Euro
zone lending shows sign of turnaround as morale improves
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[February 26, 2015]
By Paul Carrel and John O'Donnell
FRANKFURT (Reuters) - Bank lending in the
euro zone fell slightly in January but at a slower pace than a month
earlier, suggesting the economy may be turning a corner as consumer
morale picks up in the bloc's largest economies.
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European Central Bank President Mario Draghi said late on Wednesday
that "all in all, the outlook is more positive than it was a few
months ago" in the 19-country euro zone, which has been blighted by
recession in the south and falling prices.
Sparse lending to firms continues to dog the economy, but data
released by the ECB on Thursday showed the overall level of lending
to households and firms in the euro zone fell by 0.1 percent in
January from a year earlier, after a 0.5 percent drop in December.
Lending has not risen since July 2012.
"We have been seeing an across-the-board improvement to banks'
willingness to lend and also in the demand for credit," said
Reinhard Cluse, an economist with UBS.
"We are making good progress in healing the European banking sector
but we are coming from a very low base. The way to recovery is still
long. We shouldn't expect any miracles."
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German consumer sentiment jumped to its highest level in more than
13 years heading into March, a separate report showed, as low oil
prices freed up consumer cash to spend on other things.
Consumer confidence hit a near three-year high in France this month
and rose sharply in Italy, raising hopes for recovery of the
stagnant economy.
The more positive tone comes as the ECB prepares to start printing
money to buy sovereign bonds next month - a policy measure aimed at
perking up the economy and lifting inflation, which is running at
-0.6 percent, back into positive territory.
A European Commission report on Thursday showed that confidence in
the euro zone's economy strengthened for the second straight month
in February.
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There are also more positive signs from other countries in the south
of the euro zone, which was battered by the bloc's debt crisis and
is going through a painful period of structural change as it tries
to shape up to regain competitiveness.
Spain raised its 2015 economic growth forecast to 2.4 percent this
week, from 2 percent, and said it could be higher.
In Greece, however, the picture remains bleak.
ECB data showed the level of deposits in Greek banks fell by 12.2
billion euros ($13.87 billion) to 155.4 billion euros in January,
its lowest level in years.
A senior Greek banker, though, told Reuters on Thursday that more
than 850 million euros in deposits returned to Greek banks when they
reopened this week after Athens secured a fourth-month extension to
its financial rescue.
(Writing by Paul Carrel; Editing by Susan Fenton)
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