Cypriot banks are ranked second-to-last among European banks in terms of interest paid on total household deposits, according to data published by the European Banking Authority (EBA) on Wednesday. This information was released as part of the EBA's annual risk assessment of the European banking system.

In contrast, Cypriot banks are in second place among European banks regarding the return on their own capital.

Specifically, the EBA data shows that Cypriot banks paid an interest rate of just 0.0417% on household deposits in 2023, up from 0.0158% in 2022, positioning them second-to-last in Europe. Bulgarian banks are at the bottom with an interest rate of only 0.0018%.

Conversely, banks in Liechtenstein hold the top position for the highest deposit interest rates for households at 2%, followed by banks in Iceland (1.7%), Poland and Norway (1%), Romania (0.9%), Hungary (0.8%), and France, Luxembourg, and the Czech Republic (0.7%).

Cypriot banks also rank second in Europe in terms of the return on their own capital in 2023, which reached 26.3%, up from 6.9% in 2022.

Hungarian banks lead with a return on equity of 28.7%, up from 5.1% in 2022, followed by Latvian banks at 25.8%. Lithuanian banks (25.3%) and Romanian banks (23.3%) are also in the lead.

Overall, the EBA report emphasizes that the EU banking sector remains resilient despite the risks arising from changes in interest rates, stating that "the EU banking sector has proven resilient following the banking turmoil in March 2023."

It mentions that banks' capitalization remains high, with the average Common Equity Tier 1 (CET1) ratio at a robust 16%, and profitability has supported bank payouts.

The report also notes that increased interest rates have so far supported the expansion of interest margins but may have reached a turning point.

The EBA highlights that the quality of banks' assets "remains strong," yet subdued economic growth and higher interest rates pose risks.

It adds that liquidity remains high but has begun to normalize from the elevated levels recorded during the COVID-19 pandemic.

Lastly, the EBA notes that market funding costs have increased, but deposit rates "have remained comparatively low and may rise in the future."