Decline in Deposits and Loans Observed in July 2023
Corporate Loans Decreased by €127.3 Million
Data released by the Central Bank of Cyprus (CBC) on Monday showed a decline in both deposits and loans in July 2023, reversing the upward trend of the previous two months.
The CBC reported that total deposits decreased by €301.1 million in July 2023, compared to an increase of €399.2 million in June 2023. Most of this reduction was attributed to a net decline of €227.9 million in domestic deposits. Household deposits fell by €74.7 million.
Interestingly, government deposits increased by €184.3 million, mitigating the overall drop in total deposits. The annual rate of change stood at 2.4%, down from 2.7% in June 2023. The total balance of deposits in July 2023 dropped to €51.9 billion.
The loan portfolio also showed a net decrease of €100.3 million in July 2023, compared to an increase of €123.2 million in June 2023. The main contributor to this decline was a €109.9 million drop in domestic loans. On the flip side, loans to residents of other EU member states increased by €9.2 million.
Corporate loans decreased by €127.3 million, while household loans showed a mixed picture. Consumer and housing loans increased by €15 million and €10.7 million, respectively, while other types of household loans decreased by €9.6 million. The annual rate of change was -1.0%, a slight improvement over -1.2% in June 2023. The total balance of loans in July 2023 reached €25.0 billion.
Meanwhile, on Monday, August 28, 2023, CBC Governor Konstantinos Herodotou met with representatives of the Cyprus Banking Association. Key issues in the Cypriot banking system, including interest rates and foreclosures, were discussed.
Governor Herodotou reiterated the need for banks to continuously and promptly assess both global and local economic factors when determining their interest rates and other charges for customers. He emphasized the importance of having a well-argued rationale concerning foreclosures.
The banks were also updated on the CBC’s ongoing initiative aimed at further reducing the volume of Non-Performing Exposures (NPEs) in the banking system. Mr. Herodotou underscored that the meeting was conducted in a constructive atmosphere.
