Strong economic growth - the highest growth rate since 2008 - is credit positive for Cypriot banks Moody's ratings agency said on Thursday, noting however that despite the growth reduction of non-performing exposure will be slow.

According to Moody's, Cyprus' Statistical Service data showing that the country's annual GDP growth rate had accelerated to 3.9 per cent in 2017 from 3.4 per cent in 2016 is positive for the banks because it supports asset values, improves the repayment capacity of a large number of defaulted households and businesses, and provides banks with increased lending opportunities, which will support their declining pre-provision profits.

The pick-up in economic activity strengthens businesses' cashflows and improves labour market conditions for households - unemployment in Cyprus dropped to 9.8 per cent as in January 2018, from 10.3 per cent in December 2017, and 16.7 per cent in January 2015.

As reported in Cyprus Mail.