Forex loans rise, deposits fall

Foreign borrowing by Cyprus residents continues to rise apace as Cypriots take advantage of lower eurozone interest rates relative to those on offer with the Cyprus pound, according to data released by the Central Bank. Meanwhile, deposits by non-residents have fallen.

Total bank loans rose by CYP 7.14 mln in April to total CYP 10.32 bln, while for the first three months of the year, total bank loans rose by CYP 348.9 mln.

Around 48% of the loans, or CYP 4.98 bln, are classified as “personal and professional loans”.

Foreign currency borrowing accounted for 18% of total bank loans in April, at CYP 1.86 bln, compared with CYP 8.46 bln in local currency. Only around a year ago, foreign currency borrowing was about 10% of the total.

Of the CYP 1.86 bln in foreign currency borrowing, the main bulk (CYP 1.38 bln) is lending to residents.

Foreign currency loans have risen by CYP 210.6 mln since the start of the year and accounted for around 60% of new loans, while local currency loans have risen by CYP 138.3 mln and actually fell in April, by CYP 84 mln.

Deposits slip as non-residents withdraw

Total deposits slipped in April by CYP 40.2 mln compared with the previous month, owing to a CYP 125.1 mln drop in deposits held by non-residents to CYP 6 6 bln. Resident deposits actually rose in the same month by CYP 84.9 mln to CYP 9.7 bln.

The drop in non-resident deposits was exclusively in foreign-currency deposits. This is good news for the Cyprus pound, as it means that non-residents are not rushing to sell the pound.

Moreover, at CYP 16.3 bln in April, total deposits by residents and non-residents combined are still huge, accounting for more than double last year’s GDP.

Co-ops rise too

Co-ops account for around 23% of total deposits. Deposits at the Cooperative Credit Societies rose by CYP 48 mln in April to CYP 4.8 bln (compared with CYP 16.3 bln at the commercial banks).

Co-op loans accounted for aroudn 26% of the total. Total loans fell slightly by CYP 653,000 to CYP 3.6 bln, compared with CYP 10.3 bln at the commercial banks.

Fiona Mullen