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Robust Cyprus Loan Growth: Annual Lending Up 11.2% Amid Deposit Contraction

Market Overview

The Cyprus banking sector is witnessing a notable shift as annual loan growth edges upward to 11.2%, despite a significant contraction in overall deposit levels. The latest report from the Central Bank of Cyprus (CBC) underscores these contrasting trends, signaling a dynamic market environment.

Declining Deposits

According to the CBC’s most recent MFIs deposits and loans statistics, total deposits plunged by €851.2 million in January 2026, reversing the net increase of €877.1 million recorded in December 2025. This decline reflects a decreasing momentum in deposit accumulation, with an annual growth rate dropping from 6.5% to 5.3%. The outstanding deposits now stand at €56.9 billion, with Cyprus residents’ deposits alone falling by €767.7 million. In a nuanced breakdown, household deposits experienced a modest uptick of €34.2 million, while non-financial corporations saw a decrease of €469.7 million, and other domestic sectors collectively dropped by €332.2 million.

Expanding Loan Portfolios

In contrast to deposit trends, the credit market has shown marked resilience. Total loans increased by €76.4 million in January 2026, albeit down from the €587.2 million net growth recorded in the previous month. More notably, the annual expansion of total loans accelerated, rising to 11.2% from 10.7%, bringing the current loan portfolio to €26.9 billion. The demand for credit is particularly evident among Cyprus residents, whose loans jumped by €124.2 million. Meanwhile, loans to non-financial corporations only grew by €22.6 million, and household borrowing remained static. Other domestic sectors contributed an additional €101.5 million in new loans.

Implications for Stakeholders

This divergent trend between deposit contraction and loan expansion may compel stakeholders to reassess liquidity and credit risk frameworks. Analysts suggest that while the robust loan growth indicates a healthy appetite for borrowing, the simultaneous decline in deposits could signal liquidity pressures, necessitating tighter risk management strategies among financial institutions.

Conclusion

The evolving financial landscape in Cyprus, marked by a strong loan growth rate and diminishing deposit volumes, presents both opportunities and challenges. As the CBC continues to provide granular insights into these trends, market participants must remain vigilant, balancing growth ambitions with prudent liquidity management.

Ryanair Cuts 20 Routes In Belgium As Aviation Taxes And Fuel Costs Rise

Ryanair is cutting 20 routes and more than one million seats from its Belgian winter 2026 schedule, citing higher aviation taxes and rising fuel costs. The airline said it would reduce its fleet by six aircraft across Brussels Charleroi and Brussels Zaventem, representing a $600 million reduction in investment.

At the centre of the dispute is Belgium’s planned aviation tax increase, from €2 per ticket in January 2025 to €7 in January 2027. Ryanair argues that higher charges will make the country less competitive than European markets with lower operating costs.

O’Leary Warns Of Higher Fares In 2027

Ryanair chief executive Michael O’Leary has also warned that airfares could rise significantly next year as the airline’s existing fuel price protection expires.

“We guarantee no fuel surcharges, but there is no doubt that air fares are going to rise significantly in 2027 because of much higher oil prices,” O’Leary told Euronews.

The airline has secured fuel prices at approximately $67 per barrel for 2026 through advance pricing agreements. O’Leary expects costs to roughly double next year as that protection ends.

Oil prices have risen amid the war in the Middle East and concerns over supply routes through the Persian Gulf. Brent crude closed at $109.86 per barrel on Friday, its highest level since May, before moving above $110, according to the report.

Belgium Faces Pressure Over Aviation Taxes

O’Leary argues that aviation taxes do more than increase airline costs: they can also redirect passenger traffic, investment and tourism towards countries with lower charges.

“The Belgian government is doing exactly the opposite,” he said, warning that the planned increase could discourage investment, reduce passenger numbers, hurt tourism and cost jobs.

Ryanair said it had already redirected six aircraft, more than one million seats and 20 routes away from Belgium for winter 2026. The airline warned that further cuts could follow if the tax remains unchanged.

It also criticised the EU emissions trading system, arguing that it raises the cost of intra-EU flights while flights to destinations outside the bloc do not face the same burden. O’Leary called for Belgium to abolish aviation taxes, saying higher charges would shift demand and tourism towards more competitively priced destinations elsewhere in Europe.

Airlines Face Wider Cost Pressures

Belgium’s planned tax increase was reduced from an earlier proposal to charge €10 per ticket following industry pressure. Ryanair maintains, however, that the revised rate remains too high.

The capacity cuts come as other airlines also adjust their schedules amid challenging market conditions. Sweden’s SAS and easyJet have both reduced flights this year.

Ryanair is urging the Belgian government to reconsider the tax, warning that maintaining higher charges could further weaken the country’s aviation market.

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