The island’s commercial banks continued to grab market share from the Cooperative Credit Societies in terms of both deposits and loans, while among the banks there was a shift in market preferences.
In terms of loan growth, both Bank of Cyprus and Marfin Popular Bank maintained their robust growth of their lending portfolios, with BOCY holding a 26.6% share of loans and MPB a 17.6% share.
By end of January 2007, the total for loans was up at CYP 15.74 bln or EUR 27 bln from CYP 13.5 bln (EUR 23.2 bln) end of 2005 for a 16.5% increase.
The two larger banks gained a total of 21%, biting mostly into the share of the Coops, which saw their share of loans decline to 28.2% by January 2007 from 29.4% at end of 2005.
Bank of Cyprus continued to concentrate its efforts on winning market share in terms of loan growth, while an aggressive advertising campaign launched by Marfin Popular was instrumental in shifting business to
Hellenic Bank maintained its third place with 9.4% share of loans with Alpha Bank scoring one of the best performances as it increased its share of loans from 6.8% to 7.8%.
In terms of share of deposits, the decision of Bank of Cyprus to boost its margins in order to improve profitability saw its share of deposits decline to 29.6% from 31.9% previously, while an aggressive policy pursued by Marfin Popular Bank, Hellenic Bank and Alpha Bank saw their respective share of deposits climb from 20.0%, 10.7% and 5.0% respectively to 21.7%, 11.6% and 5.6%.
The total of deposits placed with
The Coops on the other hand lost market share with their combined share declining to 23.4% end January from 24.1% end of 2005.
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— Coops vs. banks
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There are 282 Co-op societies and 66 co-op savings banks in
All three Cypriot banks are key players on the FX deposit market. Collectively, Coops have a strong market share, indicating potential for significant market share gains for private sector banks, which continue to offer new and innovative packages luring the young. One of the reasons why the banks have been so successful in attracting business away from the Coops is their ability to lend in foreign currency, whereby Cypriot clients increasingly tap into cheaper priced loans in euros, yen and Swiss franc as opposed to borrowing in more expensive local currency.
A boom in property and construction loans and personal loans, which now account for 60% and 40% respective share of new loans given by banks, has also helped increase the loan portfolio of the banks.
FX deposits account for 52% of all Cyprus-based deposits. Non-resident FX deposits account for 49% of total FX deposits, growing in excess of 29% pa. with all the funds placed with the banks as opposed the Coops, which helps explain why the Coops are losing market share at such a fast pace. Foreign currency deposit demand from local residents is also growing ahead of EMU entry.
