According to the Bank of Greece, the annual growth rate of total credit to the domestic economy slowed to 2.4% in September from 3.5% in August. Credit to the private sector grew 6.0%, down from 7.3%, and credit to non-financial corporations 7.8%, with a net monthly flow of €964 million. Total deposits rose by €3.14 billion, with corporate deposits up €2.36 billion and household deposits up €428 million. The annual growth rate of deposits stayed at 9.1%.

What it means: The figures show that banks keep lending to businesses, but at a slower pace than in the summer. The slowdown in annual growth reflects partly a high comparison base and a drop in lending to insurers and other financial intermediaries, not a drying up of credit to the real economy. A net flow of almost one billion euros to non-financial companies in a single month is substantial. Sole proprietors and partnerships still see their borrowing shrink year on year, which confirms that smaller firms find it harder to obtain bank financing. On the deposit side, companies are building up cash at a rate above 20% a year, most likely thanks to a good tourist season and summer receipts. That means many firms are funding part of their needs from their own resources. For those negotiating loans, the banks' strong deposit base leaves room for competition on rates, while the ECB's decision to hold rates keeps the underlying cost stable. October figures are due on 26 November.

Notice: For information only. Not investment advice or a recommendation to buy or sell.

Read the original on Bank of Greece

Related service: Consulting

Related stories