Italian banks ease firm credit, cautious on consumer loans

Italian banks eased credit standards for firms in the second quarter of 2026, a shift influenced by a more cautious approach to credit risk assessment due to recent geopolitical and energy-related developments.

Conversely, mortgage loan standards for households remained stable, while consumer credit saw further tightening.

For the third quarter, banks anticipate unchanged credit standards for firms and a moderate tightening for households.

Firms' demand for loans increased, driven by greater needs for financing inventories and working capital, as well as debt restructuring and renegotiation.

Expectations of rising financing costs also led to a frontloading of credit requests.

Households' demand for mortgage loans was broadly stable, but consumer credit demand edged up, largely due to higher spending on durable goods and improved consumer confidence.

A slight further increase in firms' loan demand is projected for the current quarter, with household demand expected to remain unchanged.

Access conditions for bank funding improved via deposits and bonds, though securitization funding saw a slight deterioration.

Banks expect these access conditions to improve across most main sources in the current quarter.

The share of non-performing loans (NPLs) and other credit quality indicators had a slightly restrictive impact on consumer credit supply policies in the first quarter of 2026, an effect expected to persist in the current quarter.

In the first half of 2026, credit standards tightened exclusively for energy-intensive manufacturing firms, which also experienced a more marked increase in credit demand, alongside service firms.

For the current half of the year, banks foresee virtually unchanged supply standards and strengthening demand, particularly within the manufacturing sector.