Italian bank lending drops to record low
Association warns of more dud loans and deepening recession19 February, 16:13
According to ABI the value of total loans issued, 1.467 billion euros, represented a 2.5% drop on the December value and was largely the result of the continuing recession in Italy.
Meanwhile, for the current year ABI researchers said their forecasts of a 0.6% contraction in the economy would likely be revised for the worse after a higher than expected contraction of 0.9% in the fourth quarter of 2012. On this basis, and unless the government takes any measures to stimulate growth, the economy could be on track to shrink by about 1%, ABI said.
The banking association also warned of the increasing amount of potentially dud loans in the financial system - another result of the continuing poor economic climate in Italy - but added there was no cause for alarm, as the increase was "physiological" and "could be managed".
According to ABI, the total value of bad loans reached a net value of some 64.3 billion euros at end 2012, representing about 3.3% of total bank lending, up from about 2.7% to the end of 2011.
Meanwhile, ABI said that bank deposits continued to increase in January, up 6.8% on December, reaching some 1.2 trillion euros.
The January growth rate marked an acceleration with respect to December's +6.2% reading.
ABI said the increase in bank deposits is likely a result of consumers' preference for liquidity in the current recessionary climate.