October 9, 2019 / 8:32 AM / 7 days ago

Italian banks' loans to firms shrink by 0.7% in August

MILAN, Oct 9 (Reuters) - Italian banks’ lending to businesses shrank further in August and the cost of loans also eased, central bank data showed on Wednesday, in a further sign of slack in the country’s economy.

The Bank of Italy said loans to non-financial businesses fell by 0.7% year-on-year in August, following a 0.5% drop the previous month.

The average rate charged on new corporate loans stood at 1.26% from 1.37% the previous month.

The monthly report on lenders’ balance sheets also showed gross bad loans were little changed at 87.62 billion euros ($96.25 billion)in August, down from 88.23 billion the previous month.

Net of writedowns bad debts stood at 32.46 billion euros up from 31.95 billion in July, indicating banks had shed loans that were heavily written down.

Italian government bonds held by the country’s lenders were also little changed at 402.13 billion euros. ($1 = 0.9103 euros) (Reporting by Valentina Za, editing by Maria Pia Quaglia)

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