By Stelios Orphanides
The gap between deposits and loans in the Cypriot banking system shrank last month to a mere €3.1bn, the narrowest since January 2013, two months before the bail-in, the central bank said.
Total deposits in the banking system rose last month by €335.1m to €49.5bn while total loans fell by €110m to €52.5bn, the lowest since September 2008, the month in which Lehman Brothers collapsed dragging the world financial sector into chaos, the Central Bank of Cyprus said in a statement on its website.
The increase in deposits in September was mainly on €181m in inflows to accounts held by non-financial corporations and €97.2m to household accounts which saw their balance increase to €11.8bn and €28.8bn respectively, the bank supervisor said. Other financial intermediaries saw their deposits increase by €73.8m to €6.2bn while those held by insurance corporations and pension funds decreased by €33.5m to below €2bn.
The decrease in loans was mainly on deleveraging among households which repaid their loans to banks by €58.6m last month to €21.7bn, the central bank said. Other financial corporations reduced their outstanding loans by €37.8m to €8.7bn while net loan repayments of non-financial corporations was €4.7m reducing their debt to €21.3bn.