What do business loans show in the first quarter?

By Leonidas Stergiou

The preparation for investment projects launched mainly in the infrastructure sectors, the effects of inflation mainly in the energy sector and the uncertainty in smaller companies, due to price increases and war, are reflected in the new data of the Bank of Greece for the first quarter, where greater breakdown by industry, business size, and even the number of new loans.

The overall picture shows a slowdown in the pace of disbursements. The analysis of the data confirms the banks’ estimates for record business loans this year, due to launched investment plans in key sectors of the economy, the Recovery Fund and inflation.

Deal 8.6 billion in 2022

This is confirmed by the PwC report published yesterday, which expects more than 6.3 billion euros in transactions through acquisitions and mergers in 2022 from transactions that have already been announced.

Indicatively, the OPAP-Allwyn Entertainment deals are mentioned, the transactions in the food sector (such as Chipita-Mondelez International, etc.) are estimated at more than 2 billion. In the energy and construction sector, we recently had the Motor Oil – Ellactor deal. .a. But also in the energy sector we have business moves that have been announced and are evolving, such as the entry of the Italian Enri in the Greek market of photovoltaics, etc. Even in the banking and insurance sector transactions are pending, such as those from the deal JP Morgan -Vivawallet, National Insurance-CVC, etc. PwC also expects another $ 2.3 billion from privatizations.

The first reading

The first picture shows that manufacturing, trade and tourism absorbed 60% of new disbursements in the first quarter of the year, which amounted to 1 billion euros. However, this amount is much less than the 1.4 billion euros in the first quarter of 2021. In particular, new loans for processing in the first quarter of the year amounted to 268 million euros (from 326 million euros a year in the quarter of 2021), in trade 199 million (from 398 million) and in tourism (hotels and restaurants) 142 million (from 155 million)

Analysis by industry and size of companies

However, the new data of the BoG, as pointed out by bank executives, result in two major differences, in relation to 2021 and the overall picture:

First, increase the average loan disbursed. In the first quarter of 2021, 1.4 billion euros were disbursed through 4,164 new loans. The average loan corresponds to 330,000 euros. In the first quarter of this year, the average loan increased to 523,000 euros (1 billion euros through 1,944 new loans).

Second, differentiation between small, medium and large enterprises even in the same industries. Smaller companies appear to have come under more pressure from inflation and the war in Ukraine, while large companies continue their investment plans by taking positions in competition.

Examples of differentiation

Constructions: In large construction companies, disbursements in the first quarter jumped to 64m euros from 3.3m euros in the same period last year. In the smaller ones there was a reduction in loans.

Tourism: Loans to small and medium-sized tourism enterprises have been reduced to 53 million euros, compared to 109 million euros in the same quarter of 2021.

Energy: The big energy companies have not yet made use of bank lending, while in the smaller ones it has increased (50 million euros from 40 million euros last year).

Bank forecasts

In particular, banks predict that large business loans will exceed 6.5 billion euros this year and may reach 8.5 billion, with most disbursements by the end of the year. Loans of 1 billion euros are expected through the Recovery Fund, with disbursements reaching 250 million euros by the end of 2022. Loans to small and medium-sized enterprises will amount to around 1.6-1.7 billion euros.

According to bank executives, there will be large loans in the energy sector, both due to investments (eg photovoltaics) and financing of business deals as well as due to financing the increased cost of raw materials. Also, from the business agreements that have already been announced, many of the transactions and financing will take place in 2022 in several sectors, as also mentioned in the PWC report.

Big companies

Thus, in large companies, the largest disbursements in the first quarter of 2022 took place in the sectors:

* Processing: Increase to 163 million euros, compared to 156 million euros in the first quarter of 2021.

* Tourism: Almost double to 89 million (from 46 million euros).

* Constructions: A jump to 64 million euros from just 3.3 million euros in the first quarter of 2021.

Small and medium

On the other hand, in small and medium-sized enterprises, the largest disbursements took place in the following sectors:

* Trade: Reduction to 137 million euros in the first quarter of the year from 250 million euros in the corresponding quarter last year (reduction)

* Processing: Reduction to EUR 150 million (from EUR 169 million)

* Transportation, storage (logistics): Doubling to 60 million euros in the first quarter of this year from 30 million euros in the corresponding quarter last year.

* Energy: Increase to 50 million euros (from 40 million euros).

* Tourism: Big reduction to 53 million (from 109 million euros).