Cyprus banking sector credit expansion and deposit rates in June 2026

In June 2026, new loans in Cyprus experienced a significant increase, reaching €626.2 million compared to €361.9 million in May, according to Central Bank of Cyprus (CBC) data. This growth was primarily driven by business loans exceeding €1 million, which more than tripled to €387.5 million. Mortgage loans also saw a modest rise to €152.1 million, while consumer loans increased to €25.1 million. Conversely, small-scale business loans under €1 million declined to €54.5 million.

Despite the rise in lending activity, deposit interest rates in Cyprus remain among the lowest in the Eurozone, despite minor increases to 1.42% for household term deposits and 1.41% for non-financial corporations. The CBC attributes this divergence to high banking liquidity, noting a Liquidity Coverage Ratio of 310%, well above the EU average of 158%. Furthermore, Bank of Cyprus reported that its total new lending for the first half of 2026 reached €1.64 billion, marking a 2% year-on-year increase, driven largely by housing demand and international corporate clients.

The overall trend for the first half of 2026 shows total new loans across the market reaching €2.4 billion, reflecting a 3.9% annual decline. While the banking sector maintains strong liquidity, the disparity between high liquidity and low deposit rates continues to be a defining feature of the Cypriot financial landscape.