Euro area’s bank lending growth comes in strong in November

Euro area’s bank lending growth comes in relatively strong in November 2018. Today’s ECB monetary figures were most notable. While the euro area economic growth momentum has steadily been lost in the past few quarters, bank lending growth has stayed widely strong, albeit not particularly vigorous, noted Daiwa Capital Market Research in a report.

The date released today showed that, the flow of new loans to non-financial corporations recovered in November to EUR 22.2 billion, the most since January’s surge associated with the deadline for eligibility for cheap ECB liquidity under the TLTRO-II scheme.

The annual rate of growth of loans to non-financial corporations rose 0.2 percentage points to 4 percent year-on-year, matching the average of the previous six months and moving back close to the top of the post-financial crisis range.

Even if the flow of new loans to household dropped a bit to EUR 17.7 billion, that is a level beaten just once over the past decade and which took the annual growth rate to 3.3 percent year-on-year, the strongest since January 2009.

Even if external demand has softened, sentiment among businesses and consumers has deteriorated, and credit spreads have broadened, at least bank lending seems to be in line with economic growth.

“That is even still the case in Italy, where interest rates on new loans remain historically low, growth in lending to households remains close to the euro area pace and, while admittedly low by historical standards, the flow of loans to non-financial corporations in November rebounded to the highest since January”, said Daiwa Capital Market Research.

At 19:00 GMT the FxWirePro's Hourly Strength Index of Euro was slightly bullish at -31.2884, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 37.6591. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex