25 April 2017

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

Credit standards for loans to enterprises eased slightly in net terms in the first quarter of 2017, according to this BLS. The net easing (-2%) of credit standards – i.e. banks’ internal guidelines or loan approval criteria – follows a net tightening of 5% in the previous quarter.

Competitive pressure was 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 -5%, compared with 1% in the previous quarter). For the second quarter of 2017, banks expect a slight net tightening of credit standards for loans to enterprises and unchanged credit standards for housing loans.

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 continued to increase across all loan categories. Inventories and working capital and the general level of interest rates were important positive contributors to demand for loans to enterprises in the first quarter of 2017. Net demand for housing loans continued to be mainly driven by the low general level of interest rates and favourable housing market prospects.

With respect to the impact of the ECB’s expanded asset purchase programme (APP), euro area bank lending survey (BLS) banks continued to report a positive impact of the APP on their liquidity position and market financing conditions over the past six months, but a negative impact on their net interest margins. Responding banks indicated that they have mainly used the additional liquidity related to the APP to grant loans. The net easing impact of the APP continued to be stronger for terms and conditions than for credit standards.

The ECB’s negative deposit facility rate, while having a negative impact on banks’ net interest income, is assessed by banks to have a positive impact on their lending volumes.

Finally, euro area banks still assess their current level of credit standards for loans to enterprises and housing loans to be tighter compared with the historical range since 2003. At the same time, euro area banks assess their current level of credit standards on loans to enterprises to be broadly comparable to the shorter benchmark covering the period since the second quarter of 2010.

Press release

Full publication

© ECB - European Central Bank