By Theano Thiopoulou
Copyright philenews
Cyprus recorded a 6% annual increase in bank deposits during August 2025, defying widespread concerns about economic difficulties in the private sector and reaching a historic high of €56.57 billion.
The deposit expansion occurred despite banks offering minimal interest rates on savings accounts. Domestic residents’ deposits increased by €2.3 billion from January through August 2025, with household deposits rising €850 million and business deposits climbing €1.45 billion.
“The overall increase in deposits aligns with positive domestic macroeconomic conditions,” the Central Bank of Cyprus explained in its latest economic bulletin.
Deposits reach historic high of €56.57 billion in August
Monthly deposit growth has consistently exceeded Cyprus’s 3.3% GDP growth rate recorded in the second quarter of 2025. Deposits expanded 6.5% in July and 7.1% in June, maintaining momentum above broader economic performance indicators.
Domestic resident deposits increased €133.6 million in August alone. Household deposits rose €46.5 million whilst non-financial corporate deposits climbed €152.7 million, compared to monthly increases of €34.6 million and €46.8 million respectively in 2024.
The Central Bank noted a shift in deposit preferences during 2024, with savers moving from overnight and notice deposits towards term deposits of up to one year, seeking higher returns before European Central Bank policy changes affected market rates.
Central bank attributes growth to improved business conditions
The deposit surge reflects improved business activity dynamics and household incomes, according to central bank analysis. Seasonal factors, including the summer tourism period, also contribute to periodic variations in deposit levels.
Increased precautionary saving by businesses and households provides a temporary safety net, enabling them to service debt obligations during potential economic downturns caused by global geopolitical tensions, the bank stated.
The trend towards longer-term deposits suggests reduced immediate liquidity needs among non-financial corporations, reflecting improved financial conditions and preferences for higher-yielding term deposits.
Lending declines €60.8 million despite deposit surge
Total lending recorded a net decrease of €60.8 million in August 2025, contrasting with a €74.9 million increase in July 2025. Annual lending growth remained steady at 7.2%, with total loan balances reaching €26.4 billion.
Domestic resident lending fell €69.9 million, comprising €15.5 million reductions in household loans and €48.6 million decreases in non-financial corporate lending. Other domestic sectors recorded combined lending reductions of €5.8 million.
The divergence between rising deposits and declining lending highlights changing financial behaviour patterns, with increased saving coinciding with reduced borrowing demand across multiple sectors.
