José Luis M. Campuzano (Spanish Banking Association) | Do you know what the main concerns for European SMEs are? Below please find the list of answers provided by the ECB from the survey it carries out periodically:
1. Find clients (24% net replies)
2. Find trained workforce (23%)
3. Access to financing (8%)
Financing is no longer a priority. In fact, it has not been for a long time now. In this way, with cheap and extensive bank financing as a base, the SMEs can focus on their business. And the results of the survey published this week also reflect a growing optimism about the future. An improvement in sales and in profitability. With respect to this last point, it’s the first time since 2009 that a net reply in the survey flags an improvement in profitability.
But the SMEs are not letting up as far as their debt reduction efforts are concerned, while also acknowledging that costs are higher than they would like. Investment, as part of a strategy of being more efficient in the future, may help. Focusing on financing, the European SMEs are not showing signs of a change in their demand for funds from the banks. That said, they do acknowledge the availability of other funding sources like commercial loans. What they also recognise is the continued improvement in the financing offer from the lenders, in its two key areas: volume and price. And this is particularly evident in Spain.
A few days ago the ECB also published the figures for liquidity and loans in the Eurozone in October. With regard to the medium-term target for liquidity, annual M3 growth moderated to 5% in October from 5.2% in September. The most liquid component M1 also saw a moderation in its growth rate, although still at levels of 9.4% in October from a previous 9.8%. Its main counterpart of loans to residents also moderated its annual growth to 4% from 4.2%. But the moderation in the growth rate is concentrated in loans to the public sector (7.4% from the previous 8.4%), while lending to the private sector is accelerating (2.9% from 2.8%). And the acceleration in growth is thanks to the loans from the European banks: to 3.2% from 3.1% in the case of loans to households and to 1.7% from 1.5% in the case of loans to corporations.
The SMEs are key to explaining the recovery in the European economy. And bank financing has been a determining factor in European SMEs being able to focus on what is really important: growth and prosperity.