Cypriot families find it impossible to squirrel away any savings as they grapple with hefty loan payments and sky-high interest rates as household deposits decline for a fourth month.
According to the Central Bank of Cyprus, household bank accounts are taking a hit as a steady stream of withdrawals diminishes their savings to make it through the month.
The latest data reveals that total household deposits took a nosedive by €291.2 mln from July to October (July: -€74.2 mln, August: -€67.5 mln, September: -€82.7 mln, October: -€66.3 mln).
October alone witnessed a decrease of €61 mln in total deposits, starkly contrasting the robust increase of €87.7 mln in September.
The yearly change rate for total deposits dipped to 0.7%, down from 1.6% in September, leaving total deposits for October at a substantial €51.9 bln, held up by businesses.
While households are feeling the pinch and struggling to save, businesses seem to be weathering the storm much better.
Business deposits are on the rise for the third consecutive month, boasting total savings of €172.4 mln (August: €43.1 mln, September: €55.9 mln, October: €73.4 mln).
But it’s not just households in the financial downturn; insurance companies and pension funds saw a decrease of €4.4 mln in deposits for October, and other financial institutions experienced a more significant drop of €201.1 mln.
According to the Central Bank, total loans in October decreased by €212.9 mln compared to the increase of €19.2 mln in September.
The yearly rate for total loans was -0.3%, from the zero-change rate in September.
The remaining total loans in October were €24.7 bln, with loans to residents decreasing €139.6 mln.
Breaking it down, loans to households increased by a modest €0.7 mln, while loans to non-financial corporations saw a decline of €124.8 mln.
Loans to other domestic institutional sectors showed an overall decrease of €15.5 mln.
Demand for loans is affected by interest rates and the strict criteria set by banks for approving loan applications.
ECB interest rates are at 4.5% – the highest since 1999 – significantly impeding credit expansion.