Credit expansion slows in August

Credit expansion slowed to 6 percent year-on-year in August, versus 6.6 percent in the previous month, under the weight of the slowing economy, data from the Bank of Greece showed yesterday. Households and businesses have been signing up for fewer loans as consumption and investments drop due to the global economic downturn, while banks tighten credit criteria fearing that customers may not be able to pay back loans. Data indicated that home loans grew by 4.8 percent on an annual basis, or 42 million euros, to 79.1 billion, slowing from 5.2 percent in August. Consumer credit also grew at a slower pace in August, expanding by 4.8 percent, or 91 million euros, to 36.4 billion euros, versus 5.8 percent in July. Credit expansion has been decelerating in Greece but remains ahead of the 16-nation eurozone, where loan growth fell to a record slow annual pace of 0.1 percent in August from 0.7 percent in July. In Greece, credit to businesses dropped 7.3 percent to 132.2 billion euros. The amount of new loans being pumped into industrial businesses, one of the sectors hardest hit by the crisis in Greece, fell to almost zero. The central bank said the amount of new loans being signed by industrial firms rose just 0.2 percent to 24.2 billion euros.