Eurozone Banks See Lending Lifted by QE, Low Rates

By Todd Buell 

        FRANKFURT--Eurozone banks expect to be slightly more generous in lending to eurozone firms in the current quarter, a survey of lenders showed Tuesday.
        The data suggest that low European Central Bank interest rates and the central bank's policy of pumping large quantities of cash into the economy are starting to have the desired effect of encouraging bank lending to private enterprises.
        "For the second quarter of 2015, banks expect a small net easing of credit standards on loans to enterprises," while for home loans "a further net tightening of credit standards" was expected, according to the ECB's quarterly Bank Lending Survey.
        In addition to cutting interest rates to a record low level of 0.05%, the ECB is in the process of pumping more than EUR1 trillion ($1.05 trillion) into the eurozone economy through large-scale bond purchases. The ECB has also offered conditional four-year loans to banks in an effort to push them to increase lending.
        The initial data suggest that this may be working. The survey said that banks had been using additional liquidity from the ECB over the last six months "in particular for granting loans and intend to do so also in the coming months."
        The survey also suggested that low interest rates and a favorable outlook on the housing market were encouraging borrowers to apply for mortgages. "For housing loans, the low general level of interest rates and housing market prospects were the main factors contributing to strong demand."
        For the first quarter, banks registered "a further net easing of credit standards on loans to enterprises." On the flip side, "there was a slight net tightening of credit standards on loans to households for house purchase."
        The ECB said that 142 banks contributed to the survey.
        Write to Todd Buell at todd.buell@wsj.com
        (END) Dow Jones Newswires

        April 14, 2015 04:49 ET (08:49 GMT)

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