BRUSSELS (dpa-AFX) - The euro area banks tightened their credit standards for companies in the fourth quarter citing higher perceived risks and lower risk tolerance, the quarterly Bank Lending Survey from the European Central Bank showed on Tuesday.
Lenders renewed their internal guidelines and loan approval criteria for loans or credit lines to enterprises in the fourth quarter at the most pronounced level since the third quarter of 2023.
Banks in Germany and France operates in an environment of high political uncertainty and it weighed on their risk perceptions, whereas credit standards eased in Italy.
Firms expect a further net tightening of credit standards for loans to firms. The survey was conducted among 155 banks between December 10 and January 7.
Regarding mortgage loans to households, banks kept credit standards broadly unchanged in the fourth quarter after three quarters of easing. While competition from other banks had an easing impact on credit conditions, risk tolerance and risk perceptions had a tightening impact.
Banks in France reported a net easing while banks in Germany and Italy reported a net tightening.
Banks tightened conditions for consumer credit further in the fourth quarter amid concerns about deteriorating asset quality in this loan segment. Credit standards for consumer credit tightened in Germany, France and Spain, while remaining unchanged in Italy.
For the first quarter of 2025, lenders plan to tighten credit standards for housing loans and consumer credit.
Driven by falling interest rates, demand for loans from firms increased slightly but remained weak overall in the fourth quarter. Lenders expect broadly unchanged loan demand in the first quarter of this year.
Net demand for housing loans continued to rise strongly, while consumer credit demand grew slightly in the fourth quarter. For the first quarter, banks forecast demand in both categories to increase further.
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