Cyprus deposit rates trail euro area average as bank deposits continue to rise

Nicosia, Cyprus. Euro area borrowing costs remained broadly stable in July, while Cyprus deposit rates stayed substantially below the euro area average and lending rates remained comparatively high.

Euro area borrowing costs

The European Central Bank said the composite cost of borrowing for new corporate loans across the euro area was broadly unchanged at 3.80 per cent in July.

The corresponding indicator for new household loans for house purchases also remained broadly stable at 3.54 per cent.

Cyprus deposit rates

According to Central Bank of Cyprus data, the interest rate on household deposits with an agreed maturity of up to one year rose to 1.42 per cent in June, from 1.25 per cent in May.

The rate remained below the euro area average of 2.03 per cent for comparable deposits.

For non-financial corporations, the average rate on fixed-term deposits of up to one year increased to 1.41 per cent from 1.31 per cent, compared with a euro area average of 2.19 per cent.

Deposit growth

Deposits held with Cyprus financial institutions increased by a net €562.3 million in July, following a €601.2 million rise in June.

The increase was largely driven by Cyprus residents, whose deposits rose by €603.2 million. Household deposits increased by €195.7 million, while deposits held by non-financial corporations rose by €257.1 million.