The credit impulse in the eurozone, reflecting the year-on-year change in credit outstanding, remained negative in June 2021. As a reminder, the introduction of financial support measures for companies by eurozone governments led to exceptionally strong but temporary growth in bank lending to non-financial corporations in spring 2020. Combined with this, the slowdown in outstandings seen a year later (+1.9% y/y in June 2021 vs. +5.3% in March 2021) squeezed the credit impulse in lending to non-financial corporations (-5.3% in June 2021 vs. +0.3% in March). However, the very marked slowdown in outstanding loans to non-financial corporations falls against the backdrop of a significant proportion of companies still having abundant liquidity relating to loans taken out in anticipation of their needs in 2020, which may be redeployed to finance a fraction of capital expenditure. As a result of the unusually contra-cyclical role played by bank loans in 2020 and following on from the developments seen in the second quarter (rebound in real GDP of +13.6% y/y in Q2 2021 vs. -1.3% in Q1), continuing economic recovery in the second half of 2021 in the eurozone is unlikely to be accompanied by as marked an upturn in outstanding loans as usual during this phase of the cycle.
The development of outstanding household loans seems slightly more correlated to actual economic activity. Following relatively stable growth of around 3% since April 2020, in June 2021, they increased at a rate not seen since 2008, up +4.0% y/y. This growth was fuelled by demand for home loans (+5.7% y/y), while outstanding consumer loans remained down slightly in June 2021 (-0.2%).
The results of the ECB’s Bank Lending Survey suggest greater demand for financing from companies and households in the third quarter of 2021 (with an upturn likely in consumer loans in particular). On average, banks expect to keep their lending criteria unchanged after being made stricter in 2020. Lastly, the survey was conducted over a period during which the Delta coronavirus variant was already actively circulating (from 14 to 29 June 2021) and only unexpected deterioration in the health situation could shed doubt on these forecasts.
CREDIT IMPULSE IN THE EUROZONE
