In the new European Credit Risk Outlook report issued by FICO and Efma, risk managers across Europe weigh in on credit supply and demand. With the pressure on for banks and other lenders to fuel economic growth through making credit available, will the supply meet the demand?
Respondents in most regions indicated that while the amount of credit provided is expected to rise, demand for credit is expected to rise faster, a trend that is more pronounced among small business borrowers. While 62 percent of respondents overall said that consumers will request more credit, only 47 percent believed the amount of credit extended will increase, and 17 percent believed it will decrease.
With respect to small business credit, 55 percent of respondents expected an increase in the total amount of credit requested by small businesses. However, only 35 percent of respondents saw an increase in the approval rate for small business credit, and only 39 percent saw the total amount of credit extended to rise.
Results were mixed by region — the “credit gap” looks narrower for UK consumers, and in the DACH region alone bankers saw a rise in credit availability outstripping credit demand. Uniquely, DACH may be headed for a credit surplus. Overall, however, consumers and business owners in many countries are likely to perceive a “credit gap” for some time, as a result of more cautious lending caused by both economic pressures and regulatory demands for higher capital holdings.
We invite you to join us as we discuss the report at the inaugural Efma Credit Risk and Debt Management Conference, 17-18 February in Paris.