ECONOMY

Credit flow slows to a trickle

Loan growth continued to slow in July, reflecting the tight liquidity conditions that have been putting the squeeze on the majority of business, according to Bank of Greece data. Credit expansion to businesses and households in July slowed to an annual pace of 2 percent, from 2.4 percent in June and 2.8 percent in May. Total private sector debt at the end of July reached 261 billion euros, versus 262.3 billion in June and 255.6 billion in May. Tight liquidity conditions are affecting 86 percent of businesses – which are already hurting from plunging consumption – according to recent survey results from the Athens Chamber of Commerce and Industry (EBEA). Finance Minister Giorgos Papaconstantinou told Parliament earlier this month that lenders interested in seeking financial support from a 25-billion-euro bank plan will need to tell the government the rate at which they expect to pump money into the economy by disclosing credit growth plans. Meanwhile, Alpha Bank, the country’s third-largest lender, wrapped up the reporting season for banks yesterday by announcing better-than-expected first-half net profits. Hit by a one-off tax, higher provisions and weaker loan growth, Alpha Bank’s first-half net profits fell 82.2 percent year-on-year, to 38.2 million euros. Analysts were expecting a figure of about 23 million euros. The bank booked a 61.9-million-euro one-off tax on 2009 earnings, imposed by the government to shore up public finances. «Despite a tough operating environment, we delivered another solid quarterly operating performance from our core banking activities,» Alpha’s CEO Dimitris Mantzounis said in a statement. «Our culture of capital preservation, as evidenced by the EU stress test results and our defensive loan book, gives us confidence that we could survive even more adverse conditions and provides the platform for building on our financial performance in the future,» he said.