Deposits of approximately 19 billion euros have returned to banks from households and businesses since 2021, reflecting a 16% increase, according to note of the Greek economy from the Bank of Greece. The BoG’s economic bulletin highlights significant inflows of deposits from households primarily during the 2021-2023 period, while the “fatigue” observed in the first quarter of 2024 is attributed mainly to a shift toward alternative savings options offering higher returns than traditional deposits.
In August, however, the data is encouraging for a return to an upward trend, with bank deposits from non-financial corporations and households rising by 0.8 million euros, while household deposits increased by nearly 1 billion euros. That month, the annual growth rate of household time deposits slowed to 6.3%, indicating that the reallocation of funds from overnight to time deposits, which occurred in 2023 after monetary policy tightening, may have reached its conclusion.
The BoG’s note of the Greek economy also reports that net deposit inflows from households and businesses were 8.5 billion euros in 2021, 5.5 billion euros in 2022 and 5 billion euros in 2023, bringing the total to 146.8 billion euros today, up from 126.2 billion euros at the start of 2021. This development reflects increased depositor confidence in the banking system and a positive outlook for the Greek economy.
On the lending front, the situation is less optimistic. Following a peak of 12.3% in September 2022, credit expansion to businesses has significantly declined due to higher interest rates and weakening economic growth, which has contributed to lower loan demand. However, data from the Bank of Greece indicate a recovery in the annual growth rate of business loans since September 2023.
In August 2024, bank credit to businesses increased by 100 million euros, with the annual growth rate accelerating to 10.5%. In contrast, loan disbursements to households remain sluggish, largely due to a continuing decline in mortgage loans.
The Bank of Greece’s data show that the contraction of loans to households continues into 2024, primarily driven by a decrease in housing loans, although at a gradually slowing rate. Consumer loans have recorded modest but positive growth since mid-2022. In August 2024, the contraction rate of mortgage loans remained steady at -2.7%, while the annual growth rate of consumer loans held at 5.8%.
According to AnaCredit data, new loan disbursements to non-financial corporations in 2023 totaled approximately 9 billion euros, down one-third from 2022 due to monetary policy tightening, but still significantly higher than the 2021 figure of 7 billion euros. From January to August 2024, disbursements of new business loans reached 7.6 billion euros, compared to 5 billion euros during the same period last year.
SOURCE; ANA-MPA
