2018.10.2310:20:00UTC+00Eurozone Banks Expect Loan Demand Growth To Continue In Q4: ECB Survey

Euro area banks expect further increase in demand for loans from businesses and households in the fourth quarter, the results of the latest Bank Lending Survey of the European Central Bank showed on Tuesday.

Banks expect a continued increase in demand for loans to enterprises, home loans and consumer credit and other lending to households in the fourth quarter, the quarterly survey said. Net demand for loans to enterprises continued to increase, albeit less-than-expected, in the third quarter with growth in demand for loans to both small and medium-sized enterprises and large firms. Demand grew in Germany, France, Italy and the Netherlands. The survey showed that the increase in demand for loans to enterprises was mainly driven by the low general level of interest rates, fixed investment, inventories and working capital, and M&A activity. Demand for housing loans increase in all large euro countries except France. Low general level of interest rates, favorable housing market prospects and consumer confidence, remained the driving forces behind the demand for home loans.

However, the use of alternative sources of finance had a slight dampening effect on demand, the survey found. Net demand for consumer credit and other lending to households increased in all of the largest euro area countries. Credit standards, or conditions set by banks to approve loans, for loans to enterprises eased further at a stronger-than-expected pace in the third quarter. These standards are expected to remain broadly unchanged in the fourth quarter. Home loan credit standards also eased in the third quarter, but at a less-than-expected pace. These are expected to ease further in the fourth quarter.

Credit conditions for consumer credit and other lending to households remained broadly unchanged in the third quarter and they are expected to ease in the final three months of the year.