Eurobank highlights Cyprus role in regional growth plans

Cyprus integration boosts Eurobank profits to €738m in first half of 2026 Eurobank posted higher profitability for the first six months of 2026, with the banking group highlighting Cyprus as one of its three core growth markets while reporting stronger lending, deposits and capital levels despite a more challenging international environment. According to the bank’s interim report published on Wednesday, net profit attributable to shareholders reached €738 million in the first half of 2026, up from €691 million a year earlier, while adjusted net profit increased to €776 million from €711 million. The bank said Cyprus continued to play a pivotal role in its international operations, both through earnings and through the integration of the former Hellenic Bank and insurance businesses, which are expected to deliver additional synergies over the coming years. Eurobank explained that following the completion of the legal mergers between Hellenic Bank and Eurobank Cyprus, as well as between the former Hellenic Bank and CNP insurance companies during 2025, the operational integration of the businesses is now underway to create unified platforms for the enlarged entities. The group also said it expects international operations, including Cyprus, to contribute a larger share of earnings and business volumes, supported by the full realisation of these merger synergies. As part of its outlook, the bank identified Cyprus’ enhanced geopolitical role in the Eastern Mediterranean as one of the factors expected to support future growth alongside the country’s low unemployment rate and resilient economy. The report stated that Eurobank Limited now operates a network of 67 branches and business centres across Cyprus, offering retail banking, corporate banking, investment and insurance services. The group added that Cyprus remains an important pillar of its wider international strategy as it seeks to expand its presence across the Eastern Mediterranean, the Middle East and South Asia. In May 2026, Eurobank opened a representative office in Mumbai, India, marking its first institutional presence in the country. The India office is intended to strengthen business links, attract investment and facilitate knowledge exchange between India, Greece, Cyprus and the broader European market. The opening also marked the launch of Eurobank’s cross-border remittance service between Greece and India through India’s Unified Payments Interface, with the service scheduled to be introduced in Cyprus at a later stage. The bank also outlined further developments in its Cyprus insurance operations. In May, Eurobank signed an agreement with Fairfax Financial Holdings to acquire the remaining 80 per cent of Eurolife FFH Life Insurance for approximately €813m, giving the group full ownership of the life insurance company upon completion. At the same time, Fairfax affiliates will acquire 45 per cent of the share capital of ERB Asfalistiki, Eurobank Limited’s non-life insurance company in Cyprus, for approximately €55m, with an option to acquire the remaining 55 per cent over time, subject to regulatory approvals and completion of transaction documentation. The bank said these insurance transactions are expected to increase group fee and commission income by around 12 per cent, lifting the contribution of asset management and insurance activities to more than 30 per cent of total fee income. Cyprus also featured prominently in the group’s economic outlook. The report said Cyprus’ economy expanded by 3.0 per cent year on year in the first quarter of 2026, slowing from 4.3 per cent in the previous quarter, mainly because of weaker net exports. However, domestic demand strengthened, with private consumption accelerating to 4.9 per cent while unemployment fell to a record first-quarter low of 4.0 per cent. The European Commission expects Cyprus’ economy to grow by 2.3 per cent in 2026 and 2.7 per cent in 2027, after expanding by 3.8 per cent in 2025. Eurobank also pointed to continued strength in the island’s property market. The report said real estate sales volumes increased by 14.7 per cent in 2025 and continued to rise by 14.1 per cent year on year between January and April 2026, supporting the outlook for the construction sector. Although tourism weakened following the conflict involving Iran, the bank said Cyprus’ ICT, financial and professional services exports were expected to remain resilient. After tourist arrivals reached a record level in 2025 and increased by 9.1 per cent during the first two months of 2026, arrivals fell by 28.6 per cent in March and April before the decline eased to 4.9 per cent in May, raising expectations of a moderate summer recovery. The report added that inflation accelerated sharply after the outbreak of the conflict, reaching 4.1 per cent year on year in June, compared with 0.9 per cent in February, largely because of higher energy prices despite lower VAT on electricity. It also highlighted Cyprus’ public finances, stating that the country recorded a budget surplus equal to 3.4 per cent of GDP in 2025 for a fourth consecutive year, while public debt declined to 55 per cent of GDP. Across the wider group, total assets increased to €113 billion at the end of June from €108 billion six months earlier. Gross customer loans rose to €58.1bn, while deposits increased to €86.4bn. At the same time, the group’s net loan-to-deposit ratio remained stable at 66 per cent. Moreover, pre-provision income reached €1.14bn, while core pre-provision income increased by 7.7 per cent to €1.1bn. Net interest income rose by 6.1 per cent to €1.34bn, supported by loan growth, larger investment bond holdings and improved liquidity in Bulgaria following euro adoption measures. Fee and commission income climbed by 13.5 per cent to €414m, with insurance income benefiting from the consolidation of the former CNP Cyprus insurance businesses from the second quarter of 2025. Operating expenses increased by 7.8 per cent to €662m, reflecting higher staff costs, regulatory charges, inflationary pressures and increased investment in information technology. In addition, the group’s cost-to-income ratio improved slightly to 36.6 per cent. The stock of non-performing exposures remained broadly unchanged at €1.4bn, while the NPE ratio edged down to 2.5 per cent from 2.6 per cent at the end of 2025. During the second quarter, Eurobank revised its criteria for identifying certain euro-denominated retail loans as unlikely to pay, resulting in approximately €330m of loans being reclassified as non-performing. Part of these exposures was included in Project Moon II, involving the planned disposal of secured non-performing retail loans with a gross carrying amount of around €374m, expected to be completed in 2027. The bank also confirmed that Eurobank Limited completed its transaction with state-owned asset management company Kedipes on January 30, 2026, following receipt of all regulatory approvals, including clearance from Cyprus’ competition authority. The transaction resulted in the removal of the non-performing loans from the group’s balance sheet, the termination of the asset protection scheme and a €6.5m gain. The group’s total regulatory capital increased to €11bn, with a total capital ratio of 20.0 per cent, comfortably above regulatory requirements. Its Common Equity Tier 1 ratio stood at 15.1 per cent, while the consolidated minimum requirement for own funds and eligible liabilities ratio improved to 30.82 per cent. Looking ahead, Eurobank said it aims to achieve a return on tangible book value close to 17 per cent in 2026, increase earnings per share by more than 10 per cent, generate around €2bn in core profitability and maintain shareholder distributions above 50 per cent, subject to regulatory approval. The bank said those targets would be supported by approximately €4.5bn in organic loan growth, stronger fee income, continued digital transformation, disciplined cost management and sustained low levels of non-performing exposures across its core markets.