De­mand for credit stag­nant

Fi­nan­cial obli­ga­tions and un­cer­tainty kept in­vest­ment ini­tia­tives down to a min­i­mum in the sec­ond quar­ter

Kathimerini English - - Focus - BY EVGENIA TZORTZI

De­mand for new cor­po­rate and mort­gage loans re­mained stag­nant in the sec­ond quar­ter of the year, Bank of Greece data showed yes­ter­day, as neg­a­tive es­ti­mates about the fi­nan­cial state of busi­nesses and house­holds are keep­ing in­vest­ment ini­tia­tives to a min­i­mum.

Prospects for the sec­ond half of the year have been far from en­cour­ag­ing, as this is the pe­riod when tax pay­ments come due for tax­pay­ers and com­pa­nies, so de­mand for new loans re­mained neg­a­tive in the sec­ond quar­ter and is ex­pected to be un­changed in the third quar­ter of the year.

The sur­vey is con­ducted across the eu­ro­zone by na­tional cen­tral banks in co­op­er­a­tion with the Euro­pean Cen­tral Bank, and na­tional re­sults show that de­mand for fi- nanc­ing is grow­ing, partly thanks to the ECB’s pol­icy for bol­ster­ing liq­uid­ity con­di­tions across the euro area.

Greece is the ex­cep­tion, how­ever, as ac­cord­ing to BoG data the credit is­sue cri­te­ria re­mained very strict in the sec­ond half of the year and the ra­tio of ap­pli­ca­tions to re­jected cor­po­rate loans re­mained un­changed from the first quar­ter. De­mand for mort­gage or con­sumer loans re­mained low and the ra­tio of ap­pli­ca­tions to re­jected house­hold loans was also un­changed from Q1.

The coun­try’s com­mer­cial banks re­port that a lack of con­fi­dence and un­cer­tainty have been the main fac­tors ham­per­ing in­vest­ment ac­tiv­ity from the side of the en­ter­prises.

The spreads for new cor­po­rate loans re­main high and the av­er­age cost of bor­row­ing ranges be­tween 4 and 5 per­cent for large en­ter­pris- es, and be­tween 8 and 10 per­cent for small and medium-sized en­ter­prises.

For the fund­ing of SMEs banks draw a sig­nif­i­cant part of liq­uid­ity from the Euro­pean In­vest­ment Bank and the Euro­pean Bank for Re­con­struc­tion and De­vel­op­ment, ei­ther via di­rect fi­nanc­ing or col­lat­er­als. This usu­ally se­cures lower in­ter­est rates, which sources say re­duce the cost for en­ter­prises from 200 to 400 ba­sis points.

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