Net financing of 10 billion euros from banks in 2022 – Where they will be given

By Leonidas Stergiou

The four systemic banks may have disbursed new loans of 16.5 billion euros in the first nine months of 2021, with an annual target of about 20-22 billion, however the net credit expansion to the private sector was only 58 million euros, according to data of the Bank of Greece. Cause, loan repayments, securitizations (reclassifications) and write-offs. Thus, from 16.5 billion euros, business loans had a net increase of about 1 billion, while the credit expansion to households was negative by 1.3 billion euros. In addition, loan balances from 141 billion at the end of 2020 fell to 119 billion euros in November 2021, down by 22.4 billion. .

Net credit expansion

This picture is going to change in 2022. According to the plans of the four systemic banks (Eurobank, Alpha Bank, Piraeus, National), the net loans that will be given to the real economy are estimated at 10 billion euros. This amount results from an average net credit expansion of approximately 1.5 billion euros per bank plus loans from the Recovery Fund (3.6 billion euros). The total amount should include loans from the Bank of Attica and the other smaller banks, the Hellenic Development Bank and other organizations (EIB), co-financed, etc.

Recovery Fund

The 3.6 billion euros of the Recovery Fund will be directed mainly to large companies, in order to accelerate the absorption and utilization of funds up front. This is because in large companies and mainly in sectors such as energy, tourism, infrastructure, industry, etc. there are already ready business plans.

Households, businesses

The remaining approximately 6.4 billion euros will be channeled to businesses and households, where the needs and demand for funding are expected to increase, due to the growth and multiplier of the Recovery Fund. Of these, almost 60% will be in retail banking and the rest in business. Particular demand is expected for mortgages and consumer loans, where new disbursements are expected to reach 1.2 billion euros for home acquisition and more than 1 billion in consumer credit, with the bulk relating to car purchases and related costs. with buying a home. The rest will concern loans to companies, small and medium, small and self-employed. It is clarified that some banks include small, very small businesses and freelancers in retail banking. With this in mind, retail banking will absorb about 60% of net loans of € 6.4 billion in 2022.

Targets per bank

Eurobank for 2022 has planned net disbursements of 1.5-2 billion euros. This plan is part of the three-year plan to increase the credit expansion by 20% in the three years with new disbursements of 5.5 billion euros or in net borrowing of 3.5 billion in the three years, as announced by the Deputy CEO Mr. Costas Vassilios during the Presentation of the plan “Eurobank 2030” The Bank’s goal is a 30% share in loans.

Alpha Bank’s strategic planning, according to the Tomorrow project, includes a net disbursement of 10 billion euros at group level, of which 8 billion euros will concern Greece by 2024. For 2022, it is estimated that the net disbursement will move Alpha Bank’s (gross) new loan disbursements in the first nine months of 2021 were € 3.8 billion, of which net credit expansion was € 0.8 billion. The annual target for 2021 for new loans are 4.5 billion euros

Piraeus Bank in the eleven months of 2021 made new disbursements of 5.4 billion euros, with an annual target of 5.7 billion, which is estimated to be exceeded. Piraeus Bank has communicated to analysts the gross amount of loans for approximately 2020-2024 at 20-23 billion euros and the period 2021-2024 at 18-20 billion euros. Based on this plan, new disbursements for 2022 are expected at 6-6.5 billion euros. The net credit expansion will be smaller.

The National Bank in the first nine months of 2021 presented a positive credit expansion of 2.8 billion euros, with an annual target of around 4 billion euros. According to the strategic plan, the new loans for the next two years will amount to 5-5.5 billion annually to support the development of the Greek economy and the utilization of the Recovery Fund. The net credit expansion in 2022 is estimated at around 1.5-2 billion euros.

How the numbers come about

The banks’ plan is based on the calculation that the Recovery Fund will mobilize investments of 32-37 billion euros by the end of 2024, which will have financing needs of 18 billion euros. The Multiplier of the Recovery Fund is estimated at additional funding needs of 5-6 billion euros. To these must be added the new net financing needs for the whole economy, including consumption, due to growth, by about 9-10 billion. Thus, the total net credit expansion in the three years 2022-2024 is estimated at 33-35 billion. . euro. The four systemic ones claim a pie with percentages of 25-30% each, the sum of which leads to the conclusion about the intensity of the competition.

Of the Recovery Fund investments until 2024 (35 billion), almost a third of the loans will be absorbed by shipping, a third by tourism and energy, while the rest will be divided into infrastructure, real estate and manufacturing.

According to their calculations, the funds of the Recovery Fund (12 billion euros in loans and 18 billion in grants) mobilize investments of 37 billion euros that will have financing needs of about 18 billion euros by the end of 2024. In this amount add an additional 5 to 6 billion euros of financing needs that the Recovery Fund will bring as a multiplier. For example, a company may not be funded through the Fund in the first phase, but may have customers who have joined and will have to meet increased demand.

The above mixture will create new net financing needs in the whole economy (including consumption) totaling 9-10 billion euros. Therefore, the total net credit expansion in the three years 2022-2024 is estimated between 33 and 35 billion euros.

The 35 billion euros are the pie that the Greek banks want to share, with the four systemic ones claiming shares between 25% and 30% each. From this percentage the intensity of the competition becomes evident, as the total market shares of their targets add up to more than 100% of the market.

The net credit expansion of € 10 billion in 2022 could mean total funding of over € 20 billion, given that more than € 2 billion in reclassifications, refinancing and repayments are expected, amounting to an average of 1-1 , 2 billion per bank.