European banks: company credit growth registers highest growth rate in 10 years

Bankinter | Private sector’s credit stock increases +3.4% in April (vs +3.2% before). A strong performance in company credit stands out (+3.9% vs 3.6% before) as well as credit for buying houses (+3.6% vs +3.5% before).

This is the highest rate of growth in 10 years. The increase of company credit is closely related to the favourable evolution of domestic demand, especially the services sector, and attractive financing conditions.

It is good news because credit demand is evolving satisfactorily and the margin with clients is improving slightly. As reference, the average interest rate for new operations with large companies (‹ 1 year) was 1.22% in March (vs 1.17% in February vs 1.16% in January), while the average interest rates for SMEs remained around ~2% over the last three months. The increase in mortgage credit is closely related to improvements in the labour market – the unemployment rate was 7.7% vs 8.5% a year ago – and the increase in average housing prices (+4.1% in 2018).