Eurozone Bank Lending To Businesses Rise Most Since 2009

Eurozone bank lending to businesses increased in September at the fastest pace since early 2009, data published by the European Central Bank showed on Wednesday.

Loans to businesses grew at a pace of 8.9 percent annually, slightly faster than August’s 8.8 percent rise. This was the biggest increase since January 2009, when lending grew 9.2 percent.

Meanwhile, growth in loans to households eased to 4.4 percent from 4.5 percent in August.

The overall increase in adjusted loans to the private sector improved to 6.9 percent from 6.8 percent. Likewise, credit to the private sector logged a faster growth of 5.7 percent after rising 5.6 percent in August.

The Bank Lending Survey from the ECB, released on Tuesday, revealed that demand for housing and corporate loans would ease in the fourth quarter. Banks intend to tighten their credit conditions for loans to corporate and households.

With the cost of borrowing likely to keep rising, money and lending growth looks set to slow, Jack Allen-Reynolds, Capital Economics’ economist said.

The broad monetary aggregate M3 moved up 6.3 percent in September from the last year, following the 6.1 percent increase a month ago, the ECB reported today. The rate was forecast to remain unchanged at 6.1 percent.

The bank said the annual increase was driven by a one-off technical factor, without which the annual growth rate of M3 would have declined to around 5.8 percent in September.

In the three months to September, M3 growth averaged 6.0 percent.

Meanwhile, the narrow measure M1 that comprises currency in circulation and overnight deposits, weakened to 5.6 percent from 6.8 percent in August.

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