Due to the coronavirus pandemic in 2020, the number of new credits issued by Cyprus banks has dropped sharply.
According to the country's central bank, the total amount of new loans for the year fell to 2.4 billion euros, compared with 3.2 billion euros in 2019. Thus, the overall drop was 25%.
As it turned out, banks have excess liquidity in their treasuries in excess of 16 billion euros, as their loan balances are decreasing while a number of customer deposits is increasing.
At the same time, despite the accumulated money, it is difficult for banks to find viable borrowers to issue new credits, because individuals and many enterprises already have overdue loans.
Borrowers, (especially companies) have become more cautious about credits. At the same time, it is clear that the coronavirus pandemic has reduced the incomes of many of the island's residents. By the way, the decrease in the volume of loans occurred even despite the support for new government loans through subsidizing interest rates on new mortgage loans from March 2020.
The amount of new mortgage loans for 2020 decreased to 783 million euros, which is 11% or 93 million euros less than in 2019.
New small loans (up to € 1 million) to non-financial corporations decreased by 17%, to € 365 million (€ 438 million in 2019). New loans (€ 1 million) to non-financial corporations decreased by 37% or € 581 million (€ 965 million in 2019). The amount of other new loans was 141 million euros, which is 2.2% or 40 million euros less than in 2019. Finally, the amount of consumer loans decreased by 7.5%, to 149 million euros, compared with 161 million euros in 2019.
The number of restructured loans of households increased to EUR 218.2 million, compared to EUR 156.4 million in 2019, and a number of restructured loans to enterprises increased to EUR 536.8 million, compared to EUR419.9 million in 2019.
Interest rates in Cyprus remain at historically low levels:
- The interest rate on private deposits for one year decreased to 0.08% (0.09% in the previous month).
- The interest rate on deposits of non-financial corporations fell to 0.09% (0.11% in the previous month).
- The interest rate on loans (more than EUR 1 million) to non-financial corporations fell in December 2020 to 3.13% (3.23% in the previous month).
- The interest rate on loans over EUR 1 million to non-financial corporations increased to 3.26% in December 2020 (2.93% in the previous month).
- The interest rate on consumer loans in the last month of the year increased to 2.99% (2.96% in November 2020).
- But the interest rate on mortgage loans, on the contrary, increased to 2.16% in December 2020 (2.10% in November 2020).