Eurozone banks see continued lending growth in 3Q

FRANKFURT: Eurozone banks expect lending to continue rising at a moderate pace in the third quarter, helped by a new round of ultra-cheap European Central Bank loans amid easing credit standards, the ECB's quarterly lending survey showed on Tuesday.

Banks also said they did not expect credit shocks from Britain's decision to leave the European Union, and that they would continue to participate in the European Central Bank's cheap loan scheme to bolster their profitability, according to the survey of 141 lenders. The relatively upbeat survey is likely to be welcomed by the ECB, which has provided several rounds of stimulus to boost bank lending, support growth and ultimately revive inflation.

Last month the ECB reintroduced its programme of targeted longer term refinancing operations, providing zero interest-rate loans to banks. Under the terms of the programme, banks are charged the ECB deposit rate if they exceed their lending targets - currently earning them a rebate as the deposit rate stands at minus 0.4 per cent. A net 24 per cent of surveyed banks said they expected corporate lending to rise, driven by loans to small and medium-size firms, while a net 17 per cent expected a further rise in housing loans, the ECB said. The ECB meets on Thursday, when it is tipped to leave interest rates on hold and keep its focus on implementing already approved stimulus measures and highlighting the success of past efforts, even as negative risks to inflation and growth remain abundant. "Among the largest Euro-area countries, credit standards on loans to enterprises eased in France, Italy and Germany, while remaining unchanged in Spain and the Netherlands," the ECB said about lending in the second quarter. "For housing loans, banks in France, Italy and Spain reported a net easing of credit standards, whereas banks in Germany reported a net tightening." In the third quarter, corporate credit standards are seen broadly unchanged while mortgage and consumer credit standards will ease, the ECB added.