Net Interest Income of the Cypriot banking system doubled in the first half of 2023, marking an annual increase of 100% driven by the continuing rate hikes by the European Central Bank in its bid to contain rising inflation. According to the aggregate data on profitability for the first half of 2023 released on Friday by the Central Bank of Cyprus (CBC), net interest income (NII) for the Cypriot banks in the first half of 2023 spiked to pound 864.6 million from pound 432 million in the first half of 2022. NII for the first half of last year was much lower as rate hikes by the ECB which boosted income for commercial banks, began in July 2022. For the second quarter of 2023, NII amounted to pound 468.5 million compared with pound 396 million in the first quarter of the same year, reflecting rate hikes by the ECB. According to the CBC data, total interest income for the first half of 2023 exceeded pound 1 billion, edging closer to the total interest income for full year 2022 which amounted to pound 1.18 billion. Compared with the first half of last year, total interest income in the first half of 2023 spiked by 98%. Furthermore, interest expense for the Cypriot banking system rose by an annual 92% amounting to pound 209.1 million in the first half of 2023, compared with pound 109.1 million in the respective period of last year. Interest expense in the second quarter of this year has more than doubled compared with the previous quarter marking a quarterly rise of 130%. The rise in the interest expenses by Cypriot banks, is driven by the moderate rise in deposit interest rates, as well as the significant rise in the yields of funding instruments issued by banks, such as MREL bonds and Tier 2 bonds. Income from fees and commissions remained broadly unchanged in the first half of 2023 and amounted to pound 178.7 million compared with pound 177 million in the respective period of last year, the CBC said. Furthermore in line with increased income, taxation paid by the Cypriot banks rose significantly amounting to pound 76 million, up by an annual 221%, while taxation in the first six months of this year exceeded the taxation paid throughout last year which totalled pound 64 million. According to the CBC, net profit for the Cyprus banking system in the first half of this year, rose to pound 609 million, marking an increase of 1,054% compared with the first half of last year, which has not been affected by rate hikes.

Source: Cyprus News Agency