Credit standards for loans to euro area consumers eased for the first time in nearly six years in the second quarter of 2013, the European Central Bank said in its latest quarterly Bank Lending Survey, released Wednesday.
Credit standards for consumers have fallen for the first time since end-2007 to a net easing of 2 percent in the second quarter from a net tightening of 7 percent from the first quarter, the ECB said in the report. At the same time, the net percentage of banks reporting a further tightening of credit standards on loans to non-financial corporations (NFCs) stood unchanged at 7 percent. In the case of housing loans, the degree of net tightening eased to 7 percent from 14 percent.
The ECB said that the development of credit standards for both NFCs and households reflected "somewhat reduced contributions not only from banks' risk perceptions, but also from their cost of funds and balance sheet constraints."
Borrowers' risk and macroeconomic uncertainty remained the main factors that curbed lending policies, the bank said.
According to the survey, euro area banks anticipate a decline in the pace of net tightening of credit standards on loans to NFCs and loans for house purchase in the third quarter. Meanwhile, they expect conditions on consumer credit to remain broadly unchanged.
Demand for loans declined in the second quarter but to a lesser extent compared with the previous quarter, the survey found. Fewer banks reported a decline in loan demand from NFCs in the second quarter than in the first quarter.
ECB said the weakness of demand was driven mainly by a substantial negative impact of fixed investment on the financing needs of firms, while inventories and working capital contributed positively to the loan demand in the same quarter.
The proportion of banks indicating a net decline of demand for home loans fell substantially in the second quarter. Also,there was only a smaller net decline of demand in the second quarter in the case of consumer credit.
Looking forward to the third quarter, banks expect the net decline in demand for loans across all loan categories to continue, the survey showed.
In the second quarter, banks reported a further improvement across all funding categories, albeit to a lesser extent than in the previous survey. In the third quarter, euro area banks expect a marginal deterioration in funding conditions for most market segments, the survey report noted.
The survey was conducted between June 19 and July 4 in which 132 banks participated.
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