The Central Bank of Cyprus (CBC) has released its latest statistics for November, showing a general decline in both deposit and lending rates, with the notable exception of large corporate loans exceeding €1 million. The report also highlights a surge in new loan activity across various categories, indicating a dynamic shift in the financial landscape of Cyprus.
Deposit Rates See Moderate Declines
Interest rates on deposits for both households and non-financial corporations recorded slight decreases in November:
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- Households: The interest rate for deposits with a maturity of up to one year fell to 1.70%, compared to 1.76% in October.
- Non-Financial Corporations: Corporate deposit rates also declined, dropping to 1.99%, down from 2.19% in the previous month.
Lending Rates: A Mixed Picture
While most lending rates decreased in November, large corporate loans above €1 million experienced a rise:
- Consumer Loans: Rates dropped significantly to 6.99%, a notable decline from 8% in October.
- House Purchase Loans: The interest rate for home loans decreased to 4.50%, compared to 4.62% in the previous month.
- Corporate Loans:
- Loans to non-financial corporations for amounts up to €1 million saw a decline to 5.01%, down from 5.45% in October.
- In contrast, loans exceeding €1 million recorded an increase in rates to 4.97%, up from 4.72%.
New Loan Activity Surges
November saw a significant rise in the total volume of new loans, which increased to €635.7 million, compared to €533.8 million in October.
- Consumer Loans:
New consumer loans rose to €25.3 million, of which €22.3 million were classified as pure new loans. This marks an increase from €21.3 million (including €20.2 million pure loans) in October. - House Purchase Loans:
Home loans increased to €129.5 million, with €98.5 million in pure new loans, compared to €115.7 million and €96.1 million, respectively, in October. - Corporate Loans:
- Loans for amounts up to €1 million rose to €73.5 million, including €57.8 million in pure new loans, up from €57.3 million and €41.8 million, respectively, in October.
- Loans exceeding €1 million also grew significantly to €398.2 million, although pure new loans in this category decreased to €154.5 million, down from €201.8 million in October.
Implications For Cyprus’ Financial Sector
The combination of falling interest rates and increased loan activity reflects evolving financial trends in Cyprus. The lower borrowing costs appear to be encouraging higher loan uptake across sectors, particularly in consumer and housing markets. However, the increase in rates for large corporate loans suggests a nuanced approach by financial institutions in addressing varying market needs.
As businesses and households continue to adapt to changing economic conditions, these trends will be crucial in shaping the trajectory of Cyprus’ financial landscape heading into 2025.
