Lending plays a key role in the economy. Bank lending enables the flow of capital necessary for business growth, investment and consumption. They also drive job creation and stimulate economic activity in general. This is why the availability and terms of loans have a direct impact on the economic dynamics of each country or region.
This is an issue we never tire of referring to, as we can continually link to specific indicators in this area. One of the most relevant ones recently published is the banking forecast of the renowned consulting firm EY
, which belongs to the group of the so-called Big Four. These indicators provide an up-to-date view of the economic and credit situation in the euro area. Analysing this data not only gives us the opportunity to better understand how lending and credit demand impact the overall economy, but is also a tool to help us assess the challenges and opportunities facing the banking sector in a changing environment.
Incidence of non-performing loans in Spain
EY’s forecast for lending activity in the Eurozone projects moderate growth in bank lending in the coming years. According to the report, an increase of 2.1% is expected in 2023 and 1.7% in 2024. However, as expected, there are significant differences between eurozone countries.
In the case of the German economy, loan growth is expected to slow down, mainly due to low GDP growth and the impact of rising interest rates on the housing market. On the other hand, Spanish banks are expected to experience a contraction in lending, with a decline of 1.2% in 2023, weighed down by a weak start to the year, and other domestic economic factors.
The forecast also highlights that there will be an increase in delinquency rates in the eurozone, which is considered “slight” but will have a particular impact on the Spanish and Italian markets, due to the high volume of variable rate mortgages in these countries. These trends reflect the challenges facing banks in the current economic environment of high interest rates and persistent inflation.