19/09/2012 13:56
Retail trade must survive without consumer loans since banks have become stricter in lending, at the same time that consumers are starting to change their habits.
The times of finance for cars and consumers loans seem to have gone for good, as the combination of capital pressures and erosion of the repayment ability of the borrowers, have minimized new loans.
Borrowers themselves also seem to change their habits, realizing that consumption can not be based on borrowed money, especially in a period of precarious employment and wage cuts.
According to the latest Central Bank data, the growth rate of consumer loans in July remains at very low levels.
Consumer loans grew by just 0.5% in July compared with the double-digit numbers observed during the recession of 2009, which had then maintained consumption at satisfactory levels.
Of the total €23.7 billion granted as loans to households, consumer loans hardly reach €3.4 billion, though still important for the activity in retail trade.
Bankers argue that the decline in consumer loans is lower not only due to offer but also because of reduced demand.
According to Head of Bank of Cyprus Retail Banking, Haris Puangare, "the demand for consumer loans is low and the interest rates on consumer loans are very high”.
“Banks are more reluctant in granting consumer loans because they do not involve collateral, while consumers are more hesitant and avoid lending exposures.
Similarly, Chairman of the Limassol Cooperative Savings Bank, Loris Lysiotis said:
“People are reluctant for one and a half years now. Although they have more needs because of the crisis, they are hesitant, thinking that tomorrow is uncertain”, he concluded.
The times of finance for cars and consumers loans seem to have gone for good, as the combination of capital pressures and erosion of the repayment ability of the borrowers, have minimized new loans.
Borrowers themselves also seem to change their habits, realizing that consumption can not be based on borrowed money, especially in a period of precarious employment and wage cuts.
According to the latest Central Bank data, the growth rate of consumer loans in July remains at very low levels.
Consumer loans grew by just 0.5% in July compared with the double-digit numbers observed during the recession of 2009, which had then maintained consumption at satisfactory levels.Of the total €23.7 billion granted as loans to households, consumer loans hardly reach €3.4 billion, though still important for the activity in retail trade.
Bankers argue that the decline in consumer loans is lower not only due to offer but also because of reduced demand.
According to Head of Bank of Cyprus Retail Banking, Haris Puangare, "the demand for consumer loans is low and the interest rates on consumer loans are very high”.
“Banks are more reluctant in granting consumer loans because they do not involve collateral, while consumers are more hesitant and avoid lending exposures.
Similarly, Chairman of the Limassol Cooperative Savings Bank, Loris Lysiotis said:
“People are reluctant for one and a half years now. Although they have more needs because of the crisis, they are hesitant, thinking that tomorrow is uncertain”, he concluded.
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