The banking sector of Cyprus started 2026 with a decline in deposit volumes. According to the latest statistics published by the Central Bank, in January the total volume of deposits in the financial system decreased by €851.2 million. At the same time, lending to the economy continued to grow, although at a more moderate pace compared with December.
The data cover indicators of the country’s monetary financial institutions and reflect the dynamics of fund movements in the banking system against the backdrop of changes in interest rate policy and seasonal factors.
Deposits: a sharp reversal after December’s growth
While in December 2025 a net inflow of funds amounting to €877.1 million was recorded, in January there was a noticeable outflow. The annual growth rate of deposits slowed to 5.3% compared with 6.5% a month earlier. The total volume of deposits at the end of January amounted to €56.9 billion.
The main reduction occurred among residents of Cyprus, whose deposits decreased by €767.7 million. At the same time, household deposits showed a slight increase — by €34.2 million, indicating the stability of household savings. A significant decline was recorded in the non-financial corporate segment, where the outflow amounted to almost €470 million. Other domestic sectors of the economy also showed a combined reduction in funds.
Economists note that the January decline may be related to seasonal payments, business settlements at the beginning of the financial year, and the redistribution of liquidity after an active December.
Loans continue to grow
Against the backdrop of declining deposits, bank lending in January 2026 still increased by €76.4 million. Although this figure is significantly lower than the December increase of €587.2 million, the annual growth rate accelerated to 11.2% compared with 10.7% a month earlier.
The total volume of the loan portfolio reached €26.9 billion. Loans to Cyprus residents increased by €124.2 million. The largest contribution came from other domestic sectors, where the increase exceeded €100 million. Lending to non-financial companies rose by €22.6 million, while loans to households overall remained at the same level.
Specialists link the growth in credit activity to the ongoing demand for corporate financing and investment projects, especially in the fields of real estate, tourism, and energy.
The banking sector in a changing economy
The financial system of Cyprus demonstrates resilience amid the gradual normalization of interest rates in the eurozone. After a period of active tightening of monetary policy by the European Central Bank, banks are adapting to the new conditions, balancing between maintaining liquidity and stimulating lending.
The decline in deposits in January is not considered a systemic risk, since the overall volume of deposits remains high, and the capital adequacy indicators of Cypriot banks exceed the minimum regulatory requirements. An additional factor of stability is the diversified structure of depositors and the moderate level of non-performing loans compared with the previous decade.
Experts expect that in the coming months the dynamics of deposits may stabilize, especially taking into account the recovery of business activity and the tourist season, which traditionally supports the inflow of funds into the country’s economy.