They will negatively affect its growth rates in the coming years. bank financing for businesses, the expected decline in nominal GDP growth (estimated at 1.5% for 2023), as well as an increase in interest rates. It’s underlined TTE in Monetary Policy Report warning that “these effects combined will help limit the rate of growth in private savings.”

Although, as noted by the Bank of Greece, the increase interest rates central banks will increase net interest income for the banking industry, on the other hand, this is expected to “tighten the financing conditions faced by banks, but also lead to a slowdown in economic activity with secondary adverse effects on the quality of banks.” portfolio and their ability to raise funds from the markets.”

Greek banks, according to the Bank of England, may consider factors that will mitigate the impact on the real economy from an increase in borrowing costs, mentioning among them support measures for businesses and households that absorb increased energy costs to a certain extent and this is provided by the allocation of resources under NextGenerationEU. Channeling resources from the Recovery and Resilience Facility (RRF) will also support bank financing.

These uncertainties did not affect credit this year as, according to the Bank of England, the growth rate of bank financing reached the highest levels in the last 13 years, in contrast to bank credit to households, which continued to decline, even with a less pronounced annual rate in ten years. months of 2022. In the ten months from January to October 2022, the average monthly net flow of bank financing, i.e. new payments minus the repayment of existing debts by companies, was 450 million euros, compared to 35 million euros. million euros in 2021, and the acceleration of credit expansion is due to the strong recovery in GDP recorded in 2022, as well as the increased need for business financing due to rising inflation. “Rising commodity and energy prices have put pressure on corporate liquidity,” notes the Bank of England, while “uncertainty over the war in Ukraine has prompted businesses to hold excess cash reserves.” Business demand for bank financing was also boosted by the reversal of measures taken to combat the early stages of the pandemic, such as reimbursable advances and the suspension of bank loan repayments, and the fact that interest rates remained low during this period. with a negative real interest rate.

On the supply side of bank loans, a significant positive effect, according to the Bank of Greece, was the reduction in non-performing loans. The strengthening of bank liquidity due to the inflow of customer deposits, recorded in the first ten months of 2022, also made a positive contribution, while the resources attracted by banks from the Eurosystem were also maintained at a sufficient level. Much of the recovery in credit expansion was supported by financial instruments from the European Investment Bank Group and, in particular, a guarantee program using the Pan European Guarantee Fund. The corresponding payments of new bank loans to businesses using this financial instrument amounted to EUR 2.5 billion in the ten months from January to October 2022, i.e. 3.9% of the average business (and freelancer) funding balance over the same period. This positive trend is expected to continue until the end of 2022.

On the contrary, the issuance of bank loans to enterprises under the National Recovery and Resilience Plan during this period was limited, since the amount of contractual bank loans co-financing, i.e. Due to exclusively banking resources, excluding loans from the Recovery and Sustainability Fund, there were 549 million euros until October, of which almost 7.5% was disbursed.