Cyprus banks squeeze more out of customers

Money and Banking Statistics published on the website of the Statistical Service CYSTAT show that banks have been squeezing more and more out of their customers over the past few years, by charging more for their loans and giving out comparatively less in deposit interest.

Since interest rates were liberalised in 2001, spreads have shot up by 261 basis points from 1.5% in 2000 to 4.11% in 2004.

Building loans boom for third year

The same data show that building and construction was the fastest-growing category of bank lending for the third year in a row in 2004.

Total bank advances and loans for building and construction reached CY{ 1,588.4 mln, rising by 15.3% compared with 2003. In 2003, they had risen by 15.0% and in 2002 by 12.9%.

The second fastest-rising category was personal loans, which rose by a fast 12.7% to reach CYP 4,237.6 mln. Personal loans still account for the largest bulk of all loans: they accounted for 45.4% of all loans in 2004.

The dismal performance of manufacturing is reflected in a second year of decline in loans to the sector: loans fell by 3% to CYP 524.2 mln, having dropped by 3.7% in 2003.

Foreign and domestic trade, perhaps influenced by the poor performance of retail sales, also showed weakness, with loans to this sector falling by 2.7% to CYP 1,561.7 mln, having dropped by 0.6% in 2002.

Fiona Mullen