EUROZONE
- Bank lending growth and the ECB’s recently published Bank Lending Survey received attention today in both President Lagarde’s opening statement and the press conference the Q&A.
- From the statement: “Credit standards for loans remain tight. According to our latest bank lending survey, standards for lending to firms tightened slightly in the second quarter, while standards for mortgages eased moderately. Firms’ demand for loans fell slightly, while households’ demand for mortgages rose for the first time since early 2022.”
- “Overall, credit dynamics remain weak. Bank lending to firms and households grew at an annual rate of 0.3 per cent in May, only marginally up from the previous month.”
- This recent weakness in bank lending growth isn’t particularly new: those 0.3% Y/Y rates for lending to NFCs and households (adjusted for sales & securitisation) follow an average rate of 0.2% Y/Y since Sep’23 for firms and 0.3% Y/Y since Dec’23 for households.
- This does however disguise what have been some huge swings in credit impulse calculations based on new credit issuance.
- The post-pandemic period has seen heightened volatility, but the pullback after strong credit creation saw drags of up to 6% GDP on a quarterly annualized basis in late 2023.
- That has since returned to a neutral footing, implying a significant headwind to GDP growth has now dissipated, although an annual equivalent suggests it could still be lingering.
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