Household and corporate lending grew at a slower pace in February, underscoring a deceleration evident in the last two years, provisional statistics released by the Bank of Greece yesterday showed. Private sector credit growth fell to 18.1 percent in February from 19.3 percent in the previous month, with the outstanding balance standing at 88.79 billion euros. The slowdown in loan growth came despite almost daily launches of new investment products by one bank after another in a bid to capture market share in one of the most competitive segments. Proton Investment Bank economist Christos Avraamides said the slower pace was «normal» and even healthy for the banking sector and consumers alike. «In recent years, private sector credit expansion was very strong, as seen in above-40 percent growth in consumer credit. It has been slowing down, but expansion is still robust,» he said. More importantly, «lending must slow down so as not to create leverage problems for both banks and consumers,» he said. Rising household indebtedness has not created any problems to date, a survey conducted for the Bank of Greece early this year showed. It found the majority of borrowers tended to be households with high incomes and assets while debt servicing in general is well within their means. The mortgage market remained robust, with lending increasing by 34.4 percent in February, compared with 34.8 percent recorded in the previous month. Growth has been sustained by low interest rates and the housing boom. The outstanding balance reached 22 billion euros. Consumer credit lending slipped to 26.2 percent from 27 percent in January, with the outstanding balance amounting to 10 billion euros. This followed a slower pace of growth in credit card borrowing, 36.3 percent in February against 38 percent in the previous month, offsetting a robust 43.4 percent expansion in personal loans. «The slowdown in private sector credit growth is set to continue in the following months because the strong pace in previous years is just not sustainable,» said Avraamides. With total loans to GDP at around 62 percent, Greece remains an underdeveloped market compared with the EU average of about 100 percent. The catch-up process, however, could be slower than expected due in part to the launch of Teiresias, the credit bureau that is expected to come online this year. Lending growth could even fall to single digits in 2004 as a result of this and the Bank of Greece’s higher provisioning requirements for loans in arrears, Marfin Hellenic wrote in a research note in February.