Net demand for credit by euro-zone companies reached a historic level in the second quarter of 2020, but contracted sharply on the household side, against the backdrop of monetary support in the face of the coronavirus pandemic.
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From April to June, demand for corporate loans increased its rebound in the first quarter, reaching " the highest net balance since the start of the quarterly survey in 2003 ", details the European Central Bank (ECB) in its quarterly credit survey released Tuesday.
Households no longer borrow
This development, which had been anticipated by the institute during the last edition of its survey at the end of April, reflected the need for companies to preserve a liquidity mattress and to guarantee continuous payment needs when strict containment measures were in place. place, explains the institute. Demand for loans for long-term investments has declined.
On the household side, net demand for housing loans " fell sharply " from April to June and that for consumer credit reached " its worst level since the launch of the survey in 2003 ", while many businesses closed could only reopen in the middle of the previous quarter.
Banks expect an increase in demand for loans in all sectors during the current third quarter, marked by a large deconfinement. The actual conditions applied to loans to businesses and households have deteriorated, against the background of an increase in credit incidents in the first half, adds this quarterly survey carried out from June 5 to 23 among 144 establishments.
Banks expect a " significant net tightening of credit standards on business loans " for the third quarter, while state-guaranteed loan schemes will end in some major euro area countries. This tightening of credit standards should also be observed on loans to households.
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The ECB worked extensively from March to June to preserve good financing conditions in the euro zone via an emergency program endowed with 1.350 billion euros in public and private debt repurchases by the end of 2020. Banks can also obtain loans invoiced at negative rates up to -1.0% from the ECB for the period from June 2020 to June 2021.
