NEWS

Banks to rein in consumer lending

Despite being on the verge of announcing record profits, banks are looking to cut back on the number of consumer loans they grant, sources told Sunday’s Kathimerini, after a drastic increase in the amount of funds being handed out. Greek households currently owe banks a total of some 52 billion euros. Of this, 35 billion euros is tied up in mortgages, almost 10 billion is in consumer loans and the rest is made up of outstanding credit card bills. The amount owed by Greeks in consumer credit skyrocketed by 36 percent this January compared to last year, according to new figures from the Bank of Greece. This rapid increase has set off alarm bells at lending institutions, which, sources said, are now considering introducing more stringent criteria when assessing whether they should award a loan to one of their customers. Bankers are also worried about outstanding loans because of a possible slowdown in economic growth over the next few years – the government has predicted a growth rate of 3.9 percent this year and 4.1 percent next, but in last week’s spring forecast the European Commission said that Greek growth would be 1 percent lower for both years. Meanwhile, banks are set to declare record profits for the first quarter of the year, largely due to the increasing number of loans they are granting. It is thought that most banks will announce that their profits have gone up by 20 to 25 percent, with some reaching 30 percent.