According to figures from the European Central Bank, in 2018 corporate loans in Euroland grew just short of 4 percent. In other words, the rise in loans portfolios, after adjusting for sales, securitisation and fictitious cash pooling activities, slowed slightly in the fourth quarter of last year.
However, the trend differed greatly from one country to the next. While corporate loans in Germany surged 6.4 percent, the highest rate in almost ten years, they actually fell in Spain. In France, growth in Q4 2018 slowed mildly, while it dipped appreciably in Italy. Loans to private households also developed unevenly, with the overall pace for Euroland picking up slightly to reach 3.3 percent. All in all, the trend last year was gratifying: The European loans markets, which suffered from 2012 to 2015 from a decline and/or weak growth, benefited from high demand for credit among corporations and private households alike.
In our assessment, the weakening in the growth in loans seen recently in parts of the market looks set to become more pronounced in the current year. The main factor driving this is the dampening economy, which is boosting investor hesitancy and squeezing demand for loans. That said, amongst banks gradually those institutions that plan to tighten their credit lines are gaining the upper hand. This was already suggested by the ECB’s Bank Lending Survey released in mid-January. We expect that in 2019 the growth in loans to corporations and private households will remain positive but will slow, both in the Eurozone as a whole and in Germany.