Credit expansion this year will be clearly better than last year, according to market representatives, adding that it could reach up to 8 billion euros.
The main reasons are the following:
Business loans and international funds will support the expansion
A large part of the credit expansion is expected to be supported by businesses that still have to make significant changes in order to keep up with modern technology.
Net flows to businesses in the first 11 months of 2023 amounted to approximately 1.0 billion euros. The estimate is, however, that the figures will eventually be even higher.
The rise in interest rates and policies
The slowdown in credit growth seen in 2023 is mainly related to the rise in interest rates, which resulted in higher repayments especially during the first half.
Taking into account the estimates of the ECB’s officials, who keep saying how difficult it will be to lower interest rates, it is understandable that the banks must change the mix of lending and emphasize where resources can be absorbed without, of course, creating new bad loans.
The management of housing loans
Business loans continued to be supported in the 11th month of 2023 by the programs of the European Investment Bank, the Hellenic Development Bank and the Recovery and Resilience Facility.
As far as housing and consumer loans are concerned, it is clear that households are not rushing to borrow, at least in the present phase, but under certain conditions credit expansion can be stimulated in this sector.
The significant support from the Recovery Fund for credit expansion
The Greek economy and businesses continue to benefit from the significant flow of EU capital in the form of grants and competitive interest rates mainly through the Resilience and Recovery Facility (RRF) loans.
According to the banks’ calculations, investment financing from the Resilience and Recovery Facility should amount to approximately 5.0 billion euros in 2024, which justifies the estimate for a net credit expansion that can reach 8 billion euros.
Strong momentum in the real estate market – The new law
Another factor for higher credit expansion is the estimates for strong dynamics of the real estate market, as residential real estate prices rose 14% last year.
Green renovations and ESG
Even small businesses and hotel units mainly will increase the demand for green renovation products in order to serve the goals of the National Energy and Climate Plan of Greece until 2030.
