On July 25th, the Central Bank of Cyprus released new data on loans and deposits for June. The banking system saw a significant increase in new loans and a decrease in deposits.
Deposits
Overall Decrease: Deposits fell by €44.1 million in June, contrasting with a €925.7 million increase in May.
Annual Growth Rate: The growth rate dropped to 2% from 2.8%.
Total Deposits: Reached €53.4 billion.
Resident Deposits: Increased by €86.2 million, with households and non-financial corporations contributing €40 million and €259.8 million, respectively. However, deposits from other resident sectors decreased by €213.6 million.
Loans
Overall Increase: Loans rose by €234.6 million, significantly higher than the €70.2 million increase in May.
Annual Growth Rate: The growth rate of total loans rose to 1.6% from 1.2%.
Total Loans: Amounted to €25.1 billion in June.
Resident Loans: Increased by €176.9 million, with households and non-financial corporations seeing increases of €83.3 million and €115 million, respectively. Loans to other economic sectors decreased by €21.4 million.
Economic outlook:
The latest data from the Central Bank of Cyprus indicates a nuanced economic outlook. The decline in deposits suggests a potential reduction in consumer confidence or a shift towards spending over saving, possibly influenced by low deposit rates. Meanwhile, the rise in loans, particularly among households and businesses, points to an increased reliance on credit to support consumption and investment. This trend may drive short-term economic activity but also raises concerns about financial stability and growing debt levels, posing potential challenges for the economy's resilience in the future.
