The European Central Bank (ECB) announced today that 1% of banks surveyed eased credit standards for businesses in the second quarter, compared to 3% in the first quarter of the year.
Banks still recognize risks to the economy, but the impact of competition has slightly diminished.
For most banks, geopolitical uncertainty and trade tensions did not have a specific additional impact on tightening credit standards, “although they have increased monitoring of sectors and companies most exposed,” the ECB noted.
The ECB conducted the survey from June 13 to July 1, covering 155 banks in the eurozone.
The central bank conducts this survey four times a year to better understand banks’ credit lending practices.
Credit standards are the banks’ internal guidelines or criteria for approving loans.
The ECB also noted that 2% of surveyed banks tightened credit standards for household home purchases (approximately 7% had eased standards in the first quarter).
According to the survey, 11% of banks tightened standards for consumer and other loans, compared to 3% in the first quarter.
Banks anticipate maintaining credit standards for businesses in the third quarter, slightly easing standards for home purchase loans, and further tightening those for consumer loans.
Demand for business credit slightly increased in the second quarter, although demand was generally weak.
Meanwhile, demand for home purchase loans rose significantly due to falling interest rates, improved real estate market prospects, and, to a lesser extent, consumer confidence.
Banks expect an increase in business credit demand in the third quarter, a substantial rise in home purchase loans, and stable demand for consumer credits.
