Stabilization of interest rates within the next year

What is the forecast for the Cypriot economy for 2023? 

Cyprus’ economy is expected to continue to grow in 2023 as reflected in the latest forecasting by the Ministry of Finance, the Central Bank and the European Commission. Of course, the growth rate for 2023 is expected to be lower than in 2022 and limited to around 2.5% of the GDP compared to this year’s 6%. It appears that during the first half of 2023 the disposable income of households and businesses will continue to be under strain and be affected by inflation and hiking energy prices as well as the direct and indirect impact of the war in Ukraine. What worries us is the external environment and especially the situation in Europe, as it maydirectly impact the tourism sector. The situation in Britain for instance (although the initial indications are not worrisome), may affect tourist arrivals and by extension, revenue. In terms of tourism, in 2022 the loss of the Russian and Ukrainian markets was noticeable, yet arrivals from other markets such as Scandinavian countries, Poland, France and Germany increased. We believe that this will also be the case in 2023, while tourist arrivals from neighbouring Israel are also expected to continue. 

What are your predictions for the financial sector for 2023? Do you believe it will take a positive or negative turn or will it remain the same as in 2022? 

As a primary driver of the economy, the financial sector is affected by the wider economic environment as it partly reflects the economic sentiment. We therefore expect increased uncertainty in the first quarter of 2023 which may affect loan demand, and an impending stagnation. This is also expected to be the case with deposits, however we must not forget that currently, there is excess liquidity in the banking system. From there on, it is estimated that from the second quarter onwards we will be on the road to recovery, barring unforeseen circumstances. 

What are the key trends, events and developments to look out for in your industry for 2023? 

Following a challenging decade and continuous efforts to tackle non-performing loans, we are confident to say that to a large extent, this issue has been resolved for the Bank of Cyprus. Of course, we remain alert for timely intervention, where and when needed, while it is expected that interest rates will also stabilise within the next year. We are now focused on the major area of digitisation, as technology’s accelerating pace leaves no room for complacency. Investment in technological upgrading is after all at the heart of our strategy, as we want to offer the best digital products and services to our customers, something which I believe we consistently deliver in practice, but to also simplify internal processes to our customers’ benefit. 

What can we expect from your group in 2023? What are your goals? 

We have successfully concluded the rationalisation of our balance sheet and as I have mentioned, alongside the traditional areas of supporting the economy by granting loans to businesses, we intensify our efforts and activity towards technological excellence part. We have significant projects to showcase in this area, such as the new radical product Quick Loans. In particular, it offers the ability to apply for personal loans up to €15k, current accounts and credit cards through mobile banking. Our customers will therefore be offered the privilege of enjoying another innovative tool in 2023. And speaking of our customers, I would like to emphasise that our strategy is always based on customer-centric approach. Such example is the Jinius platform which connects businesses and individuals in a single digital environment. The Bank of Cyprus stands strong, ready to support businesses, households and the wider economy through yet another difficult period governed by heightened uncertainty.