Credit standards for loans to enterprises eased
On balance, 26% of Dutch banks reported eased credit standards for loans to enterprises in the third quarter of 2018. This is the first time since early 2015 that an easing is reported. In terms of firm size, credit standards eased for both loans to small and medium-sized enterprises and loans to large firms. As regards loan maturity, credit standards eased both for short-term and – for the first time in two years – long-term loans. Competitive pressure and lower risk perceptions were reported as the main factors contributing to the easing of credit standards.
Not only Dutch banks, but also banks in Germany, Spain and Italy reported a relaxation of standards for corporate loans in the third quarter of 2018. (See The euro area bank lending survey, third quarter of 2018).
Increase in demand for loans to enterprises
On balance, 43% of Dutch banks reported increased demand for loans to enterprises in the third quarter of 2018. This was mainly driven by the low general level of interest rates and high levels of finance required for fixed investment, inventories and working capital, M&A activities and debt restructuring.
Increased demand for corporate loans and the easing of credit standards for this type of loans point to an expansion of the Dutch economy in general, and the Dutch corporate sector in particular. These trends are consistent with projected capacity utilisation increases and the results of other surveys, in which fewer enterprises reported financial constraints on output. (See Economic Developments and Outlook, June 2018).
Figure 1: Dutch banks' loans to enterprises: changes in credit standards and demand
(net weighted percentages of Dutch banks)