Net demand for loans to enterprises declined in the fourth quarter of 2019 (the first time this had been seen since the fourth quarter of 2013), despite banks expecting it to remain stable overall.
According to the January 2020 euro area bank lending survey (BLS), net demand for loans to enterprises declined in the fourth quarter of 2019 (the first time this had been seen since the fourth quarter of 2013), despite banks expecting it to remain stable overall.
That decline in net demand was broadly based across a number of larger and smaller euro area countries, the report stated.
Demand for loans to enterprises continued to be supported by the low general level of Interest Rates and, to a lesser extent, M&A activities, said the report.
In contrast, financing needs for fixed investment ceased to contribute positively to firms’ loan demand, the report added.
The BLS reports that credit standards for consumer credit and other lending to households tightened further, despite expectations that they would remain broadly unchanged.
Risk perceptions (relating to both the general economic situation and the firm-specific situation) continued to have a tightening impact on the credit standards applied to loans to enterprises, the survey report specified.
Looking ahead to the first quarter of 2020, banks expect credit standards for loans to enterprises to remain unchanged, while they expect credit standards to tighten for housing loans and to ease for consumer credit and other credit to households, the report added.
The euro area bank lending survey (BLS), which is conducted 4 times a year, was developed by the Eurosystem in order to improve its understanding of banks’ lending behaviour in the euro area.
