August 6, 2015 - Emerging market bank lending conditions continued to tighten in 2015Q2, albeit at a more moderate pace, according to the latest quarterly Emerging Markets Bank Lending Survey by the Institute of International Finance.
"Credit standards continued to be tightened as funding conditions worsened and non-performing loans increased amidst a challenging growth environment in many emerging markets," said Felix Huefner, chief economist, global macroeconomics at the IIF. "This worsening of supply conditions has largely offset more positive news of higher loan demand, notably in Emerging Europe."
Lending conditions have tightened in each of the last four quarters. In 2015Q2, the composite index for EM bank lending conditions ticked up 0.9 points to 49.0 but stayed below the threshold of 50, implying that bank lending conditions continued to tighten but at a somewhat more moderate pace.'
The IIF noted that loan demand recovered following a drop in the previous quarter, but bank funding conditions deteriorated more sharply amidst renewed volatility in EM financial markets since the middle of the quarter. Both domestic and international funding conditions tightened.
Bank lending conditions eased significantly in Emerging Europe, but continued to tighten sharply in Latin America and Emerging Asia. Conditions in the MENA region tightened for the first time since 2012Q4, reflecting the impact of lower oil prices on the region.
The Institute of International Finance is the global association of the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. Within its membership IIF counts commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks. For more information visit www.iif.com.' ' '