(Finance) – In the second quarter of 2024, the supply criteria for loans to businesses were slightly loosened, for the first time since December 2021. This was due to greater risk tolerance and lower funding costs. The general terms and conditions on such loans became slightly more favorable, mainly through a decrease in interest rates on loans. Supply policies on loans to households were made moderately less stringent for loans aimed at purchasing homes, due to greater competitive pressure, and slightly more stringent for consumer credit. For the current quarter, intermediaries expect a further slight easing of the supply criteria for loans to non-financial companies and mortgages. This is what the Bank of Italy in the Isurvey of bank lending in the euro area.
There credit application by companieswhich has been declining since the beginning of 2023, has further decreased, continuing to reflect the greater use of self-financing, the lower need for fixed investment spending and the high level of interest rates. Households’ demand for financing for home purchases has increased, while that for consumption purposes has remained unchanged. Demand for loans from businesses and households is expected to increase in the current quarter.
The conditions for banks’ access to financing improved mainly with reference to debt securities, long-term deposits and the ability to transfer credit risk off-balance sheet. In the current quarter, intermediaries expect a further slight improvement.
In the first half of 2024 the share of non-performing loans (NPL) and other credit quality indicators have had a slightly restrictive impact on supply policies for consumer credit financing to businesses and households; in the current half-year the effect is expected to be generally unchanged.
In the six months ending in June the bidding criteria have been relaxed for low-energy-intensive manufacturing firms, while they have been made more stringent in all other sectors of economic activity; in the current semester, banks expect a further tightening in the construction sector and in the energy-intensive manufacturing sector.
Over the past twelve months the prospect of climate change would have contributed to a increased demand for credit from both green and transition firms and brown firms; While for the former the offer criteria and the terms and conditions on loans have been relaxed, for the latter they have been tightened.
In the first half of 2024, the change in excess liquidity held by banks in the Eurosystem it would not have had any effect on supply policies and credit volumes; in the current half-year, such effects would be restrictive, but limited.