The growth of loans granted by banks in the euro zone to companies accelerated again in June, before an expected correction as a result of the rise in interest rates, the European Central Bank (ECB) said on Wednesday.
Loans to industrial and commercial companies, adjusted for certain strictly financial transactions, increased 6.8% in one year, after 5.8% in May and 5.2% in April, according to a press release.
Growth is particularly strong (14%) for loans with a duration of less than one year.
Loans to finance rising costs
Companies are knocking on banks’ doors to finance their operating costs, which have been increased by rising energy and commodity prices.
For their part, loans granted to families, including loans for consumption and housing, maintained a growth rate of 4.6% in June, the same as in the two previous months.
Overall, adjusted loans to the private sector increased 6.1%, double the score from a year ago and the highest value recorded since January 2009 (6.3%).
The growth of the M3 money supply, of 5.7%, continues to decline after the peak at the end of 2020 (+12%), while public aid linked to the effects of the Covid-19 pandemic is in lower demand . The ECB uses the aggregate M3 as a leading indicator of inflation, including currency in circulation, loans for more than two years, and deposits from households and businesses.
The ECB prepares for new rate hikes
Despite a slower rate of money supply creation, eurozone inflation reached an all-time high of 8.6% in June, driven by soaring energy and commodity prices amid war in Ukraine.
Determined to bring the aggregate to 2%, the ECB decided last Thursday a first increase in reference rates of 0.50 percentage points, before other increases that will occur depending on the evolution of the economy.
As a result, banks expect a “sharp decline” in loan demand in the third quarter, both for businesses and for home purchases, according to a recent ECB survey.
Source: BFM TV
