
The bank also announced a number of strategic initiatives aimed at diversifying its business model and expanding its balance sheet.
These include an agreement with Cyprus Development Bank to acquire a portfolio of performing loans of approximately pound 150 million and deposits of around pound 500 million, subject to regulatory approvals expected by year-end.
In parallel, the bank agreed to acquire a 26% stake in Wealthyhood, strengthening its presence in digital investment services. Chief Executive Officer Panicos Nicolaou said a new investment application developed through the partnership is expected to be launched by June, offering customers access to equities and ETFs in international markets, Cyprus and Greece.
Commenting on the results, Nicolaou said the group had ‘started the year strongly’, supported by stabilisation in net interest income and disciplined cost management.
He added that the bank’s business model continued to generate strong organic capital, while maintaining strict lending criteria despite increased loan demand.
Nicolaou also stressed the resilience of the Cypriot economy, saying growth continued to outperform the eurozone average despite global geopolitical instability.
‘There is economic activity even during periods of crisis,’ he said, adding that Cyprus currently has sufficient ‘buffers’ and flexibility to manage external shocks.
The CEO defended the bank’s shareholder distribution policy, arguing that payout levels remain aligned with European banking standards and are supported by the bank’s strong capital position.
For 2026, Bank of Cyprus is targeting total distributions of up to 90% of adjusted profitability, comprising an ordinary distribution of 70% and up to 20% additional distributions.
The bank has proposed a final dividend of pound 0.50 per share, subject to shareholder approval at the upcoming Annual General Meeting on Friday.
Nicolaou also indicated that from 2026 onwards the bank aims to operate consistently at the upper end of its ordinary distribution range, while assessing additional distributions annually depending on market conditions and capital needs.
Addressing broader economic conditions, he stressed the importance of maintaining Cyprus’ credibility and stability in order to attract foreign investment, warning that confidence remains critical for a small economy heavily reliant on international capital inflows.
The bank also confirmed plans to establish a representative office in India, with applications already submitted to the Central Bank of Cyprus and subsequently to Indian regulators. Nicolaou said the approval process could take 12 to 18 months.
He added that the group’s international expansion strategy remains cautious, with the bank aiming to gradually increase the share of its foreign loan portfolio from 13% currently to 15% over time.