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Cypriot banks have Eurozone’s second highest LCR

July 15, 2019 at 9:47am
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Cypriot banks recorded the second highest liquidity coverage ratio (LCR) in the Eurozone for the second quarter in a row, according to the European Central Bank’s supervisory banking statistics for the first quarter of 2019.

The statistics indicate that the island’s systemic banks have much higher levels of liquidity than they actually need. And that they have overcome the tightness sparked by the “haircut” on deposits back in 2013 and the mass outflow of cash that followed.

Specifically, the liquidity coverage ratio of Cypriot banks in the first quarter of 2019 stood at 325.91%, from 311% in the fourth quarter of 2018. It exceeds by 149.71% the average of the Eurozone and about three times the 100% threshold set by the Basel III Directive.

This is the result of the return of deposits coupled with the slow rate of lending. Slovenia has the highest liquidity coverage ratio, reaching 387.21% and Greek banks the lowest at 74.07%.

Cypriot banks’ net profits amounted to €116.27 million in the first quarter of the year, the same as those of Greek banks (€116.27 million), while the amount for all the major Eurozone banks was €21.748 billion.

As for the Common Equity Tier 1 of Cyprus’ banking system, this was just above the average of Eurozone banks in the first quarter of 2019. The index stood at 14.86% compared to 14.34% of the average of 114 major Eurozone banks, and remained stable compared to the fourth quarter of 2018 (14.39%).

The lowest CET1 index was recorded by Spanish banks (11.77%), followed by Portuguese and Italian with 13.01%, while Estonian banks had the highest index – 27.69%. Banks in Latvia had an index of 22.28%, in Luxembourg 20.17%, and in Slovenia 18.30%. The average index of systemic banks in Greece was 14.88%, in France 14.33% and in Germany 15.37%.

As for the leverage ratio, Cyprus stands at 8.50% and is above the Eurozone average of only 5.40%. In Greece the leverage ratio is 10.42%, in Germany 4.78%, in Estonia 12.99%, in Ireland 9.95%, in Spain 5.61%, in France 5.07%, and in Italy 5, 65%.

 

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Liquidity of Cyprus banks at 2008 levels