New bank loans up 28.2% to May

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New credit granted by Cypriot banks increased by nearly 30% in the first five months of the year compared to 2021, pushed upwards by higher demand for household and business loans.

According to Central Bank of Cyprus data, the banking system has issued nearly €1.4 bln worth of loans as businesses and households feel encouraged to take more risk at lower interest rates following the COVID pandemic.

New loans given out by banks from January to May reached €1.36 bln from €1.06 bln in the same period last year, marking an increase of 28.2%.

Compared to pre-COVID 2019, total loans recorded a decrease of 5.3%.

The increase in the credit given comes as Banks have built up €22.7 bln of excess liquidity in their coffers, as their loan balances drop and customer deposits increase.

New business loans increased by 24.2%, reaching €668.7 mln, up from €538.5 mln in the first five months of 2021.

However, compared to 2019, business loans fell by 26.4%.

New loans to households up to May, climbed 32.3% to €697.8 mln, up from €527.5 mln, similar to a 30.5% increase in 2019.

Restructured household loans amounted to €62.8 mln, down from €131.6 mln last year, and restructured business loans were €431.4 mln from €920.6 mln.

In 2021 €2.9 bln worth of new loans were given by Cyprus banks from €2.4 bln in 2020, marking an increase of 22.2%.

Total new loans increased to €362.9 mln this May, mainly due to loans for over €1 mln and loans for purchasing homes.

The mortgage interest rate increased to 2.28%, the highest in nearly three and a half years.

The interest rate on deposits from households with an agreed maturity of up to one year remained unchanged at 0.05%, compared with the previous month.

The corresponding interest rate on deposits from non-financial corporations registered an increase to 0.01%, compared with -0.04% in the previous month.

The interest rate on consumer credit fell to 2.91%, compared with 3.00% in the previous month.

The interest rate on loans for house purchases increased to 2.28%, compared with 2.20% in the previous month.

New loans for house purchases recorded an increase to €114.7 million, from €73.1 million in the previous month.