New loans up, mortgages dip in H1

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Pure new credit (excluding renegotiated loan facilities) rose by an annual 1.26% in the first six months, with rate hikes by the European Central Bank affecting mortgages which marked a reduction of over 29%.

According to the Central Bank of Cyprus (CBC), new credit provided by Cypriot banks dropped significantly in June to €240 mln from €546 mln the month before.

The larger amount granted in May was driven by a steep rise in new corporate loans, over €1 million, which amounted to €351 mln.

In June, new lending for house purchases registered the lion’s share of total new credit with €84.4 mln, down from €104.7 mln the month before.

Loans to non-financial corporations over €1 mln, which traditionally attract the highest share of new loans, dropped significantly to €61.2 mln in June from €351 mln in May.

This steep drop is believed to be associated with a backlog of lending demand during the Easter holidays in April, which pushed up the processing of new loan applications in May.

Pure new loans to NFCs up to €1 mln in June were €42.6 mln from €48.6 mln in May, while other new lending rose to €30.1 mln from €9.6 mln in May.

According to the CBC, new consumer credit remained broadly unchanged in June, amounting to €21.5 mln, down from €22.7 mln the month before.

During the first six months, the continued interest rate hikes by the ECB since last year, coupled with rising construction costs, have adversely affected new mortgages for house purchases, which dropped by 29.1% year on year to €491 mln.

New corporate credit over €1 mln in the first half of 2023 rose 30.6% to €818.7 mln compared with €626.1 mln in the same period last year.

Corporate loans under €1 mln dropped by an annual 6.8% to €256 mln in January – June 2023, from €274.6 mln in 2022.

Consumer credit in the first half of 2023 rose 23% year on year, with new loans reaching €108 mln from €77.8 mln in the respective period last year.

Other new lending rose by an annual 51.3% in the six months to June, reaching €61.3 mln from €40.5 mln in 2022.