According to a Central Bank of Cyprus press release, in his keynote speech, the CBC Governor, Constantinos Herodotou, stated that climate risk poses a significant challenge for the banking sector. He emphasized on both physical and transition risks, highlighting the need for banks to increase their efforts in integrating climate challenges into their risk management practices and policies. This includes analyzing and segmenting their portfolios, understanding customers' transition strategies, and gathering climate-related information on collaterals.

Mr. Herodotou added that banks’ climate risk management is a top priority on CBC’s agenda. Moreover, the roadmap of the European Supervisory Authorities aim to embed climate and environmental risks in all banking and investment products and activities. This target will be achieved by updating and enhancing relevant parts of the supervisory and regulatory legal and operational framework.

The Governor mentioned that the EU's main objective is to boost banks’ green transition and enhance transparency, given that the Union’s aim is to achieve climate neutrality by 2050.

Later, Mr. Herodotou stated that green financial markets are experiencing rapid growth due to increased volumes of euro area ESG funds and green bonds. He highlighted that ESG assets nearly doubled from approximately 0.8 trillion euros in 2019 to 1.6 trillion euros in 2021. He emphasized the importance of promoting products that contribute to greening the economy, given the financial stability risks associated with climate change.

In regard to the steps taken by certain Cypriot banks towards their green transition, the Governor described this progress as a very positive development. However, he urged Cyprus’ banks to "act faster and more decisively" as they are still left behind compared to their European counterparts in that particular field.

On another matter, according to Mr. Herodotou, the CBC is leading the effort in boosting financial literacy in the country. He emphasized that individuals' ability to understand and manage effectively their finances extends to sustainability issues. Given that market trends focus on green bonds, green loans, and the risk of greenwashing, individuals need to develop skills and acquire knowledge about regulations, norms, and standards for products and services that meet sustainability standards. This will allow them to make prudent and well-thought decisions about their personal financial matters.

Furthermore, the Governor claimed that the CBC strongly supports the Global Money Week in Cyprus, an annual public-awareness campaign coordinated by the OECD. The campaign aims to promote informative and educational acts about sustainable finance products, and plays a key role in integrating ESG factors into the individuals’ everyday financial decisions.

In conclusion, Mr. Herodotou stressed that the challenges related to climate and environmental risks require immediate action and significant upfront investment. “Complacency is not an option”. He expressed his confidence that the Cypriot banking sector will adhere to all relevant regulatory and supervisory expectations and remain resilient to climate and environmental challenges that lie ahead.

Meanwhile, the Bank of Cyprus announced profit after tax of €95 million for the first quarter of 2023 compared to €17 million for the corresponding period last year.

In a press conference on Tuesday, the Bank reported that net income from interest reached €162 million, an increase of 127% compared to last year. According to the Group’s Chief Executive, Panicos Nicolaou, “this year we have achieved a significant milestone: the fulfillment of our longstanding commitment to resume dividend payments after 12 years. This represents an important step for the Group’s intention to deliver sustainable profitability and shareholder returns."

Despite persistent inflation and successive challenges in the global and European economic environment, the Cypriot economy continues to demonstrate its strength, growing by 2.8% in 2023, according to the recent European Commission’s spring forecast. “Cyprus is expected to outperform the Eurozone average,” Panicos Nicolaou added.

Furthermore, he said that “we have closed the previous chapter on the restructuring effort and have started a new chapter in which we aim to provide sustainable returns to shareholders, while continuing to serve our customers, support the Cypriot economy and contribute to the community.”

"We look forward to presenting our results and discussing all relatable matters on our Group’s financial outlook, at our Investor Update, on 8 June 2023”, the Chief Executive concluded.