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Banks suffer stillness

28/09/2009 06:44
The stillness in the bank branches and the slow money movement in the past few months forced the big banks to freeze the appointment of new staff until things in the business filed become clearer. The new Central Bank data show that the flow of new loans in the market is very low, while the net flow of deposits – excluding the state remittances – is negative.

According to the CB, the annual loan growth in August fell to 14.3%, the lowest since December 2006. Last month, it had reached 15.4%, while in August 2008 it stood at 35.9%.

The total pending loans in the market in August reached €56.9 billion against €49.8 billion last year.

The loan growth is exceptionally low this year. Since late 2008, the banks increased their loan portfolios by only 4.5% or €2.5 billion, despite the offer of low interest bearing housing and consumer loans. According to the bankers, this increase largely corresponds to the interest lending of older loans.

Deposit growth is exceptionally low too since the banks try to reheat the effort to absorb new deposits with the offer of higher interest rates.

The annual deposit growth in August fell to 3%, while in July it stood at 4.93% and in August 2008 at 13.3%.

The total deposits in August reached €58 billion against €56.3 billion in the corresponding month of 2008.

The flow of new deposits for the same month dropped sharply low. Since late 2008, the banks have added 3% or €2 billion to their deposits, while almost all stemmed from Cypriot depositors.

The Cypriots’ deposits include the state remittances of €2 billion for the strengthening of the banks’ liquidity. Excluding the remittances and the interests paid in deposits, the net flow of deposits is negative, since the businesses and the households are forced to withdraw money to deal with the economic crisis.