Bank of Cyprus targets fintech and insurance for strategic deals

The Bank of Cyprus (BoC) expects steady loan growth and remains open to targeted acquisitions under its 2026-2028 business plan, while positioning itself to withstand rising competition and potential economic volatility, according to chief executive officer Panicos Nicolaou.

Nicolaou told the media this week that the bank’s strongest defence in an uncertain environment remains its low cost of risk, supported by strong capital and liquidity buffers.

During the briefing, Nicolaou said the bank is “one of the best capitalised banks in Europe,” with a Common Equity Tier 1 (CET1) ratio of 21 per cent, adding that the institution is now in “the strongest position it has ever been.”

He explained that this position reflects the bank’s conservative strategy, which will continue in the coming years.

Referring to the escalating crisis in the Middle East, Nicolaou said the bank’s exposure to the region is very limited, while the tourism sector accounts for around one tenth of its loan portfolio in Cyprus and Greece.

At the same time, he pointed to the bank’s cost-to-income ratio, which remains below 40 per cent, as another sign of financial resilience.

“We are better prepared than ever,” he said, adding that “depending on how the situation develops, we will act.”

The bank noted that its three-year business plan was prepared before the latest developments involving Iran, based on conservative assumptions.

According to the bank’s projections, credit expansion is expected to grow by around 5 per cent in 2026, while average annual growth of about 4 per cent is projected for the period between 2026 and 2028.

In addition, the bank expects its international loan portfolio to increase from €1.4 billion to around €2 billion by 2028.

Addressing increased competition in the Cypriot banking market following moves by Eurobank and Alpha Bank, Nicolaou said that the Bank of Cyprus remains confident in its position.

“We can defend what we have,” he said, adding that the bank has “the whole package set up”, referring to its business model and long-standing customer relationships.

However, he indicated that fintech companies pose a greater competitive challenge than traditional banks.

On acquisitions, Nicolaou said the bank does not intend to use all of its capital reserves, stressing that it wants to maintain flexibility for smaller, strategically targeted deals.

He explained that the bank is primarily seeking opportunities in insurance, asset management and fintech, while continuing to prioritise organic growth.

At the same time, he stressed that any acquisition would need to meet strict financial criteria and would not be allowed to affect the bank’s dividend distribution policy.

Nicolaou also did not rule out acquisitions outside Cyprus, although he made clear that the bank does not intend to expand into the retail banking sector in Greece.

Responding to a question from Politis, regarding the timing of potential deals, Eliza Livadiotou, executive director of the bank’s financial management division, said announcements would be made only if and when a transaction materialises, noting the supervisory restrictions involved.