Os eurozone banks restricted access to corporate credit in the last quarter and expect to see more restrictions in the future due to widespread economic uncertainty, in part related to trade policies, the European Central Bank’s quarterly bank lending survey showed on Tuesday (3).
The growth of loans to companies and families has been accelerating for years, but the rate of expansion is still below the pre-pandemic era, reinforcing evidence that the bloc’s economic expansion, although resilient, remains modest.
“Concerns about the outlook for companies and the economy in general, as well as the lower risk tolerance of banks, contributed to the tightening of credit criteria,” said the ECB based on a survey of 153 of the bloc’s largest banks.
Half of the banks surveyed said uncertainty over trade policy had affected their lending, mainly through reduced risk tolerance and weaker demand, factors that will continue to impact lending this year, the ECB said.
Corporate credit became tighter in Germany and France, among the largest countries in the euro zone, while Italy and Spain did not see any tightening.
While banks have applied tighter credit standards for companies, they have continued to relax them for mortgages, particularly in France, even though some of this easing may be reversed in the first quarter of the year.
However, demand continued, with banks reporting a slight increase, a trend that will likely persist into the first quarter.
Banks expect an increase in demand for loans for most sectors except automobile manufacturing, wholesale trade, retail trade and commercial real estate.
Demand for mortgages also increased due to the improving housing market outlook, even though consumer confidence contributed negatively, the ECB said.
