Euro zone bank lending to companies grows at fastest pace in three years

Bank lending to euro zone companies rose at its fastest pace in three years in May, with annual growth in adjusted loans to non-financial corporations reaching 4.0% from 3.4% in April. Lending to households also edged higher, to 3.1% from 3.0%, while the broad money measure M3 rose 3.2% year on year after a 2.7% increase in April.

The figures point to a credit channel that is improving, but not yet running hot. The European Central Bank’s April bank lending survey still showed euro area banks tightening credit standards for loans to firms in the first quarter of 2026, and that tightening was the most pronounced since the third quarter of 2023. The survey, which the ECB runs four times a year to track supply and demand for loans to enterprises and households, also showed demand for firm loans was not uniform across the bloc: it rose in Germany, was unchanged in France, and fell in Italy and Spain.

That split matters for judging whether the lending pickup reflects a broad recovery or a narrow need to refinance through a difficult period. The ECB’s June economic bulletin said annual bank lending growth to firms had already risen to 3.2% in March from 3.0% in February, showing a steady build rather than a sudden jump. The central bank also said M3 growth averaged 3.0% over the three months to May, while narrower M1 growth increased to 4.0% from 3.8% in April.

For companies, the combination of firmer loan growth and still-tight standards suggests borrowing is becoming easier, but not easy. The cost of borrowing for corporations stood at 3.62% in April, a level that still leaves managers weighing whether to refinance existing debt, finance working capital, or commit to new investment. Households are seeing a similar, if modest, improvement: loan growth reached 3.1%, while lending for house purchase was 2.9% in April and consumer lending was 5.3%.

The latest data arrive as ECB policymakers gather in Sintra, Portugal, for the Forum on Central Banking, which runs from June 29 to July 1. That backdrop makes the May lending figures especially useful: they show credit is flowing more freely than earlier in the year, but the pattern remains uneven enough to keep the ECB focused on whether the real economy is finally healing or merely stabilizing.