Monthly Bulletin April 2008 - European Central Bank - Europa

ECONOMIC
AND MONETARY
DEVELOPMENTS
Monetary and
financial
developments
developments in household loans have been affected by the financial turmoil or that the supply of
bank loans has been disrupted. The breakdown of household loans by purpose supports this view.
The decline in the growth rate of loans to households reflects the moderation observed in the growth
rate of loans for house purchase, which declined to 6.7% in February, down from 6.9% in January
(see Table 2). This moderation was observed throughout the euro area and was particularly marked
in countries that had previously experienced strong borrowing dynamics.
The annual growth rate of MFI loans to non-financial corporations rose to 14.8% in February, up
from 14.5% in the previous month. Overall, in the seven months from August 2007 to February 2008,
the total value of MFI loans to euro area non-financial corporations was €312 billion, compared
with €328 billion in the seven months prior to the financial turmoil. This offers little indication
that the supply of bank credit has been seriously hampered by the financial turmoil. Looking at the
maturity breakdown, lending dynamics over this period were due mainly to stronger borrowing at
medium to long maturities (i.e. lending with a maturity of over one year), which accounts for the
bulk of loans to non-financial corporations. Thus, recent data provide no evidence of overall flows
having increased as a result of banks experiencing difficulties in removing short-term bridge loans
(related to LBOs and/or M&A deals) from their balance sheets. Overall, there continues to be no
clear evidence of the turmoil having had an impact on the growth of MFI loans to the non-financial
private sector.
Among the other counterparts of M3, the annual growth rate of MFIs’ longer-term financial
liabilities (excluding capital and reserves) fell to 6.4% in February, down from 7.7% in January.
Although declines were observed in the annual growth rates of all sub-components, the strongest
was observed for longer-term debt securities. Looking at the sectoral breakdown of longer-term
deposits, the non-financial private sector continued to reduce its holdings of long-term deposits,
which is to be expected in an environment characterised by a relatively flat yield curve. At the same
time, the ongoing robust growth observed in non-monetary financial intermediaries’ holdings of
long-term deposits may be related to securitisation activity.
Table 2 MFI loans to the private sector
(quarterly figures are averages; not adjusted for seasonal and calendar effects)
Outstanding amount
as a percentage of the
total 1)
Annual growth rates
Non-financial corporations 43.4 13.0 12.7 13.8 14.0 14.5 14.8
Up to one year 29.1 9.9 10.1 12.1 11.9 12.4 13.1
Over one and up to five years 19.7 19.8 19.0 19.9 21.0 22.6 22.6
Over five years 51.2 12.4 12.0 12.7 12.8 12.8 12.9
Households 2) 46.9 8.1 7.5 7.0 6.6 6.0 5.8
Consumer credit 3) 12.7 7.1 6.5 5.7 5.3 5.3 5.3
Lending for house purchase 3) 71.6 9.4 8.6 8.1 7.7 6.9 6.7
Other lending 15.7 3.2 3.6 3.2 3.1 2.5 2.6
Insurance corporations and pension funds 1.0 27.6 23.7 26.6 21.9 2.3 6.4
Other non-monetary financial intermediaries 8.7 12.3 16.1 20.0 23.2 25.9 22.7
Source: ECB.
Notes: MFI sector including the Eurosystem; sectoral classification based on the ESA 95. For further details, see the relevant technical
notes.
1) As at the end of the last month available. Sector loans as a percentage of total MFI loans to the private sector; maturity breakdown and
breakdown by purpose as a percentage of MFI loans to the respective sector. Figures may not add up due to rounding.
2) As defined in the ESA 95.
3) The definitions of consumer credit and lending for house purchase are not fully consistent across the euro area.
2007
Q1
2007
Q2
2007
Q3
2007
Q4
2008
Jan.
2008
Feb.
ECB
Monthly Bulletin
April 2008
17