Cyprus sees significant uptick in new loans

In June 2024, new loans in Cyprus substantially increased, reaching €330.6 million, up from €234.9 million in May. Data from the Central Bank of Cyprus (CBC) show that total new loans, which include both new and renegotiated contracts, climbed to €514.9 million from €391.6 million the previous month.

This rise was driven by a notable increase in pure new loans, which grew by €95.7 million. Consumer loans edged up to €21.7 million from €21.2 million, with pure new loans increasing to €20.3 million from €19.8 million. Loans for house purchases rose to €129.9 million from €119.7 million, with pure new loans in this category jumping to €107.1 million from €92.2 million.

Additionally, loans to non-financial corporations for amounts up to €1 million grew to €77.8 million from €55.5 million, with pure new loans rising to €53.9 million from €43.3 million. The most significant growth was seen in loans to non-financial corporations for amounts over €1 million, which nearly doubled to €272.4 million from €188.0 million, with pure new loans in this segment soaring to €149.3 million from €79.7 million.

Deposit rates and lending trends

Deposit interest rates also saw an uptick in June. The rate for household deposits with a maturity of up to one year increased to 2.17% from 2.02% in May. Similarly, the rate for deposits from non-financial corporations rose to 2.35% from 2.29%.

Lending rates presented mixed trends. The interest rate on consumer credit fell to 6.18% from 6.49%, while the rate for house purchase loans dipped slightly to 4.52% from 4.53%. In contrast, the rate for loans to non-financial corporations for amounts up to €1 million rose to 5.45% from 5.27%, but the rate for loans over €1 million decreased significantly to 5.33% from 6.33%.

Cyprus private debt declines as GDP grows

In the first quarter of 2024, Cyprus' total private debt, covering both households and non-financial corporations, stood at 195% of GDP, a slight decrease from the previous quarter due to GDP growth.

According to the CBC, household debt was €19.6 billion at the end of March 2024, representing 65% of GDP, down from 66% in the previous quarter. Household financial assets totaled €56.3 billion, with 56% in cash, deposits, and loans, 3% in debt securities, 24% in shares, and 17% in other financial assets. Household debt has decreased by 51% since December 2016.

Non-financial corporations' debt reached €39.3 billion, making up 130% of GDP, down from 133% at the end of 2023. Their financial assets amounted to €68.7 billion, with 17% in cash and deposits, 5% in loans, 0.6% in debt securities, 45% in shares, and 32% in other financial assets. The debt ratio for non-financial corporations has fallen by 81% since December 2016.

These financial shifts highlight Cyprus' ongoing economic adjustments and efforts to manage debt levels amid growth.

[Information from CNA]