The net demand for loans from euro area enterprises declined in the fourth quarter for the first time since 2013, despite low interest rates, the Bank Lending Survey from the European Central Bank showed Tuesday.
The decline in net demand was broadly based across a number of larger and smaller euro area countries, the survey revealed. Nonetheless, banks expect demand to remain stable in the first quarter.
Meanwhile, demand for housing loans increased further. Demand for consumer credit also increased in the fourth quarter.
Credit standards for loans to enterprises and loans to households for house purchases remained broadly unchanged in the fourth quarter. Meanwhile, conditions for consumer credit was tightened.
Looking ahead to the first quarter of 2020, banks forecast credit standards for loans to enterprises to remain unchanged, while they expect credit standards to tighten for housing loans and to ease for consumer credit and other credit to households.
The latest ECB survey suggests that while consumer spending growth will maintain a steady pace, investment growth will weaken, Jack Allen-Reynolds, an economist at Capital Economics, said.
It also implies that future TLTRO-III operations will be a little more successful than the past few, but this is unlikely to turn the economy around, the economist added.