In June 2023, the Cyprus banking system experienced substantial growth in deposits and loans, according to data released by the Central Bank of Cyprus (CBC). Deposits surged to €52.3 billion, marking a net increase of €399.2 million from the previous month's €164.8 million rise. The annual growth rate also improved slightly to 2.7% compared to 2.6% in May 2023.

At the same time, liquidity in the banking system reached €27.2 billion. Notably, loans in the banking system displayed a positive trend for the second consecutive month, reaching €25.1 billion, with a net increase of €123.2 million from May 2023's €90.6 million increase.

The outstanding amount of deposits and loans presents a promising outlook for the country's financial sector, providing a boost to the economy amid global economic uncertainties.

The significant growth in total deposits was primarily driven by other financial intermediaries (including investment organizations), which saw a substantial increase of €248.1 million. Non-financial corporations also contributed to the rise, recording a net increase of €156.9 million. Additionally, household deposits rose by €23.9 million. However, insurance corporations and pension funds experienced a decline of €42.1 million in deposits.

Comparing deposit data from June 2022, the current 2.7% annual growth rate indicates a steady improvement in deposit activity, reflecting investors' confidence in the Cyprus banking system.

Loan data also demonstrated an upward trajectory in June 2023, with total loans amounting to €25.1 billion. This positive trend contrasts with the previous year's performance, where loans experienced a decline of 1.2%, which improved to 1.3% in May 2023.

Within the loan segment, non-financial corporations saw a significant increase of €78.4 million in loans, indicating growing business activities. Additionally, loans held by households rose by €42.8 million, with a considerable portion of €29.4 million attributed to housing loans.

Meanwhile, in a bid to support the community and bolster the local economy, Alpha Bank Cyprus Ltd introduced the "Reward Program for Consistent Housing Loan Borrowers." This program, effective from August 1, 2023, to July 31, 2024, aims to reduce the current interest rates on housing loans and shield borrowers from potential base interest rate increases during the program's tenure.

Under the program, a maximum limit will be imposed on the variable base interest rate, as agreed upon in the respective housing loan contracts, with a reduction of 20 basis points (0.20%) from the rate set on March 31, 2023.

Consistent housing loan borrowers will automatically be enrolled in the program without any additional action required on their part. The reduced interest rate and adjusted repayment amount will be communicated to borrowers through a letter sent to their mailing address shortly after the program commences.

By participating in this program, borrowers are safeguarded from future base interest rate hikes while also potentially benefiting from any rate reductions during the program's duration.