The Central Bank of Malta published its eighteenth Financial Stability Report, finding that the Maltese financial system remained resilient in 2025 despite global risks. Banks maintained strong capital and liquidity positions and improved asset quality, although profitability declined at core and non-core domestic banks because of weaker net interest income and rising costs. Strong mortgage and corporate lending increased concentration in property-related activity, indicating an expansionary phase in the credit cycle. The non-bank financial sector continued to grow, while insurers and investment funds maintained sound liquidity and low leverage despite some moderation in profitability. Domestic economic growth continued to outpace the euro area, but inflation remained marginally higher and faced upside risks from geopolitical developments, supply chain disruption, and energy and commodity market volatility. The report also presents tools and analysis for identifying systemic and cyber-related risks, including a financial stability risk heatmap, refinements to macro stress testing and preliminary analysis of TARGET2 data.
Central Bank of Malta2026-06-22
Central Bank of Malta finds financial system resilient but flags rising property-related credit concentration
The Central Bank of Malta found that the financial system remained resilient in 2025, supported by strong bank capital and liquidity, improved asset quality, and sound conditions in the non-bank sector. However, stronger mortgage and corporate lending increased concentration in property-related activity, while domestic bank profitability weakened and inflation remained exposed to external risks.