The Institute of International Finance’s (IIF) composite index for the Emerging Markets Bank Lending Conditions Survey (EMBLS) reached 48.2 in Q2, 2019, 1.1 points below with respect to Q1, 2019, reflecting a tightened EM bank lending conditions.
The headline index for the Middle East and North Africa (Mena) improved during Q2, 2019 at a slower pace (.3 pts) while remaining in tightening a territory of 43.
Overall, the Mena region experienced positive performances in the demand for loans (11.7 pts), funding conditions (2.5 pts), and trade finance (2.3 pts). Non-performing loans (NPLs) however, saw a spike of 10.2 pts offsetting gains elsewhere and increasing at a faster pace than in Q1.
Banks in the Mena region expect overall conditions to ease at a faster rate than Q2 in Q3 with a 2.9 pts increase overall to an index total of 45.9. Trade finance and funding conditions should ease and the NPL’s index is predicted to reach 57.8, indicating a slower acceleration than in Q2 but positive nevertheless.
In the Emerging Market, four out of the five major categories of the index stayed in tightening zone during Q2, 2019, with the sub-index of trade finance being the only one in easing territory. Results from the survey showed that credit standards tightened, at a faster pace than Q1, 2019 (46.9 pts). Funding conditions (access to both local and international funding) remained in tightening territory. The conditions for trade finance eased, while non-performing loans (NPLs) increased. Respondents believe that Q3, 2019 should bring a favorable environment where lending conditions should ease, the IIF noted.
Overall, the index for credit standards decreased in Q2, 2019. Despite entering modest tightening territory, overall, Mena, EM Europe and EM Asia, saw modest positive gains.
Respondents across EM maintained sufficient access to domestic funding after seeing a slight drop of .28 pts from Q1 which had previously seen a 5.2 pts increase in the index from Q3, 2018. Mena and LatAm demonstrated positive funding conditions rising by 3.2 pts and 3.4 pts, respectively.
The index for credit standards decreased in Q2, 2019 by -.7 pts. Despite entering modest tightening territory, Mena saw modest positive gains.
IIF Survey indicates banks decreased their willingness to supply international trade finance in Q2, 2019, causing a fall in the index to 51.3
Source from: The Peninsula