The ECB’s dovish stance in terms of interest rate guidance and the extension of the TLTRO for another two years have pushed banks to favorably adjust credit standards for loans to corporates. Back in Q4, they were expecting credit conditions for loans to corporates to tighten but instead they remained broadly unchanged in Q1 2019 (-1%). However, large companies benefitted from an easing of credit conditions (-5%) while SMEs saw a small tightening (+1%). By country, credit standards eased for corporates in France and the Netherlands, remained unchanged in Spain and Italy, and tightened in Germany. In terms of demand, a stable trend was observed by banks in Q1 2019, instead of a rise which had been the norm since Q2 2015. Demand increased for loans to SMEs and remained unchanged for loans to large firms. We estimate that the SME bank financing gap could reach -3% of GDP in 2019 (or EUR400bn) should SMEs ask for the share of loans they consider as relevant for their future activity. By country, net demand for loans to enterprises increased in Germany and the Netherlands, while it declined in Spain and Italy given lower needs related to investments.
