Cyprus banking sector witnesses substantial rise in deposits

The most recent changes to the financial landscape of Cyprus as the country's banking industry undergoes an extraordinary increase in deposits. We look into the intriguing statistics the Central Bank of Cyprus made available, examining the main causes of this increase and how it affects loans.

A noteworthy event for the Cypriot banking sector was the large increase in deposits in the month of June, which rose to a total of €52.3 billion. The rise in liquidity, which represents the difference between deposits and loans in the system, impressively reached €27.2 billion.

According to the most recent information from the Central Bank of Cyprus for June 2023, deposits have had a net increase for the second consecutive month, and loans have also seen a net rise, with a balance of €25.1 billion.

Further examination of the figures reveals that, after taking into account changes resulting from reclassifications, foreign exchange fluctuations, and other adjustments, total deposits experienced an astounding net increase of €399.2 million. When compared to the net increase of €164.8 million in May 2023, it is obvious that the increasing trend is accelerating.

When seen from an annual perspective, the rate of change in deposits increased to 2.7% in June from 2.6% the previous month, which paints a positive image for the health and stability of the banking industry.

Presently, the overall balance of deposits in June 2023 stands tall at €52.3 billion.

It is noteworthy to highlight that the increase in deposits during June can be attributed to several positive contributors. Other financial intermediaries made a significant net change of €241.8 million, while non-financial corporations also played a pivotal role, contributing a net change of €156.9 million. Additionally, households showed their trust in the banking system, with a net change of €23.9 million.

However, on the other side, insurance companies experienced a decrease of €42.1 million in deposits, signaling possible shifts in the financial landscape for certain entities.

Shifting the focus to the loans segment, the Central Bank of Cyprus data reveals that total loans in June 2023 witnessed a net increase of €123.2 million, surpassing the net increase of €90.6 million observed in May 2023. It's worth noting that, unlike deposits, the annual rate of change in loans recorded a marginal improvement, reaching -1.2 percent in June, compared to -1.3 percent in May 2023.

As of June 2023, the total balance of loans amounted to €25.1 billion.

Examining the contributors to this net change in loans during June, non-financial corporations played a substantial role, with a net increase of €78.4 million. Moreover, households also contributed significantly, showcasing a net increase of €42.8 million, out of which €29.4 million pertained specifically to housing loans.

These numbers indicate the confidence that different stakeholders, including businesses and consumers, have in the Cyprus banking system in addition to showing the banking sector's positive momentum. Observing these changes is essential to comprehending the constantly shifting dynamics of the Cypriot financial landscape as the industry continues to develop.