Ancoria Bank is increasing its interest rate to 3% for time deposit accounts for 12 months, while deposit rates in Cyprus are on the drop once again.
According to the Central Bank of Cyprus, interest rates offered by Cypriot Banks on deposits stood at an average of 0.87%, down from 1.21% at the end of July.
The corresponding interest rate on deposits from non-financial corporations decreased to 1.68%, compared with 1.86% in the previous month.
Last week, the CBC released statistics on interest rates applied by monetary financial institutions in Cyprus on deposits and loans of euro area residents, recording a steep drop in deposit rates.
According to Ancoria Bank, “observing the developments and keeping up with the demands and needs of the market, the bank offers all its customers, existing and potential, a revised deposit rate”.
“Following its strategy and philosophy to redefine banking, it once again supports its customers by providing higher returns on their deposits”.
An interest rate of 3% is offered for fix-term deposits of 12 months for individuals and businesses.
Ancoria Bank has proceeded with interest rate increases on its other fixed-term deposit products.
In its unaudited statement at the end of June, Ancoria reported after-tax profits of €4.3 mln for the first six months of the year, compared to €3 mln for the whole of 2022 and €1 mln for 2021.
Substantial excess liquidity with deposits reaching €460 mln, compared to €429.8 mln the previous year and registering a Liquidity Coverage Ratio (LCR) of 583% compared to a minimum requirement of 100%.
Asset quality remains high with Non-Performing Exposures (NPE) ratio based on the European Banking Authority’s definition at 0%.
Lending Rates
The interest rate on consumer credit increased to 5.51%, compared with 5.23% in the previous month.
The mortgage rate increased to 4.50%, compared with 4.19% in the previous month.
The interest rate on loans to non-financial corporations for up to €1 million increased to 5.65%, compared with 5.17% in the previous month.
The interest rate on loans to non-financial corporations for over €1 million registered an increase to 6.33% from 5.87%.
Cyprus banks have increased interest rates on loans in parallel with increases introduced by the European Central Bank in recent months.
However, despite pressure from the government and political parties, they have kept interest rates on deposits at one of the lowest in the European Union.
On July 27, the European Central Bank (ECB) raised the three key interest rates by 25 basis points.
Accordingly, the interest rate on the main refinancing operations, the marginal lending facility and the deposit facility increased to 4.25%, 4.50%, and 3.75%, respectively.
This was the ninth time the ECB increased interest rates since July 27, 2022, to ensure that hiking inflation quickly returns to its 2% medium-term target.
The hike in lending rates has shocked households and businesses amid a fragile economic environment.
Most domestic banks announced schemes to increase the deposit rate and retention of mortgages, mainly for consistent borrowers.
However, the government and political parties demand further absorption by the banks of the increase in interest rates.
