The percentage of eurozone banks reporting a tightening of credit conditions to firms fell to 8% in September, in comparison with 21% in the second quarter of 2009. The comforting figures come from a quarterly survey on bank lending published yesterday (28 October) by the ECB.
Of the 118 eurozone banks surveyed by the ECB, only nine recorded worsening conditions in their loan activities to firms. All the others reported an improvement "bringing the net tightening close to a halt," underlines the ECB report.
Nevertheless, demand for loans from enterprise continued to decline in the third quarter of 2009, by 20%. In the previous quarter the drop was 29%.
The ECB survey considers that this lasting fall in demand for credit is mainly due to lower investment and fewer mergers and acquisitions. But it is also a consequence of growing market-based financing, with more companies issuing debt securities to raise money rather than asking for it from banks, signals the survey.
Firms acknowledge that credit access is no longer their main concern. "The ECB survey results coincide by and large with our clients' recent experience in getting access to finance, and it is indeed correct that most SMEs are still able to access loans," Gerhard Huemer of UEAPME, which represents EU SMEs, told EurActiv.
"However, interest rates are higher. The same is true for non-interest rate costs, and requests for more collateral seem to be increasingly common," Huemer added. Moreover, "banks are reaping the benefits of a significant spread between refinancing rates, which are back almost at pre-crisis levels, and interest rates on business loans that are still considerably high. In other words, loans are currently a very profitable business for banks, but still quite a concern for SMEs," he concluded.
Households and consumers
The ECB survey also reports a drop in the number of eurozone banks which recorded tighter credit conditions for mortgages. Only 14% reported tighter credit conditions, while the other banks surveyed signalled a better situation. In the previous quarter, 22% of banks reported a tightening of credit conditions. Banks expect credit conditions to improve further in the last quarter of the year.
At the same time, the survey reports growth in demand for loans from households. In the third quarter of 2009, demand for mortgages increased by 10%.
As for consumers, the percentage of banks experiencing a tightening of credit dropped from 21% to 13% in the third quarter of 2009. Demand for consumer credit fell to 9%, albeit at a much slower pace than in the previous quarter (-26%).
