The profitability of the Cyprus banking sector soared by an annual 644% in 2023, reaching €1.27 billion, driven by the high-interest environment, according to data released by the Central Bank of Cyprus (CBC).

The CBC’s Aggregate Cyprus banking sector data revealed a 97% increase in net interest income for 2023, climbing to €1.92 billion from €0.98 billion in 2022. This rise in the banks’ interest income was propelled by the successive interest rate hikes implemented by the European Central Bank to curb inflation, which surged in 2022 following Russia's invasion of Ukraine and the subsequent energy crisis.

Furthermore, taxation paid by banks also surged by 160%, amounting to €166 million in 2023, compared to €64 million in 2022.

Additionally, the Cypriot banking sector's Common Equity Tier 1 Capital at the end of 2023 increased to €4.6 billion, up from €3.86 billion the previous year. This growth was largely attributed to the banks' internal capital generation capacity, bolstered by high profits.