**Cyprus Deposits Surge by €562 Million While Loans Decline by €69 Million in July**
Deposits in Cyprus financial institutions saw a significant increase in July, with a net rise of €562.3 million, according to data published by the Central Bank of Cyprus (CBC). This growth comes amid a notable decline in total loans, which fell by €68.7 million during the same period.
The increase in deposits was primarily driven by residents of Cyprus, whose total holdings surged by €603.2 million. This growth was reflected across various sectors, with household deposits rising by €195.7 million and non-financial corporations seeing an increase of €257.1 million. Additionally, deposits from other domestic sectors contributed €150.4 million to the overall rise.
As a result of this influx, the total outstanding balance of deposits in Cyprus reached €59.2 billion by the end of July, more than double the total balance of loans. The annual growth rate for deposits also accelerated to 6.2%, a rise from 5% in June. However, it is worth noting that the monthly increase was slightly lower than the €601.2 million recorded in June.
In contrast to the positive trend in deposits, total loans experienced a net decrease of €68.7 million in July, reversing the substantial increase of €499.4 million seen in June. The decline in loans was largely attributed to €90 million in repayments made by residents from other euro-area member states. In terms of loans to Cyprus residents, there was a modest net increase of €1.8 million, indicating varied trends among households and businesses.
Household borrowing showed a positive trend, with an increase of €65.7 million. However, this was offset by a decrease in loans to non-financial corporations, which fell by €79.6 million. Lending to other domestic sectors rose by a combined €15.8 million, partially mitigating the overall decline in business loans.
Following these developments, the total outstanding balance of loans in Cyprus stood at €28.3 billion at the end of July. The annual growth rate of lending, while still robust, eased slightly to 11.1%, down from 11.6% in June.
The contrasting trends in deposits and loans highlight the shifting dynamics within the Cypriot financial landscape. The increase in deposits suggests a growing confidence among residents in the local banking system, while the decline in loans may reflect cautious borrowing behavior among businesses amid economic uncertainties.
As financial institutions continue to navigate these trends, the Central Bank of Cyprus will likely monitor these developments closely to assess their implications for the broader economy.