Concerns that credit growth will be limited in 2023 due to rising bank financing costs driven by rising interest rates and a slowdown in economic activity, the report said. TTE in its annual report. As he notes, “the coming slowdown in growth GDP in 2023 will negatively affect, on the one hand, demand loans from businesses and households and, on the other hand, in lending on their behalf banksas credit risk will increase due to the subsequent deterioration in the financial situation of enterprises and the population.

In addition, the Bank of England said there was a perceived risk that “rising borrowing costs will limit the solvency of private sector borrowers with floating interest rates, especially households whose real incomes have already fallen due to inflation. “.

However, in addition to the uncertainty caused by rising borrowing costs, demand for loans is expected to remain positive, mainly due to the opportunities created by financial instruments. NSRF (2021-2027) and the Recovery and Resilience Fund until at least 2026, which will act as a buffer against pressures from reduced demand for credit.

The analysis of the Bank of Greece identifies the problem created by the increase in interest rates, mainly on the demand side, that is, willingness to take loans from the business side. This conclusion is supported by the SAFE (Survey on Access to Enterprise Finance) survey, in which small and medium-sized enterprises in our country reported “banks’ willingness to lend”, although, according to the enterprise, the broader economic outlook was negatively affected.

The coming slowdown in growth will have a negative impact on the demand for business loans.

The opposite trend was observed in the euro area, where the availability of bank loans decreased, mainly due to a decrease in the willingness of banks to provide loans, but also due to a significant deterioration in the economic situation.

In terms of conditions for obtaining bank financing, businesses reported extremely high increases in bank interest rates, as well as other fees, charges and commissions, which was also observed in the rest of the eurozone.

However, as noted by the Bank of England, in contrast to the eurozone, Greek SMEs recorded an increase in the availability of bank loans, which, combined with a decrease in the need for enterprises in external financing, contributed to a reduction in the overall external financing gap index to a level close to the European average. In addition to increasing financing costs, most SMEs in Greece cited sourcing qualified staff and increasing production or labor costs as major challenges.

The increased willingness of banks to lend to businesses is underpinned by a return to profitability, which, in turn, was supported by higher interest rates and a high correlation of financing with floating rate loans. “Higher interest rates will continue to support the profitability of Greek banks in the near term by strengthening net interest income, as well as a possible upgrade of the Greek government’s investment grade credit rating by containing borrowing costs. “, – says TTE.