STROVOLOS, Cyprus – Bank managers have been desperate as of late in projecting an optimistic image for their institutions, while shareholders have been cringing on the side with prospects that earnings haven’t reached the peak yet and might not be enough to get returns on their investments.
Banking staff is on the same zombie-like sentiments as well, hoping to get more lucrative exit packages.
In recent times, the same situation faces more in the banking sector. They have been under massive criticisms from the public about their charges, which are often exorbitant, enforced on ordinary customers. In the end, a lot of clients are getting frustrated and the confidence in lenders has started waning.
According to the opinions of the public, the heavy fees that banks are trying to impose might have been put in place to compensate for the salaries of their bloated and unproductive workforce.
Both public banks, the Bank of Cyprus and Hellenic, announced their 9-month results. The report from both banks showed a depressing data when it comes to their income. The earning numbers for both banks have stayed static year-on-year, with nothing exciting or new to report on.
Despite the seemingly unmoving numbers in the bank’s profits after one year, it didn’t come as a surprise for most in the market as the majority in the banking sector is flushed with cast currently. The situation is mainly caused by negative interbank rates, which doesn’t generate any profit. To put it simply, banks don’t have other significant ways to gain revenue.
Both the Bank of Cyprus and Hellenic largely rely on the income generated from their insurance subsidiaries. Both public banks have very limited exposure towards providing financing services to the shipping sector and also have been quiet in terms of investing in new growth areas, like the energy sector.
One of the major burdens that these banks, along with other smaller financial institutions, continue to face is non-performing loans’ high rate, which is primarily caused by large corporates and mortgages on facilities and homes.
The profits of banks are expected to even shrink further as foreign investors start taking their money towards other more promising financial centers and the passport-for-investments scheme and golden visas beginning to dry up.
Moreover, the trend of investors putting their money into start-ups hasn’t picked up as predicted, especially with those start-ups having countless fund-raising systems to choose from, with most are outside of Cyprus.
Unless there are schemes through business chambers and employer’s pressure for loans to SMEs that are one of the main forces that drive the market, there is little to no investment prospects for banks in the horizon.