Net Interest Income (NII) for the Cypriot banking sector nearly doubled in the first quarter of 2023, driven by the ECB’s rising interest rates in a bid to contain inflation.

According to data released by the Central Bank of Cyprus (CBC) NII of the island’s banking sector in the first quarter of this year amounted to €396 million compared with €213 million in the respective period of last year, marking an increase of 86% year on year.

Following the surge of inflation caused by spikes in oil prices after Russia’s invasion of Ukraine, the ECB has implemented eight rate hikes totalling 400 basis points.

According to CBC total interest income for the Cyprus banking sector in the first quarter of this year amounted to €486.9 million compared with €265 million in the respective period of last year, marking an increase of 84%.

Furthermore, profit after tax for the banking sector in the first quarter of 2023 rose by 2,400% year on year, amounting to €218 million from just €9 million in the first three months of 2022.

Net operating income in the first quarter of 2023 rose by an annual 94% to €91 million from €52 million in the respective period of last year.

Interest expense in the first quarter of this year amounted to €91 million from €52 in the first quarter of last year.

Operating expenses in the first quarter of 2023 increased to €255 million from €204 million in the respective period of last year, whereas staff costs dropped to €106.5 million from €128 million in the first quarter of last year, reflecting the implementation of voluntary retirement schemes by Cypriot banks.