Greek Banks: 37% drop in new loans to SMEs in the first quarter of 2022

New financing to businesses in the first quarter of 2022 was reduced on an annual basis, reaching 1.02 billion euros from 1.36 billion euros in the corresponding period last year, according to data from the Bank of Greece.

The change is mainly due to the reduced flow of loans to small and medium-sized enterprises at the beginning of this year. On the other hand, the decline for large companies was marginal.

According to banking sources, this is an expected development. As they explain, at the beginning of 2021 the market was financed even precautionarily, as the pandemic was on the rise and the economy was in a lockdown, making it necessary to build defense zones for difficult times.

During that period, a significant increase in new loans was recorded, with the support of the Hellenic Development Bank (EBA) guarantee and interest subsidy actions, which were mainly aimed at small and medium-sized businesses.

In this context, the liquidity needs of the companies were largely met, as a result of which the requests for financing from credible clients were subsequently reduced.

The same circles even estimate that the new loans would be even lower if in the first months of 2022 there was no increase in the demand for working capital, due to the market freeze caused by the coronavirus, inflation and the extreme weather phenomena.

What the official data show

The data published by the Bank of Greece are indicative of the above trends:

In the first quarter of 2021, 868 million euros were granted to small and medium enterprises (SMEs), an amount that corresponds to 64% of the new loans of the specific period.

During the same period, financing to large companies amounted to 490 million euros.

In the first quarter of 2022, the contracts signed related to loans of 544 million euros to SMEs, an amount reduced by 37% on an annual basis, while their share in total lending fell by 11 basis points to 53%.

Respectively, loans to large companies reached 475 million euros, remaining virtually unchanged on an annual basis (down only 3.1%).

In the whole economy, new disbursements fell by 25%, as a result of the decline in the size of SMEs

Champion sectors

The same data show that 60% of new loans in the first quarter of 2022, ie 609 million euros out of 1.02 billion euros, went to three general sectors.

The lion’s share, 268 million euros, was received by processing, followed by trade (retail, wholesale) with 199 million euros and the activities of accommodation and catering services with 142 million euros.

Lending to the administrative and support sector reached € 100 million, while construction companies received € 91 million.