ECB Bank Lending Survey (Q2 26) Conflict concerns bite, but it could have been worse

Research evidence excerpt

ECB Bank Lending Survey (Q2 26) Conflict concerns bite, but it could have been worse

21 July 2026

ECB Bank Lending Survey (Q2 26) EconomicsData Reactions-

Conflict concerns bite, but it could have been worse Eurozone

◆ Middle East conflict concerns saw corporate credit conditions tighten further in Chris Hare

Q2, but by less than expected three months ago SeniorUK andEconomist,Ireland Eurozone,

HSBC Bank plc

◆ The demand side is mixed: corporate loan demand is up but lower consumer chris.hare@hsbc.com +44 20 7991 2995

confidence is weighing on household borrowing appetite

◆ Overall, the survey is consistent with material, but not massive, risks to growth

from the conflict

Facts

The ECB’s latest Bank Lending Survey (BLS) conducted 15-30 June, showed a modest further

tightening in corporate credit standards. The eurozone-wide balance came in at +7, down from +10 in

Q1 (indicating a net tightening, albeit at a less pronounced pace than in Q1) (Chart 1). The main driver of

the tightening reflects elevated risk perceptions with the Middle East conflict cited by the ECB as an

ongoing source of uncertainty.

This tightening was less severe than lenders had previously expected, though. Three months ago, the

expectations balance for Q2 stood at +19 (Chart 1). We note that most of the sample period fell after the

signing of the US-Iran Memorandum of Understanding on 17 July. Biannual questions on corporate credit

standards by sector show a fairly similar degree of tightening in H1 this year compared to H2 last year

(Chart 2).

Corporate credit demand rose slightly in Q2 (net balance +3 after -2). That contrasts sharply against

lenders’ expectations for a pullback (Chart 3). While a large portion of the increased loan demand reflects