Cyprus banks are looking for new, fully solvent clients to lend out excess liquidity they now have and which is as high as €14 billion, according to Central Bank of Cyprus data.
But with half of the island’s households and businesses currently confronted with non-performing loans, commercial banks are quite restricted in domestic market lending.
Both Bank of Cyprus and Hellenic Bank have indicated the selected sectors in the economy that they wish to provide loans to. Amongst them are tourism, education, health, trade and technology, according to their reports on the results of the year’s first six months.
Bank of Cyprus specifically said: “The Group expects to continue to be able to support the recovery of the Cypriot economy through the provision of new lending. The development of new lending in Cyprus focuses on selected sectors of the economy that are compatible with the Bank’s risk profile, such as tourism, trade, real estate, professional services, technology, information/ communication, energy, education and ecological projects. ”
The Bank’s new lending for the first half of 2019 amounted to €1,111 million. As of June 30, 2019, the Group’s net loans and advances to customers amounted to €10,949 million (compared to € 10,955 million as of March 31, 2019).
The Bank is the largest lender in Cyprus with its loan market share amounting to 41.3% as of June 30, 2019 compared to 46.7% as of March 31, 2019. On June 30, 2019, the Group’s Liquidity Coverage Index stood at 253% (compared to 216% on March 31, 2019 and 231% on December 31, 2018).
Hellenic Bank also has a large reserve of excess liquidity, according to its report which also said: “The comfortable liquidity of the Bank allows it to take advantage of opportunities presented, with the main objective being organic growth. The focus for new lending will be on companies that increase the country’s competitiveness and productivity, such as in the areas of retail and commercial activities, education, health, manufacturing, tourism and shipping, targeting specific customer profiles.”
At the same time, private sector lending will focus on home loans, small loans to new customers and support for existing clients that are considered viable, it added.