Credit contraction decelerated to 3.5% y-o-y in March

According to latest BoG data, credit contraction in the Greek market decelerated to 3.5% y-o-y in March from 3.9% in February from 4.0% in the previous two months with balances reaching €228.4bn corresponding to 119.5% of GDP. Loan balances rose 1.5% m-o-m with net deductions easing to €365m in March from €949m in February and €296m in January. March negative flow mainly reflects household and corporate lending net deductions of €254m and €132m respectively.

Individuals & private non-profit institutions’ lending growth remained on negative grounds, with balances reaching €104.7bn, down 0.3% m-o-m and 3.6% y-o-y (Feb: -3.8%). Monthly net deductions continued for thirty-sixth consecutive month slipping to €254m in March from €462m in February.

Housing loan balances contracted 0.2% m-o-m and 3.2% y-o-y (Feb: -3.3%) to €73.5bn. Deductions persisted for thirty-second month in a row easing to €118m in March from €271m in February.

Consumer credit slipped 0.6% m-o-m and 5.3% y-o-y (Feb: -5.4%) to €29.5bn. Monthly net deductions stood at €159m in March from €212m in February.

Corporate lending outstanding balances rose 3.4% m-o-m and retreated 3.6% y-o-y (Feb: -4.3%) to €110.0bn, Monthly net flow remained negative for second month in a row with a drop of net deductions to €132m in March from €457m in February.

Loans to sole proprietors stood at €13.6bn, up 0.1% m-o-m and down 2.0% y-o-y (Feb: -1.9%). Monthly net flow remained at low levels with inflows at €21m from outflows of €29m in February.

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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