Lending demand in Cyprus increases in Q1 2016

Νet demand for loans in Cyprus by both businesses and households recorded an increase in the first quarter of 2016, according to the Bank Lending Survey conducted in the euro area Member States and published by the Central Bank of Cyprus.

According to the survey the recovery in net demand for loans started from the beginning of 2015. During the same period there wasalso an increase in net demand for by from businesses and households in the euro area.

According to the bank’s expectations for the second quarter of 2016, net demand for all categories of loans (businesses and households) is expected to record further growth both in Cyprus and in the euro area.

Net demand for businesses loans in Cyprus recorded an increase during the first quarter of 2016, surpassing the expectations of banks registered in the previous quarter for unchanged demand.

The main factors contributing to the increase in net demand was the lower interest rates and the need of business to increase inventories and working capital, due to the intensification of their activities.

In the second quarter of 2016 net demand for loans by businesses in Cyprus is expected to grow significantly.

The net demand for housing loans by households in Cyprus recorded an increase during the first quarter of 2016, to a greater extent than the banks’ expectations in the previous quarter. The main factor contributing to the increase in net demand was the general reduction of interest rates.

During the second quarter of 2016 banks in Cyprus expect an increase in net demand for housing loans by households.

At the same time the net demand for consumer credit and other lending to households in Cyprus recorded an increase, in contrast to banks’ expectations for unchanged demand, mainly due to the reduction of the general level of interest rates and the increased costs for the purchase of consumer durables.

Regarding expectations for the second quarter of 2016, banks in Cyprus expect a further increase in net demand for consumer credit and other loans to households.

The lending criteria to businesses and households in Cyprus during the first quarter of 2016 remained unchanged. According to the expectations of banks for the second quarter of 2016, the lending criteria in Cyprus in all categories are expected to remain unchanged.

Source: Famagusta Gazette