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HomeEconomyItalian banks lend less to firms as demand weakens: central bank

Italian banks lend less to firms as demand weakens: central bank

(Reuters) – Bank lending to Italian companies fell sharply between November and February due to weak demand and higher interest rates, the Bank of Italy said on Friday.

In its quarterly bulletin, the Bank of Italy said that overall non-financial sector lending fell 3.2% year-on-year in February, driven by a 7.5% fall in corporate credit.

The contraction in corporate lending “reflects broad-based weakness across all sectors, particularly services,” the communiqué said, noting higher funding costs for banks and stricter lending standards.

The average interest rate on new bank loans to corporates rose by 28 basis points (0.6%) to 3.6% in Feb, the central bank said.

Home loans edged down 0.1% year-on-year in the three months to February due to lower demand for home mortgages, it added.

The communiqué also estimated that the Italian economy may have shrunk by 0.1% in the first quarter of this year compared with the previous three months, following a contraction of 0.1% at the end of last year.

Statistics Bureau ISTAT will release the Quick Calculation of GDP for the First Quarter in April .



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