Credit standards for loans to enterprises tightened in net terms in the fourth quarter of 2016, according to the January 2017 bank lending survey.

The survey found that:

• loan growth continues to be supported by increasing demand across all loan categories;
• credit standards for loans to enterprises broadly stabilising;
• continued easing of credit terms and conditions across all loan categories; and
• easing impact of targeted longer-term refinancing operations (TLTROs) on credit standards increased.

The ECB's statement said: “This was the first net tightening since the fourth quarter of 2013 and was broadly in line with expectations in the previous survey round. Banks’ lower willingness to tolerate risk was the main factor behind the slight net tightening of credit standards on loans to enterprises.”

Easting of credit standards in Q1

However, the survey found that banks expect a net easing of credit standards across all loan categories (business and household) in the first quarter of 2017. This would be mainly driven by a further narrowing of margins.

It added that euro area banks continued to adjust to ongoing regulatory and supervisory changes in the second half of 2016 by further strengthening their capital positions and reducing their risk-weighted assets. At the euro area level, banks reported a broadly neutral impact of regulatory or supervisory action on credit standards and credit margins.