Eurozone: December’s market turmoil impacts bank lending only moderately

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Every three months, the ECB conducts a eurozone bank lending survey (BLS) to gain information on bank loan demand from and supply to households and enterprises. Banks report on whether they have recently tightened or eased their credit standards and their expectations for the quarter ahead. The survey also enables banks to explain the underlying reasons for their decisions, how they are implementing any changes in credit standards and how they assess recent developments in credit demand.

The most recent BLS responses indicate that banks are tightening their credit standards slightly for the first quarter of 2019, both for households and enterprises.

Our analysis

The BLS survey was conducted between 7 and 28 December 2018, amid credit and stock market turmoil and prior to the rebound that started in January 2019. As such, this very slight tightening can be expected to be reverse in the second quarter.

In addition, during the final three months of 2018, Italian banks in particular appear to have tightened credit standards, most probably due to the country’s higher rates coupled with a sharp growth slowdown that pushed it into technical recession (two consecutive quarterly GDP falls). The agreement struck between the EU Commission and the Conte Government have allowed spreads to ease from over 300 bps to less than 250 bps and if they continue in the same direction, the Italian situation can be expected to improve.

Monthly data indicate that net credit flows continue to recover across the Eurozone. In 2018, net credit came to almost €400 billion, its highest level since 2009.

The opinion expressed above is dated January 31st 2019, and liable to change.

This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Frères Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Frères Gestion SAS.


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Julien-Pierre Nouen

Directeur des études économiques et de la gestion diversifiée