The ECB recently published data on bank loans in the Eurozone as of the end of 2024. This data confirms a gradual rebound in credit volumes issued by the banking sector, both to households (+1.1% year-over-year) and to businesses (+1.5% year-over-year). This recovery follows a halt in lending between 2022 and 2023 due to rising interest rates.
Our analysis
The rebound in credit volumes is likely just beginning: before the 2022-2023 rate hike, growth in credit to businesses and individuals was around 2.5% to 3% per year. This upturn is good news for the European banking sector, as the 'volume effect' should help offset any potential decline in lending margins due to lower rates.
It's worth noting that the annual earnings season, which dominated the first two weeks of February, confirmed the strong momentum of the European banking sector. Several institutions have once again reported record profits for 2024 and are approaching 2025 with a sense of optimism.
Written on 21 February 2025. Opinions subject to change. This document has no pre-contractual or contractual value. It is provided for information purposes. The analyses and/or descriptions contained in this document should not be considered as advice or recommendations from Lazard Frères Gestion SAS. This document does not constitute a recommendation to buy or sell securities, nor does it encourage investment. This document is the intellectual property of Lazard Frères Gestion SAS - 352 213 599 RCS Paris 25, RUE DE COURCELLES - 75008 PAR
