Financial News: Eurozone Household Lending Grows Most In 2 Years

Eurozone Household Lending Grows Most In 2 Years

(RTTNews) - Lending to euro area households grew the most in two years in May and overall private sector credit growth remained stable, data from the European Central Bank revealed on Monday.

Adjusted loans to households increased 2.0 percent year-on-year in May, the strongest since May 2023, when it was up 2.1 percent. Lending had increased 1.9 percent in April.

Meanwhile, loans to businesses grew 2.5 percent from a year ago, which was slightly slower than the 2.6 percent increase in April.

The overall growth in adjusted loans to the private sector was 2.8 percent, unchanged from the previous month.

Monetary easing is filtering through the lending channel more slowly, with borrowing growth among businesses and households showing signs of leveling off, ING economist Bert Colijn said.

Economic uncertainty seems to have reduced the impact of the rate cuts and if that persists, it adds a dovish tone to the September debate about a possible next cut, the economist noted.

Data showed that the monetary aggregates M3 expanded 3.9 percent from a year ago in May. The rate was unchanged from the previous month and slightly weaker than the expected growth of 4.0 percent.

In the three months to May, M3 growth averaged 3.8 percent. At the same time, the narrow measure M1, posted an annual increase of 5.1 percent in May, slower than the 4.7 percent rise in April. The monetary aggregate M1 comprises currency in circulation and overnight deposits.

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