Euro business loans up as firms seek cash to weather virus

FRANKFURT, May 29 — Growth in lending to eurozone businesses continued to accelerate in April as companies sought funds to cope with the tough coronavirus lockdowns which hit activity, European Central Bank data showed today.

Loans to non-financial firms added 6.6 per cent year-on-year in April after 5.5 per cent in March, the ECB said in figures adjusted for some purely financial transactions.

The pace had been just 3.0 per cent in February as the virus began to be picked up on in Europe.

The central bank said in a quarterly survey of banks that firms’ demand for credit had “surged” as the pandemic lockdowns hit, being used to cover “emergency liquidity needs”.

Since March, many eurozone governments have announced massive loan guarantee programmes, aiming to make sure companies could bridge gaps in revenue with borrowed cash.

Meanwhile the ECB has expanded its programmes of cheap lending to banks, offering those financial firms that pass more liquidity on to the real economy favourable interest rates extending into negative territory — meaning the banks are effectively paid to borrow.

The data also reflected the predictions from the April survey, as growth in lending to households continued to slow.

The increase in lending to consumers fell to 3.0 per cent last month after readings of 3.4 per cent in March and 3.7 in February.

Across the whole private sector, adjusted loans grew slightly slower in April than in March, at 4.9 per cent. — AFP