Euro zone banks unexpectedly eased credit standards in Q3: ECB

Credit: REUTERS/ANTONIO BRONIC

Euro zone banks eased their credit standards in the third quarter and expect to keep them unchanged in the last three months of the year, an ECB survey showed on Tuesday, relief for policymakers who fear a drop in lending amid a slowdown.

FRANKFURT, Oct 22 (Reuters) - Euro zone banks eased their credit standards in the third quarter and expect to keep them unchanged in the last three months of the year, an ECB survey showed on Tuesday, relief for policymakers who fear a drop in lending amid a slowdown.

With economic growth slowing and recession fears rising, the ECB has already approved extensive stimulus measures, hoping that making credit even cheaper will keep banks lending to the real economy even during a period of anaemic growth.

Credit standards or banks' internal loan approval criteria eased for business loans and mortgages in the third quarter, beating expectations for no change, the ECB said in a survey that form a key input in its policy deliberations.

"For the fourth quarter of 2019, banks expect credit standards to remain broadly unchanged for all loan categories," the ECB added.

While bank executives often complain about the ECB's negative rates as an impediment to lending growth, the survey of 144 lenders indicated a negative deposit facility rate continued to contribute to an increase in lending volumes and a decrease in lending rates across all loan categories.

In the fourth quarter, banks expect credit standards to remain broadly unchanged for all loan categories.

In terms of demand, banks see an increase in net demand for housing loans and for consumer credit while they expect demand for business loans to remain broadly unchanged.

The ECB next meets on Thursday in Mario Draghi's last meeting at the bank's president and markets expect no change in policy, even if they expect a dovish undertone.

(Reporting by Balazs Koranyi Editing by Francesco Canepa)

((Balazs.Koranyi@thomsonreuters.com; +49 69 7565 1244; Reuters Messaging: balazs.koranyi.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More