Demand for loans has increased

Published: 16/12/2023

New Lending in Cyprus Expands on Corporate Credit While Household Demand Weakens

According to data released by the Central Bank of Cyprus, total new credit originations recorded solid growth in 2023. The primary driver of this increase was corporate lending, whereas consumer borrowing continued to contract under the pressure of elevated European Central Bank (ECB) benchmark interest rates.

January–July 2023 Cumulative Results

Total new credit facilities (excluding restructurings) rose to €2.035 billion, up from €1.933 billion in 2022, surpassing the pre-pandemic 2019 baseline (€1.990 billion).
Corporate credit: expanded by 22.6% to €1.255 billion (compared to €1.024 billion in 2022).
Household borrowing: contracted by 14.2% to €780 million (down from €909 million in 2022), though up 2.1% against 2019 levels.

Monthly Breakdown for July 2023

Aggregate new credit issuance registered just €19.2 million.
Household lending saw a marginal increase of €0.7 million.
Loans to non-financial corporations decreased by €124.8 million.
Remaining financial sectors registered an aggregate decrease of €15.5 million.

Key Underlying Drivers:

For businesses: Credit expansion reflects immediate operational working capital needs and inventory accumulation amidst elevated input costs.
For households: Aggressive ECB interest rate hikes and broader inflationary pressures prompted families to defer new financial obligations, particularly residential mortgages.

Conclusion
The Cyprus financial sector displays divergent trajectories across segments:

enterprises are actively drawing credit facilities to maintain liquidity and fund core operations;
households remain cautious, reflecting broad macroeconomic uncertainty and conservative capital management.

Demand for loans has increased

New Lending in Cyprus Expands on Corporate Credit While Household Demand Weakens

January–July 2023 Cumulative Results

Monthly Breakdown for July 2023

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