Most recently, in the third quarter of this year, the annual growth of loans to non-financial corporations continued to decline, while the annual growth of loans to households remained broadly unchanged. This pattern of loan dynamics is broadly in line with past regularities around business cycle turning points.
But the latest ECB bank lending survey suggests that, while the peak in the tightening of banks' credit standards is behind us, credit standards remain considerably tighter than prior to the turmoil. It will be particularly important that banks intensify their efforts to expand their supply of loans once loan demand picks up in the recovery. Third, compensation and bonuses must remain contained.