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Cyprus experienced a rise in net new loans in October, driven primarily by businesses borrowing more, especially for amounts exceeding €1 million. Data released by the Central Bank of Cyprus (CBC) on Wednesday shows net new loans increased to €360 million, up from €286.3 million in September. However, the overall volume of new loans, including renegotiations, dropped from €667.9 million in September to €533.8 million in October.
A significant trend seen in October was a sharp decline in interest rates for business loans. Rates for loans to businesses above €1 million decreased from 5.26% to 4.72%, while loans for amounts under €1 million saw a smaller drop from 5.59% to 5.45%. This easing in business loan rates indicates a more favorable environment for companies seeking financing.
On the other hand, the picture for consumer loans wasn't as positive. New consumer loans saw a drop to €21.3 million in October from €30.2 million in September, with net new loans down from €22.4 million to €20.2 million. Housing loans also saw a slight decline, falling to €115.7 million from €121.6 million in September, reflecting a similar downward trend in borrowing by individuals.
Interest rates for household loans, including mortgages, increased slightly in October. Mortgage rates rose to 4.62%, up from 4.53%, while consumer loan rates climbed significantly to 8.00%, from 6.50% in the previous month. This shift suggests that while business borrowing is becoming more affordable, the cost of consumer credit is rising.
Another notable change in October was in deposit rates. Household fixed-term deposits saw a decrease, with rates falling to 1.76% from 1.98%. In contrast, rates for corporate fixed-term deposits increased, rising to 2.19% from 2.14%.
Bounced Checks Decline, But Still Impacting Cyprus' Economy
Meanwhile, Cyprus saw a decrease in the number of bounced checks, according to the CBC. In November 2024, 16 checks worth €21,445 were recorded, a significant drop from the 33 checks valued at €60,851 in November 2023. The number of bounced checks has also decreased over the year, with 268 uncovered checks totaling €554,970 recorded from January to November 2024, compared to 313 checks worth €1.6 million during the same period in 2023.
Additionally, nine new individuals and entities were added to the preliminary list of the Central Information Registry (CIR) for issuers of uncovered checks. This brings the total to 185 people and entities added to the CIR so far in 2024, down from 249 during the same period last year.
As Cyprus continues to navigate a challenging economic environment, the data paints a mixed picture. While business lending is on the rise, consumer borrowing is slowing, and the country still faces issues with bounced checks. However, the overall trend in reduced bounced checks is encouraging and suggests a healthier financial landscape.
With the government's ongoing efforts to upgrade the country's business environment, the coming months could reveal whether these trends will continue.
Source: CNA
