The Bank of Cyprus on Friday outlined a range of initiatives designed to ease the financial strain on customers in the face of market interest rate volatility.

In its announcement, the bank detailed key measures such as interest rate reductions and a customer rewards programme, aimed at reducing loan servicing costs to borrowers.

“We have implemented significant measures over the past months to mitigate the challenges brought about by elevated market interest rate fluctuations,” the bank said.

It added that “these actions aim to lower the cost of loan servicing and offer tangible benefits to borrowers”.

This announcement by the Bank of Cyprus follows remarks made by Central Bank of Cyprus (CBC) governor Christodoulos Patsalides earlier this week, highlighting that interest rates in Cyprus are “less responsive” compared to other eurozone countries.

Patsalides attributed this to the small size of the Cypriot economy and the sector’s excess liquidity, with a loan-to-deposit ratio of 49.3 per cent, significantly lower than the EU average of 106.5 per cent.

Moreover, recent ECB data revealed that Cyprus continues to offer some of the eurozone’s lowest deposit rates, with household time deposits dropping to 1.76 per cent in October, far below the eurozone average of 2.74 per cent.

The bank also said that on 18 September 2024, the Bank of Cyprus reduced its base lending rate by 0.60 per cent in direct response to the European Central Bank’s (ECB) interest rate cuts.

“This decision provided immediate financial relief to approximately 8,000 borrowers, primarily households with mortgages linked to the ECB base rate,” the bank stated.

The bank emphasised that the prompt adoption of rate reductions during a period of heightened interest rates “demonstrated our sensitivity to customer needs”.

Additionally, falling Euribor rates further eased burdens for 9,600 more clients, as the index declined from 4.14 per cent in October 2023 to 2.6 per cent.

“This gradual reduction translated into lower monthly instalments for borrowers with loans tied to this benchmark,” the bank explained.

Moreover, for the second consecutive year, the bank launched a rewards programme for borrowers who are up to date with their payments.

“This initiative reinforces our commitment to supporting customers who remain diligent in their financial obligations,” the statement said.

Under this scheme, 20,000 mortgage holders, with loans totalling €1.2 billion, received 300 million reward points through the bank’s Antamivi loyalty programme.

“Households with variable-rate mortgages linked to Euribor or the ECB base rate were the primary beneficiaries,” the bank said.

Those enrolled in the Diamond and Gold categories of the Pronomia programme received rewards equivalent to 25,000 points per €100,000 loan balance.

The bank also underscored its broader economic role in Cyprus. “Our commitment to supporting the real economy and our customers during challenging periods is unwavering,” it stated.

It further mentioned that “reducing the cost of borrowing helps release liquidity, driving economic stability and growth”.

“We continue to align our strategies with customer needs and sustainable development goals,” the bank concluded.