Credit growth in the Euro Area keeps accelerating

Total loans in the Euro Area grew at a faster rate in January 2022, with the growth rate accelerating to 4.5% y/y from 3.8% y/y in the previous month, fresh data by the European Central Bank (ECB) shows. This is the highest level since April 2020. The most significant increase is observed in the loans provided to insurance corporations and pension funds, which jump by 14.2% y/y from a 2.4% y/y decline in December 2022, while loans to the governments barely change, posting a negligible negative change (-0.01% y/y).

Unlike the loans, the deposits' growth rate keeps following a downward path, maintained 7 months already. The total deposits' growth rate in the Euro Area decelerated further, albeit slightly, in January to 4.87% y/y from 4.92% y/y in December.

The growth rate accelerated to 4.5% y/y from 3.8% y/y in the previous month

The diverging paths of the loans and deposits in the common currency union could both be interpreted as a sign of an ongoing economic recovery. On the one hand, the substantial acceleration of crediting underscores revival of business activity and household consumption, and on the other hand, the slowing down of the total deposits points to utilized liquidity by the economic agents, which was previously frozen due to the restrictions of mobility and production in terms of business, and due to elevated uncertainty for households.

Total loans are calculated as the sum of loans to Insurance corporations and pension funds, other financial intermediaries, households, non-financial sector, government and non-Euro Area residents, while the total deposits are the sum of all deposits by non-financial corporations, households, insurance and pension funds and other financial intermediaries.

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