Cyprus Sees Modest Recovery in Net New Loans Amid Rising Borrowing Costs

In July 2023, Cyprus witnessed a modest recovery in net new loans, reaching €300.5 million, up from €240 million in the previous month. This increase in lending activity comes against the backdrop of rising borrowing costs, driven by successive interest rate hikes by the European Central Bank (ECB).

From January to July, net new loans in Cyprus totaled €2.03 billion, compared to €1.93 billion during the same period in the previous year, reflecting sustained demand for credit.

Corporate net new loans exceeding €1 million experienced a notable surge, reaching €133.5 million in July. This marked a significant increase from €61.2 million in the previous month and €86.2 million in July 2022, underscoring businesses' appetite for financing in the face of economic challenges.

Housing loans, which constitute the second-largest loan category, remained relatively stable, standing at approximately €84.6 million in July. This figure was only slightly higher than the €84.4 million recorded the previous month and €77.5 million in the same period of the previous year.

Corporate loans up to €1 million also demonstrated an uptick, totaling €47 million in July. This represented a rise from €42.6 million in the prior month and €36.8 million in the corresponding period of the preceding year, suggesting continued support for small and medium-sized enterprises (SMEs).

Consumer loans experienced significant growth, reaching €24.1 million in July. This marked an increase from €21.5 million in the previous month and a substantial jump from the €13.4 million recorded in the same period a year ago. This surge in consumer borrowing could be attributed to various factors, including pent-up demand and economic conditions.

In contrast, net new loans in the category of "other loans" for July 2023 decreased to €11.4 million. This decline was notable compared to the €30.1 million recorded in the previous month and the €6.2 million reported in July 2022.

The data, sourced from the Central Bank of Cyprus, highlights the evolving dynamics of borrowing and lending in the country's financial landscape. As interest rates continue to play a pivotal role in influencing borrowing costs, economic conditions and consumer behavior will likely remain key factors shaping the lending environment in Cyprus.

By fLEXI tEAM