Funds are flowing into Cypriot banks at a significant rate, with deposits increasing by nearly half a billion euros in April, reflecting a robust financial landscape and a positive economic trajectory.
According to data released by the Central Bank of Cyprus, total savings recorded a net increase of €492.9 million in April 2025, a sharp rise compared to a net decrease of €66.3 million in March 2025. This also marks a substantial improvement from April 2024, which saw an increase of €209.1 million. The annual growth rate of total deposits reached 7.6%, up from 7.1% in March 2025, bringing the total outstanding deposits to €56.1 billion in April 2025.
Banks Attract Deposits Despite Low Rates, Focus Shifts to Lending
Cypriot banks are accumulating significant funds monthly without offering particularly attractive interest rates to entice depositors. The challenge now lies in converting these deposits into loans for households and businesses to stimulate the economy. While lending conditions have been tight, recent bank lending surveys indicate a change in bankers’ expectations, suggesting a more favorable environment for loans. The primary goal for banks is not merely to accept deposits and profit from interest rates, but to transform these savings into productive credit.
Domestic Deposits Drive Growth, Balanced Between Businesses and Households
A breakdown of the deposit sources reveals that domestic residents are the primary drivers of this growth, with their deposits increasing by €410.5 million. Deposits from residents of third countries rose by €42.8 million, and those from European countries by €29.6 million.
Of the domestic deposits, the increase was almost equally split between businesses (€173.1 million) and households (€172.2 million). Other intermediate organizations contributed €119.1 million, and the central government added €22 million. Conversely, there was a minor outflow of €0.7 million from insurance companies and pension funds.
The Central Bank attributes the rise in business deposits to the positive performance of the Cypriot economy and boosted corporate revenues. For households, the positive trend is linked to the beneficial impact of de-escalating inflation and continued resilience in the labor market, both of which have supported incomes.
Loan Growth Lags Behind Deposits, But Shows Improvement Year-on-Year
While deposits surged, total loans recorded a net increase of €169.1 million in April 2025, significantly less than the €492 million in new deposits collected by banks. This figure is also lower than the €429.9 million net increase in lending seen in March.
Nevertheless, the annual growth rate of total loans reached 4.9%, up from 3.1% in March 2025. Compared to April 2024, the lending picture this year is much better, as last year saw a negative change of -€278.6 million. The outstanding balance of total loans in April 2025 reached €25.6 billion.
Loans to Cypriot residents increased by €13.0 million. More specifically, loans to households grew by €27.7 million, while loans to non-financial corporations recorded a decrease of €12.8 million. Loans to other domestic sectors showed a total decrease of €1.9 million.
This robust growth in deposits, especially from domestic sources, signals strong confidence in the Cypriot banking sector and reflects broader economic stability. The challenge for banks now will be to effectively channel these funds into new lending to further support economic activity.
