Cyprus is a small, open economy that is highly exposed to the external environment. Can the tariff turmoil affect Cyprus, and how, at a time when the economy seems to be managing to attract foreign investment?

I estimate that Cyprus' direct exposure will be limited, as we do not have any particular import and export relations with the US. However, anything that affects the European and global economy affects Cyprus. And it seems that the tariffs, if they remain as they are, will have a significant impact on the global and especially the European economy, of which we are a part, so there will be an indirect negative impact on the Cypriot economy, perhaps with some time lag. It also creates a challenge for central banks in terms of interest rate setting. It is still too early to see the full impact, but certainly the uncertainty is not positive for the economy and therefore prudent economic policy is much more important in order to be able to withstand any new shocks and to continue to attract new productive investment.

The competition 

The Cypriot banking system has gone through a period of restructuring. Now we are seeing mobility, acquisitions and mergers. How does the Bank of Cyprus intend to respond to the growing competition?

Competition has always been part of the banking system in Cyprus, and we have always taken it into account when formulating our strategic plan. And the competition is not only the traditional banks, but also all the fintechs that are taking a piece of the pie, especially in transactional banking. Our strategy is specific, long-term and based on a concrete, actionable plan. We have the discipline and the patience to move forward based on that plan, with a long-term view.  Competition is a positive thing for us because it pushes us to be better and to move faster and with greater intensity.

For instance?

We are very flexible in our organisational structure to make quick decisions, but we are also pioneers in our products. We may be 125 years old, but we decided to invest in technology a few years ago. Bank of Cyprus has gone very far beyond the traditional banking model in the way it operates and we have moved to a new holistic model. We are investing in technology and developing a model that allows us to build trusted relationships with our customers.

I dare say that Bank of Cyprus is ahead of the competition and I will explain why. The Bank's growth is based on technology and what we want to offer our customers is an ecosystem of services and opportunities through an application. The Bank's mobile app is evolving into a super app, where by the end of the year our customers will be able to make payments, transfer money, apply for loans, buy insurance products, make investments and buy banking products through one app, as well as to conduct B2B and B2C transactions through the Jinius digital platform. More than 1 billion B2B payments were made through Jinius in 2024, and the target is to reach 2 billion this year. With Quick loan, we have provided loans of more than EUR 200 million in two years.

We created Joey, the banking app for kids and teens, and recently added Fleksy for installment purchases. We have a model that works and that builds trust and long-term relationships with customers.

I would like to reiterate that I do not see Bank of Cyprus as a traditional bank. We are a technology pioneer with applications and products that stand out in the market. Our strategic direction is strongly technology driven.

Will you be experimenting with AI? 

Artificial intelligence is something that we are already starting to use in the development of our products and services. I think over time it will be something that we will incorporate more and more. In the meantime, we have also created Sofia, our first internal chatbot, which marks a new era in the Group. An era in which AI becomes an ally in our daily work. In the first phase, the chatbot will provide immediate assistance on our Organization's circulars, while being continuously "trained" to provide additional information and facilities. 

In this model that you have described, is there room for expansion abroad and particularly in Greece? There is a significant Cypriot presence in Greece, both in terms of individuals and businesses, and Bank of Cyprus has a good reputation in the Greek market from its previous presence.

Physical expansion anywhere is not an end in itself. And as far as Greece is concerned, our strategy for the moment is what we have today. Cautious expansion in shipping and cautious expansion in selected large, healthy Greek businesses. In 2024, we lent around EUR 400 million abroad and the goal is to lend more this year.

There is a negative image of banks in Cypriot society. Are you concerned about this? Is this image fair?

The banking system is an easy target for the problems of society, and not only in Cyprus.

I have said several times that the banking system is being given a responsibility that is not its responsibility, which is the horizontal improvement of the standard of living of a Cypriot citizen.

This, let me say, is not the task of the banking system. The job of the banking system in Cyprus and in the rest of the world is to finance the economy. There is no other way for the economy to function without the banks, especially in Cyprus. As the Bank of Cyprus, we had record lending in 2024, but also in general the provision of loans from the Cypriot banking system to the Cypriot economy is quite good in relation to its size. There is no one who is creditworthy who cannot get a loan. And as you mentioned earlier, competition is increasing and this is to the benefit of customers.

Bank of Cyprus values its reputation. We recognize our responsibility to the community and therefore invest in society through initiatives such as the establishment and ongoing support of the Bank of Cyprus Oncology Centre, the support of the Anti-Cancer Association, the establishment of the IDEA Innovation Center, SupportCY, the Bank of Cyprus Cultural Foundation and other actions that actively contribute to society. Most importantly, we support the development and prosperity of our country by financing individuals and businesses.

Another issue that people are concerned about is interest rates. Public opinion does not consider the current level of interest rates to be fair. 

I think the interest rates on new loans are very competitive, both for mortgages and for business loans. It should be understood that the overall system interest rates are also affected by the mix of loans. That is, what interest rates you offer. In Cyprus, we have had mostly floating rate loans and a few fixed rate loans. Abroad, most mortgages are fixed rate. So when interest rates went up, most mortgages were not affected and therefore the mix appears with a lower interest rate than in Cyprus. From then on, we had a sharp rise in interest rates and as a bank, we provided facilities to our customers, including repricing.

But the issue of interest rates and understanding how they work is also an issue of financial literacy. People need to be educated about risk taking. For example, banks also offer loans with fixed interest rates for 5, 10, 25 years, which the borrower can choose and forget about interest rate fluctuations. Floating rate loans may be cheaper, but in case of a change, you may pay a much higher rate, as happened in previous years. But in general, I think that in Cyprus we should expect a slightly higher interest rate on loans than the European average because of the small size and high level of private debt.

Cypriot banks do not have many fixed-rate loans, so I think that when the ECB rate stabilises, the country will converge towards the European average.

On the deposits?

In terms of deposits, there is a lot of liquidity in the system and there is no competition to attract new deposits. If you look at other countries with the same liquidity characteristics, interest rates are lower than the European average. How the public manages its deposits is also a matter of culture. There are many opportunities for low-risk investment products, but customers do not choose them.

What do you tell investors when you present the bank abroad?

We start with the environment in which we operate, and we operate in the Cypriot economy, which has much better indicators than the EU average. Investors recognise that we operate in a positive environment. From there, we present the bank's market position. The bank is a market leader in loans and deposits, it is a market leader in insurance, payments and financial services. It is a bank that invests in technology. We have a diversified business model, which means that we are not only dependent on interest income. Around 70% of our expenses are covered by non-interest income. We have the lowest level of non-performing loans in Cyprus and Greece, at 1.9%.

All this translates into what investors are interested in, what they will get at the end of the day, which is the dividend. This bank was the first to pay dividend in Cyprus and Greece. This year, the dividend and the repurchase of own shares will exceed EUR 240 million, and we have announced a dividend policy of 50% to 70% for the next few years.

Personal career path

You have had a long career with the Bank of Cyprus. You started as a branch manager and worked your way up to the top. How have you experienced this journey? From the chaos of 2013 to today?

It is an incredible journey, with experiences that shape not only characters and personalities, but also mindsets.

And they shape mindsets because you see how easily and quickly things can change, either for the better or for the worse. The first few years in the bank, everything was set in stone, which creates complacency, a mindset that doesn't seek change and continuous improvement. And suddenly you find yourself in a crisis, and when you find yourself in a crisis, there is nothing to copy, there is no manual. I mention these things because it's not just about where you are today, it's about where you started from.

And don't forget, there is no other organisation in Cyprus and in Europe that has gone through what the Bank of Cyprus has gone through and that has managed to be in this very good position today.

I took over as CEO just before the pandemic, and in this chaos, we decided to grow the bank, seeing light at a time when there was none. I am proud because we showed courage in difficult times, and at the same time we made all the necessary cuts: aggressive reduction of NPLs, rationalization of the organizational structure and staff, investment in technology. And when these were done in 2019 and 2021, no one could have predicted what would happen in 2022 with the war in Ukraine and Russia.

But I would like to stress that you need a very good team to go far. In every crisis, in every challenge, our team has proven that with hard work, cooperation and innovation we can overcome any obstacle.