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Low Deposit Yields Persist In Cyprus As Banks Sit On Excess Liquidity

by THEFUTURE.TEAM

Patient Depositors Face Minimal Returns

For depositors willing to lock their funds for over a year, even marginal interest returns can be realized. In contrast, those opting for deposits of less than one year receive negligible interest, as banks capitalize on near-zero rates for short-term liquidity. This leaves many investors scrambling for alternative fixed-income instruments that offer satisfactory performance.

Alternative Investments And The Rise Of Real Estate

Banks have not introduced many new investment products lately, effectively steering investors toward real estate, which typically offers stronger returns than traditional deposits. Time-deposit schemes launched several years ago under regulatory and political pressure once provided gradually increasing interest rates over 12, 18, and 24 months. In 2024, the average yield for long-term deposits stood slightly above 1.5 percent. Since then, high deposit rates have slipped off the policy agenda, and with liquidity levels remaining abundant, yields have settled back at historically low levels.

Comparative Analysis: Cyprus Versus The Eurozone

The persistently low interest rates on deposits in Cyprus have positioned them among the smallest in the Eurozone, despite sporadic upward movements in time deposit rates. Data from the Central Bank indicates a gradual reversion to the subdued levels observed in 2023. For example, by December 2025, the average market rate for household time deposits up to two years had dropped to 0.75%, matching figures seen in November, compared to 1.19% in December 2024.

Market Dynamics And Future Outlook

In 2024, deposit yields were notably higher as banks were compelled, amid political pressure, to increase rates. By December 2023, the average deposit rate was 0.69% compared to a mere 0.13% in 2022. Furthermore, the rates on household deposits flagged for durations exceeding three months remained effectively stagnant at 0.07% throughout 2023 to 2025.

For corporate deposits, the average market rate currently hovers around 1.11%, down from 1.82% in December 2024 and 1.69% in December 2023. Analyses from the Central Bank also note that rates for new time deposit products continue to decline. For instance, household deposits with maturities between one and two years fell from 1.57% in December 2023 to 0.83% in December 2024 and further down to 0.49% in December 2025.

Transparent Data Limitations

It is important to acknowledge the limitations inherent in the published data by the Central Bank. The bank does not routinely disclose whether the deposits recorded are bound for one year or more versus those of shorter durations, nor does it provide the average size for each category of deposit. This lack of granularity makes it challenging for investors and industry observers to draw precise conclusions regarding the evolving deposit landscape.

Cyprus Composite Leading Economic Index Signals Steady Growth Amid Global Uncertainties

by THEFUTURE.TEAM

Robust Economic Trajectory In Cyprus

The Cyprus Composite Leading Economic Index (CCLEI) recorded a 2.9% year‐on‐year increase in January 2026, as per the revised data from the University of Cyprus‘s Economics Research Centre (CypERC). This performance, though slightly slower than the 3.1% and 3.2% gains recorded in December and November 2025 respectively, confirms resilient economic fundamentals over the period.

Sectoral Contributions And International Influences

Key components such as temperature-adjusted electricity production, property sales contracts, tourist arrivals, and retail trade activity all posted positive year-on-year growth. In contrast, external factors such as a marked reduction in Brent crude oil prices and diverging economic sentiment indicators between Cyprus and the euro area highlight a complex external environment. While the Economic Sentiment Indicator (ESI) across the euro area improved in January, the domestic ESI in Cyprus declined, reflecting a weakening business climate in the services and industrial sectors.

Detailed Insights Into Business And Consumer Confidence

Additional surveys outlined a slight deterioration in economic sentiment within Cyprus. The overall decline in the Economic Sentiment Indicator, notably a 0.2-point drop from December 2025, was primarily driven by reduced confidence in the construction, retail trade, and industrial sectors. Despite improvements in the Services Confidence Indicator and stable consumer confidence levels, adjustments in stock levels and revised sales expectations contributed to a softer outlook among business leaders. Construction firms, facing seasonal constraints and labor shortages, adopted a more neutral stance, while industrial players tempered expectations due to less favorable assessments of stock levels and production.

Methodology And Future Outlook

The CCLEI, designed to provide early warning signals for turning points in business cycles, derives its insights from an array of domestic and international indicators. These include tracking trends such as the Brent crude oil price in euros, property sales contracts, tourist arrivals, and credit card transaction values. The centre’s ongoing assessment, including its recent summary of business and consumer surveys, suggests that despite external geopolitical and economic uncertainties, the Cypriot economy maintains a stable growth trajectory.

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