Cyprus Business Now

Cyprus’ banking sector has seen its net interest income double in the first half of 2023, marking a 100 per cent increase compared to the same period last year.

This surge is attributed to consecutive interest rate hikes by the European Central Bank (ECB).

According to data from the Central Bank of Cyprus (CBC) regarding the profitability of the banking system, net interest income for the first half of the year soared to €864.6 million, up from €432 million in the first half of 2022. It’s worth noting that the substantial increase can be traced back to the ECB’s interest rate hikes, which began in July 2022.

For the period from April to June 2023, net interest income reached €468.5 million, compared to €396 million from January to March of the same year.

Based on the data, total interest income for the first half of the year exceeded €1 billion, nearing the total interest income for the entire year of 2022, which was €1.18 billion. In comparison to the first half of the previous year, total interest income shows a 98 per cent increase.

Interest expenses of the banking system also increased by 92 per cent, totaling €209.2 million compared to €109.1 million during the same period last year. However, it’s worth noting that interest expenses for the second quarter of 2023 have more than doubled compared to the first quarter of the year, registering a 130 per cent increase.

The rise in interest expenses reflects the cautious increase in deposit interest rates and the significant rise in the cost of banks for issuing financial instruments such as MREL bonds and Tier 2 reduced eligibility bonds.

Income from fees and commissions remained at approximately the same levels, totaling €178.7 million for the first half of the year, compared to €177 million during the same period last year.

Significant growth is also seen in taxation, which amounted to €76 million for the first half of the year, marking a 221 per cent increase compared to the same period last year.

Furthermore, the taxation for the first half of the year has already exceeded the total taxation for the entire year of 2022, which was €64 million.

The net profit for the Cypriot banking system for the first half of the year reached €609 million, showing a 1,054 per cent increase compared to the first half of 2022, during which there was no impact from the interest rate hikes that started in July 2022.

Cyprus saw a 3.1 per cent decrease in the Industrial Producer Price Index in August compared to the same month last year, according to data from the Cyprus Statistical Service.

In August 2023, the Industrial Producer Price Index reached 137.6 units (base year 2015=100), marking a 0.1 per cent increase compared to July 2023. However, when compared to August of the previous year, there was a noticeable 3.1 per cent decrease.

For the period from January to August 2023, the index recorded a 7.6 per cent increase compared to the same period in 2022.

In August 2023, when compared to July 2023, the index remained stable in the mining and quarrying sectors and in the electricity supply sector. It increased by 0.2 per cent in the manufacturing sector. On the other hand, there was a 0.3 per cent decrease in the water supply and material recovery sector.

Analysing changes compared to the same month in the previous year, there was a 6.7 per cent increase in the mining and quarrying sectors, a 3.9 per cent increase in manufacturing, while there was a significant 17.0 per cent decrease in the electricity supply sector and a 9.2 per cent decrease in the water supply and material recovery sector.

Looking at specific manufacturing sectors in August 2023 compared to the same month the previous year, there were increases in the production of non-metallic mineral products (8.8 per cent), the food and beverage industry (6.2 per cent), the manufacture of furniture, other manufacturing activities, and the repair and installation of machinery and equipment (5.5 per cent).

In addition, increases were observed in the production of petroleum refining products, chemicals, pharmaceuticals, and preparations (4.3 per cent), the manufacture of electronic and optical products and electrical equipment (2.6 per cent), and the manufacture of paper and paper products and printing (2.3 per cent).

Conversely, there was a decrease in the production of basic metals and the manufacture of metal products (-5.8 per cent).

The Cyprus Stock Exchange (CSE) ended Wednesday, October 4 with losses.

The general Cyprus Stock Market Index was at 129.74 points at 13:10 during the day, reflecting a decrease of 0.63 per cent over the previous day of trading.

The FTSE / CySE 20 Index was at 78.70 points, representing a drop of 0.63 per cent.

The total value of transactions came up to €340,734.

In terms of the sub-indexes, the main and alternative indexes fell by 0.46 per cent and 0.86 per cent respectively. The hotel and investment firm indexes, meanwhile, remained unchanged from the previous day.

The biggest investment interest was attracted by the Bank of Cyprus (-1.69 per cent), Hellenic Bank (no change), Salamis Tours (no change), KEO (-2.5 per cent), and Petrolina Holdings (-0.89 per cent).