Corona monitor: the latest developments in perspective
21 May 2021 - 4 min Reading time
Contactless payments break symbolic barrier
Since the outbreak of the COVID-19 pandemic, merchants and banks have been encouraging digital payments as much as possible. Paying with a card and a smartphone is an extremely safe and hygienic way to make purchases, especially when done contactlessly. Belgians have adjusted their payment behavior accordingly and seem to be maintaining this new digital habit. The number of card payments in physical stores remains stable, and the number of ATM cash withdrawals is one-third lower than before the start of the COVID-19 crisis.
The most significant evolution is seen in the share of contactless card payments in the total number of card payments. For the first time, the symbolic threshold of 50% has been exceeded: 51% of all card payments in the past month were contactless. This represents more than a tripling since February 2020 (16%).
Febelfin welcomes this evolution and encourages everyone to continue paying digitally (via card and smartphone) as much as possible because it is the most hygienic and secure way to do so.
Banks continue to extend new loans and payment deferrals to businesses
The number of loans granted to large companies remains stable. In the months of March and April of this year, 4,226 new loans were granted to large enterprises. This corresponds to the figures for 2020 when the number for March and April was 4,242. The underlying amount has increased slightly: 4 billion euros in March and April 2020 compared to 4.6 billion euros in the same period a year later.
Banks also continue to grant payment deferrals for loans to businesses, but the total number of outstanding payment deferrals is decreasing. At the end of March, the number was 28,474, while today it stands at 17,757. The underlying exposure has decreased from 5.7 billion euros to 3.7 billion euros. The loans for which payment deferrals are granted have an average exposure of 206,000 euros.
All healthy, viable companies that have already received a 9-month payment deferral can still apply for additional deferral until June 30, 2021, to address COVID-related liquidity needs.
Despite the challenging economic period, banks continue to play their societal role by providing loans to both large and small businesses.
Number of loans under state guarantee II on the rise
In collaboration with the NBB and the financial sector, the government has developed state guarantee schemes for new loans. The second guarantee scheme can be used for loans to SMEs with a term of more than one year up to a maximum of 5 years. The financial sector supports this initiative and brings these loans to the attention of entrepreneurs seeking financing.
The first scheme expired at the beginning of 2021, while the second has been extended until the end of 2021. The granting of loans under the second scheme is steadily increasing: at the end of January, the outstanding amount of loans granted under the second state guarantee scheme was 272 million euros. In May, the figure stands at 429 million euros. The number of loans granted under the Second State Guarantee has reached 4,287, which is 1,000 more than the previous month. This increase is expected to continue. The average loan amount per application is 100,000 euros.
As support measures decrease and businesses resume or increase their turnover, it is expected that companies will have an increased need for new loans, which can be guaranteed under this second state guarantee scheme.
Additionally, loans granted under the first state guarantee scheme will come due, and some of them can be refinanced through the second state guarantee scheme.
Small number of payment deferrals for mortgage Loans
The period for requesting payment deferrals for mortgage loans, under the conditions of the Second Charter, ended on March 31, 2021. Individuals who still met the initial conditions could still request an extension from their bank until that date. Therefore, the numbers continue to decline and stand at 3,903 in May 2021, with an underlying amount of 492 million euros. The peak occurred in August with 124,000 payment deferrals totaling 13.1 billion euros.
