The ECB Q1 Bank Lending Survey suggests a positive environment for future financing for the private sector in the Eurozone. Credit standards for loans to corporates eased in Q1 2018, notably for SMEs. For households, credit standards for house purchases eased further compared to Q4. Credit standards on consumer credit eased as well, albeit only slightly. For Q2 2018, banks expect a net easing of credit standards in the three loan categories. Increased competition among banks and the positive economic environment were the main drivers of the easing trend. In addition to inventories, working capital and debt refinancing which continue to weigh positively on loan demand for corporates, higher fixed investment, M&A activity and the low interest rates have been strong boosters in Q1. Across the large Eurozone countries, net demand for loans to corporates increased in Germany, Italy and the Netherlands while remaining unchanged in Spain and France. Net demand from households continued to increase for both housing loans and consumer credit. Banks’ expectations continue to point to an increase in net demand in all loan categories.
