Financial News: Eurozone Banks To Tighten Credit Standards For Loans

Eurozone Banks To Tighten Credit Standards For Loans To Firms

05/02/2023 - 09:57:00 (RTTNews)

(RTTNews) - Eurozone banks intend to tighten credit standards on loans to firms and for house purchases in the second quarter, the Bank Lending Survey from the European Central Bank showed Tuesday.

In the first quarter, credit standards applied on loans to enterprises tightened substantially. There was also further substantial tightening of credit standards for loans to households for house purchases.

For consumer credit, banks plan a further tightening in the second quarter at a similar pace as seen in the first quarter.

There was a decrease in demand from firms for loans in the first quarter, reflecting rising interest rates and lower fixed investment. The decline was the strongest since the global financial crisis.

For the second quarter, bank expects a further though smaller net decline in demand for loans to firms.

Lenders expect a fall in demand for housing loan in the second quarter and a somewhat smaller net decrease in demand for consumer credit than in the first quarter, the survey revealed. The survey was conducted between March 22 and April 6.

Monthly data from the ECB today showed that the broad money supply M3 grew at a slower pace of 2.5 percent in March after climbing 2.9 percent in February.

At the same time, the narrow measure M1 posted a sharp decline of 4.2 percent following a 2.7 percent drop.

Loans to households and non-financial corporations also registered slower growth in March. Loans to households were up 2.9 percent and that to businesses gained 5.2 percent.

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