Eurozone banks seeing loan demand rise, survey finds

Eurozone banks expect strong demand for loans from companies and home-buyers in the coming months as the European Central Bank’s money printing initiative improves funding conditions, a survey showed yesterday.

The ECB findings are the firmest sign yet that lending in the eurozone, which dried up after the financial crisis, is picking up.

The survey’s results dovetail with an overall improvement in economic readings that are suggesting, among other things, that falling prices in the currency bloc are beginning to bottom out.

The ECB’s quarterly Bank Lending Survey, which polls more than 140 top banks, showed that lending standards were gradually being loosened at respondents, although the process was expected to remain slow with the exception of brighter spots such as Italy.

“There have been substantial improvements in the level of credit standards compared with banks’ indications one year ago,” the ECB said in its report.

The results show that on balance, 9% of banks had eased lending terms over the last quarter and 1% expected them to be loosened in coming three months.

On balance, 39% of banks expected to see stronger demand for loans from companies in the coming three months while 29% expected a rise for house purchases.

Of the big eurozone countries, the ECB figures showed Italy saw the biggest improvement, with a net 25% of its banks easing lending standards over the last three months, while a net 13% and 7% did so in the Netherlands and France respectively.

“It’s an improvement, but from a very low base,” said Jack Allen of consultancy Capital Economics.“Banks’ willingness to lend has been loosening but that’s after about six years of tightening standards. The eurozone is so much further behind than the US.”

A separate part of the survey pointed to the ECB’s €1trn stimulus programme, which began last month but was announced at the start of the year, starting to bear fruit.

Reuters