April 24, 2018 / 8:18 AM / in a year

Euro zone banks see rising loan demand in second quarter: ECB survey

The German Central Bank (Bundesbank) presents the new 50 euro banknote at its headquarters in Frankfurt, Germany, March 16, 2017. REUTERS/Kai Pfaffenbach

FRANKFURT (Reuters) - Banks in the euro zone expect demand for corporate loans, consumer credit and mortgages to grow in the second quarter with credit standards also easing, the European Central Bank said on Tuesday in its quarterly lending survey.

By buying trillions of euros worth of public and private bonds over the past three years, the ECB has kept borrowing costs low, hoping to stimulate borrowing and spending, all with the aim of boosting inflation.

Although the scheme worked more slowly than expected, household and corporate lending are near their post-crisis high and the euro zone economy has been expanding for 20 straight quarters, raising the prospect that the ECB will continue to withdraw its stimulus.

In the first three months of 2018, banks saw increased demand for all types of loans. Credit standards — internal guidelines or loan approval criteria — eased for corporate, housing and consumer loans, the ECB said.

“For loans to enterprises, competitive pressure and risk perceptions were the main factors having an easing impact on credit standards in the first quarter of 2018, while banks’ risk tolerance contributed slightly to the net easing,” the ECB said.

In the second quarter, demand for loans is expected to rise further while credit standards are also expected to ease again, the survey of 149 banks indicated.

Reporting by Balazs Koranyi; Editing by Kevin Liffey

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