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MILAN, Oct 23 (Reuters) - Italian banks kept margins applied to corporate loans broadly unchanged in the third quarter except for the riskier ones which saw an increase in cost, the Bank of Italy’s quarterly lending survey showed on Tuesday.
Italy’s 10-year government bond yields hit a 5-1/2 year-high last week following a government’s plan to lift next year’s budget deficit to 2.4 percent of domestic output from 1.8 percent in 2018. The EU Commission has labelled Italy’s draft budget an “unprecedented” breach of European fiscal rules.
In a positive note, Italian banks expect credit conditions they apply to banks and households to remain “broadly” unchanged in fourth quarter, the survey said.
The rise in yields has fuelled expectations of a tightening in credit conditions.
Credit demand by Italian companies continued to grow in third quarter, while households’ mortgage demand saw a “moderate” increase.
Reporting by Giulio Piovaccari, editing by Valentina Za