Cyprus Mail

Liquidity in economy improves in November, central bank says

By Stelios Orphanides

Confidence is returning to the Cyprus banking system as the gap separating deposits from loans reached €2.9bn in November, its narrowest value since March 2013, the month in which the banking crisis culminated in a bail-in, official data shows.

In November, total deposits fell by €96.4m to €49.2bn compared to the month before after increasing by €335.1m in October, the Central Bank of Cyprus said.

Total loans rose in November by €32.6m in a month to €52.1bn after falling by €110m in October.

The above changes indicate an apparent reversal in the overall deposits inflows and deleveraging of recent years, they are the result of calculations based on the European Central Bank’s (ECB) methodology which includes in addition to the overall flows, also the impact of reclassifications, re-evaluations and exchange rates.

The decrease in deposits in November was mainly on a €264.2m drop in the amounts held in the bank accounts of other financial intermediaries to €5.9bn, compared to October, the central bank said. This drop was more than offset by a monthly €130.8m increase in deposits of non-financial corporations to €11.6bn, the highest since August 2013, a sign of improved cash flow in the real economy. Household deposits fell by €14.3m to €28.7bn.

The increase in loans was mainly on €87.5m in fresh credit extended to corporations in November which as a result rose to €21.2bn, the bank supervisor said. It was partly offset by €32.7m in loan repayments by households and €21.2m repayments by other financial intermediaries which reduced their balance to €21.6bn and €8.6bn respectively.