Middle East conflict threatens Cyprus growth outlook, economics research centre warns

Cyprus’ economy is expected to grow by 3.2 per cent in 2026, up from a previous forecast of 2.7 per cent, as stronger-than-expected economic activity and improving business confidence offset mounting inflationary pressures linked to the conflict in the Middle East, according to a report published by the University of Cyprus’ Economics Research Centre (CypERC) in October.

The latest projections point to economic growth moderating from 4.8 per cent in 2025 to 3.2 per cent in 2026 and 3.1 per cent in 2027, with rising prices and tighter monetary conditions expected to weigh on activity over the coming quarters.

The revised 2026 forecast is 0.5 percentage points higher than CypERC’s July estimate, while the projection for 2027 remains unchanged.

The upward revision reflects stronger-than-expected growth during the second quarter of 2026, alongside favourable developments in the third quarter, including improved economic confidence, low unemployment and continued growth in new housing loans.

However, the research centre warned that the outlook remained vulnerable to geopolitical developments, with the Middle East conflict intensifying inflationary pressures and increasing the risk that economic growth could fall short of expectations.

Inflation is expected to accelerate sharply, rising from 0.1 per cent in 2025 to 3.1 per cent in 2026, before easing to 2.3 per cent in 2027.

The forecasts for 2026 and 2027 are respectively 0.1 and 0.2 percentage points higher than those published in July, reflecting rising international oil prices, strong domestic economic activity and persistently low unemployment.

Economic activity remains robust

Cyprus’ economy continued to expand faster than the European Union average during the second quarter of 2026, despite mounting inflationary pressures associated with the conflict in the Middle East.

Real gross domestic product (GDP) grew by 3.3 per cent year-on-year in the second quarter, accelerating from 3 per cent in the first three months of the year.

Real gross value added increased across all economic sectors, with growth accelerating in most industries compared with the previous quarter.

Information and communication activities remained among the fastest-growing sectors, although their expansion slowed for the fourth consecutive quarter. Growth in real estate activities and professional services also moderated slightly, extending the slowdown recorded during the first quarter.

Consumption growth strengthened further during the second quarter, driven primarily by increased government spending. Private consumption continued to expand above its long-term average, maintaining the pace recorded during the first quarter.

Investment also improved, with gross fixed capital formation continuing to grow on the back of increased spending on machinery and equipment and sustained investment in construction.

Both exports and imports recorded strong annual growth. However, net exports made a negative contribution to overall GDP growth because imports increased faster than exports.

Monthly indicators suggest that economic activity remained robust during the third quarter, although some data pointed to emerging challenges.

Retail trade volumes, card purchases and property sale contracts recorded between July and September indicated continued expansion. However, figures for motor vehicle registrations, new company registrations and tourist arrivals provided mixed signals about the strength of economic momentum.

The number of registered unemployed people continued to increase year-on-year throughout the third quarter, although the construction sector was a notable exception.

Nevertheless, the unemployment rate remained very low in August and well below the EU average, according to Eurostat.

The Economic Sentiment Indicator rose above its long-term average during the third quarter, reflecting stronger consumer and business confidence, particularly in services, retail trade and construction.

Companies’ employment expectations also strengthened, moving above their historical average. Economic uncertainty declined overall, although uncertainty among businesses in services and retail trade increased in September.

Consumers’ and companies’ expectations for future prices remained above their historical averages despite some easing during the quarter. Price expectations among consumers and manufacturing firms rose markedly in September.

Inflation and borrowing costs threaten growth

Consumer price inflation increased to 3.4 per cent in the third quarter of 2026, up from 2.8 per cent in the second quarter.

The acceleration was driven by higher prices for housing, water, electricity, fuels and transport, primarily reflecting rapid increases in international oil prices.

Food inflation also continued to add to domestic price pressures, exceeding the overall inflation rate for the third consecutive quarter.

CypERC warned that Cyprus’ heavy reliance on imported fossil fuels made its inflation outlook particularly sensitive to international oil prices, which are vulnerable to geopolitical developments.

The conflict in the Middle East continued to push up global energy prices during the third quarter, with the effects expected to feed through to the prices of goods and services over the forecast period.

Higher food prices are also expected to sustain inflationary pressures, with international food price indices increasing more rapidly during the third quarter than in the first half of 2026.

The report said rising prices had already put pressure on real incomes and were expected to restrain economic activity, particularly as labour market conditions normalised.

Inflation also increased in the euro area and the United Kingdom during the third quarter, potentially weighing on demand from Cyprus’ main trading partners, particularly for services.

Higher interest rates are expected to exert additional pressure on growth, with the effects becoming more pronounced during 2027.

Euro area key interest rates increased further in September in response to rising inflation linked to the Middle East conflict, while market interest rates had begun edging upwards in March and stood considerably higher in September 2026 than a year earlier.

Domestic interest rates on most loan and deposit categories were also higher in August than in the corresponding month of 2025.

CypERC expects tighter financing conditions to restrain both domestic demand and demand from euro area trading partners, with the effects gradually materialising in 2027 and becoming particularly evident after the first quarter.

The annual contraction in new corporate lending during January to August 2026 is also expected to weigh on growth prospects.

Nevertheless, the research centre said these pressures were being outweighed by the continued dynamism of the domestic economy, supported by recent national accounts data and leading indicators.

Continued growth in new housing loans and the banking sector’s strong liquidity and capital position were also supporting the outlook.

During the first eight months of 2026, the outstanding stock of loans recorded double-digit growth, while deposits expanded strongly, driven by rising domestic deposits.

However, the volume of new loans declined year-on-year over the same period because of contracting business lending, despite strong growth in housing loans.

The ratio of non-performing loans to total loans also declined further in June.

An exception to the broader increase in domestic borrowing costs was the interest rate on new corporate loans exceeding €1 million, which fell significantly in August to its lowest level in more than three and a half years.

Public finances provide support

Cyprus’ public finances remained strong during the first eight months of 2026, with the government recording a substantial budget surplus that exceeded the corresponding figure for 2025.

Government revenue increased robustly year-on-year, outpacing expenditure growth, while the public debt-to-GDP ratio continued to decline.

CypERC said the strong fiscal position was expected to support economic growth by preserving investor confidence amid rising government borrowing costs and helping cushion the effects of cost-of-living pressures.

International and domestic stock market indices also recorded further annual gains during the third quarter, while volatility remained relatively subdued.

The continued positive performance of equity markets was seen as a sign of economic resilience despite geopolitical tensions and elevated inflation. However, the report cautioned that these favourable effects could prove fragile if financing conditions tightened further and cost-of-living pressures intensified.

Growth forecasts remain vulnerable

The research centre said downside risks to economic growth continued to outweigh upside risks, with geopolitical tensions and potentially tighter financing conditions posing the main threats.

A prolonged conflict or further escalation in the Middle East could increase uncertainty, weaken external demand for services and discourage investment.

Further disruption to supply chains could also keep international commodity prices elevated, creating more persistent inflationary pressures and weighing more heavily on economic growth than currently anticipated.

Other risks include weaker-than-expected growth among Cyprus’ trading partners, financial market turmoil that could undermine investor confidence, climate-related events and fiscal challenges arising from higher government borrowing costs.

Conversely, stronger-than-expected growth could result from resilient demand, a longer tourist season, gradually easing inflationary pressures, government measures to mitigate the cost of living and investments not yet reflected in the available economic data.

CypERC’s forecasts remain broadly consistent with those of other institutions, although their projections differ slightly.

For 2026, the Central Bank of Cyprus and the International Monetary Fund expect GDP growth of 2.9 per cent, while the Finance Ministry forecasts 3.1 per cent.

For 2027, the Central Bank projects growth of 3.1 per cent and the IMF 3.2 per cent, while the Finance Ministry expects growth to moderate to 2.9 per cent.

Inflation risks remain tilted upwards

CypERC warned that upside risks to inflation continued to dominate, primarily because of the Middle East conflict and the possibility of further increases in international energy and commodity prices.

A prolonged period of high commodity prices could trigger second-round inflation effects, reinforcing price pressures, particularly while economic activity remains strong and unemployment low.

Other risks include robust wage growth if demand remains resilient, climate-related events that push up food prices and prolonged broad-based fiscal support measures aimed at mitigating the cost of living.

The research centre said such fiscal measures could contribute to higher-than-expected inflation, particularly given prevailing labour market conditions.

Downside risks to inflation include tighter euro area monetary policy and its cooling effect on demand, particularly if higher borrowing costs substantially reduce private and public spending.

Recently introduced fiscal support measures, including cuts to fuel excise duties and reductions in value added tax, could also lower inflation compared with current projections.

The gradual transition towards green technologies in Cyprus was identified as another factor that could help reduce inflationary pressures over the forecast period.

CypERC based its projections on quarterly national accounts data up to the second quarter of 2026, leading indicators covering the third quarter and monthly data available between July and September. The forecasts incorporated revised national accounts figures published on October 20, 2026.

Industrial producer prices in Cyprus rose by 6.2 per cent year-on-year in September 2026, driven mainly by higher electricity prices, according to figures released by the Cyprus Statistical Service (Cystat) on Friday.

The increase came as the Producer Price Index for Industry reached 130.5 points in September, using 2021 as the base year, marking a 2.3 per cent rise compared with August.

For the first nine months of 2026, industrial producer prices increased by 2.1 per cent compared with the corresponding period of 2025, indicating that price pressures across the industrial sector continued to build.

The strongest annual increase was recorded in electricity supply, where producer prices rose by 21.1 per cent compared with September 2025.

Water supply and materials recovery followed with an increase of 10.3 per cent, while manufacturing prices rose by 2.4 per cent and prices in mining and quarrying increased by 0.8 per cent.

The monthly figures also highlighted the influence of electricity costs, with electricity supply prices climbing by 10.5 per cent between August and September 2026.

Over the same period, prices in water supply and materials recovery increased by 1.7 per cent, while manufacturing recorded a more modest rise of 0.2 per cent.

Mining and quarrying prices remained unchanged compared with the previous month.

The figures suggest that electricity was the main contributor to the overall monthly increase, while annual price growth was evident across all four main industrial sectors.

Within manufacturing, several industries recorded particularly pronounced annual increases in September.

The largest rise was in the manufacture of computer, electronic and optical products, where producer prices increased by 13 per cent compared with the same month in 2025.

This was followed by the manufacture of basic metals and fabricated metal products, which recorded an increase of 5.6 per cent.

Prices in furniture manufacturing and repair and installation of machinery rose by 5.2 per cent.

The wood industry, including the manufacture of products made from wood and cork, excluding furniture, recorded an annual increase of 4.5 per cent.

Meanwhile, the manufacture of machinery and equipment, motor vehicles and other transport equipment saw prices rise by 2.9 per cent.

The increases across manufacturing categories indicate that price pressures were not confined to energy-related activities, but were also evident in a range of industrial production and equipment-related sectors.

The overall Producer Price Index measures changes in prices received by domestic producers for their industrial output and provides an indication of cost and pricing developments across the sector.

Cyprus household debt stood at €20 billion, equivalent to 53 per cent of gross domestic product (GDP), at the end of June 2026, while debt among non-financial companies reached €41.7 billion, or 111 per cent of GDP, according to figures released on Friday by the Central Bank of Cyprus (CBC).

The figures show that household indebtedness has fallen by 65 per cent since December 2016, while the debt-to-GDP ratio of non-financial companies has declined by 95 per cent over the same period, pointing to a substantial reduction in borrowing across both sectors.

Despite the improvements, corporate debt remained considerably higher than household debt, with non-financial companies carrying liabilities equivalent to more than the value of the country’s annual economic output.

The CBC reported that household financial assets totalled €67.1 billion at the end of June 2026, considerably exceeding their outstanding debt.

Cash, deposits and loans accounted for 54 per cent of these assets, while shares represented 25 per cent, other financial assets 17 per cent and debt securities the remaining 4 per cent.

The figures provide an overview of the financial position of households, businesses and institutional investors, including insurance companies, investment funds and pension funds.

For non-financial companies, financial assets reached €77.9 billion at the end of June, with shares accounting for the largest portion at 37 per cent.

Other financial assets represented 33 per cent of the total, while cash and deposits accounted for 24 per cent, loans for 5 per cent and debt securities for 0.6 per cent.

Meanwhile, the sector’s outstanding debt amounted to €41.7 billion, with its debt-to-GDP ratio standing at 111 per cent, representing a marginal decrease compared with the previous quarter.

The CBC’s comparison with December 2016 showed that the debt-to-GDP ratio of non-financial companies had fallen by 95 per cent, indicating a substantial improvement in the sector’s indebtedness over the period.

The central bank also provided a breakdown of financial assets held by insurance companies, investment funds and pension funds, highlighting the different ways in which these institutional investors allocate their holdings.

Insurance companies held financial assets worth €6.5 billion at the end of June 2026, with almost half of their portfolios invested in shares.

Equities accounted for 47 per cent of their financial assets, followed by debt securities at 26 per cent and other financial assets at 20 per cent.

Cash and deposits represented 6 per cent of the total, while loans accounted for the remaining 2 per cent.

Investment funds held €7.9 billion in financial assets, with their portfolios heavily concentrated in shares, which represented 80 per cent of their total holdings.

Loans and debt securities together accounted for 13 per cent, while cash and deposits represented 4 per cent and other financial assets the remaining 3 per cent.

Pension funds, meanwhile, held €5.1 billion in financial investments, with shares accounting for 59 per cent of their portfolios.

Other financial assets represented 9 per cent, debt securities 6 per cent, while cash and deposits accounted for 12 per cent and loans for 13 per cent.

The figures underline the significant role played by equities in the investment portfolios of insurance companies, investment funds and pension funds, although the composition of their holdings varies considerably.

Alpha Bank’s international operations recorded a normalised net profit of €79 million in the first nine months of 2026, up 13 per cent year-on-year, while the Greek banking group’s Cyprus operations incurred €17.5 million in provisions linked to a voluntary staff exit scheme.

The international division, which includes the bank’s business in Cyprus, generated a reported profit of €57 million, down 16 per cent year-on-year, while net interest income rose by 64 per cent and fee services income increased by 65 per cent over the same period.

Net loans across the international operations stood at €2.9 billion, while customer deposits reached €6.6 billion, with the division recording a return on tangible book value of 12.9 per cent during the nine-month period.

The group also recorded €0.7 million in integration costs in Cyprus, contributing to total operating expenses of €231.7 million for the group in the third quarter.

The Cyprus-related provisions and integration costs formed part of a wider period of restructuring and integration, as Alpha Bank continues to pursue its transformation and prepares to present its strategic priorities through to 2030 at an Investor Day scheduled for November 5.

At group level, Alpha Bank reported profit after tax of €268.9 million in the third quarter of 2026, bringing its total reported earnings for the first nine months to €766.1 million.

On a normalised basis, which adjusts for certain exceptional items, quarterly profit after tax reached €283.2 million, while nine-month earnings amounted to €778.5 million, representing a 14 per cent annual increase.

The group achieved a normalised return on tangible book value of 15.5 per cent in the third quarter, compared with 14.5 per cent over the first nine months, while earnings per share stood at €0.11.

Its Common Equity Tier 1 (CET1) capital ratio, a key measure of a bank’s ability to absorb financial losses, remained at 14.5 per cent at the end of both reporting periods.

Tangible book value per share stood at €3.52, while total tangible book value reached €7.9 billion, representing an increase of 2.1 per cent quarter-on-quarter and 4 per cent year-on-year, rising to 10.7 per cent before accounting for distributions.

The bank attributed its performance to sustained growth in lending and deposits, higher interest rates and contributions from its recent acquisitions.

Net credit expansion reached €400 million in the third quarter and €2.6 billion during the first nine months of 2026, supported by total loan disbursements of €3.1 billion.

The group’s performing loan book, excluding senior notes, expanded by 1 per cent quarter-on-quarter to €40.4 billion, representing annual growth of 13.1 per cent.

Deposits also continued to increase, rising by 2.5 per cent quarter-on-quarter, equivalent to €1.5 billion, with time deposits accounting for 29 per cent of the total.

The bank reported a deposit beta of 22 per cent, indicating the extent to which changes in market interest rates were reflected in the rates offered to depositors.

Total customer funds increased by 18.7 per cent year-on-year, supported by a 13.3 per cent rise in customer deposits and a 32 per cent expansion in assets under management.

The group’s loan-to-deposit ratio stood at 77 per cent at the end of September, while its non-performing exposure ratio remained at 3.8 per cent.

The cost of risk, which measures the expense of provisions against potential loan losses, stood at 43 basis points in the third quarter and 42 basis points across the first nine months.

Alpha Bank’s capital position remained stable despite the recognition of a €421 million dividend accrual during the first nine months of the year, supported by 124 basis points of organic capital generation.

Net interest income reached €472.2 million in the third quarter, increasing by €35.8 million, or 8.2 per cent, compared with the previous quarter.

The increase reflected higher income from loans and bonds, supported by growth in lending volumes and higher interest rates, while net interest income for the first nine months rose by 10.7 per cent year-on-year.

Chief executive officer Vassilios Psaltis said the latest results demonstrated the resilience of the group’s banking operations and the benefits of its recent acquisitions.

“Net interest income came to €472 million, the highest quarterly figure since the fourth quarter of 2017, reflecting the sustained growth in our loan book, and the step-up in rates,” Psaltis said.

“Fee income increased to €156 million, supported by cards and payments fees, and an uptick in asset management, following a softer second quarter.”

Fee services income amounted to €156.3 million in the third quarter, representing a 16.3 per cent decline compared with the previous three-month period.

However, the decrease largely reflected a higher comparison base in the second quarter, which had benefited from a dividend received from Prodea.

Excluding that contribution, fee services income increased by 6.2 per cent quarter-on-quarter, supported by stronger revenue from cards and payments and a higher contribution from asset management fees.

For the first nine months of 2026, fee income increased by 32.2 per cent year-on-year, or 25.4 per cent when excluding dividends from Prodea.

Total operating income reached €634 million during the third quarter, while the group said its cost-to-income ratio remained comfortably within expectations.

Recurring operating expenses declined by 3.6 per cent quarter-on-quarter to €231 million, reflecting a 9.3 per cent reduction in staff costs and a 7.2 per cent decrease in depreciation expenses.

These savings were partly offset by higher general and administrative expenses, mainly resulting from increased taxes, third-party fees and building costs.

However, recurring operating costs for the first nine months were 12.2 per cent higher year-on-year, largely due to increased staff expenses, alongside higher administrative and depreciation charges.

Psaltis said the group remained confident about its financial position despite an uncertain international economic environment.

“Despite the uncertain macroeconomic environment, we remain confident in the Bank’s financial strength. Our capital position is sound, our provisioning is prudent and our funding base is solid,” he said.

He also pointed to Greece’s economic performance, arguing that the country was in a stronger position than many other European economies.

“Greece currently occupies a distinct position compared to the majority of Europe, characterised by a robust fiscal trajectory, declining public debt and an investment pipeline that continues to expand,” Psaltis said.

He added that these conditions provided confidence that the foundations for the bank’s next phase of growth were firmly established.

The results follow a major rebranding initiative unveiled on October 12, which Psaltis described as marking the completion of an ambitious transformation programme.

“On October 12, Alpha Bank achieved a significant milestone as we unveiled our new brand identity and drew a line under our ambitious transformation,” he said.

“The new brand honours our nearly 150 years of history, is closely aligned with our new Purpose and Values, and accurately reflects our strategic positioning.”

Psaltis said the new identity reflected the bank’s progress in strengthening its operations and its relationships with customers, businesses and communities.

He added that the positive response from customers, employees and business partners had reinforced confidence in the group’s strategic direction.

Alongside the rebranding, Alpha Bank introduced two initiatives aimed at its employees, including a new programme providing medical insurance and home care for employees’ elderly parents.

The bank also announced salary increases for its Gold relationship managers across its branch network, with Psaltis describing the measures as part of its commitment to its workforce.

On the economic outlook, Alpha Bank said the Greek economy had remained resilient during the first half of 2026, with gross domestic product expanding by 1.9 per cent.

The bank expects the economy to grow by just under 2 per cent for the full year, followed by expansion of 1.7 per cent in 2027.

However, it warned that renewed geopolitical tensions had intensified energy-related inflationary pressures, while political and fiscal uncertainty in Europe could weigh on external demand and create tighter and more volatile financial conditions.

Psaltis said the group expected to outline its next strategic phase at its forthcoming Investor Day, where it will present priorities extending through to 2030.

“The financial performance evident in these results, in conjunction with the new identity we unveiled this month, provides a strong foundation upon which to embark on Alpha Bank’s forthcoming chapter,” he said.

“We have much to share, and we eagerly anticipate the dialogue on November 5,” Psaltis concluded.

The Cyprus Stock Exchange (CSE) has ratified the continued suspension of trading in the shares of the Reputation Exchange Plc, keeping the company off the Emerging Companies Market until December 21, 2026, unless it resolves its outstanding obligations earlier.

The decision was confirmed at a recent meeting of the CSE Council under Article 184 of the Cyprus Stock Exchange Law, following the initial announcement on October 15, 2026.

The suspension will remain in place for a further two months, unless the company addresses the issues that led to the trading halt.

These include its failure to maintain the services of a Nominated Adviser, as well as the non-submission and non-publication of its annual financial report for the year ended December 31, 2025 and its half-yearly financial report for the six months ended June 30, 2026.

The exchange said trading could resume before the deadline if the company fulfils these outstanding ongoing obligations.

Eurobank reported adjusted net profits of €1.21 billion in the first nine months of 2026, up 14.3 per cent year-on-year, with its operations outside Greece contributing almost half of the group’s earnings, despite a decline in profits from Cyprus.

The Greek banking group’s reported net profit rose by 12.4 per cent to €1.16bn, while earnings per share reached €0.31 and its return on tangible book value stood at 16.9 per cent.

Its non-Greek operations generated adjusted net profits of €555 million, accounting for 45.9 per cent of the group’s total, with Cyprus contributing €356 million and Bulgaria €182 million.

However, adjusted net profit in Cyprus fell by 3.9 per cent year-on-year, while the Bulgarian operation recorded an increase of 9.2 per cent.

Eurobank chief executive officer Fokion Karavias said the results had been achieved against an international backdrop of energy and inflationary pressures, alongside growing concerns over government deficits and debt.

“As Europe faces a severe energy and inflationary crisis with far-reaching political and social consequences, markets have brought concerns over fiscal deficits and rising public debt into focus,” he stated.

“Greece and Cyprus stand out in this environment, with strong primary balances of 3.3 per cent and 4.0 per cent of GDP, respectively, and rapidly declining debt levels,” Karavias added.

The bank’s loan portfolio expanded organically by €3.80bn, or 10.5 per cent, during the first nine months of the year, while customer deposits increased by €4.70bn, or 10.6 per cent, reaching €87.20bn at the end of September.

Managed funds also grew by 22.3 per cent year-on-year to €11.40bn, while private banking client assets and liabilities increased by 13.2 per cent to €15.90bn.

“Greece’s debt-to-GDP ratio is falling faster than any EU country, while Cyprus’s debt-to-GDP is down to 50 per cent. Bulgaria also benefits from a low public debt-to-GDP ratio of 33 per cent, while the euro adoption and the return of political stability further strengthen the country’s macroeconomic outlook,” Karavias said.

He said the group had continued to deliver organic growth, with its loan book expanding by 10.5 per cent annually and deposits increasing by 10.6 per cent year-on-year.

“As a result of the strong performance, the return on Tangible Book Value reached 17 per cent, with a pronounced contribution from our regional activities of nearly half of profit,” he added.

Karavias said the nine-month performance demonstrated the group’s ability to sustain organic growth and gave it confidence in meeting or exceeding its full-year targets.

“The 9M26 performance demonstrates our consistent ability to deliver organic growth and gives us confidence in meeting or exceeding our full-year targets,” he mentioned.

“The acquisition completion of Eurolife provides an additional growth engine, particularly in insurance and asset management,” he added.

The completion of the Eurolife FFH acquisition is expected to strengthen Eurobank’s insurance presence and diversification, while providing further opportunities in insurance and asset management.

The bank will distribute an interim dividend of €0.0599 per share on November 26, 2026, which Karavias said reflected its strong performance and prudent capital management.

Eurobank’s net interest income increased by 8.7 per cent to €2.07bn during the first nine months, while income from fees and commissions rose by 13 per cent to €630m.

The increase in fee income was mainly driven by higher revenues from lending, wealth management and insurance operations, and represented 76 basis points of total assets.

In the third quarter alone, net interest income rose by 5 per cent compared with the previous quarter, reaching €719m.

The bank attributed this to an increase in interest-earning assets and higher European Central Bank interest rates, with the average deposit facility rate standing at 2.29 per cent in the third quarter, compared with 2.04 per cent in the second quarter.

Core income grew by 9.7 per cent to €2.70bn, while total operating income increased by 10.8 per cent to €2.78bn.

Operating expenses rose by 6.9 per cent to €995m, but the cost-to-income ratio improved to 35.8 per cent from 37.1 per cent in the corresponding period of 2025.

Core pre-provision income increased by 11.4 per cent to €1.70bn, while overall pre-provision income rose by 13.1 per cent to €1.78bn.

Loan loss provisions declined by 5.5 per cent year-on-year to €224m, equivalent to 53 basis points of average net loans, while core operating profit before tax increased by 14.4 per cent to €1.48bn.

At the end of September, the group’s non-performing exposure ratio stood at 2.4 per cent, while provisions covered 81.9 per cent of non-performing exposures.

Total capital adequacy and Common Equity Tier 1 ratios stood at 20.4 per cent and 15.5 per cent, respectively, while tangible book value per share reached €2.65, representing an annual increase of 7.7 per cent.

The group’s total assets amounted to €114.20bn at the end of September, including €66.90bn in Greece, €29.40bn in Cyprus and €14.80bn in Bulgaria.

Gross loans totalled €59.10bn, comprising €38.60bn in Greece, €9.30bn in Cyprus and €10.10bn in Bulgaria.

Across the group, business loans amounted to €37.10bn, mortgages to €13.10bn and consumer loans to €5.30bn.

Deposits were distributed across Greece, Cyprus and Bulgaria at €48.50bn, €24.30bn and €11.70bn, respectively.

The loans-to-deposits ratio stood at 66.4 per cent, while the liquidity coverage ratio reached 174.4 per cent.

Despite the strong results, credit rating agency Morningstar DBRS has highlighted a potential deterioration in asset quality in the final quarter of the year.

The agency warned that loans affected by legislation concerning the conversion of Swiss franc-denominated loans could be reclassified as unlikely to pay during the fourth quarter.

Such a development could add around 40 basis points to Eurobank’s non-performing loan ratio and reduce its coverage ratio by 10 percentage points.

The Cyprus Stock Exchange (CSE) has extended the suspension of trading in the shares of Rianeson Investments Plc and G.A.P. Vassilopoulos Public Ltd for a further two months, until December 28, 2026, because both companies have outstanding financial reporting obligations.

The exchange announced on Friday that the suspensions would remain in force under Article 185 of the Securities and Cyprus Stock Exchange Law, as the reasons behind the original decisions had not been resolved.

Rianeson Investments has failed to submit and publish four outstanding financial reports, covering both annual and half-yearly periods.

These include its annual financial report for the year ended December 31, 2024, its half-yearly report for the six months to June 30, 2025, its annual report for the year ended December 31, 2025, and its half-yearly report for the six months to June 30, 2026.

G.A.P. Vassilopoulos, meanwhile, remains suspended because it has not submitted and published its half-yearly financial report for the period ended June 30, 2026.

The CSE said the suspensions could be lifted before the extended deadline if either company fulfils its outstanding obligations during the suspension period.

The Central Bank of Cyprus (CBC) set the reference interest rate at 11.60 per cent on Friday, under provisions of the Criminal Code aimed at preventing excessive charges on loans.

The rate is determined under Article 314A of the Cyprus Criminal Code, Cap. 154, which makes it a criminal offence for lenders to demand or receive financial or other benefits exceeding the prescribed reference rate.

The provision applies when a loan is granted, its repayment period is extended, or an existing loan is renewed or discounted.

It covers benefits received, collected, charged, stipulated or obtained either for the lender’s own benefit or on behalf of a third party.

Anyone convicted of breaching the provision faces up to five years in prison, a fine of up to €30,000, or both penalties.

The CBC determines the reference rate in accordance with its powers under the legislation, with the latest announcement setting it at 11.60 per cent.

Cyprus showcased 28 local food and drink businesses at the international SIAL Paris exhibition in France from October 17 to 21, 2026, using two national pavilions covering a combined area of approximately 356 square metres to promote domestic products and explore new export opportunities.

The event, held at the Paris Nord Villepinte exhibition centre, is considered one of the leading international trade fairs for the food and beverage industry and is organised every two years by Comexposium.

According to an announcement by the Ministry of Energy, Commerce and Industry, this year’s exhibition brought together 8,000 exhibitors from 130 countries and approximately 295,000 professional visitors, offering opportunities to explore emerging industry trends, discover innovations and develop commercial partnerships.

A major focus of Cyprus’ presence was halloumi, with 13 companies taking part in the dairy products pavilion in Hall 7.

The cheese received dedicated promotion through special signage featuring the Halloumi® name and Protected Designation of Origin (PDO) mark, while an entire side of the Hall 7 entrance was devoted to the Cypriot product.

Visitors were also able to use an interactive touchscreen entitled “Discover halloumi”, which provided information about the cheese and Cyprus’ dairies, highlighting its connection with domestic production.

The second national pavilion, located in Hall 2, hosted the remaining 15 participating businesses, which presented a wide variety of products from the island’s food industry.

These included olive oil, olives, honey, bulgur wheat, fruit juices, nuts, dried fruit, herbal beverages and coffee, alongside frozen foods and vegan products.

An interactive display at the pavilion provided information about the participating companies and their products, while also featuring a quiz designed to give visitors a more engaging and direct introduction to Cyprus’ food production.

“The country’s participation this year highlighted the potential and diversity of the domestic food industry, promoting both products with a strong identity and recognition, such as halloumi, and a wide range of other Cypriot products,” the ministry said.

“It also confirmed the importance of an organised presence at leading international exhibitions as a means of strengthening international outreach, promoting Cypriot production and exploring new business opportunities in international markets,” it added.

The Ministry of Energy, Commerce and Industry said it would continue supporting the promotion of Cypriot products abroad, helping strengthen the international presence of domestic businesses and create opportunities for further export growth.

Cyprus tourism revenue fell by 3.4 per cent year-on-year in August to €562 million, as fewer tourists and shorter stays weighed on earnings despite an increase in average daily spending, according to figures released by the statistical service (Cystat) on Friday.

Revenue stood at €581.8m in August 2025, meaning the sector earned €19.8m less than a year earlier, as tourist arrivals declined from 602,026 to 581,880.

The latest figures also show that tourism revenue for the first eight months of 2026 reached €2.32 billion, down 6.2 per cent from €2.47bn during the corresponding period of 2025.

The August decline follows a stronger performance in July, when tourism revenue increased by 4.6 per cent to €536.5m, supported by higher visitor spending despite slightly lower arrivals.

In August, however, average expenditure per tourist remained almost unchanged at €965.81, compared with €966.41 a year earlier.

Although the average length of stay declined from 9.2 days to 8.9 days, tourists spent more each day, with average daily expenditure increasing from €105.04 to €108.52.

The United Kingdom remained Cyprus’ largest tourist market, accounting for 30.5 per cent of total arrivals, followed by Israel with 23.3 per cent and Poland with 6.3 per cent.

British arrivals fell from 193,091 in August 2025 to 177,603 this year, while the average length of stay shortened from 10.6 days to 10.2 days.

Spending by British visitors also declined, with average expenditure per person falling from €1,195.02 to €1,062.12, while daily spending decreased from €112.74 to €104.13.

Israel, meanwhile, recorded a substantial increase in arrivals, rising from 105,597 to 135,628, strengthening its position as Cyprus’ second-largest source of tourists.

Israeli visitors stayed for an average of five days, compared with 5.2 days a year earlier, but their expenditure increased considerably.

Average spending per person rose from €792.69 to €892.20, while daily expenditure climbed from €152.44 to €178.44, considerably higher than the average for the tourism market as a whole.

Poland remained the third-largest market, although arrivals declined from 41,844 to 36,622.

Polish tourists stayed slightly longer, with the average visit increasing from 7.7 days to 7.9 days, but spending per person fell from €740.38 to €729.93. Daily expenditure also declined from €96.15 to €92.40.

German arrivals decreased from 27,665 to 25,823, while the average stay shortened from 10.5 days to 10.2 days.

Despite this, German visitors spent more, with average expenditure per person increasing from €987.97 to €1,084.18 and daily spending rising from €94.09 to €106.29.

Sweden followed a similar pattern, with arrivals declining from 18,636 to 17,441, although the average stay increased from 8.4 days to 8.8 days.

Average spending among Swedish tourists rose from €876.21 to €1,024.42 per person, while daily expenditure increased from €104.31 to €116.41.

Danish arrivals also fell slightly, from 9,984 to 9,733, while visitors shortened their stays from 8.8 days to 7.7 days.

Their average expenditure per person declined from €836.78 to €780.74, although daily spending increased from €95.09 to €101.39.

Norwegian arrivals moved in the opposite direction, increasing marginally from 7,896 to 8,006. However, Cystat did not publish reliable expenditure or length-of-stay figures for this market.

Arrivals from Greece declined from 15,294 to 13,810, with the average stay falling from 10.5 days to 10.2 days.

Greek visitors also spent less, with average expenditure per person decreasing from €484.94 to €466.29, while daily spending slipped from €46.18 to €45.71.

Visitors from the US recorded one of the most striking increases in spending, with average expenditure per person almost doubling from €849.70 to €1,691.60.

American arrivals increased from 8,597 to 9,665, while the average length of stay rose sharply from 12.2 days to 16.7 days.

Daily expenditure also increased substantially, from €69.65 to €101.29, with the longer stays contributing to the considerable increase in spending per visitor.

Austrian arrivals fell from 11,935 to 10,389, although visitors stayed considerably longer, with the average duration increasing from 7.4 days to 9.1 days.

Average expenditure among Austrian tourists rose from €899.80 to €1,116.79 per person, while daily spending increased slightly from €121.59 to €122.72.

Swiss arrivals also declined, from 7,277 to 6,739, but the average length of stay increased from 8.9 days to 9.2 days.

Swiss visitors remained among the highest-spending tourists, with average expenditure per person rising from €1,254.87 to €1,423.77, while daily spending increased from €141 to €154.76.

Arrivals from the Netherlands fell from 7,672 to 6,331, although Dutch visitors extended their average stay from 9.7 days to 10.9 days.

Despite spending more time in Cyprus, their average expenditure per person declined from €1,103.80 to €1,062.19, while daily spending fell from €113.79 to €97.45.

France recorded one of the sharpest declines among Cyprus’ main European tourism markets, with arrivals falling from 15,663 to 8,453.

French tourists nevertheless stayed longer, with the average visit increasing from 9.4 days to 11.2 days.

Their average expenditure per person rose from €979.40 to €1,034.62, although daily spending declined from €104.19 to €92.38.

Belgian arrivals, meanwhile, increased from 3,342 to 4,475, accompanied by a substantial rise in the average length of stay from 10.2 days to 13.3 days.

Average expenditure by Belgian tourists increased from €918.56 to €1,064.54 per person, although daily spending fell from €90.05 to €80.04.

Finnish arrivals declined from 4,018 to 3,431, with tourists spending an average of €1,105.20 per person and €120.13 per day, based on an average stay of 9.2 days.

Italian arrivals also fell sharply, dropping from 11,173 to 6,282, while the average stay shortened from 8.5 days to 8.1 days.

However, Italian tourists increased their average expenditure from €773.38 to €928.95 per person, with daily spending rising from €90.99 to €114.69.

Finally, arrivals from Lebanon declined from 5,745 to 5,085.

The cumulative figures show that the sector has yet to recover the revenue lost during the earlier months of 2026, with tourism earnings for January to August remaining €153.1m below the corresponding period last year.

Cyprus’ unemployment rate remained at 4 per cent in September 2026, unchanged from August and below the 4.2 per cent recorded a year earlier, while youth unemployment stayed at 11.3 per cent, according to figures published by Eurostat on Friday.

The number of unemployed people in Cyprus stood at approximately 21,000 in September, down from around 22,000 in September 2025, as the labour market continued to perform better than the European Union average.

The figures also showed that youth unemployment in Cyprus declined over the past year, with the number of unemployed people aged under 25 falling from approximately 4,000 in September 2025 to 3,000 in June 2026, where it remained through September.

Across the EU, however, unemployment increased over the year, with the overall rate reaching 6.2 per cent in September, compared with 6 per cent in the same month of 2025.

The euro area unemployment rate stood at 6.5 per cent, unchanged from August but higher than the 6.3 per cent recorded a year earlier.

Eurostat, the statistical office of the European Union, estimated that 13.773 million people were unemployed across the EU in September, including 11.555 million in the euro area.

Compared with August, the number of unemployed people increased by 105,000 across the EU and by 122,000 in the euro area.

On an annual basis, unemployment rose by 471,000 across the EU and by 420,000 in the euro area.

Cyprus unemployment remains below EU average

Cyprus’ unemployment rate declined from 4.2 per cent in September 2025 to 3.8 per cent in June 2026, before edging up to 3.9 per cent in July and reaching 4 per cent in August, where it remained in September.

The number of unemployed people followed a similar pattern, falling from approximately 22,000 in September 2025 to 21,000 in June and July 2026.

The figure increased to around 22,000 in August before returning to approximately 21,000 in September.

The latest figures place Cyprus’ unemployment rate 2.2 percentage points below the EU average and 2.5 percentage points below the euro area rate.

While the EU and euro area have experienced an increase in unemployment over the past year, Cyprus’ rate has declined, indicating comparatively favourable labour market conditions.

Youth unemployment remains lower in Cyprus

The unemployment rate among people aged under 25 in Cyprus stood at 11.3 per cent in September 2026, unchanged from July and August and below the 12.9 per cent recorded in September 2025.

The rate had fallen to 11.8 per cent by June 2026 before declining further to 11.3 per cent in July.

The number of unemployed young people also decreased over the year, from approximately 4,000 in September 2025 to 3,000 in June 2026, remaining at that level through September.

The figures compare favourably with the wider European picture, where youth unemployment continued to rise.

Across the EU, the youth unemployment rate reached 15.5 per cent in September, up from 15.4 per cent in August.

In the euro area, the rate increased to 15.4 per cent from 15.1 per cent in the previous month.

Eurostat estimated that 3.022 million people aged under 25 were unemployed across the EU in September, including 2.469 million in the euro area.

Compared with August, youth unemployment increased by 44,000 across the EU and by 69,000 in the euro area.

Compared with September 2025, the number of unemployed young people rose by 45,000 in the EU and by 80,000 in the euro area.

Unemployment among women and men

The unemployment rate for men in Cyprus stood at 3.7 per cent in September 2026, unchanged from July and August, after declining from 4 per cent in September 2025 to 3.6 per cent in June 2026.

Among women, the rate reached 4.3 per cent in September, down from 4.4 per cent a year earlier.

Female unemployment had fallen to 4.1 per cent in June 2026 before increasing to 4.2 per cent in July and 4.4 per cent in August, then edging down in September.

The figures show that the unemployment rate for women remained higher than that for men in Cyprus, although the difference narrowed slightly in September.

Across the EU, the unemployment rate for women stood at 6.4 per cent in September, while the rate for men was 6 per cent, with both unchanged from the previous month.

In the euro area, female unemployment remained at 6.7 per cent, while the male rate increased to 6.4 per cent from 6.3 per cent in August.

European unemployment rises over the year

The wider European figures showed a gradual increase in unemployment compared with September 2025, despite rates remaining stable between August and September 2026.

In the euro area, the unemployment rate rose from 6.3 per cent in September 2025 to 6.4 per cent in June 2026, before reaching 6.5 per cent in July and remaining at that level through September.

The number of unemployed people in the euro area increased from 11.135 million in September 2025 to 11.555 million in September 2026.

Across the EU, the unemployment rate increased from 6 per cent in September 2025 to 6.2 per cent in June 2026, remaining at 6.2 per cent through September.

The total number of unemployed people across the bloc rose from 13.302 million to 13.773 million over the same period.

The latest figures therefore highlight a contrast between Cyprus, where overall unemployment and youth joblessness remained below their levels a year earlier, and the wider EU, where both the number of unemployed people and the overall rate increased.

Household electricity prices in Cyprus fell to €0.26 per kilowatt-hour in the first half of 2026, according to Eurostat data, easing from their energy-crisis peak but remaining significantly above pre-crisis levels as electricity costs continue to weigh on consumers.

The latest figures show that prices, including all taxes and levies, have declined steadily since reaching €0.37 per kilowatt-hour in the first half of 2023, although households are still paying considerably more than they did before the energy crisis.

When adjusted for differences in purchasing power, Cyprus recorded 29.9 purchasing power standard (PPS) units per 100 kilowatt-hours in the first half of 2026, providing an indication of the relative burden of electricity costs on households.

Across the European Union, average household electricity prices fell by 2.2 per cent in the first half of 2026, declining to €0.28 per kilowatt-hour from €0.29 in the second half of 2025.

Despite the decrease, prices remained well above levels recorded before the 2022 energy crisis, indicating that households continued to face higher electricity costs than before the energy market turmoil.

Taxes and levies also declined slightly as a proportion of household electricity bills, falling by 0.5 percentage points, from 28.9 per cent in the second half of 2025 to 28.4 per cent in the first half of 2026.

Cyprus electricity prices peaked in 2023

Eurostat data show that household electricity prices in Cyprus followed a relatively stable pattern between 2015 and 2020, before surging during the energy crisis and subsequently easing.

During the initial period, prices fluctuated between €0.15 per kilowatt-hour in the first half of 2016 and €0.22 in the second half of 2019, before falling to €0.16 in the second half of 2020.

The subsequent energy crisis brought a sharp increase in household electricity costs, with prices reaching €0.37 per kilowatt-hour in the first half of 2023, more than double the level recorded in late 2020.

Prices then began to ease, declining to €0.32 per kilowatt-hour in the first half of 2024 before continuing their gradual downward trajectory.

By the first half of 2026, the price had fallen to €0.26 per kilowatt-hour, representing a substantial reduction from the 2023 peak but remaining well above the levels recorded before 2021.

The trend highlights the persistence of the energy crisis’ impact on household electricity bills, even as prices have retreated from their highest levels.

Ireland records highest electricity prices

Ireland recorded the highest household electricity prices in the EU during the first half of 2026, at €0.39 per kilowatt-hour, followed by Germany and Belgium, where prices stood at €0.36 per kilowatt-hour in both countries.

Six member states recorded household electricity prices exceeding €0.30 per kilowatt-hour, while five countries reported prices below €0.20.

The lowest nominal prices were recorded in Hungary, at €0.11 per kilowatt-hour, followed by Malta and Bulgaria, where households paid €0.13 per kilowatt-hour.

However, comparisons based solely on euros do not fully reflect the financial burden electricity bills place on households, as purchasing power and general price levels differ between countries.

When electricity prices were adjusted using the purchasing power standard (PPS), Romania recorded the highest costs, at 46.9 units per 100 kilowatt-hours, followed by Poland at 41.1 and the Czech Republic at 34.3.

Cyprus recorded 29.9 PPS units per 100 kilowatt-hours, while the lowest purchasing-power-adjusted prices were observed in Malta, at 13.8, Hungary at 14.7 and Luxembourg at 15.5.

The PPS measure allows comparisons between countries by accounting for differences in purchasing power, offering a clearer indication of the relative cost of electricity for consumers.

Electricity prices move sharply in several countries

Although the EU average declined in the first half of 2026 compared with the second half of 2025, national trends varied considerably when prices were compared with the same period a year earlier.

Using comparisons in national currencies, Eurostat found that household electricity prices increased sharply in Romania, rising by 51.6 per cent compared with the first half of 2025.

Ireland recorded the second-largest increase, at 19.8 per cent, followed by Finland, where prices rose by 18.4 per cent.

In contrast, Denmark registered the largest decrease, with household electricity prices falling by 31.7 per cent, while Luxembourg recorded a decline of 24.1 per cent.

The figures illustrate the uneven evolution of electricity costs across Europe, despite the overall reduction in average EU prices during the first six months of 2026.

For Cyprus, the combination of the historical price trend and the latest purchasing-power-adjusted figures shows that, although household electricity costs have fallen considerably from their 2023 peak, prices remain elevated compared with the period before the energy crisis.

Cyprus’ tax-to-GDP ratio rose to 36.3 per cent in 2025 from 36 per cent a year earlier, according to Eurostat, as tax and social contribution revenues increased across most European Union member states.

The figures show that Cyprus remained below the EU average, where the overall tax-to-GDP ratio climbed to 40.7 per cent in 2025 from 40.2 per cent in 2024.

Across the euro area, the ratio increased more sharply, reaching 41.3 per cent, compared with 40.7 per cent in the previous year.

The tax-to-GDP ratio measures the combined revenue governments collect from taxes and net social contributions as a share of gross domestic product (GDP), providing an indication of the relative size of tax revenues in an economy.

In absolute terms, EU revenue from taxes and social contributions increased by €401 billion in 2025 to reach €7.68 trillion, compared with the previous year, Eurostat reported.

Despite the overall increase, significant differences remained between member states, reflecting variations in national tax systems, social contribution arrangements and the size of government revenue relative to economic output.

France recorded the highest tax-to-GDP ratio in the EU at 46 per cent, followed by Belgium at 44.7 per cent, Denmark at 44.3 per cent and Austria at 43.9 per cent.

At the other end of the scale, Ireland registered the lowest ratio at 22.7 per cent, followed by Romania at 29.3 per cent, Malta at 30.3 per cent and Bulgaria at 30.6 per cent.

Cyprus’ ratio of 36.3 per cent placed it below the EU and euro area averages, although its increase from 2024 indicated that tax and social contribution revenues had risen relative to the size of the economy.

Tax ratios rise across most EU countries

Eurostat said the tax-to-GDP ratio increased in 19 EU member states in 2025 compared with the previous year.

Germany recorded the largest increase, with its ratio rising from 40.3 per cent in 2024 to 41.4 per cent in 2025.

Malta followed, with an increase from 29.3 per cent to 30.3 per cent, while Spain’s ratio climbed from 37.2 per cent to 38.1 per cent.

In contrast, the ratio declined in eight member states, with the largest decreases recorded in Sweden and Latvia.

Sweden’s tax-to-GDP ratio fell from 41.8 per cent in 2024 to 41.2 per cent in 2025, while Latvia’s declined from 34.9 per cent to 34.2 per cent.

The figures underline the differing trends in government revenue across the bloc, with the overall EU and euro area ratios increasing despite reductions in several individual countries.

For Cyprus, the rise from 36 per cent to 36.3 per cent represented a comparatively modest increase, leaving the country’s ratio below the European averages in 2025.

China’s Leapmotor is making a bigger push into Europe, with a clear ambition to bring advanced electric-car technology within reach of more drivers, without the hefty price tag often associated with it. And with the backing of automotive giant Stellantis, the relatively young manufacturer is already making considerable headway.

Founded in 2015, Leapmotor has built its business around technology, developing electric systems, advanced software and digital features while keeping prices competitive. According to the company, the thinking behind this approach is that modern technology should not be reserved for expensive cars, but should be something far more motorists can enjoy.

Its European ambitions received a considerable boost in 2023, when Stellantis invested in the Chinese carmaker, leading to the creation of Leapmotor International. The joint venture is 51 per cent owned by Stellantis and 49 per cent by Leapmotor, giving the brand access to an extensive European sales and after-sales support network.

That matters, particularly for a manufacturer still establishing its name in Europe. Buying a car from a relatively unfamiliar brand is one thing, but knowing there is an established network to provide servicing and support is just as important.

The company’s growth figures tell their own story. According to Leapmotor, more than 600,000 vehicles were sold worldwide in 2025, while total deliveries since its establishment have passed the one million mark. The brand is now present in more than 40 markets, with a global network approaching 1,700 sales and service locations.

European drivers were first introduced to Leapmotor through the compact electric T03 and the larger C10 SUV. Since then, the range has grown to include models such as the B10 and B05, giving customers more choice across different vehicle categories.

And for those who like the idea of electric driving but are not quite ready to rely entirely on battery power, Leapmotor has also developed Range Extender technology. It offers another option for motorists considering the switch, rather than limiting them to fully electric models.

The company’s ties with Europe have been growing in other ways, too. In March 2026, Leapmotor opened its first Innovation Centre outside China, in Munich, bringing the manufacturer closer to European design and engineering expertise.

For a company founded just over a decade ago, the expansion has been remarkably quick. Its approach brings together smart technology, practical cars, competitive prices and an extensive support network, all of which are central to the brand’s ambitions.

And that, according to Leapmotor, is precisely the point. Making modern electric driving more accessible, rather than something reserved for those with the biggest budgets.

Patsalides says Cyprus must remain vigilant as inflation risks rise

Central Bank of Cyprus governor Christodoulos Patsalides has warned that a prolonged energy shock is intensifying inflationary pressures and increasing risks to the economic outlook, as the European Central Bank (ECB) keeps interest rates unchanged and Cyprus continues to experience elevated price growth.

In a statement following the ECB’s monetary policy decision on Thursday, October 29, Patsalides said the euro area faced a more prolonged period of elevated inflation, while Cyprus’ economic resilience, sound public finances and strong banking sector were helping the country withstand the effects of rising prices.

“The prolongation of the energy shock, the deterioration in the inflation outlook and the ECB’s commitment” were the defining features of the current situation, he said.

The ECB’s Governing Council decided to leave its three key interest rates unchanged, with the deposit facility rate at 2.50 per cent, the main refinancing rate at 2.65 per cent and the marginal lending facility rate at 2.90 per cent.

The decision followed September’s 0.25 percentage point increase, as the conflict in the Middle East continued to push energy prices higher and threaten both inflation and economic growth.

Patsalides said geopolitical tensions and the associated energy shock were continuing to intensify price pressures, with euro area inflation rising to 3.8 per cent in September from 3.2 per cent in August, largely because of higher energy prices, particularly petroleum products.

According to the ECB, energy inflation in the euro area climbed to 18.9 per cent in September from 14.3 per cent in August, while inflation excluding energy increased to 2.3 per cent from 2.1 per cent.

Services inflation also edged higher, reaching 3.2 per cent, compared with 3 per cent in August, while food inflation rose to 1.3 per cent from 1.1 per cent.

Diesel and petrol prices reached new peaks during September, partly reflecting higher refining margins, adding to the pressure on households and businesses.

Despite the deterioration in the inflation outlook, Patsalides said the tightening of financial conditions was helping to contain the extent to which energy-related price increases were spreading throughout the wider economy.

This tightening reflected both the transmission of previous monetary policy rate increases and a significant rise in long-term government bond yields, amid growing concerns about the sustainability of global public debt.

“So far, the indirect effects of the energy shock have remained relatively limited, while meaningful second-round effects have yet to emerge, as reflected in the latest developments in wage indicators,” he said.

Inflation expectations in international financial markets and relevant surveys also remained broadly contained, particularly over the medium and longer term, he added.

The ECB similarly said underlying inflation had remained broadly stable and wages had not yet shown a material response to the energy shock.

However, it warned that the increasing magnitude and duration of the energy shock could eventually drive inflation higher and weigh on economic growth through indirect effects and further price and wage increases.

Economic activity across the euro area had continued to demonstrate resilience, Patsalides said, although elevated uncertainty and more restrictive financing conditions were expected to weigh on growth in the period ahead.

The ECB has reiterated its commitment to bringing inflation back to its medium-term target of 2 per cent, while emphasising that future interest rate decisions would depend on incoming economic and financial data rather than a predetermined path.

“In light of the new data and our overall assessment, we judged that maintaining the key interest rates at their current levels allows the ECB to manage the prevailing uncertainty effectively, while remaining firmly committed to returning inflation to, and maintaining it at, the medium-term target of 2 per cent,” Patsalides said.

Cyprus faces elevated inflation

Turning to the domestic economy, Patsalides said Cyprus continued to demonstrate remarkable resilience despite heightened geopolitical uncertainty, supported primarily by robust domestic demand, favourable labour market conditions and sound public finances.

Nevertheless, inflation remained elevated at 5.2 per cent in September, driven largely by significant increases in energy prices and services costs.

Energy prices rose by 21 per cent, while services inflation reached 7.1 per cent, reflecting persistent pressure in these components of the domestic price basket.

There were also signs that underlying price pressures were beginning to ease, with core inflation, which excludes energy and food, declining to 3.9 per cent in September from 4.5 per cent in August.

Despite this moderation, Patsalides warned that risks to the inflation outlook remained tilted to the upside, underlining the need for continued vigilance and close monitoring of developments.

“In an environment of persistent inflationary pressures, economic resilience becomes a factor of critical importance, acting as an essential buffer against the cumulative effects of rising prices and helping preserve the economy’s growth momentum,” he said.

He identified several ways in which economic resilience could help Cyprus withstand the effects of inflation, beginning with the strength of the labour market and the high level of employment.

These conditions support household disposable incomes, allowing private consumption to remain an important driver of economic activity even as rising prices put pressure on purchasing power.

Sound public finances also provide an important safeguard, Patsalides said, because a resilient economy helps maintain a stable flow of tax revenues.

This gives the government the flexibility to introduce targeted support measures for vulnerable groups without placing excessive pressure on public finances.

He also highlighted the importance of the banking sector’s strong capital and liquidity positions, which reinforce financial stability and support banks’ capacity to finance economic activity effectively.

The resilience of the financial system is particularly important when tighter financing conditions threaten to constrain borrowing and investment, both of which are essential for sustaining economic growth.

Another source of strength is the broadening of Cyprus’ productive base, particularly through the development of dynamic sectors such as information and communication technologies.

A more diversified economy is better equipped to absorb external shocks and offset pressures affecting industries that are more exposed to elevated inflation, Patsalides said.

He added that this resilience, together with recent sovereign credit-rating upgrades, was strengthening Cyprus’ attractiveness as a reliable investment destination, supporting continued foreign capital inflows and improving the economy’s growth prospects.

Prudent policies remain essential

Patsalides stressed that economic resilience alone would not eliminate inflationary pressures, making the consistent implementation of prudent economic policies essential.

“In an environment characterised by global challenges, the consistent implementation of prudent economic policies remains the most effective way to shield the economy from the erosion caused by inflation,” he said.

The governor warned that the combination of upside risks to inflation and intensifying threats to the global economy made a comprehensive and disciplined policy approach increasingly important.

For the ECB, the challenge is to prevent the energy shock from becoming embedded in broader price and wage developments without unnecessarily undermining economic activity.

For Cyprus, the priority is to preserve the domestic conditions that have supported growth while limiting the effects of persistent price increases on households, businesses and public finances.

Patsalides’ assessment underlined the importance of maintaining economic stability, protecting purchasing power and strengthening the economy’s capacity to absorb external shocks as uncertainty over energy prices and the wider geopolitical outlook continues.

Artificial intelligence is beginning to reshape the legal profession, with law firms increasingly exploring how emerging technologies can improve research, document analysis and other aspects of legal work without compromising professional judgement.

Speaking to the Cyprus Mail for the latest issue of Cyprus 4.0, Elias Neocleous, managing partner of Elias Neocleous & Co. LLC, explained that the development of NeoLaw.ai reflects a longer-term effort to integrate technology into legal practice rather than a response to the recent AI boom.

Developed as an internal legal support environment, NeoLaw.ai is intended to assist lawyers with research, complex documentation, case preparation, preliminary risk analysis and routine administrative work.

Neocleous argued that the value of AI lies not in replacing legal expertise, but in freeing lawyers to concentrate on areas where human judgement, creativity and professional responsibility remain essential.

The discussion also examined the safeguards required when AI is used in a profession where accuracy and confidentiality are fundamental, as well as the potential for Cyprus to develop into a regional hub for technology-enabled professional services.

Looking ahead, Neocleous considered how AI could gradually change the delivery of legal services and why the future of LegalTech may ultimately involve rethinking the role of the lawyer itself.

What problem in the legal sector led you to create NeoLaw.ai, and what gap were you trying to address that existing legal tools could not adequately solve?

The origins of NeoLaw.ai predate the recent surge of interest in large language models. Its development was not a reaction to technological fashion, but a continuation of a long-standing philosophy: that the legal profession must evolve in step with the broader trajectory of human progress. Automation, in various forms, has shaped industries since the industrial revolution; artificial intelligence represents simply the next phase of that continuum.

From our perspective, the gap was not merely technological, but conceptual. Existing tools often approached legal work as a process to be accelerated, rather than a discipline to be enhanced. Our objective was different. We sought to create an environment in which our lawyers are empowered – freed from repetitive tasks, yet supported in exercising judgement, creativity and precision.

Ultimately, NeoLaw.ai was designed not as a substitute for legal expertise, but as a mechanism to elevate it, ensuring that we serve our clients with greater clarity, consistency and foresight.

For someone encountering NeoLaw.ai for the first time, how does the platform work and what can it do for lawyers or legal teams in practical terms?

NeoLaw.ai is designed as an integrated legal support environment, embedded within the daily workflow of our lawyers rather than operating as a detached tool. In practical terms, it enables in-depth legal research across multiple sources, assists in the review and analysis of complex documentation and supports case preparation through structured insights and references to relevant case law.

It can also provide preliminary risk analysis, helping legal teams to identify potential issues at an early stage and contributes to the automation of routine administrative tasks that would otherwise consume valuable time.

Importantly, its development is not static. NeoLaw.ai evolves in parallel with our firm’s broader commitment to continuous improvement. Each use case informs further refinement, ensuring that the platform becomes progressively more aligned with the realities of legal practice and the increasing demands placed upon it.

What role does artificial intelligence play within the firm, and how have you approached issues such as accuracy, reliability and the risk of AI-generated errors in a legal context?

Artificial intelligence occupies a central, but carefully defined, role within the firm. It is not viewed as an autonomous decision-maker, but as a tool that enhances the capabilities of experienced practitioners. Accuracy and reliability are therefore not secondary considerations – they are foundational. Every output generated through NeoLaw.ai is subject to review by our legal professionals, ensuring that judgement remains firmly in human hands.

We approach this as a co-existing relationship: the system supports our lawyers, while our lawyers continuously refine and train the system through informed use. This dynamic mitigates the risk of error while strengthening the overall quality of output. In a legal context, where precision is inseparable from responsibility, such safeguards are essential. The objective is not simply efficiency, but the preservation- and enhancement – of professional integrity.

LegalTech is developing rapidly internationally. Where do you believe NeoLaw.ai can differentiate itself from the growing number of AI-powered legal tools entering the market?

NeoLaw.ai distinguishes itself not by attempting to compete with every emerging LegalTech solution, but by being deliberately and precisely tailored to the realities of our own practice. It has been developed around our internal processes, structures, templates and accumulated institutional knowledge – elements that no external platform, however sophisticated, can fully replicate. In that sense, its primary advantage lies in its alignment with how we actually work, rather than how legal work is generically modelled.

Equally important is our underlying approach. We have not built NeoLaw.ai with commercialisation as the driving force, but with a practical question in mind: how can this system meaningfully enhance the quality and efficiency of our legal services? This inward focus allows for a level of refinement and adaptability that would be difficult to achieve otherwise.

Finally, the platform is hosted entirely on our internal infrastructure, ensuring the highest standards of confidentiality and data security – an essential consideration in the legal profession.

What have you learned from developing and bringing NeoLaw.ai to market so far, particularly from working with lawyers and other users who are adopting AI into their professional workflows?

What the development of NeoLaw.ai has revealed, perhaps more than anything else, is that technological progress is ultimately a human question. The success of such an initiative depends less on the sophistication of the tool itself and more on the willingness of people to engage with it. It requires a team with vision-one that does not merely tolerate change, but recognises it as a constant parameter of professional life. In that sense, we have not sought to “invent” technology, but to thoughtfully integrate it into our existing systems.

Equally instructive has been the pattern of adoption. Even within a large and forward-looking organisation, the familiar dynamics of the bell curve apply – early adopters lead, others follow more cautiously. This has reinforced the importance of structured implementation and internal dialogue.

Perhaps most importantly, the process has sharpened our understanding of what truly matters in legal practice: distinguishing enduring value from operational noise, and identifying where change is genuinely necessary.

Do you see Cyprus developing a significant LegalTech ecosystem of its own, and what would need to happen for the country to become a stronger regional hub for legal technology and innovation?

Cyprus is unlikely, at least in the near term, to develop a LegalTech ecosystem on the scale of larger jurisdictions such as the United Kingdom, the United States, or key Central European markets. These are environments where the sheer volume and international reach of law firms create the natural demand that drives large-scale LegalTech innovation. By comparison, the Cypriot legal market is more focused and specialised, which inevitably shapes the direction and scale of technological development within it.

That said, the broader technology ecosystem in Cyprus is stronger than it has ever been. The entry of globally recognised innovation platforms, such as Plug and Play Tech Center, signals a meaningful shift. Combined with Cyprus’ strategic location, regulatory alignment with the European Union, and an increasingly sophisticated professional services sector, this creates a compelling foundation.

Rather than leading in LegalTech production, Cyprus is well positioned to emerge as a regional hub for technology-enabled services-where innovation is applied, refined, and integrated into high-value professional practice.

Looking beyond the current product, what opportunities do you see for AI to transform the legal profession over the next five years, and where do you expect NeoLaw.ai to fit into that transformation?

Over the next five years, artificial intelligence is likely to reshape the legal profession not through sudden disruption, but through gradual and structural refinement. The more routine aspects of legal work – research, document analysis and process management – will increasingly be absorbed by intelligent systems. This will not diminish the role of the lawyer; rather, it will reorient it towards judgement, strategy, and the exercise of professional responsibility.

The more important question, however, is not what AI can do, but how it is governed and integrated. The legal profession carries an inherent duty to uphold trust, accuracy, and accountability-principles that must remain intact as technology advances.

Within this transformation, NeoLaw.ai will continue to evolve as an internal framework that supports our lawyers in meeting these obligations. Its role is not to redefine the profession, but to ensure that we adapt to change without compromising its core values.

What makes you believe the future of LegalTech is not simply about automating existing legal processes, but about fundamentally rethinking how legal services are delivered?

The future of LegalTech cannot be confined to the automation of existing processes, because the legal profession itself is not merely procedural. At its core lies the role of the lawyer as a trusted advisor – someone who navigates complexity not only through technical knowledge, but through relationships built on trust, continuity and understanding. These relationships are not incidental; they are the foundation upon which effective legal counsel is delivered.

In parallel, lawyers often play a quiet but essential role in shaping legislative and regulatory frameworks. Through sustained engagement with institutions, policymakers and market participants, they contribute to the refinement of laws in a way that reflects practical realities. This is a function that cannot be automated – it requires judgement, dialogue and credibility developed over time.

Technology, therefore, must be understood as an enabler. By relieving lawyers of routine burdens, it allows them to invest more meaningfully in these higher-order functions: advising with clarity, fostering trust, and contributing to the evolution of the legal and regulatory environment itself.

Website: https://neo.law

LinkedIn page: https://www.linkedin.com/company/elias-neocleous-&-co-llc?originalSubdomain=cy

Cyprus’ hotel industry is facing another licensing headache, with tourist businesses at risk of closure next year unless Parliament agrees to give them more time to meet fire safety requirements, raising concerns over jobs and the wider economy at an already difficult time for tourism.

With the February 28, 2027 deadline approaching, MPs from Disy, Diko and Elam have put forward a proposal to extend the transitional arrangements for hotels and tourist accommodation establishments that have still not secured their full operating licences.

The concern, as mentioned by Politis this week, is that a substantial number of businesses will not obtain the necessary fire protection certificates in time, potentially forcing them to stop trading.

The MPs behind the proposal have warned that widespread closures could have serious consequences for the economy, putting thousands of jobs at risk and affecting businesses that depend on tourism.

Their proposed amendment would move the fire safety deadline to February 28, 2029, giving operators another two years to secure the required documentation and resolve outstanding problems with their properties.

It would also allow qualifying businesses to continue operating until December 31, 2030, provided they comply with the relevant conditions while working towards obtaining full licences from the Deputy Ministry of Tourism.

The proposal was submitted to Parliament on October 22 by Disy MP Nikos Georgiou, Elam MP Linos Papayiannis and Diko MP Chrysis Pantelides.

Under the proposed arrangements, establishments must already hold a building permit allowing their premises to be used as a hotel or tourist accommodation business. Operators would have until December 31, 2028 to obtain an operating confirmation from the Deputy Ministry of Tourism.

The extension would not, however, excuse businesses from meeting health and safety requirements.

They would still need the necessary documentation covering fire protection, hygiene, swimming pools, electrical installations, lifts, gas installations and workplace safety, where applicable.

The Fire Service would continue inspecting properties before issuing the relevant certificates, and businesses that fail to submit their fire safety documentation by the new deadline would lose their temporary operating approval.

For operators struggling with complicated licensing procedures, another extension would provide some breathing space. The difficulty is that Cyprus has been trying to sort out the same problem for decades, with successive deadlines doing little to bring the entire industry into compliance.

In fact, Parliament approved another extension only six months ago, allowing qualifying establishments to continue operating without full licences until the end of 2028.

That legislation passed with 25 votes in favour, one against and 15 abstentions, although several MPs were far from convinced that giving hoteliers more time would produce the desired results.

Disy MP Kyriacos Hadjiyianni questioned the effectiveness of repeated extensions, while Akel MP Costas Costa argued that some operators had grown accustomed to Parliament stepping in whenever another deadline approached.

Their concerns were hardly without foundation.

An audit office investigation published in July revealed that only 168 of the 728 hotels and tourist accommodation establishments examined held full operating licences, representing just 23 per cent of the total.

Another 158 were operating under temporary arrangements, leaving 402 establishments, or 55 per cent, without either a full licence or temporary authorisation.

The situation was particularly troubling in Famagusta, one of Cyprus’ principal tourist districts, where just 24 out of 241 establishments held full operating licences.

For the audit office, the problem went considerably further than missing paperwork.

Its findings raised concerns over inadequate inspections, weak enforcement and the risks associated with businesses operating without the necessary approvals.

It also questioned the fairness of allowing establishments that had failed to meet licensing requirements to compete with businesses that had invested in bringing their properties into compliance.

Auditor General Andreas Papaconstantinou warned that the shortcomings were calling into question efforts to improve the quality of Cyprus’ tourism product, particularly when proper supervision and safety standards could not always be guaranteed.

The watchdog was equally critical of years of limited enforcement, arguing that concerns about the economic consequences of hotel closures could not justify allowing businesses to continue operating outside the law indefinitely.

There is, nevertheless, another side to the problem.

The Deputy Ministry of Tourism has repeatedly acknowledged that hotel licensing is a complicated affair, particularly for older establishments whose buildings have undergone extensive alterations over the years.

In its response to auditors, the ministry explained that the difficulties date back almost three decades and became more pronounced between 2014 and 2018, following large-scale hotel renovations and expansions encouraged by planning incentives introduced in 2013.

Those changes left some properties with discrepancies between their approved plans and their actual construction, requiring further approvals before full licences could be issued.

Obtaining those documents can involve several authorities, with lengthy procedures adding to the difficulties faced by businesses trying to regularise their position.

Progress has been made, although not nearly enough to settle the matter.

According to the ministry, only 43 operating licences had been issued during the five-year transitional period introduced under the 2019 legislation, leaving just 6 per cent of establishments fully licensed by April 2023.

The proportion has since risen to 23 per cent, with a further 22 per cent operating under temporary arrangements.

Tourism Deputy Minister Kostas Koumis told Parliament in February that approximately 70 per cent of hotel beds were now covered by licences, a considerably stronger picture than the overall number of fully licensed establishments might imply.

He also acknowledged that the government was not opposed to further extensions, provided hoteliers took responsibility for bringing their businesses into compliance.

There is, however, one detail that remains particularly difficult to overlook. More than half of tourist establishments had never submitted an application for a full operating licence, according to the ministry’s own findings.

That makes it difficult to attribute the entire problem to lengthy procedures and administrative delays, particularly after so many opportunities to put matters right.

The issue has also raised questions at the highest level of government.

In February, President Nikos Christodoulides referred an earlier hotel licensing amendment back to Parliament, expressing concerns that a special permitting arrangement could create unequal treatment between businesses already complying with the law and those operating under more flexible conditions.

The government subsequently supported a further transitional extension, although the underlying difficulties remained.

Now, another proposal is before MPs, at a time when the tourism industry has rather more immediate worries than licensing paperwork.

Tourist arrivals reached 3.4 million during the first nine months of 2026, down 5.6 per cent compared with the same period last year, according to the Statistical Service.

September brought some relief, with arrivals rising 1.8 per cent to a record 580,889, but the stronger month was not enough to reverse the decline recorded since the beginning of the year.

The outlook for 2027 has also given hoteliers reason for concern.

Paphos hoteliers association president Evripides Loizides warned earlier this month that advance bookings from Britain’s three largest tour operators were running 20 to 30 per cent below last year’s levels.

Although these are early booking figures rather than a forecast for the entire season, they have added to uncertainty following a summer affected by the Middle East conflict.

Loizides also reported that hotel occupancy during the summer months and September had been approximately 7 per cent lower than a year earlier, while rising costs, staffing shortages and competition from short-term holiday rentals continued to weigh on businesses.

It is in this climate that the latest licensing dispute has taken on greater importance. For hotel operators, a forced closure could mean lost revenue, cancelled bookings and uncertainty for employees. Suppliers, restaurants, transport companies and other businesses relying on visitor spending could also feel the consequences.

For the authorities, though, the issue is not simply about keeping hotels open. Visitor safety, fair competition and the credibility of the licensing system are equally important, particularly when businesses that have complied with the rules are expected to compete with those that have not.

The MPs supporting the latest proposal argue that more time is necessary because obtaining the required certificates and approvals remains a lengthy process, making the existing deadlines difficult for some establishments to meet.

Their proposal has been referred to the House commerce committee for examination and has not yet been approved.

Cyprus’ National Betting Authority (NBA) expects to collect €72.92 million in 2027, helped by its agreement with OPAP Cyprus (Allwyn) and continued growth in the betting market, although the figure is €2.35m lower than it was forecasting earlier this year.

The revised figures, included in the authority’s 2027 budget, which has been submitted to parliament, show revenue rising by €1.07m, or 1.5 per cent, compared with the €71.85m expected in 2026.

The increase is being driven mainly by the agreement with OPAP Cyprus and expectations of further growth in betting activity, following the increases recorded in recent years.

The latest forecast, though, represents a downward revision from the €75.27m previously projected for 2027, according to the earlier budget figures presented to parliament in January.

The difference is worth noting, particularly as the betting industry continues to generate substantial revenue for operators and the state.

Under the proposed budget, expenditure will reach €72.71m, an increase of €1.18m, or 1.65 per cent, from 2026, leaving the authority with a relatively modest surplus of €210,000.

The outlook improves over the following two years, with revenue expected to reach €77.1m in 2028 and €81.33m in 2029, compared with projected spending of €76.66m and €80.81m respectively.

This would leave surpluses of €430,000 in 2028 and €520,000 in 2029.

A considerable share of the money, however, does not remain with the regulator.

Of its planned expenditure for 2027, €67.39m relates to taxes and fees collected on behalf of the state and subsequently transferred to government coffers.

The amount reflects both the agreement with OPAP Cyprus and the industry’s financial performance in recent years.

More specifically, the authority expects to collect €53m from betting and certain gambling taxes, unchanged from its 2026 estimate.

Of this, €32m is expected to come from tax on OPAP Cyprus’ gross gaming revenue under its agreement with the Republic.

The concession agreement, signed in June 2024, granted OPAP Cyprus exclusive rights to operate specified games of chance for 15 years, extending until June 2039.

Under its terms, the Republic receives 22.5 per cent of gross gaming revenue, while the company is required to allocate another 5 per cent to sporting, social and charitable activities in Cyprus.

The agreement also provides for annual licensing payments linked to the performance of the games, with minimum annual proceeds for the Republic set at €20m.

Meanwhile, revenue from imposed fees, OPAP licensing and supervisory contributions is expected to increase from €8.2m this year to €8.7m in 2027.

Betting-related contributions are also forecast to rise, from €10m to €10.5m, while administrative fines are expected to bring in another €150,000, unchanged from 2026.

The projections come at a time when Cyprus’ licensed betting industry is showing an interesting pattern, with operators earning more even when the amount wagered falls.

According to the latest market figures, wagers reached €329.8m in the second quarter of 2026, down €30.3m from the previous three months but still 11 per cent higher than a year earlier.

More importantly for bookmakers, gross gaming revenue rose by 24 per cent to €46.9m, compared with €37.9m in the corresponding quarter of 2025.

In other words, operators kept more money after paying out winnings, despite handling fewer bets than in the first quarter.

Across the first six months of 2026, total betting activity reached almost €690m, with bookmakers retaining approximately €92.8m after player payouts.

Online betting continues to account for the largest share of the market, reflecting the growing importance of digital platforms to the industry’s earnings.

That growth, however, also raises questions about how much betting activity is taking place beyond the reach of licensed operators.

In response, the authority is planning a €60,000 study into illegal gambling in Cyprus, seeking to establish how much business is being diverted towards unlicensed providers.

The research will examine what is known as channelisation, essentially measuring the proportion of players using legal, regulated betting services rather than illegal alternatives.

It will also look at why people turn to unlicensed operators, the factors influencing their choices and what might encourage them to use legitimate platforms instead.

For the regulator, the findings should provide a clearer basis for deciding where enforcement efforts are needed and whether existing measures are making a difference.

The scale of the challenge is already evident from the authority’s enforcement activity.

By the end of June 2026, 22,660 unauthorised betting websites were on its blocking list, with 245 added during the second quarter alone.

Alongside the proposed study, the 2027 budget includes €400,000 for strategic initiatives, covering existing commitments and new activities aimed at improving how the industry is regulated.

Among the priorities are greater use of artificial intelligence and emerging technologies, support for innovation and start-ups, and stronger supervision of licensed betting operators.

The authority also plans to tighten measures against money laundering and terrorist financing, strengthen efforts to prevent match-fixing and improve the systems used to block illegal gambling websites.

Further work will focus on due diligence checks, particularly when assessing licence applications and identifying the beneficial owners of betting companies.

Player protection is another area receiving funding, with €1.5m earmarked for safer gambling initiatives under the authority’s wider strategy.

The money will support programmes intended to protect young people and those experiencing gambling-related harm, alongside public awareness campaigns and the annual Safer Gambling Week.

Cooperation with the Cyprus national addictions authority will also continue, including treatment services in the Famagusta and Paphos districts and plans to extend support to minors.

At the same time, the regulator intends to expand the national self-exclusion platform to land-based betting, allowing people who want to restrict their gambling activity to do so beyond online services.

Educational activities in schools, preventive programmes for vulnerable groups and further public awareness initiatives are also included in the plans.

The authority’s proposed budget remains subject to parliamentary scrutiny, with the House Finance Committee expected to examine the figures and spending priorities.

Investment platform Wealthyhood has recorded a five-fold increase in investors and an eight-fold rise in client assets in Cyprus between June and September 2026, with data from its partnership with the Bank of Cyprus pointing to growing interest in local shares, exchange-traded funds and accessible long-term investing.

The figures, published in ‘Wealthyhood’s Cyprus Investor Pulse 2026‘ report, cover anonymised and aggregated data from clients resident in Cyprus between June 1 and September 30, with the findings highlighting how lower entry costs and simpler account funding can encourage participation in financial markets.

Alexandros Christodoulakis, co-founder and chief executive of Wealthyhood, told the Cyprus Mail that the response from Cypriot investors had exceeded expectations in terms of the quality of their engagement.

“People in Cyprus didn’t need to be convinced that investing matters. What they were missing was a simple, trusted way to start, and once that existed, they moved quickly,” he said.

The report found that 88.6 per cent of clients who deposited money went on to buy a stock or exchange-traded fund (ETF), compared with 80.4 per cent among clients who signed up in Greece during the same period.

Christodoulakis said the company was encouraged by the extent to which customers were continuing to invest after opening their accounts, rather than simply registering and leaving the platform.

“Of those who joined in June or July and invested, 88.9 per cent were still invested on September 30,” he said.

“Seven in ten (70.3 per cent) have never sold an investment, and six in ten (59.1 per cent) made a second deposit within 30 days of their first,” Christodoulakis continued. “People are not trying the app once and walking away; they are building a habit.”

He added that four months of activity remained an early snapshot, but that the quality of engagement had been particularly encouraging.

Low entry barriers foster early activity and habit-building

The report also found that 58.4 per cent of new investors made their first investment within 7 days of signing up, while 14.4 per cent invested on the same day.

The typical first deposit was €100, while the typical first investment amounted to €55. Almost two-thirds of investors, or 64 per cent, started with €100 or less, suggesting that many were entering the market with relatively modest sums.

More than half, or 56.8 per cent, made their first investment in an ETF, which allows investors to buy into a collection of companies through a single product.

The most popular first investment was the Vanguard S&P 500 ETF, accounting for 16.6 per cent of first investments, followed by Bank of Cyprus shares at 10.2 per cent.

Christodoulakis said traditional barriers to investing included high minimum investment requirements, fees that eroded smaller amounts, paperwork and complicated terminology.

“Faced with that, many people who could invest simply never start. Not because they don’t care about their future, but because the first step looks expensive, complicated and opaque,” he stated.

Wealthyhood aims to address these obstacles by allowing customers to invest in international and local markets from €1, with zero commission and fractional shares, alongside an education hub containing more than 50 guides.

The platform also offers Autopilot, an automated investing service through which users can make regular investments without having to manage each transaction manually. The typical Autopilot user invests €150 a month, according to the report.

Christodoulakis said access to financial markets needed to be accompanied by a better understanding of investment products and their risks.

“Access alone isn’t enough, though. People also need to understand what they’re buying and why, which is why education sits at the core of the app, not in a corner of it,” he said.

Investor demographics reveal mature and higher-earning profile

The report’s demographic findings challenge the assumption that investment applications primarily attract younger users.

The typical investor in Cyprus is 40 years old, works full-time and declares an annual income of between €30,001 and €50,000. The largest age group is 35 to 44, accounting for 31.7 per cent of investors, followed by those aged 45 to 54 at 25.9 per cent and those aged 25 to 34 at 25.3 per cent.

People under 30 account for 19.3 per cent of investors.

Income levels were also higher than those recorded among investors in Greece. Some 31 per cent of Cypriot investors declared annual incomes above €50,000, while 24 per cent reported incomes below €20,000, compared with 58 per cent of investors in Greece in the latter category.

Full-time employees account for 86.5 per cent of investors, while 4.7 per cent are self-employed.

Finance and insurance is the most common industry, employing 31.5 per cent of investors, followed by information technology at 10.5 per cent and the public sector at 8.1 per cent.

Nicosia district accounts for 50.5 per cent of investors, followed by Limassol at 25.6 per cent, Larnaca at 14.9 per cent, Paphos at 5.1 per cent and Famagusta at 3.9 per cent.

Christodoulakis said the available data was not yet sufficient to establish how the investor profile had changed over time or to draw reliable conclusions about customers’ previous investing experience.

However, he said the behaviour observed so far pointed towards a cautious, long-term approach, characterised by small initial investments, ETFs and limited selling.

“One number I’d like to see change: about one in six new investors is a woman. Closing that gap is one of the biggest challenges for retail investing, in Cyprus and beyond,” he said.

He added that the market was increasingly being shaped by working people seeking greater control over their long-term finances, rather than traders attempting to profit from short-term market movements.

“As cost and complexity keep falling, I expect that profile to broaden, especially to younger people and to women,” he said.

Domestic shares drive engagement alongside global ETFs

The availability of domestic shares has also helped attract investors to the platform, with the Bank of Cyprus emerging as its most-bought individual stock.

Cypriot and Greek shares became available through Wealthyhood on July 17, allowing customers to hold domestic investments alongside international stocks and ETFs.

Customers can access Bank of Cyprus shares and 8 other companies listed on the Cyprus Stock Exchange, namely Vassiliko Cement, Demetra Holdings, Logicom, Cyprus Cement, Petrolina, Atlantic Insurance, Pandora Investments and GlobalWealth Group.

Within less than 3 months of the launch, 29.2 per cent of buyers had purchased at least 1 Cypriot share.

The Bank of Cyprus was bought by 35.8 per cent of stock investors, ahead of US technology company NVIDIA at 21.3 per cent and SpaceX at 12.6 per cent.

Among investors who purchased Cypriot shares, 82.6 per cent chose the Bank of Cyprus, followed by Vassiliko Cement at 16 per cent, Petrolina at 12.3 per cent and Logicom at 8.2 per cent.

The report found that domestic shares were bringing new participants into the market. For 52.8 per cent of investors holding Cypriot shares, a local company had been their first investment on Wealthyhood, compared with just 1.8 per cent among other investors.

Those holding Cypriot shares also had larger portfolios, with a typical portfolio 1.8 times the size of those held by other investors and containing 3 investments rather than 1.

Christodoulakis said familiar domestic companies could provide an accessible entry point for people who were less comfortable with international markets.

“People invest more readily in companies they know, and familiar local names are often the bridge into the market,” he said.

However, he stressed that local shares were complementing rather than replacing international investments.

The report found that 8.6 per cent of money invested since July 17 had gone into Cypriot shares, while Greek shares accounted for 12.3 per cent. Some 18.9 per cent of buyers had purchased at least 1 Greek share.

Across portfolios, 37.6 per cent of invested money was allocated to the United States, 21.1 per cent to global ETFs, 16.5 per cent to the rest of Europe, 11.3 per cent to Greece and 8.9 per cent to Cyprus.

The figures also showed the importance of ETFs in investors’ portfolios. The Vanguard S&P 500 ETF, which tracks the 500 largest US companies, had been purchased by 42.7 per cent of ETF investors and was held by 24.4 per cent of all investors on September 30.

Other popular ETFs included the Vanguard LifeStrategy 80 per cent Equity fund, purchased by 13.6 per cent of ETF investors, the SPDR MSCI World at 13.1 per cent and the iShares Nasdaq 100 at 11.9 per cent.

Among investors who still held investments on September 30, 42.5 per cent held only ETFs.

Dual exchange listings and long-term literacy goals

The report also examined access to shares listed in Athens. On September 30, 25.6 per cent of investors held at least 1 stock listed on Euronext Athens, including the Bank of Cyprus, while 7.6 per cent held a stock listed on the Cyprus Stock Exchange and 4.2 per cent held shares listed on both exchanges.

Athens-listed stocks accounted for 17.1 per cent of invested money, while Cyprus Stock Exchange-listed shares represented 2.1 per cent.

After the Bank of Cyprus, the most widely held Athens-listed stocks were Eurobank, at 5.1 per cent, followed by Allwyn and Alpha Bank, each at 2.8 per cent. Half of the 10 most widely held names were banks.

Christodoulakis said the company’s priorities in Cyprus were to improve financial education, encourage customers to turn initial investments into regular habits and expand the role of automated investing.

He said Wealthyhood and the Bank of Cyprus shared a responsibility to help close the financial literacy gap, particularly among younger people and women, by improving understanding of risk, diversification and the importance of time in investing.

“Giving people access to markets is only half of the job; helping them understand risk, diversification and time is the other half,” he said.

The company also wants to build on existing customer behaviour through services such as Autopilot, which can make regular investment contributions easier to maintain.

Christodoulakis said the first months of activity had demonstrated a clear appetite for accessible investing in Cyprus, but that the next challenge was to turn the initial momentum into sustained participation.

“Four months in, Cyprus has shown us the appetite is real. Now the work is to turn that early momentum into a generation of long-term investors,” he said.

The Enterprise Europe Network (EEN) in Cyprus will hold an online information session on November 19, 2026, to present funding opportunities available to businesses and organisations under the European Innovation Council’s (EIC) 2027 work programme.

The event, announced by the Cyprus Chamber of Commerce and Industry (Keve), which coordinates EEN activities in Cyprus, will explain the main funding instruments available under the programme and outline the most important changes and new developments planned for 2027.

The session is aimed at businesses and organisations seeking European funding to support innovation, develop new technologies and scale up their operations.

Participants will receive information on the EIC Pathfinder, EIC Transition and EIC Accelerator programmes, as well as the Strategic Technologies for Europe Platform (STEP) Scale Up initiative.

These instruments support different stages of innovation, from early-stage research and the development of technologies towards commercialisation to the growth of businesses seeking to expand their operations.

The event will also feature EEN2EIC, which will present its activities, services and tools designed to help innovative small and medium-sized enterprises (SMEs) and start-ups access EIC funding opportunities.

The special session will also explain how EEN2EIC supports businesses in improving their investment readiness, helping them prepare to attract funding and pursue opportunities under the European innovation funding framework.

Interested businesses and organisations can register through the event’s registration link provided by the organisers.