Box 4. Recent developments in Spanish SMEs' access to external finance according to the ECB's six-monthly survey

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The October 2018 Bank Lending Survey in Spain

Artículo de revistaIn 2018 Q3, according to the Bank Lending Survey, credit standards for loans to enterprises eased somewhat, both in Spain and in the euro area, while the terms and conditions applied to such loans also eased. As for lending to households, Spanish banks reported an easing in the credit standards and terms and conditions for consumer credit and other lending to households, and no change in those for housing loans, while in the euro area banks reported no significant changes in the first of these segments and a slight easing in the second. The demand for loans to enterprises fell somewhat in Spain and increased in the euro area as a whole, while in the two segments of loans to households, loan applications increased in both areas. In Spain, banks’ conditions of access to wholesale funding markets deteriorated, while their conditions of access to retail funding markets barely changed. In the euro area as a whole, on the other hand, the changes were very small in both cases. The ECB’s expanded asset purchase programme continued to contribute, over the six month period prior to the survey, to improving the liquidity position and funding conditions of banks in both areas and to easing the terms and conditions for loans, while the impact on profitability was mildly positive in Spain and negative in the euro area as a whole. Both Spanish and euro area banks reported that the ECB’s negative deposit facility rate had led to a reduction in net interest income over the previous six months, and a general fall in interest rates and margins on loans, as well as a slight increase in the volume of lendin

January 2020 Bank lending survey in Spain

Artículo de revistaAccording to the Bank Lending Survey, during 2019 Q4, credit standards tightened slightly for all categories of lending in Spain, whereas this only affected consumer credit and other lending to households in the euro area. In this segment, the general terms and conditions on new lending eased, both in Spain and in the euro area as a whole. Furthermore, in Spain, the terms and conditions on loans to households for house purchase tightened slightly. Demand for all types of credit in Spain decreased, whereas in the euro area as a whole loan applications from enterprises declined and those from households increased. According to the responding banks, regulatory and supervisory actions on capital, leverage and liquidity had a negligible impact on credit supply in Spain in the second half of 2019, whereas they prompted a slight tightening in the euro area. The NPL ratio contributed to a tightening of credit standards (in consumer credit in Spain and in the other two segments in the euro area). Lastly, as for the ECB’s TLTRO III (the third series of targeted longer-term refinancing operations), the banks’ participation in the September operation was limited and increased significantly in the December operation, as they were essentially attracted by the favourable conditions of this funding

Results of non-financial corporations in 2016 and in the first three quarters of 2017

Artículo de revistaAccording to the CBA and CBQ surveys, non-financial corporations as a whole continued to create employment in 2016 and in the first nine months of 2017, as did most sectors and most of the firms individually. As regards business activity, the main surpluses grew significantly in 2016, resulting in an increase in aggregate ordinary net profit. The favourable behaviour of extraordinary costs and revenues also contributed to the increase in net profit. By contrast, in the first three quarters of 2017, gross value added and ordinary net profit continued to grow, but at more moderate rates than in the previous year, owing to the adverse effects of the behaviour of some large firms with a high weight in the quarterly sample, which led to a slight decrease in aggregate profitability. Also, during the first nine months of this year, non-recurring items had a negative impact, leading to a sharp contraction in net profit. Lastly, average debt ratios continued to decline in 2016, while in the first three quarters of 2017 they rose slightly. Driven by the lower cost of borrowing, the debt burden declined in both periods. The article includes two boxes, the first of which analyses the performance of SMEs relative to larger firms in 2016, and the second the results and financial position of Spanish consolidated groups in 201

Bank Lending Survey in Spain: October 2019

Artículo de revistaIn 2019 Q3, according to the Bank Lending Survey, loan supply in Spain remained generally stable, with only credit standards for consumer credit to households tightening slightly, and terms and conditions on new loans for house purchase easing somewhat. By contrast, in the euro area, credit standards mostly eased while the overall terms and conditions tightened. In Spain, loan demand across all categories is estimated to have decreased, while demand from the two household segments appears to have increased in the euro area. Conditions of access to wholesale and retail funding markets remained stable or improved in nearly all cases during the quarter, both in Spain and in the euro area. In the last six months, the ECB’s expanded asset purchase programme continued to have a positive effect on banks’ liquidity and financing conditions, although the impact on banks’ profitability in the euro area appears to have been negative. This programme also continued to contribute to an easing of the terms and conditions of loans, and to an increase in the volume of lending, in nearly all segments. Lastly, the ECB’s negative deposit facility rate is estimated to have contributed, in the last six months, to the drop in the net interest income of Spanish and euro area banks, and to the lower interest rates applied to new loans. In the euro area, the negative interest rates also favoured a reduction in margins and an increase in lending volumes

Box 4. Recent developments in Spanish SMEs’ access to external finance according to the European Central Bank's six-monthly survey

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Results of non-financial corporations in 2019 Q1

Artículo de revistaOn information from the Banco de España Central Balance Sheet Data Office Quarterly Survey (CBQ), activity at non-financial corporations remained expansionary in 2019 Q1, although some indicators point to a certain degree of deceleration. Employment continued to rise, but also at a slower pace than in 2018. In this setting, corporate profitability ratios held steady, while borrowing costs declined again, prompting a further slight widening of the spread between return on investment and the cost of debt. Debt ratios rose somewhat, reversing the downward pattern of recent years. Lastly, the decline in borrowing costs and the growth in profit led to a further decrease in the debt burden ratio, down to all-time lows in the CBQ historical series. The article includes a box that analyses certain aspects of the recent performance of SMEs in Spain, drawing on qualitative data taken from the ECB’s survey on access to finance of enterprises (SAFE

The July 2018 Bank Lending Survey in Spain

Artículo de revistaThe results of the Bank Lending Survey show that during 2018 Q2 credit standards for new loans eased slightly in all segments, both in Spain and in the euro area. Household demand for credit grew in both areas, while that from enterprises did so only in the euro area, holding stable in Spain. As regards funding, both Spanish and euro area banks generally perceived some improvement in access conditions to retail markets and a slight deterioration in practically all wholesale markets. During the first half of 2018, regulatory and supervisory measures are estimated to have been conducive, in both areas, to some increase in capital levels, and, in the case of the euro area, also in assets. According to Spanish banks, these measures are not expected to have appreciably impacted either their funding conditions or lending standards or margins on loans. In the case of the euro area, they provided for some easing in institutions’ funding conditions, along with a slight tightening in credit standards, not significantly affecting the margins applied in most segments. Banks in both areas highlighted, as the key factors for the setting of their margins, the search for yield and competitive pressures. Finally, the NPL ratio has not significantly affected Spanish institutions’ lending policies during the first half of 2018, while it has contributed to some tightening in the euro are

Results of non-financial corporations to 2019 Q2

Artículo de revistaOn information from the Central Balance Sheet Data Office Quarterly Survey (CBQ), activity at non-financial corporations slowed in 2019 Q1, with gross value added (GVA) increasing very moderately (0.4%), below that posted in the same period last year. Employment continued to rise (0.6%), but also at a slower pace than in 2018. In this setting, the return on investment ratio declined slightly, while debt ratios rose somewhat, reversing the downward trend of recent years. However, the decline in average borrowing costs, together with the slight growth in profit, led to a further decrease in the debt burden ratio, down to all-time lows in the CBQ historical series. The article includes a box which shows that the average headcount at Spanish firms in 2017 stood below the pre-crisis level. However, despite this aggregate performance, a significant proportion of firms were able to increase their headcount during the period analysed

The January 2019 Bank Lending Survey in Spain

Artículo de revistaIn 2018 Q4, according to the Bank Lending Survey (BLS), credit standards for consumer credit and other lending to households tightened slightly both in Spain and in the euro area. There were no appreciable changes in the other two lending segments. For the current quarter, Spanish banks anticipated a slight tightening in all lending segments, a development also observable in the euro area – albeit to a lesser degree – in practically all segments. The overall terms and conditions on new loans eased across the board, both in Spain and, more moderately, in the euro area as a whole. In Spain, the demand for credit fell both in loans to enterprises and loans to households for house purchase, and it ceased to grow in consumer credit and other lending to householdsin the euro area as a whole, meantime, loan applications grew across the board. Conditions of access to wholesale funding markets worsened, both in Spain and in the euro area, whereas in retail markets the changes were minor and of a different sign. According to the banks surveyed, regulatory and supervisory measures in respect of capital, leverage and liquidity did not exert an appreciable impact on the supply of credit in Spain in the second half of 2018, whereas in the euro area they prompted some tightening. Finally, the NPL ratio did not exert any influence on Spanish banks’ lending policy in the second half of 2018, while in the euro area they contributed to some tightening in the supply of credit in all segment