Latest BoG data show that credit contraction in the Greek market remained almost stable at 4.8% y-o-y in August, from 4.9% in July, with balances reaching €233.0bn corresponding to 111.7% of GDP. Loan balances eased 0.6% m-o-m with net flow retaining its downward trend for second consecutive month on extended deductions of €1.05bn in August from €1.43bn in July and additions of €0.85bn in June.
Individuals & private non-profit institutions’ lending growth remained on negative grounds, with balances reaching €108.1bn, down 0.3% m-o-m and 4.2% y-o-y. Monthly net deductions continued unabated for twenty-ninth consecutive month at 0.35bn in August from €0.46bn in July and €0.26bn in June.
Housing loan balances contracted 0.3% m-o-m and 3.6% y-o-y to €75.5bn. Deductions continued for twenty-fifth month in a row at 0.27bn in August from €0.29bn in July and €0.11bn in June.
Consumer credit slipped 0.3% m-o-m and 5.3% y-o-y to €30.8bn. Monthly net deductions remained almost flat m-o-m at €0.16bn.
Corporate lending outstanding balances retreated 0.9% m-o-m and 5.3% y-o-y (Jul: -5.3%) to €111.0bn, Monthly net flow remained negative with deductions easing to 0.66bn in August from €0.94bn in July and additions of €1.07bn in June.
Loans to sole proprietors stood at €14.0bn, up 0.5% m-o-m and down 4.7% y-o-y. Monthly flow remained at low levels with outflows of 42m in August from €33m in July and additions of €49m in June.
Lending constraints of Greek banks and tight liquidity conditions coupled with the prevailing macro uncertainty and consumers’ reluctance to involve in any lending activity are expected to retain, in my view, lending growth at negative levels, hovering at 4-5% in the coming months, on continuing outflows in the household lending sector, while corporate lending flow volatility is expected to be maintained.