Credit contraction decelerated to 4.0% in December

According to latest BoG data, credit contraction in the Greek market decelerated for second consecutive month to 4.0% y-o-y in December from 4.6% y-o-y in November and 4.8% in October, with balances reaching €227.7bn corresponding to 117.4% of GDP. Loan balances eased 0.9% m-o-m with net flow retaining its downward trend for sixth consecutive month, yet at significantly lower net deductions of €152m in December from €722m in November and €1,037m in October. Furthermore, outflows in all lending segments were contained below the €100m mark for the first time since the beginning of the crisis.

Individuals & private non-profit institutions’ lending growth remained on negative ground, with balances reaching €106.6bn, down 0.1% m-o-m and 3.8% y-o-y (Nov: -3.9%). Monthly net deductions continued for thirty-third consecutive month yet a decelerating pace at €85m in December from €368m in November.

Housing loan balances remained flat m-o-m and contracted 3.3% y-o-y (Nov: -3.5%) to €74.7bn. Deductions persisted for twenty-ninth month in a row substantially dropping to just €13m in December from €224m in November.

Consumer credit slipped 0.4% m-o-m and 5.1% y-o-y (Nov: -5.1%) to €30.3bn. Monthly net deductions eased to €95m in December from €125m in November.

Corporate lending outstanding balances retreated 1.7% m-o-m and 4.0% y-o-y (Nov: -5.4%) to €107.3bn, Monthly net flow remained negative with deductions slipping to just €25m in December from €343m in November.

Loans to sole proprietors stood at €13.8bn, down 0.4% m-o-m and 3.1% y-o-y (Nov: -2.8%). Monthly outflows rose to €42m in December from €12m in November.

Lending constraints of Greek banks and tight liquidity conditions coupled with the prevailing recession and consumers’ reluctance to involve in any lending activity are the key reasons for negative credit expansion, on continued outflows in the household lending sector and negative – yet volatile – corporate lending flow. A deceleration of credit contraction and potential net additions may be evident after the completion of Greek banks recapitalisation.

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