Frankfurt am Main: Eurozone banks are tightening the criteria firms and households must meet to be granted loans, the European Central Bank said Tuesday, as policymakers weigh their response to stuttering growth.
Lenders upped their requirements of business borrowers and households seeking consumer credit between April and June, the quarterly poll of 144 banks showed. Among the bloc’s largest economies, Germany, France and Italy saw tighter standards for business loans, while Spain’s remained flat and Netherlands-based banks reported easing.
Meanwhile, standards for issuing mortgages remained on par with the first quarter in the eurozone average.
“Lower risk tolerance and, for loans to enterprises, higher risk perceptions, accompanied by higher cost of funds and balance sheet constraints, contributed to the tightening of credit standards across loan categories,” the ECB commented in a statement.
On the demand side, the survey found companies’ appetite for credit continued mounting in the second quarter, “supported by the low general level of interest rates and fixed investment” as well as mergers and acquisitions activity.
Meanwhile, demand for mortgages was buoyed by rising housing markets and consumer confidence, although growth in demand for consumer credit slowed slightly.
Banks expect steady or easing credit standards across categories in the third quarter, the survey found.
But hints that the flow of lending could be ebbing will be closely studied by ECB policymakers ahead of a meeting on Thursday.
Their actions in recent years, including setting interest rates at historic lows and executing a 2.6 trillion euro ($2.9 trillion) bond-buying programme from 2015-18, have all been aimed at stimulating lending to the real economy. — AFP
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