CBC: Cyprus lending rates near Eurozone median, deposit rates lowest in bloc
The Central Bank of Cyprus (CBC) released a quarterly bulletin this week, offering a review of how local interest rates compare with those across the euro area.
Titled “Cypriot Interest Rates in a European Context: Analysis and Comparison”, the report says lending rates in Cyprus, both for outstanding balances and new loans, are broadly aligned with the Eurozone median. Specifically, the interest rate margin on outstanding loans stands at just 0.09 percentage points above the Eurozone median for households and 0.44 percentage points for non-financial corporations (NFCs). For new loans, the spread is even narrower, at 0.24 percentage points for businesses, while household lending rates are nearly identical to the Eurozone median.
However, the picture is notably different on the deposit side. Deposit rates in Cyprus, for both outstanding balances and new deposits, remain the lowest in the euro area. The Central Bank attributes this to the exceptionally high liquidity levels in the Cypriot banking sector and the relatively small size of the domestic banking market. In December 2024, Cyprus recorded a Liquidity Coverage Ratio (LCR) of 333%, far above the Eurozone median of 184% and the average of 163%.
