Cyprus banks tighten lending criteria in the third quarter of 2020, while there was increased demand for loans from businesses and households, according to the bank lending survey for October, compiled by the Central Bank of Cyprus (CBC).
According to CBC survey, "on the one hand, banks have adopted stricter criteria in offering loans, mainly due to the uncertainty and potentially increased risk they face amid the pandemic and on the other hand, the demand for business loans has increased, mainly due to of the lack of liquidity they faced ".
As CBC points out, the implementation of support measures for businesses in Cyprus in the form of state guarantees, was expected to lead to a relaxation of lending criteria, and therefore to increased demand, as has been observed in some countries where the specific measures were implemented.
However, in the third quarter of 2020, according to the banks surveyed, the criteria for lending to businesses in Cyprus were affected by the crisis and became stricter than in the previous quarter, as well as the criteria for lending to households for both mortgages, as well as for consumer and other loans.
Moreover, in the third quarter of 2020, the net demand for loans in Cyprus by companies increased, according to the banks ` responses to the survey.
Demand for loans from households also increased compared to the previous quarter, both for mortgages, consumer and other loans.
According to the banks` expectations for the fourth quarter of 2020, presented in the CBC survey, the criteria for lending in Cyprus to both businesses and households for all types of loans were expected to become stricter.
In addition, according to the expectations of the banks participating in the survey in Cyprus for the fourth quarter of 2020, the net demand for loans from both businesses and households for all categories of loans is expected to increase.
Source: CNA
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