Cyprus Property News magazine for overseas buyers & real estate investors

Thursday 16th July 2020
Home News Banks helped by increased building permits

Banks helped by increased building permits

Cyprus Banks helped by increased building permitsA SUSTAINED increase in demand in building permits will assist Cypriot banks to improve their asset quality in the real estate sector, rating agency Moody’s says, as building permits in Cyprus reach a new high since the 2013 banking crisis.

The Statistical Service of Cyprus released data showing that the number of building permits issued in the country during the first four months of 2017 reached their highest level since the 2013 banking crisis.

According to Moody’s, during the first four months of 2017, 1,861 building permits were issued, 8% more than the year-earlier period. The increase is the result of a 38% increase in building permits for the construction of new homes, while the total value of permits issued in the first four months of 2017 was 36% higher than in 2016.

“Although Cypriot banks continue to face significant asset quality challenges, a sustained increase in demand for building permits would be a credit-positive indication of an improving operating environment for the construction and real estate industries,” the agency said in its bi-weekly credit outlook.

Moody’s added it expects that “recovering demand for new real estate and overall improvement in the sector will increase construction companies’ cash flows, with positive implications on banks’ asset quality in the construction and real estate sectors, which constituted approximately 18% of gross loans as of March 2017.”

The agency pointed out that non-performing exposures (NPEs) in these sectors, based on the Central Bank of Cyprus’ assessment of troubled loans using the European Banking Authority’s broad definition, declined to 56.4% in March 2017 from 73.0% in November 2014, with the recovering construction and real estate sectors accelerating asset quality improvements.

Furthermore, Moody’s believes that of the large domestic banks, Bank of Cyprus, the island’s largest lender, is likely to benefit most from an improvement in these sectors, which accounted for 31% of gross loans as of March 2017.

Through debt to asset swaps, the bank’s Real Estate Management Unit (REMU), has acquird €1.4 billion of property, an amount that constitutes 6% of total assets and is the largest share of any Cypriot bank, Moody’s added.

“A gradually recovering property market would facilitate REMU’s sale of these assets and reduce the likelihood of the bank recording losses,” the agency pointed out.

However, the agency noted that “notwithstanding the improving operating environment, it will take time for Cypriot banks to rehabilitate their balance sheets because of the long cure periods for restructured loans before they are reclassified as performing, and the substantial volumes of distressed debt, with system-wide NPEs at 45% of gross loans as of March 2017.”

– Cyprus News Agency

Further reading

Moody’s Credit Outlook – 13 July 2017 (pages 12 & 13)


  1. Good going!! This should make banks stronger and better to facilitate another Bank Robbery.

    Keep robbing the people and selling land to foreigners for Visas.

    I will immigrate out of Cyprus soon thank God.

    Thieves, Banksters, and a pack of wolves at the top allowing nobody to get anywhere.

  2. So, the only way Cyprus can keep inching towards the ‘black’/away from the ‘red’ is by piling more concrete onto its land?

    What a sad end to a once-beautiful island.

Comments are closed.



EUR - Euro Member Countries


COVID-19 hits new homes in Cyprus

Permits for the construction of new homes in Cyprus fell by more than a half during April; the second month during which the COVID-19 containment measures continued to apply.

Cyprus’ largest ever housing project will help low-income families

Limassol municipality and the Land Development Corporation (KOAG) reached an official agreement on Thursday regarding the establishment of the largest housing project ever undertaken in Cyprus, worth €100 million.

Corrupt lawyers continue to plunder estates

Corrupt lawyersin Cyprus continue to plunder the estates of their deceased clients by calculating their fees for administering estates on the Cyprus Bar Association's 'Minimum Fee Regulations', which were abolished in 2018

Cyprus house price index up 2.5 per cent

The Cyprus house price index rose by an average of 2.5 per cent in the first quarter of 2020 compared to the previous quarter according to official figures from the Cyprus Statistical Service (CYSTAT)