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Credit expansion: DECEMBER 1999

03/03/2000 - Press Releases

The most recent data on the evolution of credit expansion are published in the February issue of the Bulletin of Conjunctural Indicators which is released today (Tables IV.4 to IV.7 inclusive).

As noted in the previous press release on credit expansion, the most characteristic feature of the evolution of credit aggregates in the course of 1999 was the relatively high level of foreign exchange valuation differences included in the outstanding balances of loans, owing to the considerable appreciation of the Japanese yen (30 per cent) and the US dollar (16.2 per cent). As around 2/3 of total foreign currency loans to the private sector have been concluded in these two currencies, their appreciation against the drachma led to a substantial increase in the outstanding balances of loans in drachma terms, which, however, does not reflect a corresponding growth of bank lending. Adjusted for foreign exchange valuation differences, total credit expansion stood at 11.1 per cent in 1999, relative to a monitoring range of 7-9 per cent, and credit expansion to the private sector came to 10.3 per cent, compared with 13 per cent in 1998.

Not adjusted for foreign exchange valuation differences, total credit expansion amounted to 12.3 per cent in 1999, compared with 9.7 per cent in 1998. This development was due to the faster credit expansion to the public sector (1999: 11.4 per cent, 1998: 7.4 per cent), while credit expansion to the private sector decelerated (1999: 14.4 per cent, 1998: 15 per cent).

As shown by the breakdown of commercial bank lending to the private sector by branch of economic activity, housing loans and credit to manufacturing expanded faster in 1999, while loans to trade and consumer credit decelerated considerably (see Table IV.6). More specifically, credit to manufacturing, which comprises industry, mining and small-scale industry, rose by 11.3 per cent in 1999, compared with an increase of 7 per cent in 1998. Not adjusted for foreign exchange valuation differences, credit expansion to manufacturing is limited to 6 per cent, compared with 3.9 per cent in 1998. A large acceleration was observed in the growth of housing loans (1999: 26.7 per cent, 1998: 18.5 per cent), whose twelve-month rate of increase accelerated throughout 1999, except for December, when it declined slightly. By contrast, credit expansion to trade decelerated considerably (1999: 6.8 per cent, 1998: 19.7 per cent), as did the growth of consumer credit (1999: 31 per cent, 1998: 36.7), even though the latter item continues to expand faster than any other category of commercial bank lending. It should be recalled that, with regard to consumer loans, as compared with other categories of loans, banks are subject to additional deposit requirements, in the event that the growth rate of such credit overshoots predetermined limits.

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