Euro area banks reported further tightening of corporate loan approval standards in the European Central Bank’s third-quarter survey. The net share tightening was 9 per cent, while demand for business credit declined. The survey measures the balance of banks’ responses rather than a direct percentage change in lending volumes, and its next-quarter answers remain expectations.
The European Central Bank’s October lending survey showed tighter corporate loan approval standards. Econostream also reported the findings for corporate and consumer borrowing. The net share of banks tightening corporate standards reached 9 per cent, compared with an earlier expectation of 5 per cent. Consumer credit recorded net tightening of 14 per cent, while housing loan standards were broadly unchanged.[1], [2]
Corporate loan demand recorded a net decline of 6 per cent after a net increase of 3 per cent in the preceding quarter. Banks cited interest rates, weaker fixed-investment needs among smaller firms and substitution towards other financing. Housing loan demand showed a net decline of 27 per cent. These balances describe responses about demand, rather than an equivalent percentage fall in the amount lent.[1]
The survey includes responses from 159 banks and separates third-quarter experience from fourth-quarter expectations. Banks anticipate net demand declines of 1 per cent for corporate credit, 36 per cent for housing and 14 per cent for consumer credit. They also expect financing needs for AI infrastructure providers to increase gradually. Those answers are banks’ assessments, not already realised lending or investment outcomes for the coming quarter.[1]
