InvestmentsJul 30 2014

European bank lending outlook brightens

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Credit conditions for eurozone companies improved for the first time since 2007, according to the European Central Bank’s quarterly lending survey, bolstering hopes for a strengthening economic recovery, FastFT reports.

The ECB’s bank lending survey indicated that financial institutions in the common currency bloc reported a net easing of credit standards on loans to enterprises for the first time since the second quarter of 2007, and a further relaxation for household loans.

Moreover, the BLS said that banks have lowered the cost of borrowing for riskier companies, for the first time since the survey was started in 2003.

The survey asked 137 banks in the eurozone, and relate to changes in credit conditions in the second quarter and expectations of changes in the next three months.

Still, the ECB cautioned that lending conditions remained tight for many companies, a concern that was echoed by Colin Bermingham of BNP Paribas:

“The results of the survey, while containing no surprises, are encouraging and continue the improvements that have been seen in previous quarters.

“To date, however, improvements in the bank lending survey have been slow to translate into improvements in credit growth, particularly for corporates. Thus, corporate credit growth is likely to remain subdued for some time yet.”