Eurozone credit growth continues to strengthen as corporate lending accelerates

Bank lending to eurozone companies expanded at its fastest pace in three years during May, according to data released by the European Central Bank (ECB) on Monday.

The figures indicate that credit growth continued to strengthen across both businesses and households, while the region's money supply also expanded at a faster pace.

The latest data showed that the annual growth rate of the broad monetary aggregate M3 rose to 3.2% in May 2026 from 2.7% in April.

Over the three months up to May, the average annual growth rate stood at 3.0%, reflecting a gradual but consistent acceleration in monetary expansion.

Broad money supply continues to strengthen

According to the ECB, the narrower monetary aggregate M1, which includes currency in circulation and overnight deposits, recorded an annual growth rate of 4.0% in May, up from 3.8% in April.

Meanwhile, the annual growth rate of short-term deposits other than overnight deposits (M2-M1) increased to 1.4% from 0.9% in the previous month.

Growth in marketable instruments (M3-M2) also accelerated sharply, rising to 3.2% from 0.9% in April.

The ECB data showed that M1 remained the largest contributor to M3 growth, adding 2.6 percentage points in May compared with 2.4 percentage points in April.

Short-term deposits contributed 0.4 percentage points, while marketable instruments added 0.2 percentage points.

Household and corporate deposits show mixed trends

Among deposit holders, household deposits maintained steady growth.

The annual growth rate of deposits placed by households remained unchanged at 2.9% in May.

Deposits placed by non-financial corporations strengthened further, with annual growth rising to 4.2% from 3.8% in April.

Investment funds other than money market funds also showed improvement.

Their annual growth rate remained negative but recovered significantly to -0.4% in May from -5.8% in April.

Private sector credit continues to improve

The ECB data indicated that claims on the private sector remained the largest positive contributor to M3 growth, adding 3.1 percentage points in May, compared with 2.8 percentage points in April.

Net external assets contributed 1.9 percentage points, slightly lower than the 2.0 percentage points recorded in April.

Claims on the general government made a neutral contribution after contributing negatively in the previous month.

Longer-term liabilities reduced M3 growth by 1.4 percentage points, while the remaining counterparts subtracted 0.4 percentage points.

Overall, the annual growth rate of total claims on euro area residents increased to 2.4% in May from 2.0% in April.

Claims on general government returned to positive territory, rising to an annual growth rate of 0.1% after contracting 0.4% in April.

At the same time, claims on the private sector accelerated to 3.3% from 2.9%.

Corporate lending records strongest growth in three years

The ECB reported that the annual growth rate of adjusted loans to the private sector increased to 3.9% in May from 3.5% in April.

Within the private sector, lending to households remained broadly stable.

The annual growth rate of adjusted loans to households edged up to 3.1% from 3.0% a month earlier.

Business lending recorded the greatest improvement.

The annual growth rate of adjusted loans to non-financial corporations rose to 4.0% in May from 3.4% in April, marking the fastest pace of expansion in three years.

The latest figures suggest that credit conditions across the euro zone continued to improve during May.

Lending to businesses accelerated, household borrowing remained resilient, and broader monetary aggregates expanded at a faster pace, extending the gradual strengthening observed in recent months.