As previously discussed, credit conditions remain tight thanks to both supply and demand factors. The European Central Bank’s latest survey of bank loan officers confirms this trend in the euro area. When it comes to their corporate clients, banks continue to report both a net tightening in credit standards and a net decline in loan demand.
Looking ahead, lenders expect net loan demand to turn positive in the current quarter. That said, they had a similarly bullish outlook in the previous quarterly survey and, in the end, were proven wrong by a worsening appetite for loans among corporate borrowers.