According to latest BoG data, credit contraction in the Greek market remained stable at 4.0% y-o-y in January following a deceleration recorded in the previous months (from 4.8% in October to 4.0% in December) with balances reaching €225.5bn corresponding to 116.8% of GDP. Loan balances eased 0.9% m-o-m with net deductions rising to €296m in January from €195m in December. January negative flow is entirely attributed to household lending net deductions of €392m, while corporate lending recorded net additions of €96m.

Individuals & private non-profit institutions’ lending growth remained on negative ground, with balances reaching €105.4bn, down 1.1% m-o-m and 3.7% y-o-y (Dec: -3.9%). Monthly net deductions continued for thirty-fourth consecutive month increasing to €392m in January from €120m in December.

Housing loan balances contracted 1.0% m-o-m and 3.2% y-o-y (Dec: -3.4%) to €73.9bn. Deductions persisted for thirtieth month in a row rising to €229m in January from just €31m in December.

Consumer credit slipped 1.1% m-o-m and 5.1% y-o-y (Dec: -5.1%) to €29.9bn. Monthly net deductions rose to €161m in January from €112m in December.

Corporate lending outstanding balances retreated 0.8% m-o-m and 4.4% y-o-y (Dec: -4.4%) to €106.5bn, Monthly net flow turned positive with net additions of €96m from net deductions of €34m in December.

Loans to sole proprietors stood at €13.7bn, down 1.0% m-o-m and 2.4% y-o-y (Dec: -3.0%). Monthly flow was zero in January from outflows of €41m in December.

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.