Credit expansion to continue
Greek banks are planning for a dynamic credit expansion in 2021, mainly to businesses, but to households too, as this year is expected to signal the return of the country’s economy to a path of growth.
The new credit is estimated to climb to 4-5 billion euros net, and the activation of the Next Generation EU fund will be key to a more dynamic increase in loan issues this year. A sum of loans adding up to €30 billion is expected to flow into Greece through the fund until 2026.
Although banks’ budgets provide for financing of up to €18 billion, the net amount to enter the economy will also be the result of loan repayments by corporations and households. Given that lenders issued loans of €20 billion in 2020 (according to Hellenic Bank Association data), but the new disbursements to reach the real economy came to an estimated €6 billion, banks believe that even at a lower rate there will also be a credit expansion in 2021, which is destined to become the year the groundwork is laid for restarting the economy.
The Bank of Greece figures released on Tuesday showed that last year’s net credit to enterprises by end-November amounted to €5.3 billion. The pace of credit expansion to corporations therefore came to its highest point in the last decade, at 7.6%, while for non-credit sector companies the expansion rate amounted to 8.7%, also a decade-high.
Therefore, according to the official data, the net disbursements are expected to have come close to €6 billion throughout 2020, and there are prospects for another net €4-5 billion in new loans in 2021.
Senior bank officials in the domain of large and medium-sized enterprise funding say that the loans issued over 2020 have created a safety cushion of liquidity. This mainly concerns working capital banks have issued with the support of the Hellenic Development Bank, which currently covers businesses’ liquidity needs.
Of course demand this year will also depend on the course of the pandemic and the outlook for key sectors such as tourism and transport.