The ECB recent data on monetary aggregates and bank balance sheets posts a slowdown in the outlook for money growth.
Although the broad money M3 annual growth rate was unchanged at +4.9% in September, credit to the private sector contracted to +0.4% from +0.8% in August led by non-financial corporation (NFC) loans to fall to +0.1% from +0.4% (adjusted for sales and securitisation), notes Barclays.
The September report of the central bank reveals some positive improvements, including further improvement in household loans (up to +1.1% y/y from +1.0% previously), they do not look strong enough to reassure the ECB that the lending recovery that started in Q2 last year is firmly on track.
"Should private sector loans continue to rise consistent with the monthly growth trend experienced since they started to recover in April 2014, it would take it more than four years to return to an annual growth rate in line with pre-crisis average of (+8.7% between 1998 and 2008), argues Barclays.
