Private sector deleveraging, or the reduction of loans to households and enterprises, is continuing despite the significant improvement in the country’s economy.
Although the slowdown in the economic contraction has been significant, bringing negative growth to just 0.3 percent in the second quarter of the year, credit expansion has remained negative, at 3.9 percent in December 2013, 4.1 percent in March and 3.5 percent at end-June.
That does not mean banks are not issuing any loans at all, but rather that more money is being paid back than is being loaned out. Bank officials say that a significant part of the shift in the balance is due to several major companies resorting to the international markets to refinance their obligations via bond issues.
The word in the banking sector is that the local credit picture will improve considerably in the last quarter of the year, which may well end up in positive territory. They add that 2015 will be a year of credit expansion, which will add to the improvement already observed in the country’s economy.