ABN AMRO economist, Aline Schuiling points out that latest Bank Lending Survey of ECB for Q4 2018 revealed that banks kept their lending standards unchanged after easing for seven consecutive quarters in a row.
“The outcome for 2018Q4 was in line with what banks had expected the quarter before. The forward looking part of the most recent survey reveals that banks plan to tighten lending standards in 2019Q1.”
“Looking at the largest five individual eurozone countries, Italy was the only one where banks on balance reported a tightening of credit standards on loans to enterprises in Q4 (balance +10, up from -10 in 2018Q3). Moreover, the details of the report shows that banks in Italy and Spain reported that cost of funds and balance sheet constraints had had a significant tightening impact on overall terms and conditions on loans to enterprises.”
“Over the past 3 months, the positive contribution to loan demand stemming from fixed investment remained unchanged in 2018Q4, whereas demand stemming from inventories and working capital and the general level of interest rates declined somewhat.”
“Overall, the BLS shows that the banking sector is starting to feel the impact of slower economic growth and market volatility, with the growth in demand for loans slowing, while banks are no longer easing credit conditions.”
Latest Forex News, Analysis & Market Moving Events: