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30 Jun 2014
Pace of contraction in Eurozone bank lending seems to be slowing down - ING
Martin van Vliet from ING believes that the pace of contraction in bank lending in the Eurozone seems to be slowing down, although the recovery in the area still remains creditless.
Key quotes
"The annual rate of change in loans to the non-financial private sector originated by banks (adjusted for sales and securitisation) improved for a second month, rising from -1.6% in April to -1.4% in May."
"The annual growth rate of loans to households (adjusted for sales and securitisation) edged up from 0.4% to 0.5%, while the annual growth rate of loans to non-financial corporations also increased, from -2.8% to -2.5%."
"However, the net monthly flow in loans to non-financial corporations, contrary to those to households, remained negative (-€4bn versus -€3bn in April). This shows that the underlying dynamics in bank lending to the private sector remain very weak."
"To be sure, the latest bank lending survey suggests that the improved economic outlook across the Eurozone may be starting to feed through into stronger loan demand. But this is not yet showing up clearly in the actual lending data."
"Meanwhile, annual growth in M3, the broad money supply measure watched by the ECB as an early warning of future inflation, came in at just 1.0% – a warning sign that the fight to ward off deflationary pressures has not been won yet."
"All in all, today’s lending data vindicate the ECB’s recent decision to launch a series of targeted LTROs."
Key quotes
"The annual rate of change in loans to the non-financial private sector originated by banks (adjusted for sales and securitisation) improved for a second month, rising from -1.6% in April to -1.4% in May."
"The annual growth rate of loans to households (adjusted for sales and securitisation) edged up from 0.4% to 0.5%, while the annual growth rate of loans to non-financial corporations also increased, from -2.8% to -2.5%."
"However, the net monthly flow in loans to non-financial corporations, contrary to those to households, remained negative (-€4bn versus -€3bn in April). This shows that the underlying dynamics in bank lending to the private sector remain very weak."
"To be sure, the latest bank lending survey suggests that the improved economic outlook across the Eurozone may be starting to feed through into stronger loan demand. But this is not yet showing up clearly in the actual lending data."
"Meanwhile, annual growth in M3, the broad money supply measure watched by the ECB as an early warning of future inflation, came in at just 1.0% – a warning sign that the fight to ward off deflationary pressures has not been won yet."
"All in all, today’s lending data vindicate the ECB’s recent decision to launch a series of targeted LTROs."