ECB Bank Survey Reveals Easing Conditions

The European Central Bank’s (ECB) bank lending survey for the first quarter this year, has revealed  that lending conditions have improved for enterprises, and loan demand has also increased.

Euro area banks reported in the survey, that there has been a further net easing of credit standards on business loans in the first quarter of this year, where competitive pressures was noted as the primary reason for loans to be more accessible.

In contrast, credit conditions for households tightened, compared to the survey for the final quarter of last year, by a net percentage of 4% whereas the previous quarter totalled -7%.

Although the survey also found the net easing in bank’s overall terms and conditions for new loans continued for enterprises from the previous survey, which also intensified for housing loans and consumer credit.

Across all loan categories demand increased, especially in housing due to low interest rates, and favourable housing market indicators.

Demand for enterprise loans can be attributed to businesses needing to boost their levels of working capital, low rates, fixed investment, and merger’s and acquisitions activity.

The impact of the negative deposit facility rate, currently minus 0.4%, has had a positive effect on the volumes of lending, in particular for household lending.

The negative rates banks reported did reduce net interest income, as many expected would happen, loan margins were also effected by the rates in the first quarter this year and the fourth quarter last year.

Banks in the survey also said that the ECB’s quantitative easing (QE) asset purchasing programme, now expanded to EUR 80 billion a month, was also hampering banking profitability.

The net easing impact of QE appears to be stronger for terms and conditions, than for the credit standards of euro area banks.

European Union Current Account Surplus of EUR 9.1 Billion

Figures from Eurostat have unveiled that the current account surplus across the whole of the European Union (EU), reached EUR 9.1 billion for February.

This was down compared to the EUR 15.5 billion that was registered in January, and the EUR15.7 billion surplus in February a year ago.

Amongst the member states, Germany had the largest rise in their current account, leaping by EUR 19.96 billion in February.

They were followed by Denmark, whose surplus of EUR 1.63 billion, highlighting the strength of Germany’s contribution to the overall excess in the EU.

France suffered the biggest fall in their current accounts, falling to a negative of EUR 10.83 billion, in a reverse of the influence of Germany on the EU surplus, as Greece recorded the next largest negative of EUR 0.80 billion, way down from France’s figure.

Euro Area Construction Production Falls by 1.1%

Activity in the construction sector in the euro area has fallen by 1.1% in February according to Eurostat, compared to the previous month, and the EU as a whole saw construction fall by 0.4%.

They were disappointing figures, as the sector rose in January by 2.4% in the euro area, and 0.9% in the EU.

Year on year, the latest results released were also pale in comparison, as in February last year, the industry grew in the euro area and the EU by 2.5% and 2.3% respectively.