18 July 2017

ECB: Results of the July 2017 euro area bank lending survey

Credit standards for loans to enterprises eased slightly in net terms in the second quarter of 2017. The net easing (-3%) of credit standards – i.e. banks’ internal guidelines or loan approval criteria – followed a net easing of -2% in the previous quarter.

Competitive pressure remained the main factor behind the net easing of credit standards on loans to enterprises. Credit standards on loans to households for house purchase also eased (a net percentage of -4%, compared with -5% in the previous quarter). For the third quarter of 2017, banks expect a net easing of credit standards on loans to enterprises (-2%), on housing loans (-6%) and on consumer credit (-4%).

The net easing of banks’ overall terms and conditions on new loans (i.e. the actual terms and conditions agreed in the loan contract) continued across all loan categories, mainly driven by a further narrowing of margins on average loans.

Net demand increased across all loan categories. Merger and acquisition activity and fixed investment made an important and increasingly positive contribution to demand for loans to enterprises in the second quarter of 2017, and the general level of interest rates and inventories and working capital also continued to have a positive impact on demand. Net demand for housing loans continued to be driven mainly by the low general level of interest rates and favourable housing market prospects.

Euro area banks continued to adjust to ongoing regulatory and supervisory changes in the first half of 2017 by further strengthening their capital positions and reducing their risk-weighted assets. At the euro area level, banks reported an easing impact of regulatory or supervisory action on credit standards and on credit margins, with the exception of house purchase loans where there was a tightening effect on margins and a broadly neutral effect on standards.

Regarding the targeted longer-term refinancing operations (TLTROs) conducted by the Eurosystem, participation was again predominantly driven by profitability motives. The main reported effect of the TLTROs continued to be an easing of credit terms and conditions, but an increased share of banks also reported an easing impact on credit standards for loans to enterprises and consumer credit in the most recent survey.

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