Pure new credit (loans excluding renegotiated credit facilities) rose by an annual 1.26% in the first six months of 2023, with continued rate hikes by the European Central Bank affecting housing loans which marked an annual reduction of almost 30%, data published by the Central Bank of Cyprus (CBC) show.

However, pure new credit provided by the Cypriot banks dropped significantly in June to €240 million from €546 million the month before. The large amount granted in May was driven by a steep rise in new corporate loans over €1 million which amounted to €351 million.

June Lending

In June new lending for house purchase registered the lion’s share of total pure new credit with €84.4 million, down from €104.7 million the month before.

Loans to non-financial corporations over €1 million, which traditionally attract the highest share of new loans, dropped significantly to €61.2 million in June from €351 million in May. This steep drop is believed to be associated with a backlog of lending demand in the Easter holidays in April, which pushed the processing of new loans applications in May.

Pure new loans to NFCs up to €1 million in June amounted to €42.6 million compared with €48.6 million in May, while other new lending rose to €30.1 million from €9.6 million in May.

According to the CBC, new consumer credit remained broadly unchanged in June amounting to €21.5 million from €22.7 million in the month before.

As far as the data for the first half are concerned, the continued interest rate hikes by the ECB since last July, coupled with rising construction cost have adversely affected new credit for house purchase, which dropped by 29.1% year on year to €491 million.

New corporate credit over €1 million in the first half of 2023 rose by 30.6% amounting to €818.7 million compared with €626.1 million in the respective period of last year, while loans to corporate up to €1 million dropped by an annual 6.8%, amounting to €256 million in January – June 2023, from €274.6 million in the corresponding period of 2022.

According to the CBC, consumer credit in the first half of 2023 rose by 23% year on year with new loans reaching €108 million compared with €77.8 million in the respective period of last year.

Other pure new lending rose by an annual 51.3% in the first half of 2023, reaching €61.3 million from €40.5 million in the first half of 2022, the CBC added.