Charis Pouangare: A year of continued stability and growth for the banking sector in 2025

The year 2025 is expected to be one of further stability and growth for the banking sector, according to Charis Pouangare, Deputy CEO and Chief of Business at Bank of Cyprus. He highlights that digitisation and the adoption of new technologies will continue to shape the banking industry.

In an interview with InBusinessNews as part of the “IN Business Forecasting 2024” series, Pouangare says that Bank of Cyprus, having significantly reduced non-performing loans and invested in modern technologies, is in a strong position to face future challenges. He also expressed confidence that, thanks to the strategic moves made in recent years, the bank is well-equipped to handle any upcoming obstacles.

Outlook for the Cyprus economy

Regarding the Cypriot economy, the Deputy CEO of Bank of Cyprus expects it to continue its growth trajectory, supported by financial services, shipping, technology, and the ongoing recovery of the tourism sector.

Commenting on the trend of mergers and acquisitions, he predicts that “in the coming years, we may see further mergers and acquisitions, as the high operational and compliance costs make it difficult for smaller entities to remain sustainable.”

How do you expect the Cypriot economy to perform in the coming year? How optimistic are you about its prospects?

“The Cypriot economy has demonstrated resilience through multiple crises, such as the pandemic, inflation, and geopolitical instability. In 2025, we expect the economy to continue its growth, driven by financial services, shipping, technology, and the ongoing recovery of tourism.

International rating agencies, the European Commission, and organisations such as the IMF predict positive growth rates as the country continues to benefit from the reforms implemented in recent years, though there remains room for further improvements.

Moreover, the Recovery and Resilience Plan, which includes investments in green growth and digital transformation, will remain a key driver of economic development.

I am optimistic that, with the maintenance of fiscal discipline and the strategic approach demonstrated by both the state and businesses, 2025 could be another year of progress for Cyprus. However, continuous vigilance is required to address challenges, particularly those arising from external factors.”

Key risks for the economy

What do you see as the biggest threats to the country’s economy? What should be prioritised to ensure sustained growth?

“Despite its strong foundations, the Cypriot economy remains vulnerable to external factors. Geopolitical instability, such as tensions in our region and ongoing conflicts, creates uncertainty and disruptions in international markets.

Maintaining fiscal discipline, promoting structural reforms, and remaining adaptable to external challenges will be crucial to safeguarding the country’s growth trajectory.”

Global crises, such as inflation, rising energy prices, and even a potential trade war, inevitably affect our economy by driving up the cost of living and business operations.

Beyond these immediate concerns, there are long-term challenges, such as climate change and demographic shifts. Population aging and the need for sustainable development require targeted actions.

To maintain economic growth, it is essential to continue implementing policies that support innovation, the green economy, and the modernisation of the country’s economic base.

Further leveraging the Recovery and Resilience Plan and strengthening Cyprus’ role as a stable financial hub are also crucial.

Enhancing Cyprus’ attractiveness for foreign investments

What should Cyprus do to become an even more attractive destination for foreign investments, and how important are these investments to the economy?

Foreign investments are vital for the growth of the Cypriot economy, as they bring capital, expertise, and new employment opportunities.

Cyprus must reinforce its image as a stable and reliable investment destination by focusing on the stability of its legal and regulatory framework, reducing bureaucracy, and promoting transparency.

The country’s strategic geographical location, combined with its tax advantages (which should remain stable) and the high educational level of its workforce, is a key attraction for investors.

Further investment in sectors such as the digital economy, green development, and infrastructure can enhance competitiveness and attract high-quality investments.

In recent years, Cyprus has ranked among the top countries globally in attracting investments, and there is room for this trend to continue further.

Outlook for 2025 in the banking sector

How do you expect your company’s sector to perform in 2025? Are there any concerns?

The year 2025 is expected to be one of continued stability and growth for the banking sector.

Bank of Cyprus, having significantly reduced non-performing loans and invested in modern technologies, is well-positioned to face future challenges. This is not just our perspective—it is reflected in our results: in our dividend policy, credit rating upgrades, increased customer base, and the attraction of institutional investors.

Maintaining vigilance in ensuring the quality of the loan portfolio is essential, although, to date, we have not observed any trends that cause concern.

Thanks to the strategic moves we have made in recent years, we feel confident that the bank is capable of handling any challenge, as demonstrated by our strong performance in the latest stress tests.

Major trends and challenges

What are the biggest trends/changes you anticipate in your sector, and what are the key challenges?

Digitisation and the adoption of new technologies will continue to shape the banking sector. The use of artificial intelligence, machine learning, and data analytics is constantly improving the efficiency of our services. However, we recognise that this also brings new challenges, such as the need for enhanced cybersecurity, which remains one of our top priorities.

Simultaneously, the increasing demand for sustainable development and compliance with ESG criteria will shape the banks’ strategies, while the need for specialised products and services will continue to grow.

Mergers and acquisitions in banking

A strong trend in Cypriot business appears to be mergers and acquisitions. Will this trend be prominent in your sector as well?

I believe the developments we have seen in the banking sector over the past year to a year and a half speak for themselves. The trend of mergers and acquisitions is becoming a reality, driven by the need for scale, cost efficiency, and competitiveness in an increasingly regulated and demanding market environment.

In the coming years, we may witness more mergers and acquisitions, given that the operational and compliance costs in the sector have become so high that they are unsustainable for smaller entities below a certain scale.

Strategic development plans for 2025

What should we expect regarding your organisation’s plans and growth strategy for 2025? What steps do you intend to take in that direction?

Bank of Cyprus will continue investing in digital transformation, enhancing the capabilities of its digital channels, and offering even more tailored solutions to meet customer demands.

All changes will be customer-centric, focusing on improving customer service. Our goal is to strengthen our presence in the local market by leveraging technology to optimise customer experiences.

At the same time, we will maintain our focus on diversifying our revenue streams by introducing and promoting innovative banking and insurance products, services tailored to the unique needs of each customer, and solutions for the digital economy.

Moreover, integrating ESG criteria has been a core pillar of our strategy for years, and we believe that by doing so, we contribute to the sustainable development of society and the economy.