Citing its concerns about the rapid pace of credit expansion and the asset quality of the Greek banking sector, the Bank of Greece (BoG) yesterday announced increases in provision rates for different categories of loans. The central bank’s disquiet came after eurozone-related interest rate reductions in the last few years led to a massive jump in personal and mortgage lending and credit card borrowing. Credit expansion in the private sector in October was a robust 19 percent, with mortgage loans up by 35.5 percent and credit card borrowing by 27.7 percent, BoG’s provisional figures showed. With Greek household debt still significantly below EU averages, lending is expected to grow strongly this year. Credit rating agency Moody’s in a report issued last week said the fast speed of credit expansion in Greece «raises concerns about future asset quality problems and highlights the importance of the appropriate risk-management systems.» It said banks’ ability to manage their risks successfully would set the leaders out from the followers. The new provision rate for loans where repayment has been delayed by more than a year increases to 50 percent from 40 percent. Provisions for bad debts are also due to rise to 60 percent from 50 percent. Provision rates for consumer and personal loans and credit card borrowings are set to increase by 10 percent to 40 percent. The 30-percent reduction on provisions for mortgaged housing loans will continue to be valid on condition that the loan does not exceed 70 percent of the value of the property. Banks will be allowed to adjust the effect on their capital adequacy ratio in two stages, once on June 30 and again at the end of the year.