Credit decline will not exceed 2 pct if GDP rebounds
Banks expect credit to continue shrinking in 2014, albeit at the slower rate of 2 to 3 percent, against a 4 percent contraction last year, with the latest Bank of Greece data showing a 3.83 percent yearly decline in loans issued in the first 11 months of 2013.
In the period from 2009 to 2013 the balance of loans to households and enterprises dropped by 39 billion euros due to the crisis, while deposits have fallen by 75 billion euros. Since end-2009 loans to enterprises have dropped by 26.3 billion euros, or by 20.2 percent, as in end-November 2013 the corporate loan balance stood at 103.7 billion, from 130.04 billion euros four years earlier.
Bank officials have told Kathimerini that if the economy confirms positive expectations for growth this year, the credit shrinking rate may be no more than 2 percent on an annual basis, with a return to credit expansion next year after five consecutive years of contraction, provided the general economic landscape remains favorable in 2015.
They warn, however, that should conditions take another negative turn, there will be a return to uncertainty and the economy will revert to a declining course, affecting credit flows with multiple consequences.