Cyprus' banking sector continues to demonstrate resilience. According to the latest figures released by the Central Bank of Cyprus, bank deposits increased significantly in May 2026, while lending to households and businesses continued to grow at an accelerating pace. Experts note that this trend reflects the financial system's strong liquidity and the continued confidence of customers in the country's banking sector.
Deposits
In May, total deposits in Cyprus' banking system increased by €343.8 million. By comparison, the previous month recorded a net outflow of €123.1 million. As a result, the annual growth rate of deposits accelerated from 4.5% to 5.1%. The total amount held in bank accounts reached €58 billion.
Cyprus residents made the largest contribution to the increase. Their deposits grew by €239 million. Household deposits rose by €171.3 million, indicating that residents continue to maintain a strong preference for saving. Non-financial corporations also significantly increased their account balances, adding nearly €194 million. Meanwhile, other categories of domestic customers, including various organisations and institutions, reduced their deposits by approximately €126 million.
Economists attribute the increase in deposits to several factors, including continued economic growth, higher revenues from the tourism sector, strong activity in the property market, and deposit interest rates that remain relatively attractive compared with previous years.
Loans
Banks also continued to expand lending activity. In May, new lending increased by €260.3 million, compared with just €40.5 million in April. The annual growth rate of the loan portfolio reached 12.6%, up from 12% the previous month. The total outstanding volume of loans rose to €28.1 billion.
Within the domestic market, loans to Cyprus residents increased by €173.7 million. Households borrowed an additional €52.7 million, reflecting continued demand for mortgages and consumer loans. Non-financial companies secured an additional €63 million in financing, while other domestic borrowers increased their borrowing by a further €58 million.
What is driving the increase in banking activity?
The growth in lending indicates that banks are gradually expanding financing for the economy after a period of increased caution caused by rising interest rates across Europe. Despite borrowing costs remaining relatively high, demand for financing continues to be supported by the strength of the construction sector, investment in commercial real estate, and the ongoing expansion of small and medium-sized businesses.
The banking sector is also benefiting from Cyprus' strong tourism industry. In 2026, the island continues to record high visitor numbers, boosting revenues for hotels, restaurants, and service businesses, which in turn contributes to higher volumes of money flowing into the banking system.
What this means for Cyprus residents
The increase in deposits suggests that people in Cyprus continue to trust the banking system and prefer to keep their available funds in bank accounts. At the same time, stronger lending activity indicates that financial institutions are becoming more willing to finance home purchases, business expansion, and investment projects.
Experts believe that if economic conditions remain stable, Cyprus' banking sector is likely to maintain its positive momentum throughout the second half of 2026. However, future developments will largely depend on the European Central Bank's decisions regarding interest rates, inflation across the eurozone, and overall conditions in the global economy.