ECB Lending Survey: Improving Picture, German Corporates Lagging

ECB bank lending survey– some thoughts after a longer read. Overall, little change other than weaker corporate loan demand, especially in Germany.

• Banks tightened corporate lending again in 1Q24 but only by +3% which is both lower than the prior quarter and well below the +9% that had been expected last time around. Home loans were eased the most since the middle of 2018 (-6%) and consumer credit, whilst still tightening (+9%) is on a positive trajectory. So pretty much all moving in a positive direction.
• Demand for lending was substantially lower from the corporate sector (-28%) and turned down again after an improvement in the prior two quarters. Conversely, demand from consumers, for both home and unsecured loans, improved and was (broadly) stable.
• Germany remains the laggard on credit standards though all the main geographies were little changed on the prior quarter. Conversely, it was the better performer in terms of loan demand from corporates.
• So, we see a two-speed outturn with corporates appearing more cautious (perhaps tempered by German real estate woes) but consumers feeling less bearish than previously. Still, most of the main measures are either negative or close to the zero line.