Monday , December 11 2017
Home / Perspectives Pictet / Euro bank credit still strong in spite of February weakness

Euro bank credit still strong in spite of February weakness

Summary:
But today's credit report means ECB will have to tread carefully when it comes to reducing the degree of monetary accommodation.The euro area M3 and credit report for February was slightly disappointing overall. Broad money growth (M3) eased from 4.8% to 4.7% y-o-y.  Bank loans to non-financial corporations fell back to 2.0% y-o-y in February, from 2.3% in January, as a result of weaker lending flows across the region.Notwithstanding this modest setback, the euro area credit cycle remains broadly on track and further improvements in credit flows are likely in the next few months. Aggregate demand is rising, interest rates remain low, and ECB’s TLTROs should help at the margin. Finally, we note that euro area banks have continued to increase long-term loans with a maturity over 5 years, which bodes well for business investment spending this year.Against this backdrop, we continue to expect the ECB to tread carefully when it comes to reducing the degree of monetary accommodation.

Topics:
Frederik Ducrozet considers the following as important: , , , ,

This could be interesting, too:

Nadia Gharbi writes Further improvement in financial situation of euro area SMEs

Luc Luyet writes US likely to peak against yen in first half of 2018

Nadia Gharbi writes Switzerland: stronger and broader growth

Thomas Costerg writes Debt energised

But today's credit report means ECB will have to tread carefully when it comes to reducing the degree of monetary accommodation.

The euro area M3 and credit report for February was slightly disappointing overall. Broad money growth (M3) eased from 4.8% to 4.7% y-o-y.  Bank loans to non-financial corporations fell back to 2.0% y-o-y in February, from 2.3% in January, as a result of weaker lending flows across the region.

Notwithstanding this modest setback, the euro area credit cycle remains broadly on track and further improvements in credit flows are likely in the next few months. Aggregate demand is rising, interest rates remain low, and ECB’s TLTROs should help at the margin. Finally, we note that euro area banks have continued to increase long-term loans with a maturity over 5 years, which bodes well for business investment spending this year.

Against this backdrop, we continue to expect the ECB to tread carefully when it comes to reducing the degree of monetary accommodation.

Euro bank credit still strong in spite of February weakness

Leave a Reply

Your email address will not be published. Required fields are marked *