Credit standards (i.e. banks’ internal guidelines or loan approval criteria) for loans to European SMEs tightened in Q2 (5%) while they remained broadly unchanged for loans to large corporates (1%). This was contrary to banks’ expectations of a further easing, reflecting increased concerns about economic outlook and rising risk aversion. Among the large Eurozone countries, credit standards on loans to corporates tightened considerably in France, Italy and, to a lesser extent, Germany, while they remained unchanged in Spain and continued easing in the Netherlands. The net percentage share of rejected loan applications continued to increase for loans to corporates, reaching a record high level. However, loan demand proved high in Q2, in line with expectations, on the back of the still low level of interest rates and fixed investment intentions, albeit to a lower extent compared to the previous quarter. Banks expect company loan demand to remain strong in Q3.
