Santander| Slight improvement in lending to the private sector in October, although corporate lending is already contracting in the eurozone (for the first time since August 2015) and more sharply in the periphery. The ECB has now released eurozone private sector lending data, with a slight improvement in October to +0.4% YoY vs +0.2% in September, although this is a minimal rebound within its clearly downward trend since the peak of +7.1% in September last year, as a consequence of the current environment of rate hikes, tightening financing conditions and lower demand.
Moreover, monthly changes in corporate and household lending have fallen on a monthly basis (-0.5pp to -0.3% YoY corporate lending and -0.2pp to +0.6% household lending), so that corporate lending is already in contraction in the eurozone, for the first time since August 2015. In this regard, let’s recall that in the latest ECB survey of financing conditions published in October, banks expect a further tightening of conditions in corporate lending in 4Q23 (+12%), as well as a further fall in demand, although less than in 3Q23, both in corporate lending (-21% vs. -36% in 3Q23) and in mortgages (-11% vs. -45%) and consumer credit (-7% vs. -12%).
By geography, the core countries still recorded year-on-year growth in corporate lending, albeit declining (+2.7% in France and +0.1% in Germany), in contrast to the -4.3% fall in Spanish lending and, above all, -5.6% in Italy. Similarly, lending to households is also positive in Germany (+0.9%) and France (+2%), but negative in Spain (-2.1%) and Italy (-1.1%). The exception to this divergence between core and peripheral countries is consumer credit, where the lowest growth rate is in German credit: +0.7%, in contrast to +5.4% in Italian credit and +2.3% at the European level.
