Eurozone banks tighten credit standards further: ECB

Most banks in eurozone continued to tighten their credit standards in the third quarter of this year, according to the results of a survey conducted by the European Central Bank (ECB) and published on Tuesday, reported Xinhua.

Fifty-six percent of the 157 banks involved in the ECB lending survey conducted between Sept. 15 and Oct. 2 reported they had tightened their credit standards.

"Cumulative net tightening since 2022 has been substantial, which is consistent with the ongoing significant weakening in lending dynamics," the ECB said in a statement.

The overall terms and conditions required by banks for all loan categories were stricter in the third quarter thanks mainly to the widening loan margins.

As banks tightened the credit standards, demand for credit from firms and households continued to decrease in the third quarter.

In a bid to tame inflation, the ECB has raised its key interest rates ten consecutive times since July 2022. Meanwhile, the bank is also reducing its balance sheet portfolio, which eurozone banks indicated in the survey "contributed to a deterioration in market financing conditions and liquidity positions for eurozone banks over the past six months."

Looking ahead into the fourth quarter, eurozone banks expect a further net tightening of credit standards on loans to firms. The standards on loans for house purchases are expected to remain steady in the fourth quarter.