Demand For Loans In Eurozone Falls For The First Time Since 2013

In the 4th quarter, demand for bank loans from Eurozone companies declined amid uncertain global economic conditions, according to a study by the European Central Bank (ECB).

The net percentage decrease in demand (the difference between the number of banks that recorded a growth in demand for loans and the number of banks that registered a drop in demand) amounted to 8% in the 4th quarter compared with a 1% increase in the 3rd quarter, the ECB reports.

The drop in companies’ demand for borrowed funds was recorded for the first time since the 4th quarter of 2013, which « reflects the slowdown in economic activity observed since 2018. »

« In contrast, the demand for mortgages and consumer loans continued to grow, » says a quarterly study of bank lending.

The banks surveyed by the ECB expect a further decline in business demand in the 1st quarter of 2020. At the same time, the internal criteria for approving loans for companies remained virtually unchanged in the fourth quarter, and is expected to remain “generally unchanged” in the first quarter of 2020.

Housing lending standards are expected to be tightened, while consumer lending and other types of lending to households are likely to relax.

The ECB study was conducted from December 6 to December 27 with the participation of 144 credit institutions.

source: ecb.europa.eu

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